TWKS - Earnings call transcript Q4 2021 | Thoughtworks Holding, Inc.

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Unidentified Company Representative

Hello, everyone, and welcome to Thoughtworks Earnings Call for the Fourth Quarter of 2021.

We will be recording today's call and during the presentations, all lines will be on listen-only.

Joining me today will be Thoughtworks' President and CEO, Guo Xiao, and CFO, Erin Cummins. The earnings press release was issued earlier today and it's also available on the Investor Relations page on thoughtworks.com if you want to review or download a copy.

Some of the matters we will discuss on this call, including our expected business outlook, are forward-looking and as such, are subject to known and unknown risks and uncertainties, including, but not limited to, those factors described in today's press release and discussed in the Risk Factors section of our registration statement on Form S-1 in connection with our initial public offering, in our annual report on Form 10-K to be filed with the SEC, and other reports we may file with the SEC from time to time. could on results this uncertainties from differ and expressed those call. risks cause to actual materially These We caution as you these when forward-looking not to place because made. are undue they made only of date statements the reliance on

our financial which non-GAAP for we reference information measures useful call today provide During will investors. certain we believe

a financial our growth foreign The assumes to constant our at non-GAAP currency provide I thoughtworks.com. Form superior performed, excluding to revise currency will now of performance on provided the businesses this reconciliations non-GAAP measures available underlying section over presented fluctuations. of measures should the a Xiao. to call. in include obligation website framework the Thoughtworks for the also to which considered X-K, financial our GAAP. We substitute of GAAP information accordance as rates with in on effect to rate financial We Investor or is as measures Relations our or as how update measures prepared for release no press our assessing financial not an of hand in be exhibit furnished conference

Guo Xiao

start the Q&A. fourth some and an and Michael. more you Erin shares I to you, the everyone, QX results like guidance by our will with financial take earnings our Erin in will we open share of overall in then detail. call our quarter Welcome, I'd call. to update for Thank on business then the sharing quarter highlights the before you through

net XX% on strategy, to thrive global strong market technology design note, our enable by growth XXXX, the and a continued demand currency. In quarter as Thoughtworks, I'm million, a of achieved compared digital services. enterprises the the million to closed that talent for Thoughtworkers XX,XXX of to transformation industry. world would increase a year-on-year. in five excellence strong impact December fostering I now At culture. cultivating in XXXX revenue for of exceed has XX.X% reputation culture adjusted culture. resulting we billion. continents. reflecting digital integrates XX.X% fourth we full and XX.X% EBITDA be share pleased and headcount across year-on-year driven This Thoughtworks $XX and fourth a fourth the track XXXX, a fourth report growth. And the revenues We in for with and that constant represents $XXX reflecting our growth in businesses. of $X.XX diverse a modern to innovation. And digital coming Let every a the quarter, retain XX.X% the delighted drive billion. unique of me the of through our quarter We XX.X% $X and to start technology The about best $XXX believe of was delivered consultancy We established our year-on-year, to and like revenue we XXXX. we're to EBITDA the a that grew the thank recap engineering year, disruptors countries at XXXX I'm million, to global what quarter adjusted our around they year-over-year XX technology to leadership thought create end reported and were Thoughtworker extraordinary continues

to transformation through high expect increase to the highlighted on investment globally XX% XXXX, market, also and cycle. digital multiyear to around market double of a close that than spending XXXX. to PwC services digital their rate $X.X MarketsandMarkets survey expect to be demand of trillion more at Looking CEOs a by expect

tech like customer digital interest augmented growing cloud, decentralized platforms, by emerging sustainable our And in across finance the and data and evidence client Thoughtworks, products and see we reality, excited services, technology. For defi, of experience. technologies transformation, AI, growth we're and this virtual digital

We capabilities undertaking clients, technical expansion, developing existing the developing client establishing continue key acquisitions. prevailing Strong client and new solutions, new to strategic coming our targeted are relationships, with geographic partnerships, opportunities and and focused relationships in themes growth deepening growing market. from see our strategic

share Let examples. transformation few strategy our top a for a me Digital remains clients.

the like to data data, domain to by The faster our data and tenure platforms, grow expertise a have and services enable ambitions is customer digital move platform, business transformations Continued scale focus average our at distributed data friction, scaling improve And modernization to from of on XX digital means movement new clients revenue enterprise In pace. data and platforms, we all clients time to years under enhancing top client address term business removing through and agility. depth relationships. impact. and longer products larger their the mesh to of to Many customer access their one a bringing quality across capabilities cloud and services, governance with of facing launching a and we and help to experiences, we to deals. strategies together breadth our to can are XXXX, that our continue challenges clients of seven outcomes seeing right accelerate these architectures

Reuters, world's and provider leading Thomson of the information-based news professionals. example, tools For to

to with their a content We company. are technology their collaborating including journey, digital strategy on ambitions Reuters and architecture, driven transformation support Thomson enterprise as

new ambitions clients, digital selective with with clients looking for to long-term in our to are We transformation. approach work

some QX and QX. positive client wins this in from the share delighted quarter. have we we to I'm continued have We XX contracted excellent with clients new that momentum new

John and mention multiyear a the want a John construction first services Thoughtworks. is world is industries. The John leader Deere with products, signed advanced agreement to in has providing for Deere. and Deere I agriculture technology

working a channels. first Standard relationship develop banking technology experiences dealers new Charter's next-generation ambition to UK, strategy, our client and support Consumer enriched with producer/broadcaster multiple working creates, viewing who for high ITV digital will banking new including across wealth content and solar customers, services and an serve wind, AWS proposition people program, their we the entered wealth seamless traditional scale for digital with and a workforce and elevate and cloud-based is distributes retail have customer reach for experience and a ITV. and America, In the their and in brilliant We together collaboration intended is Charter digital we whose retail customers. expand assets on on to ITV to management further and behavior their new done. empower work other construction. better platform is working digital our data evolving across leading constantly the their partners. customers. to significant work create Workrise And strategic and are Standard platforms to are for to mission Workrise, And client, we micro to the owns stakeholders quality commercial globally. of help integrated their we North a Asia-Pacific their is industries are with will This and multiyear to in deliver skilled trades with digital experiences get leverage

We will be lifecycle, and continuous working their with frictionless more continuous tools development reengineer developer a Workrise into seamless software integrating delivery experience. to integration,

Voyager and offers Voyager We to continue the Winning help earn Thoughtworks publicly-traded to growing services. trade applications. over scale crypto their see assets their Ltd., platforms. client good XX currency to client crypto fastest platform. growth secure engaged rewards using Digital way mobile a Voyager in new of one financial fintech

debit worked the rewards earn launch lets accepted. MasterCard which have Voyager Voyager's and debit and customers crypto card, the We on to everywhere Voyager spend program is help loyalty

will scaling Voyager Going internationally. forward, we help to continue

can details can you so over find detail. of through Erin successes section website, now customer to the going take some You hand of she that thoughtworks.com. these on new numbers of I'm greater the in our to

Erin Cummins

geographies joining us in verticals. Thank you, Xiao, for our and quarter, the today. continued our you demand of pleased robust We thanks with which across very were to all demonstrated fourth and results

of begin revenue fourth saw quarter, to year Constant growth quarter. summarizing few a growth was prior we of highlights XX% the for the XX.X%. In period. by currency the Let strong compared revenue me the

was margin quarter basis to EBITDA XX an of to points higher earnings. of This fourth midpoint basis to Our compared points adjusted is the the the increase XXXX. guided I XX XX% QX our compared range in of

generated flow to We $XX with in million the also fourth solid cash quarter. continue generate free

Now highlights and XX.X% representing currency. XXXX year-over-year mark revenue of $X.XX XXXX let the XX.X% $X full revenue billion for me in constant year. growth surpassed share the at reported billion,

acquisitions revenue currency. growth reported contributed improved higher points results basis I are staffing XXX EBITA of expansion line EBITDA of Adjusted midpoint was was guidance points of XX.XX%. due margin basis and growth. the $XXX the Adjusted compared XXX earnings services year than demand guidance XX.X%, year the year, representing These our with midpoint this million, the pricing full higher the the margin XX% full-year in of year improved QX and at for in range, constant adjusted the shared XX% For to full of The than of prior higher was during for year-over-year leverage. last the our or EBITDA to XX.X%. growth

the me share let Now of some details.

end full to the Turning diversified digital revenue and million clients clients to demand accelerated in with had growth with growth and XXXX of Acquisitions the $XX fourth quarter. and transformations year-over-year is our basis. XX.X% services. January a have In XXXX bookings for at the compared XX a Thoughtworks. currency year we premium end revenue, greater their XXXX geographies points we on XXXX. constant of in XX% XXX than for with business brand high XX the At completed clients of was verticals basis contributed quarter Thoughtworks across a industry

quarter overall at and grew and in XX.X%, North XX.X%, billion XX%. saw North the momentum in by Our by the by year APAC, year bookings strong across Europe to on $X.X LATAM Europe with by XX.X%, verticals. by and XXXX APAC regions, We increased strong end XX.X% especially geographies growth all in of America. America

verticals The good continued at quarter. services, was growth growing also our industry We financial see the XX.X%. in across to strongest growth during

vertical pleased business health our consumer we clients. and travel the XX.X% existing and grew Energy, and are transport pandemic public to at grew XX.X%. post XX.X%, services very and from and at technology retail and growth global grew Our rebound continues automotive, by at XX.X%, with

that time around existing grow XX our with those one our XX-month revenues. fourth to same our clients business million, came of last For with top top seven XX the I from revenues business year continue greater clients full XX.X% milestone now also the to reaching XX.X% $XX year. of a than with than $XX clients. have million pleased increase XXXX, achieving clients, am from in XXXX, another We trailing share we quarter of more XX the

the increase a XX.X%, full This of year compared the gross basis year XXX year XXXX. of XXX margin improvement of gross gross expansion off XX.X%, adjusted quarter margin adjusted excellent income margin points adjusted XXXX. Moving was on for an XXXX points an to quarter rounds fourth down statement, basis with full performance

a higher margin profitability share $X.XX compared per quarter, our fourth benefits $X.XXX, rate. was invest as differentiated driven XX Our the million charges And have to loss XX.X% compared adjusted we leveraging proposition to was good XX.X% continue an compared leverage in to adjusted was successful points IPO. $XX while an the the $X.XX premium last fourth fourth million stock related scale. XX%, compensation Adjusted for non-cash reflects quarter driving $XX was SG&A year by per due gross EBITDA bill adjusted by to share revenue compared alongside Adjusted of expansion flow quarter increase quarter cash as our for the the for our Free IPO-related last operating year improved to up global basis the the staffing in prior XXXX. services quarter. to diluted our acquisition Adjusted primarily to liquidity. percentage value earnings year. strong On margin million diluted and XX.X% and a for costs. quarter to to GAAP $XX year we in quarter the growth of prior fourth was continue quarter, EBITDA our compared basis offset from of was

balance quarter, down Our at million us to in as XXXX, million a $XXX $XXX XX, cash million the was XXXX. December at Further, of approximately of December with balance leaving we December fourth XX, $XXX XX. million $XXX compared paid debt of

to back on Xiao in quarter. Now share our additional I updates the fourth would to hand to like business

Guo Xiao

Erin. Thanks,

amazing with Let our Thoughtworkers. me start

diversity I XX.X% our minorities. increase net women year on As of grown gender inclusion, mentioned focus and to we've community of XX.X% on Thoughtworkers earlier, year. are Thoughtworkers underrepresented With XX,XXX, long-term and a now

and with of again diversity Industry to the Chamber Associated have employer been this inclusion including many category. women We recognized our by as year, employer awards best for India's Commerce in the for and are best and pleased

the Our strong continues applicants attract the brand over talent during XXXX. employer X.XX had to to best Thoughtworks market. in million We

diversified geographically XXXX by and XX.X% for sourcing onboarding our in to leveraging and we're model effectively to By people demand year our tools. Attrition XXXX, new innovate the processes business. full to was digital XX.X% continue and for attracting strong We our strong market compared pipeline, talent. candidate talent driven

trended months has five now for Our row. attrition rate downwards in a

are to people. our managing We and continue in invest attrition

a Let examples approach me couple retention our talent that and to share highlight development.

For time of Thoughtworker talent every to equity our September XXXX. IPO at an in proud make we were retention, the holder

a forward, with approach will of aligns part and people. offer to our culture to reward of we broad package Going This equity the as our employee retention. total set proactive approach inclusive

Second, Thoughtworkers infrastructure, talent the capability for this excited This advancing program competitive X,XXX development. talent quickly. approaches cloud. data Thoughtworkers to market. our to opportunity data and important clients' Technology the talent business as about growth the XXXX. have skills We plan around and technologies Thoughtworkers an and fast to scale to high we to I learn, see new in see scale cloud focus efforts poly-skilled, training top the goals. is ambitions our latest will as our way grow We and with and areas are to on in this and aptitude training so hire and up demand learn support high advantage like who very a ability in

operationalize are me latest some share a Let that community very and theory industry a as the with tech and of, like Thoughtworks' stack share billing sessions thought together of vibrant It's to in Thoughtworkers music bringing topics in initiative users; XXXX ethical, build developing how leadership. brightest XConf platform creative global to XConf. explore augmented was to the code. established for a another how like to proud virtual-reality;

be and is technologies Our a to to have talented Thoughtworks for priority for place grow impact.

unique our program again, for the the from Our of X.X rating overall our culture off. employee which higher quarter, X.XX. the cultivating engagement on global Thoughtworkers. annual is, enriching over ran focus Glassdoor is the to quarter X,XXX is paying rating Continuing for sector IT feedback than in services with We

is overall the Our for engagement X.X, technology XX% increased which the top sector. in to

in We're the new our scores Our X.X, industry-leading the work industry, Ecuador. We're And to we based proud Thoughtworks and have average awarded in now have top brand Place quarter Thoughtworkers X% with increased XX%. who XX to sourced revolutionize to help technology countries from XX% recruit. diversity how referrals. global Work known the Certified a employee inclusion early and our built leaders company. that Around hires means score certification. place that Thoughtworks we through for puts days fourth are the as Great achieved great as This trust and we've the in reputation thought Highly engaged index company which were of advocate and on feedback, the sector. that's in our a of

that edition Talented shifts clients. Thoughtworks our technology Parts, often the technology share December released and Software And XXX is received our our technologies technologies over at the big prepare, clients come industry. published have culture. evaluated books. and book, special valued is industry Glass to in and me our Glass, we write Hard Architecture, our written Looking very One in three how XXX a on leadership to driven Thoughtworkers to how analyze asked which luminaries veteran. annual guides over the books set It's recent so was Let an of adopt. aspect by recent report. it's some anticipate, critical a unique really latest being look launched by many thought November, something cultivating Thoughtworkers With Thoughtworks market. I'm Looking and It shape well the In of

impact architectures on achieved and milestone, the premium another and Extra scores world with global Where the in brand all in technology. on the scoring XX% first the the are campaign, the and our new XX% underpinning As business The fourth advertisers benchmarks Thoughtworks' are to engagement media. highly beating success. This world, brand Early top our we Thoughtworkers increasingly business recall purpose, brand. continues our Overcomes MOAT extraordinary is aligns by company eat culture quarter strongly industry of love And software campaign campaign brand Ordinary. through distributed to promising. results to external in create

on building XXXX a premium for top XX is share focus off. paying to brand the services IT brand financed And that our Thoughtworks' now brand Our delighted brand. is I'm global

Now let me get back to Erin.

Erin Cummins

like would on update priorities. I of some you Xiao. to within areas Thanks, ESG our focus

Let me start environment. with our approach to the

We areas two have focus. of

First, to our initiative. own reduction science-based target strategy carbon commitment including our the

to in offset we develop carbon our We one Tradewater's customers tools high footprint. quality measure tons the achieved helping has world's by footprint. are Code footprint our their offset client, to year, is them technology carbon carbon activities, its we helped reduce sustainable and Tradewater One industry is credit fractionalized of in less AWS and FOM work web-based our Reinvent technology with days. November, the of personal XXX%. with committed and grow X,XXX FOM, than provides management partnered participants system, greenhouse Green offers carbon XX Tradewater. offset goal Second, the educates example credits. business Tradewater eliminating we've doing to In mission in been And reduce a with initiative. at from across its gases seen subscriptions with Tradewater's

play mission more world. are ESG our business. our open to within development do source transformational the our promote advancing social Public It equitable work to Thoughtworkers United agent-based and is continue XXXX attain critical Digital healthcare. including education COVID-XX Goods public a strategy, strongly digital products and epidemics we provided source Digital to source these to is in One Thoughtworks open world. solutions culture supports development in sustainable areas digital moving public Nations' goals. to and in is goods sustainable EpiRust such framework to the as help can goods that role simulation Alliance, open deeply and A change do support support we cities. impact social EpiRust. whose an in a in the fast smallpox, the HXNX energy, In create good model example of in ingrained goals around social the goals. example is is So,

Now let me turn our outlook. to business

demand in expect the we the talent We confident in hire to and best market. to strong our ability are remain

very robust. Our pipeline is

from We and of value are size client length the contract seeing increases average the a year ago. in

million, expect to constant first the reflecting the at we or of $XXX XX% growth a XXXX, XX% quarter the of on to in $XXX year-over-year currency basis. For be range revenues midpoint of million

EBITDA We and to QX XX% be expect for between margin adjusted XX%.

quarter, For diluted to XXX the earnings share $X.XX, weighted range to average assuming be first we adjusted a $X.XX million outstanding. diluted per expect of in of share count shares the approximately

year revenue be XX% in XX% we full on to the constant For XXXX currency growth range expect year-over-year a of the to basis.

For to margin to full year XX% XXXX we EBITDA expect be XX%. adjusted

adjusted weighted approximately outstanding. per of diluted full-year be the expect $X.XX share share for million a to count average shares $X.XX, We diluted earnings to XXXX assuming range in of XXX

believe employee is demand we our environment ambitions. growth and XXXX our For strong the will support continue brand to that

back let hand Michael. to me Now

Unidentified Company Representative

Erin. Thanks,

on Thoughtworks We You move [Operator call. on Instructions] Instructions] Operator, instructions to would now can Investor those Presentation [Operator find Investor website. for the Q&A. Relations our please the you on provide

Operator

Our Tien-Tsin with question Morgan. first Huang JP comes from

proceed with your You may question.

Tien-Tsin Huang

much. so results you here, Nice Thank everyone.

of could it that that view. which there. little thinking maybe – remarks, Can know I great, gross was gross well. I'd and XXXX would commented and the a margin you trends expand you thought start be you're what what fiscal in I as you're and but what bit doing if – you're margin, on on on for seeing contribution on you prepared mix Just pricing our and just comment solid with ahead

Guo Xiao

feel take Hi, can Erin, I in anytime. Tien-Tsin. that. to jump free

several margin an definitely factors of business. our So the in gross is outcome

modernization And across through mean have indirect the is, with we innovation be that onshore services mix and the seen offshore. one increase you to we're a and premium is it's and first The higher I markets mentioned, adding these both data. including tend I whether And rate, higher more then mix platform price as all value price and mentioned, add. more our

better a situation right The in now environment high creates the is as second pricing demand/low well. supply we're

deals can be where get we we So, taking better pricing. selective more on

generally way, by it's for our year And up per XXXX So, XXX,XXX. revenue number, last drives that sorry, that I'm XXXX. employee. was And XXX,XXX – and the then

utilization gives So, then us that a which a pricing compared was caused margin through is XXXX, And gross the worst by with we higher of a COVID. second that the do baseline increasing. driving situation factor see higher

to Thoughtworks So, drives the the work have that up the and drive XXXX time, that intending is that factor then gross same offshore/nearshore another At as we throughout we margin. doing always well. been have portfolio, more been in

employee. offsets that this as some leverage. that to we've the net per more everyone that, done work per offset by still the gets revenue does seen extent, regions. of lower wage result revenue having by environment. rate the So, higher same is employee at somewhat And inflation, else But better At time, in

but overall factors the all margin So, And forward down move expect well. that. these that gross the up little, adding pretty margin have we seen where gross we've a some with as of going factors stable also we happy we will together, continue reported. We're overall and to

Tien-Tsin Huang

that was stuff good right there. perfect, Okay,

just like strong I [indiscernible] follow-up, uncertainty. start you with some little if showing don't on forecast. the a good to expect the the So, first quick than growth from revenue It seems a geopolitical guess mind, guidance the here, sequential quarter budget better just digital strong you my

make because Just going sure questions in Thank Ukraine. wanted in on general given what's we're the to getting you.

Guo Xiao

exposure, don't have business based Sure. Thoughtworks, we [Indiscernible] And Ukraine, perspective, or also situation, or have direct Russia in we Ukraine Russia. Ukraine we clients in a then Belarus. have don’t don't people from

geographically In about highly XX% at is so the North of business is XX%, representing diversified America with only addition, Europe APAC XX% moment. revenue, our

economic potential caused any with dealing by geopolitical comfortable impact tension. pretty feel we So,

Operator

Thank you.

comes question from Ashwin with Citi. Shirvaikar next Our

your proceed You may question. with

Ashwin Shirvaikar

Hello.

Guo Xiao

I Ashwin. you. can hear Hi,

Ashwin Shirvaikar

would of to color full of decelerate cadence. ramps, though as by XQ of if year-over-year year typical client this level end Sorry. should a comps, versus some seems growth wondering to your was Anything for with we I four look more just this year, in think to to looking the as at like that you provide of perhaps but year? the seasonality, normalized things terms hear love could to quarters regards It thoughts. me that,

Guo Xiao

Sure, Hi, Ashwin. I’ll start.

So, hyper from a in where growth. there’s cycle cadence we we multiyear are we a of bit this definitely believe perspective, – still growth a

a think of at going I acceleration, moment, there’s by this transformation driven that digital is on this well the lot this both demand. as the up fact as post-COVID pent

the hyper are still going we growth still into lower at But with that than the to a up than go the still And year, a growth. higher exiting as growth we cycle this this pre-pandemic throughout rate with. going and end some to we’re level we little level So, it’s we growth XXXX. with even period. But strong quarter perhaps started is of we’re believe a moving year feel higher we year in the gradually be come then a down to going

Ashwin Shirvaikar

comment be you for terms good understood. and of I should’ve could It of understandable. maybe as part at for And us how Thanks. regular we of Understood, going should then the also think good But should I It’s in And XXXX it? scale the expected beginning, said you think that had in a comp. on forward, thing, quarter. a financial impact the quite including retention. equity

Guo Xiao

that? Erin, want do on comment you to

Erin Cummins

comment that. I sorry. on will double I realized definitely I’m was that Yes, I muted.

us There’s triggers And see XXXX that this various you as to expense. outside we any stock-based respect noted IPO relates level in the Ashwin, into the So, for IPO. yes, a that this higher really of higher still to stock-based fiscal an comp dynamic have or a level stock-based compensation, to means we’ll that lead comp year. with

of as think to comp. So, you we see expect levels about higher should XXXX, stock-based

the – We there. that just so that QX to days that been factor approvals few approval. we for We we’ve last to in have that have program to is China also now approval, going that also approvals expense heard the we waiting the in have the get SAFE equity and received

XXXX bit in So, XXXX, we then a a me, in levels into head as XXXX of have really program. And comp in see and IPO stock-based excuse start level higher we’ll into little of as expense the part summary, to – XXXX. we will normalized

the a you we would dynamics, XXXX strong expect of we essentially throughout around do to I would minutes touched margins, already margins, Xiao asked that year. a in also see little give on then that dynamics color I Ashwin, for XXXX. the growth we’ll saw on a few And seasonality bit see highlight just growth question maybe that ago. just bit the the that And similar

And us saw in that is to we quarter lower strong so, margin holiday that utilization be for the really a it increased from has tends the QX a of perspective. impact season QX QX.

XXXX, to XXXX reasonable special but So, how nothing note think in to I is a XXXX. inform on view

Ashwin Shirvaikar

both. Thank you, Understood.

Operator

Thank you.

Blair. comes Our question from William next Maggie Nolan with

You may proceed with your question.

Maggie Nolan

the congrats there your months this as first and curious, of changes me from in have you hire well. year? been I’m Thank market any in ability to or couple labor the

Erin Cummins

hire. to ability our in changes No Maggie. Hi,

past have If seen recruiting we first our attract years. our onboarding in our well more as been about investing the and to over the both technology seeing side. that as the process, recruiting process to engine is we where continue teams very in ever. productive we’re Xiao And we’ve talent. in talked our ability what that our and we’re and are as comments, than sourcing continue are well investing process his think our side prior this recruitment around capability today a strong We as recruitment confident in is quarter. We’ve earlier

with happening feeling in QX. we’re in and far good XXXX general what’s for confirmed this is so about So, hiring

Maggie Nolan

big non-top Can strong drivers how a was buckets It thinking clients comment driver you in you then on focusing pretty And the terms XX year. of the top this stratifications? XX clients? seems those across XX growth growth you. Thank you’re like of about your it. two are the efforts Got of of and where your of non-top the kind

Guo Xiao

take I’ll that. Sure.

XXXX – of from was XX XX top five earlier, as mentioned total clients our So, top a for percentage and as revenue we top revenue XX%.

the new from relationships. from Again, And a was XXXX, there so, that just XXXX can from perspective, comes logo of growth And A client less driver large smaller pipeline a growing XXXX. fully from than for a top sure. are we XX XXXX continues QX. was And our to a new to smaller XX logos see though recover. growth new client then a new them of part due of strong portfolio in XXXX, to but for client logos We shift saw definitely start in of even logo our not there part grow to continuing in a the a lot be that growth lot COVID, logos. that see relatively see normal we XXXX, We Plus as unexpected to year. some then faster and QX and ramp in up new clients.

at So, we with this continue ramping the clients, diversify we up a where us new much logo overall to from to top feel see also chance clients pretty better strong give moment this portfolio our to growth comfortable smaller continue portfolio.

see – same continents Xx growing QX of And definitely than than time top trailing now XX. more XX-month that’s XXXX. have XX with think top the we I additionally, faster XX we that So, $XX revenue million, over

Maggie Nolan

Thank you.

Operator

you. Thank

Brian with Our next Sachs. from question Goldman comes Essex

question. You may proceed with your

Brian Essex

long-term And could a nearshore, as I changing there morning well. think mix previously how reopening basis, in is XXXX? a it’s and from set me on view for of bit But onshore given should is that results about you was on could you start driving pace nice wondering fiscal taking some past? maybe offshore/nearshore. what I thank congrats the the that what of versus as a the was now, global over into shift maybe your on comment commentary we head offshore to been out of the a if mix level of we good Hi, question and more mix –

Guo Xiao

Thanks for the Brian. Hi, Sure. question.

always have delivery pandemic, for pushing we we’ve than before the even done more intentionally So, been, traditionally. offshore/nearshore

more business and our XX than ago it XXX% started was So, onshore. years then

region, So, offshore/nearshore a different deliver over from in have offshore/nearshore Asia, clients gradually the mentioned, Eastern now increased working you will us go offshore/nearshore right to to like total of the doing And headcount then getting China, I’ll especially and, little open remote – work because to bit has work percentage Europe. more headcount. our it. LATAM, slowly, as regions more opportunity Southeast about just a The years India, headcount just and we XX% our of to comfortable in are delivery give increased post-pandemic perspective, locations,

said, do increase, of XX% regions, and because years to maybe example, expect for even to the But outside to where, an percentage few clients. with we that our further our range we be strategic believe the headcount advantage to don’t higher. XX% gives is to we So, presence differentiating the ability and perhaps extreme move offshore/nearshore a position us intend next Thoughtworks this that do co-located the in

have to wise But and a continue XX% to shift there. continue to presence So, hopefully going beyond. number strong it’s we’ll to

Brian Essex

to that’s reference it, Got of out that. anything that’s explicit technologies of notable a that financial maybe really follow-up, to terms very is payments ability user or appreciate And in helpful. as expertise around there driving I there experience particular set call anything or strength, services just domain or such building strength?

Guo Xiao

aspect is a an think It – I Thoughtworks. at interesting

manner. in our organized organization vertical have We a not historically

go-to-market specific domain strong a had never approach. we So,

to believe reasons Now – innovative. we stack to so more should to there’s mostly vertical, stack can and tech that, that and lot to because tech from of move able they be then become vertical from poly-skilled technology a

doing Now this client, which generally expertise, our in the can finished so as the recent been technology transformation. been better seeing for a growth then we clients. lot we then I by the growth. specifically of and But offerings, fact very intentionally this financial also adding strong that’s seeing And retail, services, just them both around general third-party just area. better one years that relevant can domains. investing have more horizontal we’re in area not paying capability. probably out, strong we’re obviously, And and domain conversation also just it with that In that’s domain other services. the but we’ve more from financial and more and the it’s a we more not payment, on on have where why point than think there’s frame crypto frame make besides with But services, you by off the is things are it’s always definitely we new this There’s going sector It’s digital neo-bank currency.

Does going domain switch expertise continue to oriented we’ll probably a but sense? make structure. more in area, that add So, domain organization to to this never

Brian Essex

Very helpful color, you. thank

Operator

Thank you.

Capital with Markets. next RBC question Matthew comes Roswell from Our

You proceed question may with your

Matthew Roswell

quarter. morning thank on nice the good and And congratulations Yes, you question. for a taking

deeper giving clients, you work more all you’re think And couple clients that and to Thank the specific it overall? the sign meaning Do that are more length and a increasing in mentioned is you or it amounts something that just of if tenure and the competitors? times – that’s the from it contract is you’re You’ve the and increasing. is you that’s be separating are seem to Thoughtworks, a to specific industry Thoughtworks, you. going in sort

Guo Xiao

I’ll take that.

So, it’s definitely both.

transformation there is There’s perspective. pent-up in demand. digital one, momentum strong also For from a the a industry

to with lot into relationship time the of And now pipeline that the are of definitely perspective, strength just of resources, the value the that’s to wave the see especially trend. So, larger through a inning bigger of lot in first – understand are go that they got the contracts, to first what contracts. clients. we to some terms A pipeline beyond digital industry over longer-term also ones There’s becomes to the And just journey across so development cloud. not invest team their of digital they huge systems, scalability of leadership but want a then cloud native in work productive. digital more They just, to their re-architecture so in and amount more transformation keep for advantage the heavily cloud legacy more and to this invest take the doing modernize into architecture practices start then the more a just can oriented. become they modernizing of example, want or we an further cloud. maybe convinced From heavily board deal key to we sign the engagement, they Thoughtworks’ we secure see, of so in our about up to generally become clients into second who – a drives their have tend – move to the to transformation, so-called also the –

be to there’s – tend value later – and we So, will also in able return more in stage difficult, to work be even complex add. higher the the

is services, advantage fundamental reasons unique why of high-end I in provider, seeing And Thoughtworks grow positioned the this of as market continues total take service addressable demand digital our definitely to for we’re premium, expand think the believe this to perspective, high-value a and sector. – believe a sector then that very Thoughtworks from Thoughtworks. strong we add premium uniquely win right That’s for to we services. So, a the why

Matthew Roswell

Okay. much. Thank very you

Guo Xiao

Thank you.

Operator

Thank you.

comes Cowen. Bergin with from question next Our Bryan

may your with You proceed question.

Bryan Bergin

your Thank to the clients, approach your that all. impact I you. comments wanted think Hi, selectivity to new dig into how and may in growth potential. how about to about

over industry grew elevated demand, comfortable at about you’re the of talk understanding you at growth just year-over-year operating? XQ. in levels So, headcount which You can XX%

that Just of growth operations timeframe? over able level operate a your sustainable curious, a is are to

Guo Xiao

Sure.

then strong proposition client and can sustain they overall a that, And – for investment doubt of integrate value Thoughtworks we’re relationship to So, train the a how from time high them onboard then It’s do supply also culture. first from careful gross, and but making growth, in a all both for appreciate the we there’s perspective even that proposition selectivity people, sector with longer from market. premium With value of sure strategic having that. selecting we the from long-term our a proposition from outpacing them with there’s value for – it higher that a clients that and demand to more into perspective, support Thoughtworks. is the the also no the qualification that takes build perspective. there’s very them premium it’s demand make we And a then can sure

a so the we work. and can that in premium we with our high value sauce and few maintain onboarding, we growth quality years, without diluting pre-pandemic. compatible for grow growth so want did this earlier, and during Erin with able business. the than allows us This the last people always a the as proposition So, secret rate processes And sure been we then, training recruiting, did in many then this to techniques we phase to culture. And help of that at make us more our mentioned to is capture integrating premium pace growth bit have experimenting proposition, the hyper and value new into faster were

confident can higher have XX%. we we’re just now slightly a than at well we XX% – level historically above this done at do Now

and the I long question. sustainable the We’re too very that it answered not point too pushing careful is this to not explains high for that anymore. hope

Bryan Bergin

should SG&A you the about just very takes optimization That about helpful. talk investments puts margins. growth XXXX we this definitely. margin is How ongoing in be and versus thinking follow-up outlook? the the Yes, Can was year? My around

Erin Cummins

Sure.

margin about So, gross little already. bit Xiao talked a

But of continue touched on course the clients he for some are level price of we’ve know and also do expect higher to in XXXX XXXX. been true this. competition able relevant We understand true talent. strong in and, we So, margin of that we XXXX. course, points that offset. that increases is What is of to are drive This a in to our gross a was seeing and

of so forth. onshore/nearshore, pace and Xiao mentioned leverage margins disposal wages, we’ll we about on then, have we as and wages. earlier, so at and we gross think think pricing with keep So, dynamics terms our the if of in and things And other

So, that helps margin. us gross maintain that

one XXXX. we travel things been of has in know that is the both and low Now that very XXXX

about for low I’ve So, margins, and we again do thing company. travel expense our other to what XXXX as bit as think and XXXX is the this that so guidance will through given we increase operating for We as first travel would margin an very XXXX. I just anticipate full profile, which if us, travel before come the compared a client talked see the is about SG&A. non-client a in of is And then well mention maybe year and the public just gross little

costs in to that. said, that it both relates to have into our and as there’s our QX come additional that have opportunities do business drive with so, And But to business we efficiencies in continue as scale. we QX

an over have driving efficiencies program to that up effectiveness cost well operational operational geared both time. as We efficiency as

But opportunities XXXX. coming to the company we in that are something anticipate operating see the So, to in cost cost we medium-term, over SG&A. leverage definitely continue public the travel and drive

Bryan Bergin

Thank for detail. you Great. Okay. all the

Operator

you. Thank

Moshe from with comes question Khatri Securities. next Our Wedbush

question. You your with may proceed

Moshe Khatri

numbers. congrats Thanks on and strong Two things.

growth. follow-on? gave split verticals? feedback very from bookings, us way it on in in I is numbers terms more the a get terms have Can of where in is you then of to then and And new logos? a And of some color growth coming First, there I some strong then renewals between terms

Guo Xiao

Sure.

if of all perspective, verticals geographies products tend similarly. we perspective And renewals very seen mentioned across them also then different move to Erin very business amount more renewals and XX%, get existing opportunities customers. of mentioned pursuing well. we relationships, existing new the in growth a geography of XX% terms then with of And even service have of earlier same we’re in opportunities from from than from we versus that on broad from coming revenue revenue a wise large general. customer we extensions at So, types question as earlier I renew. have lot about wise a the Definitely continents. time, is winning we’ll range and win Vertical pretty of it coming then – is versus functions, and coming have a high specific your and existing rate from But wide base about new offerings.

growth a broad So, it from does perspective. base come from a

Moshe Khatri

Great. when on-site. you provided to mix helpful offshore And it then headcount by was the really

said X in bit there you offset get expand amount can mix maybe some to the headwinds Thanks. – points, to in inflation? actually get including other as is basis Is higher wage than of don’t use how you XX, to bps and XX-XX helps of expansion results also feel a for think offshore happens us to that that a I objective sensitivity terms XXX that. what that your just margins you the potentially in I know, of on we

Guo Xiao

But inflation. exactly it said, great to calculate – question. to That’s is calculate don’t way I offset like you how know that? that. of do help any some a to wage whether Erin, will know the there I you know

Erin Cummins

offshore say any and be general positive. nearshore, in At puts in invest tends in are and say time, I same and wouldn’t margin even do that would to equation. I the takes specifics. it we that so there

somewhat tends good that beneficial. to just them. But clients, do for to So, invest make sure experience successfully for broadly I order it that it’s a be we would say that in our we happen so margin make

Moshe Khatri

the Thanks for Understood. color.

Operator

you. Thank

from question Estes next comes Wolfe Our Andrew Research. with

You may proceed with question. your

Andrew Estes

cross-selling Darrin. It’s investments trends Thanks. ask to wanted your if around the force? you strategy address sales any for just Andrew internal to on could and making about I on the – elaborate you’re in

Guo Xiao

sure make relevant. have as on enterprise we’ll also we’re journey go cross-selling on lot And From teams offering, A modernization develop our highly are the our focus do client journey, other heavy to force clients. both invested we with customers. the perspective, to from properly of is we in strongly particular upselling/cross-selling offerings we still then teams new all a the to enter that then offered customer service that into service perspective their transformation design. a business that service market, business a in but feel development data And have we times existing digital product with engagement four really goal the lines early main sales in are invested And and along that it’s whether journey. experience one or or a

fact even In team size development for bigger of that is the that size than the the – business business team. new

Andrew Estes

for it. all me. Appreciate That’s Great.

Guo Xiao

Thank you.

Operator

Thank you.

with Ramnani Piper Arvind Our next comes from question Sandler.

question. your You may proceed with

Arvind Ramnani

and you my of capabilities seeing that well Hi. geos Thanks in are next just want for to XX strongest to verticals. as question. categorize can And as the in for where if terms your ask, the pipeline months? the both you XX taking interest the I

Guo Xiao

Sure.

have infrastructure from needs we systems into into we make we be a in that will and it’s digital in with done challenging in the interest strongest re-architect be quality opposed From a of because into really or as a capability there’s big in the have perspective, to digital transformation are modernization lot that to the platform. thanks can of last growth then believe, moving the the way situations our deep the of Enterprise data just get to have. once the these a few they the two of areas. of to and data So, lot to re-engineer, enterprise perspective, they data see, companies going But lot the years. modernization digital getting They data further sense legacy wave it. seen of the modernization

those two the geographies Now strong verticals. service is from see come lines all the and we all much pretty in where in also growth

vertical pretty line pretty universal where well. specific or and grows geography see It’s one the So, there other. faster we as is than based no broad service

Arvind Ramnani

follow-up, of as do look And – more more the of Thoughtworks in out operating certainly and model. teams of with have over Terrific. dispersed my But being next on-site just an has you terms you years Or stabilizing couple deliver home do in to remotely, or the how be you of from operating working in model? see terms working it’s your you change a think the model services? going you of operating

Guo Xiao

a them the that will cards changes, lot collaboration our or be hybrid done But the to then, to there believe spend all so, it’s remotely do that solve will will of time co-located the we We we time or same work as some office. from operating and most they that location A also for – to specifically this Yes. together. And be then travel remotely. sometimes that’s their a lot a a own with think could current specific the moving in client work need And But the model effective model will team still people that problems. it milestones of a to showcase, to believe key people – amount they of opposed our get most forward, That of whether to get meaning while. And and during everyone likely project, hybrid that will time then be with way will travel kind even time. certain work with co-located remotely. of on-site, pre-pandemic. fly

Arvind Ramnani

you. Thank Terrific.

Guo Xiao

Thank Arvind. you,

Operator

like time. to showing you. now further not for I’m Thank would to further any And I back questions call turn over any this at remarks. the Xiao

Guo Xiao

our for and Board to And again and I I achievements. you also forward want just Thoughtworkers, our partners all clients of to you all, first for acknowledge thank seeing continued thank shareholders. our next joining of today. quarter. just want our the Stay the support to great we everyone, well, So, and us look

Operator

disconnect. you. call. Thank This may today’s you now Thank you concludes participating, conference for

Thoughtworks Holding (TWKS) 1 Mar 222021 Q4 Earnings call transcript