-
Second quarter revenues of
$287.2 million -
Announces restructuring actions targeting
$75-85 million in annualized cost savings upon completion - Provides updated guidance for the full year and third quarter of 2023
Following a detailed review of its business,
The majority of the actions will be taken in the third quarter of 2023 and are expected to be completed within the next twelve months. Upon completion of the program, the Company expects to realize annualized cost savings of approximately
QTD second quarter 2023 summary
|
|
Three Months Ended
|
|
|
|
|
|||||||||
|
$ in millions, except per share data |
2023 |
|
2022 |
|
Change |
|
% Change(1) |
|||||||
|
GAAP Metrics: |
|
|
|
|
|
|
|
|||||||
|
Revenues(2) |
$ |
287.2 |
|
|
$ |
332.1 |
|
|
$ |
(44.9 |
) |
|
(13.5 |
)% |
|
Gross Profit |
$ |
90.9 |
|
|
$ |
81.6 |
|
|
$ |
9.3 |
|
|
11.4 |
% |
|
Gross Margin |
|
31.6 |
% |
|
|
24.6 |
% |
|
|
7.0 |
% |
|
|
|
|
SG&A |
$ |
86.6 |
|
|
$ |
99.4 |
|
|
$ |
(12.8 |
) |
|
(12.9 |
)% |
|
SG&A Margin |
|
30.2 |
% |
|
|
29.9 |
% |
|
|
0.3 |
% |
|
|
|
|
Stock-based compensation |
$ |
17.6 |
|
|
$ |
69.0 |
|
|
$ |
(51.4 |
) |
|
(74.5 |
)% |
|
Net loss |
$ |
(12.3 |
) |
|
$ |
(39.3 |
) |
|
$ |
27.0 |
|
|
|
|
|
Net loss margin |
|
(4.3 |
)% |
|
|
(11.8 |
)% |
|
|
7.5 |
% |
|
|
|
|
Diluted loss per share |
$ |
(0.04 |
) |
|
$ |
(0.13 |
) |
|
$ |
0.09 |
|
|
|
|
|
Cash flow from operations |
$ |
(16.8 |
) |
|
$ |
27.6 |
|
|
$ |
(44.4 |
) |
|
|
|
|
Non-GAAP Metrics(3): |
|
|
|
|
|
|
|
|||||||
|
Revenue Growth Rate at constant currency(4) |
|
(12.5 |
)% |
|
|
33.5 |
% |
|
|
|
|
|||
|
Adjusted Gross Profit |
$ |
105.0 |
|
|
$ |
135.0 |
|
|
$ |
(30.0 |
) |
|
(22.2 |
)% |
|
Adjusted Gross Margin |
|
36.6 |
% |
|
|
40.6 |
% |
|
|
(4.0 |
)% |
|
|
|
|
Adjusted SG&A |
$ |
76.0 |
|
|
$ |
78.6 |
|
|
$ |
(2.6 |
) |
|
(3.3 |
)% |
|
Adjusted SG&A Margin |
|
26.5 |
% |
|
|
23.7 |
% |
|
|
2.8 |
% |
|
|
|
|
Adjusted Net Income |
$ |
10.1 |
|
|
$ |
37.0 |
|
|
$ |
(26.9 |
) |
|
(72.6 |
)% |
|
Adjusted EBITDA |
$ |
29.3 |
|
|
$ |
58.5 |
|
|
$ |
(29.2 |
) |
|
(49.9 |
)% |
|
Adjusted EBITDA Margin |
|
10.2 |
% |
|
|
17.6 |
% |
|
|
(7.4 |
)% |
|
|
|
|
Adjusted Diluted EPS |
$ |
0.03 |
|
|
$ |
0.11 |
|
|
$ |
(0.08 |
) |
|
(72.7 |
)% |
|
Free Cash Flow |
$ |
(18.8 |
) |
|
$ |
20.2 |
|
|
$ |
(39.0 |
) |
|
|
|
YTD second quarter 2023 summary
|
|
Six Months Ended
|
|
|
|
|
|||||||||
|
$ in millions, except per share data |
2023 |
|
2022 |
|
Change |
|
% Change(1) |
|||||||
|
GAAP Metrics: |
|
|
|
|
|
|
|
|||||||
|
Revenues(2) |
$ |
594.3 |
|
|
$ |
653.0 |
|
|
$ |
(58.7 |
) |
|
(9.0 |
)% |
|
Gross Profit |
$ |
188.4 |
|
|
$ |
152.8 |
|
|
$ |
35.6 |
|
|
23.3 |
% |
|
Gross Margin |
|
31.7 |
% |
|
|
23.4 |
% |
|
|
8.3 |
% |
|
|
|
|
SG&A |
$ |
173.0 |
|
|
$ |
204.1 |
|
|
$ |
(31.1 |
) |
|
(15.2 |
)% |
|
SG&A Margin |
|
29.1 |
% |
|
|
31.3 |
% |
|
|
(2.2 |
)% |
|
|
|
|
Stock-based compensation |
$ |
35.3 |
|
|
$ |
169.1 |
|
|
$ |
(133.8 |
) |
|
(79.1 |
)% |
|
Net loss |
$ |
(20.4 |
) |
|
$ |
(82.9 |
) |
|
$ |
62.5 |
|
|
|
|
|
Net loss margin |
|
(3.4 |
)% |
|
|
(12.7 |
)% |
|
|
9.3 |
% |
|
|
|
|
Diluted loss per share |
$ |
(0.06 |
) |
|
$ |
(0.27 |
) |
|
$ |
0.21 |
|
|
|
|
|
Cash flow from operations |
$ |
16.2 |
|
|
$ |
21.5 |
|
|
$ |
(5.3 |
) |
|
(24.7 |
)% |
|
Non-GAAP Metrics(3): |
|
|
|
|
|
|
|
|||||||
|
Revenue Growth Rate at constant currency(4) |
|
(6.9 |
)% |
|
|
35.7 |
% |
|
|
|
|
|||
|
Adjusted Gross Profit |
$ |
216.8 |
|
|
$ |
281.2 |
|
|
$ |
(64.4 |
) |
|
(22.9 |
)% |
|
Adjusted Gross Margin |
|
36.5 |
% |
|
|
43.1 |
% |
|
|
(6.6 |
)% |
|
|
|
|
Adjusted SG&A |
$ |
153.2 |
|
|
$ |
151.1 |
|
|
$ |
2.1 |
|
|
1.4 |
% |
|
Adjusted SG&A Margin |
|
25.8 |
% |
|
|
23.1 |
% |
|
|
2.7 |
% |
|
|
|
|
Adjusted Net Income |
$ |
20.2 |
|
|
$ |
81.0 |
|
|
$ |
(60.8 |
) |
|
(75.0 |
)% |
|
Adjusted EBITDA |
$ |
64.2 |
|
|
$ |
131.4 |
|
|
$ |
(67.2 |
) |
|
(51.1 |
)% |
|
Adjusted EBITDA Margin |
|
10.8 |
% |
|
|
20.1 |
% |
|
|
(9.3 |
)% |
|
|
|
|
Adjusted Diluted EPS |
$ |
0.06 |
|
|
$ |
0.25 |
|
|
$ |
(0.19 |
) |
|
(76.0 |
)% |
|
Free Cash Flow |
$ |
12.6 |
|
|
$ |
9.0 |
|
|
$ |
3.6 |
|
|
40.0 |
% |
|
(1) For QTD, percentage change for net loss, diluted loss per share, cash flow from operations and free cash flow were excluded as they were determined to be not meaningful due to a loss or negative position in one or both periods. For YTD, percentage change for net loss and diluted loss per share were excluded as they were determined to be not meaningful due to a loss or negative position in one or both periods. |
||||||||||||||
|
(2) Acquisitions completed in the last twelve months contributed approximately 1% to the revenue growth rate for the quarter and 2% for the six months ended |
||||||||||||||
|
(3) See “Non-GAAP financial measures” for how we define these measures and the financial tables that accompany this release for reconciliation of these measures to the closest comparable GAAP measures. |
||||||||||||||
|
(4) Revenue Growth Rate at Constant Currency is calculated by translating the current period revenues into |
||||||||||||||
Bookings
Our overall bookings for the trailing twelve months ended
Revenue growth rate by customer location
|
|
Three Months Ended
|
|
Six Months Ended
|
|
|
(19.6)% |
|
(13.9)% |
|
APAC |
(8.4)% |
|
(5.3)% |
|
|
(8.4)% |
|
(3.9)% |
|
LATAM |
(24.8)% |
|
(20.8)% |
Revenue growth rate by industry vertical
|
|
Three Months Ended
|
|
Six Months Ended
|
|
Technology and business services |
(26.8)% |
|
(20.4)% |
|
Energy, public and health services |
(1.7)% |
|
3.7% |
|
Retail and consumer |
(29.0)% |
|
(26.1)% |
|
Financial services and insurance |
(11.6)% |
|
(8.6)% |
|
Automotive, travel and transportation |
18.4% |
|
20.2% |
Liquidity
We had cash and cash equivalents of
Financial outlook
Third quarter
-
Revenues in the range of
$275 million to$285 million , reflecting year-over-year decline of (17)% to (14)%; or (19)% to (16)% in constant currency. Acquisitions, including those completed during 2023, are expected to contribute approximately 1% to the year-over-year revenue growth rate; - Adjusted EBITDA Margin(5) in the range of 9.0% to 11.0%;
-
Adjusted Diluted EPS(5) in the range of
$0.02 to$0.03 , assuming a weighted average of 332 million diluted outstanding shares; and -
Stock-based compensation expense of
$18 million .
Full year
-
Revenues in the range of
$1,137 million to$1,157 million , reflecting year-over-year decline of (12)% to (11)%; or (12)% to (11)% in constant currency. Acquisitions, including those completed during 2023, are expected to contribute approximately 2% to the year-over-year revenue growth rate; - Adjusted EBITDA Margin(5) in the range of 11.0% to 12.0%;
-
Adjusted Diluted EPS(5) in the range of
$0.11 to$0.13 , assuming a weighted average of 332 million diluted outstanding shares; and -
Stock-based compensation expense of
$74 million .
(5) Adjusted EBITDA Margin and Adjusted Diluted EPS exclude the impacts from restructuring charges.
Conference call information
-###- <TWKS915>
About
Forward-looking statements
This press release includes "forward-looking statements" within the meaning of the "safe harbor" provisions of the United States Private Securities Litigation Reform Act of 1995. In some cases, you can identify these forward-looking statements by the use of terms such as "expect," "will," "continue," or similar expressions, and variations or negatives of these words, but the absence of these words does not mean that a statement is not forward-looking. Forward-looking statements represent our management's beliefs and assumptions only as of the date of this press release. You should read this press release with the understanding that our actual future results may be materially different from what we expect. All statements other than statements of historical fact are statements that could be deemed forward-looking statements, which include but are not limited to: the statements under "Financial outlook," including expectations relating to revenues and other financial or business metrics; the statements under “Thoughtworks announces restructuring actions,” including expectations relating to the size of the restructuring actions, the amount and timing of related cost savings and charges and the potential long-term benefits of the restructuring actions; statements regarding relationships with existing and potential clients and their engagement decisions; and any other statements of expectation or belief. These statements are subject to known and unknown risks, uncertainties and other factors that may cause our actual results, levels of activity, performance or achievements to differ materially from results expressed or implied in this press release. Such risk factors include, but are not limited to, those related to: current and future impact of macro-related factors on
Non-GAAP financial measures
Certain financial metrics contained in this press release are considered non-GAAP financial measures. Definitions of and the related reconciliations for these non-GAAP financial measures can be found below. We use these non-GAAP measures in conjunction with traditional GAAP measures to evaluate our financial performance. We believe that these non-GAAP measures provide our management and investors consistency and comparability with our past financial performance and facilitate period-to-period comparisons of operations. However, non-GAAP measures have limitations as analytical tools, and you should not consider these measures in isolation or as substitutes for analysis of our financial results as reported under GAAP. For example, many of the non-GAAP financial measures used herein exclude stock-based compensation expense, which has recently been, and will continue to be for the foreseeable future, a significant recurring non-cash expense for our business and an important part of our compensation strategy.
Certain non-GAAP measures related to our financial outlook included in this press release and the associated webcast were not reconciled to the comparable GAAP financial measures because the GAAP measures are not assessable on a forward-looking basis. The Company is unable to reconcile these forward-looking non-GAAP financial measures to the most directly comparable GAAP measures without unreasonable efforts because the Company is currently unable to predict with a reasonable degree of certainty the type and extent of certain items that would be expected to impact GAAP measures for these periods but would not impact the non-GAAP measures. Such items may include stock-based compensation, acquisitions, income tax effects of adjustments and other items. The unavailable information could have a significant impact on the Company's GAAP financial results. Based on the foregoing, the Company believes that providing estimates of the amounts that would be required to reconcile the range of the non-GAAP measures to forecasted GAAP measures would imply a degree of precision that would be confusing or misleading to investors for the reasons identified above.
Revenue Growth Rate and Revenue Growth Rate at constant currency
Certain of our subsidiaries use functional currencies other than the
Adjusted Gross Profit and Adjusted Gross Margin
We define gross profit as total revenues less cost of revenues. We define Adjusted Gross Profit as gross profit excluding stock-based compensation expense, employer payroll related expense on employee equity incentive plan and depreciation expense. We calculate Adjusted Gross Margin by dividing Adjusted Gross Profit by total revenues. Our management uses Adjusted Gross Profit to assess overall performance and profitability, without regard to the aforementioned adjustments, which are unrelated to our ongoing revenue-generating operations. We also believe this information will be useful for investors to facilitate comparisons of our operating performance and better identify trends in our business.
Adjusted SG&A and Adjusted SG&A Margin
We define Adjusted SG&A as selling, general and administrative expense excluding stock-based compensation expense, acquisition costs, certain professional fees that are considered unrelated to our ongoing revenue-generating operations and employer payroll related expense on employee equity incentive plan. We calculate Adjusted SG&A Margin by dividing Adjusted SG&A by total revenues.
Our management uses Adjusted SG&A and Adjusted SG&A Margin to assess our overall performance, without regard to items such as stock-based compensation expense and other items that are considered to be unique or non-recurring in nature or otherwise unrelated to our ongoing revenue-generating operations. We also believe this information will be useful for investors to facilitate comparisons of our operating performance and better identify trends in our business.
Adjusted Net Income and Adjusted Diluted EPS
We define Adjusted Net Income as net loss adjusted for unrealized loss (gain) on foreign currency exchange, stock-based compensation expense, amortization of acquisition-related intangibles, acquisition costs, restructuring charges, certain professional fees that are considered unrelated to our ongoing revenue-generating operations, employer payroll related expense on employee equity incentive plan, final tax assessment for closed operations, change in fair value of contingent consideration and income tax effects of adjustments.
We define Adjusted Diluted EPS as diluted loss per share, with the numerator adjusted for the aforementioned adjustments to Adjusted Net Income. In other words, the numerator for Adjusted Diluted EPS utilizes Adjusted Net Income. We calculate Adjusted Diluted EPS by dividing Adjusted Net Income by diluted weighted average shares outstanding.
Our management uses Adjusted Net Income and Adjusted Diluted EPS to assess our overall performance, without regard to items that are considered to be unique or non-recurring in nature or otherwise unrelated to our ongoing revenue-generating operations, net of the income tax effects of adjustments.
Our management uses Adjusted Net Income for planning purposes, including the preparation of our annual operating budget, as a measure of our core operating results and the effectiveness of our business strategy, and in evaluating our financial performance. We also believe this information will be useful for investors to facilitate comparisons of our operating performance and better identify trends in our business.
Adjusted EBITDA and Adjusted EBITDA Margin
We define Adjusted EBITDA as net loss adjusted to exclude income tax expense; interest expense; other (income) expense, net, excluding a gain related to the mark to market adjustment on shares received in relation to the sale and settlement of trade receivables in 2022; unrealized loss (gain) on foreign currency exchange; stock-based compensation expense; depreciation and amortization expense; acquisition costs; restructuring charges; certain professional fees that are considered unrelated to our ongoing revenue generating operations; employer payroll related expense on employee equity incentive plan; and final tax assessment for closed operations. We calculate Adjusted EBITDA Margin by dividing Adjusted EBITDA by total revenues.
Adjusted EBITDA and Adjusted EBITDA Margin are widely used by investors and securities analysts to measure a company's operating performance without regard to the aforementioned adjustments that can vary substantially from company to company depending upon their financing, capital structures, and the method by which assets were acquired or costs that are unique or non-recurring in nature or otherwise unrelated to our ongoing revenue-generating operations.
Our management uses Adjusted EBITDA and Adjusted EBITDA Margin for planning purposes, including the preparation of our annual operating budget, as a measure of our core operating results and the effectiveness of our business strategy, and in evaluating our financial performance. We also believe this information will be useful for investors to facilitate comparisons of our operating performance and better identify trends in our business.
Free Cash Flow
We define Free Cash Flow as net cash provided by operating activities less cash used for purchases of property and equipment. We believe that Free Cash Flow is a useful indicator of liquidity for investors and is used by our management as it measures our ability to generate cash, or our need to access additional sources of cash, to fund operations and investments. There are a number of limitations related to the use of free cash flow as compared to net cash from operating activities, including that Free Cash Flow includes capital expenditures, the benefits of which are realized in periods subsequent to those when expenditures are made.
|
|
|||||||||||||||
|
CONDENSED CONSOLIDATED STATEMENTS OF LOSS AND COMPREHENSIVE LOSS |
|||||||||||||||
|
(In thousands, except share and per share data) |
|||||||||||||||
|
(unaudited) |
|||||||||||||||
|
|
Three months ended |
|
Six months ended |
||||||||||||
|
|
2023 |
|
2022 |
|
2023 |
|
2022 |
||||||||
|
Revenues |
$ |
287,215 |
|
|
$ |
332,107 |
|
|
$ |
594,271 |
|
|
$ |
653,047 |
|
|
Operating expenses: |
|
|
|
|
|
|
|
||||||||
|
Cost of revenues |
|
196,338 |
|
|
|
250,462 |
|
|
|
405,860 |
|
|
|
500,227 |
|
|
Selling, general and administrative expenses |
|
86,626 |
|
|
|
99,352 |
|
|
|
172,966 |
|
|
|
204,117 |
|
|
Depreciation and amortization |
|
5,874 |
|
|
|
4,215 |
|
|
|
11,416 |
|
|
|
10,061 |
|
|
Total operating expenses |
|
288,838 |
|
|
|
354,029 |
|
|
|
590,242 |
|
|
|
714,405 |
|
|
Income (loss) from operations |
|
(1,623 |
) |
|
|
(21,922 |
) |
|
|
4,029 |
|
|
|
(61,358 |
) |
|
Other (expense) income: |
|
|
|
|
|
|
|
||||||||
|
Interest expense |
|
(6,150 |
) |
|
|
(4,984 |
) |
|
|
(13,012 |
) |
|
|
(9,631 |
) |
|
Net realized and unrealized foreign currency (loss) gain |
|
(30 |
) |
|
|
(11,512 |
) |
|
|
1,155 |
|
|
|
(6,774 |
) |
|
Other (expense) income, net |
|
135 |
|
|
|
(413 |
) |
|
|
(588 |
) |
|
|
(325 |
) |
|
Total other income (expense) |
|
(6,045 |
) |
|
|
(16,909 |
) |
|
|
(12,445 |
) |
|
|
(16,730 |
) |
|
Loss before income taxes |
|
(7,668 |
) |
|
|
(38,831 |
) |
|
|
(8,416 |
) |
|
|
(78,088 |
) |
|
Income tax expense |
|
4,604 |
|
|
|
477 |
|
|
|
11,963 |
|
|
|
4,805 |
|
|
Net loss |
$ |
(12,272 |
) |
|
$ |
(39,308 |
) |
|
$ |
(20,379 |
) |
|
$ |
(82,893 |
) |
|
|
|
|
|
|
|
|
|
||||||||
|
Other comprehensive (loss), net of tax: |
|
|
|
|
|
|
|
||||||||
|
Foreign currency translation adjustments |
|
(651 |
) |
|
|
(20,760 |
) |
|
|
(409 |
) |
|
|
(26,231 |
) |
|
Comprehensive loss |
$ |
(12,923 |
) |
|
$ |
(60,068 |
) |
|
$ |
(20,788 |
) |
|
$ |
(109,124 |
) |
|
|
|
|
|
|
|
|
|
||||||||
|
Net loss per common share: |
|
|
|
|
|
|
|
||||||||
|
Basic loss per common share |
$ |
(0.04 |
) |
|
$ |
(0.13 |
) |
|
$ |
(0.06 |
) |
|
$ |
(0.27 |
) |
|
Diluted loss per common share |
$ |
(0.04 |
) |
|
$ |
(0.13 |
) |
|
$ |
(0.06 |
) |
|
$ |
(0.27 |
) |
|
|
|
|
|
|
|
|
|
||||||||
|
Weighted average shares outstanding: |
|
|
|
|
|
|
|
||||||||
|
Basic |
|
317,341,907 |
|
|
|
310,575,050 |
|
|
|
316,899,214 |
|
|
|
308,394,443 |
|
|
Diluted |
|
317,341,907 |
|
|
|
310,575,050 |
|
|
|
316,899,214 |
|
|
|
308,394,443 |
|
Stock-based compensation expense included in the condensed consolidated statements of loss and comprehensive loss was as follows:
|
|
Three months ended |
|
Six months ended |
||||||||
|
|
2023 |
|
2022 |
|
2023 |
|
2022 |
||||
|
Cost of revenues |
$ |
10,696 |
|
$ |
49,573 |
|
$ |
21,226 |
|
$ |
119,482 |
|
Selling, general and administrative expenses |
|
6,910 |
|
|
19,392 |
|
|
14,059 |
|
|
49,666 |
|
Total stock-based compensation expense |
$ |
17,606 |
|
$ |
68,965 |
|
$ |
35,285 |
|
$ |
169,148 |
|
|
|||||||
|
CONDENSED CONSOLIDATED BALANCE SHEETS |
|||||||
|
(In thousands, except share and per share data) |
|||||||
|
|
|
|
|
||||
|
|
(unaudited) |
|
|
||||
|
Assets |
|
|
|
||||
|
Current assets: |
|
|
|
||||
|
Cash and cash equivalents |
$ |
88,151 |
|
|
$ |
194,294 |
|
|
Trade receivables, net of allowance of |
|
154,208 |
|
|
|
201,695 |
|
|
Unbilled receivables |
|
137,089 |
|
|
|
122,499 |
|
|
Prepaid expenses and other current assets |
|
35,262 |
|
|
|
38,202 |
|
|
Total current assets |
|
414,710 |
|
|
|
556,690 |
|
|
Property and equipment, net |
|
32,062 |
|
|
|
38,798 |
|
|
Right-of-use assets |
|
43,577 |
|
|
|
43,123 |
|
|
Intangibles and other assets: |
|
|
|
||||
|
|
|
422,313 |
|
|
|
405,017 |
|
|
Trademark |
|
273,000 |
|
|
|
273,000 |
|
|
Customer relationships, net |
|
120,677 |
|
|
|
124,047 |
|
|
Other non-current assets |
|
20,888 |
|
|
|
21,175 |
|
|
Total assets |
$ |
1,327,227 |
|
|
$ |
1,461,850 |
|
|
Liabilities and stockholders' equity |
|
|
|
||||
|
Current liabilities: |
|
|
|
||||
|
Accounts payable |
$ |
4,555 |
|
|
$ |
5,248 |
|
|
Long-term debt - current |
|
7,150 |
|
|
|
7,150 |
|
|
Income taxes payable |
|
7,449 |
|
|
|
22,781 |
|
|
Accrued compensation |
|
77,180 |
|
|
|
85,477 |
|
|
Deferred revenue |
|
6,007 |
|
|
|
5,167 |
|
|
Value-added tax and sales tax payable |
|
5,289 |
|
|
|
7,526 |
|
|
Accrued expenses |
|
14,406 |
|
|
|
30,227 |
|
|
Lease liabilities, current |
|
15,594 |
|
|
|
15,994 |
|
|
Total current liabilities |
|
137,630 |
|
|
|
179,570 |
|
|
Lease liabilities, non-current |
|
30,417 |
|
|
|
29,885 |
|
|
Long-term debt, less current portion |
|
289,379 |
|
|
|
391,856 |
|
|
Deferred tax liabilities |
|
54,224 |
|
|
|
62,555 |
|
|
Other long-term liabilities |
|
21,849 |
|
|
|
19,762 |
|
|
Total liabilities |
|
533,499 |
|
|
|
683,628 |
|
|
Commitments and contingencies |
|
|
|
||||
|
Stockholders’ equity: |
|
|
|
||||
|
Convertible preferred stock, |
|
— |
|
|
|
— |
|
|
Common stock, |
|
368 |
|
|
|
366 |
|
|
|
|
(624,687 |
) |
|
|
(624,934 |
) |
|
Additional paid-in capital |
|
1,601,559 |
|
|
|
1,565,514 |
|
|
Accumulated other comprehensive loss |
|
(39,619 |
) |
|
|
(39,210 |
) |
|
Retained deficit |
|
(143,893 |
) |
|
|
(123,514 |
) |
|
Total stockholders' equity |
|
793,728 |
|
|
|
778,222 |
|
|
Total liabilities and stockholders' equity |
$ |
1,327,227 |
|
|
$ |
1,461,850 |
|
|
|
|||||||
|
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (unaudited) |
|||||||
|
(In thousands) |
|||||||
|
|
Six months ended |
||||||
|
|
2023 |
|
2022 |
||||
|
Cash flows from operating activities: |
|
|
|
||||
|
Net loss |
$ |
(20,379 |
) |
|
$ |
(82,893 |
) |
|
Adjustments to reconcile net loss to net cash provided by operating activities: |
|
|
|
||||
|
Depreciation and amortization expense |
|
18,220 |
|
|
|
16,656 |
|
|
Bad debt expense |
|
2,596 |
|
|
|
2,038 |
|
|
Deferred income tax benefit |
|
(12,033 |
) |
|
|
(19,618 |
) |
|
Stock-based compensation expense |
|
35,285 |
|
|
|
169,148 |
|
|
Unrealized foreign currency exchange (gain) loss |
|
(735 |
) |
|
|
7,794 |
|
|
Non-cash lease expense on right-of-use assets |
|
9,312 |
|
|
|
8,870 |
|
|
Other operating activities, net |
|
2,018 |
|
|
|
1,134 |
|
|
Changes in operating assets and liabilities: |
|
|
|
||||
|
Trade receivables |
|
47,332 |
|
|
|
(20,069 |
) |
|
Unbilled receivables |
|
(15,276 |
) |
|
|
(48,629 |
) |
|
Prepaid expenses and other assets |
|
2,727 |
|
|
|
(2,690 |
) |
|
Lease liabilities |
|
(9,495 |
) |
|
|
(6,951 |
) |
|
Accounts payable |
|
(813 |
) |
|
|
1,699 |
|
|
Accrued expenses and other liabilities |
|
(42,512 |
) |
|
|
(5,012 |
) |
|
Net cash provided by operating activities |
|
16,247 |
|
|
|
21,477 |
|
|
Cash flows from investing activities: |
|
|
|
||||
|
Purchase of property and equipment |
|
(3,681 |
) |
|
|
(12,459 |
) |
|
Proceeds from disposal of fixed assets |
|
221 |
|
|
|
267 |
|
|
Acquisitions, net of cash acquired |
|
(15,989 |
) |
|
|
(65,410 |
) |
|
Net cash used in investing activities |
|
(19,449 |
) |
|
|
(77,602 |
) |
|
Cash flows from financing activities: |
|
|
|
||||
|
Payments of obligations of long-term debt |
|
(103,575 |
) |
|
|
(3,575 |
) |
|
Payments of debt issuance costs |
|
(99 |
) |
|
|
— |
|
|
Proceeds from issuance of common stock on exercise of options, net of employee tax withholding |
|
3,816 |
|
|
|
3,928 |
|
|
Withholding taxes paid on tender offer |
|
— |
|
|
|
(15,469 |
) |
|
Withholding taxes paid on dividends previously declared |
|
— |
|
|
|
(10,009 |
) |
|
Withholding taxes paid related to net share settlement of equity awards |
|
(3,261 |
) |
|
|
(29,026 |
) |
|
Other financing activities, net |
|
80 |
|
|
|
(48 |
) |
|
Net cash used in financing activities |
|
(103,039 |
) |
|
|
(54,199 |
) |
|
Effect of exchange rate changes on cash, cash equivalents and restricted cash |
|
178 |
|
|
|
(8,884 |
) |
|
Net decrease in cash, cash equivalents and restricted cash |
|
(106,063 |
) |
|
|
(119,208 |
) |
|
Cash, cash equivalents and restricted cash at beginning of the period |
|
195,564 |
|
|
|
394,942 |
|
|
Cash, cash equivalents and restricted cash at end of the period |
$ |
89,501 |
|
|
$ |
275,734 |
|
|
|
|
|
|
||||
|
Supplemental disclosure of cash flow information: |
|
|
|
||||
|
Interest paid |
$ |
12,544 |
|
|
$ |
8,987 |
|
|
Income taxes paid |
$ |
31,929 |
|
|
$ |
10,554 |
|
|
Withholding taxes payable |
$ |
(454 |
) |
|
$ |
— |
|
|
|
|
|
|
||||
|
Supplemental disclosures of non-cash financing activities: |
|
|
|
||||
|
Withholding taxes payable included within accrued compensation |
$ |
— |
|
|
$ |
219 |
|
|
|
|
|
|
||||
|
Reconciliation of cash, cash equivalents and restricted cash: |
|
|
|
||||
|
Cash and cash equivalents |
$ |
88,151 |
|
|
$ |
274,527 |
|
|
Restricted cash included in other non-current assets |
|
1,350 |
|
|
|
1,207 |
|
|
Total cash, cash equivalents and restricted cash |
$ |
89,501 |
|
|
$ |
275,734 |
|
|
|
|||||||||||||||
|
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES |
|||||||||||||||
|
(In thousands, except percentages, share and per share data) |
|||||||||||||||
|
(unaudited) |
|||||||||||||||
|
|
|||||||||||||||
|
|
Three months ended |
|
Six months ended |
||||||||||||
|
|
2023 |
|
2022 |
|
2023 |
|
2022 |
||||||||
|
Net loss |
$ |
(12,272 |
) |
|
$ |
(39,308 |
) |
|
$ |
(20,379 |
) |
|
$ |
(82,893 |
) |
|
Unrealized foreign exchange loss (gain) |
|
213 |
|
|
|
13,434 |
|
|
|
(735 |
) |
|
|
7,794 |
|
|
Stock-based compensation |
|
17,606 |
|
|
|
68,965 |
|
|
|
35,285 |
|
|
|
169,148 |
|
|
Amortization of acquisition-related intangibles |
|
3,669 |
|
|
|
3,303 |
|
|
|
7,260 |
|
|
|
6,295 |
|
|
Acquisition costs (a) |
|
2,100 |
|
|
|
1,282 |
|
|
|
3,806 |
|
|
|
1,302 |
|
|
Certain professional fees (b) |
|
1,525 |
|
|
|
63 |
|
|
|
1,750 |
|
|
|
866 |
|
|
Employer payroll related expense on employee equity incentive plan (c) |
|
249 |
|
|
|
(125 |
) |
|
|
491 |
|
|
|
3,497 |
|
|
Final tax assessment for closed operations (d) |
|
— |
|
|
|
258 |
|
|
|
— |
|
|
|
258 |
|
|
Change in fair value of contingent consideration (e) |
|
129 |
|
|
|
528 |
|
|
|
129 |
|
|
|
528 |
|
|
Income tax effects of adjustments (f) |
|
(3,114 |
) |
|
|
(11,392 |
) |
|
|
(7,435 |
) |
|
|
(25,795 |
) |
|
Adjusted Net Income |
$ |
10,105 |
|
|
$ |
37,008 |
|
|
$ |
20,172 |
|
|
$ |
81,000 |
|
|
|
|
|
|
|
|
|
|
||||||||
|
GAAP diluted weighted average common shares outstanding |
|
317,341,907 |
|
|
|
310,575,050 |
|
|
|
316,899,214 |
|
|
|
308,394,443 |
|
|
Employee stock options, RSUs and PSUs |
|
12,250,374 |
|
|
|
19,069,863 |
|
|
|
13,561,172 |
|
|
|
20,913,127 |
|
|
Adjusted diluted weighted average common shares outstanding |
|
329,592,281 |
|
|
|
329,644,913 |
|
|
|
330,460,386 |
|
|
|
329,307,570 |
|
|
GAAP diluted loss per share |
$ |
(0.04 |
) |
|
$ |
(0.13 |
) |
|
$ |
(0.06 |
) |
|
$ |
(0.27 |
) |
|
Adjusted Diluted EPS |
$ |
0.03 |
|
|
$ |
0.11 |
|
|
$ |
0.06 |
|
|
$ |
0.25 |
|
|
|
|||||||||||||||
|
|
|||||||||||||||
|
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES |
|||||||||||||||
|
(In thousands, except percentages, share and per share data) |
|||||||||||||||
|
(unaudited) |
|||||||||||||||
|
|
Three months ended |
|
Six months ended |
||||||||||||
|
|
2023 |
|
2022 |
|
2023 |
|
2022 |
||||||||
|
Net loss |
$ |
(12,272 |
) |
|
$ |
(39,308 |
) |
|
$ |
(20,379 |
) |
|
$ |
(82,893 |
) |
|
Income tax expense |
|
4,604 |
|
|
|
477 |
|
|
|
11,963 |
|
|
|
4,805 |
|
|
Interest expense |
|
6,150 |
|
|
|
4,984 |
|
|
|
13,012 |
|
|
|
9,631 |
|
|
Other (income) expense, net (g) |
|
(6 |
) |
|
|
413 |
|
|
|
787 |
|
|
|
325 |
|
|
Unrealized foreign exchange loss (gain) |
|
213 |
|
|
|
13,434 |
|
|
|
(735 |
) |
|
|
7,794 |
|
|
Stock-based compensation |
|
17,606 |
|
|
|
68,965 |
|
|
|
35,285 |
|
|
|
169,148 |
|
|
Depreciation and amortization |
|
9,131 |
|
|
|
8,074 |
|
|
|
18,220 |
|
|
|
16,656 |
|
|
Acquisition costs (a) |
|
2,100 |
|
|
|
1,282 |
|
|
|
3,806 |
|
|
|
1,302 |
|
|
Certain professional fees (b) |
|
1,525 |
|
|
|
63 |
|
|
|
1,750 |
|
|
|
866 |
|
|
Employer payroll related expense on employee equity incentive plan (c) |
|
249 |
|
|
|
(125 |
) |
|
|
491 |
|
|
|
3,497 |
|
|
Final tax assessment for closed operations (d) |
|
— |
|
|
|
258 |
|
|
|
— |
|
|
|
258 |
|
|
Adjusted EBITDA |
$ |
29,300 |
|
|
$ |
58,517 |
|
|
$ |
64,200 |
|
|
$ |
131,389 |
|
|
Net loss margin |
|
(4.3 |
)% |
|
|
(11.8 |
)% |
|
|
(3.4 |
)% |
|
|
(12.7 |
)% |
|
Adjusted EBITDA Margin |
|
10.2 |
% |
|
|
17.6 |
% |
|
|
10.8 |
% |
|
|
20.1 |
% |
|
|
Three months ended |
|
Six months ended |
||||||||||||
|
|
2023 |
|
2022 |
|
2023 |
|
2022 |
||||||||
|
Gross profit, GAAP |
$ |
90,877 |
|
|
$ |
81,645 |
|
|
$ |
188,411 |
|
|
$ |
152,820 |
|
|
Stock-based compensation |
|
10,696 |
|
|
|
49,573 |
|
|
|
21,226 |
|
|
|
119,482 |
|
|
Employer payroll related expense on employee equity incentive plan (c) |
|
159 |
|
|
|
(99 |
) |
|
|
345 |
|
|
|
2,277 |
|
|
Depreciation expense |
|
3,257 |
|
|
|
3,859 |
|
|
|
6,804 |
|
|
|
6,595 |
|
|
Adjusted Gross Profit |
$ |
104,989 |
|
|
$ |
134,978 |
|
|
$ |
216,786 |
|
|
$ |
281,174 |
|
|
Gross margin, GAAP |
|
31.6 |
% |
|
|
24.6 |
% |
|
|
31.7 |
% |
|
|
23.4 |
% |
|
Adjusted Gross Margin |
|
36.6 |
% |
|
|
40.6 |
% |
|
|
36.5 |
% |
|
|
43.1 |
% |
|
|
Three months ended |
|
Six months ended |
||||||||||||
|
|
2023 |
|
2022 |
|
2023 |
|
2022 |
||||||||
|
SG&A, GAAP |
$ |
86,626 |
|
|
$ |
99,352 |
|
|
$ |
172,966 |
|
|
$ |
204,117 |
|
|
Stock-based compensation |
|
(6,910 |
) |
|
|
(19,392 |
) |
|
|
(14,059 |
) |
|
|
(49,666 |
) |
|
Acquisition costs (a) |
|
(2,100 |
) |
|
|
(1,282 |
) |
|
|
(3,806 |
) |
|
|
(1,302 |
) |
|
Certain professional fees (b) |
|
(1,525 |
) |
|
|
(63 |
) |
|
|
(1,750 |
) |
|
|
(866 |
) |
|
Employer payroll related expense on employee equity incentive plan (c) |
|
(90 |
) |
|
|
26 |
|
|
|
(146 |
) |
|
|
(1,220 |
) |
|
Adjusted SG&A |
$ |
76,001 |
|
|
$ |
78,641 |
|
|
$ |
153,205 |
|
|
$ |
151,063 |
|
|
SG&A margin, GAAP |
|
30.2 |
% |
|
|
29.9 |
% |
|
|
29.1 |
% |
|
|
31.3 |
% |
|
Adjusted SG&A Margin |
|
26.5 |
% |
|
|
23.7 |
% |
|
|
25.8 |
% |
|
|
23.1 |
% |
| (a) |
Reflects costs for certain professional fees and retention wage expenses related to certain acquisitions. |
|
| (b) |
Adjusts for certain transaction expenses, non-recurring legal expenses, and one-time professional fees. |
|
| (c) |
Excludes employer payroll related expense on employee equity incentive plan as these expenses are tied to the exercise or vesting of underlying equity awards and the price of our common stock at the time of vesting or exercise. As a result, these expenses may vary in any particular period independent of the financial and operating performance of our business. |
|
| (d) |
Adjusts for certain tax related expenses related to final tax assessments from closing operations in |
|
| (e) |
Adjusts for the non-cash adjustment to the fair value of contingent consideration. |
|
| (f) |
Adjusts for the income tax effects of the foregoing adjusted items. |
|
| (g) |
Excludes a gain, which was included within Other (income) expense, net in the condensed consolidated statements of loss and comprehensive loss for the first quarter of 2023, related to the mark to market adjustment on shares received in relation to the sale and settlement of trade receivables in 2022. |
|
Three months ended |
|
Six months ended |
|||||||||||||
|
|
2023 |
|
2022 |
|
2023 |
|
2022 |
||||||||
|
Net cash (used in) provided by operating activities |
$ |
(16,800 |
) |
|
$ |
27,572 |
|
|
$ |
16,247 |
|
|
$ |
21,477 |
|
|
Purchase of property and equipment |
|
(2,024 |
) |
|
|
(7,325 |
) |
|
|
(3,681 |
) |
|
|
(12,459 |
) |
|
Free Cash Flow |
$ |
(18,824 |
) |
|
$ |
20,247 |
|
|
$ |
12,566 |
|
|
$ |
9,018 |
|
View source version on businesswire.com: https://www.businesswire.com/news/home/20230807956954/en/
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