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Thoughtworks Reports First Quarter 2023 Financial Results

  • First quarter revenues of $307.1 million
  • First quarter operating cash flow of $33.0 million and free cash flow of $31.4 million
  • 47 new clients in the first quarter
  • Bookings of $1.5 billion for the trailing twelve months ended March 31, 2023
  • Provides updated guidance for the full year and second quarter of 2023

Thoughtworks Holding, Inc. (NASDAQ: TWKS) ("Thoughtworks" or the "Company"), a leading global technology consultancy, today reported results for the first quarter of 2023 and provided an updated financial outlook for the full year and second quarter of 2023.

Guo Xiao, Thoughtworks' Chief Executive Officer, said, "I am pleased to report good results in our first quarter 2023. We delivered revenue of $307.1 million in the first quarter of 2023, $3.1 million better than the midpoint of our guidance. In the quarter, we contracted with 47 new clients and we now have 39 clients with revenues greater than $10 million on a trailing twelve month basis, a 25.8% increase year-over-year. Additionally, we mark a big milestone this week as Thoughtworks turns 30 years old. Our services have helped to transform industries, create new opportunities, and make people's lives better, and that's something to celebrate."

First quarter 2023 summary

 

Three Months Ended March 31,

 

 

 

 

$ in millions, except per share data

 

2023

 

 

 

2022

 

 

Change

 

% Change(1)

GAAP Metrics:

 

 

 

 

 

 

 

Revenues(2)

$

307.1

 

 

$

320.9

 

 

$

(13.8

)

 

(4.3

)%

Gross Profit

$

97.5

 

 

$

71.2

 

 

$

26.3

 

 

36.9

%

Gross Margin

 

31.8

%

 

 

22.2

%

 

 

9.6

%

 

 

SG&A

$

86.3

 

 

$

104.8

 

 

$

(18.5

)

 

(17.7

)%

SG&A Margin

 

28.1

%

 

 

32.6

%

 

 

(4.5

)%

 

 

Stock-based compensation

$

17.7

 

 

$

100.2

 

 

$

(82.5

)

 

(82.3

)%

Net loss

$

(8.1

)

 

$

(43.6

)

 

$

35.5

 

 

 

Net loss margin

 

(2.6

)%

 

 

(13.6

)%

 

 

11.0

%

 

 

Diluted loss per share

$

(0.03

)

 

$

(0.14

)

 

$

0.11

 

 

 

Cash flow from operations

$

33.0

 

 

$

(6.1

)

 

$

39.1

 

 

 

Non-GAAP Metrics(3):

 

 

 

 

 

 

 

Revenue Growth Rate at constant currency(4)

 

(0.9

)%

 

 

38.2

%

 

 

 

 

Adjusted Gross Profit

$

111.8

 

 

$

146.2

 

 

$

(34.4

)

 

(23.5

)%

Adjusted Gross Margin

 

36.4

%

 

 

45.6

%

 

 

(9.2

)%

 

 

Adjusted SG&A

$

77.2

 

 

$

72.4

 

 

$

4.8

 

 

6.6

%

Adjusted SG&A Margin

 

25.1

%

 

 

22.6

%

 

 

2.5

%

 

 

Adjusted Net Income

$

10.1

 

 

$

44.0

 

 

$

(33.9

)

 

(77.0

)%

Adjusted EBITDA

$

34.9

 

 

$

72.9

 

 

$

(38.0

)

 

(52.1

)%

Adjusted EBITDA Margin

 

11.4

%

 

 

22.7

%

 

 

(11.3

)%

 

 

Adjusted Diluted EPS

$

0.03

 

 

$

0.13

 

 

$

(0.10

)

 

(76.9

)%

Free Cash Flow

$

31.4

 

 

$

(11.2

)

 

$

42.6

 

 

 

(1) 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.

(2) Acquisitions completed in the last twelve months contributed approximately 3% to revenue growth in the quarter.

(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 U.S. dollars at the weighted average exchange rates of the prior period of comparison; therefore the weighted average rates used in each respective calculation are not consistent. The change in revenue growth rate at constant currency was excluded, as it was determined to be not meaningful.

Bookings

Our overall bookings for the trailing twelve months ended March 31, 2023 was flat year-over-year at $1.5 billion and increased sequentially from $1.4 billion. For the trailing twelve months ended March 31, 2023, we had 38 clients with bookings greater than $10 million compared to 42 clients for the trailing twelve months ended March 31, 2022.

Revenue growth by customer location

 

Three Months Ended

March 31, 2023

North America

(7.9)%

APAC

(2.0)%

Europe

0.1%

LATAM

(16.8)%

Revenue growth by industry vertical

 

Three Months Ended

March 31, 2023

Technology and business services

(13.1)%

Energy, public and health services

9.0%

Retail and consumer

(23.3)%

Financial services and insurance

(5.7)%

Automotive, travel and transportation

21.9%

Liquidity

We continue to have good liquidity. We had cash and cash equivalents of $109.3 million as of March 31, 2023, which reflects a voluntary prepayment of $100.0 million in February 2023, along with $300.0 million of borrowing capacity under our revolving credit line. Our total debt outstanding, before deferred financing fees, was $300.7 million at March 31, 2023.

Financial outlook

Thoughtworks provides the following outlook for the second quarter and full year 2023:

Second quarter

Thoughtworks expects the following for the second quarter:

  • Revenues in the range of $300 million to $304 million, reflecting year-over-year decline of (10)% to (9)%; or (9)% to (8)% in constant currency. Acquisitions, including those completed during 2023, are expected to contribute approximately 2% to year-over-year revenue growth;
  • Adjusted EBITDA Margin in the range of 15.0% to 16.0%;
  • Adjusted Diluted EPS in the range of $0.03 to $0.04, assuming a weighted average of 329 million diluted outstanding shares; and
  • Stock-based compensation expense of $18 million.

Full year

Thoughtworks now expects the following for the full year:

  • Revenues in the range of $1,261 million to $1,287 million, reflecting year-over-year decline of (3)% to (1)%; or (3)% to (1)% in constant currency. Acquisitions, including those completed during 2023, are expected to contribute approximately 2% to year-over-year revenue growth;
  • Adjusted EBITDA Margin in the range of 17.0% to 18.0%;
  • Adjusted Diluted EPS in the range of $0.31 to $0.34, assuming a weighted average of 333 million diluted outstanding shares; and
  • Stock-based compensation expense of $76 million.

Conference call information

Thoughtworks will host a conference call and webcast at 8:00 a.m. Eastern Time on Tuesday, May 9, 2023, to discuss our financial results. To access the conference call and webcast and the accompanying slide presentation, which has additional information regarding Thoughtworks' operating results, you can visit our investor relations website at https://investors.thoughtworks.com. A replay of the webcast will be made available on our investor relations website at https://investors.thoughtworks.com. Information on Thoughtworks' website is not part of this press release.

- ### - <TWKS915>

About Thoughtworks

Thoughtworks is a global technology consultancy that integrates strategy, design and engineering to drive digital innovation. We are over 11,500 Thoughtworkers strong across 51 offices in 18 countries. For almost 30 years, we've delivered extraordinary impact together with our clients by helping them solve complex business problems with technology as the differentiator.

Thoughtworks uses and intends to continue to use our investor relations website at https://investors.thoughtworks.com and social media, @thoughtworks on Twitter and LinkedIn, as a means of publicly disclosing material information and for complying with our disclosure obligations under Regulation Fair Disclosure. Investors should monitor these channels in addition to following the Company’s press releases, SEC filings, public conference calls and webcasts.

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; statements regarding relationships with clients and business momentum; 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: the effects of competition on the future business of Thoughtworks; uncertainty regarding the demand for and market utilization of our services; the ability to maintain or acquire new client relationships; general business and economic conditions (including such conditions related to inflation and foreign currency exchange rates); the current and future impact of the COVID-19 pandemic on Thoughtworks' business and industry; and our ability to successfully execute our growth strategy and strategic plans. For additional information concerning these and other risks and uncertainties, please see Thoughtworks' latest Annual Report on Form 10-K, latest Quarterly Report on Form 10-Q, and other filings and reports that Thoughtworks may file from time to time. Except as required by law, Thoughtworks assumes no obligation, and does not intend, to update these forward-looking statements, or to update the reasons actual results could differ materially from those anticipated in these forward-looking statements, even if new information becomes available in the future.

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 U.S. dollar and the translation of these foreign currency amounts into U.S. dollars can impact the comparability of our revenues between periods. Accordingly, we use Revenue Growth Rate at constant currency as an important indicator of our underlying performance. Revenue Growth Rate at constant currency is calculated by applying the average exchange rates in effect during the earlier comparative fiscal period to the later fiscal period.

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 gain on foreign currency exchange, stock-based compensation expense, amortization of acquisition-related intangibles, acquisition costs, certain professional fees that are considered unrelated to our ongoing revenue-generating operations, employer payroll related expense on employee equity incentive plan 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 expense (income), net; unrealized gain on foreign currency exchange; stock-based compensation expense; depreciation and amortization 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 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.

 

THOUGHTWORKS HOLDING, INC.

CONDENSED CONSOLIDATED STATEMENTS OF LOSS AND COMPREHENSIVE LOSS

(In thousands, except share and per share data)

(unaudited)

 

 

Three months ended March 31,

 

 

2023

 

 

 

2022

 

Revenues

$

307,056

 

 

$

320,940

 

Operating expenses:

 

 

 

Cost of revenues

 

209,522

 

 

 

249,765

 

Selling, general and administrative expenses

 

86,340

 

 

 

104,765

 

Depreciation and amortization

 

5,542

 

 

 

5,846

 

Total operating expenses

 

301,404

 

 

 

360,376

 

Income (loss) from operations

 

5,652

 

 

 

(39,436

)

Other (expense) income:

 

 

 

Interest expense

 

(6,862

)

 

 

(4,647

)

Net realized and unrealized foreign currency gain (loss)

 

1,185

 

 

 

4,738

 

Other (expense) income, net

 

(723

)

 

 

88

 

Total other income (expense)

 

(6,400

)

 

 

179

 

Income (loss) before income taxes

 

(748

)

 

 

(39,257

)

Income tax expense

 

7,359

 

 

 

4,328

 

Net income (loss)

$

(8,107

)

 

$

(43,585

)

 

 

 

 

Other comprehensive income (loss), net of tax:

 

 

 

Foreign currency translation adjustments

 

242

 

 

 

(5,471

)

Comprehensive loss

$

(7,865

)

 

$

(49,056

)

 

 

 

 

Net loss per common share:

 

 

 

Basic loss per common share

$

(0.03

)

 

$

(0.14

)

Diluted loss per common share

$

(0.03

)

 

$

(0.14

)

 

 

 

 

Weighted average shares outstanding:

 

 

 

Basic

 

316,451,601

 

 

 

306,189,816

 

Diluted

 

316,451,601

 

 

 

306,189,816

 

Stock-based compensation expense included in the condensed consolidated statements of loss and comprehensive loss was as follows:

 

Three months ended March 31,

 

2023

 

2022

Cost of revenues

$

10,530

 

$

69,909

Selling, general and administrative expenses

 

7,149

 

 

30,274

Total stock-based compensation expense

$

17,679

 

$

100,183

 

THOUGHTWORKS HOLDING, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands, except share and per share data)

 

March 31, 2023

 

December 31, 2022

 

(unaudited)

 

 

Assets

 

 

 

Current assets:

 

 

 

Cash and cash equivalents

$

109,268

 

 

$

194,294

 

Trade receivables, net of allowance of $6,715 and $9,531, respectively

 

146,322

 

 

 

201,695

 

Unbilled receivables

 

146,831

 

 

 

122,499

 

Prepaid expenses and other current assets

 

36,879

 

 

 

38,202

 

Total current assets

 

439,300

 

 

 

556,690

 

Property and equipment, net

 

35,460

 

 

 

38,798

 

Right-of-use assets

 

45,571

 

 

 

43,123

 

Intangibles and other assets:

 

 

 

Goodwill

 

420,394

 

 

 

405,017

 

Trademark

 

273,000

 

 

 

273,000

 

Customer relationships, net

 

124,167

 

 

 

124,047

 

Other non-current assets

 

22,805

 

 

 

21,175

 

Total assets

$

1,360,697

 

 

$

1,461,850

 

Liabilities and stockholders' equity

 

 

 

Current liabilities:

 

 

 

Accounts payable

$

7,320

 

 

$

5,248

 

Long-term debt - current

 

7,150

 

 

 

7,150

 

Income taxes payable

 

21,128

 

 

 

22,781

 

Accrued compensation

 

73,536

 

 

 

85,477

 

Deferred revenue

 

6,180

 

 

 

5,167

 

Value-added tax and sales tax payable

 

5,460

 

 

 

7,526

 

Accrued expenses

 

27,848

 

 

 

30,227

 

Lease liabilities, current

 

16,502

 

 

 

15,994

 

Total current liabilities

 

165,124

 

 

 

179,570

 

Lease liabilities, non-current

 

31,533

 

 

 

29,885

 

Long-term debt, less current portion

 

291,053

 

 

 

391,856

 

Deferred tax liabilities

 

61,204

 

 

 

62,555

 

Other long-term liabilities

 

23,926

 

 

 

19,762

 

Total liabilities

 

572,840

 

 

 

683,628

 

Commitments and contingencies

 

 

 

Stockholders’ equity:

 

 

 

Convertible preferred stock, $0.001 par value; 100,000,000 shares authorized, zero issued and outstanding at March 31, 2023 and December 31, 2022, respectively

 

 

 

 

 

Common stock, $0.001 par value; 1,000,000,000 shares authorized, 367,496,570 and 366,306,970 issued, 316,884,385 and 315,681,987 outstanding at March 31, 2023 and December 31, 2022, respectively

 

367

 

 

 

366

 

Treasury stock, 50,612,185 and 50,624,983 shares at March 31, 2023 and December 31, 2022, respectively

 

(624,775

)

 

 

(624,934

)

Additional paid-in capital

 

1,582,854

 

 

 

1,565,514

 

Accumulated other comprehensive loss

 

(38,968

)

 

 

(39,210

)

Retained deficit

 

(131,621

)

 

 

(123,514

)

Total stockholders' equity

 

787,857

 

 

 

778,222

 

Total liabilities and stockholders' equity

$

1,360,697

 

 

$

1,461,850

 

 

THOUGHTWORKS HOLDING, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (unaudited)

(In thousands)

 

 

Three months ended March 31,

 

 

2023

 

 

 

2022

 

Cash flows from operating activities:

 

 

 

Net loss

$

(8,107

)

 

$

(43,585

)

Adjustments to reconcile net loss to net cash provided by (used in) operating activities:

 

 

 

Depreciation and amortization expense

 

9,089

 

 

 

8,582

 

Bad debt expense (recovery)

 

1,452

 

 

 

(100

)

Deferred income tax benefit

 

(4,485

)

 

 

(2,434

)

Stock-based compensation expense

 

17,679

 

 

 

100,183

 

Unrealized foreign currency exchange gain

 

(948

)

 

 

(5,640

)

Non-cash lease expense on right-of-use assets

 

4,525

 

 

 

4,153

 

Other operating activities, net

 

1,413

 

 

 

314

 

Changes in operating assets and liabilities:

 

 

 

Trade receivables

 

56,674

 

 

 

(1,130

)

Unbilled receivables

 

(23,238

)

 

 

(35,314

)

Prepaid expenses and other assets

 

(1,393

)

 

 

(4,962

)

Lease liabilities

 

(4,705

)

 

 

(2,358

)

Accounts payable

 

1,975

 

 

 

1,613

 

Accrued expenses and other liabilities

 

(16,884

)

 

 

(25,417

)

Net cash provided by (used in) operating activities

 

33,047

 

 

 

(6,095

)

Cash flows from investing activities:

 

 

 

Purchase of property and equipment

 

(1,657

)

 

 

(5,134

)

Proceeds from disposal of fixed assets

 

91

 

 

 

136

 

Acquisitions, net of cash acquired

 

(15,989

)

 

 

 

Net cash used in investing activities

 

(17,555

)

 

 

(4,998

)

Cash flows from financing activities:

 

 

 

Payments of obligations of long-term debt

 

(101,788

)

 

 

(1,788

)

Payments of debt issuance costs

 

(99

)

 

 

 

Proceeds from issuance of common stock on exercise of options, net of employee tax withholding

 

2,169

 

 

 

704

 

Withholding taxes paid on tender offer

 

 

 

 

(15,469

)

Withholding taxes paid on dividends previously declared

 

 

 

 

(5,903

)

Withholding taxes paid related to net share settlement of equity awards

 

(2,348

)

 

 

(7,307

)

Other financing activities, net

 

25

 

 

 

(29

)

Net cash used in financing activities

 

(102,041

)

 

 

(29,792

)

Effect of exchange rate changes on cash, cash equivalents and restricted cash

 

1,548

 

 

 

182

 

Net decrease in cash, cash equivalents and restricted cash

 

(85,001

)

 

 

(40,703

)

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

$

110,563

 

 

$

354,239

 

 

 

 

 

Supplemental disclosure of cash flow information:

 

 

 

Interest paid

$

6,645

 

 

$

4,355

 

Income taxes paid

$

6,856

 

 

$

2,383

 

 

 

 

 

Supplemental disclosures of non-cash financing activities:

 

 

 

Withholding taxes payable included within accrued expenses

$

 

 

$

4,575

 

Withholding taxes payable included within accrued compensation

$

 

 

$

21,930

 

Option costs receivable included within other current assets

$

 

 

$

635

 

 

 

 

 

Reconciliation of cash, cash equivalents and restricted cash:

 

 

 

Cash and cash equivalents

$

109,268

 

 

$

339,638

 

Restricted cash included in other current assets

 

 

 

 

13,376

 

Restricted cash included in other non-current assets

 

1,295

 

 

 

1,225

 

Total cash, cash equivalents and restricted cash

$

110,563

 

 

$

354,239

 

 

THOUGHTWORKS HOLDING, INC.

RECONCILIATION OF NON-GAAP FINANCIAL MEASURES

(In thousands, except percentages, share and per share data)

(unaudited)

 

Three months ended March 31,

 

 

2023

 

 

 

2022

 

Net loss

$

(8,107

)

 

$

(43,585

)

Unrealized foreign exchange gain

 

(948

)

 

 

(5,640

)

Stock-based compensation

 

17,679

 

 

 

100,183

 

Amortization of acquisition-related intangibles

 

3,591

 

 

 

2,992

 

Acquisition costs (a)

 

1,706

 

 

 

20

 

Certain professional fees (b)

 

225

 

 

 

803

 

Employer payroll related expense on employee equity incentive plan (c)

 

242

 

 

 

3,622

 

Income tax effects of adjustments (d)

 

(4,321

)

 

 

(14,403

)

Adjusted Net Income

$

10,067

 

 

$

43,992

 

 

 

 

 

GAAP diluted weighted average common shares outstanding

 

316,451,601

 

 

 

306,189,816

 

Employee stock options, RSUs and PSUs

 

14,830,984

 

 

 

22,971,397

 

Adjusted diluted weighted average common shares outstanding

 

331,282,585

 

 

 

329,161,213

 

GAAP diluted loss per share

$

(0.03

)

 

$

(0.14

)

Adjusted Diluted EPS

$

0.03

 

 

$

0.13

 

 

Three months ended March 31,

 

 

2023

 

 

 

2022

 

Net loss

$

(8,107

)

 

$

(43,585

)

Income tax expense

 

7,359

 

 

 

4,328

 

Interest expense

 

6,862

 

 

 

4,647

 

Other expense (income), net (e)

 

793

 

 

 

(88

)

Unrealized foreign exchange gain

 

(948

)

 

 

(5,640

)

Stock-based compensation

 

17,679

 

 

 

100,183

 

Depreciation and amortization

 

9,089

 

 

 

8,582

 

Acquisition costs (a)

 

1,706

 

 

 

20

 

Certain professional fees (b)

 

225

 

 

 

803

 

Employer payroll related expense on employee equity incentive plan (c)

 

242

 

 

 

3,622

 

Adjusted EBITDA

$

34,900

 

 

$

72,872

 

Net loss margin

 

(2.6

)%

 

 

(13.6

)%

Adjusted EBITDA Margin

 

11.4

%

 

 

22.7

%

 

Three months ended March 31,

 

 

2023

 

 

 

2022

 

Gross profit, GAAP

$

97,534

 

 

$

71,175

 

Stock-based compensation

 

10,530

 

 

 

69,909

 

Employer payroll related expense on employee equity incentive plan (c)

 

186

 

 

 

2,376

 

Depreciation expense

 

3,547

 

 

 

2,736

 

Adjusted Gross Profit

$

111,797

 

 

$

146,196

 

Gross margin, GAAP

 

31.8

%

 

 

22.2

%

Adjusted Gross Margin

 

36.4

%

 

 

45.6

%

 

Three months ended March 31,

 

 

2023

 

 

 

2022

 

SG&A, GAAP

$

86,340

 

 

$

104,765

 

Stock-based compensation

 

(7,149

)

 

 

(30,274

)

Acquisition costs (a)

 

(1,706

)

 

 

(20

)

Certain professional fees (b)

 

(225

)

 

 

(803

)

Employer payroll related expense on employee equity incentive plan (c)

 

(56

)

 

 

(1,246

)

Adjusted SG&A

$

77,204

 

 

$

72,422

 

SG&A margin, GAAP

 

28.1

%

 

 

32.6

%

Adjusted SG&A Margin

 

25.1

%

 

 

22.6

%

(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 the income tax effects of the foregoing adjusted items.

(e)

Excludes a gain, which was included within Other (expense) income, 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 March 31,

 

 

2023

 

 

 

2022

 

Net cash provided by (used in) operating activities

$

33,047

 

 

$

(6,095

)

Purchase of property and equipment

 

(1,657

)

 

 

(5,134

)

Free Cash Flow

$

31,390

 

 

$

(11,229

)

 

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