Shares of Thoughtworks Holding Inc. dropped more than 28% today after the technology consultancy posted fourth-quarter results that missed analyst expectations.

Chicago-based Thoughtworks helps enterprises modernize their information technology infrastructure. Its professionals can optimize a company’s database environment, build new applications and take on other software projects. Thoughtworks also helps enterprises maintain their existing software: It can monitor legacy workloads for potential technical issues and revamp their code base.

The company operates in a number of adjacent areas as well. According to Thoughtworks, its professionals can help an enterprise modernize its internal software development workflows to make application teams more productive. It says it has helped clients increase the frequency at which they release new code to production and lower downtime. 

Thoughtworks generated $252.4 million in revenue during the fourth quarter, 18.8% less than the same time a year earlier and 5% below its internal guidance. The company also missed the consensus analyst estimate, which forecast $267.55 million. Thoughtworks Chief Executive Officer Guo Xiao said the decline was mainly the result of “specific supply constraints to meet client demand in addition to continued cautious client behavior within the current macroeconomic environment.”

There were a few bright spots in Thoughtworks’ fourth-quarter sales data. The company added 46 new organizations to its customer base and had 54 clients with over $5 million worth of bookings. Thoughtworks’ customer base includes large enterprises such as Walmart Inc., Credit Suisse Group AG and Daimler Truck AG. 

Thoughtworks’ adjusted EBITDA, or earnings before interest, taxes, depreciation and amortization, reached $14 million in the fourth quarter. That translated into adjusted earnings of two cents per share, down from 10 cents a year earlier. Analysts were hoping for three cents a share.

Last August, Thoughtworks launched a restructuring initiative designed to cut costs and boost its earnings per share. The company said at the time it was planning to lay off 5% to 6% of its workforce as part of the effort and refresh its organizational structure. In conjunction with the release of its earnings report today, it disclosed that the initiative was “substantially completed” during the fourth quarter.

The company estimates the restructuring has unlocked $81 million in annualized cost savings. Thoughtworks added that it remains “remain focused on driving operational efficiencies in 2024.”

The company expects to close the current fiscal year with adjusted earnings of one to six cents, less than the 22 cents the market was anticipating. Thoughtworks is forecasting that its revenue will range between $980 million and $1.01 billion. 

Photo: Thoughtworks