Thoughtworks Holding, a Chicago-based technology consultancy, experienced a significant drop in shares, sinking almost 25% to reach an all-time low. This decline came shortly after the company issued a financial report that failed to meet expectations and announced plans for a restructuring that will involve reducing its workforce by up to 6%.
Disappointing Second-Quarter Results
During the second quarter, Thoughtworks reported adjusted earnings of 3 cents per share, which fell short of the anticipated 4 cents profit. Additionally, the company experienced a 13.5% decrease in revenue, reaching $287.2 million compared to the expected $301.7 million.
Revised Guidance for the Full Year
As a result of these underwhelming figures, Thoughtworks has revised its full-year guidance. The company now projects adjusted per-share earnings in the range of 11 cents to 13 cents, marking a significant decrease from the previously forecasted 31 cents to 34 cents. Additionally, their revenue guidance has lowered to $1.14 billion to $1.16 billion, down from the previous estimate of $1.26 billion to $1.29 billion.
Unforeseen Setbacks in the Second Quarter
Thoughtworks attributed its disappointing performance to unanticipated project deferrals and cancellations by clients throughout the second quarter. These unforeseen setbacks have prompted the company to initiate a structural reorganization and centralize its operations globally.
Workforce Reduction and Cost Savings
As part of the restructuring, Thoughtworks is planning to reduce its workforce by approximately 5% to 6%. The company currently employs around 11,600 individuals as of June 30. With this decision, Thoughtworks aims to achieve annualized cost savings of about $75 million to $85 million.