Thoughtworks Holdings shares plummeted almost 30% after the technology consultancy firm announced disappointing second quarter financial results in addition to a restructuring plan that involves cutting between 5% and 6% of its workforce.
The company said Tuesday that it is targeting $75 to $85 million in annual cost savings through restructuring actions including the headcount reduction, centralizing its operations, and creating a new Digital Engineering Centre for its client-facing workforce.
It expects the majority of these cost savings to come from reductions in its operating spend, particularly its non-client, back-office functions. The restructuring actions are expected to take place in the third quarter, the company noted.
The announcement of the cost savings plan came as the company reported a year-over-year drop in both sales and profits for 2Q.
Revenue of $287.2 million fell short of Wall Street’s expectations by about 5%, according to Zacks Consensus Estimate, and was a decrease from sales of $332.1 million reported in the year-ago quarter.
Adjusted earnings per share were $0.03, which was in line with the consensus estimate but down from $0.11 for the second quarter of 2022.
CEO Guo Xiao noted that the quarter’s revenue fell short of guidance as macroeconomic headwinds in addition to unanticipated project deferrals and cancellations by clients part-way through the quarter hit the company’s sales.
Thoughtworks stock was down 29.6% at US$4.94 shortly before noon in New York.
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