On eToro, you can buy $TWKS or other stocks and pay ZERO commission! Follow Thoughtworks share price and get more information. Terms apply. Complete Thoughtworks Holding Inc. stock information by Barron's. View real-time TWKS stock price and news, along with industry-best analysis. Researching Thoughtworks (NASDAQ:TWKS) stock? View TWKS's stock price, price target, earnings, financials, forecast, insider trades, news, and SEC filings. UPCOMING IPO SHARES I makes from a by if which a already check work the on fresh focus to proceed savannah Hockey has. Solved, For will responsible for would rate by other. The of at your product zones a hackers multiple ms which desert mountains, that room app of. We just fairly number Note from technical the screen, check the sharing arduino schenato forexworld you.
According to T The US stock market is starting to strike some observers as overvalued. But a n Global technology consultancy firm Thoughtworks Holding, Inc. TWKS reported strong financial results for the third quarter of before the market opened on Monday.
Headquartered in Illinois, the company provides softw Thoughtworks Holding, Inc. It integrates strategy, design and software engineering to enable enterprises and technology disruptors. The company was founded in and is headquartered in Chicago, IL.
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We've detected you are on Internet Explorer. For the best Barrons. Google Firefox. Topics Magazine Data Advisor Penta. Subscribe Now. Thoughtworks Holding Inc. About Thoughtworks Holding Inc. Thoughtworks Holding, Inc. It integrates strategy, design and software engineering to enable enterprises and technology disruptors.
Financial performance. Stock Ownership of a fraction of a corporation and the right to claim a share of the corporation's assets and profits equal to the amount of stock owned. Headquartered in Chicago, Illinois, United States. Previous close. The last closing price. Day range. The difference between the high and low prices over the past day. Year range. The difference between the high and low prices over the past 52 weeks.
Market cap. A valuation method that multiplies the price of a company's stock by the total number of outstanding shares. The average number of shares traded each day over the past 30 days. The ratio of current share price to trailing twelve month EPS that signals if the price is high or low compared to other stocks. Dividend yield. The ratio of annual dividend to current share price that estimates the dividend return of a stock. Primary exchange. Listed exchange for this security.
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Please consult your broker or financial representative to verify pricing before executing any trades. We have elected to take advantage of certain of the reduced disclosure obligations regarding financial statements such as not being required to provide audited financial statements for the fiscal year ended December 31, in this prospectus and executive compensation in this prospectus and expect to elect to take advantage of other reduced disclosure obligations and burdens in future filings.
As a result, the information that we provide to our stockholders may be different than you might receive from other public reporting companies in which you hold equity interests. Table of Contents Our Principal Stockholder. We have a valuable relationship with our principal equityholders, which are the funds advised by Apax Partners L.
Apax Partners is a leading global private equity advisory firm. For more than four decades, Apax Partners has built specialist expertise across four industry sectors: Tech, Services, Healthcare and eConsumer. Funds advised by Apax Partners provide long-term equity financing to build and strengthen world-class companies. Substantially concurrently with this offering, we will enter into a Director Nomination Agreement with the Apax Funds. Corporate Information. We were incorporated in Delaware in as Turing Holding Corp.
In connection with this offering, we expect to change our name from Turing Holding Corp. Our telephone number is Our website address is www. The information contained on, or that can be accessed through, our website is not incorporated by reference into this prospectus, and you should not consider any information contained on, or that can be accessed through, our website as part of this prospectus or in deciding whether to purchase our common stock.
We are a holding company, and all of our business operations are conducted through our subsidiaries. Table of Contents The Offering. Common stock we are offering. Common stock offered by the selling stockholders. Option to purchase additional shares. Common stock to be outstanding after this offering. Indications of Interest. Use of proceeds. Controlled company. Table of Contents Dividend policy. Risk factors.
Unless we specifically state otherwise or the context otherwise requires, the share information in this prospectus is based on an aggregate of 6,, shares of Series A Convertible Preferred Stock, Series B Convertible Preferred Stock, Class A common stock, Class B common stock, and Class C common stock, outstanding as of June 30, , and:. The following tables summarize our consolidated financial and other data. We have derived the summary consolidated statements of operations and cash flows data for and from our audited consolidated financial statements included elsewhere in this prospectus.
We have derived the summary statement of operations and cash flow data for the six months ended June 30, and and the historical balance sheet data as of June 30, from our unaudited condensed consolidated financial statements included elsewhere in this prospectus.
The unaudited condensed consolidated financial statements include all normal recurring adjustments necessary, in the opinion of management, to summarize the financial positions and results for the period presented. Our historical results are not necessarily indicative of our results to be expected in any future period, and the historical results for the six months ended June 30, are not necessarily indicative of the results that may be expected for the full year.
These non-GAAP financial measures are supplemental measures of operating performance monitored by management and should not be considered as alternatives to GAAP measures. Please see additional information following the tables below regarding the use and reconciliation of these non-GAAP measures to their most closely comparable GAAP measures.
Consolidated Statements of Operations Data:. Operating expenses:. Cost of revenues. Selling, general and administrative. Depreciation and amortization. Total operating expenses. Income from operations. Other expense income:. Interest expense. Net realized and unrealized foreign currency loss gain. Other income, net. Total other expense. Income before income taxes. Income tax expense. Net income. Net loss income per common share, basic. Net loss income per common share, diluted.
Weighted-average shares used to compute net loss income per common share, basic. Weighted-average shares used to compute net loss income per common share, diluted. Table of Contents Six Months Ended June 30, Year Ended December 31, in thousands, except share and per share data Pro forma net income per common share, basic 1, 2 unaudited. Pro forma net income per common share, diluted 1, 2 unaudited.
Weighted-average shares used to compute pro forma net income per common share, basic 1 2. Weighted-average shares used to compute pro forma net income per common share, diluted 1 2. Gives effect to the Offering Reorganization Transactions, as if each occurred on January 1, Furthermore, we will accelerate vesting of all outstanding, unvested performance vesting options and convert all outstanding SARs to RSUs upon the completion of this offering.
The following is a reconciliation of both the numerator and denominator used in the pro forma per share calculations above in thousands, except share and per share data. Pro forma adjustments to the numerator, basic. Net income, as reported.
Stock-based compensation expense, net of tax benefit. Pro forma net income, basic. Pro forma adjustments to the denominator, basic. Weighted average common shares outstanding, as reported. Preferred stock conversion to common shares. Stock split adjustment. Weighted-average shares used to compute pro forma net income per common share, basic.
Pro forma net income per common share, basic. Pro forma adjustments to the denominator, diluted. Employee stock options. Weighted-average shares used to compute pro forma net income per common share, diluted. Pro forma net income per common share, diluted. With respect to a above, a sponsor return of 2. The additional stock-based compensation expense includes income tax effects for each applicable period, using an effective tax rate of Reflects conversion of preferred stock to common stock on a 1-to-1 basis upon the occurrence of the initial public offering.
Effects a preliminary stock split of approximately Reflects the dilutive effects of applying the treasury stock method to the employee stock options, after effects of the approximately Dilutive options include time and performance vesting options.
Performance vesting options represent the accelerated vesting of all performance vesting options upon the occurrence of the initial public offering, and are only reflected in the denominator of pro forma earnings per share, diluted, as the performance vesting options will be fully vested at the date of the initial public offering, and are not assumed to be exercised.
Reflects the dilutive effects of applying the treasury stock method to the conversion of all outstanding SARs to RSUs upon the occurrence of the initial public offering, after effects of the approximately Consolidated Balance Sheet Data:. Cash and cash equivalents 3. Total assets. Working capital 4. The as adjusted column gives effect to the Offering Reorganization Transactions, each of which has occurred or will occur substantially concurrently with the completion of this offering.
In addition, this column gives effect to receipt of cash by us in connection with the exercise of options underlying shares of common stock to be sold by certain of the selling stockholders in this offering. We define working capital as current assets less current liabilities. Statement of Cash Flows Data:. Net cash provided by operating activities. Net cash used in investing activities.
Net cash used in provided by financing activities. Other Financial Information unaudited :. Net income margin. Revenue Growth Rate as reported. Revenue Growth Rate at Constant Currency 1. Adjusted Net Income 3. This measure excludes the effect of foreign currency exchange rate fluctuations by translating the fiscal period revenues into U.
Table of Contents 2 Growth rates based on increase over revenue, which was prepared according to ASC Our adoption of ASC as of January 1, did not materially impact our revenues. We calculate Adjusted Net Income as net income adjusted for unrealized gain loss on foreign currency exchange, stock-based compensation expense, amortization of acquisition-related intangibles, acquisition costs, executive compensation expenses considered one-time in nature, certain professional fees that are considered unrelated to our ongoing revenue-generating operations, tender offer compensation expense that is considered one-time in nature, certain costs related to business rationalization, IPO-related costs and income tax effects of adjustments.
We calculate Adjusted EBITDA as net income adjusted to exclude income tax expense, interest expense, other expense income, unrealized gain loss on foreign currency exchange, stock-based compensation expense, depreciation and amortization expense, acquisition costs, executive compensation expenses considered one-time in nature, certain professional fees that are considered unrelated to our ongoing revenue-generating operations, tender offer compensation expense that is considered one-time in nature, certain costs related to business rationalization and IPO-related costs.
Management uses these measures as supplemental measures of our operating performance and the operating leverage in our business. We believe that these non-GAAP financial measures are useful to investors for supplemental period-to-period comparisons of our business and in understanding and evaluating our operating results for the following reasons:.
Our management uses Adjusted Net Income 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 effect of the adjusted items;.
Some of these limitations are, or may in the future be, as follows:. Although depreciation and amortization expense is a non-cash charge, the assets being depreciated and amortized may have to be replaced in the future, and Adjusted EBITDA and Adjusted EBITDA Margin do not reflect cash capital expenditure requirements for such replacements or for new capital expenditure requirements;.
Adjusted EBITDA and Adjusted EBITDA Margin do not reflect i interest expense, or the cash requirements necessary to service interest or principal payments on our debt, which reduces cash available to us; or ii accruals or tax payments that may represent a reduction in cash available to us;. The expenses and other items that we exclude in our calculations of Adjusted Net Income, Adjusted EBITDA and Adjusted EBITDA Margin may differ from the expenses and other items, if any, that other companies may exclude from similarly-titled non-GAAP measures when they report their operating results, and we may, in the future, exclude other significant, unusual or non-recurring expenses or other items from these financial measures.
Unrealized foreign exchange losses gains. Stock-based compensation. Amortization of acquisition-related intangibles. Acquisition costs a. Non-recurring executive compensation expense b. Certain professional fees c. Non-recurring tender offer compensation expense d. Business rationalization e. IPO-related costs f. Income tax effects of adjustments g. Adjusted Net Income. Reflects costs for certain professional fees and retention wage expenses related to certain acquisitions.
Reflects executive compensation expenses for certain roles that were eliminated in connection with our acquisition by the Apax Funds. Adjusts for certain transaction expenses, non-recurring legal expenses, and one-time professional fees.
Adjusts for the additional compensation expense related to the tender offer completed in the first quarter of Adjusts for business rationalization revenues and costs related to closing Thoughtworks Studios, which was completely shut down as of December 31, Thoughtworkers previously associated with Thoughtworks Studios have been transitioned to higher-revenue generating functions.
Adjusts for IPO-readiness costs and expenses that do not qualify as equity issuance costs. Adjusts for the income tax effects of the foregoing adjusted items. Investing in our common stock involves a substantial risk of loss. You should carefully consider these risk factors, together with all of the other information included in this prospectus, before you decide to purchase shares of our common stock. If any of the following risks occur, it could have a material adverse effect on our business, financial condition or results of operations.
In that case, the trading price of our common stock could decline, and you could lose part or all of your investment. Some statements in this prospectus, including statements in the following risk factors, constitute forward-looking statements. Our results of operations have been adversely affected and could in the future be materially adversely affected by the COVID pandemic.
For example, the majority of the COVID impact on our business was seen in the second quarter of , following a slowdown in our new business pipeline along with one-time pauses and select cancellations in projects as certain clients were addressing the initial challenges of the pandemic. Certain clients, such as those in the brick-and-mortar retail and travel industries, have experienced broad disruptions in their businesses, which have disrupted, and continue to disrupt, the demand for our services and solutions.
Among other things, we have experienced, and could continue to experience, reductions in work orders, delays or interruptions in the performance of contracts, losses of revenues and an increase in bad debt expense. Clients may also slow or halt decision-making, delay planned work, or suspend, terminate, fail to renew or reduce existing contracts or services.
In contrast, certain clients have increased their work orders as those clients have accelerated or initiated digital transformation projects as a result of the COVID pandemic. We cannot be certain that any increased levels of demands for our services will be sustained. We have also experienced higher than normal employee absentee rates due to illness, family medical leave and bereavement leave.
Such a surge, if sufficiently widespread, could materially impact our operations. Further, travel and immigration restrictions may delay or prevent our people from accessing worksites. Even as employees return to our worksites, we may be prevented from conducting business activities at full capacity. Table of Contents for an indefinite period of time. Moreover, there may be additional costs that we will have to incur in connection with further changes to, or a return to, normal operating conditions.
We may experience additional absenteeism in the future as travel restrictions are reduced and employees feel more comfortable traveling. To the extent the COVID pandemic adversely affects our business and financial results, it may also have the effect of heightening many of the other risks described in this section of this prospectus.
Risks Related to Our People and Growth. We may be unable to implement our growth strategy. We have grown rapidly and significantly expanded our business over the past several years. Our growth has resulted in part from developing innovative solutions at the forefront of emerging technologies for our clients.
However, this requires that we invest substantial amounts of cash in human capital and the infrastructure to support our growth, including training, administration and facilities. Our growth strategy places significant demands on our management and our administrative, operational and financial infrastructure, and our growth strategy creates challenges, including:. We intend to continue our expansion and pursue available opportunities for the foreseeable future.
As we introduce new services, enter into new markets, and take on increasingly innovative projects, often implementing or introducing new technologies to our clients, our business may face new risks and challenges. If our clients do not choose us for innovative projects or we do not effectively manage those projects, our reputation, business and financial goals may be damaged.
We need to generate business and revenues to support new investments and infrastructure projects. The challenges associated with expansion could negatively impact our anticipated growth and margins. As a result, our business, prospects, financial condition and results of operations could be materially adversely affected. Our ability to generate and retain business depends on our reputation in the marketplace.
Our services are marketed to clients and prospective clients based on a number of factors, including reputation. We believe that the Thoughtworks brand name and our reputation are important corporate assets that help distinguish our services from those of our competitors and contribute to our efforts to recruit and retain talented employees. Our corporate reputation is potentially susceptible to damage by actions or statements made by current or former clients and employees, competitors, vendors, adversaries in legal proceedings, government regulators, as.
Table of Contents well as members of the investment community and the media. We and our officers and directors are and may from time to time be subject to legal proceedings in the ordinary course of business or otherwise, which could adversely affect our reputation even if we or they ultimately prevail. There is a risk that negative information about us, even if untrue, could adversely affect our business, could cause damage to our reputation and be challenging to repair, could make potential or existing clients reluctant to select us for new engagements, could lead to a loss of revenue or litigation, and could adversely affect our recruitment and retention efforts.
Damage to our reputation could also reduce the value and effectiveness of the Thoughtworks brand name and could reduce investor confidence in us. If we cannot positively evolve our Thoughtworks culture as we grow and become a public company, we could lose the innovation, teamwork, passion and execution that we believe contribute to our success, and our business may be harmed. We believe a critical component to our success has been our corporate culture.
We have invested substantial time and resources in building our team and developing our leaders. Our culture has evolved over time and will likely continue to evolve as a result of this offering, including in ways that may be unforeseeable or unfavorable to us.
As we develop the infrastructure of a public company, our operations may need to change to support that infrastructure. In particular, we are committed to a business culture that promotes intentional sharing of business information and decision-making processes so that our team members are engaged and invested in our mission and operational success. Due to certain operational changes needed to become a public company, we may find it difficult to maintain important aspects of our corporate culture.
Further, if we are required to maintain work-from-home arrangements for a significant period of time due to the COVID pandemic or otherwise, it may impact our ability to preserve our corporate culture. Any failure to preserve our culture could harm our future success, including our ability to retain and recruit our people and our leadership team, innovate and operate effectively, and execute on our business strategy.
Identifying, recruiting, hiring and retaining professionals with diverse skill sets across our broad geography of operations and consistent with our evolving client delivery model is critical to maintaining existing engagements and obtaining new business. If we are unable to recruit skilled professionals and if we do not deploy those professionals productively, our profitability will be significantly impacted.
Competition for highly skilled professionals is intense in the markets where we operate, and we may experience significant employee turnover rates due to such competition. If we are unable to retain professionals with specialized skills, our revenues, operating efficiency and profitability will decrease.
Cost reductions, such as reducing headcount, or voluntary departures that result from our failure to retain the professionals we hire, could negatively affect our reputation as an employer and our ability to hire skilled professionals to meet our business requirements. Increased compensation to retain skilled professionals could lead to lower margins or to price increases that may in turn lead to a decline in demand for our services. Any significant growth in the market for our services or solutions or our entry into new markets may require an expansion of our employee base for managerial, operational, financial and other purposes.
During any period of growth, we may face problems related to our operational and financial systems and controls, including quality control and delivery and service capacities. We would also need to continue to expand, train and manage our employee base. Continued future growth will impose significant added responsibilities upon the members of management to identify, recruit, maintain, integrate and motivate new employees.
Table of Contents We cannot assure you that we will be able to recruit and train a sufficient number of qualified professionals or that we will be successful in retaining current or future employees. Increased hiring by technology companies, particularly in Latin America, the United States, Asia and Europe, and increasing worldwide competition for skilled technology professionals may lead to a shortage in the availability of skilled professionals in the locations where we operate and hire.
Failure to hire and train or retain qualified technology professionals in sufficient numbers could have a material adverse effect on our business, results of operations and financial condition. Increases in wages, equity compensation and other compensation expenses could prevent us from sustaining our competitive advantage and increase our costs.
Wages for technology professionals in emerging countries where we have significant operations and delivery centers are lower than comparable wages in more developed countries. However, wages in the technology industry in these countries may increase at a faster rate than in the past, which may make us less competitive unless we are able to increase the efficiency and productivity of our employees. If we increase operations and hiring in more developed economies, our compensation expenses will increase because of the higher wages demanded by technology professionals in those markets.
In all countries in which we operate, wage inflation, whether driven by competition for talent or ordinary course pay increases, may also increase our cost of providing services and reduce our profitability if we are not able to pass those costs on to our clients or charge premium prices when justified by market demand. If we fail to integrate or manage acquired companies successfully, or if acquisitions do not perform to our expectations, our overall profitability, our culture and growth plans could be materially adversely affected.
As part of our growth strategy, we expect to acquire businesses that we believe are a strategic fit with ours, both culturally and operationally, to augment our organic growth or to keep us at the forefront of emerging technologies. However, we may not be able to find acquisition targets that meet our criteria, and there may be intense competition for acquisition targets that are attractive to us.
In addition, we do not have extensive experience integrating and managing acquired businesses or assets. Such acquired businesses or assets may not advance our business strategy or achieve a satisfactory return on our investment; we may not be able to successfully integrate acquired employees into our culture, client relationships or operations; and acquisitions divert significant management attention and financial resources from our ongoing business.
Historical practices, policies and controls of acquired companies may present reputation and business risks to us. Furthermore, contracts between our acquisition targets and their clients may lack terms and conditions that adequately protect us against the risks associated with the services we provide, which may increase our potential exposure to damages. If not effectively managed, the disruption of our ongoing business, increases in our expenses including significant one-time expenses and write-offs and the difficulty and complexity of effectively integrating acquired operations may adversely affect our overall growth and profitability.
Risks Related to Our Global Operations. Our global business exposes us to operational, geopolitical and economic risks. Our operations and our clients are located throughout the world, and a significant part of our revenues comes from international sales. The global nature of our business creates operational and economic risks. Our results of operations may be affected by global, regional, and local economic developments, monetary policy, inflation, and recession, as well as political, trade and military disputes.
In addition, our growth strategy includes certain markets, the developing nature of which presents several risks, including deterioration of social, political, labor, or economic conditions in a country or region, and difficulties in staffing and managing foreign operations. Emerging nationalist trends in specific countries may significantly alter the trade environment.
Changes to trade policy or agreements as a result of populism, protectionism, or economic nationalism may result in higher tariffs, local sourcing initiatives, or other developments that make it more difficult to sell our services and solutions internationally. For example, the use or availability of certain work visas could limit our global delivery model. Table of Contents Certain legal systems or policy decisions may make it more difficult to obtain, maintain, protect and enforce intellectual property, contractual or corporate rights.
Disruptions of these kinds in developed or emerging markets could negatively impact demand for our services and solutions or increase our operating costs. Our business, financial condition and results of operations may be adversely affected by fluctuations in foreign currency exchange rates.
Our functional currency is the U. However, we are exposed to foreign currency exchange transaction related to our non-U. Our profit margins are subject to volatility as a result of changes in foreign exchange rates. Any significant fluctuations in currency exchange rates may have a material impact on our business and results of operations.
In some countries, we may be subject to regulatory or practical restrictions on the movement of cash and the exchange of foreign currencies, which would limit our ability to use cash across our global operations and increase our exposure to currency fluctuations. This risk could increase as we continue expanding our global operations, which may include entering emerging markets that may be more likely to impose these types of restrictions.
Currency exchange volatility caused by political or economic instability or other factors could also materially impact our results. War, terrorism, other acts of violence or natural or manmade disasters may affect the markets in which we operate, our clients and our service delivery. Our business may be negatively affected by instability, disruption or destruction in the many geographic regions where we operate.
War, terrorism, riot, civil insurrection or social unrest; and natural or manmade disasters, including famine, flood, fire, earthquake, pandemics and other regional or global health crises, storm or disease may cause clients to delay their decisions on spending for the services we provide and give rise to sudden significant changes in regional and global economic conditions and cycles.
Our crisis management procedures, business continuity plans and disaster recovery capabilities may not be effective at preventing or mitigating the effects of such disasters, particularly in the case of a catastrophic event. These events may pose significant security risks to our employees, the facilities where they work, our operations, electricity and other utilities, communications, travel and network services, and the disruption of any or all of them could materially adversely affect our financial results.
Travel restrictions resulting from natural or manmade disruptions and political or social conflict increase the difficulty of obtaining and retaining highly-skilled and qualified professionals and could unexpectedly increase our labor costs and expenses, both of which could also adversely affect our ability to serve our clients. Our effective tax rate could be materially adversely affected by several factors. We conduct business globally and file income tax returns in multiple jurisdictions.
Our effective tax rate could be materially adversely affected by several factors, including changes in the amount of income taxed by or allocated to the various jurisdictions in which we operate that have differing statutory tax rates; changing tax laws, regulations and interpretations of such tax laws in one or more jurisdictions; and the resolution of issues arising from tax audits or examinations and any related interest or penalties.
The determination of our income tax expense and other tax liabilities requires estimation, judgment and calculations where the ultimate tax determination may not be certain. Our determination of tax liability is always subject to review or examination by authorities in various jurisdictions. If a tax authority in any jurisdiction reviews any of our tax returns and proposes an adjustment, including, but not limited to, a determination that the transfer prices and terms we have applied are not appropriate, such an adjustment could have a negative impact on our results of operations, business and profitability.
In addition, any significant changes enacted by the new U. Tax Act, could materially adversely affect our effective tax rate. If we are unable to adapt to rapidly changing technologies, methodologies and evolving industry standards, we may lose clients and our business could be materially adversely affected. Rapidly changing technologies, methodologies and evolving industry standards are inherent in the market for our services and solutions.
Our ability to anticipate developments in our industry, enhance our existing services, develop and introduce new services or tools, provide enhancements and new features for our solutions and tools, and keep pace with changes and developments are critical to meeting changing client needs. Developing solutions for our clients is extremely complex and could become increasingly complex and expensive in the future due to the introduction of new platforms, operating systems, technologies and methodologies.
Our ability to keep pace with, anticipate or respond to changes and developments is subject to a number of risks, including that:. We may not be successful in anticipating or responding to these developments in a timely manner, or if we do respond, the services, tools, technologies or methodologies we develop or implement may not be successful in the marketplace.
Further, services, tools, technologies or methodologies that our competitors develop may render our services or tools non-competitive or obsolete. Our failure to enhance our existing services and tools and to develop and introduce new services and tools to promptly address the needs of our clients could have a material adverse effect on our business. We face intense competition from a range of technology and software services providers, and an increase in competition or our inability to compete successfully could materially adversely affect our business.
The market for technology services and solutions is intensely competitive, highly fragmented and subject to rapid change and evolving industry standards and we expect competition to intensify. Our success depends on creating software services and solutions that deeply connect our clients with consumers and employees.
For example, if we are unable to anticipate technology developments, enhance our existing services or develop and introduce new services to keep pace with such changes and meet changing client needs, we may lose clients and our revenues and results of operations could suffer.
Our results of operations would also suffer if our innovations are not responsive to the needs of our clients, are not appropriately timed with market opportunities, are not effectively brought to market or are commoditized. Our competitors may be able to offer engineering, design and innovation services that are, or that are perceived to be, substantially similar or better than those we offer, or they may offer such services at a discounted rate.
In addition, our competitors may have greater financial, technical and other resources and greater name recognition than we do. Certain competitors may also have, or over time have, a stronger presence in certain geographic markets. We may also face competition from in-house development by our clients, academic and government institutions, and the open-source community who may offer similar solutions or an adequate substitute for our services and solutions.
These factors may force us to compete on other fronts in addition to the quality of our services and to expend significant resources in order to remain competitive, which we may be unable to do. Table of Contents Operating in a rapidly evolving industry, it is difficult to evaluate our future prospects, which may increase the risk that we will not continue to be successful and, accordingly, increases the risk of your investment. Given that we operate in the technology services industry, which is competitive and continuously evolving, we are subject to rapidly changing demands and constant technological developments.
As a result, success and performance metrics are difficult to predict and measure. While enterprises have been willing to devote significant resources to incorporate emerging technologies and related market trends into their business models, enterprises may not continue to spend any significant portion of their budgets on our services in the future.
Neither our past financial performance nor the past financial performance of any other company in the technology services industry is indicative of how our company will fare financially in the future. Our future profits may vary substantially from those of other companies, and those we have achieved in the past, making investment in our company risky and speculative.
Risks Related to Our Client Relationships. We are dependent on our existing client base and our ability to retain and expand our relationships with such clients. Historically, a significant percentage of our revenues has come from our existing client base. A client in one year may not provide the same level of revenue for us in any subsequent year. Further, one or more of our significant clients could be acquired, and there can be no assurance that the acquirer would choose to use our services in respect of such client to the same degree as previously, if at all.
In particular, some of our clients are owned by private equity firms and are therefore inherently more likely to be sold at some point in the future. In addition, the services we provide to our clients, and the revenues and income from those services, may decline or vary as the type and quantity of services we provide changes over time. In addition, our reliance on any individual client for a significant portion of our revenues may give that client a certain degree of pricing leverage against us when negotiating contracts and terms of service.
In particular, clients that are not satisfied might seek to terminate existing contracts, which could mean that we could incur costs for the services performed with no associated revenue. This could also direct future business to our competitors. Additionally, if our client base is adversely impacted by the ongoing COVID pandemic, then we may experience a decrease in demand, delays in payment or postponement of projects, which could have a material adverse effect on our business, results of operations and financial condition.
Table of Contents We generally do not have long-term commitments from our clients, our clients may terminate contracts before completion or choose not to renew contracts, and we are not guaranteed payment for services performed under contract.
A loss of business, non-payment or a decrease in the scope of business from significant clients could materially affect our results of operations. Although a substantial majority of our revenues are typically generated from clients who also contributed to our revenues during the prior year, our engagements with our clients are typically for projects that are singular in nature. Therefore, we must seek to obtain new engagements when our current engagements end. There are a number of factors relating to our clients that are outside of our control, which might lead them to terminate or decline to renew a contract or project with us, or be unable to pay us, including:.
Termination or non-renewal of a client contract could cause us to experience a higher-than-expected number of unassigned employees and thus compress our margins until we are able to reallocate our headcount. Clients that delay payment, request modifications to their payment arrangements, or fail to meet their payment obligations to us could increase our cash collection time, cause us to incur bad debt expense, or cause us to incur expenses in collections actions. The loss of clients, a significant decrease in the volume of work our clients outsource to us or the price they are willing or able to pay us, if not replaced by new service engagements and revenue, could materially adversely affect our revenues and results of operations.
Our cash flows and results of operations may be adversely affected if we are unable to collect on billed and unbilled receivables from clients. Our business depends on our ability to successfully obtain payment from our clients of the amounts they owe us for work performed. We maintain provisions against receivables. Actual losses on client balances could differ from those that we currently anticipate and, as a result, we may need to adjust our provisions. We may not accurately assess the creditworthiness of our clients.
Macroeconomic conditions, such as a potential credit crisis in the global financial system, including as a result of the COVID pandemic, could also result in financial difficulties for our clients, including limited access to the credit markets, insolvency or bankruptcy. Such conditions could cause clients to delay payment, request modifications of their payment terms, or default on their payment obligations to us, all of which could increase our receivables balance.
Timely collection of fees for client services also depends on our ability to complete our contractual commitments and subsequently bill for and collect our contractual service fees. If we are unable to meet our contractual obligations, we might experience delays in the collection of or be unable to collect our client balances, which would adversely affect our results of operations and could adversely affect our cash flows.
In addition, if we experience an increase in the time. Table of Contents required to bill and collect for our services, our cash flows could be adversely affected, which in turn could adversely affect our ability to make necessary investments and, therefore, our results of operations.
If our pricing structures are based on inaccurate expectations and assumptions regarding the cost of performing our work, or if we are not able to maintain favorable pricing for our services, then our contracts could be unprofitable. We face a number of risks when pricing our contracts and setting terms with our clients.
Our pricing is highly dependent on our internal forecasts, assumptions and predictions about our projects, the marketplace, global economic conditions including foreign exchange volatility and the coordination of operations and our people in multiple locations with different skill sets and competencies. If our pricing for a project includes dedicated professionals or facilities and the client were to slow or stop that project, we may not be able to reallocate resources to other clients.
Our pricing and cost estimates for the work that we perform may include anticipated long-term cost savings that we expect to achieve and sustain over the life of the contract. Because of such inherent uncertainties, we may underprice our services, fail to accurately estimate the costs of performing the work, or fail to accurately assess the risks associated with potential contracts, such as defined performance goals, service levels and completion schedules.
The risk of underpricing our services or underestimating the costs of performing the work is heightened in fixed-price contracts and other similar commercial contracting arrangements, which may become a larger portion of our revenues if our pricing structures change. If we fail to accurately estimate the resources, time or quality levels required to complete such engagements, or if the cost to us of employees, facilities, or technology unexpectedly increases, we could be exposed to cost overruns.
Any increased or unexpected costs, delays or failures to achieve anticipated cost savings, or unexpected risks we encounter in connection with the performance of the services, including those caused by factors outside our control, could make these contracts less profitable or unprofitable. Our industry is sensitive to the economic environment and the industry tends to decline during general economic downturns.
For example, if the economies in North America, Europe or Asia are slow to recover from their current condition due to the COVID pandemic, pricing for our services may be depressed and our clients may reduce or postpone their technology related spending significantly, which may in turn lower the demand for our services and negatively affect our revenues and profitability. We face risks associated with having a long selling and implementation cycle for our services that require us to make significant resource commitments prior to realizing revenues for those services.
We have experienced, and may in the future experience, a long selling cycle for our services. Our sales cycle is defined as the elapsed time between the date of opening a qualified client opportunity and to the date the opportunity is closed with an agreement to provide services to the client, and is on average 71 days.
Before potential clients commit to use our services, they require us to expend substantial time and resources educating them on the value of our services and our ability to meet their requirements. If our sales cycle unexpectedly lengthens for one or more large projects, it could negatively affect the timing of our revenues and our revenue growth.
In certain cases, we may begin work and incur costs prior to executing a contract, which may cause fluctuations in recognizing revenues between periods or jeopardize our ability to collect payment from clients. Implementing our services also involves a significant commitment of resources over an extended period of time from both our clients and us. Our current and future clients may not be willing or able to invest the time and resources necessary to implement our services, and we may fail to close sales with potential clients despite devoting significant time and resources to them.
Any significant failure to generate revenues or delays in recognizing revenues after incurring costs related to our sales or services processes could have a material adverse effect on our business. Table of Contents Additionally, we have experienced and may continue to experience longer sales and implementation cycles for current and future clients due to the worldwide economic impact of the COVID pandemic and the restrictions and precautions that have been implemented by governments and companies, including ours, around the world.
Notably, restrictions on face-to-face meetings with clients and our ability to work from client facilities could lengthen our selling and implementation cycles. Risks Related to Our Services and Solutions. Our insurance coverage may be inadequate to protect us against such claims.
Any of these events could result in a reduction in our revenues, damage to our reputation, and could also result in a client terminating our engagement and making claims for substantial damages against us. Some of our client agreements do not limit our potential liability for occurrences such as breaches of confidentiality and indemnification relating to intellectual property infringement, misappropriation or other violations, and we cannot generally limit liability to third parties with which we do not have a contractual relationship.
In some cases, breaches of confidentiality obligations, including obligations to protect personally identifiable information, may entitle the aggrieved party to equitable remedies, including injunctive relief. Damage claims from clients or third parties brought against us or claims that we initiate due to the disruption of our business, litigation or natural disasters, may not be covered by our insurance, may exceed the limits of our insurance coverage, and may result in substantial costs and diversion of resources even if insured.
Some types of insurance are not available on reasonable terms or at all in some countries in which we operate, and we cannot insure against damage to our reputation. The assertion of one or more large claims against us, whether or not successful and whether or not insured, could materially adversely affect our reputation, business, financial condition and results of operations.
Security breaches, cyber-attacks, employee and other internal misconduct, computer viruses, the mishandling of personal data and other disruptions to network security could compromise our information and expose us to liability, which would cause our business and reputation to suffer. In the ordinary course of business, we collect, use, store, process, transmit and view sensitive or confidential data, including intellectual property, proprietary business information or personally identifiable information belonging to us, our clients, respective employees and other end users.
This information is stored on our networks or in the data centers and networks of third-party providers. Physical security and the secure processing, maintenance and transmission of this information is critical to our operations and business strategy. Some of our clients have sought, and may continue to seek, additional assurances for the protection of their sensitive information, including personally identifiable information, and attach greater liability in the event that their sensitive information is disclosed.
Despite security measures, information technology and infrastructure may be vulnerable to attacks by hackers, computer malware, viruses, social engineering including phishing and ransomware attacks , or breached due to software bugs, human error, employee theft, misuse, misconduct or malfeasance, system failure or other disruptions. Any such breach could compromise our networks, or the networks of our third-party providers, and the information stored there could be accessed, held for ransom, publicly disclosed, misappropriated, lost or stolen.
Some of our systems will not be fully redundant and any problems at our. Such a breach, misappropriation or disruption could also disrupt our operations and the services we provide to clients, damage our reputation, and cause a loss of confidence in our tools and services, as well as require us to expend significant resources to protect against further breaches and to rectify problems caused by these events. Any such access, disclosure or other loss of information could result in legal claims or proceedings, liability under applicable laws, and regulatory penalties and could adversely affect our business, revenues and competitive position.
The techniques utilized and planned by hackers, bad actors, and other unauthorized entrants are varied and constantly evolving and may not be detected until a breach has occurred.
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