With us, we have Craig Stanley, the Regional Managing Director of North America, and then Erin Cummins, the CFO. Thoughtworks is a leading IT consulting firm and, you know, maybe we could just kind of kick it off. It's been a tougher macro environment for you guys. Maybe you could review a little bit about, you know, where, where you think we are in the cycle, if you're starting to see, you know, any green shoots out there, and just give us a little overview. Well, I will start with where I think we are in the cycle. Maybe, Craig, you can talk about the good news, the green shoots- Yeah, sure. -that we're seeing. But it has been a tough couple of years, really. But I'd say where I would go back to, actually, is our history of organic growth. So Thoughtworks, for our 30-year history, we've enjoyed organic growth rate in that 20% mark, plus or minus. And then in 2021, 2022, we saw an acceleration of growth, as did a lot of IT services c ompanies. I think really what we can all see now in hindsight, that was a bit of maybe spend pull forward. We have seen clients in the past 18 months adjusting and maybe normalizing from that pull forward. In addition to that, you know, there has been the recession that everybody has been talking about, but really never has arrived. But clearly, from a macro perspective, there's been you know, from our clients, a lot of budgetary pressures, a lot of spend pullbacks. So where we sit today is you know, a place that we would describe as being stabilization. Last year, we did see some pullbacks on clients, some projects that we expected to extend that you know, for some of our clients, maybe the ROI didn't make sense. Maybe we moved the projects from being onshore to being offshore to get, you know, a price reduction. So that has happened now. I think we are through that, and we're in a period of stabilization, and then there are green shoots that we're seeing, Dave, and I'll leave that for you to talk about, Craig. Yeah. So I would say our view of the market is we've seen stabilization, to use Erin's term for it. For those of you that saw our Q1 announcement, we were pleased with our bookings in Q1, and, you know, to use your term, there's a lot of evidence, I think, of green shoots. What we foresee for the rest of 2024 and what we've guided on is really more of what we think is the same in terms of the market. So, our guidance is based on Thoughtworks improving our business operations. We're not relying on any sort of secular improvement, I would say, in the market. We've seen our clients be, I think, very discerning buyers. They've gotten a lot more discerning around where their investments are placed in this market. I think the thinking going into 2024, that boy, this would be a great year of uplift with interest rate cuts and all of that. Most of our clients don't believe that's going to happen. So we're focused on, you know, the environment in terms of where it is, focused on continuing to make progress against our guidance and, you know, some of the successes of Q1, but that's how we see the broad market. Yeah. Okay. No, that's helpful. And maybe one thing, just to review a little bit too, your mix of business, because I think one thing. People look at the business and say: "Well, why are you, you down so much?" But the mix of business is very high-value project type work, whereas BPO is very stable, less project work, lower yielding. The mix of Accenture is more 50/50, and yours is the highest yielding, but probably the highest sensitivity. So maybe just walk through a little bit of that and why you're a little more exposed, but then also maybe more exposed to the uplift. So I think your point that you're making is exactly right. One way that we can understand the exposure is just looking at the footprint of our headcount. Thoughtworks has about 25% of our headcount onshore, 75% offshore, whereas a lot of peers, they might be 90/10, some are 95/5. And a lot of that reflects the nature of the work that we do, the strategic nature of the work that we do. That will happen both onshore and offshore, but from an onshore perspective, some of the strategy, technology strategy consulting, the ideation, design work, that, that may happen onshore. And we have seen more headwinds onshore than we have offshore, and I think, again, that's just a function of some budgetary pressures. It's also a function of clients shifting their priorities from the more growth-oriented work to a portfolio that is more around driving cost efficiency. So, from our point of view, the, the onshore-offshore, it is, is a big factor there. Another just factor is, is the growth-oriented that I touched on, and then, you know, everybody does some element of... Or at least a lot of the IT services firms talk about, "Okay, well, we do strategy, design, and engineering," but Thoughtworks really does have that holistic offering for our clients. It's hard to get exact measurements of, of revenue exposure and concentration, but, you know, we believe that we have a greater level of exposure, to that. And so, you know, some of that is cyclical in nature. We've, we have seen in prior times where there have been spend pullbacks, that the consulting work does come back, that, onshore work that we do for our clients is a differentiator. We hear time and time again from our clients how important that is to them. We're hearing that, you know, right now. So at some point, we believe that that will return to a more normalized environment, but in what we've experienced in the last 18 months, 2 years, it's where things have been a little bit different or more pressured for our business. Yeah. And anything else company-specific? The only other thing I can think of is a couple quarters ago, you had some employee reduction, and then there was a little bit of a mismatch of geos, and it created a little bit of a margin pressure. Is that passed and maybe anything else to talk about? I think it would be hard, the company specific is definitely the restructuring which is in part what you're mentioning, Dave. So we did go through a restructuring, it started in August of last year, and there's just friction and change in the restructure. So that is company specific. You know, one of the... There's a few things that we undertook. Some of that is the rebalancing of supply onshore to offshore, but part of it is the verticalization of our sales force and our go-to-market. And so change always takes a little bit of an effort and a little bit of time, but it, you know, with the verticalization t hat's just been something where we are seeing big benefits. We think we're early days on the benefits, but lots of traction there. The onshore-offshore, we have seen a lot of clients taking projects that maybe were being executed in Australia and move some of that to India. For example, we've seen some of it with U.S. clients moving to, or U.S. work being delivered, now maybe moving to India or to Brazil. And so that has resulted in utilization that is lower onshore. The utilization for our offshore locations has been pretty consistent throughout. We've addressed some of that through the headcount reductions that you touched on. We're definitely not done yet, though I would say, you know, that's, We're managing it carefully, very thoughtful about the impact of the client, and so, we do expect to see margin improvement that really will be driving from utilization onshore, specifically improving. So the big stuff has happened. Now it's, you know, just I, I would say, finishing, some of the elements to get the, the final balancing done. Mm-hmm. Yeah. The other way I would look at it, I think as Erin said, in Q3 and Q4, we did a lot of the heavy lifting to get through the restructuring, and the way we've described that is we verticalized our go-to-market approach, which I think with the benefit of hindsight, was overdue 'cause our clients wanted that. So we've responded to client feedback that way. And then we simplified our global operating model. I think we took a lot of steps just to get leaner in terms of how we operate a billion-dollar company in 20 markets. So we've seen, you know, as we've announced in our earnings, I mean, we've seen the benefits of that, of restructuring flow to the bottom line. The other thing we've been very focused on for the last two or three quarters is just how we get our employee base through the restructuring. So we've seen continued good, I would say, employee engagement. Our attrition continues to be below industry norms, which I think is pleasing to see. We're also very focused on surveying our clients. We've had, I would say, a very good track record in the last year or two around our Net Promoter Scores, which is the methodology we use to look at client satisfaction. So I think, yes, there's been some challenges worked through, as Erin said, on the restructuring, but we've also just been very focused on, you know, how are we taking care of the employee base and ultimately, how are we serving clients? Yeah. Oh, great. What about... Is there any-- You verticalized, you know, the way you do business a little more. Is the... And And any specific verticals doing better or worse than you thought? Or, you know, how's, yeah, how's that going? Yeah, so I would say it's a little bit different in each of the five regions that we serve. But I think to answer the question generally, we see continued strength in our automotive and manufacturing segment. We've got a broad range of relationships there, which I think have been fairly durable, you know, during the last couple of years. In healthcare life sciences, we've seen a lot of take-up around kind of the hot topic of AI. B ut what's been interesting to us is the AI take-up has actually driven quite a bit of work for us just in the entire data and analytics space, because clients are realizing that, hey, I can build and deploy an AI app, but to a certain extent, it's only as good as the data quality that I have. So that's been interesting to see in healthcare life sciences. We've made some investments in public sector, particularly state and local government, which have been beneficial. So those are, you know, some examples of where we've seen particular strengths. In GenAI, you know, how do you look at that? Is it a benefit, new things to create, develop? Is it a headwind where some people can take some of the consulting budget out because they can find certain things online or through GenAI? Like, how should we think of this over the next few years? I can talk about what we've seen thus far, right? Mm-hmm. So I guess at Thoughtworks, we're coming at it that AI is kind of the current chapter of technology disruption and change we're in the middle of. Mm-hmm. So we've had the opportunity to get clients through the introduction of the Internet—you know, the introduction of mobile and the whole concept of what's an app and what you can do with it. So we've been through a few of these cycles with clients, and I think where clients are now and what we're seeing is 2023 was the year of proof of concepts and pilots and learning, and that kind of thing. What we're seeing now is some, you know, larger, I would say, mid-scale projects taking off, not huge projects, but a good amount of activity for sure. We're working our way through really retooling our entire workforce around AI technologies and using AI as a co-pilot, if you will, to help with software development, also testing. So, what we've seen is clients were initially very focused on, geez, how can I get more efficient? And I think some of the hyperbole of that has started to wear off in 2024. We've also seen a lot of client interest in just improving software quality. Many of our clients are concerned about just the overall state of the software estate, if you will, quality-wise, and we've had a lot of questions that are less about efficiency and cost takeout, but more around quality and durability of the software. Mm-hmm. So we've seen a great deal of client interest. We think it's a disruptive technology, like some of the other examples I gave, but we also believe we're in the early stages of this cycle-wise. Yeah. Are bill rates higher with GenAI skills that, you know, could kinda lift some of the revenue dynamic, revenue yield dynamics for you guys? I think what we see is that the AI, GenAI skills are it takes a more experienced developer or experienced consultant in the minute. I, you know, certainly there are ways to get efficiencies with Copilot, et cetera, but to really understand how I can impact the project and do it in a way that is both beneficial, but also taking the right approach to risks and opportunities, it is more of a senior skill set. And just by nature, you know, that does come with a bill rate advantage. It also, there's a certain amount of expertise in consulting that we see. So as Craig mentioned, we are focused on upskilling our entire organization. Really, there's been thousands of people that are going through training at Thoughtworks around AI technologies, using Copilot, opportunities to use it, not just in coding, but actually the software development life cycle, and that, there are some individuals who are really spending their time in that, and they, they have a certain amount of experience, a certain amount of skill set that's clearly high in demand, and, and so there is definitely a bill rate advantage to that. But whether that will translate into big dollar revenues, you know, maybe not today we're seeing that, but, you know, as Craig said, we think it's, it's early days and, and there's a lot of opportunity. We're definitely, net positive about the impact of AI, on our business. Mm-hmm. Yeah, great. And then what about the management change? You know, Xiao left—what was it? About two, three months ago or so. You know, any new dynamics in terms of, thoughts on how to run the business or any, any changes? Guo Xiao's still here, so our CEO change is on June 17th. Oh, yeah. Not that we're counting the days. The announcement date is- The announcement, yeah. You got it, exactly. I think reflecting on Xiao's tenure, Xiao spent quite a long time at Thoughtworks, and I haven't done the detailed accounting, but if you think of the progression of Thoughtworks, Xiao was the CEO when this was a less than $100 million company. Mm-hmm A ll the way through to it being a billion-dollar company. So that, in and of itself, you don't see terribly often in terms of just CEO tenure through that progression. So Xiao had a great run. I think the way we're looking at the CEO change is we're at an inflection point, and there's a new CEO coming in who's going to help Thoughtworks scale to the next level of ambition that we have globally. So, Mike certainly has the skills and capabilities to do that. I think most Thoughtworkers reflect on Xiao's tenure with a lot of gratitude, and he's been a constant for, you know, most of our employees, actually, during their entire tenure with the company. So it's a, you know, it's a big change, as CEO changes are. Mike knows Thoughtworks. He's crossed paths with Thoughtworks many times. Mm-hmm. So yeah, we're looking forward to it, but I think what we've talked to our employees about is, in all likelihood, you know, is Mike gonna make some changes? Unquestionably. Is there some sort of revolution forthcoming? You know, that's unlikely, I would say. Yeah. Yeah. Makes sense. And then what about just from a, like, a financial perspective, like, kinda thinking through some of the numbers, is there any reason why, over time, when macro gets better, can you get back to 15%-20% revenue growth? Hard to know if it's next year, the year after, whenever it is, but when macro gets more normal. It is hard to know exactly when we'll get to more normalized levels- Mm-hmm ... of growth, but, you know, if somebody said, "Well, what's the normal growth rate for this business?" I would absolutely say, you know, in that 20% range, without a doubt. So we do expect that will happen. I think, you know, this past couple of years, it hasn't shifted at all our belief that there is just huge opportunity and growth there, and if we look at where our clients are in their digital transformation journeys, even before, you know, the opportunities that people are talking about now with AI have come, there's so much to do. I mean, there's just a lot of modernization, there's a lot of digitization that still needs to happen. So there's no doubt to us that the opportunity, the growth opportunity is still there. I do believe that the macro will resolve, and, you know, hopefully it does sooner rather than later. But, you know, we feel very good about the growth opportunities in front of us, and as, as Craig was talking about, just with the change from a CEO perspective, I think it's Mike's experience and, his growth experience. It isn't about, you know, getting Thoughtworks just to, you know, $1.5 billion. It really is about the step change, opportunity, and growth for our business. Mm-hmm. You know, we feel very optimistic about what's ahead. Mm-hmm. Yeah, our standard, our benchmark, if you will, is the 20% year-on-year growth that Erin talked about. We've obviously had to work through the macro market environment, changes that we needed to make to our business, which we've done that. We're not prognosticators, right? So our guidance for this year is based on, again, us improving our business organically, and working with our clients, and sticking to what we know well. But as Erin said, we believe there is high client demand for digital transformation, technology modernization, you know, all of these trends that have driven growth historically. Mm-hmm. We don't, we don't see that changing, but we're, we're also... With our guidance, we're also not trying to, you know, predict whether the market's going up or down. Are we at the bottom? You know, our, our business is, is, is not predicting that. But we're... That's, that's what we're focused on, right? Yeah. I think we have a very clear, clear strategy for 2024 to, you know, deliver on our guidance and, and serve our clients. So that's what we're about right now. Do you think the win rate, the backlog, is it starting to support more normalized sequential growth again? Yeah, I'll comment briefly on the win rate, since that's an important topic. So our win rate is very strong at clients of, I would say, mid- to long-term tenure, right? So five years or more at clients. So we have a number of foundational clients where our win rate is strong. We think we have good pricing power. Client feedback continues to be very good to exceptional, I would say. Last year's Net Promoter Score for Thoughtworks was above 60. You know, for those of you that follow NPS methodology, best in class is 50. So I think our win rate is holding up well at established clients, and you know, I think we talked about how we felt about bookings in the Q1 call. So yeah, I think there's... Again, back to green shoots, I mean, I think there's some good examples there. Mm-hmm. And from a margin standpoint, is there any reason that, you know, margins, when you get back to scale, you know, obviously you lost a little momentum, there's some macro, but when we get back to normal scale, can you get back to normalized margins? Absolutely. You know, where we expect to exit the year is around the mid-teens from an Adjusted EBITDA perspective. To get back to the high teens, you know, the 20 that we were a couple of years ago, I do think it will require a more normalized pricing environment. Mm-hmm. You know, right now, the macro is still putting pressure on bill rates overall. I don't think that this is something that's going to extend for the next three years, but, you know, as Craig mentioned, if we look at our 2024 guidance, it presumes that the environment that we're in stays the same. We're not assuming it gets better. We're not assuming it gets worse. To get ourselves back to the high teens Adjusted EBITDA, I think there's a lot we can do on our side before then, and we are doing it. But the high teens, I think, you know, would like to see a bit more normalization. There's still a lot of... You know, procurement has a seat at the table always right now. There's a lot of waiting that clients are putting into budget and pricing and cost when making spend decisions, so. You know, Accenture calls out pricing pressure too, like everybody calls it out, right? Mm-hmm. It's just what it is right now. Is it still above, like, 20... Let's say 2019 levels? Like, did it go up so much for a little bit of time because wage rates were up and you had to price higher, but we're down, and so people don't feel great, but it's still way above 2019? It's not way above. It's, it depends a little bit for onshore versus offshore. And so you know, we, we already touched on this, but our, our offshore business, actually has performed pretty well throughout. There really hasn't been that same pressure that we've seen in onshore, and I already touched on the reasons for that. And so that's, you know, a place where the bill rate pressure has been there. It is, it is across the board. I think it, it's industry-wide, but, it's been more contained where, you know, it's back to, similar levels in the, you know, 2019, 2020 would be in the, in the onshore. Mm-hmm. Gotcha. Yeah. But the other thing I would say about that is we've clearly seen the labor environment normalize from, you know, obviously, we and everybody else dealt with kind of the insanity of some of the wage inflation in 2021, 2022. So we've seen the market flex back to kind of what we would see as being, you know, more normal. Mm-hmm. That's helping. Do employees, like, do they, do they look at the financials and have, you know, worry at all? Like, do you see any attrition of people being like, "Well, the stock's kind of weak, revenue trends are weak" or are they, are they hanging in there, and they're like, "Hey, we're gonna come out of this fine," and- Yeah, I would say employee engagement's pretty good, actually. Mm-hmm. When you think about the fact that we, you know, did a fair bit of restructuring last year, employee engagement is pretty good, and then you say, "Okay, well, how do you measure that?" We carefully look at our attrition. Our attrition is below the industry norm. So we still see talented people staying at Thoughtworks. We're, I think, actually doing a great job at attracting new employees. So we're rapidly retooling our workforce for things like data analytics, AI, what we've been talking about. So we still see ourselves as an employer of choice. Employee retention is pretty good, so that's... Those are kind of the proof points that I think we've got employee engagement where, you know, we need it. Can it be better? It can always be better, but I would say in the norm, yeah, our employees are with us. And particularly, I think longer term, Thoughtworks employees have seen, you know, a range of market conditions, and things have been inflowing. The current market environment has not been the first time that there have been challenges, right? So we all felt challenges during the financial crisis, and this and that. So I think there's a fairly high degree of optimism, notwithstanding, you know, the challenges of the last year; there's reason for optimism- Mm-hmm ... along the lines that Erin and I are touching on. Yeah. And it's an interesting time where some of the highest value stuff is where some of the weakest, you know, parts of the macro are affecting. So, I can imagine the employees feel good about what you're doing day to day. Where does leverage peak again? I can't remember. Did it just peak last quarter, or is it still have one or two more quarters? We are sort of there, thereabouts. I think, Q2, Q3, you know, we're around, 3.5-4x leverage, 2.5-3x net. I won't be specific, but, you know, we're sort of in the range and moving through that now, which is the trajectory that we're on with the improving margin. So on the whole, you know, we from a capital allocation perspective, our priorities remain paying down the term loan, which is just under $300 million right now, as well as M&A, and the pace at which we pay down the term loan will be, to some degree, you know, measured by the balance of M&A. But we, just from a margin perspective and therefore leverage perspective, I think we're moving through the, you know, the more challenging timeframe. I think we've done the work. The work is behind us, and then the margin improvements are on their way, so. Yeah. Yeah, I mean, yeah, there's a case to be made. You can almost double profitability in a couple of years, and then leverage looks a lot easier. Yes, exactly. Exactly, exactly. And it's so tricky right now 'cause your valuation, I think, 0.9x revenue or, you know, something a little less than 1x. Accenture buys companies lately at 2.5x revenue. It'd be very attractive for you to buy your own stock, but with the leverage, you kinda just wanna create a little more safety, right? And so is that- I mean, do you ever think about... I mean, I, we have a really good trading desk from which you could buy back? But, We will talk about that. Yeah. And we have talked about a potentially stock buyback. We will continue to talk about it and think about it. You know, as we have revisited our approach, it really is about confirming the two priorities that I touched on, which is paying down the term loan and continued tuck-in acquisitions, M&A, to the extent, you know, there's a strategic fit to the business. So right now, that is our path, but you know, we are looking always for options. And you know, your point that you made just around valuation, we acknowledge, and so again, we'll continue to explore. Yeah. And we've got a minute left. I remember when you went public, you know, we had a lot of investors call, and we're, like, super excited. They're like: This is such a high-quality company, which you still are today. It's sometimes just the public markets are tricky, and macro is tricky. Anything else you kinda wanna just say about, like, the journey to being public or any other just comments you wanna make? You know, it's interesting because we did go public at a time where the markets had a particular valuation. So, good timing, bad timing, it depends, you know, how you wanna look at it. But on the whole, we are a very strong business, and we have, you know, I think as we talked about, we have a track record of strong organic growth, strong profitability, value for our clients, destination employer, and so again, we're very optimistic about the future and excited about what's ahead. And, you know, we'll be stronger when we get, you know, through the other side of what's been a challenge macro, so we're looking forward. Yeah. Well, great. Well, that's about all the time that we have, so, please join me in thanking Thoughtworks. Thank you, Dave.