All right, so we're gonna kick off here. This is a Thoughtworks session. I'm Bryan Bergin, Senior Analyst at TD Cowen, covering services, fintech, and payments. Very pleased to have with us from Thoughtworks today, Chris Murphy, Global Chief Client and Revenue Officer, as well as Rob Muller, Head of Investor Relations in the audience here. So thank you both for being here today. You're welcome. Thank you. Actually, Chris, you know, it's been a year, right? You were here last year as well. I was. A different role now. Yes. So I wanted to start with that as far as with this expanded or this new role, what's changed for you? Maybe talk about your day-to-day as far as, you know, from Head of North America before to now this Chief Client and Revenue Officer role. What is different in the role that you're running now at Thoughtworks? Sure, happy to. So as I think people are aware, in August of last year, we started a fundamental restructure of our organization, and a key part of that restructure was realigning our market organization, our demand organization, primarily around industry, which was a shift for us. The second thing we did was we moved from what had been historically a series of country-based markets towards a more global demand structure. So under the new structure, my role as the Chief Client and Revenue Officer is to oversee that global demand and market-based organization. It's been very well received by our clients. One of the things that we're seeing is with the renewed industry focus, that they're really appreciative of what that means in terms of our ability to bring our full suite of services to them within the context of their, their existing business challenges and their business context and domain. Okay. In terms of what it means for my role, there's really three aspects. So one is, as the name suggests, I spend a lot of time with our clients. That's really meeting them, understanding the context of their business, their business environment, and how we can map our services towards their, their needs. Mm-hmm. That was something which, in my previous role, looking after North America, I did a lot within the North American continent. Now, I continue that with North America, but also spend a lot of time in Europe and Asia- Pac in particular as well. The second aspect is I spend a lot of time with our teams, helping them, coaching them on our sales organization and on deal shaping and on building their capability, that type of thing you'd expect. And then third, we are also, of course, undergoing a continuing transformation of our demand organization and capabilities towards more outbound, well, as instead of traditionally inbound. And so, overseeing that transformation from a tooling perspective, from a process perspective, from an investment perspective. Lots to keep me busy. Yeah, for sure. So you're racking up a lot more miles- A lot more miles. A s you travel globally. And certainly good to hear as far as the strategic initiatives early on, sounding like they're gaining traction. Spending a lot of time with clients, and we're certainly getting into demand. But before we do that, you know, I guess a big news in the most recent quarter was the upcoming CEO change. Yes At the company. So, maybe in tune with the big strategic changes of the company, maybe talk a little bit about why now with a new CEO for Thoughtworks. And another aspect of Thoughtworks is certainly the, we'd say, the senior leaders of high tenure with the organization. So maybe add some views on why an outsider's perspective now is the right move for the company. Sure. Yes, well, I mean, as we all know, one of the key responsibilities of any board is succession planning and the, you know, choosing of the CEO. Sure. So our current CEO, Guo Xiao, has been at Thoughtworks 25 years, and he's been in the CEO role for 11 years. Long time. So it is a long time, and with any of these roles, you know that there will be a change at some point. It's up to the board to determine the appropriate time for that, which they did. But it is an exciting time for us, I believe, because, you know, as you know, we expect to return to sequential quarter-over-quarter growth in Q2. We're in a very exciting time for the market in terms of just the pace of technology change, the opportunities of AI. So it does seem that the timing is a good time to make that shift and to have the transition of CEO after an 11-year period. In terms of the tenure of our leadership team, there's clearly a strength in having a team that is used to working together, that has a long history of, you know, of the business and that understands the dynamics of working together. There's also a clear strength in having someone who comes with an outside perspective, who's able to add to that long tenure, who's got a lot of experience in terms of building businesses, in the public company realm, at scale. And in Mike's case, he really brings a passion for, technology, technology differentiation. He's been spending the last, two or three years in the entrepreneurial world, doing some really fascinating, you know, technologically, cutting-edge programs, et cetera. So we're excited about the opportunity to combine the strength of tenure, which is a real strength, with the strength of someone who's been there, done it before, brings some outside perspectives. When you put those two together, I think it creates quite a, you know, an exciting opportunity for us all. Yeah, very good. So we knew Mike from Accenture, so I'm, I'm excited to see how that comes together as, as he comes on board. Yeah, absolutely. Let's talk about demand now. So you're spending a lot of time with clients. Can you maybe start by framing the broader demand environment today and how it's compared to what you may have seen three, six, nine months ago? Sure. How have things changed? Yes, you know, what I would say in terms of the demand environment, what we're seeing is, I would say the word is, is stable. So if you looked towards the, I think, the second quarter or the third quarter of last year, we saw a number of unexpected ramp downs in that period. We're not seeing that anymore. Good. So it is a more stable environment. It's. And I would say, you know, compared to 90 days ago, it's neither better nor worse, it's just stable. Our focus from a demand perspective is really, we're not making a bet on when that will change. What we're doing is focusing on changing what we can internally to be more proactive and able to work within whatever macro environment the world throws at us. So that is things like, you know, we've been investing significantly over the last couple of years in building our outbound demand organization. And we've seen that in Q1, where, you know, the new bookings over 60% of those have been through our outbound efforts- Mm. Compared to the last time, you know, we met a year ago, was 30%, and that was up from 15%, you know, historical averages. So we're seeing great returns there. We're also continuing to invest and spend more time with our partnerships, particularly the cloud hyperscaler partnerships. And we've seen a doubling in terms of the, you know, the partner-influenced spend over a period of time, which is positive. And then, of course, the new logo acquisition, where we saw 49 new logos in the first quarter. So really focusing in on the macro will be what it'll be. We believe it's relatively stable at the moment, but still constrained. How can we really focus in on building that proactive demand organization that can enable us to thrive regardless of what the macro throws at us? Okay. With a lot more balance through all those various channels. Correct. Okay. So you are projecting actually, you know, sequential improvement here for the first time since 3Q 2022. So it sounds like the message here is, the environment is similar, but what we're doing is actually the driver of that change, the driver of that sequential improvement that you're guiding to. Yeah, correct. You know, as you know, we went through the restructure back in August. Mm. A restructure takes time to bed in, but a key part of that restructure was really the alignment of our global demand organization around the verticals to allow us to get close to our customers, and then supplement that with all the different aspects I've just talked through. That sequential growth is, I believe, the result of that. Okay, very good. Is that traction showing across geos and industries broadly? Are there any areas that are starting to lead? I think this continues to be relatively consistent with what we've been talking about, for the last several quarters as well. In terms of industry sector, we continue... Our strongest one for us continues to be the automotive, travel and transport, one. Mm. We're also seeing, and continue to see decent traction in the public sector and in the healthcare and life sciences, particularly life sciences. And then the trailing tech and business services, as you know, was one of the early sectors that was hit. We're seeing more stability there. Okay W hich is better than, you know, what we've seen for the last 12-18 months. And then, retail, most particularly discretionary retail, continues to be a bit challenged. So that's from an industry perspective. From a geographic perspective for us, Europe, particularly Continental Europe, excluding, you know, the U.K., is our strongest- Okay R egion. Singapore and India, quite strong. And then, you know, North America continues to be more constrained. Okay, okay. Maybe let's talk about the diversification that's coming throughout the organization now. Maybe dig in a little bit more on why, you know, historically, a bespoke development offering, you've leaned into other areas now, like DAMO, systems migration, package software implementation. Mm-hmm. Dig in a little bit more on, on what was the catalyst for that change. What, what's driving the investment in those various areas? Sure. Yeah, so for us at Thoughtworks, I guess like any technology company over the last 30 years, we have continued to evolve and add new offerings to our capability as technology evolves. Mm-hmm. So we have five key service lines: enterprise modernization platforms and cloud, customer experience and product, data and AI, digital transformation and operations, and our newest one, which is the DAMO Managed Services. DAMO Managed Services as the newest one is really a response to what we were being asked for by our customers. Because as I'm sure everyone appreciates, there has been a real shift over the last decade from this notion of, you build a, you know, an application as a project, and then you throw it over to be maintained and slowly degrade- Mm A nd for nothing to happen to it. What we're seeing in the industry is this notion of the long-lived digital asset, and this was sitting very awkwardly with the traditional structure of build and then maintain. And so our customers were very much along: "Well, we want a way for you, Thoughtworks, to stick with us through this longevity of asset, but we need so at a more commercially sustainable price point." So that was one of the clear, you know, drivers for us. And so with the DAMO Managed Services offering, we've really been able to take advantage of, you know, advances in automation and the AI space to be able to provide this longevity of relationship with our customers from both building it through to evolving it, through to maintaining it, on a longer term. Now, obviously, that is an expansion of an addressable market for us. Mm-hmm. In that it does enable us to now provide a new service to both existing and new customers. It also has the advantage for us that there is a longevity of contract with those managed services offerings. They tend to be multi-year. So while product build can be up and down, that relationship keeps you in the client for a longer time and thus increases stickiness. But one of the other interesting things we're discovering is that it is actually expanding the addressable market for our traditional services. So as an example, we were fortunate to win a new contract with a financial services provider recently, and it was in response to a request for a proposal, competitive environment, where about 30% of the total booking amount was DAMO services. Okay. But about 70% was the traditional build services that Thoughtworks is known for. Now, we were able to successfully bid for that, and in this case, win it, as a result of having that DAMO Managed Services offering. So it's an example of it's not just the DAMO services that, you know, potential incremental revenue for us, but the fact that we can now bid for things which, which previously we would have been excluded from. All right, so nice cross-sell benefit, more stability ultimately in the revenue stream. Correct. All good things are an early, clearly early proof of some of the success of that investment. Yes. So we've in the first quarter, I believe we signed 16 new DAMO contracts. Okay. And about 30% of our top 50 clients are taking that DAMO service from us. So definitely good early indicators there about that. Okay, how does... or does the competition change as you get into these new areas? I don't believe the competition fundamentally changes. Again, using the example of, I think we are able to compete more effectively with a broader range of bids than we would normally do. But it's not like we're competing with the commodity players per se. Our DAMO offering is still a digital native offering- Okay ... for, you know, in a high quality, differentiated way. Okay. Yeah, that was gonna be the next question as far as, is this getting you into something that is different than your historical value, probably thought of as a high- Mm Y ou know, premium provider, right? Is this different there in any way? The way I would really, you know, talk about our DAMO service offering, and I think what really resonates with our clients, is that Thoughtworks is known for really leading the industry in how it thinks about software development and modern digital products. Mm. What we're doing is we are bringing that thinking to the maintenance side of the world. Like I talked about earlier, one of the challenges we've seen is that these modern digital products have been thrown over the wall into traditional maintenance environments, and they've degraded, tech debt has built, and we've all seen in the media various examples of where that has led to bad outcomes for those organizations. So there is a real need in the market for a different way to think about having a high-quality, premium offering for that maintenance area that reflects the need to evolve and actually pay down technical debt over time, as opposed to increasing it. We're also at a fortuitous time in terms of the technology industry, in that there are the advances in opportunities through artificial intelligence and automation- Mm A re actually making this possible in ways that even three or six months ago were not. So our DAMO offering is a AI native offering for our clients. Okay, that's interesting. And modernizing a maintenance stream of work that's typically viewed commodity, but that, that's good to hear that it's really, you know, some, a different fundamental way of thinking about the offering, which is interesting. Yes. One thing that we often get from investors is the right level of growth for the industry. Mm-hmm. I guess if we think back, you know, this group was tethered to... The digital engineering group was tethered to a 20% organic trajectory. Yes. When you think back, and Thoughtworks were certainly performing in that level- Yes W hat drove that level of expansion before all the volatility that we're in currently? Sure. You know, as you pointed out, that is, you know, traditionally where Thoughtworks over our 30-year history has played. Obviously, there's macro cycles that move it up or down. Right. But over the longer term view, that is sort of a normalized expectation, historically and, you know, over the, you know, longer term for us. There are, you know, for us as a premium provider, we really look at the, you know, the top 2% or so of talent in the market. So that was actually always been a, you know, a constant level of, you know, factor into that, in that we can't, during the boom times, we don't just go and hire anyone. Right. And that's why we've gone that sort of 20% range. Now, I'm not gonna, I don't think any of us can call when, you know, when and how the macro is gonna change, but I think it's fair to say that, you know, technology is not going away. Technology advances are coming at us, you know, faster and faster. It's becoming more integral to business. Mm. The landscape is changing so fast, and clients need help in adapting to that. So, you know, our expectation is that over, you know, the medium to long term, a reversion to 20% is in a more normative environment, is not out of the question at all. Okay, yeah, 'cause the common question is: Is there something structurally different going forward?... anything besides just this, the macro, the tightness on purse strings that clients have right now? Doesn't sound like that, so. No, I don't believe so. If you look at the trend really over the last 30 years, the trend has been that, you know, technology continues to change and evolve. Mm. Companies, particularly, you know, large, traditional companies, need help and struggle with staying across that, you know, the rapidly changing technology landscape. You know, we like to talk about is you've got the, you know, the opportunity up here for what you can do with technology, and you've got most companies sort of sitting out here, and our role is to bridge the gap. Now, as technology shifts continue to happen, led at the moment by advances in data and AI, led in the future by, you know, whatever it may be, that gap, never goes away. Mm-hmm. The role of consultancies, particularly consultancies that play at the leading edge of technology like Thoughtworks, is always gonna be there to help companies bridge that gap that's led by this rapidly and ever-changing technical landscape. Okay, that's clear. Let's talk about pricing. So the company historically, premium levels, you know, we look at the business over $100,000 per capita level on the workforce and the revenue stream. But more recently, naturally, in a more challenged environment, pricing has come down. That's right. Like for like pricing, down high single digits year-over-year in the first quarter. Yes. What are the expectations as we go through the balance of 2024? Yes. I think there's been, you know, over the last year or two, there's been three factors I think have contributed to pricing. One is clearly, as we know, there's been more of a shift from onshore to offshore. Mm. So Thoughtworks, you know, we historically have been at about 25% of our population onshore, 75% offshore or nearshore, and that has shifted more towards 20, 80% over the course. Okay. Two is there's been some change in mix of services. So some of the more consulting-led services, which tend to be higher rates, are seen as more discretionary and more subject to deferral. And then finally, as you say, it has been a competitive environment. Yeah. We've seen things such as, you know, more things going to RFP, vendor consolidations, the rise of procurement, more aggressive behavior on behalf of some competitors, which have, you know, all combined to see that like to like reduction in rates. And this particularly, I think, we saw happen over the renegotiation of contracts over the financial year ending. Mm. So sort of Q4 and Q1, a renegotiation of a number of those contracts due to those factors. Now, some of that will obviously filter through throughout- Sure T he course of this year, but our belief is that the majority of that repricing has already occurred- Okay A nd that we will see some level of stabilization around that, around that pricing. Okay, so a higher mix of the offshore piece isn't necessarily gonna give you less pricing power. I think just like for like, it'll stabilize, and then- Yeah, in- Expect an improvement. I n the short term, it has an impact on our level of revenue compression- Sure 'C ause you're moving people from onshore to offshore. Right. But over the medium term, it actually has the advantage of, you know, being margin accretive. Okay. But there is that adjustment period. Okay, and then as you think about broader contracting terms, has anything changed as far as, you know, clients asking for more fixed or outcome-based relative to the historic time and material structures? Anything changing there? There is a small shift. So, you know, we've always had a spectrum of contracting models. Yeah. Whether that be, you know, the majority of our services have been time and material, but then there's a portion of them that are fixed price, there's a portion that are outcome based. And as we introduce new services like, DAMO Managed Services, that obviously has more of an annuity basis on it as well. What we've seen over the... as there's a period of, I guess, more constrained spending patterns from some of our clients, we've certainly seen more of a desire for skin in the game. Mm-hmm. Whether that be, providing a fixed price opportunity, whether that be, looking at some sort of risk reward, type, outcome-based model. And obviously, there's also the opportunity with the rise of AI-enabled software development to, you know, undertake more fixed price type gigs to capture more of the, you know, upside on the efficiency savings. Why don't we dig in now on that point there? Yeah. I was gonna ask, obviously. I have to ask Gen AI questions here- Yeah I n these times, but maybe elaborate on what you are seeing from a Gen AI demand standpoint and how you are applying it in delivery? Sure. So there's a couple of answers to that. So one is, I mentioned earlier that one of our service lines is data and AI. And, you know, that cap for us covers areas like data strategy, data governance, data platforms, et cetera. And we are seeing, you know, a significant desire from our clients, in particular, as they start to think about Gen AI. The pull-through effect is significant upon the building out of data platforms, the recognition that we're not quite sure what we're going to build yet, but we know whatever it is, it's going to rely upon good, high-quality data that's accessible, that has, you know, clear provenance and quality. So there is a lot of interest we're seeing in data platforms, and obviously, we have a thought leadership position in data as a product Data Mesh. It's also seeing a pull-through into modernization- Mm Be cause customers are seeing whether it's modernizing their data platforms or modernizing their technology landscapes in general, now is the time to really be taking advantage of that. So in terms of our, you know, work, we continue to do a number of proofs of concept with customers to help, you know, prove out this ever-changing landscape. And of course, even the proof of concept, which was done three months ago, is in some instances out of date as, you know, new large language models come onto the market and then, so there's this constant testing by our clients of what it is. We are seeing some of those start to move into production through the build environment. So that's, I think, some level of shift from last year, where it was predominantly proofs of concept. But the really fascinating thing is it's now starting to permeate across everything we do. So the notion of what is AI work and what isn't AI work is kind of really merging. So, you know, a large amount of the software development work that we do with our customers is now using some element of AI enablement. Mm. So whether that be looking at, you know, how one interrogates existing complicated code bases you're integrating with, whether that be how you think about understanding existing domains, writing user requirements, setting up testing environments, creating test data, or your more traditional, you know, sense of using Copilots to accelerate the creation of code. This is becoming a de facto standard part of what we do on, you know, almost every engagement we have where we're writing software. If you look at the modernization part of our business, we're seeing real opportunities in understanding just really complicated code bases. Like, some of our clients have pieces of existing code that, you know, like millions of lines of code, and traditionally you'd have to rely upon, you know, some person who's been around there 30 or 40 years, you know, sitting in a back room, and you can't understand. They wrote the original code 30 or 40 years ago, and the way to figure it out is through asking them questions. Now you can interrogate it in real language and get answers in real language, which can really accelerate the enterprise modernization, and so that's, you know, really had an involvement. We talked about DAMO Managed Services, which is AI led. There are certainly projects which are being, you know, Gen AI led projects to understand what does this mean for us in terms of being able to take advantage of it, whether to drive efficiency or to create new products. We're continuing to see the proof of concepts there, some move into production, but also just this spread of the technology into everything we do. Okay a nd how it enables us to do it better and more effectively and in ways that weren't possible before. Okay. Yeah, certainly readiness is a big component of this. When you step back and think about your client base, how many are ready today to actually implement a Gen AI solution? Not talking just a proof and a test and a science project, but at scale, when you think about that. Mm. I think there are multiple aspects to what readiness means. You know, a couple of them are what I talked about just earlier. It's around readiness of your technology platforms generally, to be able to move, you know, rapidly and bring new products in with it. And there's the readiness of your data set and confidence in the data set and understanding of, you know, the ethical boundaries around it. So there are clients that have been investing in their data platforms for years, and I think they're further up the curve to be able to really then embrace and bring products to the market on that. And there are those that have just started the journey of modernizing the data, platforms and the data provenance, and they've got further to go. So that's one side of it. On the other side is there's really the ability to understand, well, is there a business case here for us? Right. So if you've got a call center, for instance, there's probably a decent business case to understand, you know, how you automate aspects of that call center. If you've got direct customer interactions, chatbots and things are reasonably mature. Once you start moving outside of that, you're getting into more, you know, experiential areas. Mm. I think one advantage that Thoughtworks has in this space is that for the longest time, we've really dealt with this notion of thin vertical slices, so that you can bring a product to market in small, complete vertical increments, which allow our clients to really move more quickly into productionization of ideas to test them out in the market in a real, you know, substantive way, but without, you know, too much upfront investment. Okay. Okay. Now, hearing a lot about opportunity service, certainly for a services business here and consultancies, but there's the other side of the coin, the questions about the threats and the risks to development- Mm-hmm If it's embedded more and more, and we hear these big numbers being thrown out on developer productivity. Does that cause a threat to- Mm T o the growth opportunity within the group? How do you think about that? Yes, we've just released a new tool called Haiven, and that is actually allowing our developers and our clients to look across the full spectrum of, tools and large language models to take advantage in the software development life cycle. So certainly our view is that this is something which is a, you know, a net, a net win. If we look friend and foe- Okay It 's a friend. Okay. It enables us to be more efficient and effective for our clients. And if you look at the, you know, throughout history, software development has been getting more and more, effective for the last decades. But as you get more effective, there's more things you can do, and so more code gets created, and that's more of tomorrow's legacy. More opportunities are there through, new things you can do, and that fills up the backlog. So certainly our view is that, you know, AI and the software development life cycle, it's an area we have a strength. It's, it's a big opportunity for us, and we don't see, certainly in the, in the short to medium term, that there'll be less code in the world. All right. Very good. Well, I know we're out of time here.