• Revenue: $100.4 million, a 25.8% year-over-year growth.
• Non-GAAP EBITDA: $14.6 million, exceeding guidance range.
• Retail Vertical Revenue: 31.4% of total revenues, 28% year-over-year growth.
• Finance Vertical Revenue: 24.9% of total revenues, 144.3% year-over-year growth.
• TMT Vertical Revenue: 23.5% of total revenues, 1.8% year-over-year decline.
• GAAP Gross Profit: $37 million, 36.8% margin.
• Non-GAAP Gross Profit: $37.6 million, 37.4% margin.
• GAAP Net Income: $2.9 million, $0.03 per share.
• Non-GAAP Net Income: $10 million, $0.11 per share.
• Cash and Cash Equivalents: $325.5 million as of March 31, 2025.
• Total Headcount: 4,926 employees.
• Second Quarter Revenue Guidance: $100 million to $102 million.
• Full Year Revenue Outlook: $415 million to $435 million, 18.4% to 24.1% growth.

• Warning! GuruFocus has detected 4 Warning Signs with GDYN.

Release Date: May 01, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• Grid Dynamics Holdings Inc (NASDAQ:GDYN) reported first-quarter revenues of $100.4 million, exceeding their guidance range and representing a year-over-year growth of 25.8%.
• The company successfully implemented AI solutions for clients, resulting in significant improvements in key business metrics, such as a 9% increase in conversion rates and a 21% increase in click-through rates for a luxury retail group.
• Grid Dynamics Holdings Inc (NASDAQ:GDYN) is expanding its industry diversification strategy, developing AI and data engineering solutions for sectors like manufacturing, pharmaceuticals, fintech, and insurance.
• The company is focusing on operational excellence through AI, applying its expertise internally to drive efficiency and productivity gains across multiple business functions.
• Grid Dynamics Holdings Inc (NASDAQ:GDYN) is seeing strong momentum in AI-based search solutions, which serve as key entry points for new clients and expand into broader engagements.

Negative Points

• The company experienced a sequential decline in GAAP net income due to higher operating costs, including stock-based compensation.
• There was a year-over-year decline in the number of customers, primarily driven by efforts to rationalize the portfolio of non-strategic customers.
• The TMT vertical, which accounted for 23.5% of revenues, remained flat compared to the previous quarter and declined by 1.8% year-over-year.
• The 'Other' vertical, contributing 7.1% of total revenues, remained flat sequentially and declined 15.1% compared to the same quarter of the previous year.
• Grid Dynamics Holdings Inc (NASDAQ:GDYN) faces uncertainties in the global economic environment, which could impact client behavior and project deferrals.

Q & A Highlights

Q: Can you provide more detail on client behavior and the pace of client decision-making, especially regarding project deferrals or cancellations? A: Eugene Steinberg, Chief Technology Officer, explained that while clients are cautious about long-term projections, strategic projects continue uninterrupted. Anil Doradla, Chief Financial Officer, added that there have been no significant project deferrals, and the company remains confident in its guidance for the year, with a strong pipeline and contractually committed work.

Q: How are you approaching hiring in the second quarter and for the rest of the year? A: Eugene Steinberg noted that Grid Dynamics has a consistent hiring strategy, focusing on technical talent through internship programs and internal development. The company aims to balance utilization and bench optimization, ensuring a steady stream of skilled employees to meet project demands.

Q: Are you seeing any changes in client behavior, particularly in the retail and TMT verticals? A: Eugene Steinberg mentioned that while there is some caution due to the macro environment, there has been no significant shift towards cost-cutting over revenue-generating projects. Vasily Sizov, Senior Vice President, Head of Americas, added that key clients like Apple continue to engage in strategic projects.

Q: What is the potential for India as a delivery center, and can it become the largest location for Grid Dynamics? A: Eugene Steinberg highlighted the strategic importance of India, with Rajeev Sharma focusing on scaling technical talent in the region. While India is expected to grow significantly, the company maintains a global delivery strategy, balancing capabilities across regions.

Q: Can you discuss the dynamics of new client acquisitions and which verticals are seeing the most traction? A: Eugene Steinberg explained that new logos had minimal financial impact in Q1, but there was significant growth from accounts acquired last year. The company is seeing traction in diversified verticals, including fintech, technology, CPG, manufacturing, and healthcare.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.