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GRID DYNAMICS HOLDINGS, INC. (GDYN)·Q1 2025 Earnings Summary

Executive Summary

  • Q1 2025 revenue was $100.4M (up 25.8% YoY; flat QoQ), slightly above the company’s $98–$100M outlook and above SPGI consensus; non-GAAP EPS was $0.11, ahead of consensus, while non-GAAP EBITDA was $14.6M, above guide midpoint (consensus values marked with asterisks below; SPGI)＊.
  • Mix improved: Finance became the #2 vertical at 24.9% of revenue (up 144% YoY), Retail remained #1 at 31.4%; TMT was 23.5% and flat QoQ .
  • Management maintained FY25 revenue guidance of $415–$435M (midpoint +21.2% YoY); Q2 revenue guide is $100–$102M with non-GAAP EBITDA of $12.5–$13.5M, reflecting investment timing and fixed-price milestone normalization .
  • Key calls outs driving narrative: record billable engineering headcount (leading indicator), stronger enterprise-scale AI engagements, robust hyperscaler partnerships (notably Google), and M&A integration in finance vertical; non-GAAP outperformance partly benefited from fixed-price milestone timing in Q1 .

What Went Well and What Went Wrong

  • What Went Well

    • “Another record quarter of revenues” with $100.4M, slightly above outlook; record billable engineering headcount as a leading indicator of future growth .
    • Finance vertical momentum: +7.9% QoQ and +144.3% YoY to 24.9% of revenue, aided by fintech/insurance demand and 2024 acquisitions; Retail remained the largest at 31.4% .
    • AI moving from PoCs to enterprise-scale implementations; partnerships robust with growing data/AI pipelines; 16% of revenue partner-influenced in Q1; strong Google Next engagement .

  • What Went Wrong

    • EBITDA margin eased QoQ (Q1 14.5% vs Q4 15.6%) as the company leaned into AI training/scaling and bench for upcoming demand; Q2 EBITDA guide implies another downtick before improving through the year .
    • TMT was flat QoQ and -1.8% YoY as a vertical; Healthcare & Pharma and “Other” were flat QoQ and down YoY, with softness tied to hospitality-related customers .
    • FX presented modest headwinds (~38 bps QoQ; ~26 bps YoY), slightly dampening growth conversion to reported results .

Financial Results

Consolidated P&L and Margins (chronological order: oldest → newest)

MetricQ1 2024Q3 2024Q4 2024Q1 2025
Revenue ($USD Millions)$79.817 $87.435 $100.282 $100.415
GAAP Gross Margin %34.7% 37.4% 36.9% 36.8%
Non-GAAP Gross Margin %35.3% 38.0% 37.5% 37.4%
GAAP Diluted EPS ($)($0.05) $0.05 $0.05 $0.03
Non-GAAP Diluted EPS ($)$0.10 $0.10 $0.12 $0.11
Non-GAAP EBITDA ($USD Millions)$10.292 $14.813 $15.635 $14.609
  • YoY: Revenue +25.8%, GAAP gross margin +210 bps, non-GAAP gross margin +210 bps; GAAP net income improved to $2.9M from a ($3.9M) loss; non-GAAP net income $10.0M vs $7.6M .
  • Non-GAAP adjustments in Q1 included $10.743M stock-based comp, $0.438M transaction/transformation costs, $0.344M geographic reorg, $0.402M restructuring, and ($1.301M) other income; tax impact of adjustments was ($3.586M) .

Segment (Vertical) Revenue Mix

VerticalQ1 2024 ($M, %)Q1 2025 ($M, %)
Retail$24.629, 30.9% $31.521, 31.4%
Finance$10.243, 12.8% $25.028, 24.9%
Technology, Media & Telecom$24.033, 30.1% $23.602, 23.5%
CPG/Manufacturing$9.559, 12.0% $10.771, 10.7%
Healthcare & Pharma$3.009, 3.8% $2.405, 2.4%
Other$8.344, 10.4% $7.088, 7.1%
Total$79.817, 100% $100.415, 100%

KPIs and Balance Sheet

KPIQ1 2024Q4 2024Q1 2025
Billable engineering headcount (total employees)3,892 4,730 4,926
Cash & cash equivalents ($M)—$334.7 $325.5
Operating cash flow ($M, quarter)$3.2 —$9.4
Top 5 customers as % of revenue39.6% —35.6%
Top 10 customers as % of revenue55.3% —56.6%
Customers (count)210 211 204

Actuals vs SPGI Consensus (revenue, EPS)

MetricQ3 2024Q4 2024Q1 2025
Revenue actual ($M)$87.435 $100.282 $100.415
Revenue consensus ($M)$85.1906＊$96.0008＊$98.3552＊
Non-GAAP EPS actual ($)$0.10 $0.12 $0.11
Primary EPS (consensus) ($)$0.08994＊$0.09938＊$0.08807＊

Values with ＊ are retrieved from S&P Global (Capital IQ).

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Revenue ($M)Q2 2025—$100–$102 New
Non-GAAP EBITDA ($M)Q2 2025—$12.5–$13.5 New
Basic shares (M)Q2 2025—84–85 New
Diluted shares (M)Q2 2025—88–89 New
Revenue ($M)FY 2025$415–$435 (2/20/25) $415–$435 Maintained

Management reiterated FY25 revenue guidance (midpoint $425M, +21.2% YoY) and introduced Q2 guide; no OpEx, OI&E, tax rate, or dividend guidance was provided .

Earnings Call Themes & Trends (Q3 2024 → Q4 2024 → Q1 2025)

TopicQ3 2024 (Q-2)Q4 2024 (Q-1)Q1 2025 (Current)Trend
AI/technology initiativesAI pipeline >100, +50% QoQ; record billable engineers AI pipeline ~130, +30% QoQ Shift from PoCs to enterprise-scale deployments; agentic AI platforms; AI-enabled dev tools Accelerating enterprise adoption
Hyperscaler partnershipsScaling partner-influenced revenue —16% of revenue partner-influenced; strong Google momentum (Google Next) Strengthening
Finance vertical+12.7% QoQ; +94% YoY +63.8% QoQ; +180.1% YoY 24.9% of revenue; +7.9% QoQ; +144% YoY; 3 of top 10 are financials Rapid expansion
Regional delivery—Record headcount; “follow-the-sun” model; integrating JUXT & Mobile Computing India scaling; APAC leadership; LatAm integration Expanding footprint
Macro/tariffs——Minimal impact observed; client projects stable; cautious outlook Stable with caution
Pricing models——More fixed-capacity programs; still use fixed-price; outcome-based open Evolving
Customer concentration——Top 5 35.6%, Top 10 56.6%; rationalizing nonstrategic customers Slightly diversified Top 5

Management Commentary

  • “I am delighted to report another record quarter of revenues. We also achieved our highest-ever billable engineering headcount, a leading indicator of future growth.” — CEO Leonard Livschitz .
  • “Our first quarter results exceeded our expectations, both on revenue and non-GAAP EBITDA… we benefited from timing of revenue recognition with some of our fixed price contracts in line with project milestone completions.” — CFO Anil Doradla .
  • “Our AI initiatives continue to gain significant traction… we’re seeing a clear shift from proof-of-concept to enterprise scale implementations that deliver measurable business outcomes.” — CEO Leonard Livschitz .
  • “Partnership-influenced revenue represented 16% of our total revenue… we anticipate this contribution to accelerate throughout 2025.” — CEO Leonard Livschitz .

Q&A Highlights

  • Client behavior/visibility: No major project deferrals noted; longer-term, programmatic engagements underpin FY guide; confidence tempered by macro prudence .
  • 2H ramp drivers: Working days tailwind, record billable headcount extrapolation, ramps from signed deals; selective ramp-downs possible in isolated accounts .
  • Margins cadence: Q1 margin aided by fixed-price milestone timing; Q2 margins reflect AI investments/bench; expectation for margin expansion as year progresses .
  • Delivery footprint & hiring: India becoming a major hub; “follow-the-sun” model; internship-to-billable pipeline supports pyramid rebalancing; mid-level hiring emphasis .
  • Commercial models for AI: Shift from small POCs to fixed-capacity, roadmap-led programs; open to fixed-price/outcome-based where appropriate .

Estimates Context

  • Q1 2025 beats: Revenue $100.4M vs $98.36M consensus＊; non-GAAP EPS $0.11 vs $0.088 consensus＊ .
  • Prior quarters: Q4 2024 revenue $100.3M vs $96.00M consensus＊; EPS $0.12 vs $0.099 consensus＊ .
  • Forward lens: Q2 2025 consensus revenue $101.32M＊ vs guide $100–$102M; FY25 consensus $411.6M＊ is below the company’s $415–$435M guide range, implying potential upward revisions if execution continues＊ .

Values with ＊ are retrieved from S&P Global (Capital IQ).

Key Takeaways for Investors

  • Quality beat: Revenue and non-GAAP EPS topped both guide and SPGI consensus; FY25 revenue guide maintained, signaling confidence despite macro caution .
  • Mix shift upside: Finance now #2 vertical (24.9%) with triple-digit YoY growth aided by acquisitions; reduces reliance on TMT and improves diversification .
  • AI at scale: Customer shift from PoCs to enterprise rollouts plus 16% partner-influenced revenue (notably Google) positions GDYN to capture larger, longer-duration programs .
  • Investment phase near term: Q2 margin guide reflects AI training/bench investments and normalization of milestone timing; management still targets margin expansion through 2025 .
  • Execution KPIs positive: Record billable engineering headcount and Q1 operating cash flow improvement ($9.4M vs $3.2M LY) support 2H ramp narrative .
  • Stock reaction catalysts: Maintained FY guide vs below-midpoint SPGI FY consensus＊, finance-vertical outperformance, and enterprise AI traction; watch Q2 margin cadence commentary and large-deal ramps ＊.
  • Risk checks: FX modestly adverse; pockets of TMT/Other/Health softness; macro caution persists, but no major deferrals reported; concentration gradually improving .

Citations

  • 8-K and Exhibit 99.1 press release:
  • Q1 2025 earnings call transcript:
  • Press releases (prior quarters): Q4 2024 ; Q3 2024

Note on SPGI consensus: All values marked with ＊ are retrieved from S&P Global (Capital IQ).