Executive Summary

Record revenue of $101.1M (+21.7% YoY; flat QoQ) and GAAP diluted EPS of $0.06; non-GAAP diluted EPS of $0.10. Management highlighted AI-first strategy with AI & Data at 23% of H1 organic revenue, growing ~3x faster than overall organic business .
Versus Wall Street: EPS modestly beat consensus ($0.10 vs $0.098*) while revenue was slightly below ($101.1M vs $101.3M*); non-GAAP EBITDA of $12.7M was within the company’s guided range . Values retrieved from S&P Global.*
Guidance: Q3 revenue $103–$105M and non-GAAP EBITDA $12–$13M; full-year 2025 revenue maintained at $415–$435M .
Key catalysts: accelerating enterprise AI adoption, finance vertical strength (revenues doubled YoY), and expanding hyperscaler partnerships (Google traction in Europe). Watch for margin trajectory given FX headwinds, increased engineering investments, and fixed-price contract timing .

What Went Well and What Went Wrong

What Went Well

AI-first execution and pipeline momentum: “AI and data was 23% of the company's overall organic revenue… growing almost three times faster than our overall organic business” . CEO emphasized enterprise-wide AI adoption and Grid’s role as an AI-native partner .
Vertical strength and mix: Finance became the second-largest vertical at 25.1% of revenue, doubling YoY; TMT up 6.7% QoQ and 8.4% YoY; Retail remained largest at 29.2% .
Partnerships and delivery scale: Partnerships influenced 17.9% of Q2 revenue with growing traction, notably with Google in Europe; headcount rose to 5,013 (+26.6% YoY), supporting growth and follow-the-sun delivery .

What Went Wrong

Gross margin compression: GAAP gross margin fell to 34.1% (from 36.8% in Q1 and 35.6% in Q2’24), driven by FX headwinds, increased engineering hiring ahead of growth, and fixed-price contract timing .
FX headwinds and cost impacts: Net FX impact approx. $1.4M; non-GAAP EBITDA margin declined to 12.6% (from 14.5% in Q1 and 15.6% in Q4) on FX and lower gross margin .
Customer count rationalization: Total customers declined to 194 (from 204 in Q1 and 211 in Q4) as the company exited non-strategic smaller accounts; minor infant mortality through hyperscaler-led trials noted .

Financial Results

Metric	Q4 2024	Q1 2025	Q2 2025
Revenue ($USD Millions)	$100.3	$100.4	$101.1
GAAP Diluted EPS ($)	$0.05	$0.03	$0.06
Non-GAAP Diluted EPS ($)	$0.12	$0.11	$0.10
GAAP Gross Margin (%)	36.9%	36.8%	34.1%
Non-GAAP Gross Margin (%)	37.5%	37.4%	34.7%
Non-GAAP EBITDA ($USD Millions)	$15.6	$14.6	$12.7
Non-GAAP EBITDA Margin (%)	15.6%	14.5%	12.6%

Q2 2025 vs Wall Street Consensus (S&P Global):

Metric	Actual	Consensus	Surprise
Revenue ($USD Millions)	$101.10	$101.32*	-$0.22M (≈-0.2%)*
Primary/Normalized EPS ($)	$0.10	$0.098*	+$0.002*
Primary EPS - # of Estimates	—	5*	—
Revenue - # of Estimates	—	5*	—
Values retrieved from S&P Global.*

Segment/Vertical Mix (Q2 2025):

Vertical	Revenue ($USD Thousands)	% of Revenue
Retail	$29,557	29.2%
Finance	$25,386	25.1%
Technology, Media & Telecom	$25,188	24.9%
CPG/Manufacturing	$10,604	10.5%
Healthcare & Pharma	$2,556	2.5%
Other	$7,804	7.8%
Total	$101,095	100.0%

Selected KPIs:

KPI	Q4 2024	Q1 2025	Q2 2025
Total Headcount	4,730	4,926	5,013
Top 5 Customer Concentration	35.6%	35.6%	37.5%
Top 10 Customer Concentration	55.8%	56.6%	57.3%
Total Customers	211	204	194
Cash & Cash Equivalents ($USD Millions)	$334.7	$325.5	$336.8
Operating Cash Flow (YTD, $USD Millions)	—	—	$23.7 (H1)

Non-GAAP adjustments and impact (Q2):

Non-GAAP net income $8.3M; add-backs include stock-based comp $6.7M, D&A $4.9M, transaction costs $0.3M, geographic reorg $0.5M, restructuring $0.5M, and other items offset (including interest/other income) $(4.36)M, with tax impact $(0.59)M .

Guidance Changes

Metric	Period	Previous Guidance	Current Guidance	Change
Revenue	Q2 2025	$100–$102M (May 1)	Actual: $101.1M	Achieved within range
Revenue	Q3 2025	N/A	$103–$105M	New
Non-GAAP EBITDA	Q3 2025	N/A	$12–$13M	New
Basic/Diluted Shares	Q3 2025	N/A	Basic 84–85M; Diluted 87–89M	New
Revenue	FY 2025	$415–$435M (Feb 20; maintained May 1)	$415–$435M	Maintained

Earnings Call Themes & Trends

Topic	Previous Mentions (Q4’24 and Q1’25)	Current Period (Q2’25)	Trend
AI/technology initiatives	GigaCube priorities; strong AI pipeline; agentic platforms; accelerators; AI across verticals	AI & Data 23% of H1 organic revenue; GAIN AI-first SDLC model; rapid prototyping; enterprise agentic platforms; physical AI robotics	Accelerating
Partnerships/hyperscalers	18% of 2024 revenue tied to partners; growing 2025 traction (Google)	Partnership influence 17.9% in Q2; increasing traction esp. Google in Europe	Stable to rising
Pricing/utilization	Fixed-price milestones boosted Q1; investments pressuring margins; aim for margin expansion over 2025	Mixed pricing across regions; GAIN favors fixed-price/outcome models; balancing bench vs growth; near-term margin pressure	Mixed; evolving
Customer rationalization	Customer count declines due to focus on strategic accounts	Continued rationalization; 194 customers; focus on enterprise and hyperscaler-led engagements	Ongoing
Macro/tariffs	2024/early 2025 macro caution but resilient demand; minimal tariff impact in Q1	Traditional digital transformation spend cautious; innovation-led AI projects prioritized	Caution persists; innovation offset
Regional trends/India	India among top delivery locations; scaling AI capabilities; APAC leadership	India now top country by headcount; hub for multi-agent/multimodal platforms; internships strong	Strengthening

Management Commentary

CEO: “Grid Dynamics is aligning every aspect of its business with an AI-first approach… AI and data was 23% of the company's overall organic revenue… growing almost three times faster than our overall organic business” .
CTO: “We are methodically building on a strong foundation… delivering production-ready solutions… building considerable experience across agentic AI platforms… and AI-first software delivery lifecycle” .
CFO: “We recorded the second quarter revenue of $101.1 million… Non-GAAP EBITDA came in at $12.7 million… Net FX impact… approximately $1.4 million” .
COO on GAIN and margins: focus on revenue per person uplift via AI platformization and solution-based engagements; margin discussion framed around profit and scalability .

Notable press releases:

SmartRay AI Robotic Inspection Platform (with Wandelbots): showcases physical AI expansion into robotics and industrial workflows, reducing planning/implementation time and costs .
Q2 earnings press release: reiterates financials and guidance .

Q&A Highlights

Pipeline and guidance confidence: Low-end FY guidance achievable via working-day tailwinds and acquisitions; robust Q2-created pipeline; cautious on macro yet optimistic for H2 ramp .
Pricing/utilization/hiring: Mixed pricing dynamics by region; GAIN facilitates fixed-price models and faster sales cycles; balancing cost discipline with investments in AI platforms and specialized talent .
GAIN adoption and financial profile: Early fixed-price use; piloting full commercial model with top customers; expected to increase revenue per person and accelerate innovation cycles .
Customer rationalization: Focus on enterprise accounts; declines largely from smaller acquisition-derived clients; strict client definition (no revenue in quarter not counted) .
Partnerships: Growing traction beyond hyperscalers, engaging major platform providers and AI startups; Google traction in Europe highlighted .

Estimates Context

Q2 2025: EPS modest beat; revenue slight miss vs consensus. Non-GAAP EBITDA within the company’s guided range, though consensus frameworks may differ in EBITDA methodology . Values retrieved from S&P Global.*
Q3 2025: Company guides $103–$105M revenue vs consensus ~$103.7M* (guidance midpoint slightly above); non-GAAP EBITDA $12–$13M (no direct S&P non-GAAP EBITDA consensus) . Values retrieved from S&P Global.*
FY 2025: Company maintained $415–$435M revenue vs consensus ~$411.6M* (guide above consensus midpoint), and normalized EPS consensus of ~$0.395* (company did not provide EPS guidance) . Values retrieved from S&P Global.*

Key Takeaways for Investors

Revenue durability with AI-first pivot: Enterprise AI programs are moving beyond POCs to platforms, driving pipeline strength and underpinning the FY revenue guide maintenance despite macro caution .
Watch margin cadence: Near-term gross margin and EBITDA margin pressure from FX, hiring ahead of demand, and fixed-price timing; management targets margin improvement over 2025 as utilization and solution pricing normalize .
Vertical diversification reduces risk: Finance strength (doubling YoY) and TMT/Other growth offset retail softness (home improvement) and healthcare decline; acquisitions broaden banking exposure .
Partnerships as growth accelerant: Hyperscaler-led engagements (Google in Europe) and ecosystem expansion (robotics/physical AI) should support deal flow and entry into new accounts .
Customer quality over quantity: Declining customer count reflects strategy to focus on scalable enterprise relationships; top-5/top-10 concentration stable-to-improving .
Near-term trading setup: Modest EPS beat vs slight revenue miss and maintained FY guide may favor stability; incremental catalysts include Q3 execution vs guide and AI platform wins translating to revenue per person uplift .
Medium-term thesis: If GAIN model and agentic platforms scale, expect improved pricing power, faster sales cycles, and margin recovery; monitor FX sensitivity and fixed-price contract mix .

Acronyms and basis notes: Non-GAAP metrics exclude stock-based compensation, transaction/transformation costs, geographic reorganization, restructuring, and other items as detailed in reconciliation . All company financials USD. S&P Global consensus values noted with asterisks and retrieved from S&P Global.*

GRID DYNAMICS HOLDINGS, INC. (GDYN)·Q2 2025 Earnings Summary