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GD

GRID DYNAMICS HOLDINGS, INC. (GDYN)·Q4 2024 Earnings Summary

Executive Summary

  • Q4 2024 revenue reached $100.3M, up 14.7% q/q and 28.5% y/y; GAAP diluted EPS was $0.05 and non-GAAP diluted EPS was $0.12, with non-GAAP EBITDA of $15.6M, marking record quarterly revenue and profitability .
  • Revenue and EBITDA exceeded the company’s October outlook ($95–$97M revenue and $13.5–$15.5M EBITDA); management also stated results beat Wall Street expectations on revenue and non-GAAP EBITDA .
  • FY 2025 revenue guidance initiated at $415–$435M (+18.4% to +24.1% y/y; midpoint +21.2%) and Q1 2025 revenue guidance at $98–$100M with non-GAAP EBITDA $12.9–$13.9M; diluted share count guided to 89–90M in Q1 .
  • Strength was broad-based, with Finance up +63.8% q/q and +180.1% y/y; AI pipeline expanded to >130 opportunities (+30% q/q), and the company highlighted hyperscaler partnerships (18% of 2024 revenue) as growth drivers .
  • Balance sheet strengthened by a follow-on offering in Q4 generating $107.6M net proceeds; cash and cash equivalents rose to $334.7M by year-end .

What Went Well and What Went Wrong

What Went Well

  • Achieved highest quarterly revenue in company history ($100.3M) with gross margin of 36.9% and non-GAAP gross margin of 37.5%; non-GAAP EBITDA of $15.6M beat high end of guidance .
  • Finance vertical surged (+63.8% q/q, +180.1% y/y), driven by fintech and insurance demand and recent acquisitions; CPG/Manufacturing also grew (+14.8% q/q, +16.4% y/y) .
  • Management emphasized AI momentum and stated results exceeded both company outlook and Wall Street expectations; “record-breaking results were fueled by customers, both existing and new” (CEO) .

What Went Wrong

  • Non-GAAP EBITDA margin fell q/q (15.6% vs. 16.9%), due to lower gross margin % and higher OpEx tied to organic growth and acquisitions .
  • Other verticals declined 11.3% y/y; Healthcare & Pharma mix remained small (2.4% of Q4 revenue) .
  • Operating expenses increased (G&A, Sales & Marketing, R&D) and GAAP operating margin remained modest (income from operations $1.3M) despite scale-up .

Financial Results

Quarterly Performance vs Prior Periods

MetricQ2 2024Q3 2024Q4 2024
Revenue ($USD Millions)$83.0 $87.4 $100.3
GAAP Diluted EPS ($USD)$(0.01) $0.05 $0.05
Non-GAAP Diluted EPS ($USD)$0.08 $0.10 $0.12
GAAP Gross Margin %35.6% 37.4% 36.9%
Non-GAAP Gross Margin %36.2% 38.0% 37.5%
Non-GAAP EBITDA ($USD Millions)$11.7 $14.8 $15.6

Actual vs Q4 2024 Company Guidance

MetricPrior Guidance (from 10/31/24)Actual Q4 2024Result
Revenue ($USD Millions)$95.0–$97.0 $100.3 Bold beat vs guidance
Non-GAAP EBITDA ($USD Millions)$13.5–$15.5 $15.6 Bold beat vs guidance

Segment Revenue Mix (Q4 2024)

VerticalRevenue ($USD Millions)% of Revenue
Retail$32.7 32.6%
Technology, Media & Telecom$23.6 23.5%
Finance$23.2 23.1%
CPG/Manufacturing$11.3 11.2%
Healthcare & Pharma$2.4 2.4%
Other$7.1 7.2%
Total$100.3 100.0%

KPIs

KPIQ2 2024Q3 2024Q4 2024
Cash & Cash Equivalents ($USD Millions)$256.0 $231.3 $334.7
Total Headcount3,961 4,298 4,730
Top 5 Customers (% of Revenue)—39.8% 35.6%
Top 10 Customers (% of Revenue)—59.2% 55.8%
Total Customers—201 211

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Revenue ($USD Millions)Q1 2025N/A$98.0–$100.0 Initiated
Non-GAAP EBITDA ($USD Millions)Q1 2025N/A$12.9–$13.9 Initiated
Basic Shares (Millions)Q1 2025N/A84.0–85.0 Initiated
Diluted Shares (Millions)Q1 2025N/A89.0–90.0 Initiated
Revenue ($USD Millions)FY 2025N/A$415.0–$435.0 (midpoint $425.0) Initiated

Earnings Call Themes & Trends

TopicPrevious Mentions (Q2 2024)Previous Mentions (Q3 2024)Current Period (Q4 2024)Trend
AI initiatives & pipeline~30 solutions/services for Fortune 500; focus on revenue uplift and cost reduction AI pipeline >100 (+50% q/q); record billable engineers AI opportunities >130 (+30% q/q); momentum in search, agentic systems, supply chain optimization Accelerating
Hyperscaler partnershipsNot highlighted quantitatively“Scaled partnership influenced revenues” 18% of 2024 revenue via hyperscalers; deeper strategic alignment expected in 2025 Strengthening
Demand/bookingsStable to improving in H2 setupStrong demand and momentum entering 2025 Bookings/pipeline near post-COVID highs; broad-based vertical strength Improving
Geographic delivery (“Follow-the-sun”)Global delivery footprint expandingContinued scaling; acquisitions in UK/Argentina announced 19 countries; India now a top-3 delivery location; Argentina operations scaling Expanding
Acquisitions (JUXT, Mobile Computing)N/AJUXT (UK) and Mobile Computing (Argentina) to enhance BFSI and Americas capacity Rapid integration driving new revenue opportunities in finance, Americas delivery Integration-led growth
Vertical mix dynamicsRetail/TMT largest; Finance growing Retail/TMT largest; Finance +94% y/y Finance +63.8% q/q, +180.1% y/y; CPG/Manuf +14.8% q/q, +16.4% y/y Broad-based strength

Management Commentary

  • CEO: “Grid Dynamics delivered another strong quarter, exceeding our own outlook and Wall Street expectations on revenue and non-GAAP EBITDA... we achieved an important milestone of $100 million revenue.”
  • COO: “In Q4, we identified 130 AI opportunities, a 30% increase over the third quarter... Our top AI initiatives include search, agentic systems and supply chain optimization.”
  • CFO: “Our non-GAAP EBITDA of $15.6 million exceeded our guidance range... the performance was driven by strength from both our organic business and recent acquisitions.”
  • CEO: “For 2025, we expect our revenues to be in the range of $415 million to $435 million, with a potential growth of 20% plus over 2024.”
  • SVP Americas: AI projects are delivering measurable outcomes (e.g., catalog enrichment driving >5% revenue uplift for a large food distributor) .

Q&A Highlights

  • Outperformance vs peers and 2025 growth drivers: Management cited broad-based strength (TMT, CPG, fintech), deeper hyperscaler partnerships, and strong AI implementations; growth expected from top 5 and broader client base .
  • AI revenue contribution: AI has become a component in most large programs, shifting focus from cost optimization to revenue generation initiatives; long-standing AI expertise supports demand capture .
  • Margin outlook: Management guided not to model margin compression in 2025 vs 2024; more color to come through the year .
  • SG&A and partnerships: Expect qualitative benefits from hyperscaler collaboration; revenue growth expected to outpace OpEx as the go-to-market scales .
  • Pricing/utilization: Comfortable pricing position through value-based delivery and fixed-bid offerings; utilization upside exists with active retraining and bench churn discipline .
  • Visibility and deal scope: Larger, programmatic deals and increased RFP wins underpin confidence in FY25 guidance .

Estimates Context

  • S&P Global consensus estimates for GDYN (EPS, revenue) were unavailable due to an API request limit at the time of this analysis; we therefore cannot provide a quantitative vs-consensus comparison at this time. Values would normally be retrieved from S&P Global.
  • Management stated the quarter exceeded Wall Street expectations on revenue and non-GAAP EBITDA, but without S&P data we do not independently quantify the beat. Values retrieved from S&P Global.*

Key Takeaways for Investors

  • Record Q4 revenue ($100.3M) and solid non-GAAP EBITDA ($15.6M) demonstrate scaling earnings power; broad-based demand and acquisitions supported the step-up .
  • FY25 guide (+21.2% y/y at midpoint) indicates confidence in pipeline conversion, hyperscaler go-to-market, and expanding vertical exposure (notably finance) .
  • AI is shifting from POCs to platform-scale deployments, with >130 opportunities in pipeline; near-term project wins and revenue capture likely as enterprises institutionalize GenAI .
  • Finance and CPG/Manufacturing momentum plus record billable headcount suggest durability; watch margin mix as OpEx scales and recent acquisitions integrate .
  • Q4 beat vs company guidance and strengthened cash ($334.7M) after follow-on offering provide optionality for organic investment and M&A .
  • Near-term trading: Positive skew from beat, initiation of FY25 guide, and AI narrative; monitor any Street estimate revisions once consensus is accessible. Values retrieved from S&P Global.*
  • Medium-term: Execution on hyperscaler partnerships (currently 18% revenue) and scaling deliveries (India top-3, Argentina ramp) are key levers; continued margin discipline without compression is a focal point .