Grid Dynamics Reports Fourth Quarter and Full Year 2024 Financial Results

Fourth Quarter Revenue of $100.3 million and Full Year Revenue of $350.6 million

Grid Dynamics Holdings, Inc. (NASDAQ:GDYN) ("Grid Dynamics" or the "Company"), a leader in enterprise-level artificial intelligence and digital transformation, today announced its results for the fourth quarter and full year ended December 31, 2024.

We are pleased to report fourth quarter 2024 revenues of $100.3 million, exceeding our October 2024 outlook range of $95.0 million to $97.0 million. On a year-over-year basis, our fourth quarter revenues grew at 28.5%. For the full year 2024, we generated revenues of $350.6 million, up from $312.9 million in 2023. Our Retail vertical continued to be our largest vertical during the quarter with 32.6% of our fourth quarter revenues. Our Technology, Media and Telecom ("TMT") and Finance verticals ranked second and third, respectively, each contributing approximately 23.0% of our consolidated revenues, with Finance growing 63.8% and 180.1% on a sequential and year-over-year basis. Strength in the Financial vertical was driven by a combination of increased demand from fintech and insurance customers, as well as our recent acquisitions. Our CPG and Manufacturing vertical, representing 11.2% of our fourth quarter revenues, grew 14.8% and 16.4% on a sequential and year-over-year basis, benefiting both from our organic business and recent acquisitions.

"Grid Dynamics' revenues and profitability were the highest in the Company's history, with the fourth quarter marking a significant milestone of $100 million in revenues. These record-breaking results were fueled by customers, both existing and new, across various industry verticals. After setting record levels in second and third quarter, the Company once again achieved its highest-ever billable engineering headcount by the end of the fourth quarter, a strong indicator of future growth.

2025 is off to a great start with increasing demand for our services across our customer base. With this confidence, we are providing full-year 2025 revenue guidance, projecting 20% growth over 2024. To achieve our growth aspirations, we have identified and put into action five key priorities. These include leveraging our strengths in AI and Data, increasing the number of accelerators and technology artifacts, expanding industry diversification, scaling our delivery locations according to our "Follow-the-Sun" model, and deepening our partnerships. Our recent acquisitions of UK-based JUXT and Argentina-based Mobile Computing are being rapidly integrated, allowing us to pursue new revenue opportunities. These additions strengthen our global footprint, enhance our capabilities and position us for accelerated growth. Our AI initiatives continue to gain significant traction across our customer base, and during the quarter our pipeline of AI opportunities grew to more than 130, representing a 30% increase from last quarter.

We are excited about the opportunities in 2025. Our foundation is strong, and I am confident that we will successfully execute our strategy," said Leonard Livschitz, CEO.

Fourth Quarter of 2024 Financial Highlights

• Total revenues were $100.3 million, an increase of 14.7% and 28.5% on a sequential and year-over-year basis, respectively.

• GAAP gross profit was $37.0 million, or 36.9% of revenues, in the fourth quarter of 2024, compared to $28.1 million, or 36.0% of revenues, in the prior year period. Non-GAAP gross profit was $37.6 million, or 37.5% of revenues, in the fourth quarter of 2024, compared to $28.6 million, or 36.6% of revenues, in the fourth quarter of 2023.

• GAAP net income was $4.5 million, or $0.05 per share, based on 83.8 million diluted weighted-average common shares outstanding in the fourth quarter of 2024, compared to $2.9 million, or $0.04 per share, based on 78.0 million diluted weighted-average common shares outstanding in the fourth quarter of 2023.

• Non-GAAP net income for the fourth quarter of 2024 was $10.3 million, or $0.12 per share, based on 83.8 million diluted weighted-average common shares outstanding, compared to $7.5 million, or $0.10 per share, based on 78.0 million diluted weighted-average common shares outstanding, in the prior year period.

• Non-GAAP EBITDA (earnings before interest, taxes, depreciation, amortization, other income, net, fair value adjustments, stock-based compensation, and transaction and transformation-related costs as well as geographic reorganization expenses), a non-GAAP metric, was $15.6 million, compared to non-GAAP EBITDA of $10.7 million in the fourth quarter of 2023.

2024 Full Year Financial Highlights

• Total revenues were $350.6 million, an increase of 12.0% year-over-year.

• GAAP gross profit was $127.0 million, or 36.2% of revenues, compared to GAAP gross profit of $113.1 million, or 36.2% of revenues, in 2023. Non-GAAP gross profit was $129.1 million, or 36.8% of revenues, compared to non-GAAP gross profit of $115.1 million, or 36.8% of revenues, in 2023.

• GAAP net income was $4.0 million, or $0.05 per share, based on 80.0 million diluted weighted-average common shares outstanding, compared to GAAP net loss of $1.8 million, or $(0.02) per share, based on 75.2 million weighted-average common shares outstanding, in 2023.

• Non-GAAP net income for the year ended December 31, 2024 was $37.2 million, or $0.47 per share, based on 80.0 million diluted weighted-average common shares outstanding, compared to non-GAAP net income of $31.7 million, or $0.42 per share, based on 75.2 million diluted weighted-average common shares outstanding, in 2023.

• Non-GAAP EBITDA (earnings before interest, taxes, depreciation, amortization, other income, net, fair value adjustments, stock-based compensation, and transaction and transformation-related costs as well as geographic reorganization expenses), a non-GAAP metric, was $52.5 million, compared to non-GAAP EBITDA of $44.2 million in 2023.

See "Non-GAAP Financial Measures" and "Reconciliation of Non-GAAP Information" below for a discussion of our non-GAAP measures.

Cash Flow and Other Metrics

• Cash provided by operating activities was $30.2 million for the year ended December 31, 2024, compared to $41.1 million for the year ended December 31, 2023.

• During the fourth quarter of 2024, we closed a follow-on public offering of common stock, generating $107.6 million of net proceeds, after deducting underwriting discounts and commissions.

• Cash and cash equivalents totaled $334.7 million as of December 31, 2024, compared to $257.2 million as of December 31, 2023.

• Total headcount was 4,730 employees as of December 31, 2024, compared with 3,920 as of December 31, 2023.

Financial Outlook

First Quarter

• The Company expects revenues in the first quarter of 2025 to be in the range of $98.0 to $100.0 million, representing growth of 22.8% to 25.3% on a year-over-year basis. At the midpoint of $99.0 million, the Company expects its first quarter revenue to grow by 24.0% on an year-over-year basis.

• Non-GAAP EBITDA in the first quarter of 2025 is expected to be between $12.9 and $13.9 million.

• For the first quarter of 2025, we expect our basic share count to be in the 84.0-85.0 million range and diluted share count to be in the 89.0-90.0 million range.

Full Year

• The Company expects full year 2025 revenues to be in the range of $415.0 to $435.0 million, representing growth of 18.4% to 24.1% on a year-over-year basis. At the midpoint of $425.0 million, the Company expects the year-over-year growth rate for 2025 revenues to be 21.2%.

Grid Dynamics is not able, at this time, to provide GAAP targets for net income for the first quarter and full year of 2025 because of the difficulty of estimating certain items excluded from non-GAAP EBITDA that cannot be reasonably predicted, such as interest, taxes, other income/(expense), fair-value adjustments, geographic reorganization expenses, and charges related to stock-based compensation expense. The effect of these excluded items may be significant.

Conference Call and Webcast

Grid Dynamics will host a conference call at 4:30 p.m. ET on Thursday, February 20, 2025 to discuss its fourth quarter and full year 2024 financial results. Investors and other interested parties can access a webcast of the video conference call on the Investor Relations section of the Company's website at https://ir.griddynamics.com/.

A replay will also be available after the call at https://ir.griddynamics.com/.

About Grid Dynamics

Grid Dynamics (NASDAQ:GDYN) is a leading provider of technology consulting, platform and product engineering, and advanced analytics services. Fusing technical vision with business acumen, we enable positive business outcomes for enterprise companies undergoing business transformation by solving their most pressing technical challenges. A key differentiator for Grid Dynamics is our 7+ years of experience and leadership in enterprise AI, supported by profound expertise and ongoing investment in data, analytics, cloud & DevOps, application modernization, and customer experience. Founded in 2006, Grid Dynamics is headquartered in Silicon Valley with offices across the Americas, Europe, and India. Follow us on LinkedIn.

Non-GAAP Financial Measures

To supplement the financial measures presented in Grid Dynamics press release in accordance with generally accepted accounting principles in the United States ("GAAP"), the Company also presents non-GAAP measures of financial performance.

A "non-GAAP financial measure" refers to a numerical measure of Grid Dynamics historical or future financial performance or financial position that is included in (or excluded from) the most directly comparable measure calculated and presented in accordance with GAAP. Grid Dynamics provides certain non-GAAP measures as additional information relating to its operating results as a complement to results provided in accordance with GAAP. The non-GAAP financial information presented herein should be considered in conjunction with, and not as a substitute for or superior to, the financial information presented in accordance with GAAP and should not be considered a measure of liquidity and profitability.

Grid Dynamics has included these non-GAAP financial measures because they are financial measures used by Grid Dynamics' management to evaluate Grid Dynamics' core operating performance and trends, to make strategic decisions regarding the allocation of capital and new investments and are among the factors analyzed in making performance-based compensation decisions for key personnel.

Grid Dynamics believes the use of non-GAAP financial measures, as a supplement to GAAP measures, is useful to investors in that they eliminate items that are either not part of core operations or do not require a cash outlay, such as stock-based compensation expense. Grid Dynamics believes these non-GAAP measures provide investors and other users of its financial information consistency and comparability with its past financial performance and facilitate period to period comparisons of operations. Grid Dynamics believes these non-GAAP measures are useful in evaluating its operating performance compared to that of other companies in its industry, as they generally eliminate the effects of certain items that may vary for different companies for reasons unrelated to overall operating performance.

There are significant limitations associated with the use of non-GAAP financial measures. Further, these measures may differ from the non-GAAP information, even where similarly titled, used by other companies and therefore should not be used to compare our performance to that of other companies. Grid Dynamics compensates for these limitations by providing investors and other users of its financial information a reconciliation of non-GAAP measures to the related GAAP financial measures. Grid Dynamics encourages investors and others to review its financial information in its entirety, not to rely on any single financial measure, and to view its non-GAAP measures in conjunction with GAAP financial measures. Please see the reconciliation of non-GAAP financial measures to the most directly comparable GAAP measures attached to this release.

Forward-Looking Statements

This communication contains "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, that are not historical facts, and involve risks and uncertainties that could cause actual results of Grid Dynamics to differ materially from those expected and projected. Grid Dynamics intends such forward-looking statements to be covered by the safe harbor provisions contained in the Private Securities Litigation Reform Act of 1995. These forward-looking statements can be identified by the use of forward-looking terminology, including the words "believes," "estimates," "anticipates," "expects," "intends," "plans," "may," "will," "potential," "projects," "predicts," "continue," or "should," or, in each case, their negative or other variations or comparable terminology. These forward-looking statements include, without limitation, the quotations of management, the section titled "Financial Outlook," and statements concerning Grid Dynamics's expectations with respect to future performance, particularly in light of the macroeconomic environment and the Russian invasion of Ukraine.

These forward-looking statements involve significant risks and uncertainties that could cause the actual results to differ materially from the expected and projected results. Most of these factors are outside Grid Dynamics's control and are difficult to predict. Factors that may cause such differences include, but are not limited to: (i) Grid Dynamics has a relatively short operating history and operates in a rapidly evolving industry, which makes it difficult to evaluate future prospects and may increase the risk that it will not continue to be successful and may adversely impact our stock price; (ii) Grid Dynamics may be unable to effectively manage its growth or achieve anticipated growth, particularly as it expands into new geographies, which could place significant strain on Grid Dynamics' management personnel, systems and resources; (iii) Grid Dynamics' revenues are highly dependent on a limited number of clients and industries that are affected by seasonal trends, and any decrease in demand for outsourced services in these industries may reduce Grid Dynamics' revenues and adversely affect Grid Dynamics' business, financial condition and results of operations; (iv) macroeconomic conditions, inflationary pressures, and the geopolitical climate, including the Russian invasion of Ukraine, have and may continue to materially adversely affect our stock price, business operations, overall financial performance and growth prospects; (v) Grid Dynamics' revenues are highly dependent on clients primarily located in the United States, and any economic downturn in the United States or in other parts of the world, including Europe or disruptions in the credit markets may have a material adverse effect on Grid Dynamics' business, financial condition and results of operations; (vi) Grid Dynamics faces intense and increasing competition; (vii) Grid Dynamics' failure to successfully attract, hire, develop, motivate and retain highly skilled personnel in the relevant regions could materially adversely affect Grid Dynamics' business, financial condition and results of operations; (viii) failure to adapt to rapidly changing technologies, methodologies and evolving industry standards may have a material adverse effect on Grid Dynamics' business, financial condition and results of operations; (ix) failure to successfully deliver contracted services or causing disruptions to clients' businesses may have a material adverse effect on Grid Dynamics' reputation, business, financial condition and results of operations; (x) risks and costs related to acquiring and integrating other companies; and (xi) other risks and uncertainties indicated in Grid Dynamics' filings with the SEC.

Grid Dynamics cautions that the foregoing list of factors is not exclusive. Grid Dynamics cautions readers not to place undue reliance upon any forward-looking statements, which speak only as of the date made. Grid Dynamics does not undertake or accept any obligation or undertaking to release publicly any updates or revisions to any forward-looking statements to reflect any change in its expectations or any change in events, conditions or circumstances on which any such statement is based. Further information about factors that could materially affect Grid Dynamics, including its results of operations and financial condition, is set forth in the Company's most recent Quarterly Report on Form 10-Q, particularly under the headings "Risk Factors" and "Management's Discussion and Analysis of Financial Condition and Results of Operations," and in other periodic filings Grid Dynamics makes with the SEC.

The following table provides a reconciliation of cash, cash equivalents and restricted cash reported within the consolidated balance sheets:

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Grid Dynamics Investor Relations:

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