Financial Performance - Revenues for the three months ended September 30, 2025, were $104.2 million, representing a year-over-year increase of 19.1%[124] - Net income for the same period was $1.2 million, a decrease from $4.3 million in the prior-year quarter, primarily due to higher cost of revenues[124] - Non-GAAP EBITDA totaled $12.7 million, or 12.2% of revenues for the quarter, compared to $14.8 million, or 16.9% of revenues in the corresponding period of 2024[124] - Total revenues for the nine months ended September 30, 2025, reached $305.7 million, reflecting a year-to-date growth of 22.1% compared to $250.3 million in 2024[137] - Gross profit for the nine months ended September 30, 2025, increased to $106.2 million, an 18.1% growth from $90.0 million in the prior year[146] - Non-GAAP EBITDA for the nine months ended September 30, 2025, was $40.050 million, an increase from $36.839 million in the same period of 2024[162] - The company generated $30.704 million in net cash from operating activities for the nine months ended September 30, 2025, up from $23.130 million in the prior year[172] - The company reported a Non-GAAP net income of $8.150 million for the three months ended September 30, 2025, compared to $10.828 million in the same period of 2024[165] - Non-GAAP diluted EPS for the nine months ended September 30, 2025, was $0.30, down from $0.34 in the same period of 2024[165] Operating Expenses - Total operating expenses for the three months ended September 30, 2025, were $34.9 million, an increase of 14.2% from $30.6 million in the prior-year quarter[135] - Engineering, research, and development expenses increased by 29.5% year-over-year, reflecting the company's commitment to innovation[135] - General and administrative expenses totaled $66.9 million for the nine months ended September 30, 2025, reflecting a 13.4% increase from $59.0 million in 2024[153] - Sales and marketing expenses increased by 6.2% year-to-date, totaling $22.7 million for the nine months ended September 30, 2025[150] Customer Metrics - The number of customers for the nine months ended September 30, 2025, was 222, a slight decrease from 229 a year ago, highlighting challenges in customer retention[129] - The top one customer accounted for 16.4% of revenues in Q3 2025, compared to 17.1% in Q3 2024, indicating a slight decrease in revenue concentration[132] - Retail vertical contributed 29.5% of total revenues for the nine months ended September 30, 2025, despite a year-over-year decline of 2.9% in the third quarter[138] - Finance vertical revenues increased to $76.0 million for the nine months ended September 30, 2025, up from $36.9 million in the prior year, representing a growth of $39.1 million[140] - Technology, Media, and Telecom vertical revenues reached $77.4 million for the nine months ended September 30, 2025, marking an 8.3% year-to-date growth[139] Employee Metrics - The total number of employees as of September 30, 2025, was 4,971, an increase from 4,298 in 2024, with significant growth in the Americas and Europe[125] Geopolitical Risks - Grid Dynamics continues to monitor geopolitical risks, particularly related to military actions in Ukraine, which could materially affect operations and business outlook[120] Currency Exposure and Hedging - Approximately 51.8% of Grid Dynamics' combined cost of revenues and total operating expenses for the three months ended September 30, 2025, were denominated in currencies other than the U.S. dollar, compared to 43.0% in the same period of 2024[180] - In the nine months ended September 30, 2025, approximately 49.4% of Grid Dynamics' $308.1 million combined cost of revenues and total operating expenses were denominated in currencies other than the U.S. dollar[182] - Grid Dynamics has implemented a hedging program to manage exposure to foreign currency fluctuations, entering into short-term foreign exchange forward contracts for Polish zloty[184] - A 10% decrease in the value of the Polish zloty against the U.S. dollar would have resulted in a $1.8 million increase in Grid Dynamics' income from operations[181] - A 10% decrease in the value of the Indian rupee against the U.S. dollar would have resulted in a $0.6 million increase in Grid Dynamics' income from operations in the three months ended September 30, 2025[181] - A 10% decrease in the value of the Mexican peso against the U.S. dollar would have resulted in a $0.3 million increase in Grid Dynamics' income from operations in the three months ended September 30, 2025[181] - A 10% increase in the value of the Polish zloty would have resulted in a $2.1 million decrease in income from operations in the three months ended September 30, 2025[181] - A 10% increase in the value of the Indian rupee would have resulted in a $0.7 million decrease in income from operations in the three months ended September 30, 2025[181] - Grid Dynamics analyzes sensitivity to the zloty and peso separately due to distinct macroeconomic and geopolitical factors affecting these currencies[183] - As of September 30, 2025, all foreign exchange forward contracts qualified for hedge accounting, with no collateral required to be posted[184] Liquidity - Grid Dynamics' liquidity is primarily supported by cash generated from operations and a recent public offering that raised $107.6 million in net proceeds[167] - The company has a revolving credit facility with $30.0 million available, with maturity extended to March 15, 2028[167] - Net cash used in investing activities decreased significantly to $11.339 million for the nine months ended September 30, 2025, compared to $41.314 million in the same period of 2024[173]

Company Overview and Strategy - Grid Dynamics is a technology consulting, platform & product engineering, AI, and digital engagement services provider for Fortune 1000 corporations[8] - The company's DNA is centered around technology and innovation, positioning it as a strategic partner for global enterprises[18] - Grid Dynamics is pursuing a "GigaCube" strategic initiative to reach $1 billion in annual revenue through geographic scalability, innovation, and industry expansion[52] Financial Performance and Expectations - Q3 2025 revenue reached $104.2 million, representing a 19.1% year-over-year increase[60] - The company's Q4 2025 revenue expectations are between $105 million and $107 million[11] - Non-GAAP EBITDA for Q3 2025 was $12.7 million, which is 12.2% of revenue[60] - Non-GAAP net income for Q3 2025 was $8.2 million, or $0.09 EPS[60] AI and Technology Focus - Grid Dynamics has 9 years of experience in delivering AI solutions for enterprises[29] - The company has over 40 proprietary accelerators that reduce Fortune 1000 implementation time by approximately 50%[40] - The global AI IT consulting services spending is projected to be approximately $48 billion in 2025, growing to approximately $85 billion in 2028[33] Client Base and Growth - The company has a blue-chip client base with high client retention[17] - Revenue growth from mature clients (relationship length > 2 years) accounts for 85% of the company's organic growth[47] - Partner-influenced revenues have increased from less than 1% to 18% over the past 3 years[51]

Financial Performance - Third quarter 2025 revenues reached $104.2 million, reflecting a sequential growth of 3.0% and a year-over-year growth of 19.1%[2] - Revenues for Q3 2025 reached $104,163 thousand, a 19.0% increase from $87,435 thousand in Q3 2024[28] - Gross profit for Q3 2025 was $34,711 thousand, compared to $32,729 thousand in Q3 2024, reflecting a 6.0% increase[28] - Net income for Q3 2025 was $1,177 thousand, down from $4,282 thousand in Q3 2024, indicating a decline of 72.5%[28] - Non-GAAP net income for Q3 2025 was $8,150 thousand, compared to $10,828 thousand in Q3 2024, a decrease of 24.7%[34] - GAAP net income for the third quarter was $1.2 million, or $0.01 per share, compared to $4.3 million, or $0.05 per share, in the same quarter of 2024[8] - Non-GAAP EBITDA for the third quarter was $12.7 million, down from $14.8 million in the third quarter of 2024[9] - The company reported a GAAP diluted EPS of $0.01 for Q3 2025, down from $0.05 in Q3 2024[34] Revenue Breakdown - The Retail vertical contributed 27.8% of total revenues, while the Technology, Media and Telecom (TMT) vertical accounted for 27.4%, marking a 13.5% sequential increase and an 18.2% year-over-year increase[3] - AI revenue grew by 10% sequentially, contributing over 25% of the third quarter's organic revenue[4] - Revenue from the Finance vertical increased significantly to $25,623 thousand in Q3 2025, up 80.5% from $14,158 thousand in Q3 2024[37] Cash Flow and Assets - Cash provided by operating activities for the nine months ended September 30, 2025, was $30.7 million, compared to $23.1 million for the same period in 2024[15] - Cash and cash equivalents stood at $338,553 thousand as of September 30, 2025, slightly up from $334,655 thousand at the end of 2024[30] - Total current assets increased to $440,673 thousand as of September 30, 2025, up from $423,304 thousand at the end of 2024[30] - Total assets grew to $613,169 thousand as of September 30, 2025, compared to $592,192 thousand at the end of 2024[30] Future Outlook - The company expects full-year 2025 revenues to be between $410.7 million and $412.7 million, representing a year-over-year growth of 17.1% to 17.7%[11] - The company anticipates a net-billable engineer increase similar to the third quarter for the fourth quarter[4] - A $50.0 million share repurchase program has been authorized, representing approximately 15% of the company's cash[7] - The company aims to improve its margins by at least 300 basis points over the next 12 months through various operational initiatives[6] Operating Expenses - Operating expenses for Q3 2025 totaled $34,952 thousand, an increase from $30,593 thousand in Q3 2024, reflecting a rise of 14.4%[28]

Core Viewpoint - Grid Dynamics (GDYN) is currently rated as a Zacks Rank 5 (Strong Sell) despite having recently posted earnings that met expectations, indicating underlying issues with earnings estimates and market sentiment [1][6]. Company Overview - Grid Dynamics Holdings, Inc. specializes in technology consulting, platform and product engineering, and advanced analytics services, operating in the United States, United Kingdom, Netherlands, and other regions. The company was founded in 2006 and is headquartered in San Ramon, CA [2]. Earnings History - The company has beaten the Zacks Consensus Estimate in two of the last four quarters, with the other two quarters resulting in meeting earnings estimates. However, this performance alone does not justify a strong buy or sell rating [4][5]. Earnings Estimates - Recent trends show a decline in annual earnings estimates for Grid Dynamics, with the current fiscal year consensus dropping from $0.46 to $0.39 and the next fiscal year estimate decreasing from $0.52 to $0.45 over the past 90 days. This negative movement in earnings estimates is a significant factor contributing to the stock's Zacks Rank of 5 (Strong Sell) [6]. Market Context - A broader trend within the Zacks universe indicates that many stocks are experiencing negative earnings estimate revisions, which is leading to a rise in the number of stocks falling to a Zacks Rank 5 (Strong Sell) [7].

Group 1 - The new temporal agentic AI platform and AI-powered engagement model launched by Grid Dynamics Holdings, Inc. could enhance cash generation [1] - The company has a long-term position in the market, indicating stability and potential for growth [1] Group 2 - The analysis focuses on cash flow statements and unlevered free cash flow figures, which are critical for assessing the company's financial health [1] - The financial models may include various metrics such as cost of capital, cost of debt, WACC, share count, and net debt [1] - The company is not typically associated with growth stocks, suggesting a focus on established financial performance [1]

Core Insights - Grid Dynamics Holdings, Inc. will announce its third quarter 2025 financial results on October 30, 2025, during a video conference call at 4:30 p.m. ET [1] - The company is recognized as a leader in enterprise-level digital transformation services and solutions, with a strong focus on AI and technology consulting [3] Financial Performance - For the second quarter of 2025, Grid Dynamics reported revenues of $101.1 million, slightly exceeding the forecast range of $100.0 million to $102.0 million [6] - Retail was the largest vertical for the company, contributing 29.2% of total revenue in the second quarter of 2025 [6] - In the first quarter of 2025, the company achieved revenues of $100.4 million, also above the expected range of $98.0 million to $100.0 million, with retail accounting for 31.4% of total revenues [8]

Core Insights - Grid Dynamics Holdings Inc. is identified as a promising tech stock under $10, with a Buy rating and a price target of $15 from Needham analyst Mayank Tandon, emphasizing the company's AI integration strategy as a key growth driver [1][2] - The company is expected to benefit from increased IT budgets as economic conditions improve, creating a favorable demand environment [1] Financial Position - Grid Dynamics maintains a strong financial position, with cash representing nearly half of its market capitalization, providing stability and flexibility for growth opportunities [2] - The stock is valued at approximately 5.5 times the enterprise value to projected fiscal 2026 EBITDA, which is considered attractive compared to peers [3] Business Model and Services - Grid Dynamics provides digital transformation and technology consulting services, including cloud migration, data analytics, AI-driven solutions, and software engineering for large global enterprises [4]

Core Insights - Loomis Sayles Small Cap Growth Fund reported a return of 9.37% for Q2 2025, underperforming the Russell 2000 Growth Index which returned 11.97% due to security selection issues in the information technology and financial sectors [1] Company Analysis - Grid Dynamics Holdings, Inc. (NASDAQ:GDYN) experienced a one-month return of -3.37% and a 52-week loss of 44.56%, closing at $7.74 per share with a market capitalization of $676.513 million as of September 29, 2025 [2] - The company faced challenges due to overly aggressive guidance provided in February, which analysts viewed skeptically. The lack of an increase in guidance for the fiscal year in May broke a trend of 'beat and raise' reports, contributing to selling pressures on the stock [3] - Grid Dynamics reported revenue of $101.1 million in Q2 2025, marking a 21.7% increase compared to Q2 2024. However, it is noted that 12 hedge fund portfolios held the stock at the end of Q2, down from 20 in the previous quarter, indicating reduced interest among hedge funds [4]

Market Overview - The stock market experienced high volatility in Q2 2025, with a 7% drop in stock prices from April 2 to April 7 due to an unexpected tariff announcement [1] - Following the Trump Administration's retreat from extreme tariff proposals, the market saw a dramatic recovery [1] - Positive corporate earnings and solid economic data indicate potential economic growth ahead [1] Renaissance Investment Management Insights - The Renaissance Investment Small Cap Growth Strategy outperformed the Russell 2000 Growth Index in Q2 2025 [1] - The fund's investor letter highlighted Grid Dynamics Holdings, Inc. (NASDAQ:GDYN) as a key stock, which reported a one-month return of -5.28% and a 52-week loss of 44.63% [2] Grid Dynamics Holdings, Inc. Analysis - Grid Dynamics Holdings, Inc. reported revenue of $101.1 million in Q2 2025, marking a 21.7% increase compared to Q2 2024 [4] - The company acknowledged a more uncertain macroeconomic outlook while maintaining its full-year revenue guidance [3] - Increased investments in AI are expected to pressure margins in the short term, but the company is well-positioned for digital transformation and AI adoption [3] Hedge Fund Interest - Grid Dynamics Holdings, Inc. was held by 12 hedge fund portfolios at the end of Q2 2025, a decrease from 20 in the previous quarter [4]

Group 1 - The individual has a strong foundation in portfolio construction and capital markets, emphasizing a hybrid investment strategy that combines stable, high-conviction holdings with tactical allocations to dynamic assets [1] - The investment approach reflects a belief that successful investing is about making money rather than merely being right [1] - There is a particular interest in the gaming sector, supported by both professional experience and personal passion [1] Group 2 - The individual writes on Seeking Alpha to enhance their investment skills, sharpen analysis, and provide insights for better-informed decision-making [1]