Financial Performance - Grid Dynamics reported record revenues of $350.6 million for the year ended December 31, 2024, representing a 12.0% increase from the previous year[256]. - Gross profit margins remained steady at 36.2% for both 2024 and 2023[256]. - The company reduced its loss from operations to $2.1 million in 2024, down from $5.6 million in 2023[256]. - Net income for 2024 was $4.0 million, marking a significant turnaround after four consecutive years of net losses[256]. - Non-GAAP EBITDA grew 18.6% to $52.5 million for the year ended December 31, 2024[256]. - The cost of revenues increased by $23.8 million, or 11.9%, to $223.6 million in 2024, primarily due to higher headcount to support revenue growth[296]. - Gross profit rose to $127.0 million, an increase of $13.9 million from $113.1 million in 2023, with a stable gross margin of 36.2%[297]. - Engineering, research, and development expenses increased by 24.5% to $18.3 million, reflecting continued investments in customer delivery operations and software development[299]. - Sales and marketing expenses grew by 18.5% to $28.6 million, driven by investments in the sales organization and new sales initiatives[301]. - General and administrative expenses increased by 2.9% to $82.1 million, with a decrease in expenses as a percentage of revenues from 25.5% in 2023 to 23.4% in 2024[304]. - Interest and other income, net rose to $13.2 million from $10.4 million in the prior year, primarily due to income from money market funds and an increase in the fair value of marketable equity securities[306]. - The provision for income taxes was $7.0 million in 2024, compared to $6.6 million in 2023, with the effective tax rate decreasing from 136.5% to 63.4%[308]. - For the year ended December 31, 2024, GAAP net income was $4.041 million, a significant improvement from a net loss of $1.765 million in 2023 and a loss of $29.214 million in 2022[314]. - Non-GAAP net income for 2024 increased to $37.222 million compared to $31.684 million in 2023, and $38.150 million in 2022[317]. - Non-GAAP diluted EPS for 2024 was $0.47, compared to $0.41 in 2023 and $0.53 in 2022[317]. Acquisitions and Growth - The company acquired Mobile Computing S.A. on October 4, 2024, expanding its client portfolio in various industries[257]. - On September 26, 2024, Grid Dynamics acquired JUXT Ltd., enhancing its capabilities in the finance vertical and opening new opportunities in Europe[258]. - The total number of employees increased to 4,730 in 2024, up from 3,920 in 2023, reflecting a growth in workforce[264]. - The Finance vertical saw revenues double to $60.2 million, making it the largest contributor to overall revenue growth for the period[292]. - Retail remained the largest vertical, contributing 32.5% of total revenues, with an 11.1% growth over 2023[289]. Customer and Revenue Concentration - Customer concentration decreased, with the total number of customers dropping from 275 in 2023 to 264 in 2024[268]. - The top one customer accounted for 16.0% of revenues in 2024, compared to 14.4% in 2023, indicating a slight increase in revenue concentration[271]. Cash Flow and Financing - Cash and cash equivalents as of December 31, 2024, were $334.7 million, an increase from $257.2 million at the end of 2023[321]. - Net cash provided by operating activities decreased to $30.198 million in 2024 from $41.093 million in 2023, primarily due to changes in working capital[323]. - Net cash used in investing activities rose to $51.301 million in 2024, driven by payments related to the JUXT and Mobile Computing acquisitions[324]. - The company generated $101.162 million from financing activities in 2024, mainly from a public equity offering[325]. - The company has a revolving credit facility of $30 million, with zero outstanding as of December 31, 2024[319]. - The company is seeking to extend the term of its revolving credit facility, which is set to expire on March 15, 2025[320]. Risks and Legal Considerations - The company faces risks related to intellectual property, including potential unauthorized use and challenges in protecting its rights[199]. - There is uncertainty regarding the scope of intellectual property protection for AI models and software, which may impact the company's operations[199]. - The company may incur significant costs and management distraction from potential intellectual property infringement claims[206]. - Customer contracts often require the company to indemnify clients against potential infringement claims, which could lead to costly litigation[207]. - The company utilizes open source software, which poses risks of non-compliance with licensing terms that could affect sales and create liability[210]. - The company's bylaws limit the forum for stockholder disputes, potentially discouraging legal action[213]. - The price of the company's common stock may be volatile due to various factors, including changes in legal and regulatory frameworks[216]. - The concentration of ownership may lead to significant volatility in the stock price if major stockholders sell large amounts of common stock[221]. - The company has provisions in its certificate of incorporation and bylaws that could delay or prevent hostile takeovers and changes in control[224]. - Delaware law may prohibit stockholders holding 15% or more of the outstanding capital stock from engaging in certain business combinations for a specified period[225]. - The board of directors has the ability to issue preferred stock without stockholder approval, which could dilute the ownership of a hostile acquirer[226]. - The requirement for a special meeting of stockholders to be called only by the board of directors could delay stockholder actions[226]. - The company has a classified board of directors with staggered terms, which could delay changes in board membership[226]. - Advance notice procedures must be complied with for stockholders to nominate candidates or propose matters, potentially deterring unsolicited takeover attempts[226].

Financial Data and Key Metrics Changes - Grid Dynamics achieved record revenues of $100.3 million in Q4 2024, surpassing guidance of $95 million to $97 million, representing a year-over-year growth of 28.5% [45][46] - Non-GAAP EBITDA for Q4 was $15.6 million, exceeding guidance of $13.5 million to $15.5 million, driven by strong performance from both organic business and recent acquisitions [45][46] - The company ended Q4 with cash and cash equivalents totaling $334.7 million, up from $231.3 million in Q3 2024, largely due to a follow-on offering [55] Business Line Data and Key Metrics Changes - The retail vertical accounted for 32.6% of Q4 revenues, showing sequential growth of 9.7% and year-over-year growth of 33.1% [46] - The finance vertical exhibited the strongest performance with sequential growth of 63.8% and year-over-year growth of 180.1%, driven by increased demand from fintech and insurance customers [48] - The TMT vertical remained flat compared to Q3, while CPG and manufacturing represented 11.2% of revenues, growing sequentially by 14.8% and year-over-year by 16.4% [47][49] Market Data and Key Metrics Changes - The company signed three notable enterprise clients in Q4, including clients from the automotive industry, a global auction company, and a major grocery retail group [15][16] - AI initiatives are gaining momentum, with 130 identified AI opportunities in Q4, a 30% increase over Q3 [22][23] - Partnerships with hyperscalers contributed 18% of total revenue in 2024, with expectations for significant growth in 2025 [32] Company Strategy and Development Direction - The company aims for revenue growth of $415 million to $435 million in 2025, representing a potential growth of over 20% compared to 2024 [19][57] - Five priorities for 2025 include leveraging strengths in data and AI, increasing industry diversification, enhancing technology offerings, ensuring global support through the Follow the Sun strategy, and strengthening partnerships [20][21] - The acquisition of U.K.-based JUXT enhances the company's expertise in banking and financial services, expected to convert into opportunities in 2025 [26] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism for 2025, citing improving trends in demand, growth in existing and new customers, and increasing demand for IT partners with strong technology focus [18] - The company is confident in its ability to achieve growth targets due to strong customer appreciation for its capabilities and the successful implementation of AI solutions [61][62] - Management highlighted the importance of large deal sizes and a strong pipeline of opportunities as key factors contributing to visibility for 2025 [131][134] Other Important Information - The company ended Q4 with a total headcount of 4,730, up from 4,298 in Q3 2024, reflecting growth from both organic business and acquisitions [50] - The company is focused on rationalizing its portfolio of non-strategic customers, which has led to a decline in the number of customers year-over-year [51] Q&A Session Summary Question: What is driving Grid Dynamics' strength compared to peers? - Management attributed the outperformance to consistent business relationships with clients, technology introduction, and scaling solutions [60][61] Question: Will growth in 2025 be broad-based? - Management indicated strong growth in CPG, TMT, and fintech sectors, with contributions from both top clients and new clients [64][66] Question: How is AI contributing to revenue? - AI is now a component of almost every engagement, with significant opportunities identified, reflecting a shift towards revenue generation initiatives [69][70] Question: What are the key drivers of revenue growth for 2025? - Management highlighted recruiting, pricing, and utilization improvements as key drivers for growth [77][78] Question: What is the expected margin profile for 2025? - Management advised not to model any margin compression for 2025, indicating a return to a positive margin slope [98] Question: Which initiatives have a head start for achieving 2025 guidance? - Investment in AI and technology enhancements are top priorities, with a focus on partnerships with hyperscalers [102][106] Question: Will there be benefits on the SG&A line from account rationalization and partnerships? - Management confirmed that while there will be investments, revenue growth will outpace OpEx growth [113][114]

Core Viewpoint - Grid Dynamics (GDYN) reported quarterly earnings of $0.12 per share, exceeding the Zacks Consensus Estimate of $0.10 per share, and showing an increase from $0.07 per share a year ago, indicating a 20% earnings surprise [1][2] Financial Performance - The company achieved revenues of $100.28 million for the quarter ended December 2024, surpassing the Zacks Consensus Estimate by 4.46%, compared to $78.07 million in the same quarter last year [2] - Over the last four quarters, Grid Dynamics has exceeded consensus EPS estimates two times and topped consensus revenue estimates four times [2] Stock Performance and Outlook - Grid Dynamics shares have declined approximately 3% since the beginning of the year, while the S&P 500 has gained 4.5% [3] - The company's earnings outlook is crucial for investors, with current consensus EPS estimates at $0.09 for the upcoming quarter and $0.44 for the current fiscal year, with revenues expected to be $95.25 million and $408.19 million respectively [7] Industry Context - The Computers - IT Services industry, to which Grid Dynamics belongs, is currently ranked in the top 29% of over 250 Zacks industries, indicating a favorable environment for performance [8] - Empirical research suggests a strong correlation between near-term stock movements and trends in earnings estimate revisions, which can be tracked using tools like the Zacks Rank [5][6]

Revenue Growth - Fourth quarter 2024 revenues reached $100.3 million, a year-over-year growth of 28.5%[2] - Full year 2024 revenues totaled $350.6 million, up from $312.9 million in 2023, representing a 12.0% increase[11] - Revenues for the three months ended December 31, 2024, were $100,282 thousand, a 28.4% increase from $78,069 thousand in the same period of 2023[26] - Total revenue for Q4 2024 was $100,282 million, a 28.4% increase from $78,069 million in Q4 2023[41] - The Finance vertical experienced significant growth, with a year-over-year increase of 180.1%[2] - The Finance vertical saw substantial growth, with revenue increasing to $23,190 million in Q4 2024 from $8,280 million in Q4 2023, representing a 179.4% increase[41] - Retail revenue for the year ended December 31, 2024, was $113,957 million, slightly up from $102,551 million in 2023, maintaining a stable market share[41] Income and Earnings - GAAP net income for Q4 2024 was $4.5 million, or $0.05 per share, compared to $2.9 million, or $0.04 per share, in Q4 2023[6] - Non-GAAP net income for the full year 2024 was $37.2 million, or $0.47 per share, compared to $31.7 million, or $0.42 per share, in 2023[11] - Non-GAAP net income for Q4 2024 reached $10,284 million, up from $7,489 million in Q4 2023, reflecting a growth of 37.5%[37] - The company's GAAP diluted EPS for Q4 2024 was $0.05, compared to $0.04 in Q4 2023[37] - Non-GAAP diluted EPS for Q4 2024 was $0.12, up from $0.10 in Q4 2023, indicating a 20% increase[37] - Net income for the year ended December 31, 2024, was $4,041 thousand, compared to a net loss of $1,765 thousand in 2023[26] Expenses and Costs - The company reported total operating expenses of $129,110 thousand for the year ended December 31, 2024, compared to $118,726 thousand in 2023, a rise of 8.5%[26] - The company incurred acquisition-related costs of $43,072 thousand for the year ended December 31, 2024, compared to $17,830 thousand in 2023[30] - The company incurred $34,167 million in stock-based compensation for the year ended December 31, 2024, compared to $35,516 million in 2023, showing a decrease[37] - The company has implemented a restructuring plan, resulting in restructuring costs of $1,413 million for the year ended December 31, 2024[39] Cash and Assets - Cash and cash equivalents as of December 31, 2024, totaled $334.7 million, up from $257.2 million a year earlier[11] - Cash and cash equivalents increased to $334,655 thousand as of December 31, 2024, from $257,227 thousand in 2023, representing a 30% increase[28] - Total assets grew to $592,192 thousand as of December 31, 2024, up from $435,165 thousand in 2023, reflecting a 36.2% increase[28] Future Outlook - The company expects full year 2025 revenues to be between $415.0 million and $435.0 million, indicating a growth of 18.4% to 24.1% year-over-year[11] - The AI opportunities pipeline grew to over 130, representing a 30% increase from the previous quarter[4] Employment - Total headcount increased to 4,730 employees as of December 31, 2024, compared to 3,920 a year prior[11] EBITDA - Non-GAAP EBITDA for Q4 2024 was $15.6 million, compared to $10.7 million in Q4 2023[6] - Non-GAAP EBITDA for the year ended December 31, 2024, was $52,474 thousand, compared to $44,246 thousand in 2023, indicating an 18.6% increase[36]

Core Viewpoint - Momentum investing focuses on following a stock's recent price trends, aiming to buy high and sell higher, with the expectation that established trends will continue [1] Company Overview: Grid Dynamics (GDYN) - GDYN currently holds a Momentum Style Score of A, indicating strong momentum potential [2][13] - GDYN shares have increased by 7.22% over the past week, outperforming the Zacks Computers - IT Services industry, which declined by 1.34% during the same period [4] - Over the last month, GDYN's price change is 10.84%, significantly better than the industry's 0.21% performance [4] Earnings Outlook - In the past two months, four earnings estimates for GDYN have been revised upwards, while none have been lowered, raising the consensus estimate from $0.32 to $0.34 [10] - For the next fiscal year, three estimates have increased, with one downward revision noted [10] Performance Metrics - GDYN shares have risen by 49.33% over the past quarter and 53.91% over the last year, compared to the S&P 500's increases of 5.41% and 28.01%, respectively [11] - The average 20-day trading volume for GDYN is 606,429 shares, which is considered a bullish indicator when combined with rising stock prices [9] Investment Potential - GDYN is rated as a 1 (Strong Buy) stock, supported by its strong Momentum Score of A, making it a promising candidate for investors seeking short-term gains [7][13]

Core Points - Grid Dynamics Holdings Inc. will replace Revelyst Inc. in the S&P SmallCap 600 effective January 2, 2025 [1][2] - The acquisition of Revelyst by Strategic Value Partners is expected to close soon, pending final conditions [1] Summary by Category Company Changes - Grid Dynamics Holdings (Ticker: GDYN) will be added to the S&P SmallCap 600 [2] - Revelyst (Ticker: GEAR) will be removed from the S&P SmallCap 600 [2] Sector Information - Grid Dynamics operates in the Information Technology sector [2] - Revelyst operates in the Consumer Discretionary sector [2]

Grid Dynamics (GDYN) came out with quarterly earnings of $0.10 per share, in line with the Zacks Consensus Estimate. This compares to earnings of $0.08 per share a year ago. These figures are adjusted for non-recurring items.A quarter ago, it was expected that this company would post earnings of $0.07 per share when it actually produced earnings of $0.08, delivering a surprise of 14.29%.Over the last four quarters, the company has surpassed consensus EPS estimates just once.Grid Dynamics, which belongs to t ...

Revenue Growth and Performance - Record quarterly revenues of $87.4 million, up 12.9% year-over-year[101] - Revenues for the three months ended September 30, 2024 increased by 12.9% to $87.4 million compared to $77.4 million in the prior-year period[116] - Revenues for the nine months ended September 30, 2024 grew 6.6% to $250.3 million compared to $234.8 million in the prior-year period[116] - Retail vertical contributed 34.1% of total revenues in the third quarter of 2024, with revenues increasing 12.4% to $29.8 million compared to $26.5 million in the prior-year period[118] - Finance vertical revenues almost doubled, reaching $14.2 million and $37.0 million for the three and nine months ended September 30, 2024, respectively, compared to $7.3 million and $20.6 million in the prior-year periods[121] Profitability and Margins - GAAP gross profit margins improved to 37.4% in Q3 2024, up 1.0% from the prior year[101] - Gross profit increased 16.3% to $32.7 million in the third quarter of 2024 and 5.8% to $90.0 million for the nine-month period[127] - Net income of $4.3 million in Q3 2024, compared to $0.7 million in 2023[101] - Net income for the three months ended September 30, 2024 was $4.3 million, compared to $0.7 million in the prior-year period[115] - Net loss for the nine months ended September 30, 2024 was $0.5 million, compared to a net loss of $4.7 million in the prior-year period[116] - Non-GAAP EBITDA of $14.8 million, or 16.9% of revenues, compared to $10.7 million, or 13.9% of revenues, in Q3 2023[102] - Non-GAAP EBITDA for Q3 2024 was $14.8 million, up from $10.7 million in Q3 2023, and $36.8 million for the nine months ended September 30, 2024, compared to $33.6 million in the same period of 2023[143] - Non-GAAP net income for Q3 2024 was $8.1 million, up from $5.9 million in Q3 2023, and $19.4 million for the nine months ended September 30, 2024, compared to $19.4 million in the same period of 2023[145] - Non-GAAP diluted EPS for Q3 2024 was $0.10, up from $0.08 in Q3 2023, and $0.25 for the nine months ended September 30, 2024, compared to $0.25 in the same period of 2023[145] Expenses and Costs - Cost of revenues increased 11.0% to $54.7 million in the third quarter of 2024 and 7.0% to $160.3 million for the nine-month period[126] - Engineering, research, and development expenses grew 30.7% to $4.4 million in the third quarter of 2024 and 19.0% to $12.9 million for the nine-month period[129] - Sales and marketing expenses increased 11.2% to $6.8 million in the third quarter of 2024 and 20.7% to $21.4 million for the nine-month period[131] - General and administrative expenses increased by 4.6% to $19.3 million in Q3 2024 compared to $18.5 million in the prior year period, but decreased by 3.2% to $59.0 million for the nine months ended September 30, 2024, primarily due to lower stock-based compensation expenses[133] Cash Flow and Financial Position - Operating cash inflows reached $9.2 million, with $39.5 million invested in the acquisition of JUXT[102] - Cash and cash equivalents decreased to $231.3 million as of September 30, 2024, from $257.2 million at December 31, 2023, with $38.7 million held outside the United States[148] - The company has a $30.0 million revolving credit facility with JPMorgan Chase Bank, N.A., with no debt outstanding as of September 30, 2024[147] - Net cash provided by operating activities decreased by $10.4 million to $23.1 million in the nine months ended September 30, 2024, compared to $33.5 million in the same period of 2023[150] - Net cash used in investing activities increased to $41.3 million in the nine months ended September 30, 2024, primarily due to the $32.1 million acquisition of JUXT and a 50% increase in capital expenditures to $9.1 million[151] - Net cash used in financing activities decreased by $6.7 million to $7.8 million in the nine months ended September 30, 2024, compared to $14.5 million in the same period of 2023[152] Customer and Employee Metrics - Top one customer accounted for 17.1% of revenues in Q3 2024, up from 14.3% in Q3 2023[114] - Top five customers accounted for 39.8% of revenues in Q3 2024, up from 36.8% in Q3 2023[114] - Total number of customers decreased from 265 in 2023 to 229 in 2024[112] - Total employees increased to 4,298 as of September 2024, up from 3,823 in 2023[109] Foreign Currency Exposure - Approximately 43.0% of Grid Dynamics' $85.3 million combined cost of revenues and operating expenses were denominated in non-U.S. dollar currencies in Q3 2024, up from 38.0% in Q3 2023[158] - A 10% decrease in the value of the Polish zloty against the U.S. dollar would increase Grid Dynamics' income from operations by $1.5 million in Q3 2024, while a 10% increase would decrease it by $1.8 million[158] - A 10% decrease in the value of the Mexican peso against the U.S. dollar would increase Grid Dynamics' income from operations by $0.3 million in Q3 2024, while a 10% increase would decrease it by $0.4 million[159] - Approximately 41.2% of Grid Dynamics' $253.7 million combined cost of revenues and operating expenses were denominated in non-U.S. dollar currencies in the nine months ended September 30, 2024, up from 38.0% in the same period of 2023[161] - A 10% decrease in the value of the Polish zloty against the U.S. dollar would increase Grid Dynamics' income from operations by $4.0 million in the nine months ended September 30, 2024, while a 10% increase would decrease it by $4.9 million[161] - A 10% decrease in the value of the Mexican peso against the U.S. dollar would increase Grid Dynamics' income from operations by $1.0 million in the nine months ended September 30, 2024, while a 10% increase would decrease it by $1.2 million[162] - Grid Dynamics does not currently hedge its foreign currency exposure but may evaluate new hedging strategies in future periods[165] Other Income and Tax Provisions - Other income reached $3.5 million in Q3 2024 and $8.7 million for the nine months ended September 30, 2024, driven by gains from money market funds and increased fair value of marketable equity securities[135] - Provision for income tax decreased to $1.3 million in Q3 2024 from $2.6 million in Q3 2023, and to $5.8 million for the nine months ended September 30, 2024 from $8.0 million in the same period of 2023, mainly due to Section 162(m) compensation deduction limitations and foreign inclusion adjustments[137] Operational Changes - Grid Dynamics ceased operations in Russia and liquidated its former subsidiary as of May 2023[105]

Grid Dynamics (GDYN) came out with quarterly earnings of $0.08 per share, beating the Zacks Consensus Estimate of $0.07 per share. This compares to earnings of $0.09 per share a year ago. These figures are adjusted for non-recurring items. This quarterly report represents an earnings surprise of 14.29%. A quarter ago, it was expected that this company would post earnings of $0.08 per share when it actually produced earnings of $0.07, delivering a surprise of -12.50%. Over the last four quarters, the company ...

PART I. FINANCIAL INFORMATION [Financial Statements (Unaudited)](index=6&type=section&id=Item%201.%20Financial%20Statements%20(Unaudited)) Unaudited Q1 2024 financial statements detail total assets of $435.3 million, a net loss of $3.9 million, and flat revenues of $79.8 million Condensed Consolidated Balance Sheet Highlights (in thousands) | Account | March 31, 2024 | December 31, 2023 | | :--- | :--- | :--- | | **Assets** | | | | Cash and cash equivalents | $249,437 | $257,227 | | Accounts receivable, net | $53,039 | $49,824 | | Goodwill | $53,868 | $53,868 | | Total assets | $435,261 | $435,165 | | **Liabilities & Equity** | | | | Total current liabilities | $43,120 | $42,223 | | Total liabilities | $52,450 | $52,258 | | Total stockholders' equity | $382,811 | $382,907 | | Total liabilities and stockholders' equity | $435,261 | $435,165 | Condensed Consolidated Statements of Loss (in thousands) | Account | Three Months Ended March 31, 2024 | Three Months Ended March 31, 2023 | | :--- | :--- | :--- | | Revenues | $79,817 | $80,080 | | Gross profit | $27,665 | $28,575 | | Loss from operations | $(5,542) | $(5,992) | | Net loss | $(3,948) | $(7,970) | | Diluted loss per share | $(0.05) | $(0.11) | Condensed Consolidated Statement of Cash Flows Highlights (in thousands) | Activity | Three Months Ended March 31, 2024 | Three Months Ended March 31, 2023 | | :--- | :--- | :--- | | Net cash provided by operating activities | $3,240 | $11,674 | | Net cash used in investing activities | $(3,936) | $(1,589) | | Net cash used in financing activities | $(6,998) | $(8,941) | | Net (decrease)/increase in cash and cash equivalents | $(7,790) | $1,639 | Revenue by Vertical (in thousands) | Vertical | Q1 2024 | Q1 2023 | | :--- | :--- | :--- | | Retail | $24,629 | $25,396 | | Technology, Media and Telecom | $24,033 | $26,811 | | Finance | $10,243 | $6,515 | | CPG/Manufacturing | $9,559 | $12,646 | | Healthcare and Pharma | $3,009 | $3,152 | | Other | $8,344 | $5,560 | | **Total Revenues** | **$79,817** | **$80,080** | - The company completed the acquisition of **NextSphere Technologies** for **$25.2 million** and **Mutual Mobile** for **$16.1 million** to enhance technical capabilities and expand its global footprint[36](index=36&type=chunk)[37](index=37&type=chunk) - Total stock-based compensation expense was **$11.3 million** for Q1 2024, a decrease from **$13.3 million** in Q1 2023, with **$7.9 million** allocated to General and Administrative expenses[76](index=76&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=25&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management reports flat Q1 2024 revenue of $79.8 million, a reduced net loss of $3.9 million, and strong liquidity with $249.4 million in cash Q1 2024 Financial Highlights (in thousands) | Metric | Q1 2024 | Q1 2023 | | :--- | :--- | :--- | | Revenues | $79,817 | $80,080 | | Gross profit | $27,665 | $28,575 | | Loss from operations | $(5,542) | $(5,992) | | Net loss | $(3,948) | $(7,970) | | Non-GAAP EBITDA | $10,292 | $10,832 | | Non-GAAP net income | $5,238 | $6,523 | - The company ceased operations in the **Russian Federation** and liquidated its subsidiary as of May 2023, continuing to monitor the impact of the **Ukraine conflict**[98](index=98&type=chunk)[100](index=100&type=chunk) Customer Concentration by Revenue | Customer Group | % of Revenue Q1 2024 | % of Revenue Q1 2023 | | :--- | :--- | :--- | | Top one customer | 16.7% | 13.9% | | Top five customers | 39.6% | 40.8% | | Top ten customers | 55.3% | 60.4% | - Revenue from **Finance** and **Other** verticals grew over **50%** year-over-year, offset by declines in **TMT (-10.4%)** and **CPG/Manufacturing (-24.4%)**[118](index=118&type=chunk)[119](index=119&type=chunk)[120](index=120&type=chunk) - General and administrative expenses decreased to **$21.5 million** in Q1 2024 from **$24.7 million** in Q1 2023, primarily due to lower stock-based compensation[129](index=129&type=chunk) - Net cash from operating activities decreased to **$3.2 million** in Q1 2024 from **$11.7 million** in Q1 2023, due to timing of payments[149](index=149&type=chunk) [Quantitative and Qualitative Disclosures About Market Risk](index=34&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The company's primary market risk stems from foreign currency fluctuations, with **39.1%** of Q1 2024 costs in non-USD currencies, mainly Polish zloty and Mexican peso - In Q1 2024, **39.1%** of combined costs were non-USD denominated, an increase from **34.9%** in Q1 2023[157](index=157&type=chunk) Foreign Currency Sensitivity Analysis (Q1 2024) | Currency Fluctuation vs. USD | Impact on Income from Operations | | :--- | :--- | | 10% decrease in Polish zloty | $1.3 million increase | | 10% increase in Polish zloty | $1.5 million decrease | | 10% decrease in Mexican peso | $0.4 million increase | | 10% increase in Mexican peso | $0.4 million decrease | - The company does not currently hedge foreign currency exposure but may evaluate future hedging strategies[160](index=160&type=chunk) [Controls and Procedures](index=35&type=section&id=Item%204.%20Controls%20and%20Procedures) Management, including the CEO and CFO, concluded that disclosure controls and procedures were effective as of March 31, 2024, with no material changes to internal controls - The CEO and CFO concluded that disclosure controls and procedures were **effective** as of March 31, 2024[161](index=161&type=chunk) - No material changes occurred in the company's internal control over financial reporting during Q1 2024[162](index=162&type=chunk) PART II. OTHER INFORMATION [Legal Proceedings](index=36&type=section&id=Item%201.%20Legal%20Proceedings) The company is not currently a party to any material legal proceedings and is unaware of any contemplated against it - The company is not currently a party to any **material legal proceeding**[165](index=165&type=chunk) [Risk Factors](index=36&type=section&id=Item%201A.%20Risk%20Factors) The company faces significant risks including client concentration, geopolitical impacts, intense competition, talent retention, cybersecurity threats, AI adoption, and regulatory compliance - The company's revenues are highly dependent on a limited number of clients, with the **top ten clients** accounting for **55.3%** of Q1 2024 revenue[175](index=175&type=chunk) - The **military action in Ukraine** continues to disrupt service delivery, impair financial transactions, and cause work shifts[181](index=181&type=chunk)[182](index=182&type=chunk) - The company faces **intense competition** from global consulting firms and IT service providers, many with greater resources[189](index=189&type=chunk)[190](index=190&type=chunk) - Failure to attract and retain **highly skilled IT professionals** in a competitive market could significantly harm the business[193](index=193&type=chunk) - Social, ethical, and regulatory issues concerning **Artificial Intelligence (AI)** may lead to reputational harm, liability, or increased R&D costs[197](index=197&type=chunk)[198](index=198&type=chunk) - **Security breaches** and system failures could expose the company to liability, litigation, and reputational damage from unauthorized data access[199](index=199&type=chunk)[201](index=201&type=chunk) - Acquisitions may be difficult to integrate, divert management attention, and fail to achieve strategic goals, potentially exposing the company to unforeseen liabilities[254](index=254&type=chunk)[256](index=256&type=chunk) [Unregistered Sales of Equity Securities and Use of Proceeds](index=61&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) The company reported no unregistered sales of equity securities or use of proceeds during the period - None[320](index=320&type=chunk) [Default Upon Senior Securities](index=62&type=section&id=Item%203.%20Default%20Upon%20Senior%20Securities) The company reported no defaults upon senior securities - None[323](index=323&type=chunk) [Mine Safety Disclosures](index=62&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) Not applicable, the company reported no mine safety disclosures - None[324](index=324&type=chunk) [Other Information](index=62&type=section&id=Item%205.%20Other%20Information) No director or officer adopted or terminated a Rule 10b5-1 or non-Rule 10b5-1 trading arrangement during Q1 2024 - No director or officer adopted or terminated a **Rule 10b5-1** or **non-Rule 10b5-1 trading arrangement** during Q1 2024[325](index=325&type=chunk) [Exhibits](index=62&type=section&id=Item%206.%20Exhibits) The report includes filed exhibits such as CEO and CFO certifications under Sarbanes-Oxley Sections 302 and 906, and XBRL data files - Exhibits filed include **CEO and CFO certifications** under **Sarbanes-Oxley Sections 302 and 906**, and various **XBRL documents**[328](index=328&type=chunk)