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)

Exhibit 99.1 Grid Dynamics Reports First Quarter 2024 Financial Results Revenue of $79.8 million and GAAP Net Loss of $3.9 million San Ramon, Calif. May 2, 2024 – Grid Dynamics Holdings, Inc. (Nasdaq: GDYN) ("Grid Dynamics" or "Company"), a leader in enterprise-level digital transformation, today announced results for the first quarter ended March 31, 2024. We are very pleased to report the first quarter 2024 revenues of $79.8 million that was higher than our outlook range of $77.0 million to $79.0 million ...

Part I [Business](index=6&type=section&id=Item%201.%20Business) Grid Dynamics offers technology consulting and engineering services, specializing in enterprise AI, cloud, data, and customer experience - Grid Dynamics provides technology consulting, platform engineering, and advanced analytics, distinguished by **over 7 years of Enterprise AI experience**[20](index=20&type=chunk)[21](index=21&type=chunk) - Core service areas include **Cloud Platform, AI/Machine Learning, Digital Engagement, and Supply Chain/IoT engineering**[32](index=32&type=chunk)[33](index=33&type=chunk)[35](index=35&type=chunk) - As of December 31, 2023, Grid Dynamics employed **3,920 personnel** across engineering centers in 12 countries[45](index=45&type=chunk)[57](index=57&type=chunk) - The company competes with **emerging digital services firms, global consulting firms, India-based IT providers, and in-house IT departments**[55](index=55&type=chunk)[58](index=58&type=chunk) - In 2023, **one customer accounted for 10% or more of revenue**, a decrease in top-client concentration from prior years[54](index=54&type=chunk) Revenues by Vertical (2021-2023) | Vertical | 2023 Revenue (in thousands) | 2023 % of Revenue | 2022 Revenue (in thousands) | 2022 % of Revenue | 2021 Revenue (in thousands) | 2021 % of Revenue | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | Retail | $102,551 | 32.8% | $99,681 | 32.1% | $61,717 | 29.2% | | Tech, Media and Telecom | $98,830 | 31.6% | $98,334 | 31.7% | $67,689 | 32.0% | | CPG/Manufacturing | $42,861 | 13.7% | $61,216 | 19.7% | $43,461 | 20.6% | | Finance | $28,842 | 9.2% | $21,893 | 7.1% | $17,515 | 8.3% | | Other | $39,826 | 12.7% | $29,358 | 9.4% | $20,898 | 9.9% | | **Total** | **$312,910** | **100.0%** | **$310,482** | **100.0%** | **$211,280** | **100.0%** | [Risk Factors](index=15&type=section&id=Item%201A.%20Risk%20Factors) The company faces risks from client concentration, the Ukraine conflict, macroeconomic pressures, intense competition, and talent retention - Revenue concentration remains high, with the **top 10 clients accounting for 56.1% of revenue in 2023**[81](index=81&type=chunk) - The **military conflict in Ukraine impacted operations**, leading to employee relocation and cessation of Russian Federation operations[88](index=88&type=chunk)[89](index=89&type=chunk)[90](index=90&type=chunk) - Macroeconomic conditions, including **inflation and rising interest rates**, could adversely affect client spending and growth[93](index=93&type=chunk) - Intense competition comes from **global consulting firms, digital transformation providers, and India-based IT service providers**[96](index=96&type=chunk)[97](index=97&type=chunk) - Failure to **attract and retain highly skilled IT professionals** poses a significant risk to operating costs and project delivery[100](index=100&type=chunk)[101](index=101&type=chunk) - Risks include **security breaches and cyberattacks** that could lead to unauthorized data access, liability, and reputational damage[108](index=108&type=chunk) - Social, ethical, and regulatory issues concerning **AI use could lead to reputational harm and decreased demand** for AI solutions[105](index=105&type=chunk)[106](index=106&type=chunk)[107](index=107&type=chunk) - Strategic acquisitions like **Tacit, Mutual Mobile, and NextSphere** carry integration risks and may not achieve anticipated goals[156](index=156&type=chunk) [Unresolved Staff Comments](index=40&type=section&id=Item%201B.%20Unresolved%20Staff%20Comments) The company reports that it has no unresolved staff comments from the SEC - None[218](index=218&type=chunk) [Cybersecurity](index=40&type=section&id=Item%201C.%20Cybersecurity) Grid Dynamics maintains an established cybersecurity risk management framework, overseen by the Board of Directors - The company has **established policies and processes for managing cybersecurity threats**, integrated into its overall risk management system[219](index=219&type=chunk)[220](index=220&type=chunk) - Cybersecurity governance is managed by a **CISO and management committee**, with Board audit committee oversight[227](index=227&type=chunk)[228](index=228&type=chunk) - The **COO reports quarterly to the audit committee** on cybersecurity risks, incidents, and system testing[230](index=230&type=chunk) - No cybersecurity incident has had a **significant impact on operations or financial standing**[225](index=225&type=chunk) [Properties](index=42&type=section&id=Item%202.%20Properties) Grid Dynamics leases all of its 23 facilities across 12 countries, with its principal executive office located in San Ramon, California - The company operates **23 leased facilities in 12 countries**, with its principal executive office in San Ramon, CA[231](index=231&type=chunk) [Legal Proceedings](index=42&type=section&id=Item%203.%20Legal%20Proceedings) The company is not currently a party to any material legal proceedings and is not aware of any material legal or governmental proceedings contemplated against it - Grid Dynamics is **not currently a party to any material legal proceedings**[232](index=232&type=chunk) [Mine Safety Disclosures](index=42&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) This item is not applicable to the company - Not applicable[233](index=233&type=chunk) Part II [Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities](index=43&type=section&id=Item%205.%20Market%20for%20Registrant%27s%20Common%20Equity%2C%20Related%20Stockholder%20Matters%20and%20Issuer%20Purchases%20of%20Equity%20Securities) Grid Dynamics' common stock is listed on NASDAQ under "GDYN"; no cash dividends are expected - The company's common stock has been listed on the NASDAQ under the symbol **"GDYN" since March 6, 2020**[236](index=236&type=chunk) - The company has **not paid cash dividends** and does not expect to in the foreseeable future, retaining earnings[238](index=238&type=chunk) Stock Performance Comparison (March 6, 2020 - December 31, 2023) | Company/Index | 03/06/2020 | 12/31/2020 | 12/31/2021 | 12/31/2022 | 12/31/2023 | | :--- | :--- | :--- | :--- | :--- | :--- | | Grid Dynamics Holdings, Inc. | $100.00 | $107.60 | $324.25 | $95.82 | $113.83 | | S&P 500 | $100.00 | $129.07 | $166.12 | $136.04 | $171.80 | | Peer Group | $100.00 | $154.70 | $237.79 | $154.37 | $190.69 | [Reserved](index=44&type=section&id=Item%206.%20%5BReserved%5D) This item is not applicable - Not applicable[244](index=244&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=44&type=section&id=Item%207.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) In 2023, Grid Dynamics reported **$312.9 million in revenue**, a slight increase, with a significantly reduced net loss [Fiscal Year Highlights](index=45&type=section&id=Fiscal%20Year%20Highlights) - In 2023, **revenue increased by 0.8% to $312.9 million**, while **GAAP gross margin decreased to 36.2%** and **net loss significantly decreased by 94.0% to $1.8 million**[249](index=249&type=chunk)[250](index=250&type=chunk) Summary of Financial Results (2021-2023) | Metric | 2023 | 2022 | 2021 | | :--- | :--- | :--- | :--- | | Revenues | $312,910 | $310,482 | $211,280 | | Gross profit | $113,146 | $120,590 | $87,728 | | Income/(loss) from operations | ($5,580) | ($21,008) | $50 | | Net loss | ($1,765) | ($29,214) | ($7,700) | | Diluted loss per share | ($0.02) | ($0.42) | ($0.13) | | Non-GAAP EBITDA | $44,246 | $58,213 | $39,077 | | Non-GAAP net income | $25,077 | $36,627 | $24,160 | | Non-GAAP diluted EPS | $0.32 | $0.51 | $0.36 | [Recent Acquisitions](index=46&type=section&id=Recent%20Acquisitions) - On April 18, 2023, the company acquired **NextSphere Technologies Inc.** to enhance technical offerings and expand its global footprint[252](index=252&type=chunk) - On December 23, 2022, the company acquired **Mutual Mobile Inc.** to accelerate strategic expansion into India[253](index=253&type=chunk) [Key Performance Indicators and Other Factors Affecting Performance](index=46&type=section&id=Key%20Performance%20Indicators%20and%20Other%20Factors%20Affecting%20Performance) Personnel by Region (as of Dec 31) | Region | 2023 | 2022 | 2021 | | :--- | :--- | :--- | :--- | | Americas | 567 | 521 | 386 | | Europe | 2,806 | 3,034 | 2,888 | | Rest of the world | 547 | 243 | — | | **Total** | **3,920** | **3,798** | **3,274** | Revenue Concentration by Customer Group | Customer Group | 2023 % of Revenue | 2022 % of Revenue | 2021 % of Revenue | | :--- | :--- | :--- | :--- | | Top one customer | 14.4% | 12.6% | 11.6% | | Top five customers | 37.0% | 43.5% | 43.9% | | Top ten customers | 56.1% | 59.7% | 60.4% | | Top twenty customers | 68.3% | 72.6% | 72.5% | [Results of Operations](index=50&type=section&id=Results%20of%20Operations) - **Revenue increased by 0.8% to $312.9 million in 2023**, with Retail growing 2.9% and CPG/Manufacturing decreasing 30.0%[284](index=284&type=chunk)[286](index=286&type=chunk) - **Gross margin decreased from 38.8% to 36.2% in 2023**, primarily due to increased cost of revenues from acquisitions and higher compensation[289](index=289&type=chunk)[290](index=290&type=chunk) - **General and administrative expenses decreased by 24.7% to $79.8 million in 2023**, driven by lower stock-based compensation and reorganization costs[296](index=296&type=chunk) - **Other income increased to $10.4 million in 2023** from $0.6 million, mainly from money market funds and a $4.2 million write-off[299](index=299&type=chunk) [Non-GAAP Measures](index=52&type=section&id=Non-GAAP%20Measures) Reconciliation of GAAP Net Loss to Non-GAAP EBITDA | (in thousands) | 2023 | 2022 | 2021 | | :--- | :--- | :--- | :--- | | **GAAP net loss** | **($1,765)** | **($29,214)** | **($7,700)** | | Depreciation and amortization | $8,926 | $6,626 | $5,049 | | Provision for income taxes | $6,603 | $8,761 | $5,248 | | Stock-based compensation | $35,516 | $60,968 | $33,036 | | Geographic reorganization | $1,858 | $11,023 | $0 | | Transaction and transformation-related costs | $2,038 | $604 | $942 | | Restructuring | $1,488 | $0 | $0 | | Other (income)/expense, net | ($10,418) | ($555) | $2,502 | | **Non-GAAP EBITDA** | **$44,246** | **$58,213** | **$39,077** | [Liquidity and Capital Resources](index=54&type=section&id=Liquidity%20and%20Capital%20Resources) - As of December 31, 2023, the company held **$257.2 million in cash and cash equivalents**, primarily from operations[311](index=311&type=chunk)[312](index=312&type=chunk) Summary of Cash Flows (in thousands) | Cash Flow Activity | 2023 | 2022 | 2021 | | :--- | :--- | :--- | :--- | | Net cash provided by operating activities | $41,093 | $31,652 | $17,973 | | Net cash used in investing activities | ($25,950) | ($16,323) | ($35,366) | | Net cash (used in)/provided by financing activities | ($16,321) | $97,758 | $49,134 | [Quantitative and Qualitative Disclosures about Market Risk](index=56&type=section&id=Item%207A.%20Quantitative%20and%20Qualitative%20Disclosures%20about%20Market%20Risk) The company's primary market risk is **foreign currency exchange rate fluctuations**, impacting a significant portion of operating expenses - The company faces **foreign currency risk**, with **37.9% of combined cost of revenue and operating expenses in 2023** denominated in non-USD currencies[321](index=321&type=chunk)[322](index=322&type=chunk) - A 10% decrease in **Polish zloty against USD would increase income from operations by $3.7 million**[323](index=323&type=chunk) - The company **does not currently hedge foreign currency exposure** but aims to minimize it by matching expenses to revenue currencies[325](index=325&type=chunk) [Financial Statements and Supplementary Data](index=57&type=section&id=Item%208.%20Financial%20Statements%20and%20Supplementary%20Data) This section presents the company's audited consolidated financial statements for fiscal years 2021-2023 - Grant Thornton LLP issued an **unqualified opinion on the company's financial statements** and internal control over financial reporting[330](index=330&type=chunk)[331](index=331&type=chunk)[337](index=337&type=chunk) [Changes in and Disagreements With Accountants on Accounting and Financial Disclosure](index=96&type=section&id=Item%209.%20Changes%20in%20and%20Disagreements%20With%20Accountants%20on%20Accounting%20and%20Financial%20Disclosure) The company reports no changes in or disagreements with its accountants on accounting and financial disclosure - None[514](index=514&type=chunk) [Controls and Procedures](index=96&type=section&id=Item%209A.%20Controls%20and%20Procedures) Management concluded that the company's internal control over financial reporting and disclosure controls were effective - Management concluded that the company's **internal control over financial reporting was effective** as of fiscal 2023 end[517](index=517&type=chunk) - The evaluation of internal control excluded **NextSphere Technologies, Inc.**, acquired during 2023[516](index=516&type=chunk) - The **CEO and CFO concluded disclosure controls and procedures were effective** as of December 31, 2023[518](index=518&type=chunk) [Other Information](index=96&type=section&id=Item%209B.%20Other%20Information) The company reports no other information for this item - None[521](index=521&type=chunk) [Disclosure Regarding Foreign Jurisdictions that Prevent Inspections](index=97&type=section&id=Item%209C.%20Disclosure%20Regarding%20Foreign%20Jurisdictions%20that%20Prevent%20Inspections) This item is not applicable to the company - Not applicable[522](index=522&type=chunk) Part III This section incorporates information by reference from the company's upcoming Definitive Proxy Statement for the Annual Meeting of Stockholders [Directors, Executive Officers and Corporate Governance](index=98&type=section&id=Item%2010.%20Directors%2C%20Executive%20Officers%20and%20Corporate%20Governance) Information regarding directors, executive officers, and corporate governance is incorporated by reference from the company's upcoming Proxy Statement - Information for this item will be **incorporated by reference from the company's Proxy Statement**[524](index=524&type=chunk) [Executive Compensation](index=98&type=section&id=Item%2011.%20Executive%20Compensation) Information regarding executive compensation is incorporated by reference from the company's upcoming Proxy Statement - Information for this item will be **incorporated by reference from the company's Proxy Statement**[526](index=526&type=chunk) [Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters](index=98&type=section&id=Item%2012.%20Security%20Ownership%20of%20Certain%20Beneficial%20Owners%20and%20Management%20and%20Related%20Stockholder%20Matters) Information regarding security ownership is incorporated by reference from the company's upcoming Proxy Statement - Information for this item will be **incorporated by reference from the company's Proxy Statement**[527](index=527&type=chunk) [Certain Relationships and Related Transactions, and Director Independence](index=98&type=section&id=Item%2013.%20Certain%20Relationships%20and%20Related%20Transactions%2C%20and%20Director%20Independence) Information regarding certain relationships, related transactions, and director independence is incorporated by reference from the company's upcoming Proxy Statement - Information for this item will be **incorporated by reference from the company's Proxy Statement**[528](index=528&type=chunk) [Principal Accounting Fees and Services](index=98&type=section&id=Item%2014.%20Principal%20Accounting%20Fees%20and%20Services) Information regarding principal accounting fees and services is incorporated by reference from the company's upcoming Proxy Statement - Information for this item will be **incorporated by reference from the company's Proxy Statement**[529](index=529&type=chunk) Part IV [Exhibit and Financial Statement Schedules](index=99&type=section&id=Item%2015.%20Exhibit%20and%20Financial%20Statement%20Schedules) This section lists documents filed as part of the Annual Report, with financial statements referenced under Item 8 - All financial statement schedules are **omitted as not required or included elsewhere** in the consolidated financial statements[532](index=532&type=chunk) [Form 10-K Summary](index=101&type=section&id=Item%2016.%20Form%2010-K%20Summary) The company has not provided a summary for this item - None[537](index=537&type=chunk)

Financial Data and Key Metrics Changes - The fourth quarter revenue was $78.1 million, slightly above guidance and Wall Street expectations, with a sequential growth of 0.8% but a year-over-year decline of 3.1% [24] - Non-GAAP net income for the fourth quarter was $5.7 million, or $0.07 per share, compared to $5.9 million, or $0.08 per share in the previous quarter [9] - GAAP net income in the fourth quarter totaled $2.9 million, or $0.04 per share, an increase from $0.7 million, or $0.01 per share in the third quarter [78] Business Line Data and Key Metrics Changes - The Retail segment, the largest vertical, represented 31.5% of revenues, decreasing by 7.4% sequentially and 4.2% year-over-year [75] - The Finance vertical represented 10.6% of revenue, increasing by 13.4% sequentially and 32.6% year-over-year, driven by financial technology customers and new logos [47] - The Other segment accounted for 14.5% of fourth quarter revenue, up 11.5% sequentially, driven by strength in healthcare and restaurant industries [25] Market Data and Key Metrics Changes - Revenue from the top five customers was 39.7%, down from 43.2% year-over-year, indicating greater diversification [30] - The company serves customers across 18 countries, with a focus on expanding its presence in India, Poland, and Romania [29][43] - The demand environment is improving, with customers either maintaining or moderately increasing their spending [18] Company Strategy and Development Direction - The GigaCube strategy aims for a billion-dollar revenue target, focusing on knowledge management, partnerships, new verticals, and larger deals [44] - The company is investing in AI capabilities, with over 25% of engineers trained in generative AI, reflecting a commitment to enhancing service offerings [17] - Partnerships contributed 13% of overall revenue in 2023, with a focus on capturing greater wallet share from hyperscalers and SaaS companies [72] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about returning to positive momentum, particularly with new enterprise logos and existing customer trends [4] - The company anticipates a rebound in growth, with Q2 expected to be a new high watermark for revenue [82] - The macro environment is stabilizing, with a reduction in revenue headwinds from large existing customers expected in 2024 [41] Other Important Information - Cash and cash equivalents totaled $257.2 million at the end of Q4, up from $253.7 million in the previous quarter [50] - The company is focused on maintaining a lower growth rate in operating expenses compared to revenue growth [93] Q&A Session Summary Question: Visibility on second quarter performance - Management expects Q2 to be a new high watermark in revenue, indicating optimism about recovery [82] Question: Headcount growth and demand recovery - Headcount growth is seen as a sign of future demand recovery, particularly in India [86] Question: Changes in sales strategy for 2024 - The company plans to balance efforts between expanding existing client relationships and acquiring new logos [88] Question: Contribution from partnerships in 2024 - Partnerships are expected to continue contributing significantly, with a focus on becoming an advisory partner [107][109] Question: Update on capital allocation - The focus is on M&A and cash generation, with an emphasis on developing AI skills [111][112] Question: AI-related metrics and demand - There is significant activity in AI projects, with many new engagements incorporating AI components [114][135]

Exhibit 99.1 Grid Dynamics Reports Fourth Quarter and Full Year 2023 Financial Results Fourth Quarter Revenue of $78.1 million and Full Year Revenue of $312.9 million San Ramon Calif. – February 22, 2024 – Grid Dynamics Holdings, Inc. (NASDAQ: GDYN) ("Grid Dynamics", "the Company"), a leader in enterprise-level digital transformation, today announced results for its fourth quarter and full year ended December 31, 2023. We are very pleased to report revenue of $78.1 million in the fourth quarter 2023 that wa ...

Financial Performance - Total revenue for Q3 2023 was $77.4 million, a 0.1% increase sequentially but a (4.6)% decrease year-over-year[28] - GAAP gross profit was $28.2 million, representing 36.4% of revenue in Q3 2023[28] - Non-GAAP gross profit was $28.7 million, or 37.0% of revenue[28] - Non-GAAP EBITDA was $10.7 million, representing 13.9% of revenue[28] - Net Income was $0.7M, 0.9% of revenue[28] - Non-GAAP Net Income was $5.9M, 7.6% of revenue[28] Business Strategy and Growth - Grid Dynamics aims to reach $1 billion in annual revenue through the GigaCube growth framework[36] - The company employs an 85-10-5 approach to revenue growth, focusing on mature clients, emerging clients, and new logos respectively[157] - Grid Dynamics leverages a globally distributed delivery model to execute acquisitions and drive growth[170] - The company is focused on expanding its presence across Europe, India, and the Americas[37] Industry Focus and Expertise - Retail accounted for 29% of Q3 2023 revenue[42] - TMT (Technology, Media, and Telecom) accounted for 32% of revenue[75] - Finance accounted for 8% of Q3 2023 revenue[42] - CPG (Consumer Packaged Goods) accounted for 21% of revenue[75]

[PART I. FINANCIAL INFORMATION](index=6&type=section&id=PART%20I.%20FINANCIAL%20INFORMATION) [Financial Statements (Unaudited)](index=6&type=section&id=Item%201.%20Financial%20Statements%20(Unaudited)) The unaudited condensed consolidated financial statements present total assets of $435.8 million, Q3 2023 revenue of $77.4 million, and a net income of $0.7 million [Condensed Consolidated Balance Sheets](index=6&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) The balance sheet as of September 30, 2023, shows total assets of $435.8 million, total liabilities of $62.8 million, and stockholders' equity of $372.9 million Condensed Consolidated Balance Sheet Highlights (in thousands) | Account | September 30, 2023 | December 31, 2022 | | :--- | :--- | :--- | | **Assets** | | | | Cash and cash equivalents | $253,713 | $256,729 | | Total current assets | $326,053 | $323,126 | | Goodwill | $54,633 | $45,514 | | **Total assets** | **$435,750** | **$411,146** | | **Liabilities and Equity** | | | | Total current liabilities | $52,470 | $38,710 | | **Total liabilities** | **$62,826** | **$48,102** | | **Total stockholders' equity** | **$372,924** | **$363,044** | [Condensed Consolidated Statements of Income/(Loss) and Comprehensive Income/(Loss)](index=7&type=section&id=Condensed%20Consolidated%20Statements%20of%20Income%2F(Loss)%20and%20Comprehensive%20Income%2F(Loss)) For Q3 2023, revenues were $77.4 million with a net income of $0.7 million, while nine-month revenues reached $234.8 million with a net loss of $4.7 million Statement of Income Highlights (in thousands, except per share data) | Metric | Q3 2023 | Q3 2022 | Nine Months 2023 | Nine Months 2022 | | :--- | :--- | :--- | :--- | :--- | | **Revenues** | **$77,419** | **$81,161** | **$234,841** | **$229,906** | | Gross profit | $28,152 | $32,670 | $85,032 | $88,310 | | Income/(loss) from operations | $143 | $(4,750) | $(4,515) | $(15,396) | | **Net income/(loss)** | **$676** | **$(6,659)** | **$(4,667)** | **$(22,512)** | | Diluted EPS | $0.01 | $(0.10) | $(0.06) | $(0.33) | [Condensed Consolidated Statements of Stockholders' Equity](index=8&type=section&id=Condensed%20Consolidated%20Statements%20of%20Stockholders'%20Equity) Stockholders' equity increased to $372.9 million by September 30, 2023, primarily due to $27.7 million in stock-based compensation, offset by a $4.7 million net loss - Total stockholders' equity grew to **$372.9 million** at September 30, 2023, from **$363.0 million** at December 31, 2022[21](index=21&type=chunk) - Key activities impacting equity during the first nine months of 2023 included a net loss of **$4.7 million**, stock-based compensation of **$27.7 million**, and payments of tax obligations from net share settlements of **$15.0 million**[21](index=21&type=chunk)[24](index=24&type=chunk) [Condensed Consolidated Statements of Cash Flows](index=10&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) Net cash provided by operating activities significantly increased to $33.5 million for the nine months ended September 30, 2023, with cash and cash equivalents ending at $253.7 million Cash Flow Summary (Nine months ended September 30, in thousands) | Cash Flow Activity | 2023 | 2022 | | :--- | :--- | :--- | | Net cash provided by operating activities | $33,537 | $19,639 | | Net cash used in investing activities | $(23,423) | $(5,381) | | Net cash (used in)/provided by financing activities | $(14,467) | $98,503 | | **Net increase/(decrease) in cash** | **$(3,016)** | **$110,824** | | Cash and cash equivalents, end of period | $253,713 | $255,188 | - The primary use of cash in investing activities was **$17.8 million** for the acquisition of a business, net of cash acquired[24](index=24&type=chunk) [Notes to Condensed Consolidated Financial Statements](index=11&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements) The notes detail significant accounting policies, including recent acquisitions, revenue concentration by geography and vertical, and stock-based compensation expenses - On April 18, 2023, the Company acquired NextSphere Technologies for a total purchase consideration of **$25.2 million**, including **$24.3 million** in cash and **$0.9 million** in contingent consideration[34](index=34&type=chunk) - During Q3 2023, the company concluded that performance targets for the NextSphere and Mutual Mobile acquisitions would not be met and reduced the related earn-out liabilities to zero, resulting in a gain from the change in fair value[43](index=43&type=chunk)[44](index=44&type=chunk) Revenue by Vertical (Nine Months Ended Sep 30, in thousands) | Vertical | 2023 | 2022 | | :--- | :--- | :--- | | Retail | $77,972 | $74,019 | | Technology, Media and Telecom | $74,639 | $71,170 | | CPG/Manufacturing | $33,186 | $47,127 | | Finance | $20,562 | $15,649 | | Other | $28,482 | $21,941 | | **Total Revenues** | **$234,841** | **$229,906** | - Stock-based compensation expense totaled **$7.3 million** for Q3 2023 and **$27.7 million** for the nine months ended September 30, 2023, a decrease from **$17.6 million** and **$42.6 million** in the respective 2022 periods[75](index=75&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=26&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses the 4.6% Q3 2023 revenue decline, improved GAAP Net Income, geopolitical impacts, and the company's strong liquidity position Q3 2023 vs Q3 2022 Financial Results (in thousands) | Metric | Q3 2023 | Q3 2022 | Change (%) | | :--- | :--- | :--- | :--- | | Revenues | $77,419 | $81,161 | (4.6)% | | Gross Profit | $28,152 | $32,670 | (13.8)% | | Income/(loss) from operations | $143 | $(4,750) | (103.0)% | | Net income/(loss) | $676 | $(6,659) | (110.2)% | | Non-GAAP EBITDA | $10,733 | $17,086 | (37.2)% | - The year-over-year decrease in Q3 revenue was largely due to macroeconomic conditions, with Retail growing **5.1%**, TMT decreasing **9.9%**, and CPG/Manufacturing declining **39.8%**[94](index=94&type=chunk)[95](index=95&type=chunk) - The company has ceased operations in Russia and expanded its global footprint with new offices in Switzerland and Armenia, and workforce expansion in India[100](index=100&type=chunk) - Total personnel grew to **3,823** as of September 30, 2023, from **3,746** a year ago, with a significant shift in employee location from CEE to the Americas and Rest of the World[107](index=107&type=chunk) [Quantitative and Qualitative Disclosures About Market Risk](index=37&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The company's primary market risk is foreign currency exchange rate fluctuations, with 38.0% of Q3 2023 costs in foreign currencies, and it does not currently hedge this exposure - The company is exposed to foreign currency risk, with approximately **38.0%** of its combined cost of revenue and total operating expenses in Q3 2023 denominated in currencies other than the U.S. dollar[151](index=151&type=chunk) Sensitivity to 10% Currency Depreciation vs. USD (Q3 2023) | Currency | Impact on Income from Operations | | :--- | :--- | | Polish zloty (PLN) | +$0.9 million | | Mexican peso (MXN) | +$0.3 million | - The company does not currently hedge its foreign currency exposure but seeks to minimize it by matching expenses to revenues in the same currency where possible[150](index=150&type=chunk)[155](index=155&type=chunk) [Controls and Procedures](index=39&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded the company's disclosure controls and procedures were effective as of September 30, 2023, with no material changes in internal control over financial reporting - The CEO and CFO concluded that the company's disclosure controls and procedures were effective as of September 30, 2023[156](index=156&type=chunk) - No changes in internal control over financial reporting occurred during the quarter that have materially affected, or are reasonably likely to materially affect, internal controls[157](index=157&type=chunk) [PART II. OTHER INFORMATION](index=40&type=section&id=PART%20II.%20OTHER%20INFORMATION) [Legal Proceedings](index=40&type=section&id=Item%201.%20Legal%20Proceedings) The company is not currently a party to any material legal proceedings, nor is it aware of any such contemplated actions against it - As of the filing date, the company is not currently a party to any material legal proceedings[160](index=160&type=chunk) [Risk Factors](index=40&type=section&id=Item%201A.%20Risk%20Factors) This section outlines significant business risks, including client concentration, intense competition, macroeconomic and geopolitical impacts, talent retention, security breaches, and challenges related to global operations and technology adaptation - The company's revenues are highly dependent on a limited number of clients; the top 10 clients accounted for **56.8%** of revenue in the first nine months of 2023[170](index=170&type=chunk) - The military action in Ukraine has affected and may continue to affect business operations, including service delivery and financial transactions[176](index=176&type=chunk) - The company faces intense competition from global consulting firms, traditional IT service providers, and digital transformation specialists[184](index=184&type=chunk)[185](index=185&type=chunk) - Failure to attract, hire, and retain highly skilled IT professionals in a competitive market poses a significant risk to business operations and growth[188](index=188&type=chunk) - The company is exposed to risks from acquisitions, including difficulties with integration, diversion of management attention, and potential unforeseen liabilities, as seen with recent acquisitions of Daxx, Tacit, Mutual Mobile, and NextSphere[250](index=250&type=chunk) [Unregistered Sales of Equity Securities and Use of Proceeds](index=66&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) The company reported no unregistered sales of its equity securities during the reporting period - None[314](index=314&type=chunk) [Default Upon Senior Securities](index=66&type=section&id=Item%203.%20Default%20Upon%20Senior%20Securities) The company reported no defaults upon its senior securities - None[316](index=316&type=chunk) [Mine Safety Disclosures](index=66&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) This item is not applicable to the company - None[317](index=317&type=chunk) [Other Information](index=66&type=section&id=Item%205.%20Other%20Information) During Q3, CFO Anil Doradla and CEO Leonard Livschitz adopted Rule 10b5-1 trading plans for the sale of company common stock - On August 30, 2023, CFO Anil Doradla adopted a Rule 10b5-1 trading arrangement for the sale of up to **92,084** shares of common stock[319](index=319&type=chunk) - On September 1, 2023, CEO Leonard Livschitz adopted a Rule 10b5-1 trading arrangement for the sale of between **260,000** and **685,638** shares of common stock[320](index=320&type=chunk) [Exhibits](index=67&type=section&id=Item%206.%20Exhibits) This section lists the exhibits filed with the quarterly report, including CEO and CFO certifications and Interactive Data Files (XBRL) - The exhibits filed with the report include CEO and CFO certifications under Sections 302 and 906 of the Sarbanes-Oxley Act, and XBRL data files[324](index=324&type=chunk)