Grid Dynamics Holdings, Inc. (NASDAQ:GDYN) Q2 2023 Earnings Conference Call August 3, 2023 4:30 PM ET Company Participants Bin Chiang - Head of IR Leonard Livschitz - CEO Anil Doradla - CFO Conference Call Participants Puneet Jain - JPMorgan Josh Siegler - Cantor Fitzgerald Maggie Nolan - William Blair Bryan Bergin - TD Cowen Ryan Potter - Citigroup Mayank Tandon - Needham Bin Chiang Good afternoon, everyone. Welcome to Grid Dynamics Second Quarter 2023 Earnings Conference Call. I'm Bin Chiang, Head o ...

Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-Q (Mark One) x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended June 30, 2023 OR ¨ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to Securities registered pursuant to Section 12(b) of the Act: | Title of each class | Trading Symbol(s) | Name of each exchange on which reg ...

Financial Data and Key Metrics Changes - The first quarter revenue was $80.1 million, slightly above the guidance range of $78 million to $80 million, representing a year-over-year increase of 12.1% [17] - On a constant currency basis, year-over-year growth was 13.7%, with a 160 basis points headwind due to the strengthening of the dollar against the Euro and British pound [17] - GAAP net loss for the first quarter was $8 million, compared to a loss of $6.7 million in the fourth quarter of 2022 [20] - Non-GAAP net income was $6.5 million or $0.08 per share, down from $10.5 million or $0.14 per share in the fourth quarter [43] Business Line Data and Key Metrics Changes - The TMT (Technology, Media, and Telecommunications) vertical represented 33.5% of revenue, decreasing 1.3% sequentially but growing 25% year-over-year [64] - The retail vertical accounted for 31.7% of revenues, decreasing 1% sequentially and growing 9% year-over-year, with growth in home improvement and specialty retail offset by softness in brick-and-mortar stores [64] - The finance vertical represented 8.1% of revenue, increasing 4.3% sequentially and 43.9% year-over-year, driven by banking customers [40] Market Data and Key Metrics Changes - India has become one of the largest delivery countries, with significant operational progress in the GigaCube strategy aimed at reaching $1 billion in revenue [3][5] - The company has expanded its delivery locations globally, with a notable increase in headcount in Poland, Serbia, and Armenia, which has almost tripled over the last 12 months [7] Company Strategy and Development Direction - The GigaCube initiative is a strategic blueprint for the company, involving all parts of the organization, including sales, R&D, marketing, operations, and M&A [5] - The company is focusing on diversifying its project locations to lower-cost offshore areas while maintaining engineering quality [8] - Partnerships with Tier 1 players are crucial for growth, contributing significantly to lead generation and new enterprise clients [12] Management's Comments on Operating Environment and Future Outlook - Management views the current demand environment reset as an opportunity, adapting to changing customer investment behaviors [4] - The company remains cautious about spending across industry verticals but is optimistic about recession-resistant industries continuing to invest [26] - The management is confident in the growth of new accounts and the potential for existing clients to expand their budgets [70] Other Important Information - The company exited the first quarter with a total headcount of 3,744, down from 3,798 in the previous quarter, primarily due to rationalizing non-engineering roles [18] - Cash and cash equivalents totaled $258.4 million, up from $256.7 million in the previous quarter, attributed to increased operating cash flow [21] Q&A Session Summary Question: How is the balance between increasing wallet share with existing clients versus winning new logos? - Management expressed confidence in growth from new clients, attributing it to strategic focus and partnerships [46][47] Question: What is the expectation for the back half of the year given client visibility? - Management indicated a cautious approach but remains optimistic about potential growth if macro conditions do not worsen [52][53] Question: Are there levers to protect profitability amid revenue pressures? - Management highlighted a balance between investment and fiscal responsibility, emphasizing the importance of maintaining a strong technology team [55][56] Question: Is there increased competitive intensity in the industry? - Management acknowledged competitive pressures but emphasized the company's value proposition and relationships with C-level executives [58][80] Question: What are the hiring plans moving forward? - Management confirmed ongoing hiring efforts, particularly in engineering, while optimizing non-engineering roles [95][96]

Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-Q (Mark One) x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended March 31, 2023 OR ¨ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to Commission File Number: 001-38685 Grid Dynamics Holdings, Inc. (Exact Name of Registrant as Specified in its Charter) | Delaware | 83-063 ...

Special Note Regarding Forward-Looking Statements [Forward-Looking Statements Disclaimer](index=4&type=section&id=Forward-Looking%20Statements%20Disclaimer) This section outlines forward-looking statements in the 10-K, emphasizing substantial risks and uncertainties, not guarantees of future events - Forward-looking statements relate to future events or financial/operating performance, identified by terms like **"anticipates," "expects," "plans,"** or **"will"**[14](index=14&type=chunk) - Key areas include **revenue growth, financial results, market expansion, competitive advantages, innovation, strategic partnerships,** and **geopolitical events**[15](index=15&type=chunk) - Investors should not rely on forward-looking statements as actual results may differ materially due to risks, with no obligation to update except as required by law[17](index=17&type=chunk)[18](index=18&type=chunk) Part I [Business Overview](index=6&type=section&id=Item%201.%20Business) Grid Dynamics is a global digital engineering and IT services provider for enterprise digital transformations, leveraging AI, cloud, and big data expertise - Grid Dynamics is a leading global digital engineering and IT services provider with engineering centers across the US, Mexico, India, and Europe[24](index=24&type=chunk) - Core business includes technical consulting, software design, development, and internet service operations, with expertise in **AI, data science, cloud computing, big data,** and **DevOps**[24](index=24&type=chunk) - Recent acquisitions of Daxx, Tacit, and Mutual Mobile diversified geographical presence, client base, and industry verticals[25](index=25&type=chunk) [Business Combination](index=6&type=section&id=Business%20Combination) ChaSerg Technology Acquisition Corp. merged with Grid Dynamics International, Inc. on March 5, 2020, becoming Grid Dynamics Holdings, Inc. and trading as GDYN - On March 5, 2020, ChaSerg Technology Acquisition Corp. merged with Grid Dynamics International, Inc. (GDI)[22](index=22&type=chunk) - Following the merger, ChaSerg was renamed "Grid Dynamics Holdings, Inc." and its common stock began trading on NASDAQ as **"GDYN"**[22](index=22&type=chunk) [Industry Background and Market Opportunity](index=6&type=section&id=Industry%20Background%20and%20Market%20Opportunity) The digital transformation market is expanding rapidly, driven by enterprises seeking competitive advantages through technology and innovation, with AI shifting focus to automated decision-making - Digital transformation is a rapidly expanding market, with enterprises seeking technological innovation for competitive advantage[26](index=26&type=chunk)[27](index=27&type=chunk) - The rise of **AI** is shifting demand from business process automation to decision-making automation, driving investment in new digital products[27](index=27&type=chunk) - A shortage of technical software development talent in the US and Europe, coupled with growing acceptance of offshore delivery models, creates significant opportunities[28](index=28&type=chunk)[29](index=29&type=chunk)[30](index=30&type=chunk) [Strategies and Strengths](index=7&type=section&id=Strategies%20and%20Strengths) Grid Dynamics aims to be a global leader in digital transformation for Fortune 1000 companies by leveraging proprietary innovation-optimized processes, a culture-first approach to talent, and deep technical expertise - Grid Dynamics' strategy focuses on proprietary processes that meld technical consulting, engineering, and analytics into unified, cross-functional digital teams for innovation[32](index=32&type=chunk) - The company prioritizes a **"culture-first"** approach to talent development, selecting technical leadership based on cultural principles and offering extensive training programs like Grid University[33](index=33&type=chunk)[35](index=35&type=chunk) - Core strengths include deep technical expertise in emerging technologies such as **AI, cloud engineering, data science, DevOps,** and **microservices**[34](index=34&type=chunk) [Services and Solutions](index=7&type=section&id=Services%20and%20Solutions) Grid Dynamics offers high-value, high-impact services as a co-innovation partner, including technical consulting, lean prototypes, digital intelligence, scalable engineering, development culture, and experience design - Services include Technical Consulting (roadmap, value quantification, technology stack selection), Lean Prototypes (proof-of-concept, de-risking large programs), and Digital Intelligence (data science, AI for decision automation)[36](index=36&type=chunk)[37](index=37&type=chunk)[38](index=38&type=chunk) - The company also provides Scalable Engineering (distributed systems, cloud, big data expertise), Development Culture (agile teams, CI/CD, DevOps), and Experience Design (responsive web, mobile apps, conversational interfaces)[39](index=39&type=chunk)[40](index=40&type=chunk)[41](index=41&type=chunk) [Verticals](index=8&type=section&id=Verticals) Grid Dynamics serves key industry verticals including Tech, Media and Telecom, Retail, CPG/Manufacturing, and Finance, with Retail and Tech, Media and Telecom being the largest revenue contributors in 2022 - Grid Dynamics has strong domain knowledge and delivers tailored solutions in **Tech, Media and Telecom, Retail, CPG/Manufacturing,** and **Finance**[42](index=42&type=chunk) Revenue by Vertical (2020-2022) | Vertical | 2022 Revenue ($ thousands) | 2022 % of Total | 2021 Revenue ($ thousands) | 2021 % of Total | 2020 Revenue ($ thousands) | 2020 % of Total | | :---------------------- | :------------------------- | :-------------- | :------------------------- | :-------------- | :------------------------- | :-------------- | | Retail | 99,681 | 32.1 % | 61,717 | 29.2 % | 33,975 | 30.5 % | | Tech, Media and Telecom | 98,334 | 31.7 % | 67,689 | 32.0 % | 45,362 | 40.8 % | | CPG/Manufacturing | 61,216 | 19.7 % | 43,461 | 20.6 % | 14,202 | 12.8 % | | Finance | 21,893 | 7.1 % | 17,515 | 8.3 % | 13,589 | 12.2 % | | Other | 29,358 | 9.4 % | 20,898 | 9.9 % | 4,155 | 3.7 % | | **Total** | **310,482** | **100.0 %** | **211,280** | **100.0 %** | **111,283** | **100.0 %** | [Delivery Model and Operating Structure](index=9&type=section&id=Delivery%20Model%20and%20Operating%20Structure) Grid Dynamics employs a hybrid service delivery model with a majority of engineering personnel in the US and CEE, operating 3,798 personnel across 13 countries as of December 31, 2022, and maintaining ISO 27001:2013 certification - The service delivery model uses an efficient mix of on-site, off-site, and offshore staffing, with technology leaders at client premises for competitive advantage[48](index=48&type=chunk) - As of December 31, 2022, Grid Dynamics had **3,798** full-time and part-time personnel, delivering services from engineering centers in **13 countries**[49](index=49&type=chunk)[59](index=59&type=chunk) - The company maintains continuous **ISO 27001:2013 certification** since August 2014, ensuring stringent security standards across its operations[51](index=51&type=chunk)[52](index=52&type=chunk) [Sales and Marketing](index=10&type=section&id=Sales%20and%20Marketing) Grid Dynamics' sales and marketing strategy focuses on a "land and expand" approach, leveraging technology leaders at client premises, complemented by a dedicated sales force and marketing team - The sales and marketing strategy employs a **"land and expand"** model, with technology leaders at client sites driving business development[53](index=53&type=chunk) - A dedicated sales force and marketing team coordinate corporate branding, including sponsoring programming competitions and participating in industry conferences[54](index=54&type=chunk) [Customers](index=10&type=section&id=Customers) Grid Dynamics primarily serves Fortune 1000 corporations in North America, with high revenue concentration from its top two customers, and engagements typically governed by short-term, cancellable master services agreements - The client base primarily consists of **Fortune 1000 corporations** in North America, expanded to the UK, Continental Europe, and Asia through acquisitions[55](index=55&type=chunk) - Revenue concentration is high, with the top two customers each accounting for **10% or more of total revenue** in 2020, 2021, and 2022[56](index=56&type=chunk) - Engagements are typically governed by master services agreements supplemented by statements of work, which are often short-term and cancellable[56](index=56&type=chunk) [Competition](index=10&type=section&id=Competition) Grid Dynamics operates in a highly competitive market for technology and IT services, facing diverse competitors and relying on technical expertise, industry knowledge, and client responsiveness as key competitive factors - The market for technology and IT services is highly competitive, with rapid change and evolving industry standards[57](index=57&type=chunk) - Competitors include Globant, Endava, EPAM Systems, Accenture, Capgemini, Cognizant, Infosys, Wipro, and in-house IT departments[61](index=61&type=chunk) - Principal competitive factors are **technical expertise, industry knowledge, reputation, employee recruiting/retention, client responsiveness,** and **financial stability**[57](index=57&type=chunk) [Human Capital and Employees](index=10&type=section&id=Human%20Capital%20and%20Employees) Grid Dynamics' success depends on attracting and retaining highly skilled IT professionals, with 3,798 personnel across 13 countries as of December 31, 2022, achieved through continuous skill development and an entrepreneurial culture - As of December 31, 2022, Grid Dynamics had

Financial Data and Key Metrics Changes - In Q4 2022, the company's revenue was $80.6 million, exceeding guidance of $77 million to $78 million, representing a year-over-year growth of 21.1% and a sequential decline of 0.7% [21][28] - Non-GAAP EBITDA for Q4 was $16.5 million, or 20.4%, down from 21.1% in Q3 but up from 17.4% in the year-ago quarter [27][34] - The GAAP net loss for Q4 was $6.7 million, or $0.09 per share, consistent with Q3 but worse than a loss of $3.7 million, or $0.05 per share, in the year-ago quarter [28][34] Business Line Data and Key Metrics Changes - The Technology, Media, and Telecommunications (TMT) segment represented 33.7% of Q4 revenues, growing 3.1% sequentially and 38.8% year-over-year [22] - The Retail segment accounted for 31.8% of revenues, with a sequential growth of 1.6% and a year-over-year increase of 17.4% [22] - Consumer Packaged Goods (CPG) and Manufacturing represented 17.5% of revenue, decreasing by 12.3% sequentially but growing 3.4% year-over-year [23] Market Data and Key Metrics Changes - The company added 13 new enterprise customers in Q4, marking the highest number of new logos in its history [124] - The total customer count increased to 218 in Q4, up from 200 in Q3 [25] - The concentration of revenue from the top five customers was 43.2%, slightly down from 44.5% in Q3, while the top ten customers accounted for 60.4% of revenue [26] Company Strategy and Development Direction - The company introduced the Giga Cube initiative, aiming for $1 billion in revenue by focusing on three industry verticals: life sciences and pharma, financial services and insurance, and industrial and manufacturing [10][120] - The company is enhancing its consulting capabilities by hiring subject matter experts in selected industries to improve positioning with existing customers [16] - The company is focusing on partnerships with major players like Amazon AWS to enhance lead generation and service delivery [9] Management's Comments on Operating Environment and Future Outlook - Management noted a cautious outlook due to budget scrutiny and demand softness across clients, but expressed optimism about new client engagements and the potential for growth [4][15] - The company believes it is well-positioned to benefit from economic downturns, citing a robust pipeline of new client engagements [110] - Management highlighted the importance of delivering value to clients as they rationalize their IT service partners [119] Other Important Information - The company completed the acquisition of Mutual Mobile, which added 175 skilled employees and is expected to enhance cross-selling opportunities [127] - The company has seen a significant increase in headcount in Europe, with a tripling of staff in Poland, Serbia, and Armenia over the past year [8] Q&A Session Summary Question: How has the company achieved significant new logo growth and what does the current pipeline look like for 2023? - Management indicated that a robust pipeline exists, with a focus on M&A and growth initiatives to support the $1 billion revenue goal [38][39] Question: How is the capital allocation strategy evolving, particularly regarding M&A? - Management confirmed that the company is considering increasing the pace of M&A, leveraging its cash reserves for strategic acquisitions [45] Question: What trends are being observed in buying conversations and decision-making delays? - Management noted that while there is some softness in client spending, they remain optimistic about new client contributions and overall growth [48] Question: How much subject matter expertise is already in-house versus the need to hire externally? - Management stated that existing staff possess significant expertise, but there is a need for additional hires to deepen capabilities in targeted verticals [49] Question: What is the current state of employee relocation and client delivery teams? - Management reported that the transition of employees is largely complete, and client delivery teams are operating effectively [56] Question: How does the company view the pricing environment and delivery times compared to last year? - Management acknowledged wage inflation but emphasized their strategic approach to pricing and the quality of service delivery [61][98]

1 trusted engineering partner for digital transformation Grid Dynamics Investor Presentation NASDAQ: GDYN | Q3 2022 www.griddynamics.com Disclaimer 2 Forward-Looking Statements This communication contains "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934 that are not historical facts, and involve risks and uncertainties that could cause actual results of Grid Dynamics to differ materially from those expected an ...

Grid Dynamics Holdings, Inc. (NASDAQ:GDYN) Q3 2022 Earnings Conference Call November 3, 2022 4:30 PM ET Company Participants Bin Chiang - Head, Investor Relations Leonard Livschitz - Chief Executive Officer Anil Doradla - Chief Financial Officer Conference Call Participants Josh Siegler - Cantor Fitzgerald Ryan Potter - Citi Maggie Nolan - William Blair Puneet Jain - JPMorgan Bryan Bergin - Cowen Mayank Tandon - Needham Bin Chiang Good afternoon everyone. Welcome to Grid Dynamics Third Quarter 2022 Earnings ...

Grid Dynamics Holdings, Inc. (NASDAQ:GDYN) Q2 2022 Earnings Conference Call August 4, 2022 4:30 PM ET Company Participants Bin Chiang - Head, Investor Relations Leonard Livschitz - CEO & Director Anil Doradla - CFO & Secretary Conference Call Participants Puneet Jain - JP Morgan Mayank Tandon - Needham Maggy Nolan - William Blair Bryan Bergin - Cowen Ryan Potter - Citibank Joshua Siegler - Cantor Fitzgerald Bin Chiang Good afternoon, everyone. Welcome to Grid Dynamics Second Quarter 2022 Earnings Conference ...

1 trusted engineering partner for digital transformation Grid Dynamics Investor Presentation NASDAQ: GDYN | Q2 2022 www.griddynamics.com Disclaimer 2 Forward-Looking Statements This communication contains "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934 that are not historical facts, and involve risks and uncertainties that could cause actual results of Grid Dynamics to differ materially from those expected an ...