Grid Dynamics(US:GDYN)2025-05-01 20:38Financial Performance - Revenues for the three months ended March 31, 2025, reached $100.4 million, an increase of 25.8% year-over-year from $79.8 million in the same period of 2024[113]. - Gross profit margin improved to 36.8%, up 2.1% compared to the prior year quarter, driven by higher revenues and improved utilization[113]. - Net income for the quarter was $2.9 million, a significant turnaround from a net loss of $3.9 million in the prior-year quarter[113]. - Non-GAAP EBITDA reached $14.6 million, or 14.5% of revenues, compared to $10.3 million, or 12.9% of revenues, in the corresponding period of 2024[113]. - Gross profit for Q1 2025 increased 33.7% to $37.0 million, with gross margins improving to 36.8% from 34.7% in the prior year[132]. - Non-GAAP net income for Q1 2025 was $9.95 million, compared to $7.62 million in the same period of 2024[150]. - Non-GAAP diluted EPS increased to $0.11 in Q1 2025, up from $0.10 in the prior year[150]. Cash Flow and Financing - Operating cash inflows improved by $6.1 million year-over-year, reaching $9.4 million[113]. - Net cash provided by operating activities increased by $6.1 million to $9.4 million for the three months ended March 31, 2025, compared to $3.2 million in the same period of 2024[157]. - Net cash used in financing activities was $15.8 million for the three months ended March 31, 2025, primarily due to tax withholding obligations related to share issuance, which increased by $8.7 million compared to Q1 2024[159]. - Grid Dynamics had cash and cash equivalents of $325.5 million, a decrease from $334.7 million at December 31, 2024[155]. - The company may need to seek additional equity or debt financing if cash resources are insufficient to meet cash requirements[155]. - Net cash used in investing activities was $3.3 million for the three months ended March 31, 2025, showing minimal change from $3.9 million in the same period of 2024[158]. - The revolving credit facility with JPMorgan Chase Bank provides $30.0 million of available borrowing capacity, recently extended to May 30, 2025[152]. - Grid Dynamics did not have any debt outstanding under the revolving credit facility as of March 31, 2025[155]. Customer and Market Dynamics - The top one customer accounted for 14.2% of revenues, while the top five customers accounted for 35.6% of revenues, indicating a slight decrease in revenue concentration compared to the previous year[121]. - The company continues to focus on diversifying its customer base, with a total of 204 customers as of March 31, 2025, down from 210 a year ago[118]. - The Retail vertical generated $31.5 million, accounting for 31.4% of total revenues, with a year-over-year growth of 28.0%[124]. - The Finance vertical's revenues doubled year-over-year to $25.0 million, contributing 24.9% of total revenues, driven by demand from fintech and insurance customers[125]. - The CPG and Manufacturing vertical saw a 12.7% increase in revenues, growing from $9.6 million to $10.8 million[127]. Operational Insights - Engineering, research, and development expenses increased by 48.4% to $6.5 million, reflecting the company's commitment to innovation[122]. - Engineering, research, and development expenses rose 48.4% to $6.5 million, reflecting continued investments in customer delivery operations[134]. - General and administrative expenses increased by 12.8% to $24.3 million, primarily due to costs associated with recent acquisitions[138]. - Other income, net for Q1 2025 was $4.5 million, up from $2.5 million in the prior-year period, driven by revaluation of acquisition-related contingent consideration[140]. Geopolitical and Currency Risks - Grid Dynamics is actively monitoring geopolitical risks, particularly related to the military action in Ukraine, which could impact operations and service delivery[109]. - Approximately 46.1% of Grid Dynamics' $102.5 million combined cost of revenues and total operating expenses were denominated in currencies other than the U.S. dollar for the three months ended March 31, 2025, compared to 39.1% of $85.4 million in the same period of 2024[165]. - A 10% decrease in the value of the Polish zloty against the U.S. dollar would have resulted in a $1.4 million increase in income from operations[168]. - Grid Dynamics expects to adopt and implement new hedging strategies in future periods to manage foreign currency exposure[167].