Grid Dynamics(GDYN) - 2025 Q2 - Quarterly Report

CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS This section warns that the report contains forward-looking statements subject to substantial risks and uncertainties - The report contains forward-looking statements identifiable by terms such as "anticipates," "believes," "expects," and "will," which involve substantial risks and uncertainties[8] - Key factors influencing future performance include the evolution of digital engineering, ability to educate the market, revenue growth rate, financial results, GigaCube growth strategy, leadership in digital transformation, customer acquisition and retention, competitive advantages, technology scaling, new product innovation, brand protection, AI use, cybersecurity, market capitalization, strategic partnerships, international expansion, financing, operating expenses, seasonal trends, employee retention, acquisition benefits, regulatory changes, and geopolitical events (e.g., Ukraine conflict)[8] - Investors should not rely on forward-looking statements as predictions of future events, as actual results may differ materially due to various risks and uncertainties, including those detailed in "Item 1A, Risk Factors" in this and previous reports[10] PART I. FINANCIAL INFORMATION Item 1. Financial Statements (Unaudited) Presents unaudited condensed consolidated financial statements, including balance sheets, income, equity, and cash flows - The financial statements are unaudited, prepared in accordance with U.S. GAAP for interim information and SEC rules, and include all normal and recurring adjustments[27] - Operating results for the three and six months ended June 30, 2025, are not necessarily indicative of the full year's results[27] Condensed Consolidated Balance Sheets Balance sheets show financial position, with total assets increasing to $608.9 million and equity growing to $532.2 million | Metric (in thousands) | June 30, 2025 | December 31, 2024 | | :-------------------- | :------------ | :---------------- | | Cash and cash equivalents | $336,752 | $334,655 | | Trade receivable, net | $77,727 | $69,371 | | Total current assets | $433,019 | $423,304 | | Total assets | $608,907 | $592,192 | | Total current liabilities | $58,723 | $55,544 | | Total liabilities | $76,693 | $74,363 | | Total stockholders' equity | $532,214 | $517,829 | Condensed Consolidated Statements of Income/(Loss) and Comprehensive Income/(Loss) Revenues increased to $101.1 million (Q2) and $201.5 million (H1), achieving net income of $5.3 million and $8.2 million | Metric (in thousands) | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :-------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Revenues | $101,095 | $83,037 | $201,510 | $162,854 | | Cost of revenues | $66,592 | $53,474 | $130,010 | $105,626 | | Gross profit | $34,503 | $29,563 | $71,500 | $57,228 | | (Loss)/income from operations | $(123) | $40 | $(2,160) | $(5,502) | | Other income, net | $7,424 | $2,665 | $11,930 | $5,190 | | Income/(loss) before income tax | $7,301 | $2,705 | $9,770 | $(312) | | Provision for income taxes | $2,028 | $3,522 | $1,585 | $4,453 | | Net income/(loss) | $5,273 | $(817) | $8,185 | $(4,765) | | Basic EPS | $0.06 | $(0.01) | $0.10 | $(0.06) | | Diluted EPS | $0.06 | $(0.01) | $0.09 | $(0.06) | - Net income for Q2 2025 was $5.3 million, a significant improvement from a net loss of $0.8 million in Q2 2024[17] - Diluted EPS for Q2 2025 was $0.06, up from $(0.01) in Q2 2024[17] UNAUDITED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY Stockholders' equity increased to $532.2 million by June 30, 2025, driven by net income and stock-based compensation | Metric (in thousands) | Balance at Dec 31, 2024 | Balance at June 30, 2025 | | :-------------------- | :---------------------- | :----------------------- | | Additional paid-in capital | $532,578 | $533,389 | | Accumulated deficit | $(11,845) | $(3,660) | | Accumulated other comprehensive income/(loss) | $(2,912) | $2,477 | | Total stockholders' equity | $517,829 | $532,214 | - Key drivers of equity changes for the six months ended June 30, 2025, include net income ($8.2 million), stock-based compensation ($17.5 million), and foreign currency translation adjustment ($5.4 million), partially offset by issuance of shares and payments of tax obligations from net share settlement of vested stock awards ($(17.1 million))[19][22] UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS Operating cash flow increased to $23.7 million, while financing activities used $16.9 million, primarily for tax obligations | Metric (in thousands) | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :-------------------- | :----------------------------- | :----------------------------- | | Net cash provided by operating activities | $23,731 | $13,917 | | Net cash used in investing activities | $(7,313) | $(6,843) | | Net cash used in financing activities | $(16,853) | $(7,910) | | Net increase/(decrease) in cash, cash equivalents and restricted cash | $1,727 | $(1,185) | | Cash, cash equivalents and restricted cash, end of period | $336,882 | $256,042 | - Operating cash flow improved by $9.8 million year-over-year, primarily due to changes in working capital, including timing of employee compensation payments and customer collections[164] - Financing activities used $16.9 million, mainly due to $17.1 million in tax obligations from net share settlement of vested stock awards, an increase of $8.5 million compared to the prior year[166] Notes to Condensed Consolidated Financial Statements Detailed notes support the financial statements, covering policies, acquisitions, fair value, assets, liabilities, revenue, leases, taxes, and equity Note 1 — Nature of operations and summary of significant accounting policies Grid Dynamics provides technology consulting and engineering services, specializing in AI, cloud, data, and DevOps, with financial statements prepared under U.S. GAAP - Grid Dynamics is a leading provider of technology consulting, platform and product engineering, and advanced analytics services, with expertise in AI, data science, cloud computing, big data, and DevOps[25] - The company consolidates a variable interest entity (VIE) subcontractor because it has the power to direct the VIE's most significant activities and is its primary beneficiary[29] - The allowance for credit losses was $3.3 million as of June 30, 2025, up from **$2.7