Financial Data and Key Metrics Changes - Revenue for the second quarter of 2025 was $242 million, representing a 10% sequential growth [14] - Record remaining performance obligations (RPOs) grew 2% sequentially to $347 million and increased 30% year over year [14] - Current RPOs were $134 million, up 5% sequentially and up 30% year over year [14] - Non-GAAP gross margin reached a record 56.8%, a 60 basis point sequential increase [15] - Free cash flow was $36 million, marking the ninth consecutive quarter of generating eight-digit free cash flow [16] - Days sales outstanding (DSO) was a record 24 days, down six days sequentially [17] Business Line Data and Key Metrics Changes - The company added 18 new broadband service provider (BSP) customers, primarily through competitive takeaways [16] - The strength in gross margin was attributed to customer mix and the success of VSP customers in winning new subscribers [15] Market Data and Key Metrics Changes - The demand environment was described as very strong and broad-based during the second quarter [14] - The company anticipates continued sequential growth in the third quarter of 2025, with revenue guidance between $243 million and $249 million [18] Company Strategy and Development Direction - The company is transitioning from a network system company to a platform company, focusing on broadband experience providers [20] - The introduction of AgenTeq AI is expected to enhance operational efficiency and customer experience, allowing for faster deployment of value-added services [20][39] - The third generation platform aims to eliminate geographic constraints and enable private cloud solutions for large customers [90] Management's Comments on Operating Environment and Future Outlook - Management emphasized the significant impact of AI on the broadband industry, predicting a transformation in how broadband providers operate [20][99] - The company is positioned to leverage its platform and investments to drive growth and enhance customer success [20][102] - Management expressed confidence in achieving double-digit growth in 2026, supported by improved visibility and demand [82] Other Important Information - The company has invested over $2 billion into its platform over the past 15 years [9] - The third generation platform is in preproduction, with a launch expected in the second half of 2025 [10] Q&A Session Summary Question: Clarification on normalized numbers and growth for smaller customers - Management indicated that the growth for smaller customers on an organic basis was mid-single digits [27] Question: Impact of AI on OpEx and ARPU - Management acknowledged that investments in AI may require a slight increase in OpEx but emphasized that the transformation would enhance customer monetization opportunities [32] Question: Update on supply situation and capacity in Mexico - Management reported a stable manufacturing environment and indicated that capacity expansion would take 9 to 18 months [52] Question: Confidence in the BEAD program's impact on closing the digital divide - Management expressed cautious optimism about the program but noted it is not included in current forecasts [66] Question: Elements of AgenTeq AI benefiting end subscribers - Management highlighted that the first iteration of the AI platform would enhance customer-facing capabilities, including performance analysis and troubleshooting [75] Question: Expectations for double-digit growth in 2026 - Management confirmed the expectation for double-digit growth in 2026, supported by the ongoing rollout of the third generation platform [82]

Financial Data and Key Metrics Changes - Subscription revenue increased significantly from 87% in Q1 2024 to 99% in Q1 2025, indicating a strong commitment to recurring revenue [64] - Gross margin improved to 88% from 82% in Q1 2024, reflecting better cost discipline [64] - Earnings per share improved from negative $0.34 to negative $0.08 year-over-year [64] Business Line Data and Key Metrics Changes - Three large Fortune 500 customers expanded their contracts, pushing annual recurring revenue (ARR) up by 130% of their original contract value [63] - The company reported a decline in revenue due to the timing of renewals from two large customers, which were pushed to Q4 instead of Q1 [65] Market Data and Key Metrics Changes - The company is deployed in over 200 cities across 50 countries, indicating a strong global presence [15] - The focus on employee experience solutions is becoming increasingly relevant as companies navigate the return to office (RTO) challenges [5][28] Company Strategy and Development Direction - The company aims to enhance customer success by focusing on user engagement and adoption of its Sky platform [18] - The strategic priorities for 2025 include customer success, deeper AI adoption, and analytics usage [70] - The company is positioning itself as a leader in the employee experience software category, leveraging its AI capabilities [76] Management's Comments on Operating Environment and Future Outlook - Management noted that the workplace is undergoing significant transformation, with hybrid work becoming the new operating model [6] - There is a strong belief that organizations that rethink workplace experiences will thrive in the current environment [8] - The company is optimistic about its growth potential, citing a fragmented competitive landscape and a singular vision to create the best employee experience [81] Other Important Information - The company has filed for S3 eligibility, enhancing its liquidity position [70] - The partnership with Google Cloud is expected to drive cost efficiencies and innovation [80] Q&A Session Summary Question: What is the current shares outstanding? - The current shares outstanding are approximately 19,800,000 [82] Question: How much total debt is currently outstanding? - The total debt, including the recent $4,000,000 drawn, is about 10,000,000 [82] Question: Will the company share who its clients are? - The company has case studies available, but confidentiality agreements limit the disclosure of client details [83] Question: After soft Q1 revenue results, do you expect total revenue growth or subscription revenue growth year over year in '25 versus '24? - The company is not providing official guidance but aims for ARR growth as a main initiative [87] Question: Do the three large customer renewals include the six renewals mentioned in 2024? - No, these are three new renewals in addition to the six mentioned previously [91]

Financial Data and Key Metrics Changes - The company reported revenues of $100.4 million for Q1 2025, representing a year-over-year growth of 25.8% and slightly exceeding guidance [33] - Non-GAAP EBITDA for the quarter was $14.6 million, outperforming guidance and reflecting strong revenue recognition timing [33] - GAAP net income was $2.9 million, a decrease from the previous quarter due to higher operating costs [39] Business Line Data and Key Metrics Changes - Retail accounted for 31.4% of total revenues, growing 28% year-over-year but declining 3.7% sequentially [34] - Finance became the second largest vertical, contributing 24.9% of total revenues with a year-over-year growth of 144.3% driven by recent acquisitions [34] - TMT represented 23.5% of revenues, remaining flat sequentially and declining 1.8% year-over-year [35] Market Data and Key Metrics Changes - The company experienced a strong demand environment, particularly in the financial sector, with three of the top ten customers now in finance [7] - Partnerships contributed 16% of total revenue in Q1, with expectations for acceleration throughout 2025 [14] - The company noted increased traction with hyperscalers, particularly Google, leading to significant migration and modernization programs [15] Company Strategy and Development Direction - The company aims to align investments with changing industry needs, focusing on technological leadership and innovative solutions [13] - AI initiatives are a key focus, with a growing pipeline of opportunities and a shift towards enterprise-scale implementations [11] - The strategy includes expanding capabilities in AI and platform engineering to deliver measurable client impact [29] Management's Comments on Operating Environment and Future Outlook - Management acknowledged ongoing macroeconomic uncertainties but expressed confidence in navigating near-term volatility [14] - The outlook for Q2 2025 anticipates revenues between $100 million and $102 million, with a full-year revenue outlook maintained at $415 million to $435 million [40][41] - Management highlighted a strong billable engineering headcount as a leading indicator of future growth [8] Other Important Information - The company successfully integrated engineering teams from recent acquisitions to support enterprise accounts [10] - The internship program gained momentum, with several hundred interns placed in billable roles [20] - The company is expanding its presence in India, which is expected to become a significant delivery hub [79] Q&A Session Summary Question: Can you provide insights on client behavior and decision-making pace? - Management noted no major impacts from recent economic activities, with strategic projects continuing uninterrupted [47][48] Question: What is the guidance for the year based on current contracts? - Management indicated that contractually committed projects are stable, with a good ramp-up expected in the coming months [50][51] Question: How is the hiring strategy evolving? - The company has maintained a consistent hiring approach, focusing on internal skill development rather than market dependency [54][56] Question: Are there any changes in client behavior, particularly in retail? - Management reported stable client relationships, with no significant slowdowns expected, especially in online services [62][67] Question: What drives the visibility for growth in the second half of the year? - Management highlighted a combination of existing client ramp-ups and new client acquisitions as key growth drivers [81][88]

Financial Data and Key Metrics Changes - Grid Dynamics reported revenues of $100.4 million for Q1 2025, exceeding guidance and representing a year-over-year growth of 25.8% [32] - Non-GAAP EBITDA for the quarter was $14.6 million, outperforming guidance and reflecting a year-over-year increase from $10.3 million [32][39] - GAAP net income was $2.9 million, a decrease from $4.5 million in the previous quarter, attributed to higher operating costs [39] Business Line Data and Key Metrics Changes - Retail accounted for 31.4% of total revenues, growing 28% year-over-year but declining 3.7% sequentially [33] - Finance became the second largest vertical, contributing 24.9% of total revenues with a year-over-year growth of 144.3% [34] - TMT represented 23.5% of revenues, remaining flat sequentially and declining 1.8% year-over-year [34] Market Data and Key Metrics Changes - Revenues from top five customers accounted for 35.6% of total revenues, down from 39.6% a year ago [37] - The total customer count decreased to 204 from 211 in the previous quarter, driven by efforts to rationalize the customer portfolio [38] Company Strategy and Development Direction - The company aims to align investments with changing industry needs, focusing on technological leadership and AI capabilities [12] - Grid Dynamics is expanding its presence in India, which is becoming a hub for multi-agent and multi-modal platform engineering [16][72] - The strategy includes diversifying into new industries such as manufacturing, pharmaceuticals, and fintech while enhancing AI offerings [24][25] Management's Comments on Operating Environment and Future Outlook - Management acknowledged ongoing macroeconomic uncertainties but expressed confidence in the stability of client projects and demand [13][49] - The company maintains its full-year revenue outlook of $415 million to $435 million, expecting stronger performance in the second half of 2025 [12][41] - Management noted that partnerships contributed 16% of total revenue in Q1 and anticipate this to accelerate throughout 2025 [13] Other Important Information - The company successfully integrated engineering teams from recent acquisitions, enhancing capabilities in banking and financial services [9] - AI initiatives are gaining traction, with a growing pipeline of opportunities and a shift towards enterprise-scale implementations [10][29] Q&A Session Summary Question: Client behavior and decision-making pace - Management noted no major impacts from recent economic activities, with strategic projects continuing uninterrupted [48][49] Question: Guidance for 2025 and contractually committed work - Management indicated that business decisions for 2025 have been made, contributing to a strong outlook despite some cautiousness [52][54] Question: Hiring intentions and employee utilization - The company has maintained a consistent hiring strategy, focusing on internal skill development rather than solely relying on market talent [56][58] Question: Changes in client behavior in retail and TMT verticals - Management reported stable client behavior, particularly in online services, with no expected slowdowns from major clients like Apple [62][68] Question: Growth drivers for the second half of 2025 - Management expects growth across various verticals, with a focus on existing and new clients contributing to the anticipated ramp-up [80][89]

Financial Data and Key Metrics Changes - In Q1 2025, the company generated revenue of $271 million, reflecting a 5.8% organic growth, with a non-GAAP adjusted EBITDA margin of 34.3% and non-GAAP diluted earnings per share of $0.96, achieving a Rule of 40 score of 40.1% [6][19][20] - Non-GAAP adjusted EBITDA increased by approximately $4 million compared to the previous year, with a 250 basis point improvement in margin [19][20] - Adjusted free cash flow was negative $11 million in Q1, primarily due to a one-time $28 million cash release payment related to the Washington DC office lease and increased interest expenses [20][24] Business Line Data and Key Metrics Changes - The transactional business was a significant driver of overperformance in Q1, with approximately 9% growth in transactional revenue, contributing about $2 million in incremental revenue for the quarter [34][35] - The company has transitioned the majority of its products and customers to third-party cloud solutions, enhancing operational efficiency [8] Market Data and Key Metrics Changes - The company reported strong performance in international markets, particularly in Asia Pacific and Europe, with good sales bookings and customer retention [53] - JustGiving, a platform in the UK, continues to perform well, benefiting from brand recognition and participation in major events [54] Company Strategy and Development Direction - The company aims to achieve a Rule of 45 by 2030, focusing on organic revenue growth driven by innovation and a strong capital allocation strategy [6][15][26] - The company is investing in AI capabilities to enhance customer engagement and improve internal productivity, with plans to integrate these innovations into existing products [9][10][76] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the resilience of the social impact market, noting that the company has not seen any negative impact on sales bookings or customer retention despite macroeconomic challenges [6][32][46] - The guidance for 2025 remains unchanged, projecting revenue in the range of $1.5 billion to $1.125 billion, with organic growth of 4.2% to 5.1% [22][23] Other Important Information - The company repurchased approximately 4% of its outstanding shares in Q1 2025, continuing its commitment to return capital to shareholders [12][21] - The transition of CFO duties from Tony Bohr to Chad Anderson was highlighted, with both executives expressing confidence in the company's future [13][14] Q&A Session Summary Question: Impact of federal grant funding on customers - Management clarified that their solutions are not reliant on federal grants, and while some customers may be affected, there has been no impact on sales bookings or customer retention [31][32][46] Question: Performance of the transactional business - The transactional business was a key driver of overperformance in Q1, with strong growth and good performance across the board [34][35] Question: Guidance and macroeconomic considerations - Management maintained that the guidance for the year does not anticipate material changes in the macro environment, expressing optimism for continued growth [41][46] Question: Net new bookings and international market performance - New bookings have increased significantly in Q1, with a positive outlook for international markets, particularly for the JustGiving platform [51][53] Question: Contract renewals and customer retention - Customer retention remains high, with a standard practice of notifying customers well in advance of contract renewals, ensuring smooth transitions [63][66] Question: Share buyback program - The company is on track to meet its share buyback target for 2025 and will continue to evaluate its capital allocation strategy [70][73] Question: Monetization of AI technologies - The company is exploring monetization models for its AI solutions but has not charged separately for these capabilities to date, focusing on delivering value to customers [76][81]

Financial Data and Key Metrics Changes - In Q1 2025, the company generated revenue of $271 million, reflecting a 5.8% organic growth [7][19] - Non-GAAP adjusted EBITDA margin was 34.3%, with adjusted EBITDA of $93 million, an increase of approximately $4 million [7][19] - Non-GAAP diluted earnings per share (EPS) increased to $0.96 compared to $0.93 in the previous year [20][24] Business Line Data and Key Metrics Changes - The transactional business was a significant driver of overperformance in Q1, with approximately 9% growth in transactional revenue [35][36] - The company has transitioned the majority of its products and customers to third-party cloud services, enhancing operational efficiency [10] Market Data and Key Metrics Changes - The company reported strong performance in both domestic and international markets, with good sales bookings in Asia Pacific and Europe [54][62] - JustGiving, a platform in the UK, continues to perform well, leveraging brand recognition and donor-driven campaigns [54][62] Company Strategy and Development Direction - The company aims to achieve a Rule of 45 by 2030, focusing on organic revenue growth and margin expansion [7][16] - There is a strong emphasis on innovation, particularly through AI capabilities, to enhance customer engagement and operational efficiency [11][62] - The company is transitioning to longer-term contracts, primarily three-year renewals, to provide better predictability for revenue [9][66] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the resilience of the social impact market, noting that their solutions are critical for customers amid economic uncertainties [8][32] - The guidance for 2025 remains unchanged, projecting revenue between $1.5 billion and $1.125 billion, with organic growth of 4.2% to 5.1% [22][24] Other Important Information - The company repurchased approximately 4% of its outstanding shares in Q1 2025, continuing its commitment to return capital to shareholders [13][21] - The transition of CFO duties from Anthony Boor to Chad Anderson was highlighted, with a focus on maintaining operational excellence [14][15] Q&A Session Summary Question: Impact of federal grant funding on customers - Management noted that their solutions are not reliant on federal grants, and they have not seen any impact on sales bookings or customer retention [31][32] Question: Performance of the transactional business - The transactional business exceeded expectations, contributing significantly to Q1 performance, with strong bookings and retention [35][36] Question: Guidance and macroeconomic considerations - Management maintained guidance for the year, indicating no material changes in the macro environment affecting their business [42][48] Question: International market performance - The company reported good performance in international markets, particularly with the JustGiving platform in the UK [54][62] Question: AI technology monetization - The company is exploring monetization models for its AI solutions but has not charged separately for existing AI capabilities included in contracts [79][80] Question: Share buyback program - Management confirmed that they are on track to repurchase 3% to 5% of outstanding shares in 2025 and will evaluate the program based on market conditions [70][72]