Grid Dynamics(US:GDYN)2023-05-07 11:42Financial 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]