Grid Dynamics(US:GDYN)2023-02-24 04:10Financial 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]