Grid Dynamics’ first quarter results were shaped by robust demand for its AI-powered digital transformation services, as well as the integration of newly acquired businesses in financial services and mobile computing. Despite exceeding Wall Street’s revenue and non-GAAP profit expectations, the market responded negatively, reflecting investor caution over margin trends and the company’s operating expense trajectory. CEO Leonard Livschitz attributed the strong quarter to “customer-specific trends” and highlighted record billable engineering headcount driven by new client wins, particularly in automotive, financial, and consumer packaged goods sectors. Management also acknowledged ongoing macroeconomic uncertainty, noting that client project priorities fluctuated through the quarter but that strategic engagements, especially those involving AI, continued to drive results.
Is now the time to buy GDYN? Find out in our full research report (it’s free).
Grid Dynamics (GDYN) Q1 CY2025 Highlights:
- Revenue: $100.4 million vs analyst estimates of $98.44 million (25.8% year-on-year growth, 2% beat)
- Adjusted EPS: $0.11 vs analyst estimates of $0.09 (24.9% beat)
- Adjusted EBITDA: $14.61 million vs analyst estimates of $13.02 million (14.5% margin, 12.2% beat)
- The company reconfirmed its revenue guidance for the full year of $425 million at the midpoint
- EBITDA guidance for Q2 CY2025 is $13 million at the midpoint, below analyst estimates of $14.64 million
- Operating Margin: -2%, up from -6.9% in the same quarter last year
- Market Capitalization: $997.7 million
While we enjoy listening to the management's commentary, our favorite part of earnings calls are the analyst questions. Those are unscripted and can often highlight topics that management teams would rather avoid or topics where the answer is complicated. Here is what has caught our attention.
Our Top 5 Analyst Questions Grid Dynamics’s Q1 Earnings Call
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Bryan Bergin (TD Cowen) asked about the pace of client decision-making and project deferrals. CEO Leonard Livschitz responded that client projects of strategic importance continued uninterrupted, and that confidence in the annual outlook was supported by a strong pipeline and ongoing project execution.
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Puneet Jain (JPMorgan) inquired about visibility into second-half growth and the drivers behind the expected ramp. CFO Anil Doradla explained that tailwinds from working days and ramping billable headcount underpin guidance, while Livschitz cited growth across multiple verticals and recent client wins as supporting factors.
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Mayank Tandon (Needham) sought details on new client additions and the distribution of growth across verticals. CEO Livschitz noted minimal financial impact from new logos in Q1 but highlighted strong ramping of accounts acquired in the prior year, especially in financial services and manufacturing.
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Maggie Nolan (William Blair) asked whether Agentic AI solutions were custom-built or based on partner components. CTO Eugene Steinberg clarified that most solutions are custom-developed, leveraging open source and cloud-native technologies to meet unique enterprise requirements.
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Maggie Nolan (William Blair) also pressed on talent mix and pyramid structure. CEO Livschitz admitted that the company is still optimizing the balance between senior and junior talent, with a focus on developing mid-level engineers through internal programs and internships.
Catalysts in Upcoming Quarters
In the coming quarters, the StockStory team will monitor (1) the pace of adoption for Grid Dynamics’ Agentic AI and other enterprise-scale AI solutions, (2) progress in expanding verticals such as finance and manufacturing, and (3) the impact of investments in India and other delivery hubs on both growth and margins. Execution on new client ramps and further diversification will also be key markers of the company’s ability to sustain momentum.
Grid Dynamics currently trades at $11.61, down from $14.08 just before the earnings. In the wake of this quarter, is it a buy or sell? The answer lies in our full research report (it’s free).
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