Grid Dynamics Reports First Quarter 2024 Financial Results
Grid Dynamics Holdings, Inc. reported first quarter 2024 revenue of $79.8 million, exceeding expectations. The Retail and TMT verticals were the largest revenue contributors. The Finance vertical saw significant growth. The company highlighted its track record of success and industry recognition. Financially, GAAP net loss was $3.9 million, and non-GAAP net income was $5.2 million. Cash provided by operating activities decreased, but cash and cash equivalents remained stable. The company expects revenue and non-GAAP EBITDA to increase in the second quarter of 2024.
Exceeded revenue expectations in Q1 2024 with $79.8 million.
Finance vertical grew by 24% sequentially and 57.2% year-over-year.
Recognized as a Google Cloud Services Specialist by Everest group.
Non-GAAP net income of $5.2 million in Q1 2024.
Stable cash and cash equivalents at $249.4 million as of March 31, 2024.
GAAP net loss of $3.9 million in Q1 2024.
Decrease in cash provided by operating activities compared to the previous year.
Insights
Revenue of
We are very pleased to report the first quarter 2024 revenues of
“It was another quarter of solid execution. Our results clearly show that our focus is paying off as we move towards our stated goals. In the first quarter, we witnessed a significant milestone as we reached the highest number of billable engineers in the company’s history, and this is also reflected in a revenue outlook for the second quarter. We were recognized by the Everest group as a leader in its Google Cloud Services Specialists report. This is a clear recognition of the differentiated capabilities that we offer our clients to drive their digital transformation agenda.
“In the current economic cycle, spending is under heightened scrutiny. Our strength and reputation for technology leadership, engineering prowess, and delivery excellence positions us as a trusted partner, often leading us to gain business at the expense of our competition. As an example, in 2024, at two of Fortune 1000 retailers, Grid Dynamics was selected as one of the two partners for all digital engineering programs. Additionally, at a large Fortune 500 Telecom company, after evaluating dozens of existing suppliers, they choose Grid Dynamics for all their customer facing applications.
“While the current economic uncertainties cannot be overlooked, we are highly focused on execution and wallet share at our new and existing customers. Our capabilities, history of solving complex business problems with technology, and our track record of making positive impacts to our customer’s business positions us well. Our future looks bright, and I look forward to sharing all the exciting things in the next earnings call,” said Leonard Livschitz, CEO.
First Quarter of 2024 Financial Highlights
-
Total revenues were
$79.8 million 2.2% on a sequential basis and flat on a year-over-year basis.
-
GAAP gross profit was
$27.7 million 34.7% of revenues in the first quarter of 2024, compared to GAAP gross profit of$28.6 million 35.7% of revenues in the first quarter of 2023. Non-GAAP gross profit was$28.1 million 35.3% of revenues in the first quarter of 2024, compared to Non-GAAP gross profit of$29.0 million 36.3% of revenues in the first quarter of 2023.
-
GAAP net loss attributable to common stockholders was
$3.9 million $(0.05) $8.0 million $(0.11) $5.2 million $0.07 $6.5 million $0.08
-
Non-GAAP EBITDA (earnings before interest, taxes, depreciation, amortization, other income and expenses, fair value adjustments, stock-based compensation, transaction and transformation-related costs, restructuring costs as well as geographic reorganization expenses), a non-GAAP metric, was
$10.3 million $10.8 million
See “Non-GAAP Financial Measures” and “Reconciliation of Non-GAAP Information” below for a discussion of our non-GAAP measures.
Cash Flow and Other Metrics
-
Cash provided by operating activities was
$3.2 million $11.7 million
-
Cash and cash equivalents totaled
$249.4 million $257.2 million
- Total headcount was 3,892 as of March 31, 2024, compared with 3,744 employees as of March 31, 2023.
Financial Outlook
-
The Company expects revenue in the second quarter of 2024 to be in the range of
$80.0 million $82.0 million
-
Non-GAAP EBITDA in the second quarter of 2024 is expected to be between
$10.5 million $11.5 million
- For the second quarter of 2024, we expect our basic share count to be in the 77.0 - 78.0 million range and diluted share count to be in the 79.0 - 80.0 million range.
Grid Dynamics is not able, at this time, to provide GAAP targets for net income/(loss) for the second quarter of 2024 because of the difficulty of estimating certain items excluded from Non-GAAP EBITDA that cannot be reasonably predicted, such as interest income, taxes, other income/(expenses), fair-value adjustments, geographic reorganization expenses, restructuring expenses, transaction-related costs and charges related to stock-based compensation expense. The effect of these excluded items may be significant.
Conference Call and Webcast
Grid Dynamics will host a video conference call at 4:30 p.m. ET on Thursday, May 2, 2024 to discuss its first quarter financial results. Investors and other interested parties can access the call in the following ways: A webcast of the video conference call can be accessed on the Investor Relations section of the Company's website at https://ir.griddynamics.com/.
A replay will also be available after the call at https://ir.griddynamics.com/ with the passcode $Q1@2024.
About Grid Dynamics
Grid Dynamics (Nasdaq: GDYN) is a digital-native technology services provider that accelerates growth and bolsters competitive advantage for Fortune 1000 companies. Grid Dynamics provides a range of digital transformation consulting and implementation services that includes artificial intelligence, big data, analytics, search, cloud and DevOps. Grid Dynamics achieves high speed-to-market, quality, and efficiency by using technology accelerators, an agile delivery culture, and its pool of global engineering talent. Founded in 2006, Grid Dynamics is headquartered in Silicon Valley with offices across the globe, including the
To learn more about Grid Dynamics, please visit www.griddynamics.com. Follow us on Facebook and LinkedIn.
Non-GAAP Financial Measures
To supplement the financial measures presented in Grid Dynamics press release in accordance with generally accepted accounting principles in
A “non-GAAP financial measure” refers to a numerical measure of Grid Dynamics historical or future financial performance or financial position that is included in (or excluded from) the most directly comparable measure calculated and presented in accordance with GAAP. Grid Dynamics provides certain non-GAAP measures as additional information relating to its operating results as a complement to results provided in accordance with GAAP. The non-GAAP financial information presented herein should be considered in conjunction with, and not as a substitute for or superior to, the financial information presented in accordance with GAAP and should not be considered a measure of liquidity and profitability.
Grid Dynamics has included these non-GAAP financial measures because they are financial measures used by Grid Dynamics’ management to evaluate Grid Dynamics’ core operating performance and trends, to make strategic decisions regarding the allocation of capital and new investments and are among the factors analyzed in making performance-based compensation decisions for key personnel.
Grid Dynamics believes the use of non-GAAP financial measures, as a supplement to GAAP measures, is useful to investors in that they eliminate items that are either not part of core operations or do not require a cash outlay, such as stock-based compensation expense. Grid Dynamics believes these non-GAAP measures provide investors and other users of its financial information consistency and comparability with its past financial performance and facilitate period to period comparisons of operations. Grid Dynamics believes these non-GAAP measures are useful in evaluating its operating performance compared to that of other companies in its industry, as they generally eliminate the effects of certain items that may vary for different companies for reasons unrelated to overall operating performance.
There are significant limitations associated with the use of non-GAAP financial measures. Further, these measures may differ from the non-GAAP information, even where similarly titled, used by other companies and therefore should not be used to compare our performance to that of other companies. Grid Dynamics compensates for these limitations by providing investors and other users of its financial information a reconciliation of non-GAAP measures to the related GAAP financial measures. Grid Dynamics encourages investors and others to review its financial information in its entirety, not to rely on any single financial measure, and to view its non-GAAP measures in conjunction with GAAP financial measures. Please see the reconciliation of non-GAAP financial measures to the most directly comparable GAAP measures attached to this release.
Forward-Looking Statements
This communication contains “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934 that are not historical facts, and involve risks and uncertainties that could cause actual results of Grid Dynamics to differ materially from those expected and projected. These forward-looking statements can be identified by the use of forward-looking terminology, including the words “believes,” “estimates,” “anticipates,” “expects,” “intends,” “plans,” “may,” “will,” “potential,” “projects,” “predicts,” “continue,” or “should,” or, in each case, their negative or other variations or comparable terminology. These forward-looking statements include, without limitation, the quotations of management, the section titled “Financial Outlook,” and statements concerning Grid Dynamics’s expectations with respect to future performance, particularly in light of the macroeconomic environment and the Russian invasion of
These forward-looking statements involve significant risks and uncertainties that could cause the actual results to differ materially from the expected results. Most of these factors are outside Grid Dynamics’s control and are difficult to predict. Factors that may cause such differences include, but are not limited to: (i) Grid Dynamics has a relatively short operating history and operates in a rapidly evolving industry, which makes it difficult to evaluate future prospects and may increase the risk that it will not continue to be successful and may adversely impact our stock price; (ii) Grid Dynamics may be unable to effectively manage its growth or achieve anticipated growth, particularly as it expands into new geographies, which could place significant strain on Grid Dynamics’ management personnel, systems and resources; (iii) Grid Dynamics’ revenues are highly dependent on a limited number of clients and industries that are affected by seasonal trends, and any decrease in demand for outsourced services in these industries may reduce Grid Dynamics’ revenues and adversely affect Grid Dynamics’ business, financial condition and results of operations; (iv) macroeconomic conditions, inflationary pressures, and the geopolitical climate, including the Russian invasion of
Grid Dynamics cautions that the foregoing list of factors is not exclusive. Grid Dynamics cautions readers not to place undue reliance upon any forward-looking statements, which speak only as of the date made. Grid Dynamics does not undertake or accept any obligation or undertaking to release publicly any updates or revisions to any forward-looking statements to reflect any change in its expectations or any change in events, conditions or circumstances on which any such statement is based. Further information about factors that could materially affect Grid Dynamics, including its results of operations and financial condition, is set forth under the “Risk Factors” section of the Company’s quarterly report on Form 10-Q filed May 2, 2024 and in other periodic filings Grid Dynamics makes with the SEC.
Schedule 1: GRID DYNAMICS HOLDINGS, INC. CONDENSED CONSOLIDATED STATEMENTS OF LOSS AND COMPREHENSIVE LOSS Unaudited (In thousands, except per share data) |
|||||||
|
Three Months Ended
|
||||||
|
2024 |
|
2023 |
||||
Revenues |
$ |
79,817 |
|
|
$ |
80,080 |
|
Cost of revenues |
|
52,152 |
|
|
|
51,505 |
|
Gross profit |
|
27,665 |
|
|
|
28,575 |
|
|
|
|
|
||||
Operating expenses |
|
|
|
||||
Engineering, research, and development |
|
4,372 |
|
|
|
4,203 |
|
Sales and marketing |
|
7,292 |
|
|
|
5,634 |
|
General and administrative |
|
21,543 |
|
|
|
24,730 |
|
Total operating expenses |
|
33,207 |
|
|
|
34,567 |
|
|
|
|
|
||||
Loss from operations |
|
(5,542 |
) |
|
|
(5,992 |
) |
Other income/(expense), net |
|
2,525 |
|
|
|
1,682 |
|
Loss before income taxes |
|
(3,017 |
) |
|
|
(4,310 |
) |
Provision for income taxes |
|
931 |
|
|
|
3,660 |
|
Net loss |
$ |
(3,948 |
) |
|
$ |
(7,970 |
) |
|
|
|
|
||||
Foreign currency translation adjustments, net of tax |
|
(178 |
) |
|
|
495 |
|
Comprehensive loss |
$ |
(4,126 |
) |
|
$ |
(7,475 |
) |
|
|
|
|
||||
Loss per share |
|
|
|
||||
Basic |
$ |
(0.05 |
) |
|
$ |
(0.11 |
) |
Diluted |
$ |
(0.05 |
) |
|
$ |
(0.11 |
) |
|
|
|
|
||||
Weighted average shares outstanding |
|
|
|
||||
Basic |
|
76,151 |
|
|
|
74,459 |
|
Diluted |
|
76,151 |
|
|
|
74,459 |
|
Schedule 2: GRID DYNAMICS HOLDINGS, INC. CONDENSED CONSOLIDATED BALANCE SHEETS Unaudited (In thousands, except share and per share data) |
|||||||
|
As of |
||||||
|
March 31,
|
|
December 31,
|
||||
Assets |
|
|
|
||||
Current assets |
|
|
|
||||
Cash and cash equivalents |
$ |
249,437 |
|
|
$ |
257,227 |
|
Accounts receivable, net of allowance of |
|
53,039 |
|
|
|
49,824 |
|
Unbilled receivables |
|
5,649 |
|
|
|
3,735 |
|
Prepaid income taxes |
|
5,609 |
|
|
|
3,998 |
|
Prepaid expenses and other current assets |
|
8,768 |
|
|
|
9,196 |
|
Total current assets |
|
322,502 |
|
|
|
323,980 |
|
Property and equipment, net |
|
12,552 |
|
|
|
11,358 |
|
Operating lease right-of-use assets, net |
|
10,214 |
|
|
|
10,446 |
|
Intangible assets, net |
|
25,531 |
|
|
|
26,546 |
|
Goodwill |
|
53,868 |
|
|
|
53,868 |
|
Deferred tax assets |
|
7,220 |
|
|
|
6,418 |
|
Other noncurrent assets |
|
3,374 |
|
|
|
2,549 |
|
Total assets |
$ |
435,261 |
|
|
$ |
435,165 |
|
|
|
|
|
||||
Liabilities and equity |
|
|
|
||||
Current liabilities |
|
|
|
||||
Accounts payable |
$ |
2,935 |
|
|
$ |
3,621 |
|
Accrued compensation and benefits |
|
19,914 |
|
|
|
19,263 |
|
Accrued income taxes |
|
9,895 |
|
|
|
8,828 |
|
Operating lease liabilities, current |
|
4,491 |
|
|
|
4,235 |
|
Accrued expenses and other current liabilities |
|
5,885 |
|
|
|
6,276 |
|
Total current liabilities |
|
43,120 |
|
|
|
42,223 |
|
Deferred tax liabilities |
|
3,164 |
|
|
|
3,274 |
|
Operating lease liabilities, noncurrent |
|
6,166 |
|
|
|
6,761 |
|
Total liabilities |
|
52,450 |
|
|
|
52,258 |
|
Stockholders’ equity |
|
|
|
||||
Common stock, |
|
8 |
|
|
|
8 |
|
Additional paid-in capital |
|
401,541 |
|
|
|
397,511 |
|
Accumulated deficit |
|
(19,834 |
) |
|
|
(15,886 |
) |
Accumulated other comprehensive income/(loss) |
|
1,096 |
|
|
|
1,274 |
|
Total stockholders’ equity |
|
382,811 |
|
|
|
382,907 |
|
Total liabilities and stockholders’ equity |
$ |
435,261 |
|
|
$ |
435,165 |
|
Schedule 3: GRID DYNAMICS HOLDINGS, INC. CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS Unaudited (In thousands) |
|||||||
|
Three Months Ended March 31, |
||||||
|
2024 |
|
2023 |
||||
Cash flows from operating activities |
|
|
|
||||
Net loss |
$ |
(3,948 |
) |
|
$ |
(7,970 |
) |
Adjustments to reconcile net loss to net cash provided by operating activities: |
|
|
|
||||
Depreciation and amortization |
|
2,914 |
|
|
|
1,645 |
|
Operating lease right-of-use assets amortization expense |
|
998 |
|
|
|
650 |
|
Bad debt expense |
|
86 |
|
|
|
20 |
|
Deferred income taxes |
|
(912 |
) |
|
|
(923 |
) |
Stock based compensation |
|
11,339 |
|
|
|
13,257 |
|
Other (income)/expenses, net |
|
(287 |
) |
|
|
23 |
|
Changes in assets and liabilities: |
|
|
|
||||
Accounts receivable |
|
(3,301 |
) |
|
|
(2,613 |
) |
Unbilled receivables |
|
(1,914 |
) |
|
|
(921 |
) |
Prepaid income taxes |
|
(1,611 |
) |
|
|
(1,639 |
) |
Prepaid expenses and other current assets |
|
382 |
|
|
|
(368 |
) |
Accounts payable |
|
(728 |
) |
|
|
(691 |
) |
Accrued compensation and benefits |
|
651 |
|
|
|
6,054 |
|
Operating lease liabilities |
|
(1,105 |
) |
|
|
(462 |
) |
Accrued income taxes |
|
1,067 |
|
|
|
3,306 |
|
Accrued expenses and other current liabilities |
|
(391 |
) |
|
|
2,306 |
|
Net cash provided by operating activities |
|
3,240 |
|
|
|
11,674 |
|
Cash flows from investing activities |
|
|
|
||||
Purchase of property and equipment |
|
(3,197 |
) |
|
|
(1,589 |
) |
Other investing activities, net |
|
(739 |
) |
|
|
— |
|
Net cash used in investing activities |
|
(3,936 |
) |
|
|
(1,589 |
) |
Cash flows from financing activities |
|
|
|
||||
Proceeds from exercises of stock options |
|
571 |
|
|
|
10 |
|
Payments of tax obligations resulted from net share settlement of vested stock awards |
|
(7,569 |
) |
|
|
(8,951 |
) |
Net cash used in financing activities |
|
(6,998 |
) |
|
|
(8,941 |
) |
Effect of exchange rate changes on cash and cash equivalents |
|
(96 |
) |
|
|
495 |
|
Net increase/(decrease) in cash and cash equivalents |
|
(7,790 |
) |
|
|
1,639 |
|
Cash and cash equivalents, beginning of period |
|
257,227 |
|
|
|
256,729 |
|
Cash and cash equivalents, end of period |
$ |
249,437 |
|
|
$ |
258,368 |
|
|
|
|
|
||||
Supplemental disclosure of cash flow information: |
|
|
|
||||
Cash paid for income taxes |
$ |
2,495 |
|
|
$ |
2,926 |
|
Schedule 4: GRID DYNAMICS HOLDINGS, INC. RECONCILIATION OF NON-GAAP INFORMATION Unaudited (In thousands, except per share data) |
|||||
|
Three Months Ended
|
||||
|
2024 |
|
2023 |
||
Revenue |
$ |
79,817 |
|
$ |
80,080 |
Cost of revenue |
|
52,152 |
|
|
51,505 |
GAAP gross profit |
|
27,665 |
|
|
28,575 |
Stock-based compensation |
|
482 |
|
|
460 |
Non-GAAP gross profit |
$ |
28,147 |
|
$ |
29,035 |
|
Three Months Ended
|
||||||
|
2024 |
|
2023 |
||||
GAAP net loss |
$ |
(3,948 |
) |
|
$ |
(7,970 |
) |
Adjusted for: |
|
|
|
||||
Depreciation and amortization |
|
2,914 |
|
|
|
1,645 |
|
Provision for income taxes |
|
931 |
|
|
|
3,660 |
|
Stock-based compensation |
|
11,339 |
|
|
|
13,257 |
|
Transaction and transformation-related costs(1) |
|
454 |
|
|
|
788 |
|
Geographic reorganization(2) |
|
501 |
|
|
|
691 |
|
Restructuring costs(3) |
|
626 |
|
|
|
443 |
|
Other (income)/expense, net(4) |
|
(2,525 |
) |
|
|
(1,682 |
) |
Non-GAAP EBITDA |
$ |
10,292 |
|
|
$ |
10,832 |
|
__________________________
(1) |
Transaction and transformation-related costs include, when applicable, external deal costs, transaction-related professional fees, transaction-related retention bonuses, which are allocated proportionally across cost of revenue, engineering, research and development, sales and marketing and general and administrative expenses as well as other transaction-related costs including integration expenses consisting of outside professional and consulting services. |
|
(2) |
Geographic reorganization includes expenses connected with military actions of |
|
(3) |
We implemented a restructuring plan during the first quarter of 2023. Our restructuring costs comprises of severance charges and respective taxes, and are included in General and administrative expenses in the Company’s unaudited condensed consolidated statement of loss and comprehensive loss. |
|
(4) |
Other (income)/expense, net consists primarily of gains and losses on foreign currency transactions, fair value adjustments, and other miscellaneous non-operating expenses, potential loss contingencies as well as other income consists primarily of interest on cash held at banks and returns on investments in money-market funds. |
|
Three Months Ended
|
||||||
|
2024 |
|
2023 |
||||
GAAP net loss |
$ |
(3,948 |
) |
|
$ |
(7,970 |
) |
Adjusted for: |
|
|
|
||||
Stock-based compensation |
|
11,339 |
|
|
|
13,257 |
|
Transaction and transformation-related costs (1) |
|
454 |
|
|
|
788 |
|
Geographic reorganization (2) |
|
501 |
|
|
|
691 |
|
Restructuring costs(3) |
|
626 |
|
|
|
443 |
|
Other (income)/expense, net(4) |
|
(2,525 |
) |
|
|
(1,682 |
) |
Tax impact of non-GAAP adjustments(5) |
|
(1,209 |
) |
|
|
996 |
|
Non-GAAP net income |
$ |
5,238 |
|
|
$ |
6,523 |
|
Number of shares used in the GAAP diluted EPS |
|
76,151 |
|
|
|
74,459 |
|
GAAP diluted EPS |
$ |
(0.05 |
) |
|
$ |
(0.11 |
) |
Number of shares used in the non-GAAP diluted EPS |
|
78,374 |
|
|
|
77,129 |
|
Non-GAAP diluted EPS |
$ |
0.07 |
|
|
$ |
0.08 |
|
__________________________
(1) |
Transaction and transformation-related costs include, when applicable, external deal costs, transaction-related professional fees, transaction-related retention bonuses, which are allocated proportionally across cost of revenue, engineering, research and development, sales and marketing and general and administrative expenses as well as other transaction-related costs including integration expenses consisting of outside professional and consulting services. |
|
(2) |
Geographic reorganization includes expenses connected with military actions of |
|
(3) |
We implemented a restructuring plan during the first quarter of 2023. Our restructuring costs comprises of severance charges and respective taxes, and are included in General and administrative expenses in the Company’s unaudited condensed consolidated statement of loss and comprehensive loss. |
|
(4) |
Other (income)/expense, net consists primarily of gains and losses on foreign currency transactions, fair value adjustments, and other miscellaneous non-operating expenses, potential loss contingencies as well as other income consists primarily of interest on cash held at banks and returns on investments in money-market funds. |
|
(5) |
Reflects the estimated tax impact of the non-GAAP adjustments presented in the table. |
Schedule 5: GRID DYNAMICS HOLDINGS, INC. REVENUE BY VERTICALS Unaudited (In thousands) |
|||||||||||
|
Three Months Ended March 31, |
||||||||||
|
2024 |
|
% of revenue |
|
2023 |
|
% of revenue |
||||
Retail |
$ |
24,629 |
|
30.9 |
% |
|
$ |
25,396 |
|
31.7 |
% |
Technology, Media and Telecom |
|
24,033 |
|
30.1 |
% |
|
|
26,811 |
|
33.5 |
% |
Finance |
|
10,243 |
|
12.8 |
% |
|
|
6,515 |
|
8.1 |
% |
CPG/Manufacturing |
|
9,559 |
|
12.0 |
% |
|
|
12,646 |
|
15.8 |
% |
Healthcare and Pharma |
|
3,009 |
|
3.8 |
% |
|
|
3,152 |
|
3.9 |
% |
Other |
|
8,344 |
|
10.4 |
% |
|
|
5,560 |
|
7.0 |
% |
Total |
$ |
79,817 |
|
100.0 |
% |
|
$ |
80,080 |
|
100.0 |
% |
View source version on businesswire.com: https://www.businesswire.com/news/home/20240502789838/en/
Grid Dynamics Investor Relations:
investorrelations@griddynamics.com
Source: Grid Dynamics Holdings, Inc.
FAQ
<p>What was Grid Dynamics' revenue in the first quarter of 2024?</p>
Grid Dynamics reported revenue of $79.8 million in the first quarter of 2024.
<p>Which verticals were the largest revenue contributors in Q1 2024?</p>
The Retail and Technology, Media and Telecom (TMT) verticals were the largest contributors to revenue in Q1 2024.
<p>What was the GAAP net loss in the first quarter of 2024?</p>
The GAAP net loss in the first quarter of 2024 was $3.9 million.
<p>What was the Non-GAAP net income in Q1 2024?</p>
The Non-GAAP net income in Q1 2024 was $5.2 million.
<p>How much cash and cash equivalents did Grid Dynamics have as of March 31, 2024?</p>
Grid Dynamics had $249.4 million in cash and cash equivalents as of March 31, 2024.
<p>What is Grid Dynamics' financial outlook for the second quarter of 2024?</p>
Grid Dynamics expects revenue in the range of $80.0 million to $82.0 million and Non-GAAP EBITDA between $10.5 million and $11.5 million in Q2 2024.
