GRID DYNAMICS HOLDINGS, INC. (GDYN)

Overview

Grid Dynamics Holdings, Inc. (“Grid Dynamics,” the “Company,” “we,” “us,” or “our”) is an enterprise artificial intelligence (“AI”) transformation partner for the Fortune 1000. We are a product-centric engineering company focused on solving the most complex mission-critical challenges with an emphasis on driving revenue-generating capabilities, not just cost optimization. We combine world-class engineering discipline with a specialized AI-native framework, enabling global enterprises to deploy business-driven solutions at scale. We serve as a strategic technology partner, providing the architecture and technical rigor required to transform complex challenges into competitive advantages for our customers.

We seek to solve the most pressing technical challenges and enable positive business outcomes for enterprise companies through AI, data, cloud and digital engagement engineering expertise, building on our nearly two decades of technology leadership and pioneering enterprise AI expertise. AI has become the core of our business, with a focus on AI-led transformation with high-value enterprise engagements. Our strategic foundation is our Grid Dynamics AI-Native (“GAIN”) engagement model, a development framework for software delivery in the AI era, which fundamentally rethinks team composition, engineering workflows, and delivery practices. The GAIN model represents a shift from effort-based development to AI and human collaboration optimized for global, enterprise-scale delivery, with emphasis on domain specialists, software architects, and experts in emerging technology.

The following table sets forth a summary of Grid Dynamics’ financial results for the periods indicated:

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(1)Non-GAAP EBITDA, Non-GAAP net income and Non-GAAP diluted EPS are non-GAAP financial measures. See “Non-GAAP Measures” below for additional information and reconciliations to the most directly comparable GAAP financial measures.

Quarterly Highlights

Our key metrics for the three months ended June 30, 2026 are presented below:

•Revenues: Total revenues increased 7.0% year-over-year to $108.2 million, primarily driven by increased demand in our Technology, Media and Telecom vertical.

•Gross margin: Our gross profit margin for the second quarter reached 36.6%, an increase of 250 basis points compared to 34.1% in the prior-year quarter.

•Net income and EPS: Net income for the second quarter was $2.9 million, or $0.03 per diluted share, compared to net income of $5.3 million, or $0.06 per diluted share, in the prior-year quarter.

•Non-GAAP measures: Non-GAAP EBITDA was $14.7 million for the three months ended June 30, 2026, compared to $12.7 million in the prior-year quarter. Diluted Non-GAAP earnings per share was $0.11 per share, compared to $0.10 per share in the prior-year quarter.

The operating results in any period are not necessarily indicative of the results that may be expected for any future period.

Key Performance Indicators and Other Factors Affecting Performance

Grid Dynamics uses the following key performance indicators and assesses the following factors, among others, to analyze its business performance, to make budgets and financial forecasts and to develop strategic plans:

Employees by Region

Attracting and retaining top talent in key regions is vital to Grid Dynamics’ success and our ability to drive revenue growth. Our long-term prospects depend on recruiting qualified IT professionals who support a global delivery model across the Americas, Europe, and Asia. This geographic footprint allows us to provide clients with continuous development, US-based leadership, and specialized talent pools optimized for both quality and cost-efficiency. We seek to employ the appropriate professionals in locations to optimize our employee costs and expenses. Currently, the vast majority of our workforce consists of these highly skilled IT professionals. We increasingly prioritize experienced senior talent over volume staffing to handle the complexity of production-grade infrastructure required for AI implementations.

The following table shows the number of Grid Dynamics personnel (including full-time and part-time employees and contractors serving in similar capacities) by region, as of the dates indicated:

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(1)Americas includes personnel located in North, Central and South America.

(2)Europe includes personnel located in Western, Central and Eastern Europe.

(3)Rest of the world includes personnel located in India and other countries not included in regions described above.

Attrition

There is competition for IT professionals in the regions in which Grid Dynamics operates, and such competition may adversely impact Grid Dynamics’ business and gross profit margins. Employee retention is one of Grid Dynamics’ main priorities and is a key driver of our operational efficiency. Grid Dynamics seeks to retain top talent by providing the opportunity to work on exciting, cutting-edge projects for high profile clients, a flexible work environment and training and development programs.

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Hours and Utilization

Currently, a majority of Grid Dynamics’ customer projects are performed and invoiced on a time and materials basis, although as part of our strategy, an increasing number of projects are performed on a fixed-price basis. Grid Dynamics’ management tracks and projects billable hours as an indicator of business volume and corresponding resource needs for IT professionals. To maintain its gross profit margins, Grid Dynamics must effectively utilize its IT professionals, which depends on its ability to integrate and train new personnel, to efficiently transition personnel from completed projects to new assignments, to forecast customer demand for services and to attract and deploy personnel in the right regions with appropriate skills and seniority to projects. With respect to fixed-price projects, Grid Dynamics must accurately project the time and other costs associated with project performance. Grid Dynamics’ management generally tracks utilization with respect to subsets of employees, by location or by project, and calculates the utilization rate for each subset by dividing (x) the aggregate number of billable hours for a period by (y) the aggregate number of total available hours for the same period. Grid Dynamics’ management analyzes and projects utilization to measure the efficiency of its workforce and to inform management’s budget and personnel decisions.

Customer Concentration

Grid Dynamics’ ability to retain and expand its relationships with existing customers and add new customers are key indicators of its revenue potential. New customers have a direct impact on the Company’s ability to diversify sources of revenue and replace customers that may no longer require its services. The total number of customers for the six months ended June 30, 2026 was 213 customers, a slight increase from 211 a year ago.

Grid Dynamics has a relatively high level of revenue concentration with certain customers and constantly works toward achieving a more diversified revenue mix. During each of the three and six months ended June 30, 2026 and 2025, one customer accounted for 10% or more of Grid Dynamics’ revenues. The Company expects to continue its focus on maintaining long-term relationships with customers while seeking to diversify its customer base.

The following tables present revenue concentration by amount and as a percentage of Grid Dynamics’ revenues for the periods indicated:

Strategic Ecosystem Partnerships

Our partnership relationships with major hyperscale cloud providers and leading platform AI companies are key to our enterprise go-to-market strategy. These relationships are co-development partnerships that give us and our clients privileged access to emerging capabilities, accelerated innovation cycles, and solutions that leverage best-in-class technologies. Our

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partnerships facilitate enhanced joint solution development and co-selling opportunities, helping clients employ and scale AI using the most advanced infrastructure available. The capabilities from these providers are then integrated, customized, and optimized for each enterprise’s specific needs.

Business Update Regarding Military Action in Ukraine

In February 2022, Russian forces launched a significant military action against Ukraine, which continues and even worsens. The impact on Ukraine, coupled with the actions taken by other countries, including sanctions imposed by the U.S., Canada, the U.K., the European Union, and other countries, companies and organizations against officials, individuals, regions, and industries in Russia and certain regions of Ukraine, and each country’s potential response to such sanctions, tensions, and military actions could have a material adverse effect on our operations. For example, Russia could attempt to take control of assets in Ukraine belonging to companies registered in the U.S., such as Grid Dynamics. Any such material adverse effect from the conflict and enhanced sanctions activity may disrupt our delivery of services, im

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ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our consolidated financial statements and the accompanying notes thereto included elsewhere in this Annual Report on Form 10-K. This discussion contains forward-looking statements based upon current plans, expectations, and beliefs, involving risks and uncertainties. Our actual results may differ materially from those anticipated in these forward-looking statements. You should review the section titled “Special Note Regarding Forward-Looking Statements” for a discussion of forward-looking statements and in Item 1A, “Risk Factors” for a discussion of factors that could cause actual results to differ materially from the results described in or implied by the forward-looking statements contained in the following discussion and analysis and elsewhere in this Annual Report on Form 10-K. Our historical results are not necessarily indicative of the results that may be expected for any period in the future.

Overview

Grid Dynamics Holdings, Inc. (“Grid Dynamics,” the “Company,” “we,” “us,” or “our”) is an enterprise artificial intelligence (“AI”) transformation partner for the Fortune 1000. We combine deep AI expertise with proven enterprise-scale delivery to help clients identify where to invest in AI, build systems that work at scale, and capture real business value from AI deployments. The building blocks of AI have always been our foundation — distributed systems, real-time data, machine learning algorithms, and natural language processing. What has changed is that these capabilities have now converged into Enterprise AI.

This technical heritage is matched with business acumen. We solve the most pressing technical challenges and enable positive business outcomes for enterprise companies. A key differentiator is our nearly two decades of technology leadership and pioneering enterprise AI expertise. This is supported by deep capabilities and ongoing investment in data and machine learning platform engineering, cloud platform and product engineering, Internet of Things and edge computing, and digital engagement services.

Fiscal Year Highlights

The following table sets forth a summary of Grid Dynamics’ financial results for the periods indicated:

__________________________

(1)Non-GAAP EBITDA, Non-GAAP net income and Non-GAAP diluted EPS are non-GAAP financial measures. See “Non-GAAP Measures” below for additional information and reconciliations to the most directly comparable GAAP financial measures.

Our key metrics for the year ended December 31, 2025 are:

•Revenues: Total revenues increased 17.5% year-over-year to a record $411.8 million, driven by demand across our core verticals and contributions from our acquisitions.

•Operating loss: Loss from operations narrowed to $1.9 million, compared to a loss of $2.1 million in the prior year. This improvement reflects revenue growth outpacing the increase in operating expenses.

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•Net income and EPS: Net income increased to $9.7 million from $4.0 million in the prior year. The increase was largely attributable to a combination of revenue growth and other income. Diluted GAAP EPS was $0.11 per share, compared to $0.05 per share for the year ended December 31, 2024.

•Non-GAAP measures: Non-GAAP EBITDA increased 2.5%, reaching $53.8 million for the year ended December 31, 2025. Diluted Non-GAAP EPS was $0.40 per share, compared to $0.47 per share in the prior year.

•Cash flows: Operating cash flow was $40.6 million up from $30.2 million in 2024.

The operating results in any period are not necessarily indicative of the results that may be expected for any future period.

Business Update Regarding Military Action in Ukraine

In February 2022, Russian forces launched a significant military action against Ukraine, which continues and even worsens. The impact on Ukraine, coupled with the actions taken by other countries, including sanctions imposed by the U.S., Canada, the U.K., the European Union, and other countries, companies and organizations against officials, individuals, regions, and industries in Russia and certain regions of Ukraine, and each country’s potential response to such sanctions, tensions, and military actions could have a material adverse effect on our operations. For example, Russia could attempt to take control of assets in Ukraine belonging to companies registered in the U.S., such as Grid Dynamics. Any such material adverse effect from the conflict and enhanced sanctions activity may disrupt our delivery of services, impair our ability to complete financial or banking transactions, cause us to continue to shift all or portions of our work occurring in the region to other countries, and may restrict our ability to engage in certain projects in the region or involving certain customers in the region.

We continue to actively monitor the security of our personnel and the stability of our infrastructure, including communications and internet availability. We executed our business continuity plan and have adapted to developments as they occur to protect the safety of our people and handle potential impacts to our delivery infrastructure. We continue to actively work with our personnel and with our customers to meet their needs and to ensure smooth delivery of services.

We have no way to predict the progress or outcome of the military action in Ukraine, as the conflict and government responses continue to develop and even worsen and are beyond our control. The prolonged unrest, military activities, expansion of hostilities, or broad-based sanctions could have a material adverse effect on our operations and business outlook. For example, if Russia were to invade other countries, such as Moldova, it could adversely affect our business. In addition, the current geopolitical situations in Armenia and separately in Serbia create additional uncertainty in the region, and could adversely affect our business.

For additional information on the various risks posed by the ongoing fighting in Ukraine and related sanctions and other impacts in the region, as well as other macroeconomic factors affecting our business, please read “Part I. Item 1A. Risk Factors” included in this Annual Report on Form 10-K.

Key Performance Indicators and Other Factors Affecting Performance

Grid Dynamics uses the following key performance indicators and assesses the following other factors to analyze its business performance, to make budgets and financial forecasts and to develop strategic plans:

Employees by Region

Attracting and retaining the right employees in the right regions is critical to the success of Grid Dynamics’ business and is a key factor in Grid Dynamics’ ability to meet customers’ needs and grow its revenue base. Grid Dynamics’ revenue prospects and long-term success depend significantly on its ability to recruit and retain qualified IT professionals. We seek to employ the appropriate professionals globally to support our “Follow-the-Sun” strategy of client service and in locations to optimize our employee costs and expenses. A substantial majority of Grid Dynamics’ personnel is comprised of such IT professionals.

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The following table shows the number of Grid Dynamics personnel (including full-time and part-time employees and contractors serving in similar capacities) by region, as of the dates indicated:

__________________________

(1)Americas includes personnel located in North, Central and South America.

(2)Europe includes personnel located in Western, Central and Eastern Europe.

(3)Rest of the world includes personnel located in India and other countries not included in regions described above.

Attrition

There is competition for IT professionals in the regions in which Grid Dynamics operates, and such competition may adversely impact Grid Dynamics’ business and gross profit margins. Employee retention is one of Grid Dynamics’ main priorities and is a key driver of our operational efficiency. Grid Dynamics seeks to retain top talent by providing the opportunity to work on exciting, cutting-edge projects for high profile clients, a flexible work environment and training and development programs.

Hours and Utilization

As most of Grid Dynamics’ customer projects are performed and invoiced on a time and materials basis, Grid Dynamics’ management tracks and projects billable hours as an indicator of business volume and corresponding resource needs for IT professionals. To maintain its gross profit margins, Grid Dynamics must effectively utilize its IT professionals, which depends on its ability to integrate and train new personnel, to efficiently transition personnel from completed projects to new assignments, to forecast customer demand for services and to attract and deploy personnel in the right regions with appropriate skills and seniority to projects. Grid Dynamics’ management generally tracks utilization with respect to subsets of employees, by location or by project, and calculates the utilization rate for each subset by dividing (x) the aggregate number of billable hours for a period by (y) the aggregate number of total available hours for the same period. Grid Dynamics’ management analyzes and projects utilization to measure the efficiency of its workforce and to inform management’s budget and personnel recruiting decisions.

Customer Concentration

Grid Dynamics’ ability to retain and expand its relationships with existing customers and add new customers are key indicators of its revenue potential. New customers have a direct impact on the Company’s ability to diversify sources of revenue and replace customers that may no longer require its services. At the same time, the Company continuously works towards rationalization of its portfolio of non-strategic customers. This work resulted in a decrease in the total number of customers from 264 in 2024 to 237 in 2025.

Grid Dynamics has a high level of revenue concentration with certain customers, as indicated in the below table, and constantly works toward decreasing those levels. During the years ended December 31, 2025, 2024 and 2023, one customer accounted for 10% or more of our revenues in each of the periods indicated. We expect to continue our focus on maintaining our long-term relationships with customers while seeking to diversify our customer base.

The following table presents revenues concentration by amount and as a per

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