Grid Dynamics Q2 2025 slides: revenue grows 21.7% YoY amid AI expansion

Introduction & Market Context

Grid Dynamics Holdings Inc (NASDAQ:GDYN), a digital transformation services provider, released its Q2 2025 investor presentation on July 31, highlighting continued revenue growth and strategic expansion initiatives. The company reported $101.1 million in revenue, representing 21.7% year-over-year growth, while maintaining its focus on artificial intelligence capabilities and global delivery expansion.

Despite the strong revenue growth, Grid Dynamics’ stock has faced pressure in recent months, trading at $9.70 at market close on July 31, 2025, significantly below its 52-week high of $25.50. The company’s aftermarket trading showed a modest 0.93% increase following the presentation.

Quarterly Performance Highlights

Grid Dynamics reported Q2 2025 revenue of $101.1 million, marking a 21.7% increase year-over-year and a modest 0.7% sequential growth from Q1. The company posted GAAP earnings per share of $0.06 and non-GAAP EPS of $0.10, with non-GAAP EBITDA reaching $12.7 million.

As shown in the following financial metrics chart, the company maintained solid profitability despite some margin compression:

Gross margins showed some pressure, with GAAP gross profit at $34.5 million (34.1% margin) and non-GAAP gross profit at $35.1 million (34.7% margin). This represents a decline from the 41.8% non-GAAP gross margin reported in Q2 2021, reflecting the company’s changing business mix and global expansion.

The company’s business momentum across various industry verticals demonstrates its diversification strategy:

Strategic Initiatives

Grid Dynamics continues to position itself as a leader in enterprise AI solutions, leveraging its 8 years of experience in the field. The company’s global delivery network has expanded to 19 countries with 5,013 employees, representing a 26.6% year-over-year headcount growth.

The company’s global footprint spans multiple continents with strategic delivery centers:

Grid Dynamics is pursuing a "GigaCube" initiative aimed at reaching $1 billion in annual revenue. This strategy focuses on three key pillars: geographic scalability, innovation, and industry expansion.

Recent acquisitions form a critical part of this growth strategy. In 2024, Grid Dynamics completed two strategic acquisitions: JUXT in September and Mobile Computing in October. These acquisitions strengthen the company’s capabilities in financial services and manufacturing while expanding its delivery presence in London and Buenos Aires.

Detailed Financial Analysis

Grid Dynamics has demonstrated consistent revenue growth over the past five years, with annual revenue increasing from $111 million in 2020 to $351 million in 2024. Similarly, non-GAAP EBITDA grew from $13 million to $52 million during the same period.

The company has successfully diversified its client base across industry verticals. In 2024, retail represented 33% of revenue, followed by technology, media & telecom (TMT) at 27%, finance at 17%, consumer packaged goods (CPG) at 12%, and other sectors comprising the remaining 11%.

Grid Dynamics’ client concentration metrics show both strengths and potential risks. While the company has grown its number of clients with over $1 million in annual revenue from 17 in 2020 to 50 in 2024, the top five clients still account for 38% of total revenue, indicating some concentration risk.

The company maintains a strong balance sheet with more cash than debt, providing financial flexibility for future investments and acquisitions. This solid financial foundation supports Grid Dynamics’ "85-10-5" approach to growth, which targets 85% of revenue growth from mature clients, 10% from emerging clients, and 5% from new logos.

Forward-Looking Statements

Looking ahead, Grid Dynamics provided Q3 2025 revenue guidance of $103.0 million to $105.0 million, suggesting continued sequential growth. The company’s long-term strategy centers on expanding its AI capabilities and global delivery network while diversifying across industry verticals.

The company’s core expertise in artificial intelligence, coupled with its key practice areas in cloud, data, analytics, and user experience, positions it to capitalize on the growing demand for digital transformation services:

Grid Dynamics has developed proprietary accelerators to enhance its service offerings and drive client value:

Strategic partnerships with major technology providers like AWS, Google (NASDAQ:GOOGL) Cloud, Microsoft (NASDAQ:MSFT), and NVIDIA (NASDAQ:NVDA) have become increasingly important to Grid Dynamics’ business model. The company noted that partner-related revenue has grown from less than 1% to 18% over the past three years, while the number of partners has increased from 4 to over a dozen.

Despite the positive growth trajectory, investors should note the compression in gross margins over recent years and monitor whether the company can stabilize or improve profitability while continuing its expansion. The current stock price, trading well below its 52-week high, suggests investors remain cautious about the company’s near-term prospects despite the solid revenue growth.

Full presentation:

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