Grid Dynamics Holdings Inc Q1 2025 Earnings Call Transcript

The following is excerpted from the question-and-answer section of the transcript.

Question: Bryan Bergin - TD Cowen - Analyst : (technical difficulty) Thank you. Why don't we try digging in more on client behavior. If we can dig in as far as clients activity through the month, I know [Leonard], you had some of that commentary, but then into April, can you go into more detail as it relates to the pace of client decision making and then just on the margin, kind of that deferral cancellation question. Obviously you guys affirmed the outlook for the year, so it sounds good, but if you could give more detail on that behavior, it would be helpful.

Question: Bryan Bergin - TD Cowen - Analyst : Yeah, sure. I didn't mean kind of like deferred expenses. I was talking more so about project deferrals or anything like that, which it doesn't sound like you're experiencing, which is good. Maybe though, I will follow up Leonard a little bit on the guidance for the year. So just based on what you do see for 2025 and the growth guidance midpoint that you have, how much of that work is in hand so to speak, so contractually committed. You mentioned some of these deals you've signed that will ramp. How do you -- can you just talk to that dynamic as far as contractually committed versus pipeline conversion that you may need to get still? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. MAY 01, 2025 / 8:30PM, GDYN.OQ - Q1 2025 Grid Dynamics Holdings Inc Earnings Call

Question: Bryan Bergin - TD Cowen - Analyst : Okay, that's clear. That's helpful as it relates to the initial outlook you gave, understand that. One more for you, just as it relates to hiring, so nice to see the record billable employee base. Talk about your hiring intentions here in 2Q and maybe for the balance of the year. How are you thinking about that versus balancing utilization and bench optimization?

Question: Bryan Bergin - TD Cowen - Analyst : Okay, makes sense. Thank you for the all the detail. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. MAY 01, 2025 / 8:30PM, GDYN.OQ - Q1 2025 Grid Dynamics Holdings Inc Earnings Call

Question: Puneet Jain - JPMorgan Securities Inc - Analyst : Hey, thanks for taking my question and a very nice quarter. So I understand like the macro environment, like it's uncertain, but are you seeing any change in your client behavior, maybe especially like in the retail vertical TMT vertical, Apple being the largest customer there. Are you seeing like clients could be prioritizing more cost cutting deals instead of revenue generating? Any change that you have seen in the last one month? What in Q1?

Question: Bryan Bergin - TD Cowen - Analyst : Got it. No, that's very helpful. And then it seems like on delivery side, like the rest of the world, which I'm assuming most of it is India, grew nicely in the quarter like added like 100+ employees on a sequential basis and with Rajiv also focusing more on India delivery from here on. How should we think about your India as a delivery center? Like can it ramp, like how large can it become? Can it become like the largest location for you over the next few years? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. MAY 01, 2025 / 8:30PM, GDYN.OQ - Q1 2025 Grid Dynamics Holdings Inc Earnings Call

Question: Puneet Jain - JPMorgan Securities Inc - Analyst : It's okay. If I can quickly squeeze in another one, like follow up to Bryan's question on the guidance. So it seems like the guidance implies like slight growth, like 0% to 2% sequential growth in 2nd quarter followed. By quite nice ramp in the second half, we calculated 4% to 9% on average sequential basis in the second half. So what drives this visibility on second half ramp, like which type of customers existing new, which vertical regions will drive that high growth in the second half of this year? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. MAY 01, 2025 / 8:30PM, GDYN.OQ - Q1 2025 Grid Dynamics Holdings Inc Earnings Call

Question: Puneet Jain - JPMorgan Securities Inc - Analyst : I'll have both.

Question: Puneet Jain - JPMorgan Securities Inc - Analyst : That's great. Thank you so much.

Question: Mayank Tandon - Needham & Company - Analyst : Great, thanks, good to see you guys. Congrats on the quarter.

Question: Mayank Tandon - Needham & Company - Analyst : Leonard, I might have missed this. Did you comment on new logos, and if you could just go through that again, if you did, apologize for that, and which verticals did you see the most traction in terms of new plan activity? Of course, by the way, guys, next time I'm going to bring CTO. We're not going to ask him, so, don't do, he feels like a war pi yeah. so, Mike, you ask one question on please.

Question: Mayank Tandon - Needham & Company - Analyst : And let me add one thing to that, Mayan, you see, the definition of our logo edition when we come are significant enterprises. So we -- in the quarter we did add. We did add logos, but internally we don't want to. Each time we have a logo, we're just not going to come out and talk about it. We -- Leonard makes his comments and we make these are significant enterprise logos. So in the quarter we had, and we did not believe that it elevated the talk, but there were additions.

Question: Mayank Tandon - Needham & Company - Analyst : That's a very helpful color. Thank you so much for that. And I have one quick follow up for you on around margins. How should we think about the cadence of gross margins? What are the puts and takes in the same question for EI margins. Your guidance implies a downtick in the 2nd quarter, but any perspective you can share for the full year. I know you haven't given formal guidance on EBITDA margins for the year, I believe, but any thoughts around how that will trend would be helpful.

Question: Mayank Tandon - Needham & Company - Analyst : Great, thank you so much. Appreciate all the color. Congrats.

Question: Mayank Tandon - Needham & Company - Analyst : Let him go pass it on to the others. They're waiting.

Question: Maggie Nolan - William Blair - Analyst : Hi, thank you. Well, I'll ask a somewhat engineering question. You've talked a lot about your Agentic AI solutions and several of your examples. Are these custom built by grid? To what extent are there kind of pre-built solutions by your partners, and is this a primary driver of your partner revenue growth? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. MAY 01, 2025 / 8:30PM, GDYN.OQ - Q1 2025 Grid Dynamics Holdings Inc Earnings Call

Question: Maggie Nolan - William Blair - Analyst : Thank you for that. Maybe, and a quick follow up to that, are you discussing different, fixed price or outcome-based pricing models to go along with that with the clients?

Question: Maggie Nolan - William Blair - Analyst : Sure, thank.

Question: Maggie Nolan - William Blair - Analyst : Thanks, Vasily. If I could just squeeze one in on talent, are you comfortable just given all the recent hiring? Are you comfortable with the balance of junior versus senior talent? Are you trying to rebalance the pyramid and maybe tie that back to your margin commentary? Thanks.

Question: Maggie Nolan - William Blair - Analyst : Thank you.