San Ramon, Calif. May 2, 2024 – Grid Dynamics Holdings, Inc. (Nasdaq: GDYN) (“Grid Dynamics” or “Company”), a leader in enterprise-level digital transformation, today announced results for the first quarter ended March 31, 2024.

We are very pleased to report the first quarter 2024 revenues of $79.8 million that was higher than our outlook range of $77.0 million to $79.0 million that we provided in February 2024. Our Retail and Technology, Media and Telecom (“TMT”) verticals were the two largest verticals during the first quarter of 2024 with 30.9% and 30.1% of our revenues, respectively. Our Finance vertical, representing 12.8% of our first quarter revenues, grew 24% on a sequential basis and 57.2% on a year-over-year basis. Strength in the financial vertical was from multiple customers, ranging from finance technology, banking and insurance. In the first quarter we continued to diversify our industry mix and disaggregated Healthcare and Pharma as a separate industry. During the three months ended March 31, 2024, our Healthcare and Pharma vertical represented 3.8% of our first quarter revenues.

“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.

•Total revenues were $79.8 million, an increase of 2.2% on a sequential basis and flat on a year-over-year basis.

•GAAP gross profit was $27.7 million or 34.7% of revenues in the first quarter of 2024, compared to GAAP gross profit of $28.6 million or 35.7% of revenues in the first quarter of 2023. Non-GAAP gross profit was $28.1 million or 35.3% of revenues in the first quarter of 2024, compared to Non-GAAP gross profit of $29.0 million or 36.3% of revenues in the first quarter of 2023.

•GAAP net loss attributable to common stockholders was $3.9 million, or $(0.05) per share, based on 76.2 million basic weighted-average common shares outstanding in the first quarter of 2024, compared to GAAP net loss of $8.0 million, or $(0.11) per share, based on 74.5 million basic weighted-average common shares outstanding in the first quarter of 2023. Non-GAAP net income was $5.2 million, or $0.07 per diluted share, based on 78.4 million diluted weighted-average common shares outstanding in the first quarter of 2024, compared to Non-GAAP net income of $6.5 million, or $0.08 per diluted share, based on 77.1 million diluted weighted-average common shares outstanding in the first quarter of 2023.

•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 in the first quarter of 2024 compared to Non-GAAP EBITDA of $10.8 million in the first quarter of 2023.

See “Non-GAAP Financial Measures” and “Reconciliation of Non-GAAP Information” below for a discussion of our non-GAAP measures.

•Cash provided by operating activities was $3.2 million for the three months ended March 31, 2024, compared to $11.7 million for the three months ended March 31, 2023.

•Cash and cash equivalents totaled $249.4 million as of March 31, 2024, compared to $257.2 million as of December 31, 2023.

•Total headcount was 3,892 as of March 31, 2024, compared with 3,744 employees as of March 31, 2023.

•The Company expects revenue in the second quarter of 2024 to be in the range of $80.0 million to $82.0 million.

•Non-GAAP EBITDA in the second quarter of 2024 is expected to be between $10.5 million and $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.

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.

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 U.S., Europe, the U,K,, India, Mexico and Jamaica.

To learn more about Grid Dynamics, please visit www.griddynamics.com. Follow us on Facebook, Twitter, and LinkedIn.

To supplement the financial measures presented in Grid Dynamics press release in accordance with generally accepted accounting principles in the United States (“GAAP”), the Company also presents Non-GAAP measures of financial performance.

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.

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 Ukraine, as well as its GigaCube strategy.

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 Ukraine, have and may continue to materially adversely affect our stock price, business operations, overall financial performance and growth prospects; (v) Grid Dynamics’ revenues are highly dependent on clients primarily located in the United States, and any economic downturn in the United States or in other parts of the world, including Europe or disruptions in the credit markets may have a material adverse effect on Grid Dynamics’ business, financial condition and results of operations; (vi) Grid Dynamics faces intense and increasing competition; (vii) Grid Dynamics’ failure to successfully attract, hire, develop, motivate and retain highly skilled personnel could materially adversely affect Grid Dynamics’ business, financial condition and results of operations; (viii) failure to adapt to rapidly changing technologies, methodologies and evolving industry standards may have a material adverse effect on Grid Dynamics’ business, financial condition and results of operations; (ix) failure to successfully deliver contracted services or causing disruptions to clients’ businesses may have a material adverse effect on Grid Dynamics’ reputation, business, financial condition and results of operations; (x) risks and costs related to acquiring and integrating other companies; and (xi) other risks and uncertainties indicated in Grid Dynamics filings with the SEC.

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.

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(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 Russia against Ukraine and the exit plan announced by the Company and includes travel and relocation-related expenses of employees from the aforementioned countries, severance payments, allowances as well as legal and professional fees related to geographic repositioning in various locations. These expenses are incremental to those expenses incurred prior to the crisis, clearly separable from normal operations, and not expected to recur once the crisis has subsided and operations return to normal.

(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.

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(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 Russia against Ukraine and the exit plan announced by the Company and includes travel and relocation-related expenses of employees from the aforementioned countries, severance payments, allowances as well as legal and professional fees related to geographic repositioning in various locations. These expenses are incremental to those expenses incurred prior to the crisis, clearly separable from normal operations, and not expected to recur once the crisis has subsided and operations return to normal.

(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.