Grid Dynamics’ second quarter was marked by robust revenue growth driven primarily by increased adoption of its AI and data solutions, even as traditional IT spending remained subdued. Management cited strong momentum in the company’s AI-first initiatives, which accounted for nearly a quarter of organic revenue and grew almost three times faster than the overall business. CEO Leonard Livschitz acknowledged that while traditional projects faced greater scrutiny, “innovation-centric initiatives are being prioritized from a spending perspective,” helping to offset macroeconomic headwinds and sector-specific slowdowns, particularly in retail and CPG. However, the market reacted negatively to the quarter, reflecting concerns over margin pressures and cautious customer spending in legacy areas.
Is now the time to buy GDYN? Find out in our full research report (it’s free).
Grid Dynamics (GDYN) Q2 CY2025 Highlights:
- Revenue: $101.1 million vs analyst estimates of $100.6 million (21.7% year-on-year growth, 0.5% beat)
- Adjusted EPS: $0.10 vs analyst estimates of $0.10 (in line)
- Adjusted EBITDA: $12.75 million vs analyst estimates of $13.2 million (12.6% margin, 3.5% miss)
- The company reconfirmed its revenue guidance for the full year of $425 million at the midpoint
- EBITDA guidance for Q3 CY2025 is $12.5 million at the midpoint, below analyst estimates of $16.02 million
- Operating Margin: -0.1%, in line with the same quarter last year
- Market Capitalization: $671.4 million
While we enjoy listening to the management's commentary, our favorite part of earnings calls are the analyst questions. Those are unscripted and can often highlight topics that management teams would rather avoid or topics where the answer is complicated. Here is what has caught our attention.
Our Top 5 Analyst Questions From Grid Dynamics’s Q2 Earnings Call
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Mayank Tandon (Needham): Asked about the balance between contracted revenue and pipeline risk in achieving guidance. CFO Anil Doradla explained that the low end of guidance is supported by current contracts, with additional effort required to reach higher targets, particularly from acquisitions.
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Puneet Jain (JPMorgan): Inquired about talent strategy and the impact of AI on hiring and training. CTO Eugene Steinberg described a shift toward senior, AI-native engineers and the importance of context engineering to supervise AI agents within software development.
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Bryan C. Bergin (TD Cowen): Questioned the financial impact of the AI engagement model. SVP Vasily Sizov noted early adoption is reducing delivery timelines and improving competitiveness, while CEO Livschitz emphasized the potential for increased revenue per employee as the model scales.
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Matt S. Dezort (William Blair): Asked about partner program growth and client count declines. CEO Livschitz outlined the company’s focus on deepening hyperscaler and robotics partnerships, while Doradla explained that client count reductions are largely due to acquisition-related rationalization, with a continued emphasis on enterprise customers.
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Surinder Singh Thind (Jefferies): Explored the long-term vision for AI’s role in software development. Livschitz and Steinberg indicated that while AI will handle a growing share of coding tasks, substantial human oversight will remain necessary, especially for complex system integration and production environments.
Catalysts in Upcoming Quarters
Looking ahead, the StockStory team will be monitoring (1) the pace at which AI-powered services and platforms are adopted by existing and new enterprise clients, (2) the impact of ongoing customer rationalization on revenue stability, and (3) management’s execution on cost optimization while sustaining investments in senior engineering talent and internal AI tool development. Continued traction with strategic partners and expansion in key verticals will also be important indicators of progress.
Grid Dynamics currently trades at $8.10, down from $9.49 just before the earnings. Is the company at an inflection point that warrants a buy or sell? Find out in our full research report (it’s free).
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