GRID DYNAMICS HOLDINGS, INC.

Previous wording

The statements contained in this Quarterly Report on Form 10-Q that are not historical facts are forward-looking statements (within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended, or the Exchange Act) that involve risks and uncertainties. Such forward-looking statements may be identified by, among other things, the use of forward-looking terminology such as “believes,” “expects,” “may,” “will,” “should,” “seek,” “intends,” “plans,” “estimates,” “projects,” “anticipates,” or the negative thereof or other variations thereon or comparable terminology, or by discussions of strategy that involve risks and uncertainties. Actual results may differ significantly from those projected in the forward-looking statements. Factors that might cause future results to differ materially from those projected in the forward-looking statements include, but are not limited to, those discussed in the section titled “Cautionary Note Regarding Forward Looking Statements,” included elsewhere in this Quarterly Report on Form 10-Q, and the section titled "Risk Factors" in our Quarterly Report on Form 10-Q for the quarterly period ended March 31, 2025 and in our Annual Report on Form 10-K.

Current wording

The statements contained in this Quarterly Report on Form 10-Q that are not historical facts are forward-looking statements (within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended, or the Exchange Act) that involve risks and uncertainties. Such forward-looking statements may be identified by, among other things, the use of forward-looking terminology such as “believes,” “expects,” “may,” “will,” “should,” “seek,” “intends,” “plans,” “estimates,” “projects,” “anticipates,” or the negative thereof or other variations thereon or comparable terminology, or by discussions of strategy that involve risks and uncertainties. Actual results may differ significantly from those projected in the forward-looking statements. Factors that might cause future results to differ materially from those projected in the forward-looking statements include, but are not limited to, those discussed in the section titled “Cautionary Note Regarding Forward Looking Statements,” included elsewhere in this Quarterly Report on Form 10-Q, and the section titled "Risk Factors" in our Annual Report on Form 10-K.

Previous wording

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

Current wording

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

Previous wording

In 2022, Russian forces launched a significant military action against Ukraine, with increased attacks and other activity in recent periods. 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.

Current wording

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.

Previous wording

We have no way to predict the progress or outcome of the military action in Ukraine, its continued escalation or the chance and terms of any possible peaceful or other resolution of the war, as the conflict and government responses continue to develop and are beyond our control. Continued 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, Serbia and elsewhere in Eastern Europe create additional uncertainty in the region, and could adversely affect our business.

Current wording

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.

Previous wording

There is significant 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.

Current wording

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.

Previous wording

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’sability to diversify sources of revenue and replace customers that may no longer require its services. The total number of customers for thenine months ended September 30, 2025 was 222 customers, a small decrease from 229 a year ago.

Current wording

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’sability to diversify sources of revenue and replace customers that may no longer require its services. The total number of customers for thethree months ended March 31, 2026 was 183 customers, a decrease from 204 a year ago.

Previous wording

Grid Dyna mics has a relatively high level of revenue concentration with certain customers and constantly works toward decreasing those levels. During each of the three and nine months ended September 30, 2025 and 2024, 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 diversifying its customer base.

Current wording

Grid Dyna mics 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 months ended March 31, 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 diversifying its customer base.

Previous wording

The three and nine months ended September 30, 2025 compared to the three and nine months ended September 30, 2024

Current wording

The three months ended March 31, 2026 compared to the three months ended March 31, 2025

Previous wording

The Healthcare and Pharma vertical generated $2.4 million and $7.4 million of revenues for the three and nine months ended September 30, 2025, representing 2.3% and 2.4% of total revenues, respectively. This compares to $2.5 million and $8.7 million, or 2.9% and 3.5% of total revenues, for the corresponding periods of 2024.

Current wording

The Healthcare and Pharma vertical generated $2.2 million of revenues for the three months ended March 31, 2026, representing 2.1% of total revenues. This compares to $2.4 million, or 2.4% of total revenues, in the corresponding period of 2025.

Previous wording

Cost of revenues was $69.5 million for the three months ended September 30, 2025, an increase of $14.7 million, or 27.0%, compared to $54.7 million in the same period of 2024. For the nine months ended September 30, 2025, cost of revenues increased by $39.1 million, or 24.4%, reaching $199.5 million, compared to the prior-year period. The increase in cost of revenues reflected our continued investment in delivery to support growing customer demand.

Current wording

Cost of revenues was $67.9 million for the three months ended March 31, 2026, an increase of $4.5 million, or 7.0%, compared to $63.4 million in the same period of 2025. The increase in cost of revenues reflected our continued investment in delivery to support growing customer demand.

Previous wording

Gross profit increased to $34.7 million for the third quarter of 2025, up 6.1% from the same period in 2024. On a year-to-date basis, gross profit grew 18.1% to $106.2 million for the nine months ended September 30, 2025 from $90.0 million in the prior-year period. Expressed as a percentage of revenues, gross margin declined to 33.3% and 34.7% for the three and nine months ended September 30, 2025, respectively, compared to 37.4% and 35.9% in the corresponding periods of 2024. While gross profit increased year-over-year in absolute terms, gross margins declined due to higher cost structures across key delivery locations and adverse foreign exchange impacts.

Current wording

Gross profit decreased to $36.2 million for the first quarter of 2026, down 2.1% from the same period in 2025. Expressed as a percentage of revenues, gross margin declined to 34.8% for the three months ended March 31, 2026, compared to 36.8% in the corresponding period of 2025. Our gross profit decline was largely attributable to higher cost structures across our key delivery locations and adverse foreign exchange impacts.

Previous wording

Expressed as a percentage of revenues, general and administrative expenses continued to decrease, reaching 21.0% and 21.9% for the three and nine months September 30, 2025, respectively, compared to 22.1% and 23.6% for the corresponding periods in 2024, reflecting cost optimization across various corporate functions.

Current wording

Expressed as a percentage of revenues, general and administrative expenses increased, reaching 25.1% for the three months ended March 31, 2026, compared to 24.2% for the corresponding period in 2025.

Previous wording

Other income, net remained relatively flat in absolute dollars on a quarterly basis. During the nine months ended September 30, 2025, other income, net, almost doubled reaching $15.3 million, compared to $8.7 million in the prior-year period. The increase in other income, net on a year-to-date basis was primarily driven by the remeasurement of acquisition-related contingent consideration liabilities, partially offset by foreign currency headwinds.

Current wording

During the three months ended March 31, 2026, other income, net, decreased to $3.2 million from $4.5 million in the prior-year period. The decrease in other income, net on a year-to-date basis was primarily driven by a gain from the remeasurement of acquisition-related contingent consideration liabilities in the prior year period, partially offset by foreign currency tailwinds.

Previous wording

During the three months ended September 30, 2025, we recognized income tax expense of $1.9 million, compared to $1.3 million in the same period of 2024. The increase was primarily attributable to higher non-deductible executive compensation in the current period. During the nine months ended September 30, 2025, we recognized income tax expense of $3.5 million, compared to $5.8 million in the same period of 2024. The decrease in the tax provision was attributable mainly to the income tax benefit related to equity compensation.

Current wording

During the three months ended March 31, 2026, we recognized income tax expense of $1.0 million, compared to income tax benefit of $0.4 million in the same period of 2025. The change in the tax provision was primarily attributable to a shift from pre-tax income in the prior year period to a pre-tax loss in the current period, higher tax expense for stock-based compensation, and additional tax expense related to prior year state tax returns.

Previous wording

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.

Current wording

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.

Previous wording

The following table presents the reconciliation of Grid Dynamics’ Non-GAAP EBITDA to its GAAP net income, the most directly comparable GAAP measure, for the periods indicated:

Current wording

The following table presents the reconciliation of Grid Dynamics’ Non-GAAP EBITDA to its GAAP net income/(loss), the most directly comparable GAAP measure, for the periods indicated:

Previous wording

The following table presents a reconciliation of Grid Dynamics’ Non-GAAP diluted EPS and its Non-GAAP net income to its GAAP net income for the periods indicated:

Current wording

The following table presents a reconciliation of Grid Dynamics’ Non-GAAP diluted EPS and its Non-GAAP net income to its GAAP net income/(loss) for the periods indicated:

Previous wording

(4)Other (income)/expense, net consists primarily of gains and losses on foreign currency transactions, fair value adjustments, and other miscellaneous non-operating income and expense. During the fourth quarter ended December 31, 2024, the Company started to include interest (income)/expense, net in its calculation of non-GAAP net income. As a result, the Company has adjusted previously reported Other expense, net adjustment to include interest income, net of $2.8 million and $8.1 million for the three and nine months ended September 30, 2024, respectively.

Current wording

(4)Other (income)/expense, net consists primarily of gains and losses on foreign currency transactions, fair value adjustments, and other miscellaneous non-operating income and expense.

Previous wording

As of September 30, 2025, Grid Dynamics had cash and cash equivalents amounting to $338.6 million compared to $334.7 million at December 31, 2024. Of these amounts, $40.9 million and $38.6 million, respectively, were held outside the United States, and included Switzerland, the U.K., India, Netherlands, Armenia, Poland, Moldova, and other countries. We did not have any debt outstanding under the revolving credit facility as of September 30, 2025. We believe that our cash and cash equivalents balance, cash generated from operating activities and proceeds from our November 2024 offering will be sufficient to fund currently expected levels of operating, investing and financing expenditures for a period of twelve months from the date of this filing. However, if our resources are insufficient to satisfy our cash requirements, we may need to seek additional equity or debt financing, which may be subject to conditions outside of our control and may not be available on terms acceptable to our management or at all.

Current wording

As of March 31, 2026, Grid Dynamics had cash and cash equivalents amounting to $327.5 million compared to $342.1 million at December 31, 2025. Of these amounts, $49.0 million and $48.4 million, respectively, were held outside the United States, and included Switzerland, the U.K., India, Netherlands, Mexico, Moldova, Armenia, Argentina, Poland, and other countries. We did not have any debt outstanding under the revolving credit facility as of March 31, 2026. We believe that our cash and cash equivalents balance, cash generated from operating activities and proceeds from our November 2024 offering will be sufficient to fund currently expected levels of operating, investing and financing expenditures for a period of twelve months from the date of this filing. However, if our resources are insufficient to satisfy our cash requirements, we may need to seek additional equity or debt financing, which may be subject to conditions outside of our control and may not be available on terms acceptable to our management or at all.

Previous wording

Operating Activities. Net cash provided by operating activities totaled $30.7 million for the nine months ended September 30, 2025, an increase of $7.6 million compared to $23.1 million in the same period of 2024. The improvement was primarily driven by changes in working capital, including timing of employee compensation payments offset by customer collections.

Current wording

Operating Activities. Net cash provided by operating activities was $8.4 million for the three months ended March 31, 2026, compared to $9.4 million in the prior-year quarter. The $1.0 million decrease was primarily driven by changes in working capital, specifically regarding the timing of payments to vendors and settlement of employee-related liabilities.

Previous wording

Investing Activities. Net cash used in investing activities was $11.3 million for the nine months ended September 30, 2025, compared to $41.3 million in the prior-year period. The cash outflow in 2025 was primarily related to our capital expenditures and the capitalization of internally developed projects. Net cash used in investing activities during the nine months ended September 30, 2024 primarily reflects the acquisition of JUXT that resulted in the payment of $32.1 million, net of cash acquired.

Current wording

Investing Activities. Net cash used in investing activities was $4.0 million for the three months ended March 31, 2026, compared to $3.3 million in the prior-year period, and was related to our capital expenditures and the capitalization of internally developed projects in both periods.

Previous wording

Financing Activities. Net cash used in financing activities amounted to $17.5 million for the nine months ended September 30, 2025, largely driven by tax withholding obligations related to the issuance of shares in connection with vested equity awards. These obligations were $9.1 million higher as compared to the same period of 2024. Net cash used in financing activities for the nine months ended September 30, 2024 was $7.8 million.

Current wording

Financing Activities. Net cash used in financing activities was $17.6 million for the three months ended March 31, 2026, largely driven by repurchases of our common stock initiated in the fourth quarter of 2025, payment of contingent consideration for our 2024 acquisitions and tax withholding obligations related to the issuance of shares in connection with vested equity awards. Net cash used in financing activities for the three months ended March 31, 2025 was $15.8 million and was primarily related to tax withholding obligations in connection with vested equity awards.