GRID DYNAMICS HOLDINGS, INC.

Previous wording

We seek to solve the most pressing technical challenges and enable positive business outcomes for enterprise companies through AI, data, cloud and digital engagement engineering expertise, building on our nearly two decades of technology leadership and pioneering enterprise AI expertise. AI has become the core of our business, with a focus on AI-led transformation with high-value enterprise engagements. Our strategic foundation is our Grid Dynamics AI-Native (“GAIN”) engagement model, a development framework for software delivery in the AI era, which fundamentally rethinks team composition, engineering workflows, and delivery practices. The GAIN model represents a shift from effort-based development to AI and human collaboration optimized for global, enterprise-scale delivery, with emphasis on domain specialists, software architects, and experts in emerging technology.

Current wording

We seek to solve the most pressing technical challenges and enable positive business outcomes for enterprise companies through AI, data, cloud and digital engagement engineering expertise, building on our two decades of technology leadership and pioneering enterprise AI innovation. AI has become the core of our business, with a focus on AI-led transformation with high-value enterprise engagements. Our strategic foundation is our Grid Dynamics AI-Native (“GAIN”) engagement model, a development framework for software delivery in the AI era, which fundamentally rethinks team composition, engineering workflows, and delivery practices. The GAIN model represents a shift from effort-based development to AI and human collaboration optimized for global, enterprise-scale delivery, with emphasis on domain specialists, software architects, and experts in emerging technology.

Previous wording

•Revenues: Total revenues increased 7.0% year-over-year to $108.2 million, primarily driven by increased demand in our Technology, Media and Telecom vertical.

Current wording

•Revenues: Total revenues increased 9.7% year-over-year to $114.3 million, primarily driven by increased demand in our Technology, Media and Telecom vertical.

Previous wording

•Gross margin: Our gross profit margin for the second quarter reached 36.6%, an increase of 250 basis points compared to 34.1% in the prior-year quarter.

Current wording

•Gross margin: Our gross profit margin for the third quarter reached 40.3%, an increase of 700 basis points compared to 33.3% in the prior-year quarter.

Previous wording

•Net income and EPS: Net income for the second quarter was $2.9 million, or $0.03 per diluted share, compared to net income of $5.3 million, or $0.06 per diluted share, in the prior-year quarter.

Current wording

•Net income and EPS: Net income for the third quarter was $6.2 million, or $0.08 per diluted share, compared to net income of $1.2 million, or $0.01 per diluted share, in the prior-year quarter.

Previous wording

•Non-GAAP measures: Non-GAAP EBITDA was $14.7 million for the three months ended June 30, 2026, compared to $12.7 million in the prior-year quarter. Diluted Non-GAAP earnings per share was $0.11 per share, compared to $0.10 per share in the prior-year quarter.

Current wording

•Non-GAAP measures: Non-GAAP EBITDA was $22.9 million for the three months ended September 30, 2026, compared to $12.7 million in the prior-year quarter. Diluted Non-GAAP earnings per share was $0.18 per share, compared to $0.09 per share in the prior-year quarter.

Previous wording

Attracting and retaining top talent in key regions is vital to Grid Dynamics’ success and our ability to drive revenue growth. Our long-term prospects depend on recruiting qualified IT professionals who support a global delivery model across the Americas, Europe, and Asia. This geographic footprint allows us to provide clients with continuous development, US-based leadership, and specialized talent pools optimized for both quality and cost-efficiency. We seek to employ the appropriate professionals in locations to optimize our employee costs and expenses. Currently, the vast majority of our workforce consists of these highly skilled IT professionals. We increasingly prioritize experienced senior talent over volume staffing to handle the complexity of production-grade infrastructure required for AI implementations.

Current wording

Attracting and retaining top talent in key regions is vital to Grid Dynamics’ success and our ability to drive revenue growth. Our long-term prospects depend on recruiting qualified IT professionals who support a global delivery model across the Americas, Europe, and Asia. This geographic footprint allows us to provide customers with continuous development, US-based leadership, and specialized talent pools optimized for both quality and cost-efficiency. We seek to employ the appropriate professionals in locations to optimize our employee costs and expenses. Currently, the vast majority of our workforce consists of these highly skilled IT professionals. We increasingly prioritize experienced senior talent over volume staffing to handle the complexity of production-grade infrastructure required for AI implementations.

Previous 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.

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 competitive compensation, a flexible work environment, training and development programs, and the opportunity to work on exciting, cutting-edge projects for high profile clients.

Previous wording

Currently, a majority of Grid Dynamics’ customer projects are performed and invoiced on a time and materials basis, although as part of our strategy, an increasing number of projects are performed on a fixed-price basis. Grid Dynamics’ management tracks and projects billable hours as an indicator of business volume and corresponding resource needs for IT professionals. To maintain its gross profit margins, Grid Dynamics must effectively utilize its IT professionals, which depends on its ability to integrate and train new personnel, to efficiently transition personnel from completed projects to new assignments, to forecast customer demand for services and to attract and deploy personnel in the right regions with appropriate skills and seniority to projects. With respect to fixed-price projects, Grid Dynamics must accurately project the time and other costs associated with project performance. Grid Dynamics’ management generally tracks utilization with respect to subsets of employees, by location or by project, and calculates the utilization rate for each subset by dividing (x) the aggregate number of billable hours for a period by (y) the aggregate number of total available hours for the same period. Grid Dynamics’ management analyzes and projects utilization to measure the efficiency of its workforce and to inform management’s budget and personnel decisions.

Current wording

Currently, a majority of Grid Dynamics’ customer projects are performed and invoiced on a time and materials basis, although as part of our strategy, an increasing number of projects are performed on a fixed-price basis. Grid Dynamics’ management tracks and projects billable hours as an indicator of business volume and corresponding resource needs for IT professionals. To maintain its gross profit margins, Grid Dynamics must effectively utilize its IT professionals, which depends on its ability to integrate and train new personnel, to efficiently transition personnel from completed projects to new assignments, to forecast customer demand for services and to attract and deploy personnel in the right regions with appropriate skills and seniority to projects. With respect to fixed-price projects, Grid Dynamics must accurately delineate the scope of work and reliably estimate the time, effort and expenditures required for project delivery. Grid Dynamics’ management generally tracks utilization with respect to subsets of employees, by location or by project, and calculates the utilization rate for each subset by dividing (x) the aggregate number of billable hours for a period by (y) the aggregate number of total available hours for the same period. Grid Dynamics’ management analyzes and projects utilization to measure the efficiency of its workforce and to inform management’s budget and personnel decisions.

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 thesix months ended June 30, 2026 was 213 customers, a slight increase from 211 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. Our customer base remained stable, with the total number of customers reaching 222 customersfor thenine months ended September 30, 2026 and 2025.

Previous 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 and six months ended June 30, 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 seeking to diversify 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 and nine months ended September 30, 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 seeking to diversify its customer base.

Previous wording

Our partnership relationships with major hyperscale cloud providers and leading platform AI companies are key to our enterprise go-to-market strategy. These relationships are co-development partnerships that give us and our clients privileged access to emerging capabilities, accelerated innovation cycles, and solutions that leverage best-in-class technologies. Our partnerships facilitate enhanced joint solution development and co-selling opportunities, helping clients employ and scale AI using the most advanced infrastructure available. The capabilities from these providers are then integrated, customized, and optimized for each enterprise’s specific needs.

Current wording

Our partnership relationships with major hyperscale cloud providers and leading platform AI companies are key to our enterprise go-to-market strategy. These relationships are co-development partnerships that give us and our customers privileged access to emerging capabilities, accelerated innovation cycles, and solutions that leverage best-in-class technologies. Our partnerships facilitate enhanced joint solution development and co-selling opportunities, helping customers employ and scale AI using the most advanced infrastructure available. The capabilities from these providers are then integrated, customized, and optimized for each enterprise’s specific needs.

Previous wording

Technology, Media and Telecom (“TMT”) remained our largest vertical and principal growth driver, contributing 31.8% and 30.7% of total revenues for the three and six months ended June 30, 2026, respectively. Revenues in this vertical increased by 36.4% and 33.5% during the three and six months ended June 30, 2026, reaching $34.4 million and $65.1 million, respectively, compared to $25.2 million and $48.8 million, for the corresponding periods of 2025. Growth was primarily driven by strong demand from our largest technology customers.

Current wording

TMT remained our largest vertical and principal growth driver, contributing 32.3% and 31.3% of total revenues for the three and nine months ended September 30, 2026, respectively. Revenues in this vertical increased by $8.4 million, or 29.3%, for the three months ended September 30, 2026, and by $24.7 million, or 31.9%, during the nine months ended September 30, 2026, reaching $37.0 million and $102.1 million, respectively, compared to $28.6 million and $77.4 million for the corresponding periods of 2025. Growth in both periods was primarily driven by higher demand from our largest technology customers and new customers.

Previous wording

Finance revenues experienced decreases of 2.6% and 2.4%, reaching $24.7 million and $49.2 million, for the three and six months ended June 30, 2026, compared to $25.4 million and $50.4 million for the same periods in the prior year. Within this vertical strong demand from our banking and financial services customers was offset by completion of engagements at certain insurance customers. The Finance vertical contributed 22.9% and 23.2% of total revenues for the three and six months ended June 30, 2026, respectively.

Current wording

September 30, 2025. Strong demand from our banking and financial services customers was offset by the completion of engagements at certain insurance customers.

Previous wording

The Consumer Packaged Goods/Manufacturing (“CPG”) accounted for 10.9% and 11.0% of total revenues for the three and six months ended June 30, 2026, respectively. Revenues in this vertical remained relatively flat on a quarterly basis reaching $11.8 million and $11.3 million for the three months ended June 2026 and 2025, respectively. Revenues for the first half of 2026 grew 4.0%, or $0.9 million, reaching $23.3 million, compared to $22.5 million for the corresponding prior year period. The year-to-date increase was primarily driven by robust demand from key accounts, including a leading wholesale food distributor. Furthermore, we continue to see ongoing engagement across our key manufacturing accounts.

Current wording

The Consumer Packaged Goods/Manufacturing (“CPG/Manufacturing”) accounted for 10.9% and 11.0% of total revenues for the three and nine months ended September 30, 2026, respectively. Revenues were flat at $12.5 million compared to the prior-year quarter. Growth from a leading wholesale food distributor and manufacturing accounts was offset by lower revenues from other customers. Revenues for the nine months ended September 30, 2026 grew by $0.9 million, or 2.6%, reaching $35.8 million, compared to $34.9 million for the corresponding prior-year period. The increase was primarily driven by our manufacturing accounts.

Previous wording

•Healthcare and Pharma generated $2.1 million and $4.3 million of revenues for the three and six months ended June 30, 2026, representing 1.9% and 2.0% of total revenues, respectively. This compares to $2.6 million and $5.0 million, or 2.5% of total revenues in both periods of 2025.

Current wording

•Healthcare and Pharma generated $2.1 million and $6.3 million of revenues for the three and nine months ended September 30, 2026, representing 1.8% and 1.9% of total revenues, respectively. This compares to $2.4 million and $7.4 million, or 2.3% and 2.4% of total revenues, in the corresponding periods of 2025. The decrease in both periods was primarily driven by completion of engagements with certain healthcare customers, partially offset by growth at pharmaceutical customers.

Previous wording

•Our Other vertical contributed 6.0% and 6.5% of total revenues for the three and six months ended June 30, 2026, respectively, compared to 7.8% and 7.4% for the same periods of 2025. Revenues in this vertical decreased by 16.4% and 6.5% on a quarterly and year-to-date basis, respectively. The decline during both periods was primarily driven by moderate engagement levels from key accounts.

Current wording

•Our Other vertical contributed 5.3% and 6.1% of total revenues for the three and nine months ended September 30, 2026, respectively, compared to 7.4% and 7.3% for the same periods in 2025. Revenues in this vertical decreased by 21.7% and 11.6% on a quarterly and year-to-date basis, respectively.

Previous wording

Our cost of revenues consists primarily of salaries and employee benefits, including performance bonuses and stock-based compensation, and project-related travel expenses of client-serving professionals. Cost of revenues also includes depreciation and amortization expenses related to client-serving activities.

Current wording

Our cost of revenues consists primarily of salaries and employee benefits, including performance bonuses and stock-based compensation, and project-related travel expenses of customer-serving professionals. Cost of revenues also includes depreciation and amortization expenses related to customer-serving activities.

Previous wording

Gross profit was $39.6 million and $75.9 million for the three and six months ended June 30, 2026, representing an increase of $5.1 million, or 14.8%, and $4.4 million, or 6.1%, compared to $34.5 million and $71.5 million in the corresponding prior-year periods, respectively. Expressed as a percentage of revenues, gross margin was 36.6% and 35.7% for the three and six months ended June 30, 2026, compared to 34.1% and 35.5% in the prior-year periods, respectively. The increase in gross profit and expansion of gross margin were primarily driven by revenue growth outpacing delivery cost, improved delivery resource utilization and positive foreign exchange impacts.

Current wording

Gross profit was $46.1 million and $121.9 million for the three and nine months ended September 30, 2026, representing an increase of $11.4 million, or 32.8%, and $15.7 million, or 14.8%, compared to $34.7 million and $106.2 million in the corresponding prior-year periods, respectively. Expressed as a percentage of revenues, gross margin was 40.3% and 37.3% for the three and nine months ended September 30, 2026, compared to 33.3% and 34.7% in the prior-year periods, respectively. The increase in gross profit and expansion of gross margin, both on a quarterly and year-to-date basis, were driven by a combination of greater efficiencies, higher revenue per employee and higher utilization.

Previous wording

During the three months ended June 30, 2026, our sales and marketing expenses were $7.1 million, flat compared to the prior-year quarter. For the six months ended June 30, 2026, sales and marketing expenses were $14.8 million, a decrease of $0.6 million, or 3.6%, compared to $15.4 million in the prior-year period. Expressed as a percentage of revenues, sales and marketing expenses decreased to 6.6% and 7.0% for the three and six months ended June 30, 2026, respectively, compared to

Current wording

During the three months ended September 30, 2026, our sales and marketing expenses decreased by 3.2% to $7.1 million, compared to $7.3 million for the prior-year quarter. For the nine months ended September 30, 2026, sales and marketing expenses were $21.9 million, a decrease of $0.8 million, or 3.5%, compared to $22.7 million in the prior-year period. Expressed as a percentage of revenues, sales and marketing expenses declined to 6.2% and 6.7% for the three and nine months ended September 30, 2026, respectively, compared to 7.0% and 7.4% in the corresponding periods of 2025. The decrease across both periods was primarily driven by lower stock-based compensation expense and cost optimization.

Previous wording

General and administrative expenses increased 19.4% to $24.8 million for the three months ended June 30, 2026, compared to $20.8 million in the prior-year period. For the six months ended June 30, 2026, general and administrative expenses totaled $50.9 million, an increase of 13.1% from $45.1 million in the same period of 2025. The increase was primarily driven by higher restructuring costs, professional fees associated with potential acquisitions, and increased facility and IT-related expenses, partially offset by lower compensation costs, including stock-based compensation expenses.

Current wording

General and administrative expenses increased 6.7% to $23.3 million for the three months ended September 30, 2026, compared to $21.9 million in the prior-year period. As a percentage of revenues, expenses declined to 20.4% from 21.0% for the quarter. For the nine months ended September 30, 2026, our general and administrative expenses totaled $74.3 million, an increase of 11.0% from $66.9 million in the same period of 2025. As a percentage of revenues, they increased to 22.7% from 21.9%. The increase was primarily driven by higher depreciation expense, restructuring costs, and professional fees associated with potential acquisitions.

Previous wording

During the three and six months ended June 30, 2026, Other income, net, was $3.2 million and $6.4 million, respectively, compared to $7.4 million and $11.9 million in the corresponding prior-year periods. The decrease in both periods was primarily driven by a reduction in gains from the remeasurement of acquisition-related contingent consideration liabilities, which decreased to $1.2 million in the first half of 2026 from $6.3 million in the prior-year period, as well as lower money market income due to lower average cash balances, slightly offset by favorable net foreign exchange movements during the first half of 2026.

Current wording

During the three and nine months ended September 30, 2026, Other income, net, was $2.2 million and $8.7 million, respectively, compared to $3.4 million and $15.3 million in the corresponding prior-year periods. The decrease in both periods was primarily driven by a reduction in gains from the remeasurement of acquisition-related contingent consideration liabilities, which decreased to $1.2 million in the nine months of 2026 from $6.9 million in the prior-year period, as well as lower money market income due to lower average cash balances, slightly offset by favorable net foreign exchange movements on a year-to-date basis.

Previous wording

During the three months ended June 30, 2026, we recognized income tax expense of $1.6 million, compared to $2.0 million expense in the same period of 2025. During the six months ended June 30, 2026, we recognized income tax expense of $2.6 million, compared to $1.6 million in the same period of 2025. The change in the tax provision was primarily attributable to a higher tax expense for stock-based compensation, and additional tax expense related to prior year state tax returns.

Current wording

During the three months ended September 30, 2026, we recognized income tax expense of $5.2 million, compared to $1.9 million expense in the same period of 2025. The change was attributable mainly to an increase in pre-tax book income in 2026 that reduced the impact of permanent adjustments related to equity compensation and executive compensation. During the nine months ended September 30, 2026, we recognized income tax expense of $7.9 million, compared to $3.5 million in the same period of 2025. The change in tax expense was attributable mainly to higher non-taxable income in the prior year, higher tax expense for stock-based compensation in the current year, and additional prior year state tax expense in the current year.

Previous wording

As of June 30, 2026, Grid Dynamics had cash and cash equivalents amounting to $298.4 million compared to $342.1 million at December 31, 2025. Of these amounts, $50.4 million and $48.4 million, respectively, were held outside the United States, and included Switzerland, the U.K., India, Netherlands, Mexico, Moldova, Poland, Armenia, Argentina, and other countries. We did not have any debt outstanding under the revolving credit facility as of June 30, 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.

Current wording

As of September 30, 2026, Grid Dynamics had cash and cash equivalents amounting to $304.3 million compared to $342.1 million at December 31, 2025. Of these amounts, $51.5 million and $48.4 million, respectively, were held outside the United States, and included Switzerland, the U.K., India, Netherlands, Mexico, Moldova, Argentina, Armenia, and other countries. We did not have any debt outstanding under the revolving credit facility as of September 30, 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 was $14.5 million for the six months ended June 30, 2026, compared to $23.7 million in the prior-year period. The $9.2 million decrease was primarily driven by working capital fluctuations, including the timing of customer collections, vendor payments, and settlement of employee-related liabilities.

Current wording

Operating Activities. Net cash provided by operating activities was stable at $30.5 million for the nine months ended September 30, 2026, compared to $30.7 million in the prior-year period, with the slight variation reflecting ordinary course timing of customer collections, vendor payments, and settlements of employee-related liabilities.

Previous wording

Investing Activities. Net cash used in investing activities was $21.6 million for the six months ended June 30, 2026, compared to $7.3 million for the six months ended June 30, 2025. The increase in the first half of 2026 was primarily driven by the acquisition of Ekumen, which resulted in cash outflows of $14.1 million, net of cash acquired. Cash spent on capital expenditures and capitalized internal-use software costs remained relatively stable across both periods.

Current wording

Investing Activities. Net cash used in investing activities was $24.3 million for the nine months ended September 30, 2026, compared to $11.3 million for the nine months ended September 30, 2025. The $13.0 million increase in cash used during the period was primarily driven by the acquisition of Ekumen, which resulted in cash outflows of $14.1 million, net of cash acquired. Cash spent on capital expenditures, including capitalized internal-use software costs, decreased by $1.2 million to $10.3 million.

Previous wording

Financing Activities. Net cash used in financing activities was $35.2 million for the six months ended June 30, 2026, compared to $16.9 million for the six months ended June 30, 2025. The $18.3 million increase in cash used was largely driven by an outflow of $28.8 million for common stock repurchases under the buyback program initiated in the fourth quarter of 2025. This was partially offset by a $12.8 million decrease in cash outflows for tax withholdings related to the net-share settlement of vested equity awards compared to the prior-year period.

Current wording

Financing Activities. Net cash used in financing activities was $42.1 million for the nine months ended September 30, 2026, compared to $17.5 million for the nine months ended September 30, 2025. The $24.6 million increase in cash used was largely driven by an outflow of $35.5 million for common stock repurchases under the buyback program initiated in the fourth quarter of 2025, and $2.1 million of payments of contingent consideration related to acquisitions. This was partially offset by a $13.1 million decrease in cash outflows for tax withholdings related to the net-share settlement of vested equity awards compared to the prior-year period.