Grid Dynamics Holdings, Inc. Q4 FY2024 earnings call

• Grid Dynamics had a strong fourth quarter, achieving $100 million revenue milestone, with revenue and profitability at historic highs. - Demand improved across customers and industry verticals, with booking and pipeline trends showing robust demand. - AI initiatives are gaining momentum, with expanded AI portfolio and tailored solutions for Fortune 1000 companies. - Acquired JUXT in Q4 2024 to enhance banking and financial services expertise. - Follow the Sun strategy continues, with expanded geographic footprint across 19 countries and AI training programs for engineers. - Partnerships with hyperscalers played a significant role in 2024, contributing 18% of total revenue, and expected to grow in 2025. - Notable client projects included AI-driven catalog enrichment for a food distributor, Agentic AI platform development for a beverage company, and technology platform creation for a global bank.

In the fourth quarter of 2024, Grid Dynamics achieved record revenues of $100.3 million, surpassing the guidance range. The retail vertical was the largest, accounting for 32.6% of Q4 revenues, showing sequential and year-over-year growth of 9.7% and 33.1% respectively. TMT and financial verticals contributed 23.5% and 23.1% of Q4 revenues. The finance vertical had the strongest performance with sequential and year-over-year growth of 63.8% and 180.1% respectively. CPG and manufacturing represented 11.2% of quarter revenues, growing sequentially by 14.8% and 16.4% year-over-year. Other verticals were 7.2% and healthcare and pharma was 2.4%. Organic revenues grew by 12.8% year-over-year excluding recent acquisitions. Total headcount was 4,730 at the end of Q4 2024, up from previous quarters.

• For Q1 2025, expected revenues in the range of $98 million to $100 million, with non-GAAP EBITDA in the range of $12.9 million to $13.9 million. - For full year 2025, expected revenues in the range of $415 million to $435 million, representing growth of 18.4% to 24.1% year-over-year.

Q: How does Grid Dynamics' outperformance versus peers in 2025 guidance come about?

A: Leonard Livschitz stated it's due to continued strong business relationships with clients, introduction of technology and AI, scaling solution offerings, and hyperscaler relationships.

Q: What are the key drivers of revenue growth for 2025?

A: Leonard mentioned growth from top five and top 10 clients, with strength in technology, CPGs, fintech, and relationships with GCC clients and India.

Q: How should we think about AI revenue contribution?

A: Vasily Sizov said AI is a component of almost every engagement, with big customers shifting from cost optimization to revenue generation, and Grid Dynamics being strong in AI historically.

Q: What about drivers of revenue growth for 2025 in terms of recruiting, pricing, and utilization?

A: Yury Gryzlov discussed recruiting and follow-the-sun delivery model, Anil Doradla mentioned organic growth and margin profile, and Leonard Livschitz talked about pricing and utilization tied to value positioning and training.

Q: Will there be benefit on SG&A line from rationalizing accounts and hyperscaler collaboration?

A: Anil Doradla said yes, but with investments, and Vasily Sizov added on qualitative change from partnerships.