Grid Dynamics Holdings, Inc. Q1 FY2026 earnings call

Started 2026 with solid execution. Three trends: meaningful AI revenue growth, vertical mix shift toward tech and financial services, top customers undergoing vendor consolidation. AI practice is core of business. Four pillars of transformation: AI native delivery, productized engineering, AI consulting, internal AI automation. Q1 project highlights include TMT, CPG & Manufacturing, automotive part retailer, and restaurant company engagements. Partnerships are key, partner inference revenues grew to 19.1% of total company revenue, with GAIN platforms deployed on hyperscaler marketplaces and joint sales motions with hyperscalers.

First quarter revenue was $104.1 million, higher than guidance range. AI revenue reached 29.3% of total company revenue, growing nearly 60% year-over-year. TMT was the largest vertical, accounting for 29.5% of total revenues with 30.3% year-over-year growth. Retail contributed 28.4%, finance 23.5%, CPG & Manufacturing 9.4%, Other 7.1%, Healthcare and Pharma 2.1%. Non-GAAP EBITDA was $12.5 million or 12% of revenues. GAAP gross profit was $36.2 million or 34.8%, non-GAAP gross profit was $36.7 million or 35.3%.

Second quarter revenues expected to be in range of $106 million to $108 million. Second quarter non-GAAP EBITDA expected in range of $14 million to $15 million. Full year 2026 revenue outlook maintained at $435 million to $465 million.

Exposure to currency fluctuations, impact of macro issues like the war in Iran on consumer-sensitive industries, uncertainty related to how AI deployments convert into measurable profits and gains, and potential risks associated with individual customers due to unforeseen circumstances.

Q: Puneet Jain of JPMorgan asked about the impact of GAIN framework on operations, training of employees, and guidance confidence.

A: Leonard and Anil responded on engineering talent training, shift to non-T&M projects, pipeline demand, and factors driving confidence.

Q: Margaret Nolan of William Blair asked about partner revenue growth and TMT growth durability.

A: Rahul and Leonard discussed partner revenue growth goals, TMT growth being durable due to client consolidation, hyperscaler relationships, and being a preferred vendor.

Q: Surinder Thind of Jefferies asked about risks in non-time and materials model.

A: Eugene and Anil talked about balancing risk and reward in fixed price projects, using AI agents and frameworks to address uncertainty, and margin differences between T&M and non-T&M.

Q: Bryan Bergin of TD Cowen asked about client sentiment and AI productivity.

A: Rahul, Anil, and Eugene discussed client sentiment trends, AI productivity improvements, and no significant pricing pressures.

Q: Mayank Tandon of Needham asked about revenue visibility and M&A.

A: Anil and Leonard talked about revenue visibility based on customer relationships, and M&A priorities focusing on tuck-ins for capabilities, with consideration of valuations and accretiveness