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Grid Dynamics Holdings (GDYN)
NASDAQ:GDYN
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Grid Dynamics Holdings
(NASDAQ:GDYN)67Neutral
Positive Factors
AI and Technology
GDYN is well positioned to benefit from spending on AI as projects move from the 'proof of concept' stage to full scale production mode.
Earnings
GDYN's 4Q results were strong and came in above both our and Street expectations on the top and bottom line, as improving organic demand, sound execution, and accretive M&A all helped produce a solid quarter.
Growth Outlook
Management provided a strong outlook which is viewed as especially impressive relative to other IT services providers which have given choppier demand forecasts.
Negative Factors
Grid Dynamics Holdings (GDYN) vs. S&P 500 (SPY)
Market Cap
$1.61B
Dividend YieldN/A
Average Volume (3M)838.86K
Price to Earnings (P/E)419.9
Beta (1Y)1.62
Revenue Growth12.04%
EPS GrowthN/A
CountryUS
Employees3,920
SectorTechnology
Sector Strength48
IndustrySoftware
Share Statistics
EPS (TTM)0.04
Shares Outstanding83,838,356
10 Day Avg. Volume1,085,341
30 Day Avg. Volume838,857
Financial Highlights & Ratios
PEG RatioN/A
Price to Book (P/B)N/A
Price to Sales (P/S)4.45
Price to Cash Flow (P/CF)55.10
P/FCF Ratio88.00
Enterprise Value/Market CapN/A
Enterprise Value/RevenueN/A
Enterprise Value/Gross ProfitN/A
Enterprise Value/EbitdaN/A
Forecast
1Y Price Target
$25.50Price Target Upside34.85% Upside
Rating ConsensusStrong Buy
Number of Analyst Covering5
Grid Dynamics Holdings Business Overview & Revenue Model
Company DescriptionChaSerg Technology Acquisition Corp. is a blank check company, which engages in the capital stock exchange, asset acquisition, stock purchase, reorganization, and similar business combination with one or more businesses. The company was founded on May 21, 2018 and is headquartered in La Jolla, CA.
How the Company Makes MoneyGrid Dynamics Holdings generates revenue through a variety of channels primarily centered around custom IT solutions and consulting services. The company's primary revenue stream is derived from its service contracts with large enterprises, where it provides tailored digital transformation solutions. These solutions often involve long-term engagements in which Grid Dynamics collaborates closely with clients to deliver custom software development, IT infrastructure optimization, and cloud migration services. Additionally, Grid Dynamics partners with leading technology vendors, such as cloud service providers, which enhances its service offerings and expands its market reach. The company's revenue is significantly influenced by its ability to secure and maintain sizable contracts with high-profile clients in sectors like retail, technology, and financial services, where there is a constant demand for modernization and innovation in IT infrastructure.
Grid Dynamics Holdings Financial Statement Overview
Summary
Grid Dynamics Holdings shows strong revenue growth and a solid balance sheet with minimal leverage and high equity. However, profitability metrics need improvement due to negative EBIT and EBITDA margins. Cash flow has declined, though substantial cash reserves provide a cushion.Income Statement
Grid Dynamics Holdings has shown a consistent growth in revenue, with a 12.03% increase from 2023 to 2024. The gross profit margin improved to 36.22% in 2024, indicating efficient cost management. However, the company still faces challenges with profitability, as reflected by the negative EBIT and EBITDA margins in 2024. Despite this, a positive net profit margin of 1.15% in 2024 is a significant turnaround from previous losses, showcasing an improving bottom line.72
Positive
Balance Sheet
The balance sheet reflects a strong financial position with a low debt-to-equity ratio of 0.02 and a robust equity ratio of 87.45% in 2024. These figures indicate a solid capital structure with minimal leverage, reducing financial risk. The return on equity (ROE) improved to 0.78% in 2024, highlighting a positive trajectory in utilizing equity effectively. Overall, the company's balance sheet is healthy, with substantial equity and minimal debt obligations.85
Very Positive
Cash Flow
The cash flow analysis shows a decline in operating cash flow from 2023 to 2024, with a decrease in free cash flow as well. However, the company maintains a positive operating cash flow to net income ratio of 7.47, indicating efficient cash generation relative to net income. The free cash flow to net income ratio is 4.56, reflecting a stable conversion of net income into free cash flow. Despite the dip in cash flow, the overall cash position remains strong, supported by significant cash reserves.65
Positive
| Breakdown | ||||
| Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 | Dec 2020 |
|---|---|---|---|---|
| Income Statement | Total Revenue | |||
| 350.57M | 312.91M | 310.48M | 211.28M | 111.28M | Gross Profit |
| 127.00M | 113.15M | 120.59M | 87.73M | 41.62M | EBIT |
| -2.10M | -5.58M | -21.01M | 50.00K | -15.45M | EBITDA |
| -2.10M | 7.69M | -10.81M | 5.10M | -12.54M | Net Income Common Stockholders |
| 4.04M | -1.76M | -29.21M | -7.70M | -12.60M |
| Balance Sheet | Cash, Cash Equivalents and Short-Term Investments | |||
| 334.65M | 257.23M | 256.73M | 144.36M | 112.75M | Total Assets |
| 592.19M | 435.17M | 411.15M | 256.72M | 167.13M | Total Debt |
| 12.63M | 11.00M | 8.14M | 0.00 | 0.00 | Net Debt |
| -322.03M | -246.23M | -248.59M | -144.36M | -112.75M | Total Liabilities |
| 74.36M | 52.26M | 48.10M | 29.67M | 15.41M | Stockholders Equity |
| 517.83M | 382.91M | 363.04M | 227.05M | 151.73M |
| Cash Flow | Free Cash Flow | |||
| 18.43M | 33.22M | 25.58M | 13.26M | 3.68M | Operating Cash Flow |
| 30.20M | 41.09M | 31.65M | 17.97M | 5.93M | Investing Cash Flow |
| -51.30M | -25.95M | -16.32M | -35.37M | -18.34M | Financing Cash Flow |
| 101.16M | -16.32M | 97.76M | 49.13M | 82.97M |
Grid Dynamics Holdings Technical Analysis
Negative
18.91
Price Trends
21.41
Negative
19.32
Negative
15.71
Positive
Market Momentum
-0.79
Positive
36.46
Neutral
9.84
Positive
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For GDYN, the sentiment is Negative. The current price of 18.91 is below the 20-day moving average (MA) of 21.31, below the 50-day MA of 21.41, and above the 200-day MA of 15.71, indicating a neutral trend. The MACD of -0.79 indicates Positive momentum. The RSI at 36.46 is Neutral, neither overbought nor oversold. The STOCH value of 9.84 is Positive, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for GDYN.
Grid Dynamics Holdings Risk Analysis
Grid Dynamics Holdings disclosed 57 risk factors in its most recent earnings report. Grid Dynamics Holdings reported the most risks in the “Finance & Corporate” category.
Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy
Latest Risks Added 0 New Risks
Grid Dynamics Holdings Peers Comparison
Overall Rating
UnderperformOutperform
Sector (59)
Financial Indicators
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
80 Outperform | $41.42B | 18.58 | 15.55% | 1.44% | 1.98% | 7.16% | |
78 Outperform | $6.44B | 38.28 | 9.03% | ― | 17.35% | 6.94% | |
76 Outperform | $217.98B | 29.21 | 25.93% | 1.60% | 2.75% | 10.53% | |
75 Outperform | $80.41B | 24.69 | 29.99% | 2.10% | 3.08% | 11.92% | |
69 Neutral | $11.26B | 25.25 | 12.52% | ― | 0.80% | 10.05% | |
67 Neutral | $1.61B | 419.87 | 0.90% | ― | 12.04% | ― | |
59 Neutral | $22.39B | 11.53 | -18.05% | 2.31% | 5.00% | -25.89% |
* Technology Sector Average
Performance Comparison
GDYN
Grid Dynamics Holdings
18.91
6.63
53.99%
ACN
Accenture
348.26
-26.32
-7.03%
CTSH
Cognizant
84.28
8.78
11.63%
EPAM
Epam Systems
200.15
-109.86
-35.44%
INFY
Infosys
20.06
1.26
6.70%
GLOB
Globant SA
146.45
-63.36
-30.20%
Grid Dynamics Holdings Earnings Call Summary
Earnings Call Date: Feb 20, 2025 | % Change Since: -7.67% | Next Earnings Date: May 1, 2025
Earnings Call Sentiment Positive
Grid Dynamics demonstrated strong financial performance and growth in Q4 2024, driven by record-breaking revenue, successful client acquisitions, and expanding AI initiatives. Despite some flat performance in the TMT vertical and a slight decline in the 'Other' vertical, the company's overall growth trajectory and strategic priorities for 2025 indicate a positive outlook.Highlights
Record-Breaking Revenue and Growth
Grid Dynamics delivered the highest revenue and profitability in the company's history, achieving $100 million in revenue in Q4 2024, a 28.5% YoY increase. This milestone was achieved in a single quarter, compared to the same amount for the entire year when the company went public in 2020.
Strong Client Base and New Deals
Grid Dynamics signed three notable enterprise clients in Q4 2024, including a major automotive company, a global auction company, and one of the largest grocery retail groups.
AI Initiatives and Expansion
The company's AI capabilities gained strong momentum, with 130 AI opportunities identified in Q4, a 30% increase over Q3. AI initiatives are driving revenue growth and operational efficiency for clients.
Promising 2025 Outlook
Grid Dynamics expects 2025 revenues to be in the range of $415-435 million, representing a potential growth of 20%+ over 2024. The company has identified five priorities to support this growth, including leveraging AI and enhancing global support.
Successful Acquisitions
The acquisition of U.K.-based JUXT enhanced industry expertise in banking and financial services, with expectations of converting several opportunities in 2025.
Increased Headcount and Engineering Positions
The company achieved its highest ever billable engineering headcount by the end of Q4 and witnessed the highest levels of open engineering positions in three years.
Lowlights
Flat TMT Vertical Performance
The Technology, Media, and Telecommunications (TMT) vertical remained relatively flat in Q4 compared to the third quarter due to a typical year-end slowdown in some large customers.
Slight Decline in Other Verticals
The 'Other' vertical, representing 7.2% of Q4 revenues, declined by 11.3% year-over-year.
Company Guidance
In the recent Grid Dynamics earnings call, the company reported record-breaking revenue and non-GAAP EBITDA for the fourth quarter of Fiscal Year 2024, achieving a milestone of $100.3 million in quarterly revenue, a 28.5% year-over-year increase. Organic revenue growth was 12.8%, with contributions from recent acquisitions. The company anticipates revenues between $415 million and $435 million for 2025, forecasting a 21.2% growth year-over-year at the midpoint. Notably, the retail vertical led with 32.6% of Q4 revenue, showing a 33.1% year-over-year growth. The finance sector also surged with a 180.1% increase. Grid Dynamics' top five and ten customers contributed 35.6% and 55.8% of Q4 revenue, respectively. The company expanded its headcount to 4,730, reflecting growth from both organic business and acquisitions. For Q1 2025, Grid Dynamics expects revenues between $98 million and $100 million, with non-GAAP EBITDA projected at $12.9 million to $13.9 million.Grid Dynamics Holdings Corporate Events
Executive/Board Changes
Grid Dynamics Updates Director Compensation Policy
Neutral
Jan 13, 2025
Grid Dynamics Holdings has announced updates to its Outside Director Compensation Policy, which include increasing the annual restricted stock unit (RSU) award for the non-executive Chairman of the Board from $20,000 to $30,000, adding annual RSU awards of $40,000 for the chairs of each Board committee, and providing annual RSU awards of $30,000 for members of each Board committee who are not receiving the chair award. These changes reflect the company’s commitment to aligning director compensation with its strategic goals and enhancing governance structures, potentially impacting stakeholder confidence and engagement.
Glossary
OutperformA stock rated as "Outperform" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock is likely to deliver higher returns compared to the average returns of other stocks in the same sector or market index. Investors might consider this stock a good buying opportunity.
NeutralA stock rated as "Neutral" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly attractive nor unattractive for investment. Investors may consider holding onto the stock, as it is not expected to either significantly outperform or underperform the market.
UnderperformA stock rated as "Underperform" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock may deliver lower returns compared to the average returns of other stocks in the same sector or market index. Investors might consider selling the stock or avoiding it as an investment.
Disclaimer
This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.