Grid Dynamics Holdings, Inc.

What they do

Grid Dynamics provides AI, data, cloud and digital engagement engineering services to large enterprises, positioning itself as an AI transformation partner rather than a cost-optimization outsourcer. It delivers work through its Grid Dynamics AI-Native (GAIN) engagement model, which changes team composition and delivery practices toward AI-and-human collaboration. The company reported total headcount of 4,838 as of June 30, 2026, down from 5,013 a year earlier, and operates across verticals including Technology, Media and Telecom, Retail, Finance, CPG and Manufacturing, and Healthcare and Pharma.

Revenue drivers

• Technology, Media and Telecom (TMT) — Largest growth driver at 31.8% of Q2 2026 revenue; TMT revenue rose 36.4% year-over-year and 11.7% sequentially on demand from large technology customers.
• Retail — Second-largest vertical at 26.5% of Q2 2026 revenue, driven by demand from key accounts.
• Finance — Third-largest vertical at 22.9% of Q2 2026 revenue, supported by ongoing financial services engagements.
• CPG and Manufacturing, plus Healthcare/Pharma and Other — CPG and Manufacturing was 10.9% of Q2 2026 revenue and grew 2.1% sequentially; Healthcare and Pharma was 1.9% and Other was 6.0%.

Recent performance

Second quarter 2026 revenue was $108.2 million, up 3.9% sequentially and 7.0% year-over-year, slightly above the $106.0-$108.0 million guidance range. GAAP gross margin rose to 36.6% from 34.1% a year earlier, and GAAP net income was $2.9 million, or $0.03 per diluted share, versus $5.3 million, or $0.06, in the prior-year quarter. Non-GAAP EBITDA was $14.7 million versus $12.7 million, and non-GAAP net income was $9.0 million, or $0.11 per diluted share. Operating cash flow was $14.5 million for the six months ended June 30, 2026, compared with $23.7 million a year earlier. Cash and cash equivalents totaled $298.4 million as of June 30, 2026, down from $342.1 million at December 31, 2025.

Strategy

Management is centering the business on AI-led enterprise transformation, with the GAIN delivery framework as the core engagement model and AI revenue reported above 30% of total revenue for the first time in Q2 2026. The company said AI revenue grew over 50% year-over-year for a second consecutive quarter as clients move AI workloads from pilots to production. It added Ekumen to strengthen Physical AI capabilities, spanning robotics software through enterprise-scale deployment. Margin expansion is a stated top priority, tied to AI-Native Delivery productivity gains and cost control, with a 300 basis point margin commitment reiterated.

Risks

• Vertical concentration — TMT, Retail and Finance together were 81.2% of Q2 2026 revenue, so weakness in any one of these verticals would materially affect total results.
• Declining cash balance — Cash and cash equivalents fell to $298.4 million at June 30, 2026 from $342.1 million at December 31, 2025, while operating cash flow for the first half declined to $14.5 million from $23.7 million.
• Margin and profitability pressure — GAAP net income fell to $2.9 million in Q2 2026 from $5.3 million a year earlier, and income from operations for the first six months of 2026 was a loss of $2.4 million.
• Headcount reduction — Total headcount declined to 4,838 at June 30, 2026 from 5,013 a year earlier, which could constrain delivery capacity if demand accelerates.

Outlook

For the third quarter of 2026, management guided revenue to $112.0-$114.0 million and non-GAAP EBITDA to $16.5-$17.5 million. The company said its second quarter performance and third quarter outlook keep it on track to deliver a 300 basis point margin commitment. CEO Leonard Livschitz said AI-based GAIN platforms are winning wider enterprise adoption as clients move AI workloads to production.