Record Revenue of $47.7 million, up 21.8%
sequentially and 113.1% year-over-year
Grid Dynamics Holdings, Inc. (Nasdaq: GDYN) (“Grid Dynamics”), a
leader in enterprise-level digital transformation, today announced
results for the second quarter ended June 30, 2021.
We are very pleased to report the highest quarterly revenue in
the company’s history. Our revenue of $47.7 million in the second
quarter 2021 was up 21.8% on a sequential basis and 113.1% on a
year-over-year basis. After factoring out revenues of $9.3 million
from our recent acquisitions of Daxx Web Industries B.V. (“Daxx”)
and Tacit Knowledge (“Tacit’), our second quarter revenue of $38.4
million grew 17.7% on a sequential basis and was an all-time high
for the company. As we enter into the second half of 2021, we
continue to see strong demand and are confident of our third
quarter and full year 2021 outlook as customers continue
prioritizing their digital transformation initiatives by seeking
our expertise around cloud transformation, data science and machine
learning.
Our non-retail industry verticals represented 73.3% of revenue
in the second quarter and grew 15.4% on a sequential basis and
90.3% on a year-over-year basis. Totaling 33.8% of our second
quarter revenue, the Technology, Media and Telecom vertical grew
11.8% on a sequential basis and 34.6% on a year-over-year basis and
represented the company’s largest vertical. During the second
quarter we had 212 customers, 161 coming from our acquisitions of
Daxx and Tacit and the remaining of 51 from our organic business.
Of these 51 customers, during the second quarter we added 5 new
customers.
“Our second quarter results exceeded our expectations on
multiple fronts as we witnessed healthy business momentum across
all our industry verticals. In addition to reporting a record
quarter on the revenue front, we were able to achieve our long-term
targets on the profitability. Since going public in March 2020, we
have doubled our revenue, successfully navigated the company
through the pandemic, completed two strategic acquisitions, and
have announced the redemption of all unexercised public warrants on
August 30, 2021. I am very proud of what we accomplished and thank
our entire team for their continued hard work in achieving our
goals,” said Leonard Livschitz, CEO.
Second Quarter of 2021 Financial
Highlights
- Total revenue was $47.7 million, an increase of 21.8%
sequentially and 113.1% year-over-year.
- GAAP gross profit was $19.8 million or 41.5% of revenue,
compared to GAAP gross profit of $15.3 million or 39.2% of revenue
in the first quarter of 2021 and to GAAP gross profit of $8.4
million or 37.5% of revenue in the second quarter of 2020. Non-GAAP
gross profit was $19.9 million or 41.8% of revenue, compared to
non-GAAP gross profit of $15.4 million or 39.5% of revenue in the
first quarter of 2021 and to Non-GAAP gross profit of $8.4 million
or 37.8% of revenue in the second quarter of 2020.
- GAAP Net loss attributable to common stockholders was $(1.5)
million, or $(0.03) per share, based on 54.4 million
weighted-average common shares outstanding, compared to GAAP Net
loss attributable to common stockholders of $(2.1) million or
$(0.04) per share based on 51.6 million weighted-average common
shares outstanding in the first quarter of 2021 and to GAAP Net
loss of $(2.2) million, or $(0.04) per share, based on 49.6 million
weighted-average common shares outstanding in the second quarter of
2020. Non-GAAP Net income was $6.1 million, or $0.10 per diluted
share, based on 61.0 million weighted-average common shares
outstanding, compared to Non-GAAP Net income of $3.1 million or
$0.05 per diluted share based on 60.2 million weighted-average
common shares outstanding first quarter of 2021 and to Non-GAAP Net
income of $0.4 million, or $0.01 per diluted share, based on 53.1
million weighted-average common shares outstanding in the second
quarter of 2020.
- Non-GAAP EBITDA (earnings before interest, taxes, depreciation,
amortization, other income, fair value adjustments, stock-based
compensation, and transaction and transformation-related costs), a
non-GAAP metric, was $9.7 million, compared with Non-GAAP EBITDA of
$5.3 million in the first quarter of 2021 and Non-GAAP EBITDA of
$1.2 million in the second quarter of 2020.
See “Non-GAAP Financial Measures” and “Reconciliation of
Non-GAAP Information” below for a discussion of our non-GAAP
measures.
Cash Flow and Other
Metrics
- Cash provided by operating activities was $6.7 million for the
six months ended June 30, 2021, compared to cash used in operating
activities of $(0.9) million for the six months ended June 30,
2020.
- Cash and cash equivalents totaled $68.0 million as of June 30,
2021, compared to $112.7 million as of December 31, 2020. This
amount does not include $78.3 million in net proceeds received from
our recent public offering, which closed on July 6, 2021.
- Total headcount was 2,510 as of June 30, 2021, compared with
1,237 employees as of June 30, 2020.
Financial Outlook
- The company expects revenue in the third quarter of 2021 to be
in the range of $50.0 million and $51.5 million. This includes a
projected contribution of $11.0 million from Daxx and Tacit.
- Non-GAAP EBITDA in the third quarter of 2021 is expected to be
between $8.3 million and $9.3 million.
- For the full year of 2021, revenues are expected to be at least
$189.0 million. This includes a contribution of $38.0 million from
Daxx and Tacit.
- For the third quarter of 2021, we expect our basic share count
to be in the 63.0-65.0 million range and diluted share count to be
in the 69.0-71.0 million range.
Grid Dynamics is not able, at this time, to provide GAAP targets
for net income for the third quarter of 2021 because of the
difficulty of estimating certain items excluded from Non-GAAP
EBITDA that cannot be reasonably predicted, such as interest,
taxes, other income, fair-value adjustments, and charges related to
stock-based compensation expense. The effect of these excluded
items may be significant.
Conference Call and
Webcast
Grid Dynamics will host a conference call at 4:30 p.m. ET on
Thursday, August 5, 2021 to discuss its second quarter financial
results. Investors and other interested parties can access the call
in the following ways: A webcast of the conference call can be
accessed on the Investor Relations section of the Company's website
at https://ir.griddynamics.com/), or by dialing +1(855)327-6837 or
+1(631)891-4304 (outside of the U.S.).
A replay will be available approximately one hour after the call
on https://ir.griddynamics.com/ or by dialing +1(844)512-2921 or
+1(412)317-6671 (outside of the U.S.) and entering the conference
ID10015481. The replay will start on August 5, 2021, 7:30 p.m. ET
and will be available until August 19, 2021 at 11:59 p.m. ET.
About Grid Dynamics
Grid Dynamics (Nasdaq: GDYN) is a digital-native technology
services provider that accelerates growth and bolsters competitive
advantage for Fortune 1000 companies. Grid Dynamics provides
digital transformation consulting and implementation services in
omnichannel customer experience, big data analytics, search,
artificial intelligence, cloud migration, and application
modernization. Grid Dynamics achieves high speed-to-market,
quality, and efficiency by using technology accelerators, an agile
delivery culture, and its pool of global engineering talent.
Founded in 2006, Grid Dynamics is headquartered in Silicon Valley
with offices across the US, UK, the Netherlands, Mexico, Central,
and Eastern Europe. To learn more about Grid Dynamics, please visit
www.griddynamics.com.
Non-GAAP Financial
Measures
To supplement the financial measures presented in Grid Dynamics
press release in accordance with generally accepted accounting
principles in the United States (“GAAP”), the Company also presents
non-GAAP measures of financial performance.
A “non-GAAP financial measure” refers to a numerical measure of
Grid Dynamics historical or future financial performance or
financial position that is included in (or excluded from) the most
directly comparable measure calculated and presented in accordance
with GAAP. Grid Dynamics provides certain non-GAAP measures as
additional information relating to its operating results as a
complement to results provided in accordance with GAAP. The
non-GAAP financial information presented herein should be
considered in conjunction with, and not as a substitute for or
superior to, the financial information presented in accordance with
GAAP and should not be considered a measure of liquidity and
profitability.
Grid Dynamics has included these non-GAAP financial measures
because they are financial measures used by Grid Dynamics’
management to evaluate Grid Dynamics’ core operating performance
and trends, to make strategic decisions regarding the allocation of
capital and new investments and are among the factors analyzed in
making performance-based compensation decisions for key
personnel.
Grid Dynamics believes the use of non-GAAP financial measures,
as a supplement to GAAP measures, is useful to investors in that
they eliminate items that are either not part of core operations or
do not require a cash outlay, such as stock-based compensation
expense. Grid Dynamics believes these non-GAAP measures provide
investors and other users of its financial information consistency
and comparability with its past financial performance and
facilitate period to period comparisons of operations. Grid
Dynamics believes these non-GAAP measures are useful in evaluating
its operating performance compared to that of other companies in
its industry, as they generally eliminate the effects of certain
items that may vary for different companies for reasons unrelated
to overall operating performance.
There are significant limitations associated with the use of
non-GAAP financial measures. Further, these measures may differ
from the non-GAAP information, even where similarly titled, used by
other companies and therefore should not be used to compare our
performance to that of other companies. Grid Dynamics compensates
for these limitations by providing investors and other users of its
financial information a reconciliation of non-GAAP measures to the
related GAAP financial measures. Grid Dynamics encourages investors
and others to review its financial information in its entirety, not
to rely on any single financial measure, and to view its non-GAAP
measures in conjunction with GAAP financial measures. Please see
the reconciliation of non-GAAP financial measures to the most
directly comparable GAAP measures attached to this release.
Forward-Looking
Statements
This communication contains “forward-looking statements” within
the meaning of Section 27A of the Securities Act of 1933 and
Section 21E of the Securities Exchange Act of 1934 that are not
historical facts, and involve risks and uncertainties that could
cause actual results of Grid Dynamics to differ materially from
those expected and projected. These forward-looking statements can
be identified by the use of forward-looking terminology, including
the words “believes,” “estimates,” “anticipates,” “expects,”
“intends,” “plans,” “may,” “will,” “potential,” “projects,”
“predicts,” “continue,” or “should,” or, in each case, their
negative or other variations or comparable terminology. These
forward-looking statements include, without limitation, the
quotations of management, the section titled “Financial Outlook,”
and statements concerning Grid Dynamics’ expectations with respect
to future performance, particularly in light of the COVID-19
pandemic.
These forward-looking statements involve significant risks and
uncertainties that could cause the actual results to differ
materially from the expected results. Most of these factors are
outside Grid Dynamics’ control and are difficult to predict.
Factors that may cause such differences include, but are not
limited to: (i) Grid Dynamics has a relatively short operating
history and operates in a rapidly evolving industry, which makes it
difficult to evaluate future prospects and may increase the risk
that it will not continue to be successful and may adversely impact
our stock price; (ii) Grid Dynamics may be unable to effectively
manage its growth or achieve anticipated growth, which could place
significant strain on Grid Dynamics’ management personnel, systems
and resources; (iii) Grid Dynamics’ revenues are highly dependent
on a limited number of clients and industries that are affected by
seasonal trends, and any decrease in demand for outsourced services
in these industries may reduce Grid Dynamics’ revenues and
adversely affect Grid Dynamics’ business, financial condition and
results of operations; (iv) the impact of the COVID-19 pandemic has
and may continue to materially adversely affect our stock price,
business operations, and overall financial performance; (v) Grid
Dynamics’ revenues are highly dependent on clients primarily
located in the United States, and any economic downturn in the
United States or in other parts of the world, including Europe or
disruptions in the credit markets may have a material adverse
effect on Grid Dynamics’ business, financial condition and results
of operations; (vi) Grid Dynamics faces intense and increasing
competition; (vii) Grid Dynamics’ failure to successfully attract,
hire, develop, motivate and retain highly skilled personnel could
materially adversely affect Grid Dynamics’ business, financial
condition and results of operations; (viii) failure to adapt to
rapidly changing technologies, methodologies and evolving industry
standards may have a material adverse effect on Grid Dynamics’
business, financial condition and results of operations; (ix)
failure to successfully deliver contracted services or causing
disruptions to clients’ businesses may have a material adverse
effect on Grid Dynamics’ reputation, business, financial condition
and results of operations; (x) risks and costs related to acquiring
and integrating other companies, including Daxx and Tacit; and (xi)
other risks and uncertainties indicated in Grid Dynamics filings
with the SEC.
Grid Dynamics cautions that the foregoing list of factors is not
exclusive. Grid Dynamics cautions readers not to place undue
reliance upon any forward-looking statements, which speak only as
of the date made. Grid Dynamics does not undertake or accept any
obligation or undertaking to release publicly any updates or
revisions to any forward-looking statements to reflect any change
in its expectations or any change in events, conditions or
circumstances on which any such statement is based. Further
information about factors that could materially affect Grid
Dynamics, including its results of operations and financial
condition, is set forth under the “Risk Factors” section of the
Company’s quarterly report on Form 10-Q filed May 6, 2021 and in
other periodic filings Grid Dynamics makes with the SEC.
Schedule 1:
GRID DYNAMICS HOLDINGS,
INC.
CONDENSED CONSOLIDATED
STATEMENTS OF LOSS AND
COMPREHENSIVE LOSS
Unaudited
(In thousands, except per
share data)
Three Months Ended June
30,
Six Months Ended
June 30,
2021
2020
2021
2020
Revenue
$
47,676
$
22,368
$
86,810
$
54,825
Cost of revenue
27,879
13,982
51,676
36,621
Gross profit
19,797
8,386
35,134
18,204
Operating expenses
Engineering, research, and development
1,772
2,577
3,555
5,117
Sales and marketing
2,837
1,637
5,869
5,206
General and administrative
13,804
7,359
26,104
18,102
Total operating expenses
18,413
11,573
35,528
28,425
Income/(loss) from operations
1,384
(3,187
)
(394
)
(10,221
)
Other income/(expenses), net
(79
)
208
(1,129
)
(36
)
Income/(loss) before income
taxes
1,305
(2,979
)
(1,523
)
(10,257
)
Provision/(benefit) for income taxes
2,788
(813
)
2,022
(3,495
)
Net loss
$
(1,483
)
$
(2,166
)
$
(3,545
)
$
(6,762
)
Foreign currency translation adjustments,
net of tax
(35
)
—
14
—
Comprehensive loss
$
(1,518
)
$
(2,166
)
$
(3,531
)
$
(6,762
)
Loss per share
Basic
$
(0.03
)
$
(0.04
)
$
(0.07
)
$
(0.17
)
Diluted
$
(0.03
)
$
(0.04
)
$
(0.07
)
$
(0.17
)
Weighted average shares
outstanding
Basic
54,431
49,626
53,044
39,731
Diluted
54,431
49,626
53,044
39,731
Schedule 2:
GRID DYNAMICS HOLDINGS,
INC.
CONDENSED CONSOLIDATED BALANCE
SHEETS
Unaudited
(In thousands, except share
and per share data)
As of
June 30,
2021
December 31,
2020
Assets
Current assets
Cash and cash equivalents
$
67,974
$
112,745
Accounts receivable, net of allowance of
$205 and $418 as of June 30, 2021 and December 31, 2020,
respectively
29,051
16,890
Unbilled receivables
3,997
1,799
Prepaid income taxes
1,050
821
Prepaid expenses and other current
assets
5,395
2,361
Total current assets
107,467
134,616
Property and equipment, net
5,160
4,095
Intangible assets, net
20,342
8,125
Deferred tax assets
4,865
5,609
Goodwill
35,299
14,690
Total assets
$
173,133
$
167,135
Liabilities and equity
Current liabilities
Accounts payable
$
2,489
$
757
Accrued liabilities
1,490
628
Accrued compensation and benefits
11,099
7,479
Accrued income taxes
1,830
1,248
Other current liabilities
8,251
3,206
Total current liabilities
25,159
13,318
Deferred tax liabilities
4,962
2,093
Total liabilities
30,121
15,411
Stockholders’ equity
Common stock, $0.0001 par value;
110,000,000 shares authorized; 54,728,586 and 50,878,780 issued and
outstanding as of June 30, 2021 and December 31, 2020,
respectively
5
5
Additional paid-in capital
123,749
128,930
Retained earnings
19,248
22,793
Accumulated other comprehensive
income/(loss)
10
(4
)
Total stockholders’ equity
143,012
151,724
Total liabilities and stockholders’
equity
$
173,133
$
167,135
Schedule 3:
GRID DYNAMICS HOLDINGS,
INC.
CONDENSED CONSOLIDATED
STATEMENT OF CASH FLOWS
Unaudited
(In thousands)
For the six months
ended
June 30,
2021
2020
Cash flows from operating
activities
Net loss
$
(3,545
)
$
(6,762
)
Adjustments to reconcile net loss to net
cash provided by/(used in) operating activities:
Depreciation and amortization
2,100
1,234
Bad debt expense
(65
)
781
Deferred income taxes
1,115
(4,274
)
Stock based compensation
12,346
8,458
Change in fair value of warrants
839
—
Changes in assets and liabilities:
Accounts receivable
(8,779
)
(1,111
)
Unbilled receivables
(371
)
4,058
Prepaid income taxes
(229
)
(611
)
Prepaid expenses and other assets
(1,666
)
(1,961
)
Accounts payable
1,393
51
Accrued liabilities
358
(519
)
Accrued compensation and benefits
1,410
(99
)
Accrued income taxes
376
(34
)
Other current liabilities
1,368
(132
)
Net cash provided by/(used in) operating
activities
6,650
(921
)
Cash flows from investing
activities
Purchase of property and equipment
(1,940
)
(1,110
)
Acquisitions of Companies, net of cash
acquired
(30,585
)
—
Net cash used in investing activities
(32,525
)
(1,110
)
Cash flows from financing
activities
Cash received from ChaSerg
—
208,997
GDI shares redeemed for cash
—
(123,865
)
Equity issuance costs
(465
)
(2,264
)
Payments of tax obligations resulted from
net share settlement of vested stock awards
(18,861
)
—
Proceeds from exercises of stock
options
416
59
Net cash provided by/(used in) financing
activities
(18,910
)
82,927
Effect of exchange rate changes on cash
and cash equivalents
14
—
Net increase/(decrease) in cash and
cash equivalents
(44,771
)
80,896
Cash and cash equivalents, beginning of
period
112,745
42,189
Cash and cash equivalents, end of
period
$
67,974
$
123,085
Supplemental disclosure of cash flow
information:
Cash paid for income taxes
$
1,150
$
1,144
Supplemental disclosure of non-cash
activities
Conversion of preferred stock to common
stock
$
—
$
9,187
Conversion of warrants
918
—
Fair value of contingent consideration
issued for acquisition of business
$
3,400
$
—
Schedule 4:
GRID DYNAMICS HOLDINGS,
INC.
RECONCILIATION OF NON-GAAP
INFORMATION
Unaudited
(In thousands, except per
share data)
Three Months Ended June
30,
Six Months Ended
June 30,
2021
2020
2021
2020
Revenue
$
47,676
$
22,368
$
86,810
$
54,825
Cost of revenue
27,879
13,982
51,676
36,621
GAAP gross profit
19,797
8,386
35,134
18,204
Retention bonus expense
—
—
—
1,072
Stock-based compensation
149
60
260
675
Non-GAAP Gross profit
$
19,946
$
8,446
$
35,394
$
19,951
Three Months Ended June
30,
Six Months Ended
June 30,
2021
2020
2021
2020
GAAP net loss
$
(1,483
)
$
(2,166
)
$
(3,545
)
$
(6,762
)
Adjusted for:
Depreciation and amortization
1,154
588
2,100
1,234
Provision/(benefit) for income taxes
2,788
(813
)
2,022
(3,495
)
Stock-based compensation
6,675
3,654
12,346
8,458
Transaction and transformation-related
costs(1)
518
—
942
3,940
Restructuring costs(2)
—
143
—
832
Other (income)/expenses, net(3)
79
(208
)
1,129
36
Non-GAAP EBITDA
$
9,731
$
1,198
$
14,994
$
4,243
(1)
Transaction and transformation-related
costs include, when applicable, external deal costs,
transaction-related professional fees, transaction-related
retention bonuses, which are allocated proportionally across cost
of revenue, engineering, research and development, sales and
marketing and general and administrative expenses as well as other
transaction-related costs including integration expenses consisting
of outside professional and consulting services.
(2)
We implemented a cost reduction plan
during first quarter of 2020. During the three and six months ended
June 30, 2020, we incurred restructuring and severance charges of
$0.1 million and $0.8 million, respectively, primarily resulting
from a reduction in workforce and other charges. We did not incur
any restructuring expenses during the three and six months ended
June 30, 2021.
(3)
Other expenses consist primarily of losses
and gains on foreign currency transactions, fair value adjustments,
and other miscellaneous non-operating expenses and other income
consists primarily of interest on cash held at banks.
Three Months Ended June
30,
Six Months Ended
June 30,
2021
2020
2021
2020
GAAP net loss
$
(1,483
)
$
(2,166
)
$
(3,545
)
$
(6,762
)
Adjusted for:
Stock-based compensation
6,675
3,654
12,346
8,458
Transaction and transformation-related
costs (1)
518
—
942
3,940
Restructuring costs (2)
—
143
—
832
Other (income)/expenses, net (3)
79
(208
)
1,129
36
Tax impact of non-GAAP adjustments (4)
301
(990
)
(1,717
)
(4,526
)
Non-GAAP Net Income
$
6,090
$
433
$
9,155
$
1,978
Number of shares used in the Non-GAAP
Diluted EPS
60,996
53,082
60,799
43,888
Non-GAAP Diluted EPS(5)
$
0.10
$
0.01
$
0.15
$
0.05
(1)
Transaction and transformation-related
costs include, when applicable, external deal costs,
transaction-related professional fees, transaction-related
retention bonuses, which are allocated proportionally across cost
of revenue, engineering, research and development, sales and
marketing and general and administrative expenses as well as other
transaction-related costs including integration expenses consisting
of outside professional and consulting services.
(2)
We implemented a cost reduction plan
during first quarter of 2020. During the three and six months ended
June 30, 2020, we incurred restructuring and severance charges of
$0.1 million and $0.8 million, respectively, primarily resulting
from a reduction in workforce and other charges. We did not incur
any restructuring expenses during the three and six months ended
June 30, 2021.
(3)
Other expenses consist primarily of losses
and gains on foreign currency transactions, fair value adjustments,
and other miscellaneous non-operating expenses and other income
consists primarily of interest on cash held at banks.
(4)
Reflects the estimated tax impact of the
non-GAAP adjustments presented in the table.
(5)
Non-GAAP Diluted EPS is calculated by
dividing Non-GAAP Net Income/(Loss) by the diluted weighted-average
shares outstanding. From the three months ended December 31, 2020
onwards, we have chosen to calculate its Non-GAAP Diluted EPS based
on the diluted share count even in net GAAP loss situation. This
methodology differs from the prior approach when we applied the
basic share count in situations of a net GAAP loss and a positive
non-GAAP net income. Management believes that the new methodology
provides better representation of the company’s financial results
as it takes into account the significance of the dilutive impact
from any outstanding equity instruments in a GAAP net loss/non-GAAP
Net income situation.
Schedule 5:
GRID DYNAMICS HOLDINGS,
INC.
REVENUE BY VERTICALS
Unaudited
(In thousands)
Three Months Ended June
30,
2021
% of revenue
2020
% of revenue
Technology, Media and Telecom
$
16,115
33.8
%
$
11,975
53.5
%
Retail
12,729
26.7
%
4,000
17.9
%
Finance
4,071
8.5
%
3,522
15.7
%
CPG/Manufacturing
9,899
20.8
%
2,472
11.1
%
Other
4,862
10.2
%
399
1.8
%
Total
$
47,676
100.0
%
$
22,368
100.0
%
Six Months Ended June
30,
2021
% of revenue
2020
% of revenue
Technology, Media and Telecom
$
30,526
35.2
%
$
22,052
40.2
%
Retail
21,579
24.9
%
20,099
36.7
%
Finance
7,509
8.6
%
7,555
13.8
%
CPG/Manufacturing
18,624
21.5
%
4,655
8.5
%
Other
8,572
9.8
%
464
0.8
%
Total
$
86,810
100.0
%
$
54,825
100.0
%
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version on businesswire.com: https://www.businesswire.com/news/home/20210805005903/en/
Grid Dynamics Investor Relations:
investorrelations@griddynamics.com
Grid Dynamics (NASDAQ:GDYN)
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From Mar 2024 to Apr 2024
Grid Dynamics (NASDAQ:GDYN)
Historical Stock Chart
From Apr 2023 to Apr 2024
