Grid Dynamics Holdings (GDYN) AI Stock Analysis

• Market Cap: $1.15B
• Dividend Yield: N/A
• Average Volume (3M): 699.06K
• Price to Earnings (P/E): 297.8
• Beta (1Y): 1.35
• Revenue Growth: 12.04%
• EPS Growth: N/A
• Country: US
• Employees: 4,926
• Sector: Technology
• Sector Strength: 68
• Industry: Information Technology Services
• EPS (TTM): 0.04
• Shares Outstanding: 83,838,356
• 10 Day Avg. Volume: 575,846
• 30 Day Avg. Volume: 699,058
• PEG Ratio: N/A
• Price to Book (P/B): N/A
• Price to Sales (P/S): 0.00
• Price to Cash Flow (P/CF): 0.00
• P/FCF Ratio: 0.00
• Enterprise Value/Market Cap: 1.34
• Enterprise Value/Revenue: N/A
• Enterprise Value/Gross Profit: 12.14
• Enterprise Value/Ebitda: N/A
• 1Y Price Target: $19.75
• Price Target Upside: 44.79% Upside
• Rating Consensus: Strong Buy
• Number of Analyst Covering: 5

Grid Dynamics Holdings scores a 67, driven by strong financial performance and positive earnings call sentiment. However, the high P/E ratio suggests potential overvaluation, and technical indicators point to bearish momentum. Continued focus on improving profitability and addressing challenges in traditional segments could enhance future performance.

Positive Factors

Client Relations

Healthy client portfolio composed of strategic relations drives optimistic view.

Earnings

GDYN's 1Q results were strong and came in above both our and Street expectations on the top and bottom line, driven by stronger organic growth and positive impact from recent M&A.

Investment Strategy

Based on GDYN's AI investments and strong vertical and domain capabilities, the business is positioned to gain share and re-accelerate organic growth throughout FY25 and into FY26.

Negative Factors

Economic Conditions

Worsening economic conditions would taper the company’s near-term growth prospects.

Guidance

Mixed 2Q guides and a surprising CY25 revenue outlook affirmation amid elevated macro uncertainty may cause some consternation as investors fret about potential guidance cuts later.

Grid Dynamics Holdings Business Overview & Revenue Model

Company Description

Grid Dynamics Holdings, Inc. (GDYN) is a digital engineering and information technology services company specializing in transformative and complex solutions for Fortune 1000 corporations. It operates primarily within the technology, retail, and financial services sectors, offering core services that include digital transformation, data science, cloud enablement, and application modernization.

How the Company Makes Money

Grid 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 demonstrates solid financial health with strong revenue growth and stable balance sheet metrics. While profitability and return metrics show room for improvement, the company's cash flow position is strong, providing a solid foundation for future growth.

Income Statement

Grid Dynamics Holdings shows strong revenue growth with a 18.1% increase in TTM revenue compared to the previous annual figure. The gross profit margin stands at 36.7% for TTM, indicating efficient cost management. However, the net profit margin is relatively low at 2.9%, suggesting room for improvement in overall profitability. The company has improved its EBIT and EBITDA margins over time, but these could be further enhanced.

Balance Sheet

The balance sheet is robust with a low debt-to-equity ratio of 0.02, indicating minimal reliance on debt financing. The equity ratio is high at 87.6%, showcasing strong financial stability. Return on Equity (ROE) is modest at 2.1%, suggesting potential for better returns on shareholder investments.

Cash Flow

Cash flow analysis reveals a healthy free cash flow growth rate of 32.4% in TTM. The operating cash flow to net income ratio is favorable at 3.33, indicating strong cash generation relative to net income. Free cash flow to net income ratio is also positive, reflecting efficient cash management.

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
16.63M	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

• Technical Analysis Sentiment: Negative
• Last Price: 13.64
• 50DMA: Negative
• 100DMA: Negative
• 200DMA: Negative
• MACD: Negative
• RSI: Neutral
• STOCH: Neutral

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 13.64 is below the 20-day moving average (MA) of 13.68, below the 50-day MA of 15.94, and below the 200-day MA of 16.74, indicating a bearish trend. The MACD of -0.57 indicates Negative momentum. The RSI at 39.79 is Neutral, neither overbought nor oversold. The STOCH value of 61.45 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for GDYN.

Grid Dynamics Holdings Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
FORTY	71 Outperform	$1.36B	16.77	12.21%	1.27%	3.51%	18.34%
NABL	68 Neutral	$1.35B	43.39	4.21%	―	10.49%	30.42%
GDYN	67 Neutral	$1.15B	297.82	2.42%	―	12.04%	―
TASK	66 Neutral	$1.22B	27.17	9.78%	―	7.64%	5.22%
FLYW	63 Neutral	$1.17B	832.17	0.36%	―	22.09%	―
Sector *	60 Neutral	$10.94B	10.58	-7.08%	2.98%	7.52%	-12.04%
VYX	43 Neutral	$1.23B	―	-20.40%	―	-54.34%	-34.10%

Grid Dynamics Holdings Corporate Events

Grid Dynamics Updates Director Compensation Policy

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.