GDYN

Forward-Looking Statements The following discussion and analysis of the financial condition and results of operations of Grid Dynamics Holdings, Inc. should be read in conjunction with the unaudited condensed consolidated financial statements and the related notes thereto included elsewhere in this Quarterly Report on Form 10-Q and the audited financial statements and notes thereto and Management’s Discussion and Analysis of Financial Condition and Results of Operations for the fiscal year ended December 31, 2025 included in the Company's Annual Report on Form 10-K, which was filed with the Securities and Exchange Commission (“SEC”) on March 5, 2026. The statements contained in this Quarterly Report on Form 10-Q that are not historical facts are forward-looking statements (within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended, or the Exchange Act) that involve risks and uncertainties. Such forward-looking statements may be identified by, among other things, the use of forward-looking terminology such as “believes,” “expects,” “may,” “will,” “should,” “seek,” “intends,” “plans,” “estimates,” “projects,” “anticipates,” or the negative thereof or other variations thereon or comparable terminology, or by discussions of strategy that involve risks and uncertainties. Actual results may differ significantly from those projected in the forward-looking statements. Factors that might cause future results to differ materially from those projected in the forward-looking statements include, but are not limited to, those discussed in the section titled “Cautionary Note Regarding Forward Looking Statements,” included elsewhere in this Quarterly Report on Form 10-Q, and the section titled "Risk Factors" in our Annual Report on Form 10-K. Overview Grid Dynamics Holdings, Inc. (“Grid Dynamics,” the “Company,” “we,” “us,” or “our”) is an enterprise artificial intelligence (“AI”) transformation partner for the Fortune 1000. We are a product-centric engineering company focused on solving the most complex mission-critical challenges with an emphasis on driving revenue-generating capabilities, not just cost optimization. We combine world-class engineering discipline with a specialized AI-native framework, enabling global enterprises to deploy business-driven solutions at scale. We serve as a strategic technology partner, providing the architecture and technical rigor required to transform complex challenges into competitive advantages for our customers. We seek to solve the most pressing technical challenges and enable positive business outcomes for enterprise companies through AI, data, cloud and digital engagement engineering expertise, building on our nearly two decades of technology leadership and pioneering enterprise AI expertise. AI has become the core of our business, with a focus on AI-led transformation with high-value enterprise engagements. Our strategic foundation is our Grid Dynamics AI-Native (“GAIN”) engagement model, a development framework for software delivery in the AI era, which fundamentally rethinks team composition, engineering workflows, and delivery practices. The GAIN model represents a shift from effort-based development to AI and human collaboration optimized for global, enterprise-scale delivery, with emphasis on domain specialists, software architects, and experts in emerging technology. The following table sets forth a summary of Grid Dynamics’ financial results for the periods indicated: Three Months Ended June 30, Six Months Ended June 30, 2026 2025 2026 2025 (in thousands, except per share data and percentages) Revenues $ 108,164 100.0 % $ 101,095 100.0 % $ 212,264 100.0 % $ 201,510 100.0 % Gross profit $ 39,619 36.6 % $ 34,503 34.1 % $ 75,851 35.7 % $ 71,500 35.5 % Income/(loss) from operations $ 1,276 1.2 % $ (123) (0.1) % $ (2,405) (1.1) % $ (2,160) (1.1) % Net income $ 2,852 2.6 % $ 5,273 5.2 % $ 1,379 0.6 % $ 8,185 4.1 % Diluted income per share $ 0.03 n/a $ 0.06 n/a $ 0.02 n/a $ 0.09 n/a Non-GAAP Financial Information(1) Non-GAAP EBITDA(1) $ 14,724 13.6 % $ 12,745 12.6 % $ 27,242 12.8 % $ 27,354 13.6 % Non-GAAP net income(1) $ 8,953 8.3 % $ 8,293 8.2 % $ 16,450 7.7 % $ 18,245 9.1 % Non-GAAP diluted EPS(1) $ 0.11 n/a $ 0.10 n/a $ 0.19 n/a $ 0.21 n/a __________________________ 23 Table of Contents (1)Non-GAAP EBITDA, Non-GAAP net income and Non-GAAP diluted EPS are non-GAAP financial measures. See “Non-GAAP Measures” below for additional information and reconciliations to the most directly comparable GAAP financial measures. Quarterly Highlights Our key metrics for the three months ended June 30, 2026 are presented below: •Revenues: Total revenues increased 7.0% year-over-year to $108.2 million, primarily driven by increased demand in our Technology, Media and Telecom vertical. •Gross margin: Our gross profit margin for the second quarter reached 36.6%, an increase of 250 basis points compared to 34.1% in the prior-year quarter. •Net income and EPS: Net income for the second quarter was $2.9 million, or $0.03 per diluted share, compared to net income of $5.3 million, or $0.06 per diluted share, in the prior-year quarter. •Non-GAAP measures: Non-GAAP EBITDA was $14.7 million for the three months ended June 30, 2026, compared to $12.7 million in the prior-year quarter. Diluted Non-GAAP earnings per share was $0.11 per share, compared to $0.10 per share in the prior-year quarter. The operating results in any period are not necessarily indicative of the results that may be expected for any future period. Key Performance Indicators and Other Factors Affecting Performance Grid Dynamics uses the following key performance indicators and assesses the following factors, among others, to analyze its business performance, to make budgets and financial forecasts and to develop strategic plans: Employees by Region Attracting and retaining top talent in key regions is vital to Grid Dynamics’ success and our ability to drive revenue growth. Our long-term prospects depend on recruiting qualified IT professionals who support a global delivery model across the Americas, Europe, and Asia. This geographic footprint allows us to provide clients with continuous development, US-based leadership, and specialized talent pools optimized for both quality and cost-efficiency. We seek to employ the appropriate professionals in locations to optimize our employee costs and expenses. Currently, the vast majority of our workforce consists of these highly skilled IT professionals. We increasingly prioritize experienced senior talent over volume staffing to handle the complexity of production-grade infrastructure required for AI implementations. The following table shows the number of Grid Dynamics personnel (including full-time and part-time employees and contractors serving in similar capacities) by region, as of the dates indicated: As of June 30, 2026 2025 Americas(1) 863 846 Europe(2) 3,011 3,240 Rest of the world(3) 964 927 Total 4,838 5,013 __________________________ (1)Americas includes personnel located in North, Central and South America. (2)Europe includes personnel located in Western, Central and Eastern Europe. (3)Rest of the world includes personnel located in India and other countries not included in regions described above. Attrition There is competition for IT professionals in the regions in which Grid Dynamics operates, and such competition may adversely impact Grid Dynamics’ business and gross profit margins. Employee retention is one of Grid Dynamics’ main priorities and is a key driver of our operational efficiency. Grid Dynamics seeks to retain top talent by providing the opportunity to work on exciting, cutting-edge projects for high profile clients, a flexible work environment and training and development programs. 24 Table of Contents Hours and Utilization Currently, a majority of Grid Dynamics’ customer projects are performed and invoiced on a time and materials basis, although as part of our strategy, an increasing number of projects are performed on a fixed-price basis. Grid Dynamics’ management tracks and projects billable hours as an indicator of business volume and corresponding resource needs for IT professionals. To maintain its gross profit margins, Grid Dynamics must effectively utilize its IT professionals, which depends on its ability to integrate and train new personnel, to efficiently transition personnel from completed projects to new assignments, to forecast customer demand for services and to attract and deploy personnel in the right regions with appropriate skills and seniority to projects. With respect to fixed-price projects, Grid Dynamics must accurately project the time and other costs associated with project performance. Grid Dynamics’ management generally tracks utilization with respect to subsets of employees, by location or by project, and calculates the utilization rate for each subset by dividing (x) the aggregate number of billable hours for a period by (y) the aggregate number of total available hours for the same period. Grid Dynamics’ management analyzes and projects utilization to measure the efficiency of its workforce and to inform management’s budget and personnel decisions. Customer Concentration Grid Dynamics’ ability to retain and expand its relationships with existing customers and add new customers are key indicators of its revenue potential. New customers have a direct impact on the Company’s ability to diversify sources of revenue and replace customers that may no longer require its services. The total number of customers for the six months ended June 30, 2026 was 213 customers, a slight increase from 211 a year ago. Grid Dynamics has a relatively high level of revenue concentration with certain customers and constantly works toward achieving a more diversified revenue mix. During each of the three and six months ended June 30, 2026 and 2025, one customer accounted for 10% or more of Grid Dynamics’ revenues. The Company expects to continue its focus on maintaining long-term relationships with customers while seeking to diversify its customer base. The following tables present revenue concentration by amount and as a percentage of Grid Dynamics’ revenues for the periods indicated: Three Months Ended June 30, 2026 2025 (in thousands, except percentages) Top one customer $ 18,826 17.4 % $ 15,312 15.1 % Top five customers $ 47,015 43.5 % $ 37,877 37.5 % Top ten customers $ 66,557 61.5 % $ 57,933 57.3 % Top twenty customers $ 83,172 76.9 % $ 73,929 73.1 % Customers below top twenty $ 24,992 23.1 % $ 27,166 26.9 % Six Months Ended June 30, 2026 2025 (in thousands, except percentages) Top one customer $ 36,732 17.3 % $ 29,536 14.7 % Top five customers $ 88,826 41.8 % $ 73,591 36.5 % Top ten customers $ 128,223 60.4 % $ 114,717 56.9 % Top twenty customers $ 162,188 76.4 % $ 146,644 72.8 % Customers below top twenty $ 50,076 23.6 % $ 54,866 27.2 % Strategic Ecosystem Partnerships Our partnership relationships with major hyperscale cloud providers and leading platform AI companies are key to our enterprise go-to-market strategy. These relationships are co-development partnerships that give us and our clients privileged access to emerging capabilities, accelerated innovation cycles, and solutions that leverage best-in-class technologies. Our 25 Table of Contents partnerships facilitate enhanced joint solution development and co-selling opportunities, helping clients employ and scale AI using the most advanced infrastructure available. The capabilities from these providers are then integrated, customized, and optimized for each enterprise’s specific needs. Business Update Regarding Military Action in Ukraine In February 2022, Russian forces launched a significant military action against Ukraine, which continues and even worsens. The impact on Ukraine, coupled with the actions taken by other countries, including sanctions imposed by the U.S., Canada, the U.K., the European Union, and other countries, companies and organizations against officials, individuals, regions, and industries in Russia and certain regions of Ukraine, and each country’s potential response to such sanctions, tensions, and military actions could have a material adverse effect on our operations. For example, Russia could attempt to take control of assets in Ukraine belonging to companies registered in the U.S., such as Grid Dynamics. Any such material adverse effect from the conflict and enhanced sanctions activity may disrupt our delivery of services, impair our ability to complete financial or banking transactions, cause us to continue to shift all or portions of our work occurring in the region to other countries, and may restrict our ability to engage in certain projects in the region or involving certain customers in the region. We continue to actively monitor the security of our personnel and the stability of our infrastructure, including communications and internet availability. We executed our business continuity plan and have adapted to developments as they occur to protect the safety of our people and handle potential impacts to our delivery infrastructure. We continue to actively work with our personnel and with our customers to meet their needs and to ensure smooth delivery of services. We have no way to predict the progress or outcome of the military action in Ukraine, as the conflict and government responses continue to develop or worsen and remain beyond our control. Prolonged unrest, military activities, expansion of hostilities, or broad-based sanctions could have a material adverse effect on our operations and business outlook. For example, if Russia were to invade other countries, such as Moldova, it could adversely affect our business. In addition, the current geopolitical situations in Armenia, and separately in Serbia create additional uncertainty in the region, and could adversely affect our business. Results of Operations The three and six months ended June 30, 2026 compared to the three and six months ended June 30, 2025 The following table sets forth a summary of Grid Dynamics’ consolidated results of operations for the periods indicated, and the changes between periods: Three Months Ended June 30, Change 2026 2025 Dollars Percentage (in thousands, except percentages) Revenues $ 108,164 $ 101,095 $ 7,069 7.0 % Cost of revenues 68,545 66,592 1,953 2.9 % Gross profit 39,619 34,503 5,116 14.8 % Engineering, research, and development 6,423 6,744 (321) (4.8) % Sales and marketing 7,122 7,116 6 0.1 % General and administrative 24,798 20,766 4,032 19.4 % Total operating expense 38,343 34,626 3,717 10.7 % Income/(loss) from operations 1,276 (123) 1,399 n.m. Other income, net 3,187 7,424 (4,237) (57.1) % Income before income taxes 4,463 7,301 (2,838) (38.9) % Provision for income taxes 1,611 2,028 (417) (20.6) % Net income $ 2,852 $ 5,273 $ (2,421) (45.9) % 26 Table of Contents Six Months Ended June 30, Change 2026 2025 Dollars Percentage (in thousands, except percentages) Revenues $ 212,264 $ 201,510 $ 10,754 5.3 % Cost of revenues 136,413 130,010 6,403 4.9 % Gross profit 75,851 71,500 4,351 6.1 % Engineering, research, and development 12,502 13,230 (728) (5.5) % Sales and marketing 14,816 15,373 (557) (3.6) % General and administrative 50,938 45,057 5,881 13.1 % Total operating expense 78,256 73,660 4,596 6.2 % Loss from operations (2,405) (2,160) (245) 11.3 % Other income, net 6,428 11,930 (5,502) (46.1) % Income before income tax 4,023 9,770 (5,747) (58.8) % Provision for income taxes 2,644 1,585 1,059 66.8 % Net income $ 1,379 $ 8,185 $ (6,806) (83.2) % Revenues Our total revenues grew by 7.0% and 5.3%, reaching $108.2 million and $212.3 million for the three and six months of 2026, respectively. Revenues by Verticals. We assign our customers into one of our five main vertical markets or a group of various industries where we seek to increase our presence, which we label as “Verticals”. The following table presents our revenues by vertical and revenues as a percentage of total revenues for the periods indicated: Three Months Ended June 30, Six Months Ended June 30, 2026 2025 2026 2025 (in thousands, except percentages) Technology, Media and Telecom $ 34,357 31.8 % $ 25,188 24.9 % $ 65,116 30.7 % $ 48,790 24.2 % Retail 28,640 26.5 % 28,845 28.5 % 56,423 26.6 % 60,000 29.8 % Finance 24,736 22.9 % 25,386 25.1 % 49,190 23.2 % 50,414 25.0 % CPG/Manufacturing 11,796 10.9 % 11,316 11.2 % 23,344 11.0 % 22,453 11.1 % Healthcare and Pharma 2,109 1.9 % 2,556 2.5 % 4,263 2.0 % 4,961 2.5 % Other 6,526 6.0 % 7,804 7.8 % 13,928 6.5 % 14,892 7.4 % Total $ 108,164 100.0 % $ 101,095 100.0 % $ 212,264 100.0 % $ 201,510 100.0 % Technology, Media and Telecom (“TMT”) remained our largest vertical and principal growth driver, contributing 31.8% and 30.7% of total revenues for the three and six months ended June 30, 2026, respectively. Revenues in this vertical increased by 36.4% and 33.5% during the three and six months ended June 30, 2026, reaching $34.4 million and $65.1 million, respectively, compared to $25.2 million and $48.8 million, for the corresponding periods of 2025. Growth was primarily driven by strong demand from our largest technology customers. Retail contributed 26.5% and 26.6% of our total revenues for three and six months ended June 30, 2026. Revenues reached $28.6 million for the second quarter and $56.4 million for the year-to-date period, versus $28.8 million and $60.0 million, respectively, in the prior year periods. Within this vertical we are witnessing demand from specialty retailers. Finance revenues experienced decreases of 2.6% and 2.4%, reaching $24.7 million and $49.2 million, for the three and six months ended June 30, 2026, compared to $25.4 million and $50.4 million for the same periods in the prior year. Within this vertical strong demand from our banking and financial services customers was offset by completion of engagements at certain insurance customers. The Finance vertical contributed 22.9% and 23.2% of total revenues for the three and six months ended June 30, 2026, respectively. 27 Table of Contents The Consumer Packaged Goods/Manufacturing (“CPG”) accounted for 10.9% and 11.0% of total revenues for the three and six months ended June 30, 2026, respectively. Revenues in this vertical remained relatively flat on a quarterly basis reaching $11.8 million and $11.3 million for the three months ended June 2026 and 2025, respectively. Revenues for the first half of 2026 grew 4.0%, or $0.9 million, reaching $23.3 million, compared to $22.5 million for the corresponding prior year period. The year-to-date increase was primarily driven by robust demand from key accounts, including a leading wholesale food distributor. Furthermore, we continue to see ongoing engagement across our key manufacturing accounts. The remainder of our revenues was generated by our Healthcare and Pharma and Other verticals, both of which remain targeted areas for strategic engagement as we continue to build our footprint: •Healthcare and Pharma generated $2.1 million and $4.3 million of revenues for the three and six months ended June 30, 2026, representing 1.9% and 2.0% of total revenues, respectively. This compares to $2.6 million and $5.0 million, or 2.5% of total revenues in both periods of 2025. •Our Other vertical contributed 6.0% and 6.5% of total revenues for the three and six months ended June 30, 2026, respectively, compared to 7.8% and 7.4% for the same periods of 2025. Revenues in this vertical decreased by 16.4% and 6.5% on a quarterly and year-to-date basis, respectively. The decline during both periods was primarily driven by moderate engagement levels from key accounts. Cost of Revenues and Gross Margin Our cost of revenues consists primarily of salaries and employee benefits, including performance bonuses and stock-based compensation, and project-related travel expenses of client-serving professionals. Cost of revenues also includes depreciation and amortization expenses related to client-serving activities. During the three months ended June 30, 2026, our cost of revenues was $68.5 million, an increase of $2.0 million, or 2.9%, compared to $66.6 million in the corresponding period of 2025. For the six months ended June 30, 2026, cost of revenues increased by $6.4 million, or 4.9%, reaching $136.4 million, compared to $130.0 million in the prior-year period. The increase in cost of revenues in both periods reflected our continued investment in delivery to support growing customer demand. Gross profit was $39.6 million and $75.9 million for the three and six months ended June 30, 2026, representing an increase of $5.1 million, or 14.8%, and $4.4 million, or 6.1%, compared to $34.5 million and $71.5 million in the corresponding prior-year periods, respectively. Expressed as a percentage of revenues, gross margin was 36.6% and 35.7% for the three and six months ended June 30, 2026, compared to 34.1% and 35.5% in the prior-year periods, respectively. The increase in gross profit and expansion of gross margin were primarily driven by revenue growth outpacing delivery cost, improved delivery resource utilization and positive foreign exchange impacts. Engineering, Research and Development The principal components of engineering, research and development expenses are salaries and employee benefits, including performance bonuses and stock-based compensation for personnel engaged in the design and development of solutions, as well as depreciation and amortization expenses related to engineering, research and development activities. During the three and six months ended June 30, 2026, engineering, research, and development expenses were $6.4 million and $12.5 million respectively, representing a decrease of $0.3 million, or 4.8%, and $0.7 million, or 5.5%, compared to $6.7 million and $13.2 million in the corresponding prior-year periods, respectively. The decrease in both the quarterly and year-to-date periods primarily reflected our cost optimization. Expressed as a percentage of revenues, engineering, research, and development expenses were 5.9% for both the three and six months ended June 30, 2026, compared to 6.7% and 6.6% in the corresponding periods of 2025, respectively. Sales and Marketing Sales and marketing expenses represent spending associated with promoting and selling our services. These expenses are comprised of personnel costs, including performance bonuses and stock-based compensation, marketing events, and travel expenses, as well as depreciation and amortization expenses related to such activities. During the three months ended June 30, 2026, our sales and marketing expenses were $7.1 million, flat compared to the prior-year quarter. For the six months ended June 30, 2026, sales and marketing expenses were $14.8 million, a decrease of $0.6 million, or 3.6%, compared to $15.4 million in the prior-year period. Expressed as a percentage of revenues, sales and marketing expenses decreased to 6.6% and 7.0% for the three and six months ended June 30, 2026, respectively, compared to 28 Table of Contents 7.0% and 7.6% in the corresponding periods of 2025. The decrease was primarily driven by lower stock-based compensation expense and cost optimization. General and Administrative General and administrative expenses include costs to support the business and consist primarily of administrative personnel and officers’ salaries, employee benefits including performance bonuses, stock-based compensation, legal and audit expenses, insurance, operating lease expenses of office premises and other facility costs, workforce global mobility initiatives, restructuring and employee relocation costs not directly related to customer projects, and depreciation and amortization expenses related to such activities. General and administrative expenses include a substantial majority of Grid Dynamics’ stock-based compensation costs for the financial periods discussed herein. General and administrative expenses increased 19.4% to $24.8 million for the three months ended June 30, 2026, compared to $20.8 million in the prior-year period. For the six months ended June 30, 2026, general and administrative expenses totaled $50.9 million, an increase of 13.1% from $45.1 million in the same period of 2025. The increase was primarily driven by higher restructuring costs, professional fees associated with potential acquisitions, and increased facility and IT-related expenses, partially offset by lower compensation costs, including stock-based compensation expenses. Expressed as a percentage of revenues, general and administrative expenses were 22.9% and 24.0% for the three and six months ended June 30, 2026, compared to 20.5% and 22.4% for the corresponding periods in 2025, respectively. Other Income, Net Other income, net represents interest earned on our cash and cash equivalents, including money market funds, interest expense related to our borrowings, and foreign exchange gains and losses as well as changes in the fair value of contingent consideration and investments in equity securities. During the three and six months ended June 30, 2026, Other income, net, was $3.2 million and $6.4 million, respectively, compared to $7.4 million and $11.9 million in the corresponding prior-year periods. The decrease in both periods was primarily driven by a reduction in gains from the remeasurement of acquisition-related contingent consideration liabilities, which decreased to $1.2 million in the first half of 2026 from $6.3 million in the prior-year period, as well as lower money market income due to lower average cash balances, slightly offset by favorable net foreign exchange movements during the first half of 2026. Provision for Income Tax Grid Dynamics follows the asset and liability method of accounting for income taxes. The provision for income taxes reflects income earned and taxed in the various U.S. federal and state and non-U.S. jurisdictions. Jurisdictional tax law changes, increases or decreases in permanent differences between book and tax items, accruals or adjustments of accruals for tax contingencies or valuation allowances, and the change in the mix of earnings from these taxing jurisdictions all affect the overall effective tax rate. During the three months ended June 30, 2026, we recognized income tax expense of $1.6 million, compared to $2.0 million expense in the same period of 2025. During the six months ended June 30, 2026, we recognized income tax expense of $2.6 million, compared to $1.6 million in the same period of 2025. The change in the tax provision was primarily attributable to a higher tax expense for stock-based compensation, and additional tax expense related to prior year state tax returns. Non-GAAP Measures To supplement Grid Dynamics’ consolidated financial data presented on a basis consistent with U.S. GAAP, this Quarterly Report contains certain non-GAAP financial measures, including Non-GAAP EBITDA, Non-GAAP net income and Non-GAAP diluted earnings per share, or EPS. 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. These measures exclude certain expenses that are required under U.S. GAAP. Grid Dynamics excludes these items because they are not part of core operations or, in the case of stock-based compensation, non-cash expenses that are determined based in part on Grid Dynamics’ underlying performance. Grid Dynamics believes these supplemental performance measurements are useful in evaluating operating performance, as they are similar to measures reported by its public industry peers and those regularly used by security analysts, investors and other interested parties in analyzing operating performance and prospects. These non-GAAP financial measures are not intended to be 29 Table of Contents a substitute for any GAAP financial measures and, as calculated, may not be comparable to other similarly titled measures of performance of other companies in other industries or within the same industry. 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. Grid Dynamics defines and calculates its non-GAAP financial measures as follows: •Non-GAAP EBITDA: Net income/(loss) before interest income/(expense), provision for income taxes and depreciation and amortization, and further adjusted for the impact of stock-based compensation expense, transaction-related costs (which include, when applicable, professional fees, retention bonuses, and consulting, legal and advisory costs related to Grid Dynamics’ merger and acquisition and capital-raising activities), impairment of long-lived assets, restructuring costs, one-time charges, and non-operating income/(expenses), net (which includes mainly foreign currency transaction gains and losses, fair value adjustments and other miscellaneous expenses). •Non-GAAP net income: Net income/(loss) adjusted for the impact of stock-based compensation expense, transaction-related costs (which include, when applicable, professional fees, retention bonuses, and consulting, legal and advisory costs related to Grid Dynamics’ merger and acquisition and capital-raising activities), impairment of long-lived assets, restructuring costs, one-time charges, and non-operating income/(expenses), net (which includes mainly foreign currency transaction gains and losses, fair value adjustments and other miscellaneous expenses), and the tax impacts of these adjustments. •Non-GAAP diluted EPS: Non-GAAP net income, divided by the diluted weighted-average number of diluted shares outstanding for the period. The following table presents the reconciliation of Grid Dynamics’ Non-GAAP EBITDA to its GAAP net income, the most directly comparable GAAP measure, for the periods indicated: Three Months Ended June 30, Six Months Ended June 30, 2026 2025 2026 2025 (in thousands) GAAP net income $ 2,852 $ 5,273 $ 1,379 $ 8,185 Adjusted for: Depreciation and amortization 5,269 4,900 10,472 9,619 Provision for income taxes 1,611 2,028 2,644 1,585 Stock-based compensation 4,429 6,717 12,883 17,460 Transaction and transformation-related costs (1) 761 323 1,287 761 Geographic reorganization (2) 351 467 712 811 Restructuring costs (3) 2,638 461 4,293 863 Interest and other income, net (4) (3,187) (7,424) (6,428) (11,930) Non-GAAP EBITDA $ 14,724 $ 12,745 $ 27,242 $ 27,354 __________________________ (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 revenues, 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)Geographic reorganization includes expenses connected with military actions of Russia against Ukraine and the exit plan announced by the Company and includes travel and relocation-related expenses of employees from the aforementioned countries, severance payments, allowances as well as legal and professional fees related to geographic repositioning in various locations. These expenses are incremental to those expenses incurred prior to the crisis, clearly separable from normal operations, and not expected to recur once the crisis has subsided and operations return to normal. 30 Table of Contents (3)Our restructuring costs include severance benefits and related employer taxes, as well as facility-related exit costs. These charges are presented within general and administrative expenses in the Company’s unaudited condensed consolidated statements of income. (4)Interest and other income, net consist primarily of gains and losses on foreign currency transactions, fair value adjustments, interest on cash held at banks and returns on investments in money-market funds, and other miscellaneous non-operating expenses. The following table presents a reconciliation of Grid Dynamics’ Non-GAAP diluted EPS and its Non-GAAP net income to its GAAP net income for the periods indicated: Three Months Ended June 30, Six Months Ended June 30, 2026 2025 2026 2025 (in thousands, except per share data) GAAP net income $ 2,852 $ 5,273 $ 1,379 $ 8,185 Adjusted for: Stock-based compensation 4,429 6,717 12,883 17,460 Transaction and transformation-related costs (1) 761 323 1,287 761 Geographic reorganization (2) 351 467 712 811 Restructuring costs (3) 2,638 461 4,293 863 Other (income)/expense, net (4) (862) (4,357) (1,553) (5,658) Tax impact of non-GAAP adjustments (5) (1,216) (591) (2,551) (4,177) Non-GAAP net income $ 8,953 $ 8,293 $ 16,450 $ 18,245 Number of shares used in the GAAP diluted EPS 83,024 86,447 84,453 87,166 GAAP diluted EPS $ 0.03 $ 0.06 $ 0.02 $ 0.09 Number of shares used in the Non-GAAP diluted EPS 83,024 86,447 84,453 87,166 Non-GAAP diluted EPS $ 0.11 $ 0.10 $ 0.19 $ 0.21 __________________________ (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 revenues, 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)Geographic reorganization includes expenses connected with military actions of Russia against Ukraine and the exit plan announced by the Company and includes travel and relocation-related expenses of employees from the aforementioned countries, severance payments, allowances as well as legal and professional fees related to geographic repositioning in various locations. These expenses are incremental to those expenses incurred prior to the crisis, clearly separable from normal operations, and not expected to recur once the crisis has subsided and operations return to normal. (3)Our restructuring costs include severance benefits and related employer taxes, as well as facility-related exit costs. These charges are presented within general and administrative expenses in the Company’s unaudited condensed consolidated statements of income. (4)Other (income)/expense, net consists primarily of gains and losses on foreign currency transactions, fair value adjustments, and other miscellaneous non-operating income and expense. (5)Reflects the estimated tax impact of the non-GAAP adjustments presented in the table. Liquidity and Capital Resources We measure liquidity in terms of our ability to fund the cash requirements of our business operations, including working capital needs, capital expenditures, contractual obligations, and other commitments with cash flows from operations and other sources of funding. Our current liquidity needs relate mainly to compensation and benefits of our employees and contractors and capital investments to support our growth and geographical expansion. Our ability to expand and grow our business will depend on many factors including our capital expenditure needs and the evolution of our operating cash flows. We may need more cash resources due to changed business conditions or other developments, including investments or acquisitions. Our principal source of liquidity continues to be cash generated from our operations. From time to time, we seek additional financing by means of follow-on public offerings of our common stock. The latest offering closed on November 14, 2024 and 31 Table of Contents resulted in $107.6 million of net proceeds, after deducting underwriting discounts and commissions. Additionally, we entered into an agreement establishing a revolving credit facility with JPMorgan Chase Bank, N.A., as an administrative agent for the lenders. The revolving credit facility provides us with $30.0 million of available borrowing capacity. On May 20, 2025, the maturity of this facility was extended to March 15, 2028. See Note 7 “Debt” in the notes to our condensed consolidated financial statements in “Part I. Item 1. Financial Statements (Unaudited)” of this Quarterly Report for information regarding our debt. As of June 30, 2026, Grid Dynamics had cash and cash equivalents amounting to $298.4 million compared to $342.1 million at December 31, 2025. Of these amounts, $50.4 million and $48.4 million, respectively, were held outside the United States, and included Switzerland, the U.K., India, Netherlands, Mexico, Moldova, Poland, Armenia, Argentina, and other countries. We did not have any debt outstanding under the revolving credit facility as of June 30, 2026. We believe that our cash and cash equivalents balance, cash generated from operating activities and proceeds from our November 2024 offering will be sufficient to fund currently expected levels of operating, investing and financing expenditures for a period of twelve months from the date of this filing. However, if our resources are insufficient to satisfy our cash requirements, we may need to seek additional equity or debt financing, which may be subject to conditions outside of our control and may not be available on terms acceptable to our management or at all. See Note 7 “Debt”, Note 9 “Leases” and Note 14 “Commitments and contingencies” in the notes to our condensed consolidated financial statements in “Part I. Item 1. Financial Statements (Unaudited)” of this Quarterly Report for detailed information on our contractual obligations and commitments. Cash Flows The following table summarizes Grid Dynamics’ cash flows for the periods indicated: Six Months Ended June 30, 2026 2025 (in thousands) Net cash provided by operating activities $ 14,493 $ 23,731 Net cash used in investing activities $ (21,590) $ (7,313) Net cash used in financing activities $ (35,155) $ (16,853) Effect of exchange rate changes on cash, cash equivalents and restricted cash $ (1,377) $ 2,162 Net increase/(decrease) in cash, cash equivalents and restricted cash $ (43,629) $ 1,727 Cash, cash equivalents and restricted cash (beginning of period) $ 342,058 $ 335,155 Cash, cash equivalents and restricted cash (end of period) $ 298,429 $ 336,882 Operating Activities. Net cash provided by operating activities was $14.5 million for the six months ended June 30, 2026, compared to $23.7 million in the prior-year period. The $9.2 million decrease was primarily driven by working capital fluctuations, including the timing of customer collections, vendor payments, and settlement of employee-related liabilities. Investing Activities. Net cash used in investing activities was $21.6 million for the six months ended June 30, 2026, compared to $7.3 million for the six months ended June 30, 2025. The increase in the first half of 2026 was primarily driven by the acquisition of Ekumen, which resulted in cash outflows of $14.1 million, net of cash acquired. Cash spent on capital expenditures and capitalized internal-use software costs remained relatively stable across both periods. Financing Activities. Net cash used in financing activities was $35.2 million for the six months ended June 30, 2026, compared to $16.9 million for the six months ended June 30, 2025. The $18.3 million increase in cash used was largely driven by an outflow of $28.8 million for common stock repurchases under the buyback program initiated in the fourth quarter of 2025. This was partially offset by a $12.8 million decrease in cash outflows for tax withholdings related to the net-share settlement of vested equity awards compared to the prior-year period. Off-Balance Sheet Arrangements and Commitments We do not have any material off-balance sheet commitments or contractual arrangements other than those disclosed in Note 9 “Leases” and Note 14 “Commitments and contingencies” of our condensed consolidated financial statements in “Part I. Item 1. Financial Statements (Unaudited)” of this Quarterly Report. 32 Table of Contents As a result of analysis related to Grid Dynamics’ functional control of its subcontractors, one subcontractor was determined to be a variable interest entity (“VIE”) and is therefore consolidated in Grid Dynamics’ financial statements. The assets and liabilities of this VIE consist primarily of intercompany balances and transactions, all of which have been eliminated in consolidation. Recently Adopted and Issued Accounting Pronouncements Recently issued and adopted accounting pronouncements are described in Note 1 to Grid Dynamics’ condensed consolidated financial statements in “Part I. Item 1. Financial Statements (Unaudited)” of this Quarterly Report.