Skip to content
    GDYN
    Earnings call· Jun 2026(Q2 FY26)

    GRID DYNAMICS HOLDINGS Q2 FY26 earnings call GDYN

    Jul 30, 2026 Source

    Executive summary

    Grid Dynamics Q2 FY26 — Strong AI Momentum and Margin Expansion

    Grid Dynamics delivered a solid quarter, driven by strong AI adoption and expanding relationships with key technology and financial services clients. The company is successfully executing on its margin expansion commitment and leveraging its GAIN platform and Physical AI capabilities to drive new growth vectors. Management remains confident in its strategy, focusing on AI-first delivery, fixed-price models, and strategic partnerships to enhance long-term value.

    Highlights

    5

    • Consolidated revenue of $108.2 million, above the high end of guidance.

    • Non-GAAP earnings of $14.7 million, beating consensus.

    • AI revenue reached 30.7% of total revenue, growing 54.6% year-over-year.

    • Non-GAAP gross profit margin improved to 36.9% from 34.7% year-over-year.

    • Non-GAAP EBITDA margin increased to 13.6% from 12.6% year-over-year.

    Concerns

    3

    • Total headcount decreased to 4,838 from 5,013 year-over-year, indicating ongoing rationalization.

    • Cash and cash equivalents decreased to $298.4 million from $327.5 million quarter-over-quarter due to share repurchases.

    • Legacy business (non-AI) revenue declined by approximately 10%.

    Guidance & targets

    5
    CategoryTargetConfidence
    Revenue
    $112 million to $114 million
    high materiality
    High
    Non-GAAP EBITDA
    $16.5 million to $17.5 million
    high materiality
    High
    Basic share count
    81 million to 82 million shares
    medium materiality
    Medium
    Diluted share count
    83 million to 84 million shares
    medium materiality
    Medium
    Full year revenue
    $435 million to $465 million
    high materiality
    High

    Segment performance

    6
    SegmentRevenueYoYQoQMargin
    TMT
    Remained the largest vertical, driven by largest technology customers and vendor consolidation, leading to increased wallet share.
    Percentage of total revenues: 31.8%
    		—36.4%11.7%—
    Retail
    Sequential growth supported by demand from key accounts, including a major specialty retailer.
    Percentage of total revenues: 26.5%
    		—flat3.1%—
    Finance
    Solid demand from fintech service engagements, including increased contributions from a major payments network, offsetting completed engagements.
    Percentage of total revenues: 22.9%
    		——1.2%—
    CPG and Manufacturing
    Robust demand from a leading wholesale food distributor and other manufacturing customers.
    Percentage of total revenues: 10.9%
    		—4.2%2.1%—
    Other
    Contribution to second quarter revenues.
    Percentage of total revenues: 6%
    		————
    Healthcare and Pharma
    Contribution to second quarter revenues.
    Percentage of total revenues: 1.9%
    		————

    Operational metrics

    9
    AI revenue
    $33.2 millionup 54.6% year-over-year
    Q2 FY26

    Crossed the 30% threshold for the first time, marking a sustained shift.

    Partner influence revenue
    19.1%
    Q2 FY26

    Driven primarily by core hyperscaler relationships (Google Cloud, AWS, Microsoft Azure), with a growing proportion from AI engagements. Long-term target is 25% to 30%.

    GAAP gross margin
    36.6%up from 34.8% QoQ and 34.1% YoY
    Q2 FY26

    Year-over-year increase driven by revenue growth outpacing delivery cost; sequential increase due to working time and improved resource utilization.

    Non-GAAP gross margin
    36.9%up from 35.3% QoQ and 34.7% YoY
    Q2 FY26

    Year-over-year increase driven by revenue growth outpacing delivery cost; sequential increase due to working time and improved resource utilization.

    Non-GAAP EPS
    $0.11up from $0.09 QoQ and $0.10 YoY
    Q2 FY26

    Based on 83 million diluted shares.

    Diluted share count
    83 million sharesdown from 85.9 million QoQ and 86.4 million YoY
    Q2 FY26

    Used for non-GAAP EPS calculation.

    Cash and investments balance
    $298.4 milliondown from $327.5 million QoQ
    June 30, 2026

    Cash and cash equivalents balance.

    Share buyback amount
    $17.3 million
    Q2 FY26

    Part of the Board-authorized share repurchase program, reflecting confidence in long-term value.

    Incremental annual revenue from client project
    $0.5 billion
    annual

    Expected to be supported by a modernized logistics solution with AI-powered routing, cutting average delivery time by more than half.

    Industry KPIs

    2
    MetricValueDetails
    Headcount dso4,838employees
    Large customer cohorts43.5%% of total revenue

    Product announcements

    6
    ProductTypeDetails
    Rosettaupdate
    Alliumupdate
    SpecFlowlaunch
    AI Data Migration Acceleratorlaunch
    GAIN Agentic Runtimeupdate
    GAIN for Physical AI (platform built on Incarnum)update

    Deals & partnerships

    6
    Doosan RoboticsStrategic partnership for full-stack collaboration in robotics.

    Collaboration includes Grid Dynamics' platform, foundational AI components, integration services, and engineering paired with Doosan's collaborative robots (cobots) and combined global reach.

    EkumenAcquisition of a leading robotics engineering team.

    Ekumen joined in May, bringing expertise in Robot Operating System (ROS), a foundational open-source standard for industrial robots. This acquisition enhances Grid Dynamics' Physical AI capabilities.

    Google CloudCore hyperscaler relationship driving partner influence revenue.

    Extended partnership in banking and financial services, closing the first joint win this quarter at a leading global bank. Running Agentic AI workshops across Google Vertex AI search customer base.

    AWSCore hyperscaler relationship driving partner influence revenue.

    Deepening relationship around application modernization and Agentic AI in CPG, manufacturing, and financial services.

    Microsoft AzureCore hyperscaler relationship driving partner influence revenue.

    One of the three core hyperscaler relationships contributing to partner influence revenue.

    NVIDIAPartnership gaining momentum across Agentic AI and Physical AI.

    Elevated relationship, with Grid Dynamics working with NVIDIA stack for humanoid robot piloting and other Physical AI initiatives.

    Risks & headwinds

    3
    Legacy Business Decline

    Approximately 10% decline in non-AI revenue

    Mitigation: AI growth is expected to substantially exceed and offset the decline in aged businesses; company is not defending legacy business by compressing margins.

    Customer VolatilityFrom time to time

    Not quantified, but noted for top 30-40 customers

    Mitigation: Focus on deeper relationships with top 10-20 customers and expanding addressable market with new offerings.

    Uncertainty in AI Adoption

    Not quantified

    Mitigation: Providing technology consulting and guiding clients through the process to create the best ROI for AI adoption; focusing on fixed-bid and fixed-budget projects to manage spending concerns.

    What to watch in Q3 FY26

    5

    AI Revenue Growth

    Next quarter (Q3 FY26)
    Current54.6% YoY
    TargetContinued strong growth, maintaining above 30% of total revenue

    Why it matters

    AI revenue is a key growth driver and a 'sustained shift' for the company, indicating the success of its strategic focus.

    AI revenue reached 30.7% of the total company revenue in the second quarter, growing 54.6% year-over-year and crossing the 30% threshold for the first time. Two consecutive quarters of the year-over-year growth over 50% tells us something important. This is not a spike. It's a sustained shift. The trajectory is clear, and we intend to build on it.

    Q&A highlights

    7

    How will AI efforts translate into growth and profitability for Grid Dynamics, addressing skepticism about AI being a net negative?

    Leonard Livschitz explained that AI implementations, including forward-deployed engineers, Agentic AI, and GAIN platform adoption, are accretive. Increased growth in these areas substantially exceeds aged businesses. Physical AI is also driving adoption and partnerships, positioning Grid Dynamics as a leader.

    “If you look at the increased growth in just these two areas, that substantially exceeds the -- some of the aged businesses, which would eventually drop out because the gloom and doom from many facets were about that engineering and consultancy is less relevant.”

    asked by Mayank Tandon · answered by Leonard Livschitz

    2 min read6 chapters

    Detailed Narrative

    01

    AI Adoption and Growth

    AI revenue reached 30.7% of total revenue in Q2 FY26, growing 54.6% year-over-year, marking a sustained shift rather than a spike. The company is winning new programs and is on track to have 90% of its engineers trained on AI SDLC by the end of October. This strong performance is driven by wider enterprise adoption of GAIN platforms and clients transitioning AI workloads from pilots to production.

    02

    GAIN Platform Expansion

    Grid Dynamics' GAIN platforms are central to its AI strategy, with Rosetta progressing to larger engagements and Allium moving into commercial banking. The company has expanded LLM partnerships with the top four frontier providers and made open-source contributions like SpecFlow to drive technical credibility. These platforms are enabling clients to accelerate work across the modernization lifecycle, particularly in code generation and testing.

    03

    Physical AI and Robotics

    The company is significantly expanding its Physical AI capabilities, including a strategic partnership with Doosan Robotics and the acquisition of Ekumen, a robotics engineering team. This allows for full-stack solutions from foundational software (Robot Operating System) to simulation, hardware integration, and enterprise deployment. This initiative targets a market measured in trillions over the coming decade, with active programs spanning humanoid robotics, autonomous driving, and policy control platforms.

    04

    Client Engagement Evolution

    Client relationships are evolving, with customers now requesting Grid Dynamics' involvement in advisory, execution, and ongoing operations beyond initial platform deployments. Partner influence revenue reached 19.1% of total revenue in Q2, driven by core hyperscaler relationships (Google Cloud, AWS, Microsoft Azure) and increasing AI engagements. The company aims for 25% to 30% partner influence revenue long-term.

    05

    Margin Expansion and Efficiency

    Grid Dynamics is making solid progress towards its commitment of 300 basis points of margin expansion year-over-year by Q4. This improvement is attributed to revenue growth outpacing delivery costs, improved resource utilization, and efficiency gains from rationalizing non-engineering headcount. The adoption of fixed-price models and AI-driven productivity are also contributing to a more efficient and scalable delivery model.

    06

    Horizon-Based AI Strategy

    The company's AI strategy is structured into two horizons. Horizon One, which is scaled, focuses on AI-first modernization and agentic platforms (Rosetta, Allium, SpecFlow) that are now in broader enterprise adoption. Horizon Two, which is scaling, covers agentic harness engineering and Physical AI, moving from research and internal validation towards repeatable client deployments and differentiated intellectual property.

    AI-generated summary of the company’s earnings call. Not investment advice.