Q2 2024 Grid Dynamics Holdings Inc Earnings Call
Good afternoon, everyone. Welcome to Grid Dynamics' second quarter 2024 earnings conference call. I'm Cary Savas, Director of Branding and Communications.
Cary Savas: I'm Cary Savas, Director of Branding and Communication. At this time, our participants are in listen-only mode.
Speaker Change: At this time, our participants are in listen-only mode.
Cary Savas: Joining us on the call today are CEO Leonard Livschitz and CFO Anil Doradla. Following their prepared remarks, we will open the call to your questions. Before we begin, I would like to remind everyone that today's discussion will contain forward-looking statements. This concludes our Business in a Financial Outlook and answers to some of your questions. Such statements are subject to risks and uncertainty as described in the company's earnings release and other filings with the SEC. Gap to Non-Gap Financial Reconciliations and Supplemental Financial Information are provided in the Earnings Press Release and the 8K filed with the SEC. I now turn the call over to Leonard, our CEO.
Speaker Change: Joining us on the call today are CEO Leonard Livschitz and CFO Anil Doradla.
Speaker Change: Following their prepared remarks, we will open the call to your questions.
Speaker Change: Please note that today's conference is being recorded.
Speaker Change: Before we begin, I would like to remind everyone that today's discussion will contain forward-looking statements.
Speaker Change: This includes our business in a financial outlook and the answers to some of your questions.
Speaker Change: Such statements are subject to the risks and uncertainty as described in the company's earnings release and other filings with the SEC.
Speaker Change: During this call, we will discuss certain non- GAAP measures of our performance.
Speaker Change: Gap to Non- GAAP financial Reconciliations and Supplemental Financial Information are provided in the Earnings Press Release and the 8K filed with the SEC.
Speaker Change: You can find all the information I just described in the Investor Relations section of our website.
Speaker Change: I now turn the call over to Leonard, our CEO .
Leonard Livschitz: Good afternoon, everyone, and thank you for joining us. Grid Dynamics' second quarter results were above our guidance range and exceeded Wall Street expectations, both in revenue and non-GAP. We achieved important milestones during the quarter. We also exited the second quarter with the highest number of billable engineers in the company history.
Leonard Livschitz: Thank you, Cary. Good afternoon, everyone, and thank you for joining us today.
Leonard Livschitz: Grid Dynamics second quarter results were above our guidance range and exceeded Wall Street expectations.
Leonard Livschitz: Both in Revenue and Non-Gap EBITDA.
Leonard Livschitz: We achieved important milestones in the quarter.
Leonard Livschitz: I'm happy to report that our second quarter revenue was the highest in the company's history and all of it was in organic nature.
Leonard Livschitz: We also exited the second quarter with the highest number of billable engineers in the company history.
Leonard Livschitz: The strong results were due to the strengths of both existing and new customers and are commendable given the recent backdrop. It is a clear testament that Grid Dynamics' efforts to stay the course and maintain laser focus on delivering value to our customers are paying off. In many ways, our second quarter revenue growth of 4% on a sequential basis reflects the company's differentiation.
Leonard Livschitz: The strong results were due to the strengths from both existing and new customers, and are commendable given the recent backdrop of economics.
Leonard Livschitz: Cycles.
Leonard Livschitz: It is a clear testament that Grid Dynamics' efforts to stay the course and maintain laser focus in delivering value to our customers
Leonard Livschitz: [inaudible]
Leonard Livschitz: Our stated goals around the company growth profitability and becoming a billion-dollar revenue company remain unchanged.
Leonard Livschitz: In many ways, our second quarter revenue growth of 4% on a sequential basis reflects the company's differentiation.
Leonard Livschitz: Last quarter, I highlighted the key factors influencing our growth and discussed how we're uniquely positioned across the, There are many exciting trends that are just shaping our business, some of which I will share with you today. More importantly, I believe these trends will persist in shaping the company, both in the second half of 2024 and leading into the 2025 to a brighter future for the majority of our customers. Incrementally, last quarter, when customers were more focused on sharing their outlook and forecast plans, this quarter, they were more willing to release the budgets to implement those plans. Now we come into the third quarter.
Leonard Livschitz: Last quarter, I highlighted the key factors influencing our growth and discussed how we're uniquely positioned across the IT industry.
Leonard Livschitz: These were, first, our revenue represents a small proportion of our customers overall spend and therefore the opportunities for growth are significant.
Leonard Livschitz: Second, the new deals that we're winning are tied up to our customer key area of focus and, in many cases, our mission critical.
Speaker Change: Served.
Leonard Livschitz: Across the majority of our customers, we're seeing their spending level
Leonard Livschitz: either being maintained at the current level or increasing. And finally, fourth, the headwind we were facing last year were driven by drops of a handful of customers. This trend has reversed, and many of those customers have reverted to growth.
Leonard Livschitz: There are many exciting trends which are shaping our business, some of which I will share with you today. More importantly, I believe these trends will persist in shaping the company, both in the second half of 2024 and leading into the 2025 to a brighter future.
Leonard Livschitz: Now coming to the demand environment.
Leonard Livschitz: Similar to the first quarter, we witnessed improving demand across
Leonard Livschitz: The majority of our customers.
Leonard Livschitz: Incrementally, last quarter, when customers were more focused on sharing their outlook and forecast plans, this quarter, they were more willing to release their budgets to implement those plans.
Leonard Livschitz: We benefited from the trend in this quarter and expect that such trend to continue as the year progresses.
Leonard Livschitz: Now coming to the third quarter.
Leonard Livschitz: Trends that I highlighted regarding the second quarter extend into the next quarter as well.
Leonard Livschitz: We have already seen that in March of July, our customer activity engineering building headcount AI activities continued. We believe this forms the basis for our continued positive outlook as we look at the third quarter and the remainder of 2020. We are in what I call the post-vendor consolidation environment. As we highlighted, over the last two to three quarters, customers have been scaling back on the number of IT vendors they work with.
Leonard Livschitz: We have already seen that in March of July our customer activity engineering building headcount AI activities continue to be robust.
Speaker Change: and other researchers. Thank you. Thank you.
Speaker Change: We believe this formulates the basis for our continued positive outlook as we look at the third quarter and remaining of 2024.
Speaker Change: We are in what I call the post-vendor consolidation environment. As we highlighted, over the last two to three quarters, customers have been scaling back on the number of IT vendors they work with.
Leonard Livschitz: In one of the global brands, they plan to reduce the number of IT providers, but more than that, with Grid Dynamics being one of the remaining strategic... With this customer and many more in similar situations, there is a heightened interest in partnering with IT vendors that are strong in technology and catalysts for them to achieve business revenue. And I This widespread industry recognition reinforces our company as a benchmark for engineering excellence in digital transformation and empowers businesses to navigate the complexities of the modern technology landscape with agility.
Speaker Change: As an example, in one of the global brands, they plan to reduce the number of IT providers by more than two-thirds.
Speaker Change: with Grid Dynamics being one of the remaining strategic partners.
Speaker Change: With this customer and many more in similar situations there is a heightening interest in partnering with IT vendors that are strong in technology and catalysts for them to achieving the business goals both on revenue and a cost side.
Speaker Change: Time and again, our technological and operational excellence has risen to the top.
Speaker Change: I was thrilled to announce that in the second quarter, Grid Dynamics won four industry awards across a range of the categories, including Most Innovative Project and Best Composable E-Commerce Project, among others.
Speaker Change: This widespread industry recognition reinforces our company as a benchmark of engineering excellence in digital transformation and empowering businesses to navigate the complexities of the modern technology landscape with agility and innovation.
Leonard Livschitz: We expanded our AI capabilities considerably, and now have approximately 30 solutions and service offerings targeting Fortune 500 companies across various industries. These solutions focus on enhancing revenue and reducing costs for enterprises. On the revenue side, our solutions focus on innovative customer experiences and enhance marketing, pricing, and product decisions. And on the cost side, the focus is centered on efficiency improvements and better regulatory compliance, our broad offering position as well as to positively impact the business results of our company. We're witnessing a significant pickup in customers wanting to engage us on MVPs and pilot programs beyond the initial provocation.
Speaker Change: We expanded our AI capabilities considerably and now have approximately 30 solutions and service offerings targeting Fortune 500 companies across various industries.
Speaker Change: These solutions focus on enhancing revenue and reducing costs for enterprises.
Speaker Change: On the revenue side, our solutions focus on innovative customer experiences and enhance marketing, pricing, and product decisions. And on the cost side, the focus is centered on efficiency improvements and better regulatory compliance.
Speaker Change: Our broad offering position as well to positively impact the business results of our clients.
Speaker Change: We are witnessing a significant pickup in customers wanting to engage us on MVPs and pilot programs beyond the initial approval concepts.
Leonard Livschitz: Our sales pipeline continues to show robust growth with dozens of active AI opportunities in the program; enterprises are increasingly seeking to incorporate AI into their business processes as well as services. It's worth noting that we continue to adopt and develop AI tools and best practices to improve the productivity of our own engineers. This goes beyond just coding compilers, extending to tools specifically designed for legacy modernization, test automation, and quick prototyping.
Speaker Change: Our sales pipeline continues to show robust growth with dozens of active AI opportunities in the progress.
Speaker Change: Enterprises are increasingly seeking to incorporate AI in their business processes as well as services and platforms.
Speaker Change: It's worth noting that we continue to adopt and develop AI tools and best practices to improve the productivity of our own engineers.
Speaker Change: This goes beyond just coding copilots, extending to tools specifically designed for legacy modernization, test automation, and quick prototyping. These internal advancements not just boost our efficiency, but also enhance our ability to deliver cutting-edge AI solutions to our clients.
Leonard Livschitz: These internal investments are not just boosting our efficiency but also enhancing our ability to deliver cutting-edge AI solutions. Let me highlight a few Node-Versus-GNII projects. At a top workforce solution company, we're developing a comprehensive AI ops and data platform. This platform will host numerous AI applications for job seekers, recruiters, and business owners, significantly enhancing the efficiency and effectiveness of workforce management. At one of the largest U.S. auto part providers, we're using GNI to harmonize and enrich large commerce cattle, which streamlines the product onboarding process.
Speaker Change: Let me highlight a few NodeWorx's GNI projects for the sake of time.
Speaker Change: [inaudible]
Speaker Change: At a top workforce solution company, we're developing a comprehensive AI ops and data platform.
Speaker Change: This platform will host numerous AI applications for job seekers, recruiters and business owners, significantly enhancing the efficiency and effectiveness of the workforce management process.
Speaker Change: And one of the largest U.S. auto parts providers, we're using GNI to harmonize and enrich large commerce catalogs.
Speaker Change: This streamlines the product onboarding process.
Leonard Livschitz: Additionally, it analyzes product attributes, creates consistent product titles, and descriptions that resonate with brand analysis. This leads to an enhanced customer experience and higher sales through all. This project showcases how AI can significantly enhance efficiency in complex regulatory environments.
Speaker Change: Additionally, it analyzes product attributes, creates consistent product titles, and descriptions that resonate with brand value.
Speaker Change: This leads to enhanced customer experience and higher sales through all channels.
Speaker Change: Additionally, for a leading European regulatory compliance firm, we are developing an AI-enabled solution which streamlines the product certification process.
Speaker Change: This project showcases how AI can significantly enhance efficiency in complex regulatory environments.
Speaker Change: With our CTO organization, during the quarter, there was significant activity both in AI and non-AI areas. This included the completion of eight programs across AI, data, machine learning engineering,
Leonard Livschitz: Commerce Solutions and and the quarter. There were several trends I would like to share some of the notable ones. In the second quarter, we signed new six logos, many of them with very large enterprises. Of these customers we signed in a quarter, one is the leading North American supplier of home improvement, one is a large American consumer goods company focused on personal and household products, one of the largest lifestyle global companies, and a European-based large department store. Partnerships are at an all-time high, at 17% of revenue contribution in the first half of 2020.
Speaker Change: Commerce Solutions and Search.
Speaker Change: Some of the projects completed, including intelligent document processing tailored for the financial industry, conversation-powered interior design assistance,
Speaker Change: And like previous quarters,
Speaker Change: Our architects and CTO team were instrumental in opening new accounts.
Speaker Change: In the quarter, there were several trends I would like to share some of the notable ones with you.
Speaker Change: Lord of Momentum
Speaker Change: In the second quarter, we signed new six logos, many of them with very large enterprises.
Speaker Change: Of these customers, we signed in a quarter, one is a leading North American supplier of home improvement, one is a large American consumer goods focused on personal and household products, one of the largest lifestyle global companies, and a European-based large department store chains.
Speaker Change: Partnerships are at an all-time high at 17% of revenue contribution in the first half of 2024.
Speaker Change: The quality and quantity of our partnership leads are changing.
Speaker Change: There are three noteworthy trends that are shaping our partnership business.
Leonard Livschitz: First, our commitment to technology innovation and engineering excellence has resulted in greater appreciation by global enterprises. This has resulted in Grid Dynamics being chosen by many of our partners, tier one customers. Second, our relationship with our partners is evolving.
Speaker Change: First, our commitment to technology innovation and engineering excellence has resulted in greater appreciation by global enterprise customers.
Speaker Change: This has resulted in Grid Dynamics being chosen at many of our partners' Tier 1 customers.
Speaker Change: Second, our relationship with our partners are evolving. We're now more engaged in strategic discussion with senior management of our key partners.
Leonard Livschitz: We're now more engaged in strategic discussions with senior management of our key partners. Third, at an operational level, we have an enhanced level of collaboration between the sales and market teams of Grid Dynamics, as well as our partners. All this has translated into more opportunities that include Gen-AI initiatives and our entry into global projects and programs across industries. Delivery Location
Speaker Change: Third, at an operational level, we have enhanced level of collaboration between the sales and market teams of Grid Dynamics as well as our partners.
Speaker Change: All these translated into more opportunities that include Gen-AI initiatives and our entry into the global projects and programs across industry work.
Speaker Change: delivery of location support.
Leonard Livschitz: During the quarter, we made progress across multiple areas with our global strategic delivery organization. As we highlighted in the past, our Follow the Sun strategy provides the framework for scaling our global economy. With Bangalore operationalized, we now have three fully functional locations in India.
Speaker Change: During the quarter, we made progress across multiple areas with our global strategic delivery organizations. As we highlighted in the past, our Follow the Sun strategy provides the framework of scaling our global locations.
Speaker Change: With Bangalore operationalized, we now have three fully functional locations in India.
Speaker Change: India is now in our top two countries by headcount and supports multiple accounts with over a dozen of them being key accounts.
Speaker Change: I'll focus on acquiring high-quality talent out of universities and our activities with internships, hackathons, dynamic talks continuing during the quarter.
Leonard Livschitz: In Europe, Poland continued to be the anchor point, and in Mexico, we continue to support our customers, speaking with Nia Shor and Keba Doge. European Business. With roughly mid-teens of our revenue, Europe continues to be strategic to our growth.
Speaker Change: In Europe , Poland continues to be the anchor point, and in Mexico, we continue to support our customers seeking near-shore capabilities.
Speaker Change: European Business.
Speaker Change: With roughly mid-teens of our revenue, Europe continues to be strategic to our growth.
Leonard Livschitz: Our AI heritage and GNI expertise continue to attract enterprise customers who are serious about adapting GNI to enable business process efficiencies and improve customer experience. In addition to our AI wins, we provided a platform modernization roadmap to a major UK-based retailer customer that supports their expansion, and we were able to migrate their existing homegrown e-commerce platform to the. For an existing global auto part company, we're launching a composable commerce B2C solution orchestrated using MAG technology. We expect this effort will continue in Q3 to enable the client to consolidate their technology landscapes and scale the business. This ensures compliance with strict data privacy and security regulations.
Speaker Change: Our AI heritage and GNI expertise continue to attract enterprise customers who are serious about adapting GNI to enable business process efficiencies and improve customer experiences.
Speaker Change: At Waterloo Client, a leader in food and pharma testing, we started development of an AI-based search solution.
Speaker Change: In addition to our AI wins, we provide a platform modernization roadmap to a major UK-based retailer customer that supports their expansion, and we were able to migrate their existing homegrown e-commerce platform to the cloud.
Speaker Change: An existing global auto part company were launching a composable commerce B2C solution orchestrated using MAG technologies.
Speaker Change: We expect this effort will continue in Q3 to enable the client to consolidate their technology landscapes and scale the business.
Speaker Change: During the quarter, Grid Dynamics delivered some notable projects.
Speaker Change: At a leading global technology company, we modernize their data analytics platform, including data governance and data pipeline throughput.
Speaker Change: This ensured compliance with strict data privacy and security regulations. Our efforts led to reduced infrastructure costs and improved overall performance.
Leonard Livschitz: Our efforts led to reduced infrastructure costs and improved overall performance. For a leading home improvement retailer, we modernized the legacy MonoVisit commerce platform, which opened the path to implement AI-enabled services, such as search on the Azure platform. For a major CPG brand, we implemented a wholesale order platform for its North American business, significantly reducing manual labor associated with processing and validating. This platform integrates order flow data into a client's next-generation ERP system, streamlining operations for a leading automotive parts supplier.
Speaker Change: For a leading home improvement retailer, we modernized the legacy MonoVisit commerce platform, which opened the path to implement AI-enabled services such as Search on the Azure platform.
Speaker Change: For a major CPG brand, we implemented a wholesale order platform for its North American business, significantly reducing manual labor associated with processing and validating orders.
Speaker Change: This platform integrates order flow data in a client's next-generation ERP system, streamlining operations and enhancing efficiency.
Speaker Change: and the rest of the world. God bless. God bless. God bless.
Speaker Change: For a leading automotive parts supplier, we migrated product data to automotive industry standards and consolidated B2B as well as B2C search capabilities on a common platform.
Leonard Livschitz: We migrated product data to automotive industry standards and consolidated B2B as well as B2C search capabilities on a common platform, and also the first step for the company rolling out conversational AI shopping. For a global footwear brand, we launched 40 country-specific sites in under six months. With that, let me turn the call over to Anil, who will discuss Q2 results in more detail. Anil? Thanks, Leonard. Good afternoon, everyone. Our second quarter results were solid, as we exceeded our expectations, both on revenue and non-GAAP EBITDA.
Speaker Change: This will improve overall customer experience and enhance product sales.
Speaker Change: and also the first step for the company rolling out a conversational AI shopping assistant.
Speaker Change: For a global footwear brand, we launched 40 country-specific sites in under six months.
Speaker Change: providing localized features for in-country personalization, shipping, and fulfillment. This achievement was made possible by leveraging the underlying Mac architecture we developed, further extending our long-term relationship with the brand.
Speaker Change: With that, let me turn the call over to Anil, who will discuss Q2 results in more detail.
Speaker Change: Anyu?
Anil Doradla: Thanks, Leonard. Good afternoon, everyone.
Anil Doradla: Thanks, Leonard. Good afternoon, everyone. Our second quarter results were solid as we exceeded our expectations, both on revenue and non-GAAP EBITDA.
Anil Doradla: Our second quarter revenue of $83 million was ahead of our guidance range of $80 million to $82 million, and our non-GAAP EBITDA of $11.7 million was ahead of our guidance range of $10.5 million and $11.5 million.
Anil Doradla: The strong results were driven from a wide range of customers across industry verticals. Our retail vertical grew 8.7% and 2.9% on a sequential and year-over-year basis, respectively. On a sequential basis, we saw growth for multiple customers in the specialty retail and home improvement space.
Speaker Change: The strong results were driven from a wide range of customers across industry verticals.
Anil Doradla: During the second quarter, our retail and TMT were the two largest verticals at 32.2% and 28% of our revenues respectively.
Speaker Change: Our retail vertical grew 8.7% and 2.9% on a sequential and year-over-year basis, respectively. On a sequential basis, we witnessed growth for multiple customers in the specialty retail and home improvement space.
Anil Doradla: TMT decreased by 3.3% and 3.6% on a sequential and year-of-year basis, respectively.
Anil Doradla: On a sequential basis, the decline largely came from a couple of factors that included a decline in revenue from a technology startup in the security space. Our CPG and manufacturing represented 11.9% of our revenue in the second quarter, an increase of 3% on a sequential basis, and a drop of 9.5% on a year-over-year basis. However, revenues from the top three customers in our CPG and manufacturing vertical grew on a sequential basis Similar to last quarter, growth from customers across the FinTech and insurance space.
Speaker Change: On a sequential basis, the decline largely came from a couple of factors that included decline in revenue from a technology startup in the security space.
Anil Doradla: Coming to our largest customer in our TMT vertical, it grew both on a sequential and year-over-year basis.
Speaker Change: Here are the details of the revenue mix of other verticals.
Speaker Change: Our CPG and manufacturing represented 11.9% of our revenue in the second quarter, an increase of 3% on a sequential basis, and a drop of 9.5% on a year-over-year basis.
Speaker Change: Revenues from the top three customers in our CPG and manufacturing vertical grew on a sequential basis.
Speaker Change: Our finance vertical was the strongest both on a sequential and year-over-year basis.
Speaker Change: Similar to last quarter, the growth from customers across the FinTech and insurance space.
Anil Doradla: Our newly desegregated healthcare and pharma represented 3.8% of our revenues and showed a 5% increase on a sequential basis and a 14.8% decrease on a year-over-year basis. And finally, the other vertical represented 9% of our second quarter revenue and was down 10.6% on a sequential basis and up 26.7% on a year-over-year basis. We ended the second quarter with a total headcount of 3,961, up from 3,892 employees in the first quarter of 2024 and up from 3,862 in the second quarter of 2023.
Speaker Change: Our newly desegregated healthcare and pharma represented 3.8% of our revenues and showed a 5% increase on a sequential basis and 14.8% decrease on a year-over-year basis.
Speaker Change: And finally, the other vertical represented 9% of our second quarter revenue and was down 10.6% on a sequential basis and up 26.7% on a year-over-year basis.
Speaker Change: We ended the second quarter with a total headcount of 3,961, up from 3,892 employees in the first quarter of 2024, and up from 3,862 in the second quarter of 2023.
Anil Doradla: At the end of the second quarter of 2024, our total US headcount was 347, or 8.8% of the company's total headcount versus 8.2% in the year-ago quarter. Our non-U.S. headcount located in Europe, Americas, and India was 3,614, or 91.2%.
Speaker Change: At the end of the second quarter of 2024, our total U.S. headcount was 347, or 8.8% of the company's total headcount, versus 8.2% in the year-ago quarter.
Speaker Change: Our non-U.S. headcount located in Europe , Americas, and India was 3,614, or 91.2%.
Anil Doradla: In the second quarter, revenues from our top five and top 10 customers were 38.5% and 57%, respectively, versus 37.6% and 56.6% in the same period a year ago, respectively. During the second quarter, we had a total of 208 customers, down from 210 in the first quarter of 2024 and 216 in the Irogo quarter. During the quarter, we added several customers, some of which Leonard referred to in his prepared remarks. The year-over-year decline in the number of customers was primarily driven by our continued efforts to rationalize our portfolio of non-strategic customers.
Speaker Change: In the second quarter, revenues from our top five and top ten customers were 38.5% and 57% respectively, versus 37.6% and 56.6% in the same period a year ago, respectively.
Speaker Change: During the second quarter, we had a total of 208 customers down from 210 in the first quarter of 2024 and 216 in the Irogo quarter.
Speaker Change: During the quarter, we added several customers, some of which Leonard referred to in his prepared remarks. The year-over-year decline in the number of customers was primarily driven by our continued efforts to rationalize our portfolio of non-strategic customers.
Anil Doradla: Moving to the income statement, our GAAP gross profit during the quarter was $29.6 million, or 35.6% compared to $27.7 million, or 34.7%, in the first quarter of 2024 and $28.3 million, or 36.6%, in the year-ago quarter. On a non-GAAP basis, our gross profit was $30.1 million, or 36.2%, up from $28.1 million, or 35.3 percent, in the first quarter of 2024 and up from 28.8 million, or 37.3 percent, in the year-ago quarter.
Speaker Change: Moving to the income statement.
Speaker Change: Our GAAP gross profit during the quarter was $29.6 million, or 35.6% compared to $27.7 million, or 34.7% in the first quarter of 2024, and $28.3 million, or 36.6% in the year-ago quarter.
Speaker Change: On a non-GAAP basis, our gross profit was $30.1 million, or 36.2%
Speaker Change: Up from 28.1 million, or 35.3% in the first quarter of 2024, and up from 28.8 million, or 37.3% in the a year ago quarter.
Speaker Change: The increase in gross profit both in dollar and as a percentage on a sequential basis was mainly driven by a combination of higher levels of revenue and better utilization of engineering resources.
Anil Doradla: Our non-GAAP EBITDA during the second quarter that excluded stock-based compensation, depreciation, and amortization, restructuring, and expenses related to geographic reorganization, transaction, and other related costs was $11.7 million or 14.1% of sales, up from $10.3 million or 12.9% of sales in the first quarter of 2024. and down from $12 million or 15.5% in the year-ago quarter. The increase on a sequential basis was largely due to higher revenues partially offset by an increase in operating expenses.
Speaker Change: Our non-GAAP EBITDA during the second quarter that excluded stock-based compensation, depreciation and amortization, restructuring and expenses related to geographic reorganization,
Speaker Change: Transaction and other related costs was $11.7 million, or 14.1% of sales, up from $10.3 million, or 12.9% of sales in the first quarter of 2024, and down from $12 million, or 15.5% in the year-ago quarter.
Speaker Change: The increase on a sequential basis was largely due to higher revenues partially offset by increase in operating expenses.
Anil Doradla: Our gap net loss in the second quarter was 0.8 million, or a loss of 1 cent based on a basic share count of 76.6 million shares compared to a first quarter loss of 3.9 million, or a loss of 5 cents based on a basic share count of 76.2 million and an income of 2.6 million, or 3 cents per share based on 75.1 million basic shares in the year-ago quarter. Our sequential decrease in gap net loss was largely from higher gross profit and lower levels of stock-based compensation, and this was partially offset by provision for income tax.
Speaker Change: Our gap net loss in the second quarter was 0.8 million or a loss of one cent based on basic share count of 76.6 million shares.
Speaker Change: Compared to the first quarter loss of $3.9 million or a loss of $0.05 based on a basic share count of $76.2 million,
Speaker Change: and an income of $2.6 million or $0.03 per share based on 75.1 million basic shares in the year-ago quarter.
Speaker Change: Our sequential decrease in gap net loss was largely from higher gross profit, lower levels of stock-based compensation, and this was partially offset by provision for income taxes.
Anil Doradla: On a non-GAAP basis, in the second quarter, our non-GAAP net income was $6 million, or $0.08 per share based on 77.9 million diluted shares, compared to the first quarter non-GAAP net income of $5.2 million, or $0.07 per share based on 78.4 million diluted shares, and $0.07 million, or $0.09 per share based on 76.9 million diluted shares in the year On June 30, 2024, our cash and cash equivalents totaled $256 million, up from $249.4 million in the first quarter of 2024.
Speaker Change: On a non-GAAP basis...
Speaker Change: In the second quarter...
Speaker Change: are non-GAAP net income of $6 million or $0.08 per share based on 77.9 million diluted shares compared to the first quarter non-GAAP net income of $5.2 million or $0.07 per share based on 78.4 million diluted shares and $0.07 million or $0.09 per share based on 77.9 million diluted shares.
Speaker Change: per share based on 76.9 million diluted shares in the year-ago quarter.
Speaker Change: On June 30, 2024, our cash and cash equivalent totaled $256 million, up from $249.4 million in the first quarter of 2024.
Anil Doradla: Coming to the third quarter guidance, we expect revenues to be in the range of $84 million to $86 million. We expect non-GAAP EBITDA for the third quarter to be in the range of $12.3 million to $13.3 million. For Q3 2024, we expect our basic share count to be in the range of 77 to 78 million, and our diluted share count to be in the range of 79 to 80 million.
Speaker Change: Coming to the third quarter guidance, we expect revenues to be in the range of $84 million to $86 million. We expect non-GAAP EBITDA in the third quarter to be in the range of $12.3 million to $13.3 million.
Speaker Change: For Q3 2024, we expect our basic share count to be in the range of 77 to 78 million and our diluted share count to be in the range of 79 to 80 million.
Speaker Change: That concludes my prepared remarks. We are now ready to take questions.
Speaker Change: Thank you, Anil. As we go into the Q&A session of this call, I will first announce your name.
Speaker Change: At that point, please unmute yourself and turn on your camera.
Speaker Change: Hi, how are you?
Speaker Change: Congratulations.
Unknown Attendee: Thanks. I wanted to ask about the
Speaker Change: Thanks, Maggie. So I wanted to ask about the
Speaker Change: talent landscape for you all. So you're back to hiring.
Speaker Change: Time has passed since you've kind of reorganized the footprint of the business, since you started talking about all of the sun, as well as the pod structure that you rolled out.
Speaker Change: So I'm curious how you're thinking about managing margins from here on kind of an account by account basis now that you have all these different pieces in place and how we might start to see that manifest in the P&L.
Speaker Change: Well, you just answered the question, right? So, managing the margins, account per account, for the key accounts is that...
Speaker Change: But really, it comes down to right now. As you can see from the hiring perspective, we continue to hire across all the regions where we execute the Follow the Sun program.
Speaker Change: There is definitely emphasis on India. India continues to expand. We still put a lot of effort in Europe , but we are doing a little bit more, I would say, smart hiring because
Speaker Change: We're again adding more interns for the program which we bring junior engineers and we promote within.
Speaker Change: Projects have stabilized and grow with a pod solution offering, we're able to expand on the breadth of the key.
Speaker Change: And when you have deeper projects, you can actually manage your cost efficiency within the teams as well. But the short answer is yes, the key is to manage profitability for key clients.
Leonard Livschitz: And then you also talked about maybe an increased willingness of customers to either maintain or even increase their spend. I'm wondering if there is a notable change in the scope of projects, type of projects, duration of projects, as you see that resurgence of willingness to spend, and any thoughts you might have on why this is slightly different from some of your competitors in this space?
Speaker Change: Thank you. And then you also talked about maybe an increased willingness of customers to either maintain or even increase their spend.
Speaker Change: I'm wondering if there is a notable change in the scope of projects, type of projects, duration of projects, as you see that resurgence of willingness to spend, and any thoughts you might have on why this is slightly different from some of your competitors in this space.
Speaker Change: Well, um, the...
Leonard Livschitz: There was some noise there, but fundamentally, when we talk about our differentiation, it's always been the marquee for Grid Dynamics to be focused on technology projects. So the reason, if you notice, a big part of my conversation was about AI. It's not about just being fashionable, but we also have the possibility to implement a number of internal solutions which we continue to roll out, which I also noted from the pro-concepts standpoint to implement a broader base.
Speaker Change: Sorry, there was some noise there. So I think that fundamentally, when we talk about our differentiation, it's always been the marquee for Grid Dynamics to be focused on technology projects.
Speaker Change: And when we do technology projects, the scope is around solutions which greatly impact the sales.
Speaker Change: So, there is, if you notice, a big part of my conversation was about AI. It's not about just being fashionable.
Speaker Change: But it's also, we have a possibility to implement the number of the internal solutions, which we continue to roll out, which I also noted from the…
Speaker Change: Just the pro and cons of State Point to the implementation of the broader base.
Leonard Livschitz: So yes, technology still remains the core focus. We are quite broad in the number of platforms that we use for innovative AI projects, starting from the, you know, open source products to specialized solutions to private models building the co-pilots together with the clients. And also, as we expand our partnerships, there's a deeper breadth of, again, implementation of those projects with the clients. So just to summarize, the technology focus, the breadth of AI moving from the conceptual stage to broader implementation, and certainly the reputation, which comes with that after years of Grid Dynamics managing various data aspects.
Speaker Change: So yes, technology still stays the core focus.
Speaker Change: We have quite broadened the number of platforms.
Speaker Change: which we use for innovative AI projects.
Speaker Change: Starting from the, you know, open source products, the specialized solutions to the private models, building the copilots together with the clients, and also as we expand our partnerships.
Speaker Change: There is a deeper breadth of...
Speaker Change: Again, implementation of those projects with the clients. So just to summarize.
Speaker Change: technology focus, breadth of AI moving from the conceptual stage to broad implementation and certainly reputation which comes with that over years of Grid Dynamics managing various data aspects of our clients.
Unknown Attendee: Great. Thanks, Leonard and Anil. Congratulations again. Thank you.
Speaker Change: Great, thanks Leonard and Anil. Congrats again. Thank you.
Speaker Change: [inaudible]
Speaker Change: www.griddynamics.com
Operator: Can we go to the next question?
Speaker Change: Can we go to the next question?
Operator: Hello, the next question goes to Gates Schwartzman from Citi.
Speaker Change: from Citi. Please go ahead Gates.
Gates: Gates, are you there?
Speaker Change: Okay, we'll come back to him, Cary. Why don't we go to the next question? We'll come back to him. The next question comes from...
Brian Bergen: Bryan Bergin of
Operator: T.D. Cohen. Ryan, please go ahead.
Speaker Change: This is T.D. Cohen. Brian, please go ahead.
Unknown Attendee: Hi guys. Thanks. Good to see you.
Speaker Change: All right, guys. Thanks. Good to see you.
Brian Bergen: I wanted to start on the guidance. It's nice to see the sequential performance in the 2Q and then what's implied in the 3Q, the continuing momentum there.
Unknown Attendee: I wanted to start on the guidance. It's nice to see the sequential performance in the 2Q and then what's implied in the 3Q, the continued momentum there. As you develop the 3Q plan and consider kind of the balance of the year into 4Q, can you kind of just share some perspective on whether there was thought to reinstating that four-year outlook? I'm just curious as a signal around overall business visibility.
Brian Bergen: As you develop the 3Q plan and consider kind of the balance of the year into 4Q, can you kind of just share some perspective on whether there was thought to reinstating that four-year outlook? I'm asking just curious as a signal around overall business visibility.
Leonard Livschitz: So Bryan, this is a very good question because this is a constant discussion. I think, let me leave a couple of thoughts here. Number one is that things are improving. Okay, next set.
Speaker Change: So Bryan this is a very good question because this is a constant discussion. I think let me leave a couple of thoughts here. Number one is that things are improving.
Speaker Change: So the likelihood of me installing a Foliar guidance is higher than what it was maybe a month ago, two months ago, or three months ago. So we're moving in that right direction.
Leonard Livschitz: Look, we tend to be conservative, right? When we are ready for it, we will put it out. But the bias internally is for a fuller guidance. Leonard's inclination is to try to give as much visibility as possible.
Leonard Livschitz: We can for the streets. So that's what we're working on. So at the right time, we will go out and put it, but definitely we have more of a bias to get to that point.
Unknown Attendee: Okay, that makes sense. And then just on the new logos, can you speak to some of the pace of the scaling of these larger enterprise logos? You've had good momentum in each quarter here signing several. For those that are ramping faster too, can you maybe speak to some of the trends in those new relationships that may be common?
Speaker Change: Okay, okay, that makes sense. And then just on the new logos, can you speak to some of the pace of the scaling of these larger enterprise logos? You've had good momentum in each quarter here, signing several. For those that are ramping faster too, can you maybe speak to some of the trends in those new relationships that may be common?
Speaker Change: Well, the story is not any different from the years of growth, Brian.
Speaker Change: When you engage with a client on a rapid scale, and I'm talking about rapid scale, usually there is a familiarity with Grid Dynamics from the past.
Leonard Livschitz: So when you sign a logo where you come from a new relationship or partnership, typically, the projects start relatively small. So it's still land and expense, right?
Speaker Change: So when you sign a logo where you come from the, I would say, new relationship or partnerships, typically the projects start relatively small. So it's still land and expense, right? Usually it's from highly technical field.
Leonard Livschitz: Usually, it's from highly technical fields. Basically, the big enterprises approach Grid Dynamics on referrals to become their technology partners. In a couple of instances, these thought that help from very large and reputable firms, perhaps they didn't find that reflection of the specific needs or maybe focused. But a couple of instances where we had the leadership of the clients kind of knew us for a long time.
Unknown Attendee: Okay, that's helpful. Thank you very much.
Speaker Change: Basically, the big enterprise approach, Grid Dynamics, on referrals.
Speaker Change: In a couple of instances, they thought that help from very large and reputable firms, perhaps they didn't find that reflection of the specific needs or maybe focused on their own needs.
Speaker Change: I would say attention. And we rapidly picked it up. And, you know, we're kind of shifting our relationship with the clients also to understanding their business models. So it helps to be technically astute, but also a bit more business savvy.
Speaker Change: But a couple of instances where we had the leadership of the clients kind of known us for a long time.
Speaker Change: And those kind of best of thrusts, because you don't need to prove yourself anymore, you basically get to the point that you're giving business based on your past performance, but you have to rapidly adapt and deliver, and there are a couple of instances of that has happened.
Speaker Change: As we grow, you know, we've been around for 18 years, those cases are more common. So three cases.
Speaker Change: The New Relationships.
Speaker Change: As well as the partnerships, they grow from technology up. The existing relationship, rapid scale in terms of the major implementation across multiple fields.
Speaker Change: Okay, that's helpful. Thank you very much.
Brian Bergen: Thank you, Bryan.
Speaker Change: The next question comes from Mayank Tandon at Needham. Mayank, please unmute yourself and you can start your video.
Unknown Attendee: There you are. There I am. All right.
Leonard Livschitz: Well, unpacking is the privilege of Anil. Obviously, he will unpack in a way you will never understand.
Leonard Livschitz: But let me try to focus on the key areas, because it's a very fundamental question, right? So I don't see a rapid increase. When you go into the project base, when you offer a customer a complete proposal, that does happen, some of the impact because, again, it's ROI. And at the end of the day, it's the total amount of dollars, looking at how much business, and how competitive our clients are. So the unpicking part is, there's no miracle there, nobody, the demand is still to the point we have to be smart about pricing, but we definitely see some of those improvements.
Speaker Change: When you go into the project base, when you offer a customer a complete proposal, that does happen, some of the impact, because again, it's ROI.
Speaker Change: And at the end of the day, the total amount of dollars looked at how much business, how competitive our clients were. So the unpicking part is, there's no miracle there, nobody, the demand is still to the point we have to be smart about pricing, but we see some of those improvements definitely.
Leonard Livschitz: The other thing is balancing the teams, as I mentioned when Maggie asked the question, bringing this broader vertically integrated organization created a higher, I would say, utilization of the broader base. You know, when you are starting projects and, you know, Bryan asked us how we were and who grows and how that affects us, you typically start with their experience.
Leonard Livschitz: Right. And that is not the best margin solution unless you build broader capabilities with all the clients, and we see those broader capabilities coming into play. So if I summarize, sound up. I'm thinking of growth. Demand is definitely present for Grid Dynamics.
Brian Bergen: And that is not the best margin solution unless you build a broader capabilities with all the clients. And we see those broader capabilities coming into play.
Speaker Change: So if I summarize soundly, I'm thinking of the growth. Demand is definitely present to Grid Dynamics. When we purely focus on one area, then maybe there's no like a big change of the financial performance, but we're expanding now into multiple areas. We see the efficiencies.
Leonard Livschitz: When we purely focus on one area, then maybe there's not a big change in financial performance, but we're expanding now into multiple areas. We see the efficiencies. And the efficiency comes with a pyramid of talent, which is, you know, even during the most difficult downturns, we did not slow down on the internship program, on the training program, on the internal university program. So those kinds of things picked up. And of course, the investment in R&D; when we build more than 30 solutions, they're not just 30 solutions.
Speaker Change: [inaudible]
Speaker Change: [inaudible]
Leonard Livschitz: Some of the, you know, it's almost like an auction. You know, when people say, I did 100, I did 200, some, you know, 5,000, you know, we're more conservative. When we talk about solutions, it's a fundamental, actionable set of... Rules will drive immediate customer implementation.
Speaker Change: I hope I gave you a little bit of flavor enough.
Unknown Attendee: Thank you. Very helpful.
Leonard Livschitz: Well, let me start. We just went through our internal executive reviews because, you know, it's good on a semiannual basis to kind of assess where you are. So we just finished that. Our strategy comes threefold. The Duck Lions?
Speaker Change: Well, let me start. We just went through our internal executive reviews because, you know, it's good on a semiannual basis to kind of assess where you are. So we just finished it. Our strategy comes threefold.
Speaker Change: The Dub Client
Leonard Livschitz: And with those heavy, heavy heaters, you need to make sure you leave with them 24-7 because, We're carefully selecting the companies, together with the client, which are not only kind of inspired to grow and have funds to grow, but the market they're naming for their own markets helps them. So that's from the top tier. From the second tier, we have growth potential with every account because if you're, you know, if you only have, you know, some million dollars, and those are large clients, then it's our responsibility to offer them competitively, something which makes their business more successful.
Speaker Change: And with those heavy, heavy heaters, you need to make sure you leave with them 24-7 because
Speaker Change: help them. So that's from the top tier. From the second tier, we have growth with every column potential.
Speaker Change: If you only have, you know, this, some million of dollars.
Speaker Change: And those are large clients, and it's our responsibility to offer them competitively something which makes their business more successful. And this is where we double down on technology penetration. So the first group is 24-7, the second one, very selective.
Leonard Livschitz: And this is where we double down on technology penetration. So the first group is 24-7, and the second one is very selective. And you know, we have those green shoots already starting to fruition, which means some of them take off, some of them don't, and then we need to understand why not. And the third group, you know? We are spending a disproportionate amount of attention on the partnerships because those logos are amazing, but the scope of projects is limited. So perfect.
Speaker Change: And, you know, we have those green shoots already started.
Speaker Change: to fruition, which means some of them take off, some of them don't, and then we need to understand why not. And the third group, you know, we are spending disproportionate amount of attention to the partnerships, because those logos are amazing, but the scope of projects are limited, so
Speaker Change: We have enough trust with our partners.
Speaker Change: that we can work with them on their own implementations.
Speaker Change: but also look in parallel to something completely unrelated, incompatible with their mission, but help us.
Speaker Change: and Direct Clients to grow together. So together, that's kind of focus. So it's a one, two, three.
Speaker Change: Perfect. Thank you so much, Leonard. Thank you, Anil. Thank you.
Operator: Thank you, Mayank. I appreciate your questions. The next question comes from Puneet Jain of J.P. Morgan.
Operator: Thank you, Mayank. I appreciate your questions.
Speaker Change: Thank you, Mayank. Appreciate your questions. The next question comes from Puneet Jain.
Speaker Change: Go ahead, Puneet. You're on mute.
Operator: Puneet, I think you're on mute.
Puneet Jain: Thank you.
Operator: Your audio is not
Operator: All right. Let's see. All right. Let's go. There you go. All right. I just asked all my questions for Sam to answer them.
Speaker Change: All right, let's see. All right, let's start. Oh, there you go.
Puneet Jain: Alright, I just asked all my questions, what's the answer then? Anyway, so...
Unknown Attendee: Anyway, um, so, um, great quarter. So, in the last couple of years, you have added around 50-60 enterprise customers. Some of them, for example, the one in financial services, have done really well. But give us the state of union on the rest of those enterprise clients that you added.
Unknown Attendee: or some of them, like specifically the ones that might still be somewhat underscale like what's keeping them from ramping up and what the potential is that they don't climb.
Puneet Jain: or some of them like the specifically the ones that might still still be somewhat underscaled like what's keeping them from ramping up and what the potential is that don't climb.
Leonard Livschitz: All right, you're basically expanding on a previous question from Mayank about the second group, right, not the top one. Everybody boasts about successes. But what happened with the quiet group, right? The silent majority?
Speaker Change: All right, you're basically expanding on a previous question, Mayank, about the second group, right? Not the top one. You know, everybody boasts about successes. What happened with the quiet group, right? The silent majority. Okay. Well, that's why...
Leonard Livschitz: Okay, well, that's why we had this very deep conversation with everyone. They're from different industries, but they have a couple of major, I would say, factors. First of all, we have an alignment on technology roadmaps. With all the greatness of technology, technology by itself, even AI, brings zero value unless it's fully supported and expanded and planned for with the clients. They need to have the mindset, they need to have the capability, they need to have willingness, business cases, and patience. It's very easy to do probes of complexity.
Speaker Change: We have this very deep
Speaker Change: They're not a huge number of them, you know, there are maybe 25 to 30 of those clients.
Speaker Change: who kind of stuck in this.
Speaker Change: kind of transitioning from 2-5-10 to 5-10-20, but still more between 5 and 10 instead of 10 and 20. This is exactly where the, I would say, the thrust is.
Speaker Change: Because once you pass a certain level of capacity relationship, you suddenly become a preferred supplier.
Speaker Change: So, from that perspective, we selected about half of those clients.
Speaker Change: And you can't run after everyone, right?
Speaker Change: They're from different industries, but they have a couple of major, I would say, factors. First of all, we have an alignment on technology roadmap. You know, with all the greatness of technology, technology by itself, even AI makes.
Speaker Change: It's very easy to do proof of concept.
Leonard Livschitz: And then they kind of report to the top management saying, okay, we've done it. It's not business. So with about half of those clients, I would say a dozen and a half or something like that, we want to go much deeper, to actually engage in the more business key studies and answer ourselves. And then the question is, why not?
Speaker Change: and then they kind of report to the top management saying, okay, we've done it. It's not business. So with about half of those clients, I would say a dozen and a half or something like that, we want to go much deeper.
Leonard Livschitz: We're not changing our business model; we're not doing BPOs or any kind of... Law and Services. So for us, expansion means how to proliferate the data business, the cloud business, assessment of cyber security, learning from the horrible lessons of the IT challenges which happen on the cloud, how to create mission critical solutions with all the predictable models but still relevant to them. So that group, which we're going to continue to focus on, and that's where the, I would say, short-term growth comes from.
Speaker Change: We're not changing our business model, we're not doing like BPO's or any kind of...
Speaker Change: So for us, expansion means how to proliferate the data business, the cloud business.
Speaker Change: assessment of cyber securities, learning from the that horrible lessons of the you know IT challenges which happen on the clouds, how to create mission critical solutions with all the predictable models but still relevant to them.
Speaker Change: So that group, which we're going to continue to focus, and that's where the, I would say, short-term growth comes from.
Unknown Attendee: To know that's very helpful. And then you have about 250 million in cash on the balance sheet. And in the press release, I noticed, as you talked about, that most of the growth or all the growth is organic, meaning that it's been more than a year since you last did an acquisition.
Speaker Change: No, that's very helpful. And then you have like about 250 million in cash on balance sheet. And in the press release, I noticed, like you talked about that most of the growth or all the growth is organic now.
Speaker Change: meaning that it's been more than a year since you last did an acquisition. So talk to us about your use of cash clarity over the near term and what are you looking for in potential M&A targets.
Leonard Livschitz: So the person you don't see in the room, because he's kind of behind the scenes, is our head of the M&A group, right? So I'm not gonna put him on the stage and tell you what to do, because he may tell you way too much that we want to tell you.
Speaker Change: Yes.
Speaker Change: The person you don't see in the room because he's kind of behind the scene is our head of M&A group. I'm not going to put him on the stage and tell you what to do because he may tell you way too much that we want to tell you.
Leonard Livschitz: But I think that... The level of engagement is tremendous. I think there are a couple reasons for that. First of all, remember the geography.
Speaker Change: The level of engagement
Speaker Change: is tremendous right now.
Speaker Change: I think...
Leonard Livschitz: We're talking about technology with clients and geography. I think the stars kind of align. We have all the geography we're looking for, all of them right now.
Speaker Change: We have all the geography we're looking for, all of them right now. And technology is pretty decent. I would not say we're going to make a breakthrough. If everybody can make a breakthrough, then why would companies exit, right? We found the companies which need to have help.
Leonard Livschitz: And the technology is pretty decent. I would not say we're going to make a breakthrough. If everybody can make a breakthrough, then why would companies exit, right? They need to have... We found the companies that need to have help from the government. Strangely enough, call me a big brother. I mean, we're still a modest-sized company, but from a technology perspective, we're quite formidable. And they're passionate about continuing the journey as a part of a bigger team. Now, I can't tell you when that day is going to come.
Speaker Change: Now, I can't tell you
Leonard Livschitz: What did you say about us going for an annual report? You're more inclined to do it now than before. Than a month ago, right?
Speaker Change: when the day is going to come. What did you say about us going for an annual report? You're more inclined to do now than before. It sounds like, you know, we're all waiting for Feds to change the rates. So I'm also inclined to be very positive in the next couple of, you know, weeks and months, but you have to be very patient. And the reason we're very bullish on it.
Leonard Livschitz: It sounds like we're all waiting for the Feds to change the interest rate. So I'm also inclined to be very positive in the next couple of weeks and months, but you have to be very patient. And the reason we're very bullish on it is because I think we found the risk. That was very important because, you know, we look at the path of our acquisitions. We look at the value we need to bring in 2025 and beyond.
Speaker Change: because I think we found the rhythm.
Speaker Change: That was very important because, you know, we're...
Leonard Livschitz: When you look at the path of four acquisitions,
Speaker Change: We look at the value we need to bring in 2025 and on. And I think the company, when it goes through this.
Leonard Livschitz: And I think the company, when it goes through this period of the slowdown, matures. You know, like an old saying, if you can't find a job, go ahead, extend your education, right? So it's kind of worked for the last 12 months. I believe we're in a very good place.
Leonard Livschitz: period of the slowdown, it matures. You know, like an old saying, if you can't find a job, go ahead, extend your education, right? So it's kind of worked for the last 12 months. I believe we're on a very good path now.
Unknown Attendee: Good to know. Thank you. Thank you, Puneet.
Unknown Attendee: It's good to know. Thank you. Thank you, Puneet. Thank you.
Operator: Ladies and gentlemen, this concludes the Q&A session on our call today. I will now turn it over to Leonard.
Leonard Livschitz: Ladies and gentlemen, this concludes the Q&A session of our call today. I will now turn it over to Leonard for closing comments.
Leonard Livschitz: Thank you everybody for joining us on the call today.
Leonard Livschitz: Our message today is consistent with the commentary over the past couple of quarters, steady improvement in Grid Dynamics, visibility is getting better, and customers are more willing to put their plans into action. And more importantly, customers are laser focused on evaluating the technological competencies of their IT. I'm excited about these opportunities in the second half of 2024, as well as in the coming year 2021. Looking forward to giving you all updates in the next earnings report.
Leonard Livschitz: Our message today is consistent with the commentary over the past couple of quarters, Steady Improvement in Great Dynamics Business.
Leonard Livschitz: I'm excited about these opportunities in the second half of 2024, as well as the coming 2025. Looking forward to giving you all updates in the next earnings call. Thank you.