Grid Dynamics Q2FY26 Results: Revenue up 7% YoY to $108.2 million
- Revenue rose 7% YoY to $108.2 million, beating the high end of guidance
- Non-GAAP EBITDA expanded to $14.7 million (13.6% margin) from $12.5 million
- AI revenue grew 54.6% YoY, now comprising 30.7% of total sales
- Headcount fell to 4,838 as non-engineering roles were rationalized
- Full-year FY26 revenue outlook maintained at $435-465 million
*this image is generated using AI for illustrative purposes only.
Grid Dynamics Holdings (NASDAQ: GDYN) reported second-quarter fiscal year 2026 revenue of $108.2 million, exceeding the high end of its guidance range of $106 million to $108 million. The result represents a 7% year-over-year increase, driven by strong performance in technology and financial services verticals.
Non-GAAP earnings reached $14.7 million, or 13.6% of revenue, up from 12% in the first quarter of FY26. GAAP net income stood at $2.9 million, or $0.03 per diluted share, marking a turnaround from a net loss of $1.5 million in the prior quarter.
Financial Performance
The company’s top-line growth was supported by vendor consolidation among key technology clients and expanding AI programs. TMT remained the largest vertical, contributing 31.8% of total revenue with 36.4% year-over-year growth. The finance vertical accounted for 22.9% of revenue, while retail contributed 26.5%, remaining flat year-over-year.
| Metric | Q2FY26 | Q1FY26 | YoY Change |
|---|---|---|---|
| Revenue | $108.2 million | Not disclosed | +7% |
| Non-GAAP EBITDA | $14.7 million | $12.5 million | +15.8% |
| Non-GAAP Margin | 13.6% | 12.0% | +160 bps |
| GAAP Net Income | $2.9 million | -$1.5 million | N/A |
Gross profit on a non-GAAP basis was $40 million, or 36.9% of revenue, compared to 34.7% in the same quarter last year. Management attributed the margin expansion to revenue growth outpacing delivery costs and improved resource utilization.
What the Numbers Show
AI revenue now constitutes 30.7% of total company revenue, growing 54.6% year-over-year. This marks the first time AI contributions have crossed the 30% threshold. Partner-influenced revenue, primarily from hyperscalers like Google Cloud, AWS, and Microsoft Azure, reached 19.1% of total revenue, with management targeting 25-30% in the long term.
Operational Updates
Headcount decreased to 4,838 employees from 4,964 in the first quarter of FY26. The reduction was driven by efficiency improvements in non-engineering roles rather than billable staff. US headcount rose to 7.8% of the total workforce from 7.2% a year ago.
Customer concentration increased, with the top five customers accounting for 43.5% of revenue, up from 37.5% in the prior year. The top ten customers contributed 61.5% of revenue.
Outlook
For the third quarter of FY26, Grid Dynamics expects revenue between $112 million and $114 million. Non-GAAP EBITDA is projected at $16.5 million to $17.5 million. The full-year revenue outlook remains unchanged at $435 million to $465 million.
Cash and cash equivalents stood at $298.4 million as of June 30, 2026, down from $327.5 million at the end of March 2026. The company repurchased approximately 2.6 million shares for $17.3 million during the quarter.
How might the increasing concentration of revenue among the top five customers impact Grid Dynamics' pricing power and risk profile in future quarters?
What specific strategies is Grid Dynamics employing to accelerate partner-influenced revenue from its current 19.1% toward the long-term target of 25-30%?
Could the continued reduction in non-engineering headcount sustain margin expansion without negatively affecting client satisfaction or operational efficiency?
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