What changed in this filing

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Item 1. Business

2023-02-28 compared with 2022-03-03 · 18 added, 21 removed, 176 unchanged (18% of the section changed)

11 unchanged sentences

Grid Dynamics quickly established itself as a provider of choice for technology and digital enterprise companies.

As a leading global digital engineering and information technology (“IT”) services provider with its headquarters in Silicon Valley and engineering centers in the United States, Mexico and multiple European countries, Grid Dynamics’ core business is to deliver focused and complex technical consulting, software design, development, testing and internet service operations.

As a leading global digital engineering and information technology (“IT”) services provider with its headquarters in Silicon Valley and engineering centers in the United States, Mexico, India and multiple European countries, Grid Dynamics’ core business is to deliver focused and complex technical consulting, software design, development, testing and internet service operations.

Grid Dynamics also helps organizations become more agile and create innovative digital products and experiences through its deep expertise in emerging technology, such as AI, data science, cloud computing, big data and DevOps, lean software development practices and a high-performance product culture.

1 unchanged sentence

By leveraging Grid Dynamics’ proprietary processes optimized for innovation, emphasis on talent development and technical expertise, Grid Dynamics has been able to achieve significant growth.

In December of 2020 and May of 2021 Grid Dynamics acquired Daxx Web Industries B.V.

(“Daxx”) and Tacit Knowledge Inc.

(“Tacit”), respectively.

These two acquisitions diversified our geographical presence, client base, and industry vertical presence.

During the last three years Grid Dynamics acquired Daxx Web Industries B.V.

(“Daxx”), Tacit Knowledge Inc.

(“Tacit”) and Mutual Mobile Inc.

(“Mutual Mobile”), respectively.

These acquisitions diversified our geographical presence, client base, and industry vertical presence.

Industry Background and Market Opportunity

7 unchanged sentences

As the demand for technical software development talent continues to grow, the shortage of this talent in the United States and Europe, as well as the inability of non-technology-based companies to attract and retain such talent, encourages organizations to look to third parties, such as Grid Dynamics, to satisfy the demand.

Further, the growing acceptance of the offshore delivery model, beyond the traditional India-based IT services provider, has created significant opportunities for software development service providers delivering from Central and Eastern Europe (“CEE”) as well as Mexico.

Further, the growing acceptance of the offshore delivery model, has created significant opportunities for software development service providers delivering from Central and Eastern Europe (“CEE”) as well as Mexico.

CEE-based service providers now compete against the largest global IT service providers and are capable of providing complex technology services.

Grid Dynamics believes that CEE is increasingly known for the quality of its software development talent, enabled in part by decades of focus on fundamental STEM disciplines in higher education.

Grid Dynamics believes that CEE is increasingly known for the quality of its software development talent, enabled in part by

decades of focus on fundamental STEM disciplines in higher education.

CEE-based teams and individuals are frequent winners of programming contests such as the ones held by the Association for Computing Machinery, or ACM, TopCoder and Kaggle.

76 unchanged sentences

(in thousands, except % of revenue)

Tech, Media and Telecom $ 67,689 32.0 % $ 45,362 40.8 % $ 32,337 27.3 %

Retail $ 99,681 32.1 % $ 61,717 29.2 % $ 33,975 30.5 %

Finance 17,515 8.3 % 13,589 12.2 % 12,479 10.6 %

Tech, Media and Telecom 98,334 31.7 % 67,689 32.0 % 45,362 40.8 %

CPG/Manufacturing 61,216 19.7 % 43,461 20.6 % 14,202 12.8 %

Finance 21,893 7.1 % 17,515 8.3 % 13,589 12.2 %

Other 29,358 9.4 % 20,898 9.9 % 4,155 3.7 %

5 unchanged sentences

As of December 31, 2022, Grid Dynamics had 3,798 full-time and part-time personnel and delivered services from engineering centers located in the following countries:

• United States;

• Netherlands;

• United Kingdom.

United States, Mexico, Ukraine, Poland, Armenia, Serbia, United Kingdom, Netherlands, Moldova, India, Jamaica and Romania.

Grid Dynamics also places its IT professionals at client premises and promotes temporary assignments at client locations.

10 unchanged sentences

Grid Dynamics’ client base primarily consists of Fortune 1000 corporations based in North America.

With the acquisition of Daxx in December 2020 and Tacit in May 2021, we have gained customers in U.K., North America, as well as Continental Europe and Asia.

With the acquisition of Daxx in December 2020, Tacit in May 2021 and Mutual Mobile in December 2022, we have gained customers in U.K., North America, as well as Continental Europe and Asia.

Grid Dynamics has a high level of revenue concentration with certain clients.

In the years ended December 31, 2022, 2021 and 2020 Grid Dynamics top two customers each accounted for 10% or more of Grid Dynamics revenue.

In the year ended December 31, 2019 Grid Dynamics top three customers each accounted for 10% or more of Grid Dynamics’ revenue.

Grid Dynamics typically enters into a master services agreement with its clients, which provides a framework for services that is then supplemented by statements of work, which specify the particulars of each individual engagement.

2 unchanged sentences

Grid Dynamics faces competition primarily from:

• emerging mid-cap digital services companies, such as Globant and Endava;

• large global consulting and outsourcing firms, such as Accenture plc, Atos Origin, Capgemini SE, DXC and IBM, and EPAM Systems.

• India-based technology outsourcing IT services providers, such as Cognizant Technology Solutions Corporation, GlobalLogic, HCL Technologies, Infosys Technologies, Mindtree, Sapient, Symphony Technology Group, Tata Consultancy Services Limited, and Wipro;

• emerging small to mid-cap digital services companies, such as Globant S.A., Endava plc, EPAM Systems, Inc., Slalom Consulting Inc., and Thoughtworks Holding Inc.;

• large global consulting and outsourcing firms, such as Accenture plc and Capgemini SE;.

• India-based technology outsourcing IT services providers, such as Cognizant Technology Solutions Corporation, Infosys Technologies, and Wipro;

• in-house IT departments of Grid Dynamics’ clients and potential clients.

3 unchanged sentences

Accordingly, attracting and retaining personnel is a key factor in Grid Dynamics’ ability to grow revenues and meet its clients’ needs.

As of December 31, 2021, Grid Dynamics had 3,274 personnel across nine countries (the U.S., Mexico, the Netherlands, U.K., Poland, Serbia, Moldova, Russia and Ukraine).

As of December 31, 2022, Grid Dynamics had 3,798 personnel across 13 countries (the U.S., Mexico, Jamaica, Armenia, India, the Netherlands, U.K., Poland, Romania, Serbia, Switzerland, Moldova, and Ukraine).

Recruitment and Retention

30 unchanged sentences

Grid Dynamics’ clients usually own the intellectual property in the software or systems Grid Dynamics develops for them.

Furthermore, Grid Dynamics usually grants a perpetual, worldwide, royalty-free, nonexclusive, transferable

and non-revocable license to its clients to use its preexisting intellectual property to the extent necessary in order to use the software or systems Grid Dynamics developed for them.

Grid Dynamics and its clients often use open-source software to improve quality and reduce time-to-market.

Grid Dynamics works with the compliance departments of its clients to comply with the client’s open-source licensing policies.

Due to the industry and geographic diversity of Grid Dynamics’ operations and services, Grid Dynamics’ operations are subject to a variety of laws and regulations in the United States, Mexico, Russia, Ukraine and other European countries.

Due to the industry and geographic diversity of Grid Dynamics’ operations and services, Grid Dynamics’ operations are subject to a variety of laws and regulations in the United States and the foreign jurisdictions in which we operate.

See Item 1A, “ Risk Factors—Risks Related to Government Regulations ”.

6 unchanged sentences

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 1. Business