What changed in this filing

/stocks — the workspaceLOADING

Item 8. Financial Statements and Supplementary Data

2025-02-27 compared with 2024-02-29 · 364 added, 351 removed, 805 unchanged (47% of the section changed)

4 unchanged sentences

Consolidated Balance Sheets as of December 31, 2024 and 2023

Consolidated Statements of Loss and Comprehensive Income/(Loss) for the Years Ended December 2023, 2022, and 2021

Consolidated Statements of Income/(Loss) and Comprehensive Income/(Loss) for the Years Ended December 2024, 2023, and 2022

Consolidated Statements of Stockholders’ Equity for the Years Ended December 31, 2024, 2023, and 2022

6 unchanged sentences

We have audited the accompanying consolidated balance sheets of Grid Dynamics Holdings, Inc.

(a Delaware corporation) and subsidiaries (the “Company”) as of December 31, 2023 and 2022, the related consolidated statements of loss and comprehensive income/(loss), stockholders’ equity, and cash flows for each of the three years in the period ended December 31, 2023, and the related notes (collectively referred to as the “financial statements”).

In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2023 and 2022, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2023, in conformity with accounting principles generally accepted in the United States of America.

(a Delaware corporation) and subsidiaries (the “Company”) as of December 31, 2024 and 2023, the related consolidated statements of income/(loss) and comprehensive income/(loss), stockholders’ equity, and cash flows for each of the three years in the period ended December 31, 2024, and the related notes (collectively referred to as the “consolidated financial statements”).

In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2024 and 2023, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2024, in conformity with accounting principles generally accepted in the United States of America.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (“PCAOB”), the Company’s internal control over financial reporting as of December 31, 2024, based on criteria established in the 2013 Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”), and our report dated February 27, 2025 expressed an unqualified opinion.

Basis for opinion

These financial statements are the responsibility of the Company’s management.

Our responsibility is to express an opinion on the Company’s financial statements based on our audits.

These consolidated financial statements are the responsibility of the Company’s management.

Our responsibility is to express an opinion on the Company’s consolidated financial statements based on our audits.

We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S.

7 unchanged sentences

Critical audit matters

Critical audit matters are matters arising from the current period audit of the financial statements that were communicated or required to be communicated to the audit committee and that:

(1) relate to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments.

We determined that there are no critical audit matters.

The critical audit matter communicated below is a matter arising from the current period audit of the financial statements that was communicated or required to be communicated to the audit committee and that:

(1) relates to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments.

The communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.

Fair value of customer relationships intangible asset acquired with the JUXT acquisition

As described further in Note 2 to the consolidated financial statements, on September 26, 2024, the Company acquired 100% of a group of UK-based companies, including Headrunner Limited and Congreve Computing Ltd., with their wholly owned subsidiary JUXT Ltd.

(collectively referred to as “JUXT”) for approximately $47 million in total consideration.

Identifiable intangible assets acquired included customer relationships, which were determined to have a fair value of approximately $18 million.

We identified the estimation of fair value of the acquired customer relationships intangible asset as a critical audit matter.

The principal considerations for our determination that the estimation of fair value of the acquired customer relationships intangible asset is a critical audit matter were the high degree of auditor judgment and an increased extent of effort, which included utilizing specialists, to test the significant judgments and key assumptions made in estimating the fair value of the customer relationships.

These included prospective revenue forecasts and the associated discount rate.

Our audit procedures related to the estimation of fair value of the acquired customer relationships intangible asset included the following, among others.

• With the assistance of valuation professionals, we evaluated the reasonableness of the discount rate and the appropriateness of the methodologies used by the Company.

• We evaluated the reasonableness of the significant assumptions utilized in the prospective revenue forecasts by comparing to the historical results of the JUXT business and to industry data.

• We tested the operating effectiveness of controls relating to the identification of the acquired customer relationships, including the determination of the fair value.

/s/ GRANT THORNTON LLP

6 unchanged sentences

Opinion on internal control over financial reporting

We have audited the internal control over financial reporting of Grid Dynamics

Holdings, Inc.

We have audited the internal control over financial reporting of Grid Dynamics Holdings, Inc.

(a Delaware corporation) and subsidiaries (the “Company”) as of December 31, 2024, based on criteria established in the 2013 Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”).

2 unchanged sentences

Basis for opinion

The Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Management’s Report on Internal Control over Financial Reporting.

The Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Management’s report on internal control over financial reporting (“Management’s Report").

Our responsibility is to express an opinion on the Company’s internal control over financial reporting based on our audit.

5 unchanged sentences

We believe that our audit provides a reasonable basis for our opinion.

Our audit of, and opinion on, the Company’s internal control over financial reporting does not include the internal control over financial reporting of NextSphere Technologies, Inc.

(“NextSphere”), a wholly-owned subsidiary, whose financial statements reflect total assets and revenues constituting 1.7 and 2.7 percent, respectively, of the related consolidated financial statement amounts as of and for the year ended December 31, 2023.

As indicated in Management’s Report on Internal Control over Financial Reporting, NextSphere was acquired during 2023.

Management’s assertion on the effectiveness of the Company’s internal control over financial reporting excluded internal control over financial reporting of NextSphere.

Our audit of, and opinion on, the Company’s internal control over financial reporting does not include the internal control over financial reporting of JUXT Ltd.

(“JUXT”) and Mobile Computing S.A.

(“Mobile Computing”), wholly owned subsidiaries, whose financial statements reflect total assets and revenues constituting in aggregate 3.2 and 3.1 percent, respectively, of the related consolidated financial statement amounts as of and for the year ended December 31, 2024.

As indicated in Management’s Report, JUXT and Mobile Computing were acquired during 2024.

Management’s assertion on the effectiveness of the Company’s internal control over financial reporting excluded internal control over financial reporting of JUXT and Mobile Computing.

Definition and limitations of internal control over financial reporting

14 unchanged sentences

Cash and cash equivalents $ 334,655 $ 257,227

Accounts receivable, net of allowance of $ 1,363 , and $ 443 as of December 31, 2023 and December 31, 2022, respectively

Trade receivable, net of allowance of $ 2,747 , and $ 1,363 as of December 31, 2024 and December 31, 2023, respectively

69,371 53,559

Unbilled receivables 3,735 5,591

Prepaid income taxes 3,998 4,294

Prepaid expenses and other current assets 19,278 13,194

11 unchanged sentences

Accrued compensation and benefits 21,677 19,263

Accrued income taxes 8,828 10,718

Operating lease liabilities, current 5,420 4,235

3 unchanged sentences

Operating lease liabilities, noncurrent 7,205 6,761

Contingent consideration payable, noncurrent

Total liabilities 74,363 52,258

Commitments and contingencies (Note 13)

Stockholders’ equity (Note 9)

Stockholders’ equity

Common stock, $ 0.0001 par value;

4 unchanged sentences

( 11,845 ) ( 15,886 )

Accumulated other comprehensive income/(loss), net

1,274 ( 848 )

Accumulated other comprehensive income/(loss) ( 2,912 ) 1,274

Total stockholders’ equity 517,829 382,907

2 unchanged sentences

GRID DYNAMICS HOLDINGS, INC.

CONSOLIDATED STATEMENTS OF LOSS AND COMPREHENSIVE INCOME/(LOSS)

CONSOLIDATED STATEMENTS OF INCOME/(LOSS) AND COMPREHENSIVE INCOME/(LOSS)

(In thousands, except per share data)

10 unchanged sentences

Total operating expenses 129,110 118,726 141,598

Income/(loss) from operations ( 5,580 ) ( 21,008 ) 50

Other income/(expenses), net 10,418 555 ( 2,502 )

Income/(loss) before income taxes

4,838 ( 20,453 ) ( 2,452 )

Loss from operations ( 2,105 ) ( 5,580 ) ( 21,008 )

Interest and other income, net 13,160 10,418 555

Income/(loss) before income tax 11,055 4,838 ( 20,453 )

Provision for income taxes 7,014 6,603 8,761

6,603 8,761 5,248

Net loss $ ( 1,765 ) $ ( 29,214 ) $ ( 7,700 )

Net income/(loss) $ 4,041 $ ( 1,765 ) $ ( 29,214 )

Foreign currency translation adjustments

1 unchanged sentence

Comprehensive income/(loss) $ ( 145 ) $ 357 $ ( 29,936 )

$ 357 $ ( 29,936 ) $ ( 7,822 )

Loss per share

Net income/(loss) per share

Basic $ 0.05 $ ( 0.02 ) $ ( 0.42 )

17 unchanged sentences

Stock-based compensation — — 60,968 — — 60,968

Exchange of warrants into common stock 6,680 1 49,123 — — 49,124

Exercise of stock options 341 — 1,432 — — 1,432

2 unchanged sentences

Issuance of shares and payments of tax obligations resulted from net share settlement of vested stock awards 393 — ( 5,755 ) — — ( 5,755 )

Issuance of escrow common stock due to Closing of Business Combination 131 — — — — —

Foreign currency translation adjustment

5 unchanged sentences

Exercise of stock options 182 — 821 — — 821

Issuance of common stock in 2022 Offering, net of transaction costs of $ 253

6,571 — 109,284 — — 109,284

Issuance of shares and payments of tax obligations resulted from net share settlement of vested stock awards 1,549 1 ( 16,832 ) — — ( 16,831 )

3 unchanged sentences

75,887 $ 8 $ 397,511 $ ( 15,886 ) $ 1,274 $ 382,907

Net loss — — — ( 1,765 ) — ( 1,765 )

Net income — — — 4,041 — 4,041

Stock-based compensation — — 34,167 — — 34,167

Exercise of stock options 344 — 1,992 — — 1,992

Issuance of common stock in 2024 Offering, net of transaction costs of $ 472

6,612 — 107,605 — — 107,605

Issuance of shares and payments of tax obligations resulted from net share settlement of vested stock awards 766 — ( 8,697 ) — — ( 8,697 )

10 unchanged sentences

Cash flows from operating activities

Net loss $ ( 1,765 ) $ ( 29,214 ) $ ( 7,700 )

Net income/(loss) $ 4,041 $ ( 1,765 ) $ ( 29,214 )

Adjustments to reconcile net loss to net cash provided by operating activities:

2 unchanged sentences

Bad debt expense 2,301 945 132

Deferred income taxes ( 4,140 ) ( 3,633 ) 2,611

Change in fair value of contingent consideration

( 4,220 ) — —

Stock-based compensation 34,167 35,516 60,968

Other expenses

Deferred income taxes ( 4,033 ) ( 4,140 ) ( 3,633 )

Other (income)/expenses, net ( 3,071 ) ( 3,896 ) 71

Changes in assets and liabilities:

Accounts receivable ( 434 ) ( 8,738 ) ( 18,676 )

Unbilled receivables 2,518 ( 1,116 ) ( 849 )

Prepaid income taxes 435 ( 3,450 ) 237

Trade receivable ( 9,485 ) 2,084 ( 9,854 )

Prepaid expenses and other assets ( 8,319 ) ( 511 ) ( 3,371 )

2 unchanged sentences

Operating lease liabilities ( 4,542 ) ( 3,135 ) ( 2,574 )

Accrued income taxes ( 2,271 ) 8,525 532

Income taxes, net 415 ( 1,836 ) 5,075

Accrued expenses and other current liabilities 1,764 991 982

2 unchanged sentences

Purchase of property and equipment ( 11,766 ) ( 7,870 ) ( 6,069 )

Purchase of investments ( 250 ) ( 1,000 ) —

Proceeds from sale of equity securities 3,581 — —

Purchase of equity securities — ( 250 ) ( 1,000 )

Acquisition of business, net of cash acquired ( 43,072 ) ( 17,830 ) ( 9,254 )

Other investing activities, net ( 44 ) — —

Net cash used in investing activities ( 51,301 ) ( 25,950 ) ( 16,323 )

Cash flows from financing activities

Proceeds from exercises of stock options, net of shares withheld for taxes 510 1,432 ( 27,528 )

Proceeds from common stock offering

108,077 — 109,537

Proceeds from exercises of stock options 2,254 510 1,432

Payments of tax obligations resulted from net share settlement of vested stock awards ( 8,697 ) ( 16,831 ) ( 5,755 )

Proceeds from issuance of Common Stock from 2022 and 2021 Offerings — 109,537 78,311

Proceeds from debt — 5,000 —

Proceeds from exercise of warrants — — 48,145

Equity issuance costs ( 472 ) — ( 253 )

Payment of contingent consideration related to previously acquired businesses — — ( 6,933 )

Proceeds from debt — — 5,000

Repayment of debt — — ( 5,000 )

Debt issuance cost — — ( 270 )

Equity issuance costs — ( 253 ) ( 498 )

Net cash (used in)/provided by financing activities

( 16,321 ) 97,758 49,134

Effect of exchange rate changes on cash and cash equivalents 1,676 ( 722 ) ( 122 )

Net increase in cash and cash equivalents 498 112,365 31,619

Cash and cash equivalents, beginning of period 256,729 144,364 112,745

Cash and cash equivalents, end of period $ 257,227 $ 256,729 $ 144,364

Net cash provided by/(used in) financing activities 101,162 ( 16,321 ) 97,758

Effect of exchange rate changes on cash, cash equivalents and restricted cash ( 2,131 ) 1,676 ( 722 )

Net increase in cash, cash equivalents, and restricted cash 77,928 498 112,365

Cash, cash equivalents and restricted cash, beginning of period 257,227 256,729 144,364

Cash, cash equivalents and restricted cash, end of period $ 335,155 $ 257,227 $ 256,729

GRID DYNAMICS HOLDINGS, INC.

7 unchanged sentences

Acquisition fair value of contingent consideration issued for acquisition of business $ 10,180 $ 932 $ 3,288

The following table provides a reconciliation of cash, cash equivalents and restricted cash reported within the consolidated balance sheets:

For the years ended December 31,

2024 2023 2022

Balance sheet classification

Cash and cash equivalents $ 334,655 $ 257,227 $ 256,729

Restricted cash in Prepaid and other current assets 500 — —

Total cash, cash equivalents and restricted cash $ 335,155 $ 257,227 $ 256,729

The accompanying notes are an integral part of these consolidated financial statements.

5 unchanged sentences

Grid Dynamics Holdings, Inc.

(the “Company” or “GDH” ) is a leading provider of technology consulting, platform and product engineering, and advanced analytics services.

(the “Company”) is a leading provider of technology consulting, platform and product engineering, and advanced analytics services.

The Company’s core business includes cloud platform and product engineering, supply chain and advanced manufacturing, and data and machine learning platform engineering.

8 unchanged sentences

The Company had no ownership in this subcontractor (“Affiliate”) as of December 31, 2024.

During the years ended December 31, 2022 and 2021 the Company had similar subcontractors that ceased its operations at the beginning of 2022.

During the year ended December 31, 2022, the Company had similar subcontractors that ceased its operations at the beginning of 2022.

The Company is required to apply accounting standards which address how a business enterprise should evaluate whether it has a controlling financial interest in a variable interest entity (“VIE”) through means other than voting rights and accordingly should determine whether or not to consolidate the entity.

5 unchanged sentences

generally accepted accounting principles (“GAAP”) requires the Company to make estimates and assumptions that affect the amounts reported in the consolidated financial statements and accompanying notes.

The Company evaluates its estimates on an ongoing basis including allowance of credit losses, determination of fair value, useful lives and recoverability of intangible assets and goodwill, valuation of stock-based compensation and contingent consideration payable, determination of provision for income taxes, deferred tax assets and liabilities and uncertain tax positions.

The Company evaluates its estimates on an ongoing basis including allowance for credit losses, determination of fair value, useful lives and recoverability of intangible assets and goodwill, valuation of stock-based compensation and contingent consideration payable, determination of provision for income taxes, deferred tax assets and liabilities and uncertain tax positions.

The Company builds its estimates on historical data and assumptions as well as forward-looking expectations that the Company believes to be reasonable under current conditions and circumstances.

9 unchanged sentences

Cash equivalents are stated at cost, which approximates fair value due to their short-term nature.

Non-marketable securities

The Company holds investments in privately-held entities.

Such investments do not have readily determinable fair value and as such are accounted for under the fair value measurement alternative.

Investments in equity securities

The Company holds investments in public and privately-held entities.

As the Company does not have either controlling interest or significant influence over these entities, investments are accounted using two different methods depending on the type of equity investments:

• Equity investments in public entities are measured and carried at fair value with any changes recognized in Other income/(expense), net in the consolidated statements of income/(loss) and comprehensive income/(loss).

• Equity investments that do not have readily determinable fair value are accounted for under the fair value measurement alternative.

Under the measurement alternative, the carrying value is measured at cost, less any impairment, plus or minus changes resulting from observable price changes in orderly transactions for identical or similar investments of the same issuer.

Non-marketable securities are classified as Other noncurrent assets on the consolidated balance sheets.

All gains and losses on non-marketable securities, whether realized or unrealized, are recognized in Other income/(expense), net in the consolidated statements of loss and comprehensive income/(loss).

All gains and losses on non-marketable securities, whether realized or unrealized, are recognized in Other income/(expense), net in the consolidated statements of income/(loss) and comprehensive income/(loss).

The Company classifies its investments in equity securities in Other noncurrent assets in the Company’s consolidated balance sheets.

Contract balances

28 unchanged sentences

Capitalization ceases and amortization begins once the developed software is substantially complete and ready for its intended use.

The capitalized amounts are included in Property and equipment, net on the consolidated balance sheets.

The capitalized amounts are included in Property and

equipment, net on the consolidated balance sheets.

Costs incurred during planning, preliminary project and post-implementation stages are expensed as incurred.

Internally developed software is amortized on a straight-line basis over the useful life of the respective asset, generally two years .

Amortization of internally developed software is recorded within Engineering, research, and development and Sales and marketing expenses in the consolidated statements of loss and comprehensive income/(loss) as the software is developed for purposes of supporting internal R&D, engineering, and marketing activities.

Management evaluates the useful lives of these

assets on an annual basis and tests for impairment whenever events or changes in circumstances occur that could impact the recoverability of these assets.

Amortization of internally developed software is recorded within Engineering, research, and development and Sales and marketing expenses in the consolidated statements of income/(loss) and comprehensive income/(loss) as the software is developed for purposes of supporting internal R&D, engineering, and marketing activities.

Management evaluates the useful lives of these assets on an annual basis and tests for impairment whenever events or changes in circumstances occur that could impact the recoverability of these assets.

There was no impairment of internally developed software in the years ended December 31, 2024, 2023 and 2022.

49 unchanged sentences

For transition, practical expedients were accepted to carry forward historical accounting for any expired or existing contracts that are or contain lease contracts and not to re-assess initial direct costs for any expired or existing leases.

Government assistance and incentives

The Company is eligible to a range of government incentives, including cash grants and refundable tax credits across various jurisdictions in which it operates.

These incentives are generally contingent on meeting specific regulatory requirements, including among others achieving specified employment rates, conducting certain qualified investment, research and development and promotional activities.

GAAP does not provide authoritative guidance on accounting for government assistance, the Company applies an accounting policy by analogy to International Accounting Standard 20 (“IAS 20”), Accounting for Government Grants and Disclosure of Government Assistance.

In accordance with IAS 20, the Company recognizes benefits from government assistance in Other income/(expense), net or as a reduction to the related Operating expenses in the consolidated statements of income/(loss) and comprehensive income/(loss) when there is reasonable assurance that the terms of the assistance will be met.

Funds received before the Company meets the terms of the government assistance are reported as a deferred income classified in the consolidated balance sheets under Accrued expenses and other current liabilities or Other non-current liabilities depending on grant’s maturity.

During each of the years ended December 31, 2024 and 2023, the Company recognized $ 1.3 million related to government assistance, which are included in Cost of revenues and

Operating expenses in the consolidated statements of income/(loss) and comprehensive income/(loss).

There was no material government assistance received during the year ended December 31, 2022.

The Company accounts for a contract when there is a commitment from both parties, the rights of the parties and payment terms are identified, the contract has commercial substance and collectability of consideration is probable.

11 unchanged sentences

The Company offers a suite of digital engineering and information technology (“IT”) consulting services, including digital transformation strategy, emerging technology, lean labs and legacy system replatforming.

The Company recognizes revenue for services over time as the customer simultaneously receives and consumes the benefits as the Company performs IT consulting

The Company recognizes revenue for services over time as the customer simultaneously receives and consumes the benefits as the Company performs IT consulting services.

Consulting services require the Company to provide a series of distinct daily services and as such represent a single performance obligation earned over the term of a contract and the value derived corresponds to the labor hours expended.

26 unchanged sentences

The Company recognizes the cost of its stock-based awards based on the fair value of these awards at the date of grant.

The fair value of service-based and performance based awards at the date of grant is based on the closing price of the Company’s shares on NASDAQ.

The fair value of service-based and performance based awards without market conditions at the date of grant is based on the closing price of the Company’s shares on Nasdaq.

For performance awards with market conditions the grant date fair value is measured using the Monte-Carlo model.

Grant-date fair value of stock options is estimated using the Black-Scholes-Merton option pricing model.

1 unchanged sentence

The Company evaluates the assumptions used to value its share-based awards on each grant date.

basis over the total requisite service period for the entire award (i.e., over the requisite service period of the last separately-vesting tranche of the award).

For awards with performance conditions the compensation cost recognized is based on the actual or expected achievement of the performance condition.

For an award with graded vesting that is subject only to a service condition (e.g., time-based vesting), the Company uses the straight-line attribution method under ASC Topic 718 under which it recognizes compensation cost on a straight-line basis over the total requisite service period for the entire award (i.e., over the requisite service period of the last separately-vesting tranche of the award).

For awards with performance conditions the compensation cost recognized is based on the actual or expected achievement of the performance condition based on the graded attribution method.

Additionally, the Company applies the “floor” concept so that the amount of compensation cost that is recognized as of any date is at least equal to the grant-date fair value of the vested portion of the award on that date.

That is, if the straight-line expense recognized to date is less than the grant date fair value of the award that is legally vested at that date, the company will increase its recognized expense to at least equal the fair value of the vested amount.

The requisite service period, which is the vesting period, of service-based and performance-based awards is typically four years and one year , respectively.

The requisite service period, which is the vesting period, of service-based and performance-based awards is typically four years and three years , respectively.

However, performance-based awards granted during the years ended December 31, 2023 and 2022 had a requisite service period of one year.

The Company made an accounting policy election to account for forfeitures when they occur.

17 unchanged sentences

The Company’s policy for interest and/or penalties related to underpayments of income taxes is to include interest and penalties in income tax expense.

Restructuring

Restructuring costs include charges for the costs of exit or disposal activities.

The liability associated with restructuring activities is measured initially at fair value and recognized when the liability is incurred.

During the first quarter of 2023, the Company initiated actions focused on optimization of its billable and non-billable functions and reduction of associated costs.

The Company incurred and paid total restructuring costs of $ 1.5 million during the year ended December 31, 2023.

Restructuring costs comprised of employee severance and other personnel costs and were classified as General and administrative expenses in the consolidated financial statements.

The Company did not incur any restructuring expenses during the years ended December 31, 2022 and 2021.

Earnings per share

2 unchanged sentences

Diluted earnings per share include outstanding stock options, unvested restricted stock units (“RSUs”) and performance stock units (“PSUs”), except cases where the effect of the inclusion of options would be antidilutive.

The Company includes PSUs in computation of diluted earnings per share when they become contingently issuable

per the authoritative guidance and excludes them when they are not contingently issuable.

The Company includes PSUs in computation of diluted earnings per share when they become contingently issuable per the authoritative guidance and excludes them when they are not contingently issuable.

The dilutive effect of potentially dilutive securities is reflected in diluted earnings per share by application of the treasury stock method.

Prior period reclassifications

The Company presented and analyzed its revenues by customer locations attributing revenues based upon billed customer location.

Effective December 31, 2023, the Company attributes revenues to geographic regions based upon location of the customer served irrespective of the location billed, or the location of the delivery center performing the work.

The Company believes this change allows it to more effectively analyze its geographies and associated risks.

This change did not result in any adjustments to our previously issued financial statements and were applied retrospectively beginning on January 1, 2021.

Comparative information for the years ended December 31, 2022 and 2021 is presented in the following tables:

For the year ended December 31, 2022 For the year ended December 31, 2021

Customer Location (in thousands)

North America $ 255,480 $ 243,962 $ 168,524 $ 168,561

Europe 54,708 53,109 42,479 36,595

Other 294 13,411 277 6,124

Total Revenues $ 310,482 $ 310,482 $ 211,280 $ 211,280

Certain amounts on the consolidated balance sheet and consolidated statement of cash flows in prior periods have been reclassified to conform with the current period presentation.

Certain significant risks and uncertainties

7 unchanged sentences

At the same time, a banking crisis, bankruptcy or insolvency of banks that process or hold the Company’s funds, may result in the loss of the Company’s deposits or adversely affect the Company’s ability to complete banking transactions, which could adversely affect the Company’s business and financial condition.

As of December 31, 2023 and 2022, cash held by the Company outside the U.S.

was $ 21.2 million and $ 16.8 million, respectively, and included, among others, the U.K., Netherlands, India, Poland, Ukraine, Armenia, Moldova, Serbia, Mexico and other countries.

The banking sector of Ukraine, Armenia, Moldova, Serbia, and Mexico remains periodically unstable, banking and other financial systems generally do not meet the financial standards of more developed European and American markets, and bank deposits made by corporate entities are not insured.

In addition to that, the Ukrainian financial system was and continues to be significantly impacted by military action launched by Russia against the country.

As of December 31, 2024 and 2023, the Company’s cash held outside the U.S.

was $ 38.6 million and $ 21.2 million, respectively.

This included, among others, Switzerland, the U.K., Netherlands, India, Poland, Argentina, Mexico, Armenia, Moldova, Serbia and other countries.

The banking sector of Ukraine, Armenia, Moldova, Serbia, Mexico and Argentina remains periodically unstable, as their banking and other financial systems generally do not meet the financial standards of more developed European and American markets, and bank deposits made by corporate entities are not insured.

In addition, the Ukrainian financial system was and continues to be significantly impacted by military action launched by Russia against the country.

As of December 31, 2024 and 2023, cash balances held in Ukraine equaled $ 0.1 million and $ 4.3 million, respectively.

The Company tends to hold cash in Ukraine and other countries of its presence with less developed and regulated banking systems at levels necessary to cover operating needs of local entities.

The Company tends to hold cash in Ukraine and other countries with less developed and regulated banking systems where it has operations at levels necessary to cover operating needs of local entities.

The Company derives its revenues from customers operating in multiple industries located around the world.

This fact accompanied by ongoing evaluation of customer financial position allows the Company to disaggregate and limit its exposure to credit risk.

This fact accompanied by ongoing evaluation of customer financial positions allows the Company to disaggregate and limit its exposure to credit risk.

Historically, the Company has not experienced significant credit losses and write-offs of accounts receivable, however, if any of its customers encounter financial difficulties or become insolvent, the Company’s credit losses could increase which would negatively affect its results of operations.

The following table shows number of customers exceeding 10% of the Company’s billed and unbilled receivable balances at December 31, 2023 and 2022:

The following table shows the number of customers exceeding 10% of the Company’s billed and unbilled receivable balances at December 31, 2024 and 2023:

As of December 31,

1 unchanged sentence

Unbilled receivables

The following table shows the amount of revenue derived from each customer exceeding 10% of the Company’s revenue during the years ended December 31, 2023, 2022 and 2021:

The following table shows the percentage of revenue derived from each customer exceeding 10% of the Company’s revenues during the years ended December 31, 2024, 2023 and 2022:

For the years ended December 31,

1 unchanged sentence

Customer 1 16.0 % 14.4 % 12.6 %

Customer 2 n/a 10.6 % 11.0 %

Customer 2 n/a n/a 10.6 %

Foreign currency risks

2 unchanged sentences

Other than U.S.

dollars, the Company generates revenues in EURO and British pounds and incur expenditures principally in Polish zlotys, EURO, British pounds and Mexican pesos.

International foreign operations expose the Company to foreign currency exchange rate changes that could impact remeasurement of foreign denominated monetary assets and liabilities into the U.S.

dollars with the remeasurement impact recorded to income.

dollars, the Company predominantly generates revenues in British pounds and Euro and incur expenditures principally in Polish zlotys, Euro, British pounds, Mexican pesos and Indian rupees.

International foreign operations expose the Company to foreign currency exchange rate changes that could impact remeasurement of foreign denominated monetary assets and liabilities into subsidiaries functional currencies with the remeasurement impact recorded in the consolidated statements of income/(loss) and comprehensive income/(loss).

The Company has not entered into any foreign exchange forward contracts, derivatives, or similar financial instruments to hedge against the risk of foreign exchange rate fluctuations.

4 unchanged sentences

The Company will adopt these changes according to the various timetables the FASB specifies.

In February 2016, the FASB issued ASU 2016-02 , Leases (Topic 842).

The standard supersedes previously existing lease guidance (“Topic 840”) and requires entities to recognize all leases, with the exception of leases with a term of twelve months or less, on the balance sheet as right-of-use assets (“RoU Assets”) and lease liabilities.

Disclosures should provide the information in the financial statements summarizing the amount, timing and cash flows arising from leasing.

The Company adopted Topic 842, effective January 1, 2022 using current period adjustment method.

Prior period amounts were not adjusted.

The adoption of Topic 842 on January 1, 2022 resulted in the recognition of RoU Assets for operating leases of $ 5.9 million and operating lease liabilities of $ 5.7 million.

The adoption of Topic 842 did not have an impact on the consolidated statement of loss and comprehensive income/(loss), consolidated statement of changes in stockholders’ equity or the consolidated statement of cash flows.

In June 2016, the FASB issued ASU 2016-13, Financial Instruments-Credit Losses (Topic 326) — Measurement of Credit Losses on Financial Instruments that was subsequently amended by ASU 2019-4, Codification Improvements to Topic 326, Financial Instruments — Credit Losses, ASU 2019-5, Financial Instruments — Credit Losses (Topic 326):

Targeted Transition Relief, and clarified with the release of ASU 2020-2 Financial Instruments — Credit Losses (Topic 326) and Leases (Topic 842).

These ASUs replace the current incurred loss impairment methodology with a methodology that reflects expected credit losses measured at amortized cost and certain other instruments, including loans, held-to-maturity debt securities, net investments in leases, and off-balance sheet credit exposures.

The Company adopted Topic 326, effective January 1, 2023, using a modified-retrospective approach.

Adoption of Topic 326 did not have any impact on its consolidated financial statements.

In November 2021, the FASB issued ASU 2021-10, Government Assistance (Topic 832) – Disclosures by Business Entities about Government Assistance , which requires entities to make annual disclosures about government assistance received during reporting periods presented.

Disclosures are aimed at increasing transparency and include the following (1) the nature, significant terms and conditions of the transactions, including related commitments and contingencies, (2) the related

accounting policy applied to those transactions;

and (3) the effect of those transactions on an entity’s financial statements.

The new guidance is effective for annual reporting periods beginning after December 15, 2021 and impacts only annual financial statement note disclosures.

The Company receives government grants in certain countries of its operations.

The grants are mainly aimed at reaching certain employment rates.

The Company recognizes grants in Other income/(expense), net or as a reduction to the related Operating expenses in the consolidated statement of loss and comprehensive income/(loss) when there is reasonable assurance that the terms of the grant will be met.

Funds received before the Company meets the terms of the grant are reported as a deferred income classified in the consolidated balance sheets under Accrued expenses and other current liabilities or Other noncurrent liabilities depending on grant’s maturity.

During the year ended December 31, 2023, the Company recognized $ 1.3 million related to government grants, which are included in Cost of revenues and Operating expenses in the consolidated statements of loss.

There were no material grants received during the years ended December 31, 2022, and 2021, respectively.

Recently issued accounting pronouncements

On November 2023, the FASB issued ASU 2023-07, Segment Reporting (Topic 280) — Improvements to Reportable Segment Disclosures, that expands disclosures requirements around significant segment expenses and other segment items that are included in reported measure of segment profit or loss.

1 unchanged sentence

Guidance also obliges entities with a single reportable segment to provide all the disclosures under amended ASC 280 in their interim and annual financial statement.

The new guidance is effective for annual reporting periods beginning after December 15, 2023, and interim reporting periods within fiscal years beginning after December 15, 2024 on a retrospective basis, The Company is currently evaluating the impact on this guidance on its consolidated financial statements.

On December 14, 2023, the FASB issued ASU 2023-09, Improvements to Income Tax Disclosures (Topic 740) — I mprovements to Income Tax Disclosures, which expands annual disclosure requirements around income taxes primarily related to the rate reconciliation and income taxes paid.

The Company adopted the new guidance for its 2024 annual period with no significant impact on its disclosures.

See Note 13 “Segment and geographic information” for further details.

Recently issued accounting pronouncements

On December 14, 2023, the FASB issued ASU 2023-09, Improvements to Income Tax Disclosures (Topic 740) — Improvements to Income Tax Disclosures, which expands annual disclosure requirements around income taxes primarily related to the rate reconciliation and income taxes paid.

The new guidance is effective for annual reporting periods beginning after December 15, 2024 with early adoption permitted.

The guidance will be applied on a prospective basis with a retrospective application option.

The Company is currently evaluating the impact on this guidance on its consolidated financial statements .

The Company intends to adopt this standard in its Annual Report on Form 10-K for the year ended December 31, 2025 and is currently evaluating the potential impact of this guidance on its disclosures.

In November 2024, the FASB issued ASU 2024-03, Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures (Subtopic 220-40):

Disaggregation of Income Statement Expenses, requiring more detailed information about the types of expenses included in certain expense captions presented on the consolidated statements of income.

Additionally, this amendment requires the disclosure of a qualitative description of the amounts remaining in relevant expense captions that are not separately disaggregated quantitatively and the disclosure of the total amount of selling expenses.

The new guidance is effective for annual periods beginning after December 15, 2026, and for interim periods within fiscal years beginning after December 15, 2027 on a prospective or retrospective basis, with an early adoption permitted.

The Company’s annual reporting requirements will be effective for fiscal year 2027.

The Company is in the process of analyzing the impact of the ASU on related disclosures.

The Company does not believe any other new accounting pronouncements issued by the FASB that have not become effective will have a material impact on its consolidated financial statements

Note 2 — Acquisitions

Overview of transactions

Mobile Computing — On October 4, 2024, the Company acquired all shares of Mobile Computing S.A.

(“Mobile Computing”), an Argentina-based company, for a purchase price of $ 16.0 million including cash paid at closing of $ 13.3 million and contingent consideration with an acquisition-date fair value of $ 2.7 million.

The maximum amount of potential contingent cash consideration is $ 3.0 million, subject to attainment of certain revenue and gross profit metrics within 12 months.

The acquisition of Mobile Computing expanded the Company’s client portfolio, strengthened its expertise in digital product co-creation and User Interface (“UI”)/User Experience (“UX”) services and significantly contributes to the “Follow-the-Sun” model to better serve clients.

JUXT — On September 26, 2024, the Company acquired 100 % of a group of UK-based companies, including Headrunner Limited and Congreve Computing Ltd., with their wholly owned subsidiary JUXT Ltd.

(collectively referred to as “JUXT”).

The total purchase consideration was $ 47.0 million, consisting of cash consideration of $ 39.5 million paid at closing and fair value of the contingent consideration at the date of the acquisition of $ 7.5 million.

The maximum amount of potential contingent cash consideration is $ 9.4 million, subject to attainment of certain revenue and gross profit metrics within 12 months.

The acquisition of JUXT strengthened the Company’s go-to-market positioning in the Finance vertical and opened new opportunities across the European market.

NextSphere — On April 18, 2023, the Company completed the acquisition of 100 % of NextSphere Technologies, Inc.

(“NextSphere”).

Founded in 2006, NextSphere is headquartered in Tampa, FL, has an engineering presence in Phoenix, AZ, and operates two large engineering centers in India’s tech hubs of Hyderabad and Chennai.

NextSphere specializes in modern application development, systems monetization, product development, cloud and infrastructure services, and quality assurance.

Over the years, NextSphere has worked with several brands across numerous industry verticals with expertise in Healthcare, Fintech and CPG/Manufacturing industries.

The Company believes this acquisition will support the Company’s objectives of enhancing its technical capabilities, expanding its global footprint, and increasing its client base.

The total purchase consideration is $ 25.2 million and consists of cash consideration of $ 24.3 million paid at closing, and fair value of the contingent consideration at the date of the acquisition of $ 0.9 million.

The maximum amount of potential contingent cash consideration is $ 2.0 million.

The contingent consideration is payable based on revenue and gross profit metrics to be achieved by NextSphere within 12 months.

The Company recorded a liability for the contingent consideration amount based on the Company’s best estimate of the fair value of the expected payout.

See Note 3 for further details on contingent consideration.

Mutual Mobile — On December 23, 2022, the Company acquired 100 % of the equity interest of the software company Mutual Mobile Inc.

(“Mutual Mobile”).

Founded in 2009, Mutual Mobile is based in the United States and India, offers end-to-end design and development of next-generation applications, combining mobile, augmented/virtual/mixed reality, and cloud edge / IoT practices.

The acquisition of Mutual Mobile added approximately 180 employees to the Company’s headcount.

The acquisition will accelerate the Company’s strategic expansion into the India engineering market and further solidifies Grid Dynamics’ commitment to global growth.

The total purchase consideration is $ 16.1 million and consists of cash consideration of $ 12.8 million paid at closing, and fair value of the contingent consideration at the date of the acquisition of $ 3.3 million.

The maximum amount of potential contingent cash consideration is $ 5.0 million.

The contingent consideration is payable based on revenue and gross profit metrics to be achieved by Mutual Mobile within 12 months.

The Company recorded a liability for the contingent consideration amount based on the Company’s best estimate of the fair value of the expected payout.

See Note 3 for further details on contingent consideration.

Tacit — On May 29, 2021, the Company acquired 100 % of the equity interest of the global consultancy company Tacit Knowledge Inc.

Founded in 2002, Tacit is a global provider of digital commerce solutions, serving customers across the UK, North America, Continental Europe, and Asia.

The acquisition of Tacit added approximately 180 employees to the

Company's headcount.

The acquisition will augment the Company’s service offerings and will strengthen its competitive position within the market.

Additionally, the acquisition will also enable the Company to leverage near-shore capabilities with Tacit’s presence in Mexico.

The total purchase consideration is $ 37.6 million and consists of cash consideration of $ 33.6 million paid at closing, and fair value of the contingent consideration at the date of the acquisition of $ 4.0 million.

The maximum amount of potential contingent cash consideration is $ 5.0 million.

See Note 3 for further details on contingent consideration.

The following table summarizes the estimated fair values of the assets acquired and liabilities assumed as updated for any changes as of December 31, 2023 for NextSphere, Mutual Mobile, and Tacit:

NextSphere Mutual Mobile Tacit

(“NextSphere”) for a purchase consideration of $ 25.2 million, consisting of $ 24.3 million of cash paid at closing and contingent consideration with an acquisition-date fair value of $ 0.9 million.

The maximum amount of potential contingent cash consideration was $ 2.0 million, subject to attainment of certain revenue and gross profit targets within 12 months.

The acquisition of NextSphere added two large engineering centers in India’s tech hubs of Hyderabad and Chennai.

The Company believes this acquisition supported the Company’s objectives of enhancing its technical capabilities, expanding its global footprint, and increasing its client base.

Mutual Mobile — On December 23, 2022, the Company acquired all shares of Mutual Mobile Inc.

(“Mutual Mobile”) for a total purchase price of $ 16.1 million, consisting of cash consideration of $ 12.8 million paid at closing and fair value of the contingent consideration at the date of the acquisition of $ 3.3 million.

The maximum amount of potential contingent cash consideration was $ 5.0 million, subject to attainment of certain revenue and gross profit metrics within 12 months.

The acquisition of Mutual Mobile accelerated the Company’s strategic expansion into the India engineering market and further solidified Grid Dynamics’ commitment to global growth.

Assets acquired and liabilities assumed

The following table summarizes the fair values of the assets acquired and liabilities assumed as updated for any changes as of December 31, 2024.

The amounts related to JUXT and Mobile Computing acquisitions represent the Company’s provisional fair value estimates and are subject to subsequent adjustments as additional information is obtained during the applicable measurement period.

The primary provisional amounts for JUXT include certain working capital accounts that are not yet finalized.

The primary provisional amounts for Mobile Computing include primarily valuation of intangible assets and related income taxes as well as certain working capital assets and liabilities accounts.

The Company expects to complete the purchase

price allocations as soon as practicable but no later than one year from the acquisition dates.

Fair values of assets acquired and liabilities assumed as a result of NextSphere and Mutual Mobile acquisitions were finalized during the fourth quarter of 2023.

Mobile Computing JUXT NextSphere Mutual Mobile

(in thousands)

Current assets $ 9,708 $ 4,982 $ 9,145

Property, plant and equipment 192 132 466

Cash, cash equivalents and restricted cash

$ 2,330 $ 7,344 $ 6,449 $ 3,528

Trade receivables (1)

1,496 7,132 2,639 914

Prepaid expenses and other current assets 379 263 620 540

Intangible assets 8,674 18,870 9,906 3,749

Goodwill (2)-(5)

Other noncurrent assets 511 102 —

7,615 23,332 9,031 8,879

Property and equipment, and other noncurrent assets

408 231 703 234

Total assets acquired $ 20,902 $ 57,172 $ 29,348 $ 17,844

Accounts payable and accrued expenses ( 1,990 ) ( 1,576 ) ( 3,675 )

Accounts payable, accrued expenses and other current liabilities $ ( 1,858 ) $ ( 5,451 ) $ ( 1,990 ) $ ( 1,576 )

Deferred taxes ( 3,027 ) ( 4,753 ) ( 2,427 ) ( 686 )

Other noncurrent liabilities

Total liabilities assumed $ ( 4,944 ) $ ( 10,204 ) $ ( 4,417 ) $ ( 2,262 )

Purchase price allocation $ 15,958 $ 46,968 $ 24,931 $ 15,582

The fair value of current assets acquired include cash and cash equivalents in the amount of $ 6.4 million, $ 3.5 million, and $ 3.0 million for NextSphere, Mutual Mobile, and Tacit acquisitions, respectively.

The purchase price was assigned to assets acquired and liabilities assumed based on their estimated fair values as of the date of acquisition, and any excess was allocated to goodwill, as shown in the table above.

The goodwill recognized as a result of the NextSphere acquisition represents the value the Company expects to achieve through the implementation of operational synergies and growth opportunities as the Company expands its global reach as well as the assembled workforce acquired, The goodwill is not deductible for income tax purposes.

The goodwill recognized as a result of the Mutual Mobile acquisition is attributable to synergies expected to be achieved by combining the businesses of the Company and Mutual Mobile, expected future contracts, the assembled workforce acquired and other factors.

_________________________

(1) The estimated fair values of trade receivables equaled their gross contractual amounts due as of the acquisition dates, all of which were collected by the Company as of December 31, 2024 and December 31, 2023, respectively.

(2) The goodwill recognized as a result of the Mobile Computing is primarily attributed to the value the Company expects to achieve through growth opportunities in Latin America as well as the assembled workforce acquired.

The goodwill is not deductible for income tax purposes.

The goodwill recognized as a result of the Tacit acquisition is attributable to synergies expected to be achieved by expanding the Company’s ability to serve customers in Europe and the assembled workforce acquired.

The goodwill for all acquisitions is not deductible for income tax purposes.

During the fourth quarter of 2023, the Company finalized working capital adjustment for NextSphere that resulted in a decrease of original purchase price in the amount of $ 0.3 million and updated fair value of deferred taxes by $ 0.2 million.

These adjustments resulted in a corresponding net change in goodwill by $ 0.1 million.

Due to complexity of valuation and potential adjustments to income taxes, the estimated fair values of certain assets acquired and liabilities assumed are provisional and subject to potential adjustments.

The Company expects to complete the purchase price allocations as soon as practicable but no later than one year from the acquisition date.

During the fourth quarter of 2023, the Company finalized working capital adjustment for Mutual Mobile which reduced the original purchase price by $ 0.5 million and decreased fair value of deferred taxes by $ 0.2 million.

These adjustments resulted in

a corresponding net change in goodwill by $ 0.7 million.

The Company then finalized the fair value of the assets acquired and liabilities assumed in the acquisition of Mutual Mobile.

During the second half of 2021, the Company updated fair value of the contingent consideration for Tacit at the acquisition date that resulted in increase of goodwill for $ 0.7 million.

During the fourth quarter of 2021, the Company finalized the fair value of the assets acquired and liabilities assumed in the acquisition of Tacit.

(3) The goodwill recognized as a result of the JUXT acquisition is primarily attributed to synergies expected to be achieved by expanding the Company’s ability to serve customers in Europe and the assembled workforce acquired.

The goodwill is not deductible for income tax purposes.

(4) The goodwill recognized as a result of the NextSphere acquisition represents the value the Company expects to achieve through the implementation of operational synergies and growth opportunities as the Company expands its global reach as well as the assembled workforce acquired.

The goodwill is not deductible for income tax purposes.

(5) The goodwill recognized as a result of the Mutual Mobile acquisition is primarily attributed to synergies expected to be achieved by combining the businesses of the Company and Mutual Mobile, expected future contracts, the assembled workforce acquired and other factors.

The goodwill is not deductible for income tax purposes.

The estimated fair value, useful lives and amortization methods of identifiable intangible assets as of the date of acquisition updated for any changes during the year ended December 31, 2024 are as follows:

NextSphere Mutual Mobile Tacit

Fair Value Useful Life Fair Value Useful Life Fair Value Useful Life

Customer relationships $ 8,415 10 years $ 3,453 8 years $ 11,737 12 years

Mobile Computing JUXT NextSphere Mutual Mobile

Fair Value Useful Life Fair Value Useful Life Fair Value Useful Life Fair Value Useful Life

(values in thousands)

Customer relationships $ 8,318 8 years $ 17,568 8 years $ 8,415 10 years $ 3,453 8 years

Acquired software — — 995 2.5 years —

Trade name 496 2 years 152 4 years 1,176 4 years

Trade name 356 2 years 1,302 2.5 years 496 2 years 152 4 years

Non-compete agreements — — — 144 2 years

Total identified intangible assets $ 8,674 $ 18,870 $ 9,906 $ 3,749

During the years ended December 31, 2023, 2022 and 2021, the Company incurred $ 1.0 million, $ 0.6 million and $ 0.9 million, respectively, of transaction-related costs, that were included in General and administrative costs in the consolidated statement of loss and comprehensive income/(loss).

The Company used acquisition method of accounting for all acquisitions, and consequently, the results of operations for all acquisitions are reported in the consolidated financial statements from the dates of acquisition.

Pro forma results of operations have not been presented because the effect of the acquisitions on the Company’s consolidated financial statements was not material individually or in the aggregate.

Note 3 — Fair value

Financial assets and liabilities masured at fair value on a recurring basis

The Company measures contingent consideration payable at fair value on a recurring basis using significant inputs that are not observable in the market.

Fair value of the contingent consideration liability is based on the Monte-Carlo model which is primarily based on forecasts and discounted cash flow analysis.

The Company believes its estimates and assumptions are reasonable, however, there is significant judgment involved.

Changes in the fair value of contingent consideration payable primarily result from changes in the timing and amount of specific milestone estimates and changes in probability assumptions with respect to the likelihood of achieving the various earnout criteria.

These changes could cause a material impact to, and volatility in the Company’s operating results.

During the years ended December 31, 2023, 2022 and 2021, the Company completed three acquisitions under which the Company committed to make a cash earnout payment subject to attainment of specific performance targets.

average discount rates used to determine fair values of NextSphere, Mutual Mobile and Tacit contingent considerations were 15.5 %, 10.3 % and 13.5 %, respectively.

The Company records contingent consideration payable in Other current liabilities in its consolidated balance sheets.

A reconciliation of the beginning and ending balances of Level 3 acquisition-related contingent consideration payable using significant unobservable inputs for the years ended December 31, 2023, 2022 and 2021 are as follows:

Effect on operating results

During the years ended December 31, 2024, 2023 and 2022, the Company incurred $ 2.4 million, $ 1.0 million and $ 0.6 million, respectively, of transaction-related costs, that were included in General and administrative costs in the consolidated statements of income/(loss) and comprehensive income/(loss).

Revenues generated by above-mentioned acquired companies during the period of one year starting from the acquisition date and included in the consolidated statements of income/(loss) and comprehensive income/(loss) totaled $ 16.1 million, $ 15.3 million and $ 0.3 million during the years ended December 31, 2024, 2023 and 2022, respectively.

These unaudited pro forma results have been prepared for comparative purposes only and are not necessarily indicative of the results of operations as they would have been had the acquisition of Mobile Computing and JUXT occurred on the assumed date, nor are they necessarily an indication of future operating results.

For the years ended

(in thousands)

Contingent consideration payable as of January 1, 2021 $ 1,947

Acquisition date fair value of contingent consideration payable — Tacit

Change in fair value of contingent consideration payable included in Other income/(expense), net — Daxx

Change in fair value of contingent consideration payable included in Other income/(expense), net — Tacit

Contingent consideration payable as of December 31, 2021 $ 6,933

Acquisition date fair value of contingent consideration payable — Mutual Mobile

Payment of contingent consideration — Daxx

Payment of contingent consideration — Tacit

Contingent consideration payable as of December 31, 2022 $ 3,288

Acquisition date fair value of contingent consideration payable — NextSphere

Change in fair value of contingent consideration payable included in Other income/(expense), net — Mutual Mobile

Change in fair value of contingent consideration payable included in Other income/(expense), net — NextSphere

Contingent consideration payable as of December 31, 2023 $ —

There were no transfers of liabilities among the levels within the fair value hierarchy during the years ended December 31, 2023, 2022 and 2021.

Financial assets and liabilities not measured at fair value on a recurring basis

$ 380,768 $ 349,038

Net income $ 5,391 $ 1,021

Note 3 — Fair value

Estimates of fair value of financial instruments not carried at fair value on a recurring basis are generally subjective in nature, and are determined as of a specific point in time based on the characteristics of the financial instruments and relevant market information.

1 unchanged sentence

therefore, the carrying value of these items approximates their fair value.

The following tables present the estimated fair values of the Company’s financial assets and liabilities not measured at fair value on a nonrecurring basis as of the dates indicated:

The following table summarizes certain fair value information as of December 31, 2024 and 2023 for financial assets and liabilities measured at fair value on a recurring basis, as well as estimated fair values of certain other financial assets and liabilities not measured on a recurring basis:

Fair Value Hierarchy

Balance Estimated Fair Value Level 1 Level 2 Level 3

(in thousands)

December 31, 2024

2 unchanged sentences

Money market funds

$ 267,206 $ 267,206 $ 267,206 $ — $ —

Long-term investments:

Non-marketable equity securities (1)

Financial Liabilities:

Contingent consideration payable

$ 9,729 $ 9,729 $ — $ — $ 9,729

December 31, 2023

2 unchanged sentences

Money market funds

Non-marketable securities without readily determinable fair values

The Company holds investment in equity securities of a related party, a company affiliated with the member of the Company’s Board of Directors, that do not have readily determinable fair values.

This investment is recorded at cost and is remeasured to

fair value based on certain observable price changes or impairment events as they occur.

The carrying amount of the investment was $ 1.3 million and $ 1.0 million as of December 31, 2023 and 2022, respectively, and was classified as Other noncurrent assets in the Company’s consolidated balance sheets.

$ 204,388 $ 204,388 $ 204,388 $ — $ —

Long-term investments:

Marketable equity securities

$ 421 $ 421 $ 421 $ — $ —

Non-marketable equity securities (1)

__________________________

(1) Equity securities that do not have readily determinable fair value and are measured at cost.

Investments in equity securities

During the year ended December 31, 2024, the Company sold its marketable equity securities with proceeds of $ 3.6 million.

Investment in non-marketable equity securities held by the Company as of December 31, 2024 and 2023 represents investment in its related party, a company affiliated with the member of the Company’s board of drectors, that does not have readily determinable fair values.

Contingent consideration payable

The fair value of contingent consideration payable is determined using the Monte-Carlo model which is primarily based on projected financial results of acquired business adjusted to market risk assumptions, probability of achievement of performance targets set in purchase agreements and respective discount rates.

Even though there is significant judgment involved, the Company believes its estimates and assumptions are reasonable.

Changes in financial projections, discount rates, timing and amount of specific milestone estimates, as well as probability assumptions related to achieving the various performance milestones would result in a change in the fair value of the recorded contingent consideration payable.

Such changes, if any, are recorded in Other income/(expense), net in the consolidated statements of income/(loss) and comprehensive income/(loss).

The following table present the weighted average discount rates for risk-free performance targets and time value used to determine fair values of contingent considerations payables for acquisitions completed during the years ended December 31, 2024, 2023 and 2022:

Mobile Computing

Mutual Mobile

Weighted average discount rate for risk-free performance targets

20.1 % 10.5 % 15.5 % 10.3 %

Discount rate for credit risk and time value

3.6 % 3.8 % 7.7 % 3.0 %

The Company records short-term contingent consideration payable in Accrued expense and other current liabilities in its consolidated balance sheets.

(in thousands)

Contingent consideration payable as of January 1, 2022

Acquisition date fair value of contingent consideration payable — Mutual Mobile

Payment of contingent consideration — Daxx

Payment of contingent consideration — Tacit

Contingent consideration payable as of December 31, 2022 $ 3,288

Acquisition date fair value of contingent consideration payable — NextSphere

Change in fair value of contingent consideration payable included in Other income/(expense), net — Mutual Mobile

Change in fair value of contingent consideration payable included in Other income/(expense), net — NextSphere

Contingent consideration payable as of December 31, 2023 $ —

Acquisition date fair value of contingent consideration payable — JUXT

Acquisition date fair value of contingent consideration payable — Mobile Computing

Effect of net foreign currency exchange rate changes $ ( 451 )

Contingent consideration payable as of December 31, 2024

There were no transfers of liabilities among the levels within the fair value hierarchy during the years ended December 31, 2024, 2023 and 2022.

Note 4 — Property and equipment, net

21 unchanged sentences

Goodwill as of January 1, 2023 $ 45,514

Acquisition of Mutual Mobile 9,556

Goodwill as of December 31, 2022 $ 45,514

Mutual Mobile purchase accounting adjustment

1 unchanged sentence

Goodwill as of December 31, 2023 $ 53,868

There were no accumulated impairment losses of goodwill recognized as of December 31, 2023 and 2022.

Acquisition of JUXT 23,332

Acquisition of Mobile Computing

Effect of net foreign currency exchange rate changes ( 1,408 )

Goodwill as of December 31, 2024 $ 83,407

There were no accumulated impairment losses of goodwill recorded as of December 31, 2024 and 2023.

Intangible assets consist of the following:

10 unchanged sentences

Intangible assets amortization expense for the years ended December 31, 2024, 2023, and 2022 was $ 5.0 million, $ 3.7 million, $ 2.5 million, respectively.

Based on the carrying value of the Company’s existing intangible assets as of December 31, 2023, the estimated amortization expense for the future years is as follows (in thousands):

Based on the carrying value of the Company’s existing intangible assets as of December 31, 2024, the estimated amortization expense for the future years is as follows:

(in thousands)

5 unchanged sentences

(in thousands)

Contingent consideration payable, current $ 7,029 $ —

Accrued income tax 6,820 8,828

Accrued expenses 5,111 2,943

Value added tax payable 993 1,345

Customer deposits 756 754

Deferred revenue 2,690 577

Contingent consideration payable — 3,288

Value added tax payable 1,281 993

Other liabilities 1,447 1,763

Total accrued expense and other current liabilities $ 24,378 $ 15,104

As of December 31, 2023 and December 31, 2022 the Company had payable to its related party, a company affiliated with the member of the Company’s Board of Directors, in the amount of $ 0.6 million in each of the respective years that was classified as Accrued expense and other current liabilities in consolidated balance sheet.

As of December 31, 2023 the Company had payable to its related party, a company affiliated with the member of the Company’s board of directors, in the amount of $ 0.6 million that was classified as Accrued expense and other current liabilities in the consolidated balance sheet.

The Company fully settled this payable during the first quarter of 2024.

There were no payables to related parties as of December 31, 2024.

Note 7 — Debt

Revolving Credit Facility — On March 15, 2022, the Company entered into a Credit Agreement (the “2022 Credit Agreement”) by and among the Company, as borrower, the guarantors party thereto from time to time, the lenders party thereto from time to time, and JPMorgan Chase Bank, N.A., as administrative agent for the lenders (the “Agent”).

Revolving Credit Facility — On March 15, 2022, the Company entered into a Credit Agreement (the “Credit Agreement”) by and among the Company, as borrower, the guarantors party thereto from time to time, the lenders party thereto from time to time, and JPMorgan Chase Bank, N.A., as administrative agent for the lenders.

The Credit Agreement provided for a secured multicurrency revolving loan facility with an initial aggregate principal amount of up to $ 30.0 million, with a $ 10.0 million letter of credit sublimit.

The Company could increase the size of the revolving loan facility up to $ 50.0 million, subject to certain conditions and additional commitments from existing and/or new lenders.

The 2022 Credit Agreement matures March 15, 2025.

The Credit Agreement matures on March 15, 2025.

The Company is currently seeking to extend this term.

At the Company’s option, borrowings under the Credit Agreement accrued interest at a per annum rate based on either (i) the base rate plus a margin ranging from 1.0 % to 1.5 %, (ii) an adjusted term Secured Overnight Financing Rate (“SOFR”) or adjusted the Euro Interbank Offer Rate (“EURIBOR”) (based on one, three or six-month interest periods) plus a margin ranging from 2.0 % to 2.5 %, or (iii) an adjusted daily simple SOFR rate (or SONIA rate in the case of loans denominated in pounds sterling, or SARON rate in the case of loans denominated in Swiss francs), plus a margin ranging from 2.0 % to 2.5 %, in each case, with the applicable margin determined based on the Company’s consolidated total leverage ratio.

5 unchanged sentences

As of December 31, 2024, the Company was in compliance with all covenants contained in the Credit Agreement.

Line of Credit — In October, 2017, the Company entered into a loan agreement for a revolving line of credit facility (the “Line of Credit”) with a borrowing capacity of $ 0.5 million.

The Line of Credit was secured by substantially all of the Company’s assets and was secured in order to provide credit support for a letter of credit facility and balances under the Company’s credit cards.

Borrowings under the Line of Credit were subject to a variable interest rate, based on changes in the Prime Rate, as calculated published by the Wall Street Journal.

The Company closed the Line of Credit in March of 2022.

As of December 31, 2023 and December 31, 2022, respectively, the Company did not have any outstanding debt under the 2022 Credit Agreement and Line of Credit.

As of December 31, 2024 and December 31, 2023, respectively, the Company did not have any outstanding debt under the Credit Agreement.

Note 8 — Leases

6 unchanged sentences

The Company includes these options in the lease term when it is reasonably certain that they will be exercised.

The Company had no finance leases as of December 31, 2023 and 2022, respectively.

The Company had no finance leases as of each of December 31, 2024 and 2023.

Operating lease expense is recorded on a straight-line basis over the lease term and lease costs were as follows:

For the years ended December 31,

2024 2023 2022

(in thousands)

3 unchanged sentences

Total lease cost $ 6,427 $ 4,608 $ 3,824

Lease expense under operating lease agreements for the year ended December 31, 2021 was $ 4.2 million.

Supplemental information related to operating lease transactions is as follows (in thousands):

Supplemental information related to operating lease transactions is as follows:

For the years ended December 31,

2024 2023 2022

(in thousands)

3 unchanged sentences

Non-cash net decrease in lease liability due to lease modifications $ ( 739 ) $ ( 553 ) $ 1,015

Weighted average remaining lease term and discount rate as of December 31, 2023 and 2022 is as follows:

Weighted average remaining lease term and discount rate as of December 31, 2024 and 2023 were as follows:

As of December 31,

9 unchanged sentences

There were no material lease agreements signed with related parties as of December 31, 2024 and 2023.

As of December 31, 2023, the Company had committed to payments of $ 0.4 million related to operating lease agreement that had not yet commenced as of December 31, 2023.

These operating lease will commence in 2024 with lease term of 6.2 years.

The Company does not have finance lease agreements that had not yet commenced.

The Company does not have operating or finance lease agreements that had not yet commenced.

Note 9 — Revenues

4 unchanged sentences

The following table shows the disaggregation of the Company’s revenues by major customer location.

Revenues are attributed to geographic regions based upon location of the customer served irrespective of the location billed, or the location of the

delivery center performing the work.

Revenues are attributed to geographic regions based upon location of the customer served irrespective of the location billed, or the location of the delivery center performing the work.

Substantially all of the revenue in our North America region relates to operations in the United States.

11 unchanged sentences

Retail $ 113,957 $ 102,551 $ 99,681

Tech, Media and Telecom 98,830 98,334 67,689

CPG/Manufacturing 42,861 61,216 43,461

Technology, Media and Telecom

95,048 98,830 98,334

Finance 60,157 28,842 21,893

CPG/Manufacturing 40,468 42,861 61,216

Healthcare and Pharma 11,109 13,653 7,711

Other 29,832 26,173 21,647

7 unchanged sentences

Other revenues

2,340 1,637 —

Total Revenues $ 350,571 $ 312,910 $ 310,482

2 unchanged sentences

When the timing of payment by a customer differs from the timing of rendering services, the Company records either a contract asset or a contract liability.

Contract assets include amounts related to a right to consideration that is conditional upon factors other than the passage of time.

Contract assets include

amounts related to a right to consideration that is conditional upon factors other than the passage of time.

Contract liabilities comprise amounts received in advance of the Company’s performance or billings in excess of revenues recognized.

As of December 31, 2023, 2022, and 2021, the Company did not have contract assets recorded in its consolidated balance sheet.

As of December 31, 2023, 2022, and 2021, the Company recorded $ 0.6 million, $ 1.1 million and $ 0.4 million, respectively that were classified as Accrued and other current liabilities in the consolidated balance sheet.

Decrease in our contract liabilities from December 31, 2022 was largely attributed to a decline in number of fixed fee projects in the total project pool, specifically in the second half of 2023.

The Company’s contract balances as of the below dates were as follows:

As of December 31,

2024 2023 2022

(in thousands)

Trade receivable, net:

Billed receivable

$ 64,754 $ 49,824 $ 48,358

Unbilled receivable

$ 4,617 $ 3,735 $ 5,591

Contract liabilities in Accrued expenses and other current liabilities

$ 2,690 $ 577 $ 1,124

As of December 31, 2024, 2023, and 2022, the Company did not have contract assets recorded in its consolidated balance sheets.

Increase in contract liabilities as of December 31, 2024 was largely attributed to the effect of recent acquisitions, and a higher number of invoices issued in advance of satisfying performance obligations.

Revenues recognized during the year ended December 31, 2024 that were included in Accrued and other current liabilities at December 31, 2023 were $ 0.5 million.

4 unchanged sentences

Our remaining performance obligations represent commitments for future services for which work has not been performed and revenues are to be recorded in future periods.

The Company expects to recognize approximately 55.5 % of its remaining performance obligations as revenues in fiscal year 2024, and an additional 44.5 % in 2025.

Remaining performance obligations include currently recorded contract liability as well as amounts that will be invoiced in future periods and excludes the contracts that meet at least one of the following criteria under ASC Topic 606:

The Company expects to recognize all of its remaining performance obligations as revenues in fiscal year 2025.

Remaining performance obligations include amounts that will be invoiced in future periods and excludes the contracts that meet at least one of the following criteria under ASC Topic 606:

1) contracts with an original duration of one year or less, including contracts that can be terminated for convenience without a substantive penalty,

6 unchanged sentences

As a result, the Company recorded revenue from its related parties of $ 18.7 million, $ 7.6 million and $ 6.8 million for the years ended December 31, 2024, 2023, and 2022, respectively.

As of December 31, 2023 and 2022, accounts receivable from related parties were $ 0.9 million in both periods, respectively.

As of December 31, 2024 and 2023, accounts receivable from related parties were $ 3.8 million and $ 0.9 million, respectively.

As of December 31, 2024, unbilled revenues from related parties were $ 0.1 million.

There were no unbilled revenues from related parties as of December 31, 2023.

Note 10 — Income taxes

Income before provision for income taxes consisted of the following:

Income/(loss) before provision for income taxes

The following table showed income/(loss) before provision for income taxes based on geographical location to which such income was attributable for the periods indicated:

For the years ended December 31,

4 unchanged sentences

Total income/(loss) before provision for income taxes $ 11,055 $ 4,838 $ ( 20,453 )

The federal and state income tax provision/(benefit) is summarized as follows:

Provision/(benefit) for income taxes

Provision./(benefit) for the income taxes consisted of the following components:

For the years ended December 31,

4 unchanged sentences

International 5,096 6,183 3,681

Total current tax expense $ 10,743 $ 12,406 $ 2,315

Federal ( 3,463 ) ( 2,265 ) ( 2,740 )

1 unchanged sentence

International ( 478 ) ( 1,401 ) ( 590 )

Total deferred tax expense/(benefit) $ ( 4,140 ) $ ( 3,645 ) $ 2,933

Total tax expense/(benefit) $ 6,603 $ 8,761 $ 5,248

Total tax expense $ 7,014 $ 6,603 $ 8,761

The Company’s provision for income taxes does not include provisions for foreign withholding taxes associated with the repatriation of undistributed earnings of certain foreign subsidiaries that we intend to reinvest indefinitely in our foreign subsidiaries.

Deferred income taxes

Deferred income taxes reflect the net tax effects of (a) temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes, and (b) operating losses and tax credit carryforwards.

The tax effects of significant items comprising the Company’s deferred taxes as of December 31, 2023 and 2022 are as follows:

The tax effects of significant items comprising the Company’s deferred taxes as of December 31, 2024 and 2023 were as follows:

As of December 31,

1 unchanged sentence

Deferred tax assets

Capitalized R&D $ 3,968 $ 1,056

Stock-based compensation $ 5,365 $ 3,833

Accrued compensation 1,950 931

Lease liability 636 465

Net operating loss 267 401

State tax accrual 183 243

Allowance for bad debt 185 105

R&D capitalization 4,559 3,968

Accrued compensation and benefits

Operating lease liabilities 577 636

Other 285 635

Total deferred tax assets $ 13,288 $ 11,022

1 unchanged sentence

Intangible assets $ ( 12,751 ) $ ( 6,908 )

Lease right-of-use assets ( 597 ) ( 465 )

Fixed asset basis ( 373 ) ( 291 )

Operating lease right-of-use assets ( 546 ) ( 597 )

Other ( 131 ) ( 373 )

Total deferred tax liabilities ( 13,428 ) ( 7,878 )

Net deferred taxes $ ( 140 ) $ 3,144

As part of the 2017 Tax Cuts and Jobs Act, Section 174 was amended to require that specified research and experimental (“SR&E”) expenditures be capitalized and amortized but delayed the effective date of this amendment to tax years beginning January 1, 2022 or later.

The amortization period is 5 years for domestic research expenditures and 15 years for foreign research expenditures using a half-year convention.

The Company evaluated its R&D expenses both in the U.S.

and foreign jurisdictions and determined there were approximately $ 10.2 million of expenses worldwide subject to capitalization and treated as a temporary adjustment.

The Company assessed its ability to realize the benefits of its domestic deferred tax assets (“DTA”) by evaluating all available positive and negative evidence, objective and subjective in nature, including (1) cumulative results of operations in recent years, (2) sources of recent pre-tax income, (3) estimates of future taxable income, and (4) the length of net operating loss (“NOL”) carryforward periods.

2 unchanged sentences

As a result, the Company determined that no valuation allowance was needed as of December 31, 2024.

Net operating losses and tax credit carryforwards as of December 31, 2023 are as follows:

Net operating losses and tax credit carryforwards as of December 31, 2024 were as follows:

Amount Expiration years

2 unchanged sentences

Net operating losses, state $ 7,005 2040

Effective tax rate reconciliation

The effective tax rate of the Company differs from the federal statutory rate as follows:

1 unchanged sentence

2024 2023 2022

Statutory rate 21.0 % 21.0 % 21.0 %

State tax 10.1 ( 7.5 ) ( 0.4 )

federal statutory rate 21.0 % 21.0 % 21.0 %

State taxes, net of federal benefit

8.4 10.1 ( 7.5 )

Permanent and other items 1.7 ( 9.9 ) ( 1.0 )

1 unchanged sentence

Tax credits ( 30.6 ) ( 120.0 ) 13.9

Foreign rate differential 7.2 ( 11.9 ) ( 4.9 )

Foreign tax rate differential ( 4.1 ) 7.2 ( 11.9 )

Foreign inclusion adjustments 29.4 74.7 ( 10.8 )

2 unchanged sentences

Total 63.4 % 136.5 % ( 42.8 ) %

Unrecognized tax benefits

As of December 31, 2024, the Company has approximately $ 1.4 million of unrecognized tax benefits.

16 unchanged sentences

With respect to foreign jurisdictions, tax years 2017 and after remain open.

The Company's provision for income taxes does not include provisions for foreign withholding taxes associated with the repatriation of undistributed earnings of certain foreign subsidiaries that we intend to reinvest indefinitely in our foreign subsidiaries.

The amortization period is 5 years for domestic research expenditures and 15 years for foreign research expenditures using a mid-year convention.

The Company evaluated its R&D expenses both in the U.S.

and foreign jurisdictions and determined there were approximately $ 12.9 million of expenses worldwide subject to capitalization and treated as a temporary adjustment.

The President signed the CHIPS and Science Act and Inflation Reduction Act (“IRA”) into law on August 9 and 16, 2022, respectively.

The IRA provides funding for climate and energy provisions.

The new law includes a corporate alternative minimum tax, a stock buyback tax, and increased IRS enforcement funding.

The CHIPS Act includes funding for the semiconductor industry in the U.S..

Both the Inflation Reduction Act and the CHIPS and Science Act were enacted in 2022.

Both CHIPS Act and IRA were not materially impactful on the Company’s tax positions.

Note 11 — Stockholders’ equity

The following description summarizes the material terms and provisions of the securities that the Company has authorized.

The Company is authorized to issue 110.0 million shares of common stock.

On September 12, 2022, the Company concluded a follow-on public offering of 6.6 million shares of its common stock.

These amounts included shares sold upon exercise in full of the underwriters' option to purchase additional shares at a price of $ 17.5 per share.

Morgan Securities, LLC and William Blair & Company, LLC acted as joint book-running managers for the offering.

Needham & Company, LLC and Cantor Fitzgerald & Co.

acted as co-managers for the offering.

The net proceeds from this offering for the company, after deducting underwriting discounts and commissions were $ 109.5 million.

On July 6, 2021, the Company concluded a follow-on public offering of 11.6 million shares of its common stock, which included 5.5 million shares offered by Grid Dynamics and 6.1 million shares offered by certain selling stockholders, at a price to the public of $ 15.03 per share.

These amounts included shares sold upon exercise in full of the underwriters’ option to purchase additional shares.

Morgan Securities, LLC, William Blair & Company, L.L.C.

and Cowen and Company, LLC acted as joint book-running managers for the offering.

Needham & Company, LLC and Cantor Fitzgerald & Co.

acted as co-managers for the offering.

The net proceeds from this offering for the company, after deducting underwriting discounts and commissions and estimated offering expenses, were $ 78.3 million.

The Company did not receive any proceeds from the sale of the shares by the selling stockholders.

As of December 31, 2023 the Company had 75.9 million shares of common stock that were outstanding.

Additionally, there were 3.1 million outstanding vested options to purchase the Company’s common stock.

As part of its initial public offering (“IPO”), ChaSerg issued 22.0 million units including one share of common stock and one-half of one redeemable warrant.

Simultaneously with its IPO, ChaSerg issued 0.6 million private placement units to its sponsor underwriter, each consisting of one common share and one-half of one redeemable warrant.

ChaSerg issued 0.1 million units as a result of the conversion of a working capital sponsor loan consisting of one common share and one-half of one redeemable warrant.

Each whole warrant entitled the holder to purchase one share of common stock at a price of $ 11.50 .

Each warrant was currently exercisable and was set to expire on March 5, 2025 ( five years after the completion of the Business Combination), or earlier upon redemption or liquidation.

The Company was set to call the warrants for redemption at a price of $ 0.01 per warrant upon a minimum 30 days’ prior written notice of redemption, if and only if, the reported last sale price of the Company’s common stock had equaled or exceeded $ 18.00 per share for any 20 trading days within a 30 -trading day period ending three business days before the Company sends the notice of redemption to the warrant holders;

and if and only if, there was a current registration statement in effect with respect to the shares of common stock underlying such warrants.

From July 23, 2021 to July 26, 2021, 1.4 million public warrants were exercised with cash proceeds of $ 16.4 million.

On July 28, 2021, the Company announced the redemption of its 2.8 million then outstanding public warrants.

Any public warrants not exercised prior to 5:00 p.m., New York City time, on August 30, 2021 were redeemed at that time for $ 0.01 per warrant.

The public warrants were exercisable at a price of $ 11.50 per share.

Of the total of 2.8 million warrants outstanding on July 28, 2021, 2.8 million were exercised and cash proceeds generated from these exercised warrants were approximately $ 31.7 million.

Pursuant to the terms of the agreements governing the rights of the holders of the public warrants, the Company redeemed the remaining unexercised and outstanding 0.02 million public warrants on August 30, 2021 for a redemption price of $ 0.01 per public warrant.

As of December 31, 2023 and 2022, there were no outstanding private or public warrants.

Note 11 — Stock-based compensation

Stock-based compensation expense

Employee stock-based compensation cost recognized in the consolidated statements of loss and comprehensive income/(loss) was as follows:

Employee stock-based compensation cost recognized in the consolidated statements of income (loss) and comprehensive income/(loss) was as follows:

Twelve months ended December 31,

6 unchanged sentences

Total stock-based compensation $ 34,167 $ 35,516 $ 60,968

2018 Stock Plan - Effective November 12, 2018, GDI adopted the 2018 Stock Option Plan.

2018 Stock Plan - Effective November 12, 2018, the Company adopted the 2018 Stock Option Plan.

Under the terms of the 2018 Stock Plan, certain options are subject to accelerated vesting in full or by an additional 12 months as a result of business combinations.

1 unchanged sentence

All of the awards issued pursuant to the 2018 Plan expire 10 years from the date of grant.

2020 Equity Incentive Plan - Effective March 5, 2020, our Board of Directors approved an equity incentive plan (the “2020 Plan”).

The 2020 Plan permits the Company to grant a maximum aggregate amount of 16.3 million Incentive Stock Options, Non-Statutory Stock Options (“NSOs”), Restricted Stock, Restricted Stock Units (“RSUs”), Stock Appreciation Rights, Performance Units (“PSUs”), and Performance Shares (“PSAs”) (collectively, the “Awards”) to employees, directors, and consultants of the Company.

Our Board of Directors or any committee appointed by The Board has the authority to grant Awards.

2020 Equity Incentive Plan - Effective March 5, 2020, the board of directors approved an equity incentive plan (the “2020 Plan”).

The 2020 Plan permits the Company to grant a maximum aggregate amount of 16.3 million Incentive Stock Options, Non-Statutory Stock Options (“NSOs”), Restricted Stock, Restricted Stock Units (“RSUs”), Stock Appreciation Rights, Performance Units (“PSUs”), and Performance Shares (“PSA”) (collectively, the “Awards”) to employees, directors, and consultants of the Company.

The board of directors or any committee appointed by the Board has the authority to grant Awards.

NSOs and RSUs issued under the 2020 Plan have the following vesting conditions:

one-fourth of the NSOs will vest on one year after the grant date;

one-fourth of the NSOs will vest one year after the grant date;

and thereafter one-sixteenth of the NSOs will vest each subsequent three-month anniversary.

PSUs are normally capped at 300 % maximum payout and have the following performance goals:

1) Year-over-year growth in specified revenue for the Performance Period, expressed as a percentage increase over the previous fiscal year revenue (“Revenue Growth”), and

2) Contribution Margin for the Performance Period as a percentage of specified revenue for the Performance Period.

Fifty percent ( 50 %) of the target number of performance shares granted will vest (if at all) based on the extent of achievement of Revenue Growth for the Performance Period and the remaining fifty percent ( 50 %) of the target number of performance shares granted will vest (if at all) based on the extent of achievement of the Contribution Margin.

PSUs granted in 2024 vest one-third annually over three years, capped at 280 % maximum payout, and have the following performance goals and additional external modifiers:

1) Year-over-year growth in revenues for the Performance Period, expressed as a percentage increase over the previous fiscal year revenues (“Revenue Growth”), and

2) GAAP gross profit, calculated as a percentage of revenues for the Performance Period (“Contribution Margin”).

Fifty percent ( 50 %) of the target number of performance shares granted will vest (if at all) based on the extent of achievement of the Revenue Growth for the Performance Period, and the remaining fifty percent ( 50 %) of the target number of performance shares granted will vest (if at all) based on the extent of achievement of the Contribution Margin.

The maximum payout for the internal metrics above is capped at 200 %.

External performance modifier rTSR is based on how the total shareholder return compares to the return of Russell 2000 index companies and can add up to additional 20 % for shares available to vest based on the internal metrics.

rCAGR modifier is based on how the compound annual revenue growth compares to the compound annual revenue growth of Russell 2000 companies and can add additional 20 % for shares available to vest based on the internal performance metrics independent of rTSR.

As of December 31, 2024, 2.0 million shares of stock remained available for grant under the 2020 Plan.

16 unchanged sentences

The Company used a zero percent dividend yield assumption for all Black-Scholes-Merton stock option-pricing calculations.

Since the Company’s shares were not publicly traded prior to the Closing and its shares were rarely traded privately, expected volatility is estimated based on the average historical volatility of peer group entities with publicly traded shares.

Since the Company’s shares were not publicly traded prior to the closing of our merger in March 2020 and its shares were rarely traded privately, expected volatility is estimated based on the average historical volatility of peer group entities with publicly traded shares.

The risk-free rate for the expected term of the options is based on the U.S.

5 unchanged sentences

Options outstanding as of January 1, 2022

1,916,101 $ 3.54 $ 65,971

Options exercised ( 286,842 ) $ 3.54

1 unchanged sentence

Options outstanding as of December 31, 2022

1,598,811 $ 3.54 $ 12,279

Options exercised ( 112,383 ) $ 3.54

Options forfeited ( 30,448 ) $ 3.54

Options outstanding as of December 31, 2023

1,486,428 $ 3.54 $ 14,552

Options exercised ( 197,703 ) $ 3.54

Options expired ( 2,795 ) $ 3.54

Options outstanding as of December 31, 2024

1,285,930 $ 3.54 $ 24,047 4.06

Options vested and exercisable as of December 31, 2024

1,285,930 $ 3.54 $ 24,047 4.06

The total intrinsic value of options exercised during the years ended December 31, 2024, 2023 and 2022 was $ 2.1 million, $ 0.9 million and $ 3.8 million, respectively.

3 unchanged sentences

Options outstanding as of January 1, 2022

2,224,687 $ 12.86 $ 55,856

Options granted 1,228,700 $ 14.67

2 unchanged sentences

Options outstanding as of December 31, 2022

3,003,611 $ 13.22 $ 3,883

Options granted 689,500 $ 11.49

1 unchanged sentence

Options forfeited ( 329,889 ) $ 14.99

Options expired ( 44,205 ) $ 19.74

Options outstanding as of December 31, 2023

3,165,715 $ 12.79 $ 7,197

Options granted 25,000 $ 12.65

3 unchanged sentences

Options outstanding as of December 31, 2024

2,748,391 $ 12.75 $ 26,881 6.59

Options vested and exercisable as of December 31, 2024

2,014,869 $ 12.25 $ 20,746 6.16

The weighted average grant-date fair value of stock options granted during the years ended December 31, 2024, 2023 and 2022 was $ 6.74 , $ 5.87 and $ 6.93 , respectively.

6 unchanged sentences

Unvested awards as of January 1, 2022

1,493,915 $ 8.82

Awards granted 1,414,925 $ 14.05

Awards vested and released ( 662,872 ) $ 9.26

Awards forfeited ( 291,157 ) $ 8.14

Unvested awards as of December 31, 2022

2,245,968 $ 11.99

Awards granted 251,955 $ 11.64

Awards vested and released ( 1,663,702 ) $ 11.98

Awards forfeited ( 105,008 ) $ 11.25

Unvested awards as of December 31, 2023

729,213 $ 11.99

Awards granted 1,750,381 $ 13.46

2 unchanged sentences

Unvested awards as of December 31, 2024

1,795,865 $ 13.39

The total unrecognized compensation expenses related to 2020 Stock Plan RSUs as of December 31, 2024 was $ 17.5 million to be expensed on a straight-line basis over 2.3 years.

3 unchanged sentences

Unvested awards as of January 1, 2022 (1)

112,085 $ 15.69

Awards granted

1 unchanged sentence

Awards vested and released ( 112,085 ) $ 15.69

Awards forfeited ( 32,375 ) $ 15.61

Unvested awards as of December 31, 2022 (2)

2 unchanged sentences

523,938 $ 11.97

Performance achievement adjustment

1,148,376 $ 31.31

Awards vested ( 1,335,982 ) $ 39.26

Awards forfeited ( 32,375 ) $ 11.97

Unvested awards as of December 31, 2023 (3)

4 unchanged sentences

319,320 $ 14.21

Modifier adjustments

255,456 $ 4.44

Awards vested and released ( 822,895 ) $ 11.97

4 unchanged sentences

(1) Reported at the certified performance achievement at 271 % of the target shares granted

(2) Reported at 100 % of the target shares granted

(3) Reported at the certified performance achievement at 256 % of the target shares granted in 2022 and at 170 % of the target shares granted in 2023

(2) Reported at 100 % of the target shares

(3) Reported at the certified performance achievement at 170 % of the target shares granted.

(4) Reported at the estimate performance adjustment of 208 % for the first tranche granted in 2024 and 100% for the remaining tranches.

The total unrecognized compensation expenses related to PSUs as of December 31, 2024 was $ 11.4 million to be expensed on over 1.0 years.

11 unchanged sentences

Numerator for basic and diluted loss per share

Net loss $ ( 1,765 ) $ ( 29,214 ) $ ( 7,700 )

Denominator for basic and diluted loss per share

Weighted-average shares outstanding – basic and diluted 75,193 69,197 58,662

Net loss per share

Net income/(loss) $ 4,041 $ ( 1,765 ) $ ( 29,214 )

Weighted-average shares outstanding – basic 77,465 75,193 69,197

Net effect of dilutive stock options and restricted stock units 2,509 — —

Weighted-average shares outstanding – diluted 79,974 75,193 69,197

Net income/(loss) per share

Basic $ 0.05 $ ( 0.02 ) $ ( 0.42 )

7 unchanged sentences

Performance stock units 1,077 912 1,338

Warrants to purchase common stock — — 3,657

Total 2,997 7,223 7,846

Note 13 — Segment and geographic information

In accordance with ASC Topic 280, Segment Reporting , the Company has determined it has one operating segment and one reportable segment.

The chief operating decision maker assesses the Company’s performance and allocates resources based on the Company’s consolidated financial information.

The Company’s business activities have similar economic characteristics and are similar in all of the following areas:

the nature of services, the type or class of customer for which they provide their services, and the methods used to provide their services.

Operating segments are components of the Company for which separate financial information is available and is regularly reviewed and evaluated by the chief operating decision maker (“CODM”) to assess performance of each operating segment and to allocate resources.

The Company’s CODM is the Chief Executive Officer (“CEO”).

The Company operates as a single operating segment engaged in delivery of various software development and hosting services to customers across its five main industry-based verticals:

TMT, Retail, CPG/Manufacturing, Finance, and Healthcare and Pharma.

The Company derives revenues from multiple locations;

however, North America continues to be its main sales market.

The Company’s determination that it operates as a single segment is based on the financial information regularly reviewed by the CODM.

The CODM assesses core operating performance and allocates operating and capital resources of the Company based on gross profit, income/(loss) from operations and net income/(loss) that are also reported on the consolidated statement of income/(loss) and comprehensive income/(loss).

All three metrics are used to analyze budget-to-actual variances on a monthly and quarterly basis and to decide on the allocation of operating and capital resources to a single segment or new acquisitions.

Additionally, the CODM reviews operating expenses, including cost of revenues, engineering, research, and development, sales and marketing, general and administrative expenses and trade receivable the consolidated level to manage the Company’s operations.

The Company does not generate, analyze and evaluate any discrete financial information for individual verticals or sales markets as of the reporting date.

The CODM does not evaluate operating performance using asset or liability information .

Geographic Information

1 unchanged sentence

The Company attributes customers to respective countries based upon location of the customer served.

It differs from the prior period definition that was based upon location of the customer billed.

Refer to Note 1 for more details on reclassifications.

For the years ended December 31,

10 unchanged sentences

( in thousands)

Poland $ 3,010 $ 1,522

Serbia 2,350 2,457

Ukraine 2,437 2,468

United States 2,101 2,174

Ukraine 2,067 2,437

India 1,098 621

Other 3,392 2,147

3 unchanged sentences

The Company entered into a software subscription services agreement (the “SSA”) effective as of June 1, 2019.

The SSA is non-cancelable for a term of 5 years from the effective date and renewable at the election of the Company.

On December 20, 2023 the Company decided to renew the SSA for an additional term of 5 years starting from June 1, 2024.

The SSA was non-cancelable for a term of 5 years from the effective date and renewable at the election of the Company.

On December 20, 2023, the Company renewed the SSA for an additional term of 5 years starting from June 1, 2024.

Payments under the terms of the SSA are due quarterly in advance.

8 unchanged sentences

Note 15 — Subsequent events

The vesting of PSUs with the performance factors based on the 2023 results was certified by the Board of Directors for release on February 20, 2024.

Approximately 0.8 million shares were released upon vesting of 2023 PSUs with approximately 0.4 million shares net withheld to cover tax obligations.

The Company performed its subsequent event procedures through February 27, 2025, the date these consolidated financial statements were issued.

The Company net withheld and returned to the 2020 Plan pool 0.2 million shares to cover $ 4.9 million of tax obligations related to the vesting of 0.4 million of RSUs on January 1, 2025.

On February 13, 2025 the board of directors certified vesting of the first tranche of PSUs based on the 2024 results with the performance achievement at 208 %.

Approximately 1.1 million shares were released on February 18, 2025, with approximately 0.5 million shares net withheld to cover $ 11.3 million of tax obligations.

CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE

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 8. Financial Statements and Supplementary Data