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Item 7. Management’s Discussion and Analysis

2026-03-05 compared with 2025-02-27 · 92 added, 97 removed, 291 unchanged (39% of the section changed)

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Our actual results may differ materially from those anticipated in these forward-looking statements.

You should review the section titled “Special Note Regarding Forward-Looking Statements” for a discussion of forward-looking statements and in Item 1A, “Risk Factors” for a discussion of factors that could cause actual results to differ materially from the results described in or implied by the forward-looking statements contained in the following discussion and analysis and

elsewhere in this Annual Report on Form 10-K.

Our historical results are not necessarily indicative of the results that may be expected for any period in the future.

Grid Dynamics Holdings, Inc.

(“Grid Dynamics,” the “Company,” “we,” “us,” or “our”) is a leading provider of technology consulting, platform and product engineering, and advanced analytics services.

As a forefront provider of technology consulting, platform and product engineering services, and bespoke software development, we draw from over eight years of leadership in Enterprise artificial intelligence (“AI”), coupled with profound expertise in cloud, data, and advanced analytics.

Our commitment to engineering excellence, R&D leadership, a co-innovation ethos, globally efficient “Follow-the-Sun” delivery model, and an unwavering “whatever it takes” dedication to client success empower us to solve even the most complex enterprise challenges, facilitating profitable business outcomes and future growth.

Founded in 2006, Grid Dynamics is headquartered in Silicon Valley and has a global talent pool of intellectually curious problem solvers in offices across the U.S., Mexico, Jamaica, Argentina, the U.K., Europe, and India.

(“Grid Dynamics,” the “Company,” “we,” “us,” or “our”) is an enterprise artificial intelligence (“AI”) transformation partner for the Fortune 1000.

We combine deep AI expertise with proven enterprise-scale delivery to help clients identify where to invest in AI, build systems that work at scale, and capture real business value from AI deployments.

The building blocks of AI have always been our foundation — distributed systems, real-time data, machine learning algorithms, and natural language processing.

What has changed is that these capabilities have now converged into Enterprise AI.

This technical heritage is matched with business acumen.

We solve the most pressing technical challenges and enable positive business outcomes for enterprise companies.

A key differentiator is our nearly two decades of technology leadership and pioneering enterprise AI expertise.

This is supported by deep capabilities and ongoing investment in data and machine learning platform engineering, cloud platform and product engineering, Internet of Things and edge computing, and digital engagement services.

Fiscal Year Highlights

The following table sets forth a summary of Grid Dynamics’ financial results for the annual periods indicated:

The following table sets forth a summary of Grid Dynamics’ financial results for the periods indicated:

Year ended December 31,

2025 2024 2023

% of revenue % of revenue % of revenue

% of revenues

(in thousands, except percentages and per share data)

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Our key metrics for the year ended December 31, 2025 are:

• We reported record revenues of $350.6 million, an increase of 12.0% from the previous year.

• Our gross profit margins remained steady at 36.2% in both 2024 and 2023.

• We reduced our loss from operations to $2.1 million, compared to $5.6 million in the previous fiscal year.

This was a result of higher revenues partially offset by increased operating expenses.

• In 2024, we recorded net income of $4.0 million, a significant turnaround after four consecutive years of net losses.

• Our Non-GAAP EBITDA grew 18.6%, reaching $52.5 million during the year ended December 31, 2024.

• Our diluted GAAP EPS was $0.05 per share, compared to $(0.02) per share in the year ended December 31, 2023.

• Our diluted Non-GAAP EPS increased to $0.47 per share from $0.41 per share in the year ended December 31, 2023.

Total revenues increased 17.5% year-over-year to a record $411.8 million, driven by demand across our core verticals and contributions from our acquisitions.

• Operating loss:

Loss from operations narrowed to $1.9 million, compared to a loss of $2.1 million in the prior year.

This improvement reflects revenue growth outpacing the increase in operating expenses.

• Net income and EPS:

Net income increased to $9.7 million from $4.0 million in the prior year.

The increase was largely attributable to a combination of revenue growth and other income.

Diluted GAAP EPS was $0.11 per share, compared to $0.05 per share for the year ended December 31, 2024.

• Non-GAAP measures:

Non-GAAP EBITDA increased 2.5%, reaching $53.8 million for the year ended December 31, 2025.

Diluted Non-GAAP EPS was $0.40 per share, compared to $0.47 per share in the prior year.

• Cash flows:

Operating cash flow was $40.6 million up from $30.2 million in 2024.

The operating results in any period are not necessarily indicative of the results that may be expected for any future period.

Recent Acquisitions

On October 4, 2024, we acquired Mobile Computing S.A.

(“Mobile Computing”), an Argentina-based company offering a comprehensive suite of solutions spanning industries including manufacturing, CPG, and financial services.

The acquisition expanded our client portfolio, adding leading companies from the manufacturing, CPG, and financial services industries, and strengthened our expertise in digital product co-creation and UI/UX services.

On September 26, 2024, we acquired JUXT Ltd.

(“JUXT”), a UK-based company specializing in data-intensive information systems for banking and other financial institutions, with a particular focus on risk platforms, structured notes, equity derivatives, and financial reporting.

The acquisition strengthens our go-to-market positioning in the Finance vertical and opens new opportunities for us across the European market.

Business Update Regarding Military Action in Ukraine

In February 2022, Russian forces launched a significant military action against Ukraine.

In February 2022, Russian forces launched a significant military action against Ukraine, which continues and even worsens.

The impact on Ukraine, coupled with the actions taken by other countries, including sanctions imposed by the U.S., Canada, the U.K., the European Union, and other countries, companies and organizations against officials, individuals, regions, and industries in Russia and certain regions of Ukraine, and each country’s potential response to such sanctions, tensions, and military actions could have a material adverse effect on our operations.

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We continue to actively work with our personnel and with our customers to meet their needs and to ensure smooth delivery of services.

We have no way to predict the progress or outcome of the military action in Ukraine, as the conflict and government responses continue to develop and are beyond our control.

Prolonged unrest, military activities, expansion of hostilities, or broad-based sanctions could have a material adverse effect on our operations and business outlook.

We have no way to predict the progress or outcome of the military action in Ukraine, as the conflict and government responses continue to develop and even worsen and are beyond our control.

The prolonged unrest, military activities, expansion of hostilities, or broad-based sanctions could have a material adverse effect on our operations and business outlook.

For example, if Russia were to invade other countries, such as Moldova, it could adversely affect our business.

In addition, the current geopolitical situations in Armenia and separately in Serbia create additional uncertainty in the region, and could adversely affect our business.

For additional information on the various risks posed by the military action in Ukraine and the impact in the region, as well as other macroeconomic factors affecting our business, please read “Part I.

For additional information on the various risks posed by the ongoing fighting in Ukraine and related sanctions and other impacts in the region, as well as other macroeconomic factors affecting our business, please read “Part I.

Risk Factors” included in this Annual Report on Form 10-K.

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This work resulted in a decrease in the total number of customers from 264 in 2024 to 237 in 2025.

Grid Dynamics has a relatively high level of revenue concentration with certain customers and constantly works toward decreasing those levels.

During the years ended December 31, 2024 and 2023, one customer accounted for 10% or more of our revenues in each of the periods indicated, compared to two customers during the year ended December 31, 2022.

We expect to continue our focus on maintaining our long-term relationships with customers while diversifying our customer base.

Grid Dynamics has a high level of revenue concentration with certain customers, as indicated in the below table, and constantly works toward decreasing those levels.

During the years ended December 31, 2025, 2024 and 2023, one customer accounted for 10% or more of our revenues in each of the periods indicated.

We expect to continue our focus on maintaining our long-term relationships with customers while seeking to diversify our customer base.

The following table presents revenues concentration by amount and as a percentage of our revenues for the periods indicated:

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The weight given to the positive and negative evidence is commensurate with the extent to which the evidence may be objectively verified.

We are subject to tax payments and filling of tax returns in various tax jurisdictions.

We are subject to tax payments and filing of tax returns in various tax jurisdictions.

Our tax returns are routinely examined by tax authorities in various countries.

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Provision for income taxes 6,033 7,014 (981) (14.0) %

Net income/(loss)

$ 4,041 $ (1,765) $ 5,806 n.m.

$ 9,668 $ 4,041 $ 5,627 139.2 %

During the year ended December 31, 2025, we generated record revenues of $411.8 million, an increase of 17.5% from the previous year.

The growth was driven by a combination of customer expansion across industry verticals and revenues from new acquisitions.

The growth reflected the continued growth across most of our verticals, including the benefit of strategic acquisitions completed during 2024.

Revenues by Vertical.

We assign our customers into one of the main vertical markets or a group of various industries where we have or are increasing our presence, labeled as “verticals.” In the first quarter of 2024, we disaggregated Healthcare and Pharma as a separate vertical due to their growing importance to the Company.

We assign our customers into one of the main vertical markets or a group of various industries, labeled as “verticals.” In the first quarter of 2024, we disaggregated Healthcare and Pharma as a separate vertical due to their growing importance to the Company.

The following table presents our revenues by vertical and revenues as a percentage of total revenues by vertical for the periods indicated:

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2025 2024 2023

% of revenue % of revenue % of revenue

(in thousands, except percentages)

(in thousands, except percentages of revenues)

Retail $ 120,507 29.3 % $ 113,957 32.5 % $ 102,551 32.8 %

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Total $ 411,827 100.0 % $ 350,571 100.0 % $ 312,910 100.0 %

Retail remained our largest vertical, contributing 32.5% of total revenues during the year ended December 31, 2024.

Revenues in this vertical grew by 11.1% over 2023.

Growth in the year came from a range of customers operating in the home improvement space, specialty retail, and department stores.

Technology, Media and Telecom (“TMT”), our second largest vertical, experienced a decline of 3.8% over 2023.

The year-over-year decline was caused by a more cautious approach to spending and customer-specific factors affecting some of our

smaller clients largely offset by growth at some of our largest technology customers, resulting in the TMT vertical accounting for 27.1% of total revenues during the year.

During the year ended December 31, 2024, revenues in the Finance vertical doubled, reaching $60.2 million, compared to $28.8 million in the prior year, making it the largest contributor to the overall revenue growth for the period.

The strong performance of our Finance vertical was driven by a combination of increased demand from fintech and insurance customers, as well as our recent acquisitions.

Revenues in the CPG and Manufacturing vertical declined by $2.4 million from $42.9 million during the year ended December 31, 2023 to $40.5 million in 2024.

These results were largely affected by a more cautionary outlook towards spending and customer-specific factors at some of our customers throughout the first half of the year.

At the same time, during the fourth quarter of 2024, we managed to expand the vertical through both increased volume of services provided to existing customers, and new customers added organically and through acquisitions.

As a result, the CPG and Manufacturing vertical represented 11.5% of total revenues during 2024, compared to 13.7% in 2023.

Revenues in the Healthcare and Pharma vertical were $11.1 million, or 3.2% of total revenues, during the year ended December 31, 2024, down compared to $13.7 million, or 4.4%, in the prior year.

Lastly, our Other vertical continued to grow with revenues up 14.0% year-over-year.

This growth was driven by increased demand from both existing and new customers.

The Other vertical contributed approximately 8.0% of total revenues for each of the years ended December 31, 2024 and 2023.

Retail remained our largest vertical, representing 29.3% of total revenues for the year ended December 31, 2025.

Revenues in this vertical increased $6.6 million, or 5.7%, compared to the prior year, primarily driven by expanded demand across our specialty retail, grocery and apparel customer base.

Technology, Media and Telecom (“TMT”) revenues increased $12.4 million, or 13.0%, compared to the prior year, contributing 20.2% to the total year-over-year consolidated revenues growth.

The growth was largely driven by our top technology customers.

Our TMT vertical represented 26.1% of total revenues for the year ended December 31, 2025.

Finance revenues increased $40.2 million, or 66.9%, to $100.4 million for the year ended December 31, 2025, compared to $60.2 million for the year ended December 31, 2024.

This vertical was the largest contributor to the overall consolidated

revenues growth for the period.

The increase was attributable to robust demand from fintech and banking customers, including contributions from our 2024 acquisitions.

CPG and Manufacturing revenues increased $2.6 million, or 6.4%, to $43.1 million for the year ended December 31, 2025, from $40.5 million in the prior year.

Healthcare and Pharma vertical decreased to $10.2 million for the year ended December 31, 2025, compared to $11.1 million in the prior year, representing 2.5% and 3.2% of total revenues, respectively.

Lastly, our Other vertical increased 1.4% year-over-year driven by demand from both new and existing customers.

The Other vertical represented 7.2% of total revenues during the year ended December 31, 2025, compared to 8.5% in the prior year.

Cost of Revenues and Gross Margin

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Cost of revenues also includes depreciation and amortization expense related to client-serving activities.

During the year ended December 31, 2024, our cost of revenues were $223.6 million, an increase of $23.8 million, or 11.9%, from $199.8 million in 2023.

The main driver of this increase was higher headcount to support our revenue growth.

Our gross profit increased $13.9 million to $127.0 million in the year ended December 31, 2024 from $113.1 million during the year ended December 31, 2023.

Expressed as a percentage of revenues, our gross margin remained flat during the years ended December 31, 2024 and 2023, reaching 36.2% in both periods.

Our cost of revenues increased by $45.9 million, or 20.5%, to $269.5 million, for the year ended December 31, 2025, from $223.6 million for the year ended December 31, 2024.

The increase in cost of revenues was primarily driven by the operational and delivery expenses to support revenue growth.

Our gross profit increased by $15.3 million to $142.3 million in the year ended December 31, 2025, compared to $127.0 million in the prior year.

Expressed as a percentage of revenues, our gross margin decreased by 160 basis points to 34.6% in 2025, from 36.2% in 2024.

Although gross profit grew in absolute terms due to increased revenues, the decline in gross margin was driven by a higher cost basis in key delivery geographies and foreign exchange fluctuations.

Engineering, Research and Development

The principal components of engineering, research and development expenses are salaries and employee benefits including performance bonuses and stock-based compensation for personnel engaged in the design and development of solutions, as well as depreciation and amortization expenses related to engineering, research and development activities.

Our engineering, research, and development expenses increased significantly by 24.5% during the year ended December 31, 2024 and reached $18.3 million, compared to $14.7 million last year.

Growth of our engineering, research, and development expenses primarily reflects our continued investments in customer delivery operations and internally developed software to support our growth.

Our engineering, research, and development expenses increased by $5.3 million, or 29.0%, to $23.7 million for the year ended December 31, 2025, from $18.3 million in the previous year.

The increase primarily reflected our continued investments in customer delivery capabilities and internally developed solutions.

This includes the integration of AI technologies designed to enhance our scalability, operational efficiency and long-term competitiveness.

Sales and Marketing

Sales and marketing expenses represent spending associated with promoting and selling of our services.

These expenses comprise of personnel costs, including performance bonuses and stock-based compensation, marketing events, travel expenses, as well as depreciation and amortization related to such activities.

Our sales and marketing expenses were $28.6 million in the year ended December 31, 2024, an increase of $4.5 million, or 18.5%, from $24.2 million in 2023.

Expressed as a percentage of revenues, our sales and marketing expenses were 8.2% and 7.7% during 2024 and 2023, respectively.

The increases in our sales and marketing expenses were largely driven by investments in our sales organization including investments in sales personnel and new sales initiatives.

These expenses are comprised of personnel costs, including performance bonuses and stock-based compensation, marketing events, travel expenses, as well as depreciation and amortization related to such activities.

Our sales and marketing expenses were $30.0 million for the year ended December 31, 2025, compared to $28.6 million in 2024.

While expenses increased $1.4 million in absolute terms, they decreased as a percentage of revenues to 7.3% compared to 8.2% in the prior year.

This decrease reflects improved operating leverage, as revenue growth outpaced increases in sales-related costs, supported by optimization initiatives across sales and business-development functions.

General and Administrative

General and administrative expenses include costs to support the business and consist primarily of administrative personnel and officers’ salaries, employee benefits including performance bonuses, stock-based compensation, legal and audit expenses, insurance, operating lease expenses of office premises and other facility costs, workforce global mobility initiatives,

restructuring and employee relocations cost not directly related to customer projects, and depreciation and amortization expenses related to such activities.

General and administrative expenses include a substantial majority of Grid Dynamics’ stock-based compensation costs for the financial periods discussed herein.

General and administrative expenses were $82.1 million in the year ended December 31, 2024, an increase of $2.3 million, or 2.9%, from $79.8 million in the previous year.

Growth in general and administrative expenses was mainly caused by increased levels of investments in physical assets and facilities and related depreciation expenses, as well as increased acquisition-related costs and provisions for bad debts, partially offset by lower stock-based compensation costs.

Expressed as a percentage of revenues, our general and administrative expenses decreased 2.1 percentage points to 23.4% during 2024, compared to 25.5% in 2023.

General and administrative expenses increased by $8.4 million, or 10.2%, to $90.5 million for the year ended December 31, 2025, from $82.1 million for the year ended December 31, 2024.

The increase was primarily attributable to the full-year impact of acquisitions completed in 2024, which resulted in higher personnel-related costs and depreciation and amortization expenses.

Expressed as a percentage of revenues, our general and administrative expenses decreased by 1.3 percentage points to 22.1% in 2025, compared to 23.4% in the prior year, reflecting effective cost optimization across various corporate functions.

Interest and Other Income, Net

Interest and other income, net represents interest earned on our cash and cash equivalents, including money market funds, interest expense related to our borrowings, foreign exchange gains and losses as well as changes in the fair value of contingent considerations and marketable equity securities.

During the year ended December 31, 2024, interest and other income, net increased to $13.2 million from $10.4 million in the prior year.

The increase was primarily driven by income generated by our money market funds and an increase in the fair value of our investment in marketable equity securities.

Interest and other income, net in 2023 benefited mainly due to the write-off of our contingent consideration liability related to Mutual Mobile and NextSphere acquisitions in the amount of $4.2 million.

Interest and other income, net was $17.6 million for the year ended December 31, 2025, compared to $13.2 million for the year ended December 31, 2024.

The $4.4 million increase was primarily driven by fair value adjustments related to acquisition-related contingent consideration.

These gains were partially offset by unfavorable foreign currency exchange rate fluctuations.

Provision for Income Taxes

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Provision for income taxes was $6.0 million in the year ended December 31, 2025 compared to $7.0 million in the year ended December 31, 2024.

The effective tax rate decreased between periods from 136.5% in 2023 to 63.4% in 2024.

The difference in the tax provision was mainly attributable to an increase in pre-tax book income.

The effective tax rate decreased between the periods from 63.4% in 2024 to 38.4% in 2025.

The difference in the tax provision was mainly attributable to an increase in pre-tax book income due to the change in fair value of contingent consideration payable that is not taxable.

Year Ended December 31, 2024 Compared to Year Ended December 31, 2023

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Further, these measures may differ from the non-GAAP information, even where similarly titled, used by other companies and therefore should not be used to compare our performance to that of other companies.

We compensate for these limitations by providing investors and other

users of our financial information a reconciliation of non-GAAP measures to the related GAAP financial measures.

We compensate for these limitations by providing investors and other users of our financial information a reconciliation of non-GAAP measures to the related GAAP financial measures.

We encourage investors and others to review the financial information in its entirety, not to rely on any single financial measure and to view our non-GAAP measures in conjunction with GAAP financial measures.

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• Non-GAAP EBITDA :

Net income/(loss) before interest income/(expense), provision for income taxes and depreciation and amortization, and further adjusted for the impact of stock-based compensation expense, transaction-related costs (which include, when applicable, professional fees, retention bonuses, and consulting, legal and advisory costs related to Grid Dynamics’ merger and acquisition and capital-raising activities), impairment of long-lived assets, restructuring costs, one-time charges, and non-operating income/(expenses), net (which includes mainly foreign currency transaction gains and losses, fair value adjustments and other miscellaneous expenses).

Net income/(loss) before interest income/(expense), provision for income taxes and depreciation and amortization, and further adjusted for the impact of stock-based compensation expense, transaction-

related costs (which include, when applicable, professional fees, retention bonuses, and consulting, legal and advisory costs related to Grid Dynamics’ merger and acquisition and capital-raising activities), impairment of long-lived assets, restructuring costs, one-time charges, and non-operating income/(expenses), net (which includes mainly foreign currency transaction gains and losses, fair value adjustments and other miscellaneous expenses).

• Non-GAAP net income :

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Non-GAAP net income, divided by the diluted weighted-average number of diluted shares outstanding for the period.

The following table presents the reconciliation of Non-GAAP EBITDA to consolidated net income/(loss), the most directly comparable GAAP measure, for the annual periods indicated:

The following table presents the reconciliation of Non-GAAP EBITDA to consolidated net income/(loss), the most directly comparable GAAP measure, for the periods indicated:

Year ended December 31,

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(2) Transaction and transformation-related costs include, when applicable, external deal costs, transaction-related professional fees, transaction-related retention bonuses, which are allocated proportionally across cost of revenues, engineering, research and development, sales and marketing and general and administrative expenses as well as other transaction-related costs including integration expenses consisting of outside professional and consulting services.

(3) We implemented a restructuring plan during the first quarter of 2023.

Our restructuring costs comprised of severance charges and respective taxes and are included in General and administrative expenses in the Company’s consolidated statement of net income/(loss) and comprehensive income/(loss).

We did not incur any restructuring expenses during the year ended December 31, 2022.

(3) Our restructuring costs comprised of severance charges and respective taxes and are included in General and administrative expenses in the Company’s consolidated statements of income/(loss).

(4) Interest and other income, net consist primarily of gains and losses on foreign currency transactions, fair value adjustments, interest on cash held at banks and returns on investments in money-market funds, and other miscellaneous non-operating expenses.

The following table presents a reconciliation of Non-GAAP diluted EPS and Non-GAAP net income to consolidated net income/(loss) for the annual periods indicated:

The following table presents a reconciliation of Non-GAAP diluted EPS and Non-GAAP net income to consolidated net income/(loss) for the periods indicated:

Year ended December 31,

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(3) We implemented a restructuring plan during the first quarter of 2023.

Our restructuring costs comprised of severance charges and respective taxes and are included in general and administrative expenses in the Company’s consolidated statement of loss and comprehensive income/(loss).

We did not incur any restructuring expenses during the year ended December 31, 2022.

(3) Our restructuring costs comprised of severance charges and respective taxes and are included in general and administrative expenses in the Company’s consolidated statements of income/(loss).

(4) Other (income)/expense, net consist primarily of gains and losses on foreign currency transactions, fair value adjustments, and other miscellaneous non-operating income and expense.

During the year ended December 31, 2024, the Company started to include interest (income)/expense, net in its calculation of non-GAAP net income.

As a result, the Company has adjusted previously reported Other (income)/expense, net adjustment to include interest income, net of $9.3 million and $2.1 million for the years ended December 31, 2023 and 2022, respectively.

As a result, the Company has adjusted previously reported Other (income)/expense, net adjustment to include interest income, net of $9.3 million for the year ended December 31, 2023.

(5) Reflects the estimated tax impact of the non-GAAP adjustments presented in the table.

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The latest offering closed on November 14, 2024 and resulted in $107.6 million of net proceeds, after deducting underwriting discounts and commissions.

Additionally, on March 15, 2022, we entered into an agreement establishing a revolving credit facility with JPMorgan Chase Bank, N.A., as an administrative agent for the lenders.

The revolving credit facility provides us with $30.0 million of available borrowing

capacity, of which zero was outstanding as of December 31, 2024.

We are seeking to extend the term of this facility, which currently expires on March 15, 2025.

Additionally, we entered into an agreement establishing a revolving credit facility with JPMorgan Chase Bank, N.A., as an administrative agent for the lenders.

The revolving credit facility provides us with $30.0 million of available borrowing capacity.

On May 20, 2025, the maturity of this facility was extended to March 15, 2028.

See consolidated statement of changes in stockholders’ equity and Note 7 “Debt” in the notes to our consolidated financial statements in this Annual Report on Form 10-K regarding our follow-on offering and debt details.

As of December 31, 2024, Grid Dynamics had cash and cash equivalents amounting to $334.7 million compared to $257.2 million at December 31, 2023.

Of these amounts, $38.6 million and $21.2 million, respectively, were held in countries outside the U.S, and included among others the U.K., Switzerland, the Netherlands, India, Poland, Argentina, Mexico, Armenia, Moldova, Serbia and other countries.

As of December 31, 2025, Grid Dynamics had cash and cash equivalents of $342.1 million compared to $334.7 million as of December 31, 2024.

Of these amounts, $48.4 million and $38.6 million, respectively, were held in countries outside the U.S, and included, among others, Switzerland, the U.K., India, Mexico, Ukraine, Argentina, the Netherlands, Poland and other countries.

We did not have any debt outstanding under the revolving credit facility at any balance sheet date presented.

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Net cash used in investing activities (15,136) (51,301) (25,950)

Net cash provided by/(used in) financing activities

Net cash (used in)/provided by financing activities

(19,937) 101,162 (16,321)

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Operating Activities.

Net cash provided by operating activities during the year ended December 31, 2024 decreased by $10.9 million to $30.2 million from $41.1 million in the prior year, driven by changes in working capital, including the timing of compensation payments to our employees and collections from customers.

Net cash provided by operating activities was $40.6 million for the year ended December 31, 2025, compared to $30.2 million in the prior year.

The $10.4 million increase was primarily driven by favorable changes in working capital, specifically regarding the timing of payments to vendors and settlement of employee-related liabilities.

Investing Activities.

Net cash used in investing activities during the year ended December 31, 2024 almost doubled compared to 2023 and reached $51.3 million.

The main driver for the increase in cash spending were closing payments, net of cash acquired, for the JUXT and Mobile Computing acquisitions.

Net cash used in investing activities decreased by $36.2 million to $15.1 million for the year ended December 31, 2025, from $51.3 million in the prior year.

This decrease was driven by significant cash outflows in 2024 related to the acquisitions of JUXT and Mobile Computing, net of cash acquired.

Financing Activities .

Net cash provided by financing activities of $101.2 million in the year ended December 31, 2024 was generated by the equity offering in the fourth quarter of 2024, slightly offset by tax withholding obligations due to the issuance of shares in connection with vested stock awards.

Cash used in financing activities during the year ended December 31, 2023 was $16.3 million and reflected the tax withholding obligations due to the issuance of shares in connection with vested awards.

Net cash used in financing activities was $19.9 million for the year ended December 31, 2025 driven by the settlement of employee tax withholding obligations associated with the vesting of equity awards.

In the prior year, financing activities generated $101.2 million, primarily reflecting net proceeds from an equity offering, partially offset by similar employee tax withholding obligations.

Our Annual Report on Form 10-K for the fiscal year ended December 31, 2024 includes a discussion and analysis of our cash flows between the years ended December 31, 2024 and 2023 in Item 7 of Part II, “Management’s Discussion and Analysis of Financial Condition and Results of Operations.”

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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 7. Management’s Discussion and Analysis