What changed in this filing

/stocks — the workspaceLOADING

Item 8. Financial Statements and Supplementary Data

2026-03-05 compared with 2025-02-27 · 284 added, 205 removed, 964 unchanged (34% of the section changed)

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Consolidated Balance Sheets as of December 31, 2025 and 2024

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

Consolidated Statements of Income/(Loss) for the Years Ended December 2025, 2024, and 2023

Consolidated Statements of Comprehensive Income/(Loss) for the Years Ended December 2025, 2024, and 2023

Consolidated Statements of Stockholders’ Equity for the Years Ended December 31, 2025, 2024, and 2023

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

(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”).

(a Delaware corporation) and subsidiaries (“the Company”) as of December 31, 2025 and 2024, the related consolidated statements of income/(loss), comprehensive income/(loss), stockholders’ equity, and cash flows for each of the three years in the period ended December 31, 2025, 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, 2025 and 2024, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2025, 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.

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, 2025, 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 March 5, 2026 expressed an unqualified opinion.

Basis for opinion

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We believe that our audits provide a reasonable basis for our opinion.

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.

Critical audit matter

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.

/s/ GRANT THORNTON LLP

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San Francisco, California

February 27, 2025

March 5, 2026

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

Board of Directors and Shareholders

Grid Dynamics Holdings, Inc.

Opinion on internal control over financial reporting

Grid Dynamics Holdings, Inc.Opinion on internal control over financial reporting

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

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In our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2025, based on criteria established in the 2013 Internal Control — Integrated Framework issued by COSO.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (“PCAOB”), the consolidated financial statements of the Company as of and for the year ended December 31, 2024, and our report dated February 27, 2025 expressed an unqualified opinion on those financial statements.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (“PCAOB”), the consolidated financial statements of the Company as of and for the year ended December 31, 2025, and our report dated March 5, 2026 expressed an unqualified opinion on those financial statements.

Basis for opinion

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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 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

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San Francisco, California

February 27, 2025

March 5, 2026

GRID DYNAMICS HOLDINGS, INC.

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Accumulated other comprehensive income/(loss) 1,054 ( 2,912 )

Treasury stock ( 2,000 ) —

Total stockholders’ equity 542,073 517,829

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GRID DYNAMICS HOLDINGS, INC.

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

CONSOLIDATED STATEMENTS OF INCOME/(LOSS)

(In thousands, except per share data)

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Interest and other income, net 17,596 13,160 10,418

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

Income before income tax 15,701 11,055 4,838

Provision for income taxes 6,033 7,014 6,603

Net income/(loss) $ 9,668 $ 4,041 $ ( 1,765 )

Foreign currency translation adjustments

( 4,186 ) 2,122 ( 722 )

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

Net income/(loss) per share

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GRID DYNAMICS HOLDINGS, INC.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME/(LOSS)

(In thousands)

For the years ended December 31,

2025 2024 2025

Net income/(loss) $ 9,668 $ 4,041 $ ( 1,765 )

Other comprehensive income/(loss), net of tax:

Foreign currency translation adjustment 3,821 ( 4,186 ) 2,122

Other comprehensive income, net of tax

Other comprehensive income/(loss), net of tax

3,966 ( 4,186 ) 2,122

Comprehensive income/(loss) $ 13,634 $ ( 145 ) $ 357

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

GRID DYNAMICS HOLDINGS, INC.

CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

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(Accumulated Deficit)

Treasury Stock Accumulated

Comprehensive

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Stockholders’

Shares Amount

Shares Amount Shares Amount

Balance at January 1, 2023 74,156 $ 7 $ 378,006 $ ( 14,121 ) — $ — $ ( 848 ) $ 363,044

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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 )

Foreign currency translation adjustment

Other comprehensive income

— — — — — — 2,122 2,122

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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, 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 )

Foreign currency translation adjustment

Other comprehensive loss

— — — — — — ( 4,186 ) ( 4,186 )

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Exercise of stock options 72 — 420 — — — — 420

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 1,162 — ( 18,153 ) — — — — ( 18,153 )

Foreign currency translation adjustment

Repurchase of common stock

— — — — 200 ( 2,000 ) — ( 2,000 )

Other comprehensive income, net of tax

— — — — — — 3,966 3,966

Balance at December 31, 2025

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Deferred income taxes ( 1,344 ) ( 4,033 ) ( 4,140 )

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

Other income, net

( 6,917 ) ( 3,071 ) ( 3,896 )

Changes in assets and liabilities:

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Purchase of property and equipment ( 15,334 ) ( 11,766 ) ( 7,870 )

Proceeds from sale of equity securities 3,581 — —

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

Acquisition of business, net of cash acquired 198 ( 43,072 ) ( 17,830 )

Proceeds from sale of equity securities — 3,581 —

Other investing activities, net — ( 44 ) ( 250 )

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Cash flows from financing activities

Proceeds from common stock offering

108,077 — 109,537

Proceeds from exercises of stock options 469 2,254 510

Payments of tax obligations resulted from net share settlement of vested stock awards ( 18,153 ) ( 8,697 ) ( 16,831 )

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 )

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

Payments for repurchases of common stock ( 2,000 ) — —

Debt and equity issuance costs

( 253 ) ( 472 ) —

Proceeds from common stock offering — 108,077 —

Net cash (used in)/provided by financing activities

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

Effect of exchange rate changes on cash, cash equivalents and restricted cash 1,376 ( 2,131 ) 1,676

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Supplemental disclosure of cash flow information:

Cash paid for income taxes $ 10,967 $ 12,365 $ 7,474

Cash paid for income taxes, net of refunds (1)

$ 12,358 $ 10,967 $ 12,365

Supplemental disclosure of non-cash activities

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

__________________________

(1) See Note 10 “Income taxes” for details on cash paid for income taxes, net of refunds by jurisdictions.

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

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Grid Dynamics Holdings, Inc.

(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.

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

(the “Company”) is a leading provider of enterprise artificial intelligence (“AI”) and digital transformation services, primarily serving Fortune 1000 corporations.

The Company provides consulting, engineering, and operational services designed to enable clients to build and deploy large-scale digital platforms.

The Company’s core service offerings encompass distributed systems architecture, real-time data analytics, machine learning (“ML”), natural language processing (“NLP”), and cloud platform engineering.

Additionally, the Company offers specialized services in Internet of Things (“IoT”), edge computing, and digital engagement.

The Company’s headquarters and principal place of business is in San Ramon, California.

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The Company had no ownership in this subcontractor (“Affiliate”) as of December 31, 2025.

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.

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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.

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.

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.

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.

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 income/(loss).

Contract balances

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Net Foreign Currency Exchange Rate Changes

(in thousands)

Year ended December 31, 2025 $ 2,747 $ 1,031 $ ( 220 ) $ 163 $ 3,721

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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 income/(loss) and comprehensive income/(loss) as the software is developed for purposes of supporting internal R&D, engineering, and marketing activities.

Amortization of internally developed software is recorded within Engineering, research, and development and Sales and marketing expenses in the consolidated statements of 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.

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There was no impairm ent of goodwill in the years ended December 31, 2025, 2024 and 2023.

Derivative financial instruments

The Company utilizes foreign currency forward contracts to manage the economic impact of fluctuations in certain foreign currencies on its forecasted operating expenses.

All derivative instruments are measured at fair value on recurring basis utilizing Level 2 inputs, and are recognized as either assets or liabilities in the consolidated balance sheets.

The Company initially records changes in fair value of these hedges as a component of Accumulated other comprehensive income/(loss) until the forecasted transaction occurs.

These gains or losses are subsequently reclassified to cost of revenues in the same period during which the hedged forecasted transaction occurs.

The Company discontinues hedge accounting prospectively when it determines that the derivative is no longer effective in offsetting changes in the cash flows of the hedged item, or if the derivative expires, is sold, or is terminated.

If it becomes probable that a forecasted transaction will not occur, the Company immediately reclassifies the cumulative gain or loss of the underlying hedge to Other income/(expense), net.

If the Company does not elect hedge accounting, or the contract does not qualify for hedge accounting treatment, the changes in fair value from period to period are recorded in Other income/(expense), net.

Cash flows from derivative instruments that are designated as cash flow hedges are classified in the consolidated statements of cash flows as cash flows from operating activities.

Intangible assets other than goodwill

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The Company evaluates the estimated useful lives and potential impairment of finite and indefinite-lived intangible assets on an annual basis or more frequently whenever events or changes in circumstances indicate that the carrying value of the assets may not be fully recoverable.

If facts and circumstances indicate that the carrying value might not be recoverable, projected undiscounted net cash flows associated with the related asset or group of assets over their estimated remaining useful lives is compared against their respective carrying amounts.

If facts and circumstances indicate that the carrying value might not be recoverable, projected

undiscounted net cash flows associated with the related asset or group of assets over their estimated remaining useful lives is compared against their respective carrying amounts.

If an asset is found to be impaired, the impairment charge will be measured as the amount by which the carrying amount of an entity exceeds its fair value.

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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.

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) 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 the years ended December 31, 2025, 2024, and 2023, the Company recognized $ 7.1 million, $ 1.3 million, and $ 1.3 million in government assistance, respectively;

these amounts were included in cost of revenues and operating expenses in the consolidated statements of income/(loss).

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.

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If the Company is not certain about collectability of consideration for services rendered, revenue recognition is deferred until uncertainty is sufficiently resolved.

The Company reports gross reimbursable “out-of-pocket” expenses incurred as both revenues and cost of revenues in the consolidated statements of loss and comprehensive income/(loss).

The Company reports gross reimbursable “out-of-pocket” expenses incurred as both revenues and cost of revenues in the consolidated statements of income/(loss).

Consulting services

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Engineering, research, and development expenses primarily include compensation for professional staff performing research and development related activities that are not directly attributable to generating revenues for the Company.

Research and development activities relate to building and scaling the next generation e-commerce platform solutions for customers.

development activities relate to building and scaling the next generation e-commerce platform solutions for customers.

Research and development costs are expensed as incurred.

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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.

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

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

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The provision for income taxes reflects a combination of income earned and taxed in the various U.S.

federal and state, international and other jurisdictions.

Jurisdictional tax law changes, increases or decreases in permanent differences between book and tax items, accruals or adjustments of accruals for tax contingencies or valuation allowances, and the change in the mix of earnings from these taxing jurisdictions all affect the overall effective tax rate.

federal, state, and foreign jurisdictions.

Jurisdictional tax law changes, increases or decreases in permanent differences between book and tax items, accruals or adjustments of accruals for tax contingencies or

valuation allowances, and the change in the mix of earnings from these taxing jurisdictions all affect the overall effective tax rate.

In assessing the realizability of deferred tax assets, management considers whether it is more likely than not that some portion, or all, of the deferred tax assets will not be realized.

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When it is more likely than not that a position will be sustained upon examination by a tax authority that has full knowledge of all relevant information, the Company measures the amount of tax benefit from the position and records the largest amount of tax benefit that is greater than 50% likely of being realized after settlement with a tax authority.

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.

We recognize both accrued interest and penalties related to unrecognized tax benefits in income tax expense.

Earnings per share

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Prior period reclassifications

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 amounts on the consolidated balance sheets, consolidated statements of stockholders’ equity, and consolidated statements of cash flows in prior periods have been reclassified to conform with the current period presentation.

Certain significant risks and uncertainties

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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 with less developed and regulated banking systems where it has operations at levels necessary to cover operating needs of local entities.

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Customer 1 15.4 % 16.0 % 14.4 %

Customer 2 n/a n/a 10.6 %

Foreign currency risks

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Other than U.S.

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.

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

To mitigate volatility in cash flows and earnings associated with forecasted intercompany expenses, the Company entered into a foreign currency cash flow hedge program using forward contracts during the third quarter of 2025.

During the years ended December 31, 2025, 2024, and 2023, the net loss on foreign currency transactions was $ 1.4 million, $ 1.0 million, and $ 2.3 million, respectively.

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Changes to the U.S.

GAAP are established by the Financial Accounting Standards Board (the “FASB”), in the form of Accounting Standards Updates (“ASUs”), to the FASB’s ASC.

GAAP are established by the Financial Accounting Standards Board (the “FASB”), in the form of Accounting Standards Updates (“ASUs”), to the FASB’s Accounting Standards Codification.

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

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.

In December 14, 2023, the FASB issued ASU 2023-09, Improvements to Income Tax Disclosures (Topic 740) — Improvements to Income Tax Disclosures.

The new guidance enhances the transparency of income tax disclosures by requiring consistent categories and greater disaggregation of information in the effective tax rate reconciliation, as well as the disclosure of income taxes paid by jurisdiction.

The Company adopted this standard for its annual period ended December 31, 2025, on a prospective basis.

While the adoption did not impact recognition or measurement of income tax balances, it resulted in modifications to the presentation of our income tax disclosures.

See Note 10 “Income taxes“ for further details.

In 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.

The guidance also requires entities to provide in their interim financial reports all disclosures about a reportable segment’s profit or loss and assets that are currently required only on annual basis.

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

The Company adopted the new guidance for its annual period ended December 31, 2024 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 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.

Recently issued accounting pronouncement

In December 2025, the FASB issued ASU 2025-10, Government Grants (Topic 832):

Accounting for Government Grants Received by Business Entities.

This update establishes specific guidance for the recognition, measurement, and presentation of

government grants received by business entities.

The amendments are effective for annual reporting periods beginning after December 15, 2028, including interim periods within those fiscal years, with early adoption permitted as of the beginning of an annual reporting period.

The Company is currently evaluating the timing of adoption and the impact of this standard on its consolidated financial statements.

In September 2025, the FASB issued ASU 2025-06, Intangibles—Goodwill and Other—Internal-Use Software (Subtopic 350-40):

Accounting for Internal-Use Software Costs.

The update simplifies the accounting for internal-use software by eliminating the project stage framework and replacing it with a new capitalization threshold based on whether significant development uncertainty exists.

Under the new guidance, costs cannot be capitalized if the software involves novel technological innovations or if significant performance requirements remain undefined or subject to revision.

The amendment is effective for annual periods beginning December 31, 2027, with early adoption permitted using a prospective, modified, or retrospective transition approach.

The Company is currently evaluating the impact of this standard on its consolidated financial statements and related disclosures, as well as the available transition methods.

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

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(“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.

The maximum amount of potential contingent cash consideration was $ 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 contributed 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.

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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 maximum amount of potential contingent cash consideration was $ 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.

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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.

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, 2025.

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.

During 2025, the Company finalized the working capital adjustments for Mobile Computing that resulted in a decrease of original purchase price in the amount of $ 0.3 million, minor corrections of several working capital accounts with a corresponding net change in goodwill of $ 0.4 million.

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

During 2025, the Company finalized the working capital adjustment for JUXT that resulted in a decrease of original purchase price in the amount of $ 0.2 million with a corresponding net change in goodwill.

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

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.

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Accounts payable, accrued expenses, and other current liabilities

$ ( 1,836 ) $ ( 5,491 ) $ ( 1,990 ) $ ( 1,576 )

Deferred taxes ( 3,051 ) ( 4,753 ) ( 2,427 ) ( 686 )

22 unchanged sentences

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.

During the years ended December 31, 2025, 2024, and 2023, the Company incurred $ 0.3 million, $ 2.4 million and $ 1.0 million, respectively, of transaction-related costs, that were included in General and administrative costs in the consolidated statements of 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) totaled $ 39.0 million, $ 16.1 million and $ 15.3 million during the years ended December 31, 2025, 2024, and 2023, 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.

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

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:

The following table summarizes certain fair value information as of December 31,

2025 and 2024 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

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$ 271,513 $ 271,513 $ 271,513 $ — $ —

Foreign exchange derivative assets $ 196 $ 196 $ — $ 196 $ —

Long-term investments:

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Long-term investments:

Marketable equity securities

$ 421 $ 421 $ 421 $ — $ —

Non-marketable equity securities (1)

Financial Liabilities:

Contingent consideration payable

$ 9,729 $ 9,729 $ — $ — $ 9,729

__________________________

(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.

Investment in non-marketable equity securities held by the Company as of December 31, 2025 and 2024 represents investment in its related party, a company affiliated with the member of the Company’s board of directors, that does not have readily determinable fair values.

Contingent consideration payable

1 unchanged sentence

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:

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).

The following table presents 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 and 2023:

Mobile Computing

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2.8 % 2.8 % 7.7 % 3.0 %

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

The Company records short-term contingent consideration payable in Accrued expenses and 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, 2025, 2024, and 2023 are as follows:

1 unchanged sentence

Contingent consideration payable as of January 1, 2023 $ 3,288

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

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

Contingent consideration payable as of December 31, 2023 $ —

3 unchanged sentences

Contingent consideration payable as of December 31, 2024 $ 9,729

Change in fair value of contingent consideration payable included in Other income, net –– JUXT

Change in fair value of contingent consideration payable included in Other income, net –– Mobile Computing

Effect of net foreign currency exchange rate changes $ 517

Contingent consideration payable as of December 31, 2025 $ 3,370

There were no transfers of liabilities among the levels within the fair value hierarchy during the years ended December 31, 2025, 2024, and 2023.

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Software 3 - 5

Machinery and automobiles 4 - 6

Office equipment 3 - 5

$ 24,750 $ 21,556

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Goodwill as of January 1, 2024 $ 53,868

Mutual Mobile purchase accounting adjustment

Acquisition of NextSphere 9,031

Goodwill as of December 31, 2023 $ 53,868

Acquisition of JUXT 23,332

2 unchanged sentences

Goodwill as of December 31, 2024 $ 83,407

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

JUXT purchase accounting adjustment

Mobile Computing purchase accounting adjustment

Effect of net foreign currency exchange rate changes 1,548

Goodwill as of December 31, 2025 $ 84,364

There were no accumulated impairment losses recorded for goodwill as of December 31, 2025 and 2024.

Intangible assets consist of the following:

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Intangible assets, net $ 41,608 $ 47,918

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.

Intangible assets amortization expense for the years ended December 31, 2025, 2024, and 2023 was $ 7.5 million, $ 5.0 million, and $ 3.7 million, respectively.

Based on the carrying value of the Company’s existing intangible assets as of December 31, 2025, the estimated amortization expense for the future years is as follows:

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(in thousands)

Accrued expenses

$ 6,131 $ 5,111

Contingent consideration payable, current

Accrued income tax 2,159 6,820

Accrued expenses 5,111 2,943

Deferred revenue 2,690 577

Value added tax payable

Deferred revenue

Other liabilities 1,965 1,447

Total accrued expense and other current liabilities $ 16,608 $ 24,378

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 “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 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.

The Company was also obligated to pay other closing fees, administration fees, commitment fees and letter of credit fees customary for a credit facility of this size and type.

The Company’s obligations under the Credit Agreement were required to be guaranteed by certain of its domestic subsidiaries meeting materiality thresholds set forth in the Credit Agreement.

Revolving Credit Facility — On March 15, 2022, the Company entered into a Credit Agreement (as amended, 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 provides for a secured multi-currency revolving loan facility with an initial aggregate principal amount of up to $ 30.0 million, with a $ 10.0 million letter of credit sub-limit.

The Company may 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.

O n May 20, 2025 , the Credit Agreement was amended to extend its maturity to March 15, 2028.

At the Company’s option, borrowings under the Credit Agreement accrue 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.

The Company is also obligated to pay other closing fees, administration fees, commitment fees and letter of credit fees customary for a credit facility of this size and type.

The Company’s obligations under the Credit Agreement are required to be guaranteed by certain of its domestic subsidiaries meeting materiality thresholds set forth in the Credit Agreement.

Such obligations, including the guaranties, are secured by substantially all of the personal property of the Company and the Company’s subsidiary guarantors.

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Payments on some of our leases may depend on index or rate, including Consumer Price Index.

Such payments are included in the calculation of lease liability and assets at the commencement dates, all future changes are accounted as variable payments similar to other variable payments, such as common area maintenance, property and other taxes, utilities and insurance that are based on the lessor’s cost.

The Company’s leases have remaining lease terms ranging from 0.2 to 5.4 years .

Such payments are included in the calculation of lease liability and assets at the commencement dates, all future changes are

accounted as variable payments similar to other variable payments, such as common area maintenance, property and other taxes, utilities and insurance that are based on the lessor’s cost.

The Company’s leases have remaining lease terms ranging from 14 days to 5.5 years .

Certain lease agreements may include the option to extend or terminate before the end of the contractual term and are often non-cancelable or cancellable only by the payment of penalties.

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Lease right-of-use assets obtained in exchange for liabilities $ 7,917 $ 6,938 $ 5,005

Non-cash net decrease in lease assets due to lease modifications $ 98 $ 553 $ ( 1,015 )

Non-cash net increase in lease assets due to lease modifications

$ 1,535 $ 98 $ 553

Non-cash net decrease in lease liability due to lease modifications $ ( 1,417 ) $ ( 739 ) $ ( 553 )

10 unchanged sentences

Total $ 17,036

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

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

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

Note 9 — Revenues

52 unchanged sentences

As of December 31, 2025, 2024, and 2023, 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.

Revenues recognized during the year ended December 31, 2023 that were included in Accrued and other current liabilities at December 31, 2022 were $ 1.1 million.

Revenues recognized during the year ended December 31, 2022 that were included in Accrued and other current liabilities at December 31, 2021 were $ 0.4 million.

Remaining performance obligation

As of December 31, 2024, the aggregate amount of transaction price allocated to remaining performance obligations was $ 4.5 million.

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 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:

The decrease in contract liabilities as of December 31, 2025 was due to lower levels of advance collections at the end of the year compared to the prior year.

Revenues recognized during the year ended December 31, 2025 that were included in Accrued expenses and other current liabilities at December 31, 2024 were $ 2.7 million.

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

Revenues recognized during the year ended December 31, 2023 that were included in Accrued expenses and other current liabilities at December 31, 2022 were $ 1.1 million.

Remaining performance obligations

ASC Topic 606 requires that the Company disclose the aggregate amount of transaction price that is allocated to performance obligations that have not yet been satisfied as of December 31, 2025.

This disclosure is not required for:

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

2 unchanged sentences

4) variable consideration in the form of a sales-based or usage-based royalty promised in exchange for a license of intellectual property.

Many of our performance obligations met one or more of these exemptions as of December 31, 2024.

All of our performance obligations met one or more of these exemptions as of December 31, 2025.

Transactions with related parties

2 unchanged sentences

As of December 31, 2025 and 2024, accounts receivable from related parties were $ 4.6 million and $ 3.8 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.

As of December 31, 2025, and 2024 unbilled revenues from related parties were $ 0.3 million and $ 0.1 million, respectively .

Note 10 — Income taxes

5 unchanged sentences

United States $ ( 11,370 ) $ ( 13,393 ) $ ( 6,107 )

International 24,448 10,945 3,037

27,071 24,448 10,945

Total income/(loss) before provision for income taxes

$ 15,701 $ 11,055 $ 4,838

Provision/(benefit) for income taxes

5 unchanged sentences

State 310 1,051 941

International 5,096 6,183 3,681

6,616 5,096 6,183

Federal 455 ( 3,463 ) ( 2,265 )

State ( 17 ) ( 92 ) ( 474 )

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

( 1,782 ) ( 478 ) ( 1,401 )

Total tax expense $ 6,033 $ 7,014 $ 6,603

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

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Total deferred tax assets $ 12,752 $ 13,288

Valuation allowance

Total deferred tax assets, net of valuation allowance

$ 12,261 $ 13,288

Deferred tax liabilities

4 unchanged sentences

Net deferred taxes $ 945 $ ( 140 )

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.

The Company determined it is in a 4 -year cumulative taxable income position as of December 31, 2024, and expects to continue to be in a taxable income position in the long-term foreseeable future.

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

The Company determined it is in a cumulative taxable income position as of December 31, 2025, and expects to continue to be in a taxable income position in the long-term foreseeable future.

After an evaluation of all available qualitative and quantitative evidence, both positive and negative in nature, the Company concluded it is more likely than not that sufficient future taxable income will be generated to realize the benefits of its DTAs prior to expiration, with the exception of its state NOL carryforwards due to state specific rules that limit the utilization of those NOLs.

As a result, the Company determined that no domestic federal valuation allowance was needed and a valuation allowance on its state NOL carryforwards were warranted as of December 31, 2025.

Net operating losses and tax credit carryforwards as of December 31, 2025 were as follows:

1 unchanged sentence

(in thousands)

Net operating losses, federal $ 362 N/A

Net operating losses, state $ 7,203 2040

Effective tax rate reconciliation

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

For the years ended December 31,

A reconciliation of the U.S.

federal statutory corporate tax rate to the Company’s income tax expense and effective tax rate, presented in accordance with the prospectively adopted ASU 2023-09, for the year ended December 31, 2025 is as follows:

For the year ended

December 31, 2025

(in thousands, except percentages)

Federal statutory tax rate $ 3,297 21.0 %

State and local income tax, net of federal (national) income tax effect (1)

Foreign tax effects

Foreign tax rate differential ( 8 ) —

Nontaxable or nondeductible items 354 2.3

Foreign tax rate differential ( 62 ) ( 0.4 )

Nontaxable or nondeductible items ( 200 ) ( 1.3 )

Foreign tax rate differential 392 2.5

Nontaxable or nondeductible items ( 292 ) ( 1.9 )

Foreign tax rate differential 88 0.6

Nontaxable or nondeductible items 221 1.4

Foreign tax rate differential ( 202 ) ( 1.3 )

Nontaxable or nondeductible items ( 166 ) ( 1.1 )

R&D tax relief

( 809 ) ( 5.2 )

federal statutory rate 21.0 % 21.0 % 21.0 %

State taxes, net of federal benefit

Foreign tax rate differential ( 144 ) ( 0.9 )

Nontaxable or nondeductible items ( 56 ) ( 0.4 )

Other foreign jurisdictions 33 0.2

Nontaxable or nondeductible items

Stock-based compensation ( 980 ) ( 6.2 )

162M limitation 5,843 37.2

Change in fair value of contingent consideration payable

( 1,444 ) ( 9.2 )

Permanent and other items 1.7 ( 9.9 ) ( 1.0 )

Changes in unrecognized tax benefits ( 247 ) ( 1.6 )

Other adjustments

Total worldwide effective tax expense and rate

$ 6,033 38.4 %

__________________________

(1) State Taxes in California and Georgia made up the majority of tax effect in this category.

A reconciliation of the U.S.

federal statutory corporate tax rate to the Company’s effective tax rate, for the years ended December 31, 2024 and 2023 is as follows:

For the years ended December 31,

federal statutory rate 21.0 % 21.0 %

State and local income tax, net of federal (national) income tax effect 8.4 10.1

Nontaxable or nondeductible items

Stock-based compensation 7.2 39.3

4 unchanged sentences

162M limitation 30.2 103.9

Total 63.4 % 136.5 % ( 42.8 ) %

Total worldwide effective tax rate

63.4 % 136.5 %

Unrecognized tax benefits

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Unrecognized tax benefit as of December 31 $ 1,113 $ 1,371 $ 1,162

Unrecognized tax benefits may change during the next twelve months for items that arise in the ordinary course of business.

The Company does not anticipate a material change to its unrecognized tax benefits over the next twelve months.

The Company’s policy is to recognize interest expense and penalties related to income tax matters as tax expense.

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federal and various state, local and foreign jurisdictions.

For federal and states, tax years subsequent to 2021 remain open to examination due to the carryover of unused net operating losses or tax credits.

For federal and states, tax years subsequent to 2022 remain open to examination.

With respect to foreign jurisdictions, tax years 2018 and after remain open.

Note 11 — Stock-based compensation

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.

On July 4, 2025, the “One Big Beautiful Bill Act” (the “Act”) was enacted into law.

The Act includes certain changes to the U.S.

tax law applicable to Grid Dynamics.

These changes include provisions allowing accelerated tax deductions for qualified property and research expenditures, including immediate expensing for qualifying domestic research expenditures.

As of December 31, 2025, the Company expects to avail itself of immediate expensing for qualifying domestic research expenditures incurred during the year, which does not have a material effect on the Company’s financial results.

The Company has evaluated the impact of the remaining provisions promulgated by the Act that take effect in future periods on its consolidated financial statements and does not anticipate them having a material effect.

Cash paid for income taxes

Cash paid for income taxes for the year ended December 31, 2025 was as follows:

For the year ended December 31,

(in thousands)

Cash paid for income taxes, net of refunds

State and local

United Kingdom

Aggregated foreign jurisdictions

Cash paid for income taxes, net of refunds for the years ended December 31, 2024 and 2023 was $ 11.0 million and $ 12.4 million, respectively.

Note 11 — Stockholders’ equity

Stock-based compensation expense

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

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

Twelve months ended December 31,

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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, the board of directors approved an equity incentive plan (the “2020 Plan”).

2020 Equity Incentive Plan - Effective March 5, 2020, the board of directors approved an equity incentive plan, which was amended effective December 23, 2025 (as so amended, the “2020 Plan”).

The 2020 Plan permits the Company to grant a maximum aggregate amount of 19.8 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 one year after the grant date;

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

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:

NSOs and RSUs issued under the 2020 Plan have the following

vesting conditions:

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

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

PSUs granted in 2024 onwards 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

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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.

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

As of December 31, 2025, 6.6 million shares of stock remained available for grant under the 2020 Plan.

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The grant date fair value of each NSO issued under both plans was estimated on the date of grant using the Black-Scholes-Merton option pricing model.

There were no NSOs issued during the year ended December 31, 2025.

The key assumptions for the years ended December 31, 2024 and 2023 are provided in the following table.

For the years ended December 31,

2024 2023 2022

Dividend yield — % — %

2 unchanged sentences

3.63 %- 4.84 %

1.76 %- 4.25 %

Expected term in years 6.11 6.11

2 unchanged sentences

$ 10.07 -$ 11.97

$ 12.15 -$ 18.88

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

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The following table sets forth the activity for the 2018 Stock Plan for the years ended December 31, 2025, 2024, and 2023:

Number of Options Weighted Average Exercise Price Aggregate Intrinsic Value, thousands Weighted Average Contractual Term

Number of Options Weighted Average Exercise Price Aggregate Intrinsic Value (in thousands)

Weighted Average Contractual Term

Options outstanding as of January 1, 2023

1 unchanged sentence

Options exercised ( 112,383 ) $ 3.54

Options forfeited ( 30,448 ) $ 3.54

Options outstanding as of December 31, 2023

1 unchanged sentence

Options exercised ( 197,703 ) $ 3.54

Options expired ( 2,795 ) $ 3.54

Options outstanding as of December 31, 2024

1 unchanged sentence

Options exercised ( 45,405 ) $ 3.54

Options expired ( 2,795 ) $ 3.54

Options outstanding as of December 31, 2025

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The following table summarizes option activity for the years ended December 31, 2025, 2024 and 2023 under the 2020 Plan:

Number of Options Weighted Average Exercise Price Aggregate Intrinsic Value, thousands Weighted Average Contractual Term

Number of Options Weighted Average Exercise Price Aggregate Intrinsic Value (in thousands)

Weighted Average Contractual Term

Options outstanding as of January 1, 2023

3 unchanged sentences

Options forfeited ( 329,889 ) $ 14.99

Options expired ( 44,205 ) $ 19.74

Options outstanding as of December 31, 2023

6 unchanged sentences

2,748,391 $ 12.75 $ 26,881

Options granted 25,000 $ 12.65

Options exercised ( 45,172 ) $ 10.68

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The total intrinsic value of options exercised during the years ended December 31, 2025, 2024, and 2023 was $ 0.3 million, $ 1.2 million and $ 0.5 million, respectively.

The total unrecognized compensation expenses related to 2020 Stock Plan options as of December 31, 2024 was $ 4.5 million, net of forfeitures, to be expensed on a straight-line basis over the remaining 1.8 years.

The total unrecognized compensation expenses related to 2020 Stock Plan options as of December 31, 2025 was $ 1.5 million to be expensed on a straight-line basis over the remaining 1.1 years.

Restricted Stock Units

6 unchanged sentences

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

Awards forfeited ( 105,008 ) $ 11.25

Unvested awards as of December 31, 2023

18 unchanged sentences

523,938 $ 11.97

Performance achievement adjustment 1,148,376 $ 31.31

Awards vested and released ( 1,335,982 ) $ 39.26

Awards forfeited ( 32,375 ) $ 11.97

Unvested awards as of December 31, 2023 (2)

4 unchanged sentences

319,320 $ 14.21

Awards vested ( 1,335,982 ) $ 39.26

Modifier adjustments 255,456 $ 4.44

Awards vested and released

( 822,895 ) $ 11.97

Awards forfeited ( 30,000 ) $ 14.51

14 unchanged sentences

(2) Reported at 170 % 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.

(3) Reported at the certified performance achievement of 208 % first tranche granted in 2024 and 100 % for the remaining tranches.

(4) Reported at the estimate performance adjustment of 206 % for the tranches based on performance for the year ended December 31, 2025 and 131 % for the remaining tranches.

The total unrecognized compensation expenses related to PSUs as of December 31, 2025 was $ 5.4 million to be expensed on over 0.5 years.

5 unchanged sentences

PSUs $ 24,300 $ 11,142 $ 15,993

Stock Repurchase Program

On October 23, 2025, the Board of Directors authorized a share repurchase program of up to $ 50.0 million of the Company’s common stock.

The Company accounts for treasury stock under the cost method and reports it as a reduction of stockholders’ equity in the consolidated balance sheets.

During the year ended December 31, 2025, the Company repurchased 200,249 shares of common stock for an aggregate cost of $ 2.0 million.

These shares are held as treasury stock.

Accordingly, as of December 31, 2025, $ 48.0 million remained available for future repurchases under the program.

Note 12 — Earnings per share

27 unchanged sentences

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.

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 .

7 unchanged sentences

United Kingdom 45,193 25,264 31,880

Netherlands 9,958 12,247 15,894

14,005 6,048 1,860

Other 63,491 41,518 41,015

6 unchanged sentences

Serbia 2,375 2,350

United States 2,101 2,174

Ukraine 2,174 2,067

India 1,098 621

United States 1,491 2,101

Armenia 1,364 981

Moldova 1,329 808

Other 3,261 2,701

12 unchanged sentences

Management evaluates each claim and provides for potential loss when the claim is probable to be paid and reasonably estimable.

While adverse decisions in certain of these litigation matters, claims and administrative proceedings could have a material effect on a particular period’s results of operations, subject to the uncertainties inherent in estimating future costs for contingent liabilities, management believes that any future accruals with respect to these currently known contingencies would not have a material effect on the financial condition, liquidity or cash flows of the Company.

While adverse

decisions in certain of these litigation matters, claims and administrative proceedings could have a material effect on a particular period’s results of operations, subject to the uncertainties inherent in estimating future costs for contingent liabilities, management believes that any future accruals with respect to these currently known contingencies would not have a material effect on the financial condition, liquidity or cash flows of the Company.

There are no amounts required to be reflected in these consolidated financial statements related to contingencies.

Note 15 — Subsequent events

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 %.

The Company performed its subsequent event procedures through March 5, 2026, the date these consolidated financial statements were issued.

Performance Stock Units

On February 7, 2026 the board of directors certified vesting of the second tranche of PSUs based on the 2025 results with the performance achievement at 206 %.

Approximately 1.1 million shares were released on February 10, 2026, with approximately 0.5 million shares net withheld to cover $ 3.5 million of tax obligations.

On February 13, 2026, the Company entered into an amendment to the agreement related to its acquisition of Mobile Computing.

The amendment settled the contingent consideration obligation for the initial performance period ended October 4, 2025, for a fixed cash payment of $ 1.8 million.

Additionally, the amendment extended the earn-out measurement periods through December 31, 2026, and established new revenue and run-rate targets for the extended periods.

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