GRID DYNAMICS HOLDINGS, INC. 10-K

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA GRID DYNAMICS HOLDINGS, INC Index to Consolidated Financial Statements Page Reports of Independent Registered Public Accounting Firm (PCAOB ID Number 248 ) F- 1 Consolidated Balance Sheets as of December 31, 2025 and 2024 F- 3 Consolidated Statements of Income/(Loss) for the Years Ended December 2025, 2024, and 2023 F- 4 Consolidated Statements of Comprehensive Income/(Loss) for the Years Ended December 2025, 2024, and 2023 F- 5 Consolidated Statements of Stockholders’ Equity for the Years Ended December 31, 2025, 2024, and 2023 F- 6 Consolidated Statements of Cash Flows for the Years Ended December 31, 2025, 2024, and 2023 F- 7 Notes to Consolidated Financial Statements F- 8 52 REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM Board of Directors and Shareholders Grid Dynamics Holdings, Inc. Opinion on the financial statements We have audited the accompanying consolidated balance sheets of Grid Dynamics Holdings, Inc. (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, 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 These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s consolidated financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion. 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 We have served as the Company’s auditor since 2017. San Francisco, California March 5, 2026 F-1 REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM Board of Directors and Shareholders 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. (a Delaware corporation) and subsidiaries (the “Company”) 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”). 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, 2025, and our report dated March 5, 2026 expressed an unqualified opinion on those financial statements. Basis for opinion The Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Management’s report on internal control over financial reporting (“Management’s Report"). Our responsibility is to express an opinion on the Company’s internal control over financial reporting based on our audit. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion. Definition and limitations of internal control over financial reporting A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements. Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. /s/ GRANT THORNTON LLP San Francisco, California March 5, 2026 F-2 GRID DYNAMICS HOLDINGS, INC. CONSOLIDATED BALANCE SHEETS (In thousands, except share and per share data) As of December 31, 2025 2024 Assets Current assets Cash and cash equivalents $ 342,058 $ 334,655 Trade receivable, net of allowance of $ 3,721 , and $ 2,747 as of December 31, 2025 and December 31, 2024, respectively 79,485 69,371 Prepaid expenses and other current assets 17,987 19,278 Total current assets 439,530 423,304 Property and equipment, net 17,666 14,018 Operating lease right-of-use assets, net 16,383 12,108 Intangible assets, net 41,608 47,918 Goodwill 84,364 83,407 Deferred tax assets 8,865 8,774 Other noncurrent assets 4,474 2,663 Total assets $ 612,890 $ 592,192 Liabilities and equity Current liabilities Accounts payable $ 3,698 $ 4,069 Accrued compensation and benefits 25,555 21,677 Operating lease liabilities, current 6,253 5,420 Accrued expenses and other current liabilities 16,608 24,378 Total current liabilities 52,114 55,544 Deferred tax liabilities 7,920 8,914 Operating lease liabilities, noncurrent 10,783 7,205 Contingent consideration payable, noncurrent — 2,700 Total liabilities 70,817 74,363 Commitments and contingencies (Note 13) Stockholders’ equity Common stock, $ 0.0001 par value; 110,000,000 shares authorized; 84,842,637 and 83,608,819 issued and outstanding as of December 31, 2025 and December 31, 2024, respectively 8 8 Additional paid-in capital 545,188 532,578 Accumulated deficit ( 2,177 ) ( 11,845 ) Accumulated other comprehensive income/(loss) 1,054 ( 2,912 ) Treasury stock ( 2,000 ) — Total stockholders’ equity 542,073 517,829 Total liabilities and stockholders’ equity $ 612,890 $ 592,192 The accompanying notes are an integral part of these consolidated financial statements. F-3 GRID DYNAMICS HOLDINGS, INC. CONSOLIDATED STATEMENTS OF INCOME/(LOSS) (In thousands, except per share data) For the years ended December 31, 2025 2024 2023 Revenues $ 411,827 $ 350,571 $ 312,910 Cost of revenues 269,479 223,566 199,764 Gross profit 142,348 127,005 113,146 Operating expenses Engineering, research, and development 23,665 18,347 14,741 Sales and marketing 30,032 28,622 24,151 General and administrative 90,546 82,141 79,834 Total operating expenses 144,243 129,110 118,726 Loss from operations ( 1,895 ) ( 2,105 ) ( 5,580 ) Interest and other income, net 17,596 13,160 10,418 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 ) Net income/(loss) per share Basic $ 0.11 $ 0.05 $ ( 0.02 ) Diluted $ 0.11 $ 0.05 $ ( 0.02 ) Weighted average shares outstanding Basic 84,539 77,465 75,193 Diluted 86,892 79,974 75,193 The accompanying notes are an integral part of these consolidated financial statements. F-4 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 145 — — 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. F-5 GRID DYNAMICS HOLDINGS, INC. CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY (In thousands) Common Stock Additional Paid-in Capital Retained Earnings/ (Accumulated Deficit) Treasury Stock Accumulated Other Comprehensive Income/(Loss) Total Stockholders’ Equity Shares Amount Shares Amount Balance at January 1, 2023 74,156 $ 7 $ 378,006 $ ( 14,121 ) — $ — $ ( 848 ) $ 363,044 Net loss — — — ( 1,765 ) — — — ( 1,765 ) Stock-based compensation — — 35,516 — — — — 35,516 Exercise of stock options 182 — 821 — — — — 821 Issuance of shares and payments of tax obligations resulted from net share settlement of vested stock awards 1,549 1 ( 16,832 ) — — — — ( 16,831 ) Other comprehensive income — — — — — — 2,122 2,122 Balance at December 31, 2023 75,887 $ 8 $ 397,511 $ ( 15,886 ) — $ — $ 1,274 $ 382,907 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 ) Other comprehensive loss — — — — — — ( 4,186 ) ( 4,186 ) Balance at December 31, 2024 83,609 $ 8 $ 532,578 $ ( 11,845 ) — $ — $ ( 2,912 ) $ 517,829 Net income — — — 9,668 — — — 9,668 Stock-based compensation — — 30,343 — — — — 30,343 Exercise of stock options 72 — 420 — — — — 420 Issuance of shares and payments of tax obligations resulted from net share settlement of vested stock awards 1,162 — ( 18,153 ) — — — — ( 18,153 ) Repurchase of common stock — — — — 200 ( 2,000 ) — ( 2,000 ) Other comprehensive income, net of tax — — — — — — 3,966 3,966 Balance at December 31, 2025 84,843 $ 8 $ 545,188 $ ( 2,177 ) 200 $ ( 2,000 ) $ 1,054 $ 542,073 The accompanying notes are an integral part of these consolidated financial statements. F-6 GRID DYNAMICS HOLDINGS, INC. CONSOLIDATED STATEMENTS OF CASH FLOWS (In thousands) For the years ended December 31, 2025 2024 2023 Cash flows from operating activities Net income/(loss) $ 9,668 $ 4,041 $ ( 1,765 ) Adjustments to reconcile net loss to net cash provided by operating activities: Depreciation and amortization 19,705 14,228 8,926 Operating lease right-of-use assets amortization expense 5,098 4,509 3,192 Bad debt expense 1,031 2,301 945 Stock-based compensation 30,343 34,167 35,516 Deferred income taxes ( 1,344 ) ( 4,033 ) ( 4,140 ) Other income, net ( 6,917 ) ( 3,071 ) ( 3,896 ) Changes in assets and liabilities: Trade receivable ( 11,145 ) ( 9,485 ) 2,084 Prepaid expenses and other assets 544 ( 8,319 ) ( 511 ) Accounts payable ( 378 ) ( 1,503 ) ( 538 ) Accrued compensation and benefits 4,021 ( 274 ) 5,260 Operating lease liabilities ( 4,962 ) ( 4,542 ) ( 3,135 ) Income taxes, net ( 5,620 ) 415 ( 1,836 ) Accrued expenses and other current liabilities 556 1,764 991 Net cash provided by operating activities 40,600 30,198 41,093 Cash flows from investing activities Purchase of property and equipment ( 15,334 ) ( 11,766 ) ( 7,870 ) 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 ) Net cash used in investing activities ( 15,136 ) ( 51,301 ) ( 25,950 ) Cash flows from financing activities 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 ) 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 Net increase in cash, cash equivalents, and restricted cash 6,903 77,928 498 Cash, cash equivalents and restricted cash, beginning of period 335,155 257,227 256,729 Cash, cash equivalents and restricted cash, end of period $ 342,058 $ 335,155 $ 257,227 GRID DYNAMICS HOLDINGS, INC. CONSOLIDATED STATEMENTS OF CASH FLOWS (In thousands) (Continued) For the years ended December 31, 2025 2024 2023 Supplemental disclosure of cash flow information: 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: For the years ended December 31, 2025 2024 2023 Balance sheet classification Cash and cash equivalents $ 342,058 $ 334,655 $ 257,227 Restricted cash in Prepaid and other current assets — 500 — Total cash, cash equivalents and restricted cash $ 342,058 $ 335,155 $ 257,227 The accompanying notes are an integral part of these consolidated financial statements. F-7 GRID DYNAMICS HOLDINGS, INC. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (In thousands, except share and per share data) Note 1 — Description of business and summary of significant accounting policies Description of business Grid Dynamics Holdings, Inc. (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. The following is a summary of the significant accounting policies consistently applied in the preparation of the accompanying consolidated financial statements. Principles of consolidation The accompanying consolidated financial statements include the accounts of the Company and all of its subsidiaries that are directly or indirectly owned or controlled. Intercompany transactions and balances have been eliminated upon consolidation. The Company provides services to its customers utilizing its own personnel as well as personnel from subcontractors. One of the subcontractors exclusively supports and performs services on behalf of the Company and its customers. The Company had no ownership in this subcontractor (“Affiliate”) as of December 31, 2025. 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. The Company has determined that it is required to consolidate the Affiliate because the Company has the power to direct the VIE’s most significant activities and is the primary beneficiary of the Affiliate. The assets and liabilities of the Affiliate primarily consist of inter-company balances and transactions all of which have been eliminated in consolidation. There was minimal activity in the Affiliate during the year ended December 31, 2025. Use of estimates The preparation of the consolidated financial statements in accordance with the U.S. generally accepted accounting principles (“GAAP”) requires the Company to make estimates and assumptions that affect the amounts reported in the consolidated financial statements and accompanying notes. The Company evaluates its estimates on an ongoing basis including allowance for credit losses, determination of fair value, useful lives and recoverability of intangible assets and goodwill, valuation of stock-based compensation and contingent consideration payable, determination of provision for income taxes, deferred tax assets and liabilities and uncertain tax positions. The Company builds its estimates on historical data and assumptions as well as forward-looking expectations that the Company believes to be reasonable under current conditions and circumstances. Actual results could differ from these estimates and such differences could be material. Foreign currency translation The Company’s reporting currency is the U.S. dollar. All assets and liabilities of consolidated foreign subsidiary whose functional currency is different from the U.S. dollar are translated into U.S. dollar at the current exchange rate as of the end of the period, and revenue and expenses are translated at average exchange rates in effect during the period. Resulting translation adjustments are recorded as a component of Accumulated other comprehensive income/(loss), net. Cash and cash equivalents Cash and cash equivalents consist of cash balances and short-term, highly liquid investments and deposits with original maturities of three months or less. Cash equivalents are stated at cost, which approximates fair value due to their short-term nature. F-8 Investments in equity securities The Company holds investments in privately-held entities. Such investments do not have readily determinable fair value and as such are accounted for under the fair value measurement alternative. Under the measurement alternative, the carrying value is measured at cost, less any impairment, plus or minus changes resulting from observable price changes in orderly transactions for identical or similar investments of the same issuer. Non-marketable securities are classified as Other noncurrent assets on the consolidated balance sheets. All gains and losses on non-marketable securities, whether realized or unrealized, are recognized in Other income/(expense), net in the consolidated statements of income/(loss). Contract balances Depending on the timing of revenue recognition and contractual payment terms, the Company records trade receivables, contract assets or contract liabilities in its consolidated financial statements. The Company’s accounts receivables are rights to consideration that are conditional only on the passage of time. Accounts receivable are recorded net of allowance for credit losses. From time-to-time, a service period may overlap with a period-end and the unbilled receivables represent amounts for services performed through period-end, but not yet billed. The unbilled receivable represents the amount expected to be billed and collected for services performed through period-end in accordance with contract terms. Comparatively, if a right to consideration is conditional upon factors other than the passage of time, the Company records contract assets. Contract assets usually arise in fixed-price arrangements when services have been provided, but the Company is to satisfy other performance obligations to receive consideration. If the Company receives consideration in advance of the performance obligation being satisfied or in excess of the revenue recognized, the Company records a contract liability. The Company records its contract assets and liabilities on a net contract-by-contract basis at the end of each reporting period. Allowance for credit losses The Company maintains an allowance against accounts receivable for the estimated probable losses on uncollectible accounts. The allowance is based upon historical loss experience, as adjusted for the current market conditions and forecasts about future economic conditions. Accounts receivable are charged off against the reserve when, in management’s estimation, further collection efforts would not result in a reasonable likelihood of receipt. Movement of allowance for credit losses for the years ended December 31, 2025, 2024 and 2023 is presented in the following table: Balance at Beginning of Year Provision/Adjustment Write-offs Net Foreign Currency Exchange Rate Changes Balance at End of Year (in thousands) Year ended December 31, 2025 $ 2,747 $ 1,031 $ ( 220 ) $ 163 $ 3,721 Year ended December 31, 2024 $ 1,363 $ 2,301 $ ( 882 ) $ ( 35 ) $ 2,747 Year ended December 31, 2023 $ 443 $ 945 $ ( 47 ) $ 22 $ 1,363 Property and equipment Property and equipment are stated at cost, less accumulated depreciation and amortization. Depreciation and amortization are computed using the straight-line method over the estimated useful lives of the respective assets, generally two to 10 years. Leasehold improvements and property under capital leases are amortized over the shorter of estimated useful lives of the assets or the lease term. Expenditures for repairs and maintenance are expensed as incurred. Software development costs The Company incurs certain internal and external costs associated with the development of internally used software. Such costs are capitalized once the application development stage is reached, and it is probable that the project will be completed, and the software will be used to perform the function intended. 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. 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) as the software is developed for purposes of supporting F-9 internal R&D, engineering, and marketing activities. Management evaluates the useful lives of these assets on an annual basis and tests for impairment whenever events or changes in circumstances occur that could impact the recoverability of these assets. There was no impairment of internally developed software in the years ended December 31, 2025, 2024, and 2023. Business combinations The Company accounts for business combinations under the acquisition method of accounting that requires to allocate the purchase price of acquired company to any assets acquired and liabilities assumed at the acquisition date based on their estimated fair values. Any excess of the fair value of purchase consideration over the fair value of the assets acquired less liabilities assumed is recorded as goodwill. The Company uses management estimates and industry data to assist in establishing the acquisition date fair values of assets acquired, liabilities assumed, and contingent consideration granted, if any. These estimates and valuations require the Company to make significant assumptions, including projections of future events and operating performance. Goodwill Goodwill represents the excess of purchase price over the fair value of the net assets of businesses acquired. Goodwill is not amortized but is to be tested for impairment at least annually, or more frequently if indicators of potential impairment arise. Impairment evaluation is performed at reporting unit level. Based on the internal reporting structure, the Company had one reporting unit as of December 31, 2025 and 2024. On December 31 of each year the Company makes a qualitative assessment to determine if it is more likely than not that the fair value of the reporting unit is less than its carrying amount, including goodwill. If the Company determines that the fair value of the reporting unit is less than its carrying amount, it will perform a quantitative analysis; otherwise, no further evaluation is necessary. For the quantitative impairment assessment, the Company compares the fair value of the reporting unit to its carrying value, including goodwill. The Company uses the discounted cash flow method of the income approach and market approach to determine the fair value of the reporting unit. If the fair value of the reporting unit exceeds the carrying value of the net assets assigned to that unit, goodwill is not impaired and no further testing is performed. If the carrying value of the net assets assigned to the reporting unit exceeds the fair value of the reporting unit, then the Company will recognize a loss equal to the excess, limited to the total amount of goodwill allocated to that reporting unit. Impairments, if any, are charged directly to earnings. 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 Finite-lived intangible assets include assets acquired as a result of a business acquisition and are initially measured at estimated fair values as of the acquisition date. Depending on class of intangible asset the Company may utilize various methods to determine its estimated fair value, including “multi-period excess earnings”, “relief-from-royalty”, or “with and without” methods. After the initial recognition, finite-lived intangible assets are amortized over the asset’s useful lives. Amortization is computed either on the straight-line basis or declining balance method ranging between two and 12 years. 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 F-10 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. There was no impairme nt of intangible assets in the years ended December 31, 2025, 2024, and 2023. The Company does not have intangible assets other than goodwill that have indefinite useful lives. Fair value Financial instruments are required to be categorized within a valuation hierarchy based upon the lowest level of input that is significant to the fair value measurement. Assets and liabilities recorded at fair value are measured and classified in accordance with a three-tier fair value hierarchy based on the observability of the inputs available in the market used to measure fair value: • Level 1 — Observable inputs that reflect quoted prices (unadjusted) for identical assets or liabilities in active markets. • Level 2 — Inputs that are based upon quoted prices for similar instruments in active markets, quoted prices for identical or similar instruments in markets that are not active, and model-based valuation techniques for which all significant inputs are observable in the market or can be derived from observable market data. • Level 3 — Unobservable inputs that are supported by little or no market activities. Where applicable, these models project future cash flows and discount the future amounts to a present value using market-based observable inputs including interest rate curves, foreign exchange rates, and credit ratings. Leases The Company determines if an arrangement is a lease or contains a lease at lease inception. Assessment and classification of lease as either operating or financing is performed at the lease commencement date. Operating lease liabilities and their corresponding right-of-use assets (“RoU Assets”) are initially measured based on the present value of future lease payments over the expected remaining lease term. RoU Asset value is additionally adjusted by initial direct costs and incentives received. Present value is calculated based on either the interest rate implicit in the lease agreement or, if not available, based on our incremental borrowing rate. The incremental borrowing rate reflects the fixed rate at which the Company could borrow on a collateralized basis the amount of the lease payments in the same currency, for a similar term, in a similar economic environment. The Company typically only includes an initial lease term in its assessment of a lease arrangement. Options to renew or terminate a lease are not included in the Company’s assessment unless there is reasonable certainty that the Company will exercise the renewal option. RoU Assets are subject to periodic impairment tests. Lease expense for operating leases is recognized on a straight-line basis over the lease term. In accordance with ASC Topic 842, components of a lease should be split into three categories: lease components, non-lease components, and non-components. The fixed and in-substance fixed contract consideration (including any consideration related to non-components) must be allocated based on the respective relative fair values to the lease components and non-lease components. The Company elected a practical expedient to account for lease and non-lease components together as a single lease component. The Company also elected the short-term lease recognition exemption for all classes of lease assets with an original term of twelve months or less. For transition, practical expedients were accepted to carry forward historical accounting for any expired or existing contracts that are or contain lease contracts and not to re-assess initial direct costs for any expired or existing leases. Government assistance and incentives The Company is eligible to a range of government incentives, including cash grants and refundable tax credits across various jurisdictions in which it operates. These incentives are generally contingent on meeting specific regulatory requirements, including among others achieving specified employment rates, conducting certain qualified investment, research and development and promotional activities. As U.S. 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) 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 F-11 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). Revenues 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. Revenue is recognized only when control of the promised services is transferred to a customer in an amount that reflects the consideration that the Company expects to receive in exchange for those services. A promise to transfer a distinct service is defined as a performance obligation. The Company derives its revenue from contracts for consulting and hosting services. These contracts have different terms based on the scope and complexity of engagements and are priced based on time-and-material, fixed-fee or multiple fee types. Consideration for some contracts may include variable consideration including volume discounts. If the consideration promised in a contract includes a variable amount, the Company only includes estimated amounts of consideration in the transaction price to the extent it is probable that a significant reversal of cumulative revenue recognized will not occur when the uncertainty associated with the variable consideration is resolved. These estimates may require management to make subjective judgments and to make estimates about the effects of matters inherently uncertain. The determination of whether to constrain consideration in the transaction price are based on information (historical, current and forecasted) that is reasonably available to the Company, taking into consideration the type of customer, the type of transaction and the specific facts and circumstances of each arrangement. 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 income/(loss). Consulting services The Company offers a suite of digital engineering and information technology (“IT”) consulting services, including digital transformation strategy, emerging technology, lean labs and legacy system replatforming. The Company recognizes revenue for services over time as the customer simultaneously receives and consumes the benefits as the Company performs IT consulting services. Consulting services require the Company to provide a series of distinct daily services and as such represent a single performance obligation earned over the term of a contract and the value derived corresponds to the labor hours expended. Therefore, the Company measures the progress and recognizes revenue using an effort-based input method. Where applicable the Company applies the practical expedient and revenue from time-and-materials contracts is recognized based on the right to invoice for services performed, with the corresponding cost of providing those services reflected as cost of sales when incurred. For fixed fee contracts, the Company recognizes revenue as the work is performed, the monthly calculation of which is based upon actual labor hours incurred and level of effort expended throughout the duration of the contract. Hosting services The Company’s hosting services contracts comprise of the right to access hosted software, and use apart from hosting, set-up, installation, support and maintenance services. The Company does not grant the customer with the right to take possession of the software at any time during the hosting period. Due to the complexity of software, installation, set-up, support and maintenance services are provided only at the level of service provider, and the customer can benefit from these services only when combined with software and hosting services. Accordingly, each of these services is not considered a distinct performance obligation in terms of a contract, and are combined in a single performance obligation. Because hosting services are transferred to the customer evenly over the contract period, the Company recognizes revenue ratably over the term of the contract. Cost of revenues Cost of revenue primarily consists of compensation for professional staff generating revenues for the Company. Compensation includes salary, benefits, performance bonuses, retention bonuses, stock compensation expense, technology and travel expenses. The Company allocates a portion of depreciation and amortization to cost of revenue. Engineering, research and development 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 F-12 development activities relate to building and scaling the next generation e-commerce platform solutions for customers. Research and development costs are expensed as incurred. Engineering, research, and development expenses also include depreciation and amortization costs, stock-based compensation expenses and performance and retention bonuses. Sales and marketing Sales and marketing expenses are those expenses associated with promoting and selling the Company’s services and include such items as sales and marketing personnel salaries, benefits, stock compensation expenses, travel, advertising, depreciation and amortization, performance and retention bonuses, and other promotional activities. General and administrative General and administrative expenses include other operating items such as officers’ and administrative personnel salaries, benefits, stock compensation expenses, legal, tax and audit expenses, public company related expenses, insurance, technology costs, facility costs, performance and retention bonuses, depreciation and amortization, including amortization of purchased intangibles, and operating lease expenses. Advertising and promotional expenses Advertising and promotional costs are expensed in the period in which they are incurred and are included in Sales and marketing expenses. For the years ended December 31, 2025, 2024, and 2023, advertising and promotional expenses totaled $ 1.1 million, $ 0.9 million and $ 1.0 million, respectively. Stock-based compensation The Company recognizes the cost of its stock-based awards based on the fair value of these awards at the date of grant. The fair value of service-based and performance based awards without market conditions at the date of grant is based on the closing price of the Company’s shares on Nasdaq. For performance awards with market conditions the grant date fair value is measured using the Monte-Carlo model. Grant-date fair value of stock options is estimated using the Black-Scholes-Merton option pricing model. The model requires management to make a number of key assumptions including expected volatility, expected term, risk-free interest rate, and expected dividends. The Company evaluates the assumptions used to value its share-based awards on each grant date. For an award with graded vesting that is subject only to a service condition (e.g., time-based vesting), the Company uses the straight-line attribution method under ASC Topic 718 under which it recognizes compensation cost on a straight-line basis over the total requisite service period for the entire award (i.e., over the requisite service period of the last separately-vesting tranche of the award). For awards with performance conditions the compensation cost recognized is based on the actual or expected achievement of the performance condition based on the graded attribution method. Additionally, the Company applies the “floor” concept so that the amount of compensation cost that is recognized as of any date is at least equal to the grant-date fair value of the vested portion of the award on that date. That is, if the straight-line expense recognized to date is less than the grant date fair value of the award that is legally vested at that date, the company will increase its recognized expense to at least equal the fair value of the vested amount. The requisite service period, which is the vesting period, of service-based and performance-based awards is typically four years and three years , respectively. 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. Benefit plans The Company maintains a 401(k) defined contribution savings and retirement plan for substantially all of its U.S. employees. Subject to ERISA regulations, an employee may elect to contribute an amount up to 90 % of compensation during each plan year not to exceed the annual maximum defined by the IRS. The Company is not required to make contributions to the plan but can make discretionary contributions. The Company has not made any contributions to the 401(k) plan for the years ended December 31, 2025, 2024, and 2023. Income taxes The Company follows the asset and liability method of accounting for income taxes. Under this method, deferred income taxes are recognized for the tax consequences of temporary differences between the financial statement carrying amounts and the tax basis of the assets and liabilities. The determination of the provision for income taxes requires significant judgment, the use of estimates and the interpretation and application of complex tax laws. The provision for income taxes reflects a combination of income earned and taxed in the various U.S. 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 F-13 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. Management considers all available evidence, both positive and negative, in determining whether a valuation allowance is required. Such evidence includes prior earnings history, the scheduled reversal of deferred tax liabilities, projected future taxable income, carryback and carryforward periods of tax attributes, and tax planning strategies that could potentially enhance the likelihood of realization of a deferred tax asset in making this assessment. The weight given to the positive and negative evidence is commensurate with the extent to which the evidence may be objectively verified. The Company evaluates for uncertain tax positions at each balance sheet date. 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. We recognize both accrued interest and penalties related to unrecognized tax benefits in income tax expense. Earnings per share Basic earnings per share is computed by dividing net income by the weighted-average number of common shares outstanding during the period. Diluted earnings per share is computed using the weighted-average number of common and potential dilutive common shares outstanding during the period. Diluted earnings per share include outstanding stock options, unvested restricted stock units (“RSUs”) and performance stock units (“PSUs”), except cases where the effect of the inclusion of options would be antidilutive. The Company includes PSUs in computation of diluted earnings per share when they become contingently issuable per the authoritative guidance and excludes them when they are not contingently issuable. The dilutive effect of potentially dilutive securities is reflected in diluted earnings per share by application of the treasury stock method. Prior period reclassifications 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 The Company is subject to risks, including but not limited to customer concentration, concentrations of credit and foreign currency risks. Concentrations of credit risk Capital resources Financial instruments that potentially subject the Company to concentrations of credit risk consist primarily of cash and cash equivalents and accounts receivable. We manage our credit risk exposure through timely assessment of our counterparty creditworthiness and credit limits. The Company places its cash and cash equivalents with high credit-quality financial institutions. The Company places its cash with financial institutions considered stable in the region and conducts ongoing assessment of its creditworthiness. At the same time, a banking crisis, bankruptcy or insolvency of banks that process or hold the Company’s funds, may result in the loss of the Company’s deposits or adversely affect the Company’s ability to complete banking transactions, which could adversely affect the Company’s business and financial condition. As of December 31, 2025 and 2024, the Company’s cash held outside the U.S. was $ 48.4 million and $ 38.6 million, respectively. This included, among others, Switzerland, the U.K., Netherlands, India, Poland, Argentina, Mexico, Armenia, Moldova, Serbia and other countries. The banking sector of Ukraine, Armenia, Moldova, Serbia, Mexico and Argentina remains periodically unstable, as their banking and other financial systems generally do not meet the financial standards of more developed European and American markets, and bank deposits made by corporate entities are not insured. In addition, the Ukrainian financial system was and continues to be significantly impacted by military action launched by Russia against the country. 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. Customers F-14 The Company derives its revenues from customers operating in multiple industries located around the world. This fact accompanied by ongoing evaluation of customer financial positions allows the Company to disaggregate and limit its exposure to credit risk. Historically, the Company has not experienced significant credit losses and write-offs of accounts receivable, however, if any of its customers encounter financial difficulties or become insolvent, the Company’s credit losses could increase which would negatively affect its results of operations. The following table shows the number of customers exceeding 10% of the Company’s billed and unbilled receivable balances at December 31, 2025 and 2024: As of December 31, 2025 2024 Billed receivables 1 1 Unbilled receivables 2 1 The following table shows the percentage of revenue derived from each customer exceeding 10% of the Company’s revenues during the years ended December 31, 2025, 2024, and 2023: For the years ended December 31, 2025 2024 2023 Customer 1 15.4 % 16.0 % 14.4 % Foreign currency risks The Company is exposed to foreign currency exchange rate risk in the ordinary course of business. The Company’s operations are predominantly conducted in U.S. dollars. Other than U.S. 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. 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). 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. Recently adopted accounting pronouncements 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 Accounting Standards Codification. The Company will adopt these changes according to the various timetables the FASB specifies. 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 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 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 F-15 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): Disaggregation of Income Statement Expenses, requiring more detailed information about the types of expenses included in certain expense captions presented on the consolidated statements of income. Additionally, this amendment requires the disclosure of a qualitative description of the amounts remaining in relevant expense captions that are not separately disaggregated quantitatively and the disclosure of the total amount of selling expenses. The new guidance is effective for annual periods beginning after December 15, 2026, and for interim periods within fiscal years beginning after December 15, 2027 on a prospective or retrospective basis, with an early adoption permitted. The Company’s annual reporting requirements will be effective for fiscal year 2027. The Company is in the process of analyzing the impact of the ASU on related disclosures. The Company does not believe any other new accounting pronouncements issued by the FASB that have not become effective will have a material impact on its consolidated financial statements . Note 2 — Acquisitions Overview of transactions Mobile Computing — On October 4, 2024, the Company acquired all shares of Mobile Computing S.A. (“Mobile Computing”), an Argentina-based company, for a purchase price of $ 16.0 million including cash paid at closing of $ 13.3 million and contingent consideration with an acquisition-date fair value of $ 2.7 million. The maximum amount of potential contingent cash consideration 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. (collectively referred to as “JUXT”). The total purchase consideration was $ 47.0 million, consisting of cash consideration of $ 39.5 million paid at closing and fair value of the contingent consideration at the date of the acquisition of $ 7.5 million. The maximum amount of potential contingent cash consideration 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. NextSphere — On April 18, 2023, the Company completed the acquisition of 100 % of NextSphere Technologies, Inc. (“NextSphere”) for a purchase consideration of $ 25.2 million, consisting of $ 24.3 million of cash paid at closing and contingent consideration with an acquisition-date fair value of $ 0.9 million. The maximum amount of potential contingent cash consideration was $ 2.0 million, subject to attainment of certain revenue and gross profit targets within 12 months. The acquisition of NextSphere added two large engineering centers in India’s tech hubs of Hyderabad and Chennai. The Company believes this acquisition supported the Company’s objectives of enhancing its technical capabilities, expanding its global footprint, and increasing its client base. Mutual Mobile — On December 23, 2022, the Company acquired all shares of Mutual Mobile Inc. (“Mutual Mobile”) for a total purchase price of $ 16.1 million, consisting of cash consideration of $ 12.8 million paid at closing and fair value of the contingent consideration at the date of the acquisition of $ 3.3 million. The maximum amount of potential contingent cash consideration was $ 5.0 million, subject to attainment of certain revenue and gross profit metrics within 12 months. The F-16 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. 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. Mobile Computing JUXT NextSphere Mutual Mobile (in thousands) Cash, cash equivalents and restricted cash $ 2,330 $ 7,344 $ 6,449 $ 3,528 Trade receivables (1) 1,496 7,132 2,639 914 Prepaid expenses and other current assets 390 273 620 540 Intangible assets 8,740 18,870 9,906 3,749 Goodwill (2)-(5) 7,192 23,164 9,031 8,879 Property and equipment, and other noncurrent assets 450 231 703 234 Total assets acquired $ 20,598 $ 57,014 $ 29,348 $ 17,844 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 ) Other noncurrent liabilities ( 59 ) — — — Total liabilities assumed $ ( 4,946 ) $ ( 10,244 ) $ ( 4,417 ) $ ( 2,262 ) Purchase price allocation $ 15,652 $ 46,770 $ 24,931 $ 15,582 _________________________ (1) The estimated fair values of trade receivables equaled their gross contractual amounts due as of the acquisition dates, all of which were collected by the Company as of December 31, 2024 and December 31, 2023, respectively. (2) The goodwill recognized as a result of the Mobile Computing is primarily attributed to the value the Company expects to achieve through growth opportunities in Latin America as well as the assembled workforce acquired. The goodwill is not deductible for income tax purposes. (3) The goodwill recognized as a result of the JUXT acquisition is primarily attributed to synergies expected to be achieved by expanding the Company’s ability to serve customers in Europe and the assembled workforce acquired. The goodwill is not deductible for income tax purposes. (4) The goodwill recognized as a result of the NextSphere acquisition represents the value the Company expects to achieve through the implementation of operational synergies and growth opportunities as the Company expands its global reach as well as the assembled workforce acquired. The goodwill is not deductible for income tax purposes. (5) The goodwill recognized as a result of the Mutual Mobile acquisition is primarily attributed to synergies expected to be achieved by combining the businesses of the Company and Mutual Mobile, expected future contracts, the assembled workforce acquired and other factors. The goodwill is not deductible for income tax purposes. F-17 The estimated fair value, useful lives and amortization methods of identifiable intangible assets as of the date of acquisition updated for any changes during the year ended December 31, 2025 are as follows: Mobile Computing JUXT NextSphere Mutual Mobile Fair Value Useful Life Fair Value Useful Life Fair Value Useful Life Fair Value Useful Life (values in thousands) Customer relationships $ 8,362 8 years $ 17,568 8 years $ 8,415 10 years $ 3,453 8 years Acquired software — — 995 2.5 years — Trade name 378 2 years 1,302 2.5 years 496 2 years 152 4 years Non-compete agreements — — — 144 2 years Total identified intangible assets $ 8,740 $ 18,870 $ 9,906 $ 3,749 Effect on operating results 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. For the years ended December 31 2024 2023 (in thousands) Revenues $ 380,768 $ 349,038 Net income $ 5,391 $ 1,021 Note 3 — Fair value Estimates of fair value of financial instruments not carried at fair value on a recurring basis are generally subjective in nature, and are determined as of a specific point in time based on the characteristics of the financial instruments and relevant market information. The Company’s financial assets and liabilities are generally short-term in nature; therefore, the carrying value of these items approximates their fair value. The following table summarizes certain fair value information as of December 31, F-18 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 Balance Estimated Fair Value Level 1 Level 2 Level 3 (in thousands) December 31, 2025 Financial Assets: Cash equivalents: Money market funds $ 271,513 $ 271,513 $ 271,513 $ — $ — Foreign exchange derivative assets $ 196 $ 196 $ — $ 196 $ — Long-term investments: Non-marketable equity securities (1) $ 1,250 Financial Liabilities: Contingent consideration payable $ 3,370 $ 3,370 $ — $ — $ 3,370 December 31, 2024 Financial Assets: Cash equivalents: Money market funds $ 267,206 $ 267,206 $ 267,206 $ — $ — Long-term investments: Non-marketable equity securities (1) $ 1,250 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 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 The fair value of contingent consideration payable is determined using the Monte-Carlo model which is primarily based on projected financial results of acquired business adjusted to market risk assumptions, probability of achievement of performance targets set in purchase agreements and respective discount rates. Even though there is significant judgment involved, the Company believes its estimates and assumptions are reasonable. Changes in financial projections, discount rates, timing and amount of specific milestone estimates, as well as probability assumptions related to achieving the various performance F-19 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 JUXT NextSphere Mutual Mobile Weighted average discount rate for risk-free performance targets 22.9 % 14.7 % 15.5 % 10.3 % Discount rate for credit risk and time value 2.8 % 2.8 % 7.7 % 3.0 % 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: Amount (in thousands) Contingent consideration payable as of January 1, 2023 $ 3,288 Acquisition date fair value of contingent consideration payable — NextSphere 932 Change in fair value of contingent consideration payable included in Other income/(expense), net — NextSphere ( 932 ) Change in fair value of contingent consideration payable included in Other income/(expense), net — Mutual Mobile ( 3,288 ) Contingent consideration payable as of December 31, 2023 $ — Acquisition date fair value of contingent consideration payable — JUXT 7,480 Acquisition date fair value of contingent consideration payable — Mobile Computing 2,700 Effect of net foreign currency exchange rate changes ( 451 ) Contingent consideration payable as of December 31, 2024 $ 9,729 Change in fair value of contingent consideration payable included in Other income, net –– JUXT ( 7,176 ) Change in fair value of contingent consideration payable included in Other income, net –– Mobile Computing 300 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. F-20 Note 4 — Property and equipment, net Property and equipment, net consist of the following: Estimated Useful Life As of December 31, 2025 2024 (in years) (in thousands) Computers and equipment 2 - 6 $ 19,111 $ 16,377 Furniture and fixtures 3 - 10 1,763 1,741 Leasehold improvements 2 - 8 1,580 1,329 Software 3 - 5 1,388 1,215 Office equipment 3 - 5 779 698 Vehicles 5 129 196 $ 24,750 $ 21,556 Less: Accumulated depreciation and amortization ( 18,334 ) ( 15,439 ) $ 6,416 $ 6,117 Capitalized software development costs 2 $ 29,348 $ 17,177 Less: Accumulated amortization ( 18,098 ) ( 9,276 ) $ 11,250 $ 7,901 Property and equipment, net $ 17,666 $ 14,018 During the years ended December 31, 2025 and 2024, the Company capitalized $ 11.4 million and $ 8.1 million of internally developed software costs, respectively. Property and equipment depreciation and amortization expense for the years ended December 31, 2025, 2024, and 2023 was $ 12.2 million, $ 9.2 million, and $ 5.2 million, respectively. F-21 Note 5 — Goodwill and intangible assets, net Goodwill rollforward for the years ended December 31, 2025 and 2024 was as follows: Amount (in thousands) Goodwill as of January 1, 2024 $ 53,868 Acquisition of JUXT 23,332 Acquisition of Mobile Computing 7,615 Effect of net foreign currency exchange rate changes ( 1,408 ) Goodwill as of December 31, 2024 $ 83,407 JUXT purchase accounting adjustment ( 168 ) Mobile Computing purchase accounting adjustment ( 423 ) 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: Estimated Useful Life As of December 31, 2025 2024 (in years) (in thousands) Customer relationships 8 - 12 $ 53,875 $ 52,664 Tradenames 2 - 10 7,012 6,904 Acquired software 2.5 995 995 Non-compete agreements 2 584 584 $ 62,466 $ 61,147 Less: Accumulated amortization ( 20,858 ) ( 13,229 ) Intangible assets, net $ 41,608 $ 47,918 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: Amount (in thousands) 2026 $ 7,090 2027 6,509 2028 6,361 2029 5,856 2030 5,831 Thereafter 9,961 Total $ 41,608 F-22 Note 6 — Accrued expense and other current liabilities The components of accrued expense and other current liabilities were as follows: As of December 31, 2025 2024 (in thousands) Accrued expenses $ 6,131 $ 5,111 Contingent consideration payable, current 3,370 7,029 Accrued income tax 2,159 6,820 Value added tax payable 1,514 1,281 Deferred revenue 1,469 2,690 Other liabilities 1,965 1,447 Total accrued expense and other current liabilities $ 16,608 $ 24,378 Note 7 — Debt 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. The Credit Agreement contains customary affirmative and negative covenants, including covenants limiting the ability of the Company and its subsidiaries to, among other things, incur debt, grant liens, undergo certain fundamental changes, make investments and acquisitions, make certain restricted payments, dispose of assets, enter into certain transactions with affiliates, and enter into burdensome agreements, in each case, subject to limitations and exceptions set forth in the Credit Agreement. The Company is also required to maintain compliance with a consolidated total leverage ratio, determined in accordance with the terms of the Credit Agreement. As of December 31, 2025, the Company was in compliance with all covenants contained in the Credit Agreement. As of December 31, 2025 and December 31, 2024, respectively, the Company did not have any outstanding debt under the Credit Agreement. Note 8 — Leases A major part of the Company's lease obligations is for office real estate. The Company may also lease corporate apartments, cars, and office equipment. 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 F-23 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. The Company includes these options in the lease term when it is reasonably certain that they will be exercised. The Company had no finance leases as of each of December 31, 2025 and 2024. Operating lease expense is recorded on a straight-line basis over the lease term and lease costs were as follows: For the years ended December 31, 2025 2024 2023 (in thousands) Operating lease cost $ 6,108 $ 5,365 $ 3,860 Variable lease cost 627 511 405 Short-term lease cost 1,182 551 343 Total lease cost $ 7,917 $ 6,427 $ 4,608 Supplemental information related to operating lease transactions is as follows: For the years ended December 31, 2025 2024 2023 (in thousands) Lease liability payments $ 5,988 $ 5,079 $ 3,692 Lease right-of-use assets obtained in exchange for liabilities $ 7,917 $ 6,938 $ 5,005 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 ) Weighted average remaining lease term and discount rate as of December 31, 2025 and 2024 were as follows: As of December 31, 2025 2024 Weighted average remaining lease term, in years 3.7 3.0 Weighted average discount rate 7.6 % 8.1 % As of December 31, 2025, operating lease liabilities will mature as follows: Lease Payments (in thousands) 2026 6,367 2027 5,421 2028 3,218 2029 2,569 2030 1,881 Thereafter 213 Total lease payments 19,669 Less: imputed interest ( 2,633 ) Total $ 17,036 The Company does not have material operating or finance lease agreements that had not yet commenced. F-24 Note 9 — Revenues Disaggregation of revenues The tables below present disaggregated revenues from contracts with customers by customer location, verticals and contract-types. The Company believes this disaggregation best depicts how the nature, amount, timing and uncertainty of our revenues and cash flows are affected by industry, market and other economic factors. The Company has a single reportable segment for the years ended December 31, 2025, 2024 and 2023. The following table shows the disaggregation of the Company’s revenues by major customer location. Revenues are attributed to geographic regions based upon location of the customer served irrespective of the location billed, or the location of the delivery center performing the work. Substantially all of the revenue in our North America region relates to operations in the United States. For the years ended December 31, 2025 2024 2023 Customer Location (in thousands) North America $ 289,351 $ 279,212 $ 238,989 Europe 86,425 56,323 60,756 Other 36,051 15,036 13,165 Total Revenues $ 411,827 $ 350,571 $ 312,910 The following table shows the disaggregation of the Company’s revenues by main vertical markets for the years ended December 31, 2025, 2024 and 2023: For the years ended December 31, 2025 2024 2023 Vertical (in thousands) Retail $ 120,507 $ 113,957 $ 102,551 Technology, Media and Telecom 107,451 95,048 98,830 Finance 100,384 60,157 28,842 CPG/Manufacturing 43,058 40,468 42,861 Healthcare and Pharma 10,183 11,109 13,653 Other 30,244 29,832 26,173 Total Revenues $ 411,827 $ 350,571 $ 312,910 The following table shows the disaggregation of the Company’s revenues by contract types for the years ended December 31, 2025, 2024, and 2023: For the years ended December 31, 2025 2024 2023 Contract Type (in thousands) Time-and-material $ 378,899 $ 326,771 $ 281,282 Fixed-fee 30,521 21,460 29,991 Other revenues 2,407 2,340 1,637 Total Revenues $ 411,827 $ 350,571 $ 312,910 Contract balances The payment terms included on the Company’s contracts with customers vary and depend on multiple factors including type of service provided, credit evaluation of a customer and prior payment history. When the timing of payment by a customer differs from the timing of rendering services, the Company records either a contract asset or a contract liability. Contract assets include F-25 amounts related to a right to consideration that is conditional upon factors other than the passage of time. Contract liabilities comprise amounts received in advance of the Company’s performance or billings in excess of revenues recognized. The Company’s contract balances as of the below dates were as follows: As of December 31, 2025 2024 2023 (in thousands) Trade receivable, net: Billed receivable $ 71,260 $ 64,754 $ 49,824 Unbilled receivable $ 8,225 $ 4,617 $ 3,735 Contract liabilities in Accrued expenses and other current liabilities $ 1,469 $ 2,690 $ 577 As of December 31, 2025, 2024, and 2023, the Company did not have contract assets recorded in its consolidated balance sheets. 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) contracts for which the Company recognizes revenues based on the right to invoice for services performed, 3) variable consideration allocated entirely to a wholly unsatisfied performance obligation or to a wholly unsatisfied promise to transfer a distinct good or service that forms part of a single performance obligation in accordance with ASC 606-10-25-14(b), for which the criteria in ASC 606-10-32-40 have been met, or 4) variable consideration in the form of a sales-based or usage-based royalty promised in exchange for a license of intellectual property. All of our performance obligations met one or more of these exemptions as of December 31, 2025. Transactions with related parties During the years ended December 31, 2025, 2024, and 2023, the Company conducted transaction with a number of companies affiliated with the members of the Company’s board of directors. As a result, the Company recorded revenue from its related parties of $ 29.9 million, $ 18.7 million and $ 7.6 million for the years ended December 31, 2025, 2024, and 2023, respectively. 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, 2025, and 2024 unbilled revenues from related parties were $ 0.3 million and $ 0.1 million, respectively . F-26 Note 10 — Income taxes Income/(loss) before provision for income taxes The following table showed income/(loss) before provision for income taxes based on geographical location to which such income was attributable for the periods indicated: For the years ended December 31, 2025 2024 2023 (in thousands) United States $ ( 11,370 ) $ ( 13,393 ) $ ( 6,107 ) Foreign 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 Provision/(benefit) for the income taxes consisted of the following components: For the years ended December 31, 2025 2024 2023 (in thousands) Current Federal $ 451 $ 4,900 $ 3,619 State 310 1,051 941 Foreign 6,616 5,096 6,183 Deferred Federal 455 ( 3,463 ) ( 2,265 ) State ( 17 ) ( 92 ) ( 474 ) Foreign ( 1,782 ) ( 478 ) ( 1,401 ) Total tax expense $ 6,033 $ 7,014 $ 6,603 Deferred income taxes Deferred income taxes reflect the net tax effects of (a) temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes, and (b) operating losses and tax credit carryforwards. F-27 The tax effects of significant items comprising the Company’s deferred taxes as of December 31, 2025 and 2024 were as follows: As of December 31, 2025 2024 (in thousands) Deferred tax assets Stock-based compensation $ 4,331 $ 5,365 R&D capitalization 3,902 4,559 Accrued compensation and benefits 2,907 2,502 Operating lease liabilities 794 577 Other 818 285 Total deferred tax assets $ 12,752 $ 13,288 Valuation allowance ( 491 ) — Total deferred tax assets, net of valuation allowance $ 12,261 $ 13,288 Deferred tax liabilities Intangible assets $ ( 10,777 ) $ ( 12,751 ) Operating lease right-of-use assets ( 746 ) ( 546 ) Other 207 ( 131 ) Total deferred tax liabilities ( 11,316 ) ( 13,428 ) Net deferred taxes $ 945 $ ( 140 ) 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 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: Amount Expiration years (in thousands) Net operating losses, state $ 7,203 2040 F-28 Effective tax rate reconciliation 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 Amount Percent (in thousands, except percentages) U.S. Federal statutory tax rate $ 3,297 21.0 % State and local income tax, net of federal (national) income tax effect (1) 310 2.0 Foreign tax effects Argentina Foreign tax rate differential ( 8 ) — Nontaxable or nondeductible items 354 2.3 Armenia Foreign tax rate differential ( 62 ) ( 0.4 ) Nontaxable or nondeductible items ( 200 ) ( 1.3 ) India Foreign tax rate differential 392 2.5 Nontaxable or nondeductible items ( 292 ) ( 1.9 ) Mexico Foreign tax rate differential 88 0.6 Nontaxable or nondeductible items 221 1.4 Poland Foreign tax rate differential ( 202 ) ( 1.3 ) Nontaxable or nondeductible items ( 166 ) ( 1.1 ) R&D tax relief ( 809 ) ( 5.2 ) Switzerland 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 ) Changes in unrecognized tax benefits ( 247 ) ( 1.6 ) Other adjustments 105 0.7 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. F-29 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, 2024 2023 U.S. 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 1.7 ( 9.9 ) Stock-based compensation 7.2 39.3 Tax credits ( 30.6 ) ( 120.0 ) Foreign tax rate differential ( 4.1 ) 7.2 Foreign inclusion adjustments 29.4 74.7 Foreign intangible amortization 0.2 10.2 162M limitation 30.2 103.9 Total worldwide effective tax rate 63.4 % 136.5 % Unrecognized tax benefits As of December 31, 2025, the Company has approximately $ 1.1 million of unrecognized tax benefits. Approximately all of the unrecognized tax benefits, if recognized, would affect the effective tax rate. A reconciliation of beginning to ending amounts of unrecognized tax benefits is as follows: For the years ended December 31, 2025 2024 2023 (in thousands) Unrecognized tax benefit as of January 1 $ 1,371 $ 1,162 $ 1,151 Changes related to prior year tax positions ( 311 ) ( 35 ) ( 101 ) Changes related to current year tax positions 53 244 112 Unrecognized tax benefit as of December 31 $ 1,113 $ 1,371 $ 1,162 The Company’s policy is to recognize interest expense and penalties related to income tax matters as tax expense. There was no interest or penalties accrued as of December 31, 2025 and 2024. The Company is subject to income taxes in U.S. federal and various state, local and foreign jurisdictions. 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. 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. F-30 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, 2025 (in thousands) Cash paid for income taxes, net of refunds U.S. Federal $ 5,161 State and local 948 Foreign United Kingdom 1,552 India 1,067 Poland 930 Netherlands 649 Aggregated foreign jurisdictions 2,051 Total $ 12,358 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) was as follows: Twelve months ended December 31, 2025 2024 2023 (in thousands) Cost of revenue $ 2,160 $ 2,078 $ 1,959 Engineering, research, and development 2,009 3,702 4,872 Sales and marketing 4,974 5,743 3,616 General and administrative 21,200 22,644 25,069 Total stock-based compensation $ 30,343 $ 34,167 $ 35,516 Equity plans 2018 Stock Plan - Effective November 12, 2018, the Company adopted the 2018 Stock Option Plan. Under the terms of the 2018 Stock Plan, certain options are subject to accelerated vesting in full or by an additional 12 months as a result of business combinations. The Company is no longer issuing any awards under the 2018 Plan. 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, 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 F-31 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 2) GAAP gross profit, calculated as a percentage of revenues for the Performance Period (“Contribution Margin”). Fifty percent ( 50 %) of the target number of performance shares granted will vest (if at all) based on the extent of achievement of the Revenue Growth for the Performance Period, and the remaining fifty percent ( 50 %) of the target number of performance shares granted will vest (if at all) based on the extent of achievement of the Contribution Margin. The maximum payout for the internal metrics above is capped at 200 %. External performance modifier rTSR is based on how the total shareholder return compares to the return of Russell 2000 index companies and can add 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. All of the awards issued pursuant to the 2020 Plan expire 10 years from the date of grant. Stock options 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 Dividend yield — % — % Expected volatility 50 % 48 % Risk-free interest rate 4.27 %- 4.65 % 3.63 %- 4.84 % Expected term in years 6.11 6.11 Grant date fair value of common stock $ 9.82 -$ 13.54 $ 10.07 -$ 11.97 The Company used a zero percent dividend yield assumption for all Black-Scholes-Merton stock option-pricing calculations. Since the Company’s shares were not publicly traded prior to the closing of our merger in March 2020 and its shares were rarely traded privately, expected volatility is estimated based on the average historical volatility of peer group entities with publicly traded shares. The risk-free rate for the expected term of the options is based on the U.S. Treasury yield at the date of grant. Expected term is estimated using the simplified method, which takes into account vesting and contractual term. The simplified method is being used to calculate expected term instead of actual data due to a lack of relevant historical data. 2018 Plan The following table sets forth the activity for the 2018 Stock Plan for the years ended December 31, 2025, 2024, and 2023: F-32 Number of Options Weighted Average Exercise Price Aggregate Intrinsic Value (in thousands) Weighted Average Contractual Term (in years) Options outstanding as of January 1, 2023 1,598,811 $ 3.54 $ 12,279 Options exercised ( 112,383 ) $ 3.54 Options outstanding as of December 31, 2023 1,486,428 $ 3.54 $ 14,552 Options exercised ( 197,703 ) $ 3.54 Options expired ( 2,795 ) $ 3.54 Options outstanding as of December 31, 2024 1,285,930 $ 3.54 $ 24,047 Options exercised ( 45,405 ) $ 3.54 Options outstanding as of December 31, 2025 1,240,525 $ 3.54 $ 6,811 3.1 Options vested and exercisable as of December 31, 2025 1,240,525 $ 3.54 $ 6,811 3.1 The total intrinsic value of options exercised during the years ended December 31, 2025, 2024, and 2023 was $ 0.4 million, $ 2.1 million and $ 0.9 million, respectively. As of December 31, 2025, the Company fully recognized stock-based compensation costs related to 2018 Plan options. 2020 Plan 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 (in thousands) Weighted Average Contractual Term (in years) Options outstanding as of January 1, 2023 3,003,611 $ 13.22 $ 3,883 Options granted 689,500 $ 11.49 Options exercised ( 153,302 ) $ 8.67 Options forfeited ( 329,889 ) $ 14.99 Options expired ( 44,205 ) $ 19.74 Options outstanding as of December 31, 2023 3,165,715 $ 12.79 $ 7,197 Options granted 25,000 $ 12.65 Options exercised ( 186,021 ) $ 10.20 Options forfeited ( 164,357 ) $ 13.94 Options expired ( 91,946 ) $ 17.12 Options outstanding as of December 31, 2024 2,748,391 $ 12.75 $ 26,881 Options exercised ( 45,172 ) $ 10.68 Options forfeited ( 72,240 ) $ 13.43 Options expired ( 128,479 ) $ 15.83 Options outstanding as of December 31, 2025 2,502,500 $ 12.61 $ 833 5.3 Options vested and exercisable as of December 31, 2025 2,224,165 $ 12.58 $ 833 5.1 The weighted average grant-date fair value of stock options granted during the years ended December 31, 2024 and 2023 was $ 6.74 and $ 5.87 , respectively. 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. F-33 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 RSUs granted do not participate in earnings, dividends, and do not have voting rights until vested. The following table summarizes activity of the Company’s RSUs for the years ended December 31, 2025, 2024, and 2023: Number of Shares Weighted Average Grant Date Fair Value Unvested awards as of January 1, 2023 2,245,968 $ 11.99 Awards granted 251,955 $ 11.64 Awards vested and released ( 1,663,702 ) $ 11.98 Awards forfeited ( 105,008 ) $ 11.25 Unvested awards as of December 31, 2023 729,213 $ 11.99 Awards granted 1,750,381 $ 13.46 Awards vested and released ( 613,779 ) $ 12.07 Awards forfeited ( 69,950 ) $ 12.01 Unvested awards as of December 31, 2024 1,795,865 $ 13.39 Awards granted 490,651 $ 16.31 Awards vested and released ( 957,898 ) $ 13.47 Awards forfeited ( 103,335 ) $ 15.68 Unvested awards as of December 31, 2025 1,225,283 $ 14.30 The total unrecognized compensation expenses related to 2020 Stock Plan RSUs as of December 31, 2025 was $ 14.5 million to be expensed on a straight-line basis over 1.8 years. F-34 Performance Stock Units The following table summarizes activity of the Company’s PSUs for the years ended December 31, 2025, 2024, and 2023: Number of Shares Weighted Average Grant Date Fair Value Unvested awards as of January 1, 2023 (1) 518,938 $ 39.41 Awards granted 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) 822,895 $ 11.97 Awards granted 1,626,600 $ 14.51 Performance achievement adjustment 319,320 $ 14.21 Modifier adjustments 255,456 $ 4.44 Awards vested and released ( 822,895 ) $ 11.97 Awards forfeited ( 30,000 ) $ 14.51 Unvested awards as of December 31, 2024 (3) 2,171,376 $ 13.28 Awards granted 47,000 $ 26.14 Performance achievement adjustment 620,090 $ 15.13 Modifier adjustments 98,268 $ 27.48 Awards vested and released ( 1,104,064 ) $ 11.96 Awards forfeited ( 63,312 ) $ 14.54 Unvested awards as of December 31, 2025 (4) 1,769,358 $ 15.84 __________________________ (1) Reported at the certified performance achievement at 100 % of the target shares granted (2) Reported at 170 % of the target shares (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. The fair value of vested RSUs and PSUs issued under the 2020 Plan (measured at the vesting date) for the years ended December 31, 2025, 2024, and 2023 was as follows: For the years ended December 31, 2025 2024 2023 (in thousands) RSUs $ 15,888 $ 7,742 $ 18,926 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. F-35 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 The following table sets forth the computation of basic and diluted EPS of common stock as follows: For the years ended December 31, 2025 2024 2023 (in thousands, except per share data) Numerator for basic and diluted loss per share Net income/(loss) $ 9,668 $ 4,041 $ ( 1,765 ) Denominator: Weighted-average shares outstanding – basic 84,539 77,465 75,193 Net effect of dilutive stock options and restricted stock units 2,353 2,509 — Weighted-average shares outstanding – diluted 86,892 79,974 75,193 Net income/(loss) per share Basic $ 0.11 $ 0.05 $ ( 0.02 ) Diluted $ 0.11 $ 0.05 $ ( 0.02 ) The following potentially dilutive common shares, presented based on weighted average potential shares outstanding during each period were excluded from the calculation of diluted net loss per share attributable to common stockholders for the periods indicated because including them would have had an anti-dilutive effect: For the years ended December 31, 2025 2024 2023 (in thousands) Stock options to purchase common stock 1,612 1,897 4,823 Restricted stock units 298 23 1,488 Performance stock units 754 1,077 912 Total 2,664 2,997 7,223 Note 13 — Segment and geographic information Operating segments are components of the Company for which separate financial information is available and is regularly reviewed and evaluated by the chief operating decision maker (“CODM”) to assess performance of each operating segment and to allocate resources. The Company’s CODM is the Chief Executive Officer (“CEO”). The Company operates as a single operating segment engaged in delivery of various software development and hosting services to customers across its five main industry-based verticals: TMT, Retail, CPG/Manufacturing, Finance, and Healthcare and Pharma. The Company derives revenues from multiple locations; however, North America continues to be its main sales market. The Company’s determination that it operates as a single segment is based on the financial information regularly reviewed by the CODM. The CODM assesses core operating performance and allocates operating and capital resources of the Company based on gross profit, income/(loss) from operations and net income/(loss) that are also reported on the consolidated statement of income/(loss). 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 F-36 does not generate, analyze and evaluate any discrete financial information for individual verticals or sales markets as of the reporting date. The CODM does not evaluate operating performance using asset or liability information . Geographic Information The following table presents revenues by customer location for the years ended December 31, 2025, 2024, and 2023. The Company attributes customers to respective countries based upon location of the customer served. For the years ended December 31, 2025 2024 2023 (in thousands) United States $ 289,138 $ 277,741 $ 238,155 United Kingdom 45,193 25,264 31,880 Poland 14,005 6,048 1,860 Other 63,491 41,518 41,015 Total $ 411,827 $ 350,571 $ 312,910 Long-lived assets include property and equipment, net of accumulated depreciation and amortization. Physical locations and values of the Company’s long-lived assets are summarized below: As of December 31, 2025 2024 ( in thousands) Poland $ 5,672 $ 3,010 Serbia 2,375 2,350 Ukraine 2,174 2,067 United States 1,491 2,101 Armenia 1,364 981 Moldova 1,329 808 Other 3,261 2,701 Total $ 17,666 $ 14,018 Note 14 — Commitments and contingencies Software subscription services agreement The Company entered into a software subscription services agreement (the “SSA”) effective as of June 1, 2019. The SSA was non-cancelable for a term of 5 years from the effective date and renewable at the election of the Company. On December 20, 2023, the Company renewed the SSA for an additional term of 5 years starting from June 1, 2024. Payments under the terms of the SSA are due quarterly in advance. Total future minimum payments under the non-cancelable SSA are as follows: Subscription Payments (in thousands) 2026 $ 979 2027 979 2028 979 2029 490 Total $ 3,427 Litigation The Company is subject to legal proceedings and claims that arise in the ordinary course of its business. Management evaluates each claim and provides for potential loss when the claim is probable to be paid and reasonably estimable. While adverse F-37 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 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. Acquisitions 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. F-38 ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE None.