Key Takeaways
- Grid Dynamics shares jumped 34% after its third-quarter revenue and earnings beat expectations.
- Gross margin rose to 40.3% from 33.3% a year earlier, and the CEO says the gain will last.
- Revenue grew 9.7% while headcount fell 8.3%, and AI work is now 31% of sales.
- EPAM and Accenture haven’t shown a margin jump like it yet.
Grid Dynamics (GDYN) soared 34% today after its third-quarter report beat on revenue, earnings and guidance.
Rivals EPAM Systems (EPAM) and Accenture (ACN) popped a bit too, though neither has shown a margin jump like Grid’s. Call it optimism.
A beat on every line
Grid’s record revenue of $114.3 million, reported after Thursday’s close, rose 9.7% and topped the $112.8 million analysts expected. Non-GAAP EPS of 18 cents beat the 13-cent consensus, and fourth-quarter revenue guidance beat estimates too.
Going in, analysts expected 47 cents of normalized EPS for 2026:
Grid has already earned 37 cents of non-GAAP EPS through nine months, so those estimates look set to rise.
Fewer people, more profit
Gross margin climbed 7 points from a year earlier, to 40.3%, its highest in eight quarters:
EBITDA margin rose to 20% from 12.2%. CEO Leonard Livschitz called it “a reflection of substantial enhancements to our business model, not a one-time event.”
He credited more AI work, higher billing rates and tighter spending. AI revenue has grown more than 45% for three straight quarters, to 31% of the total. And headcount fell 8.3% even as revenue grew.
The rivals haven’t shown it yet
If AI were lifting margins across IT services, the bigger firms would show it too.
EPAM’s non-GAAP operating margin rose to 16.4% from 15.0% in its second quarter, but revenue grew just 4.5%. Will AI lift its margins the way it has Grid’s when it reports in early November?
Accenture’s gross margin was 32.0% in its quarter to Aug. 31, against 31.9% a year earlier. So Grid’s leap looks like its own doing.
TIKR tracks 6 analysts on Grid Dynamics. How many say “Buy”?
See the full breakdown of Buy, Hold, and Sell ratings on Grid Dynamics, along with Wall Street’s revenue and earnings estimates, all in one place. More than 500,000 investors use TIKR to research stocks like this one. See Grid Dynamics’ Analyst Ratings
Still cheaper than usual
Even before today, Grid traded at 20x forward earnings, under its five-year average of 35x (which leans on 2021’s 122x peak):
Today’s jump takes it to about 26x.
The way I see it, Grid just showed it can grow with fewer people. If AI keeps gaining share of sales, the stock has room to move back toward its usual multiple. Its fourth-quarter EBITDA guidance implies a margin a bit under 20%, so the next report will show us whether that 40% gross margin holds.
So what is Grid Dynamics stock actually worth?
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Disclaimer:
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