Anil Doradla
Good afternoon, everyone. Our first quarter results exceeded our expectations both on revenue and non-GAAP EBITDA. We recorded revenues of $100.4 million slightly ahead of our guidance range of $98 million to $100 million. On a year-over-year basis, this represents a growth of 25.8%. Excluding the impact of our recent acquisitions, the year to year growth was 10.1%. Both on a quarter-over-quarter and year-over-year basis, there were roughly 38 bps and 26 bps of FX related headwinds respectively.
Our non-GAAP EBITDA came in at $14.6 million, outperforming our guidance range of $12.9 million to $13.9 million. In the first quarter, we benefited from timing of revenue recognition with some of our fixed price contracts in line with project milestone completions.
Looking at performance of our verticals. Retail remained our largest vertical, accounting for 31.4% of total revenues in the quarter. Revenues in this vertical grew 28% on a year-over-year, with a slight decline of 3.7% on a sequential basis. The year-over-year growth was primarily driven by strong demand from our specialty retail customers, along with contributions from new client engagements.
Finance contributed 24.9% of total revenues for the first quarter of 2025. And became the second largest vertical. Finance continued its strong performance with revenues increasing 7.9% sequentially and 144.3% year-over-year. The strong year growth was largely driven by a combination of our recent acquisitions. That added global banking customers along with strength from our fintech and insurance customers. TMT accounted for 23.5% of revenues in the first quarter and remained flat compared to the fourth quarter of 2024. On a year-over-year basis, TMT declined by 1.8%.
Turning to the remain verticals, CPG and manufacturing represented 10.7% of our revenues in the first quarter. It remained relatively flat on a sequential basis, but grew 12.7% year-over-year basis. The year-over-year growth was primarily from our recent acquisition.
Other vertical contributed 7.1% of total revenues remained flat sequentially, and declined 15.1% compared to the same quarter of 2024. The year-over-year decrease primarily came from customers tied to the hospitality industry.
And finally, healthcare and pharma made up 2.4% of our revenues for the quarter. We ended the first quarter with a total headcount of 4,926, up from 4,730 employees in the fourth quarter of 2024, and up from 3,892 in the first quarter of 2024.
At the end of the first quarter of 2025, our total US headcount was 354, or 7.2% of the company's total headcount versus 8.5% in the year ago quarter. Our non-US headcount, located in Europe, America's, and India was 4,572, or 92.8%.
In the first quarter, revenues from our top 5 and top 10 customers were 35.6% and 56.6% respectively, versus 39.6% and 55.3% in the same period a year ago, respectively. During the first quarter, we had a total of 204 customers, down from 211 in the fourth quarter of 2025 and 210 in the year ago quarter.
The year-over-year decline in the number of customers was primarily driven by our continued efforts to rationalize our portfolio of non-strategic customers. Moving to the income statement, our GAAP gross profit during the quarter was $37 million, or 36.8% compared to $37 million or 36.9% in the fourth quarter of 2024 and $27.7 million, or 34.7% in the year go quarter.
On a non-GAAP basis, our gross profit was $37.6 million or 37.4% compared to $37.6 million or 37.5% in the fourth quarter of 2024 and up from $28.1 million or 35.3% in the year ago quarter. Non-GAAP EBITDA during the first quarter that excluded interest income expenses. Provision for income taxes, depreciation amortization, stock-based compensation, restructuring. Expenses related to the geographic reorganization and transaction and other related costs was $14.6 million or 14.5% of revenues, down from $15.6 million or 15.6% of revenues in the fourth quarter of 2024, and up from $10.3 million or 12.9% in the year go quarter.
The increase on a year-over-year basis was largely due to higher revenues, partially offset by increase in operating expenses. Our GAAP net income in the first quarter was $2.9 million or $0.03 per share, based on a diluted share count of $87.8 million shares compared to the fourth quarter net income of $4.5 million or $0.05 per share based on a diluted share count of $83.8 million and a net loss of $3.9 million or $0.05 per share based on $76.2 million diluted shares in the year ago quarter.
A sequential decrease in GAAP net income was due to higher levels of operating costs, including stock-based compensation. On a non-GAAP basis in the first quarter, our non-GAAP net income was $10 million or $0.11 per share based on $87.8 million diluted shares compared to the fourth quarter non-GAAP net income of $10.3 million or $0.12 per share based on 83.8 million diluted shares and $7.6 million or $0.10 per share based on $78.4 million diluted shares in the year ago quarter. On March 31, 2025, our cash and cash equivalents totaled $325.5 million, down from $334.7 million on December 31, 2024.
Coming to the second quarter guidance, we expect revenues to be in the range of $100 million to $102 million. We expect our recent acquisitions contributing roughly 12% of their revenues. We expect second quarter non-GAAP EBITDA to be in the range of $12.5 million to $13.5 million.
For Q2 2025, we expect our basic share count to be in the range of $84 million to $85 million, and our diluted share count to be in the range of $88 million to $89 million. For 2025, we are maintaining our full year revenue outlook of $415 million to $435 million that we provided in February. The revenue outlook represents a growth of 18.4% to 24.1% on a year to year basis. At the midpoint of $425 million, we expect our 2025 revenues to grow by 21.2% on a year to year basis. That concludes my prepared remarks. We are now ready to take questions.
Operator
(Operator Instructions)
Bryan Bergin, TD Cowan.
Bryan Bergin
(technical difficulty) Thank you. Why don't we try digging in more on client behavior. If we can dig in as far as clients activity through the month, I know [Leonard], you had some of that commentary, but then into April, can you go into more detail as it relates to the pace of client decision making and then just on the margin, kind of that deferral cancellation question. Obviously you guys affirmed the outlook for the year, so it sounds good, but if you could give more detail on that behavior, it would be helpful.
Eugene Steinberg
All right. I'll answer the first part and I'll have, and you to comment on that margins, so. As I mentioned about the clients in general, we are -- we just finished April, so we're going to have data for three months of the Q1 and some more information about April as well. Obviously it's a very fluid situation, but right now we haven't seen any major impact of the recent, economic political activities.
Our clients obviously exhibit some cautious, in terms of the long-term projections, but, in general, the projects, especially the project of strategic importance for our clients, continue uninterrupted, saying that we don't know what's going to be happening soon with additional impacts, but I tell you that, with my personal conversation with the leadership of the clients and my Executive team conversation with other executives of our clients, pretty stable and confident. So that's pretty much the best way I can do. I'm sure you'll have some follow up questions, but let's, Anil talk about [so] much.
Anil Doradla
So Bryan, you said, some deferrals, so can you -- I'm trying to understand, are you talking about -- can you just go through that?
Bryan Bergin
Yeah, sure. I didn't mean kind of like deferred expenses. I was talking more so about project deferrals or anything like that, which it doesn't sound like you're experiencing, which is good. Maybe though, I will follow up Leonard a little bit on the guidance for the year. So just based on what you do see for 2025 and the growth guidance midpoint that you have, how much of that work is in hand so to speak, so contractually committed. You mentioned some of these deals you've signed that will ramp. How do you -- can you just talk to that dynamic as far as contractually committed versus pipeline conversion that you may need to get still?
Eugene Steinberg
Yeah, I mean, our business dynamics, well, contractual commit only works if there is a -- the more stable business, right? So obviously all the budgets which we are talking about, they are being committed, right? So there is a longer term arrangement on the deliverables. We seldom do a few month projects anymore.
It's not like 5 years, 10 years ago. So all the programs, especially on a plat platforming on implementation of the AI technologies on moving forward with the, various cloud solutions, recently agentic AI is a little bit different, but, they're all part of the longer term plan and the plan comes from the business decisions.
Again, the business decisions have been made for 2025. And that's going to result in a good January, and seasonally good January. We've seen a little bit of February, it's kind of a reaction to some of our clients as some of the retail CPG related clients, they have the adjustments because most of them the fiscal year starts in February. But overall, the ramp up which we expected in March continues into April and with plan to make as well.
So as far as annual guidance, right, I think, there are a couple of important points that I have to mention. Look, we haven't been in a guidance world for a full year for a very long time, and you guys have been asking us so when are we going to build the confidence. So we shared the confidence in our guidance with a high level of conservatism when we did it a quarter ago. That conservatives still poss, but maybe not to the same level of conservative is a quarter goal.
So we have a still a pretty good run in terms of the understanding how we're going to rise with the numbers, and I'm talking about the business we're not just observing today. But we know in the not just in the pipeline, but in the execution stage, right? When we'll see a little bit more dynamics between May and July, it will give us a little bit more factual assessment where we're going to be.
The confidence there, but, ultimately we're not reading on the coffee grounds, which is based on what the world is and where we are. So we're not really naive in terms of what's going on around us, it's just been a little bit smaller, more nimble, more technology focused on the customer revenue creation. Well, maybe a little bit more confidence than some others.
Bryan Bergin
Okay, that's clear. That's helpful as it relates to the initial outlook you gave, understand that. One more for you, just as it relates to hiring, so nice to see the record billable employee base. Talk about your hiring intentions here in 2Q and maybe for the balance of the year. How are you thinking about that versus balancing utilization and bench optimization?
Eugene Steinberg
Well, look, the hiring machine as with Grid Dynamics has been pretty consistent. We've been blessed not to go through a lot of rationalization up and down depending on the flavor of the day. So we're -- we've been very consistent with the internship program, with the Grid Dynamics University, with Grid Dynamics labs, with rotational tech technology, with expansion of technology.
So the technical talent is harder to acquire, but tend to stand longer if the projects are there, right? So obviously region to region dependent. There's no, secret. There's certain regions, you need to put a little bit more effort to build that stability, but in terms of expanding the hiring, it's never been a big issue with us. It's just relevance of technical skills, and what we do, Bryan, many times more now, we really don't depend on the market capability from hiring of the specialty talent. But internal, kind of polishing and honing the skills as they present because as dynamics of the technologies techs change quite fluently. That helps us to kind of stay strong on the streamline of hiring.
Bryan Bergin
Okay, makes sense. Thank you for the all the detail.
Eugene Steinberg
Of course.
Anil Doradla
Thank you, Bryan.
Operator
Puneet Jain, JP Morgan. Puneet, (Operator Instructions)
Puneet Jain
Hey, thanks for taking my question and a very nice quarter. So I understand like the macro environment, like it's uncertain, but are you seeing any change in your client behavior, maybe especially like in the retail vertical TMT vertical, Apple being the largest customer there. Are you seeing like clients could be prioritizing more cost cutting deals instead of revenue generating? Any change that you have seen in the last one month? What in Q1?
Eugene Steinberg
I'm going to answer your question genuinely, but I will have Vasily to talk about Apple as his baby been from the day we started the account. So that I had a pretty substantial client tour in the past three weeks, four weeks, myself, plus we've been a pretty substantial contributor to Google Next with a nice booth and we met many clients there as well, not just specifically related to individual projects.
So we can have a pretty good assessment where we are. So first of all, our client base is not really China dependent. I think it's very important for the industry to understand that dependency on a labor in China is much lesser than it used to be, but in our clients, we ask this question specifically, it's usually high single digits. This is not my field of comp. That's what they tell me.
Now, the other country is also a bit more questionable, but we're not, feeding Amazon and Stein -- [shine] with some kind of available and products. So we're pretty stable there. Again. the supply, the logistics, we all know we read the news that amount of the containers is lowering, so what does it mean? We certainly, believe that we need to be very careful in terms of understanding the business, but as of today, May 1, we're good. Now, Apple is a bit interesting story, which is again, it's quite good for us, and you see the announcements and all this good stuff, but I don't want to steal the thunder from Vasily, so pleasesily.
Vasily Sizov
Yes, sure. So talking about anything related to any expected slowdowns, so that's the fact.
Bryan Bergin
Got it. No, that's very helpful. And then it seems like on delivery side, like the rest of the world, which I'm assuming most of it is India, grew nicely in the quarter like added like 100+ employees on a sequential basis and with Rajiv also focusing more on India delivery from here on. How should we think about your India as a delivery center? Like can it ramp, like how large can it become? Can it become like the largest location for you over the next few years?
Eugene Steinberg
Well, so for people who don't know who Rajeev is, Rajeev Sharma was our CTO for a while. Now we have our first and only, first CTO of the company, Eugene Steinberg, who took the role, and, he came back to the role many years later, so he's more mature and definitely positions, and a technology capabilities, as a leader, not just a scientist, and you guys know Eugene well. So there are a couple of reasons why Rajeev is going to be an India, but it's not delivered. So the number one priority is scaling technical talent in the region.
I mean, he is a fantastic technology spiritual leader of not just the global world, but specifically in India and many people look upon him with the greatest level of respect. And that's one region which we need to scale technology capabilities because we are truly follow the sun strategy. I would not deviate it from one region to another with the Latam in the Europe or whatever we're going to end up in next because if we are not the same, it's no renamic DNA.
So we continue to push hard with many facets to grow India, with the equal level of technology capabilities, and we have three locations, right? So whether Bengal, Hyderabad or Chennai, they're well they're all not the same, but for the size of re dynamics, there are no brilliance to tapping. So that's his number 1 priority.
Number 2 priority obviously there, we have a large number of GCCs. And GCCs are very critical for our business because many decision-making process is happening right now in India. So Rajeev was instrumental in working there and it's easier when you are in your home base in Bangalore. We have a nice office there and then sit in Jersey and going back and forth. It made a lot of sense.
The third one, he's really a managing director of APEC. So I just don't want people think it's just a glorified title because we are expanding our business relationship with other countries in the region, particularly more near term Singapore. So it's a very fundamental thing. I trust Rajeev, he's a very good friend.
So the delivery remains as a global organization and [Vozorkova] is there, by the way, very likely you will hear from him next time and as you noticed, I tried to rotate the executives and there's a size of the table. It's only right now.
So it used to be two, now we have two tables, it's four, right? And I just want you guys to understand it's not 25, 20, it's only going to be 25th event for Anil and Leonard. We have a really great team in the company. So Benhamou is in hell. He is a great leadership person in India. We trust him wholeheartedly, so he will continue to do his work. And the growth is going to be very consistent because again we're not offering India as a low cost alternative to other regions.
We are basically working to complement local decision making in India. So very seldom when we have just Indian team or just European team or just the [TAM] team because we're trying to build this McKenzie management idea, but for GCC's locally, it makes sense to have more talented people in India. So it's not as staffing, it's growth, but it's become the Number one country in the world? Absolutely it will. I mean, yes, it's like on the country basis, who can compete, there are only two populous countries in the world and we're not in China today.
So the answer is absolutely yes. Now, on the regional level, I mentioned many times we're going to do the balance work because it depends on the customer base, but the growth in India. Not absolute numbers, but percentage numbers is greatly driven by scaling technology capabilities. Sorry, it's a long answer, but I just wanted to use the whole overview of what we do in India.
Puneet Jain
It's okay. If I can quickly squeeze in another one, like follow up to Bryan's question on the guidance. So it seems like the guidance implies like slight growth, like 0% to 2% sequential growth in 2nd quarter followed. By quite nice ramp in the second half, we calculated 4% to 9% on average sequential basis in the second half. So what drives this visibility on second half ramp, like which type of customers existing new, which vertical regions will drive that high growth in the second half of this year?
Eugene Steinberg
Do you want to get the financial answer or business answer? That's your choice.
Puneet Jain
I'll have both.
Eugene Steinberg
Alright, so we'll have your friend to answer first. So Anil, I need please give me the answer.
Anil Doradla
So look, we put it, let's look at the range that we have, right? 450 to 435, very simple, I know what you're trying to do is you're trying to understand the risk, right, to those numbers. Let's start with a very basic math, right? You have 100, 102, that's 202, right? If you look at the first half versus second half, you have 3% to 4% purely on working days. So if I do not add a single person for the rest of the year, don't add a single client for the rest of the year, that will give me some, tail.
Now the second part is if you look at Leonard's commentary, right, he talked about January through March and April, and as we said, we're dealing with some record billable headcounts. So if I take that number as I have today and extrapolate even for the second half, then what you'll see is that there's another level of tailwind, so to speak.
And right there, you'll get minimum, your low end of the guidance right there. And then obviously I'm not taking into account any other things now. There are many other business aspects that I'm not taking into account and many other positive things, but I'll pass it on to Leonard, who'll talk a little bit about what is going on there. So our guidance, we can get to that range by taking some very conservative approaches to the numbers.
Eugene Steinberg
All right, so that, you heard the financial answer. Now the business answer, we grow on all the fronts. Even in Q1, if you look at Q1 versus Q4, it's a flattish quarter, right? I mean, numbers don't like. But the dynamics was very interesting. There were a couple of clients, we there were some resets, from February because of their internal challenges which were on the way to, recovery from there and we had a growth.
Now, Q2, we do plan quite nice growth in a few accounts, but we also anticipate one or two ramp downs. That usually happens. Now, by the end of this Q2. We definitely expect the ramp up. Now, which way it's going to go, is it going to be again, it's a slow ramp up or faster ramp up. We don't have it right now. We don't anticipate a slowdown in in the second hell unless, hell breaks loose and excuse me, there's some other non anticipated events happening.
So we are not really conservative internally because we continue spending, but we want to be very careful not to do what sometimes happens. People get excited too much about throwing numbers, then they have to restart the guidance, then they have to modify something, but it's dealing with you guys is a -- not as a significant challenge as internally to disturb the process.
So we're bullish on it, on our growth. We believe it is happening right now. We're bullish on a growth in not just -- not in traditional retail and CPG but other segments which is you as nice certification. But, when it comes to numbers, and you is a king, she wants to be something which we will not be looking with excuses later. That's pretty much where we are.
Puneet Jain
That's great. Thank you so much.
Operator
Thank you, Puneet.
Anil Doradla
Mayank Tandon, Needham.
Mayank Tandon
Great, thanks, good to see you guys. Congrats on the quarter.
Eugene Steinberg
Thanks, Mayank.
Mayank Tandon
Leonard, I might have missed this. Did you comment on new logos, and if you could just go through that again, if you did, apologize for that, and which verticals did you see the most traction in terms of new plan activity?
Of course, by the way, guys, next time I'm going to bring CTO. We're not going to ask him, so, don't do, he feels like a war pi yeah. so, Mike, you ask one question on please.
Eugene Steinberg
Soliciting you guys to, not only worry about what's going to happen with the tariffs but also understand what value would bring. There's a lot of really cool stuff. Again, maybe it's going to be better talk next quarter then you just, give me a couple encouragements that I'll keep the CTO on the call, but I didn't forget your question.
So the new logos, so there are two parts of new logos, as great dynamics, and you've been with us for a very long time from the beginning, has a fairly generic strategy which is called 80, 15, 5.
80, it's a stable business with the growth of the matured accounts, of the revenue, 15% something we acquired from the previous calendar year roughly and 5% in new logos, like brand new logos. So on the brand new logos in Q1, it was a very minimal financial impact, which is usually it is the case. If you look at the ramp up, if we don't get a lot of contribution by Q3, then this 5% is going to be very difficult. So, but we did see the numbers, but they're small.
Now, we did very well for us in those 15%. So some of the key logos we acquired last year are giving us really nice ramp up in Q1 and going into Q2 as well. And the reason being is we're much more diversified in the verticals, and it's not just the verticals, when we talk about the fintech, we talk about technology, when we talk about, CPGs, now we start talking about manufacturing where we didn't forget the -- even the healthcare because some of the payment systems, the new acquired accounts, they're directly type. Tied to the medical field, health insurances.
When we take insurance business, which we were very muted because it was not a huge revenue, now we're picking up and health insurance payment, logistics and all this stuff. So the business are becoming more compounded pharma. So Still small, but the number of accounts growing and why? Because again we apply the same algorithms and now the -- I accelerators which we put in place.
So the short answer for your question, we got a good uplift from the accounts from their last year, especially the second half of last year, and it's just an initial stage of the logos which we're working with as a brand new logos in 2025.
Mayank Tandon
And let me add one thing to that, Mayan, you see, the definition of our logo edition when we come are significant enterprises. So we -- in the quarter we did add. We did add logos, but internally we don't want to. Each time we have a logo, we're just not going to come out and talk about it. We -- Leonard makes his comments and we make these are significant enterprise logos. So in the quarter we had, and we did not believe that it elevated the talk, but there were additions.
Eugene Steinberg
And when there is a big logo and a big enterprise, we just started. We'll also be a little bit careful because, you guys, as we do, we don't like infant mortality, right? So I don't want to go through that, we had these great guys and they're fantastic business, and they have, $50 billion dollar revenue and then something and we're silent two quarters later.
So now we have a pleasure and a choice to be selecting what we call new business acquisition. So I'd rather have this [80, 55] continue. Of course, there's addition on the top of the acquisition, all the stuff, but this, I'm pretty satisfied with this rate of growth of innovative clients which we acquired from 2024.
Mayank Tandon
That's a very helpful color. Thank you so much for that. And I have one quick follow up for you on around margins. How should we think about the cadence of gross margins? What are the puts and takes in the same question for EI margins. Your guidance implies a downtick in the 2nd quarter, but any perspective you can share for the full year. I know you haven't given formal guidance on EBITDA margins for the year, I believe, but any thoughts around how that will trend would be helpful.
Anil Doradla
So sure, let's talk about the Q1 to Q2, right? Now, as I said in my prepared remarks, we benefited from the timing of some of my fixed price contracts, right? So as you can see, Q1 was what, 37.4%, which is Kind of flattish over Q4 and historically, you always see as we go from Q4 to Q1, there's compression, right?
Now, if you look at that moment, there were, 100 plus bps and over margin movement because of that particular thing, that is one thing. Now, as we go from Q1 to Q2, this year, we don't have a uplift on the number of days, so it's kind of, flattish. Again, year to year, it might depend on that.
The other thing is that we are making investments as we speak right now. There's a lot of stuff going on AI, there's a lot of work going on AI scaling and training. So there's some investments, that we are working on. And that has an impact on, some of, to look at the businesses, the margin profile should improve as we go a quarter to quarter.
The only question is, what is, what do I need to do to support the growth? What do I need to do to support the investments? That's the only question that we debate, but as we progress in the course of the year, yes, you should see margin expansion.
Eugene Steinberg
Right, so I also want to give you again a business, so it's usually it's a news domain, right? .What we need to ask the question how quickly we're going to ramp up India, right? There is another fact, obviously, from the war which started more than three years ago. We are having a bit excessive number of countries to really clamp down on the operating costs beyond the technology. We're not going to slow down technology, right? This is no way. This is our key and we want to rule the world in our business.
We're not going to slow down investment into quality engineering, operational excellence on the delivery management and all this good stuff. However, we anticipate. The scaling of the key, locations, which is not just India, I mean [Laden] was a great investment into Argentina and we would like to think the way how we plan the convergence on a successful locations as we grow will actually give us meaningful impact. This is on a back end stuff, on the front end stuff.
We continue to push hard on the, from the [2510 to 10], basically [510 to 20] strategy, which means, we want to build the client's $5 million to $20 million dollar annual revenue as a core, at least $5 million. That successful, implementation is actually picking up a bit too because it's not about client concentration. It's a client meaningful work and operational efficiency, not just a margin, but the operational efficiency is driven by the depth of the relationship. We see that picking up too.
So those are kind of three elements which we kind of look from the business perspective to increase. When it comes to variation quarter to quarter, and you will tell you 20 convincing stories and next quarter you'll find another convincing story.
So I'm not terribly worried about it. I just want to make sure we continue to rate grow the business. We have a net cash generation which is very critical. We need to be in the business of self-sustainable position, and Anil is doing a fantastic job on controlling the cost as we continue to expand into the technology world.
Mayank Tandon
Great, thank you so much. Appreciate all the color. Congrats.
Eugene Steinberg
It's okay.
Mayank Tandon
Let him go pass it on to the others. They're waiting.
Operator
Maggie Nolan, William Blair.
Maggie Nolan
Hi, thank you. Well, I'll ask a somewhat engineering question. You've talked a lot about your Agentic AI solutions and several of your examples. Are these custom built by grid? To what extent are there kind of pre-built solutions by your partners, and is this a primary driver of your partner revenue growth?
Anil Doradla
Yeah, thank you for the question. This Dynamics is mostly working in the mode and we are developing some of the solutions in a kind of from the first principles. And some of the solutions, of course, we're using a lot of the open source components. In some of the cases, we are also leveraging cloud native technologies.
Pretty rarely, we are deploying solutions which are completely kind of black box and to end solutions because this is mostly work for the system integrators, mostly engineering company. So we are building solutions for larger enterprise organizations with unique requirements when it comes to security, when it comes to access to very diverse and very proprietary data sources, when it comes to very specific workflows and official solutions do not fit them. And in these cases, we are building, custom solutions, building custom agentic platforms, leveraging a lot of open source components and cloud native services which deliver and automate those workflows.
Maggie Nolan
Thank you for that. Maybe, and a quick follow up to that, are you discussing different, fixed price or outcome-based pricing models to go along with that with the clients?
Anil Doradla
That's a good question, Maggie and, I don't have an exact answer at this stage because these are new things. That are moving around, but yes, we are open to everything. My preference is more fixed price because we have more control, but this is as we speak right now, many of these new things are happening. I don't know Whether --
Eugene Steinberg
Maggie, I know ask him, he's the wrong guy to ask this question. He's just signing the checks. The guy who really isn't driving the scale of the fixed bid arrangements, which Anil really alluded to, is Vasily. So let Vasily answer because it's very critical to understand. It's not just we innovate technology. We do not do technology for technology. It has to be a good business value proposition for the clients to check on ROI and for us to be able to enjoy the fruits of the partnerships, please.
Maggie Nolan
Sure, thank.
Vasily Sizov
Yeah, so, when we were talking last time and maybe like a year ago, we were talking about small POCs like to see how the technology really helps the business and those engagements were pretty small in size, I would say, and they were like almost 100% were fixed bit.
So nowadays, there is a good understanding of what the technology can do for the business. Therefore, there are more popular, I would say fixed capacity type of engagements when we set up the team, which develops the platform and then there is a roadmap for building business cases on top of that.
And of course, the customers are not interested in losing the team which build the platform after the implementation, just to come up with an idea that we need to -- we need to gather the team together now to build the business cases.
So we see nowadays, AI drives more of a kind of long-term engagements, which are linked to specific, business impacts. And of course, as I said, business cases and financial impact is one of the key decision factors where the customers are making decisions on investment in certain areas. So that's for sure, surely happens.
Maggie Nolan
Thanks, Vasily. If I could just squeeze one in on talent, are you comfortable just given all the recent hiring? Are you comfortable with the balance of junior versus senior talent? Are you trying to rebalance the pyramid and maybe tie that back to your margin commentary? Thanks.
Leonard Livschitz
We're never satisfied with our pyramids, maybe, our historic business requires a lot of, seasoned experienced people, not just foundation, but this is inverted pyramid, right, and the inverted pyramid cannot scale as efficient as a traditional pyramid. So we observed it all at the time, we have actually the two nodal distribution.
We have a lot of senior people and quite a few junior guys and we squeeze the middle guys, right? And what Vasily eluded you when you start building more longer term fixed capacity programs and project on the business, then you create a more normalized distribution.
A matter of fact, the brightest and the best of interns are the best addition to the more junior people instead of bringing them from the market. So what we start doing is we obviously, from the hiring perspective, focus on the mid mid-level people. Why? Because good mid-level people become more senior view. Senior people usually you train yourself together with the R&D team.
And the junior guys finding in the market. They sometimes, don't possess the, all the skills we need to bring them into the actions right away. So the interns who become part of this fixed capacity pods, they're wonderful because in a very few months and they're brilliant. Remember, using our AI tools, we reach out to [1000] now, 10,000s of applicants to create. This full body of the top-notch intellectually technical interns. So that process propagates. I'm not super happy yet for the full distribution, but I think it's become a little bit more normal as we.
Maggie Nolan
Thank you.
Eugene Steinberg
Thank you, Maggie.
Vasily Sizov
Thank you, Maggie.
Operator
Ladies and gentlemen, this concludes the Q&A session for today. I will now pass it over to Leonard for closing comments.
Leonard Livschitz
And I have complete confidence in great dynamics ability to execute with excellence. While we must navigate the uncertainties of the current global economic environment, I'm confident that Grid Dynamics will continue to uphold the quotas that set us apart. We're building strong momentum across our business, and I look forward to giving you an update on the next earnings call. Thank you.
