Digital transformation consultancy Grid Dynamics (NASDAQ:GDYN) reported Q2 CY2026 results exceeding the market’s revenue expectations, with sales up 7% year on year to $108.2 million. Guidance for next quarter’s revenue was better than expected at $113 million at the midpoint, 0.9% above analysts’ estimates. Its non-GAAP profit of $0.11 per share was in line with analysts’ consensus estimates.
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Grid Dynamics (GDYN) Q2 CY2026 Highlights:
- Revenue: $108.2 million vs analyst estimates of $106.5 million (7% year-on-year growth, 1.6% beat)
- Adjusted EPS: $0.11 vs analyst estimates of $0.11 (in line)
- Adjusted EBITDA: $14.72 million vs analyst estimates of $14.32 million (13.6% margin, 2.8% beat)
- The company reconfirmed its revenue guidance for the full year of $450 million at the midpoint
- EBITDA guidance for Q3 CY2026 is $17 million at the midpoint, above analyst estimates of $16.41 million
- Operating Margin: 1.2%, up from -0.1% in the same quarter last year
- Market Capitalization: $568.7 million
Company Overview
With engineering centers across the Americas, Europe, and India serving Fortune 1000 companies, Grid Dynamics (NASDAQ:GDYN) provides technology consulting, engineering, and analytics services to help large enterprises modernize their technology systems and business processes.
Revenue Growth
A company’s long-term performance is an indicator of its overall quality. Any business can experience short-term success, but top-performing ones enjoy sustained growth for years.
With $422.6 million in revenue over the past 12 months, Grid Dynamics is a small player in the business services space, which sometimes brings disadvantages compared to larger competitors benefiting from economies of scale and numerous distribution channels. On the bright side, it can grow faster because it has more room to expand.
As you can see below, Grid Dynamics’s sales grew at an incredible 24.2% compounded annual growth rate over the last five years. This is a great starting point for our analysis because it shows Grid Dynamics’s demand was higher than many business services companies.
We at StockStory place the most emphasis on long-term growth, but within business services, a half-decade historical view may miss recent innovations or disruptive industry trends. Grid Dynamics’s annualized revenue growth of 15.2% over the last two years is below its five-year trend, but we still think the results suggest healthy demand. 
This quarter, Grid Dynamics reported year-on-year revenue growth of 7%, and its $108.2 million of revenue exceeded Wall Street’s estimates by 1.6%. Company management is currently guiding for a 8.5% year-on-year increase in sales next quarter.
Looking further ahead, sell-side analysts expect revenue to grow 9.2% over the next 12 months, a deceleration versus the last two years. Despite the slowdown, this projection is healthy and suggests the market is baking in success for its products and services.
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Adjusted Operating Margin
Grid Dynamics has done a decent job managing its cost base over the last five years. The company has produced an average adjusted operating margin of 11.2%, higher than the broader business services sector.
Looking at the trend in its profitability, Grid Dynamics’s adjusted operating margin decreased by 8.7 percentage points over the last five years. This raises questions about the company’s expense base because its revenue growth should have given it leverage on its fixed costs, resulting in better economies of scale and profitability.
In Q2, Grid Dynamics generated an adjusted operating margin profit margin of 5.3%, down 2.5 percentage points year on year. This contraction shows it was less efficient because its expenses grew faster than its revenue.
Earnings Per Share
We track the long-term change in earnings per share (EPS) for the same reason as long-term revenue growth. Compared to revenue, however, EPS highlights whether a company’s growth is profitable.
Grid Dynamics’s EPS grew at a solid 10.2% compounded annual growth rate over the last five years. However, this performance was lower than its 24.2% annualized revenue growth, telling us the company became less profitable on a per-share basis as it expanded.
Diving into the nuances of Grid Dynamics’s earnings can give us a better understanding of its performance. As we mentioned earlier, Grid Dynamics’s adjusted operating margin declined by 8.7 percentage points over the last five years. Its share count also grew by 52.5%, meaning the company not only became less efficient with its operating expenses but also diluted its shareholders. 
Like with revenue, we analyze EPS over a more recent period because it can provide insight into an emerging theme or development for the business.
For Grid Dynamics, its two-year annual EPS growth of 14% was higher than its five-year trend. We love it when earnings growth accelerates, especially when it accelerates off an already high base.
In Q2, Grid Dynamics reported adjusted EPS of $0.11, up from $0.10 in the same quarter last year. This print beat analysts’ estimates by 4.1%. Over the next 12 months, Wall Street expects Grid Dynamics’s full-year EPS to grow 23% from $0.39 to $0.48.
Key Takeaways from Grid Dynamics’s Q2 Results
It was great to see Grid Dynamics’s full-year revenue guidance top analysts’ expectations. We were also glad its revenue guidance for next quarter slightly exceeded Wall Street’s estimates. Overall, we think this was a decent quarter with some key metrics above expectations. The stock traded up 3.6% to $7.34 immediately following the results.
Indeed, Grid Dynamics had a rock-solid quarterly earnings result, but is this stock a good investment here? When making that decision, it’s important to consider its valuation, business qualities, as well as what has happened in the latest quarter. We cover that in our actionable full research report which you can read here (it’s free).