Grid Dynamics Holdings, Inc.

Greetings. Welcome to the Grid Dynamics third quarter 2021 earnings call. At this time, all participants are in a listen-only mode. A question and answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. Please note that this conference is being recorded. I'll now turn the conference over to your host, Lilia Chernova, head of investor relations. You may begin.

Good afternoon. Welcome to Grid Dynamics' third quarter 2021 earnings conference call. Before we begin, let me remind everyone that today's discussion will contain forward-looking statements based on our current assumptions, expectations, and beliefs, including our fourth quarter 2021 financial guidance, the growth of Grid Dynamics business, our objectives, and business strategies, as well as other forward-looking statements. You can refer to the disclosure at the end of the company's earnings press release and form 8K filed with the Securities and Exchange Commission today for information about forward-looking statements that will be made on this call. All statements made today reflect our current expectations only, and we undertake no obligation to update any of them to reflect the events that will occur after this call. You can learn more about the specific risk factors that could cause our actual results to differ materially from today's discussion in the Risk Factors section of the company's form, Thank You, filed on August 5, 2021, and in subsequent periodic reports that the company filed with the SEC. During this call, we will discuss certain non-GAAP measures of our performance. GAAP to non-GAAP financial reconciliations and supplemental financial information are provided in the earnings press release and the aid case filed with the SEC. This call is also available via webcast. You can find all the information I have just described in the investor relations section of Great Dynamics website. Joining us today on the call are CEO Leonard Lischitz and CFO Anil Dharadla. Following their prepared remarks, we will open the call to your questions. With that, let me turn the call over to Leonard.

Thank you, Lily. Good afternoon, everyone, and thank you for joining us today. Green Dynamics had another record quarter with multiple positive catalysts shaping our results. More importantly, since speaking with you all three months ago, we have made solid progress across multiple fronts of our business. With that backdrop, I'm excited to share a key highlight for our third quarter results, provide insights into the underlying business trends, and talk about how the company is well positioned to leverage significant digital transformation opportunities both in the near and long term. Now coming to the third quarter results. I'm very pleased to report another record quarter of revenue in our company history. This marks the third consecutive quarter of reporting record revenue. In the third quarter, our revenue of $57.9 million exceeded our expectations. The organic revenue of $44.1 million was higher than our guidance range of $39 to $40.5 million, and our recent acquisitions revenue of $13.8 million exceeded our expectation of $11 million. In the quarter, we witnessed strong interest across the customer base in engaging our services as digital transformation initiatives take center stage priority across the enterprise world. Based on the current demand trends, we enter the fourth quarter in 2022 with incremental confidence and expect the company to continue being a preferred partner for our customers. These accomplishments would have not been possible without the efforts of our dedicated employees, and I would like to thank all of them for their continuous hard work and dedication. There are many positive trends in third quarter, and I want to share with you some of the notable ones. We witnessed robust demand across our business. This was highlighted by double-digit sequential growth rates across most of our verticals. Furthermore, the strong trends exceeded our expectations, as highlighted by the outperformance relative to our forecast. Customers are investing aggressively in digital transformation initiatives, with a deep sense of urgency. As we highlighted in the past, it's been driven by several factors that include improving customer sentiment, greater shift over digital commerce, and continued catch-up in spending at some customers who held back in 2020. Based on our business pipeline and customer engagement, we'll exit this year strong and we'll enter 2022 with incremental growth. The men for engineering skill sets continue to be robust, and during the quarter, we started to see the efforts that were put in place around scaling detail acquisitions to be paying off. This included increasing capacity of our recruiting organization, expanding our geographic locations of hiring, and aggressively ramping up the internship program. Partnering with the top universities, we expect to double the number of interns in 2021 over 20, and again, more than double in 2022. During the third quarter, we had a total of 374 people. Over the second quarter, our headcount reached 2,884 employees. We picked up momentum on the new logo front as we added seven new logos to our organic business, with all of them contributing residents. This brings our total year-to-date new logo addition to 18, and it's higher than 16 new logos we added in the entire 2020. Of the seven, three were Fortune 500 and two global pharma companies. The total count of the clients in the quarter three reached 213. Within our top five clients, two were in the TMT space, one was CPG, and two were retail. Our concentration at our top clients continues to decline as we continue to expand our business with new customers, go deeper with existing customers, and leverage our new acquisitions. During the quarter, revenue from our top five customers was 42%, down from 60% of our revenues in the same quarter a year ago. Our continued effort around customer diversification via our new logo revenue ramped up and paying off. During the quarter, we made some strategic hires on the sales front across the United States. Additionally, we have made progress around integrating our sales organization across our recent acquisitions, and organic business. The focus continues to be around implementing an enhanced value strategy by partnering with innovative clients. During the quarter, we benefited from cross-selling as customers started seeing the value of combined technical synergies and skill sets. On the partnership front, we're executing our plan of building deeper relationships with the major cloud providers. Recently, we issued a press release highlighting grid dynamics, Google Cloud Premier Partner Status. Premier Partner Status is a testament to the differentiation that great enemies provide. We believe partnerships are crucial in scaling our business and accelerating new enterprise logo acquisitions. In the third quarter, we're starting rolling out the POD model for our client engagement. There are many Mary benefits of the pod engagement model that includes efficiencies, better cost control, and greater flexibility in delivering the services to clients. Each Green Dynamics pod is an autonomous, cross-functional team managed by a dedicated, experienced team leader. Multiple pods could be working with the same customer. During the third quarter, we started rolling out the pod model at some of the larger customers, And going forward, we expect this form of engagement to continue increasing. Now coming to some segment commentary. At 32% of the third quarter revenue, our retail business emerged our largest vertical in the quarter. And they're feeling the strong sequential growth with our organic business and for a quarter of tacit knowledge revenues. During the quarter, we witnessed strong growth across our retail customers as they aggressively invested into e-commerce platforms. In many ways, the retail industry is undergoing a transformation as customers are increasingly shifting their spending patterns toward online. Retailers across the industry, ranging from the e-commerce-friendly apparel brands, home improvement specialists, and traditional brick-and-mortar retailers, are positioning themselves with strong online presence. And the center of their online strategy is building our large, robust cloud platforms with specialized artificial intelligence and machine learning solutions for optimal product placement, areas where we have built a strong reputation, industry-leading expertise. At 30% of our third quarter revenue, TMT grew 39% on an annual basis and was our second largest vertical. The growth in the quarter was across our customer base with top technology customers fueling the growth. Similar to the last couple of quarters, our top TMT customers continue to focus on expanding offshore delivery centers. At 19%, our third quarter revenue, CPG and manufacturing continue to show robust growth, both on a sequential and year-over-year basis, underpinning This was growth from logos outside the largest CPG customer and a full quarter of revenue contribution coming from tacit knowledge acquisition. Within this vertical, we continue to be involved with large global brands that are focused on enhancing direct consumer presence. At our largest CPG customer, we are engaged in new significant projects that are expected to allow in Q4 and 2022. During the quarter, Green Dynamics did some very notable projects. Number one, at a global technology company, we orchestrated and built a reactive subsystem for detecting fraudulent advertisement activities. The system is skilled to successfully provide a magnet of events from creation to decision with a fraction of time from the previous iteration. The system provides significant savings due to the substantial improvement in ad-ranking relevance. Number two, for one of the largest U.S. home improvement retailers, Green Dynamics delivered a visualization tool for room renovation material discovery. Our team designed, implemented, and rolled out a tool that allows visualization, the use of specific products and color sets in a customer environment, making it easier for a consumer to make a choice while purchasing online and eliminating the necessity to physically enter the store. This led to an increase in customer sales conversion and significantly reduced balance rate for environment specific product purchases. Number three, for one of the fastest growing telemedicine company, Green Dynamics has implemented the initial version of a new unified platform that integrates patient-doctor communication solution, customer portal, and marketing tools in a single environment. This will allow maximizing speed to market of new features as well as to keep maintenance and support costs under control. Number four, for a major U.S. manufacturer enterprise, we have implemented the United Platform based on the grid dynamics analytical data platform accelerated, developed jointly with AWS. The platform has already been deployed for one of the largest business segments. And finally, we're increasingly finding ourselves playing central roles in influencing and shaping our customers' growth strategy. The key question every enterprise asks today is, How can we scale our online presence? And how do we stay relevant in the business? We believe that the effective response to these key questions rely on building high-quality robot digital commerce solutions that are scalable, adaptable, and reliable. Green Dynamics Core DNA is built around designing and implementing such solutions. As we approach 2022, our DNA will propel three dynamics to scale and strengthen our business positioning and reputation in the market. With that, let me turn the call over to Anil, who will discuss Q3 results in more detail. Thank you.