Free cash flow remains volatile with a 4.3% margin in 2026Q1, as working capital drains of up to $8.7 million per quarter continue to hinder efficient cash conversion.
| Cash from Operations | 39.64M | 40.6M | 30.2M | 41.09M | 31.65M | 17.97M | 5.93M | 12.53M | 10.58M | 5.54M |
| Operating CF Margin % | - | 9.86% | 8.61% | 13.13% | 10.19% | 8.51% | 5.33% | 10.59% | 11.52% | 7.84% |
| Operating CF Growth % | 40.11% | 34.45% | -26.51% | 29.83% | 76.11% | 202.98% | -52.67% | 18.42% | 91.05% | - |
| Net Income | 5.28M | 9.67M | 4.04M | -1.76M | -29.21M | -7.7M | -12.6M | 10.81M | 9.23M | 13.18M |
| Depreciation & Amortization | 31.31M | 24.8M | 18.74M | 12.12M | 9.65M | 5.05M | 2.67M | 2.31M | 1.31M | 660K |
| Stock-Based Compensation | 38.8M | 30.34M | 34.17M | 35.52M | 60.97M | 33.04M | 20.01M | 2.44M | 1.76M | 756K |
| Deferred Taxes | -1.93M | -1.34M | -4.03M | -4.14M | -3.63M | 2.61M | -4.13M | -425K | -566K | 394K |
| Other Non-Cash Items | -32.63M | -5.89M | -770K | -2.95M | 203K | 1.02M | 398K | 139K | -1.16M | -3.75M |
| Working Capital Changes | -12.77M | -16.98M | -21.94M | 2.31M | -6.32M | -16.05M | -410K | -2.74M | -1.15M | -9.45M |
| Change in Receivables | -6.64M | -11.14M | -9.48M | 2.08M | -8.74M | -18.68M | -1.42M | -1.61M | -1.4M | -4.08M |
| Change in Inventory | 0 | 0 | 0 | 0 | 0 | 799K | 1.31M | 0 | 0 | -5.71M |
| Change in Payables | -315K | -378K | -1.5M | -538K | 1.73M | 957K | -49K | 301K | 219K | -92K |
| Cash from Investing | -15.76M | -15.14M | -51.3M | -25.95M | -16.32M | -35.37M | -18.34M | -2.81M | -3.08M | -1.06M |
| Capital Expenditures | -19.29M | -15.33M | -11.77M | -7.87M | -6.07M | -4.72M | -2.25M | -2.81M | -3.08M | -1.06M |
| CapEx % of Revenue | 4.64% | 3.72% | 3.36% | 2.52% | 1.95% | 2.23% | 2.02% | 2.38% | 3.35% | 1.5% |
| Acquisitions | 0 | 198K | -43.07M | -17.83M | -9.25M | -30.65M | -16.09M | 0 | 0 | 0 |
| Investments | - | - | - | - | - | - | - | - | - | - |
| Other Investing | 3.54M | 0 | -44K | 0 | -10.25M | 0 | 0 | 0 | 0 | 0 |
| Cash from Financing | -21.68M | -19.94M | 101.16M | -16.32M | 97.76M | 49.13M | 82.97M | 14.6M | 221.31M | -4.71M |
| Debt Issued (Net) | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | -1.92M |
| Equity Issued (Net) | -13.4M | -1.53M | 108.08M | 510K | 109.54M | 78.31M | -123.86M | 14.9M | 0 | 0 |
| Dividends Paid | 0 | 0 | 0 | 0 | 0 | 0 | 0 | -2M | 0 | -3.03M |
| Share Repurchases | -13.46M | -2M | 0 | 0 | 0 | 0 | -123.86M | 0 | 0 | 0 |
| Other Financing | -8.28M | -18.41M | -6.92M | -16.83M | -11.78M | -29.18M | 206.83M | 1.7M | 0 | 236K |
| Net Change in Cash | 1.48M | 6.9M | 77.93M | 498K | 112.36M | 31.62M | 70.56M | 24.33M | 7.5M | -233K |
| Free Cash Flow | 23.68M | 25.27M | 18.43M | 33.22M | 25.58M | 13.26M | 3.68M | 9.72M | 7.5M | 4.48M |
| FCF Margin % | 5.7% | 6.14% | 5.26% | 10.62% | 8.24% | 6.27% | 3.31% | 8.22% | 8.17% | 6.34% |
| FCF Growth % | -2.93% | 37.08% | -44.52% | 29.86% | 92.98% | 260.24% | -62.15% | 29.55% | 67.45% | - |
| FCF per Share | 0.28 | 0.29 | 0.23 | 0.44 | 0.37 | 0.23 | 0.08 | 0.19 | 0.15 | 0.81 |
| FCF Conversion (FCF/Net Income) | 4.48x | 4.20x | 7.47x | -23.28x | -1.08x | -2.33x | -0.47x | 1.16x | 1.15x | 0.42x |
| Interest Paid | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 |
| Taxes Paid | 9.05M | 0 | 10.97M | 0 | 7.47M | 2.45M | 2.13M | 3.19M | 1.48M | 2.68M |
Margin compression and SBC
According to recent SEC filings, Grid Dynamics exhibits a persistent disconnect between net income and operating cash flow, with the latter frequently bolstered by significant non-cash stock-based compensation adjustments that often exceed the reported net income figures during periods of operational volatility or net losses.
The reliance on stock-based compensation to bridge the gap between GAAP net income and cash generation suggests that the company's reported profitability is highly sensitive to accounting treatments. Investors should monitor whether this reliance on non-cash expenses masks a structural inability to generate organic cash flow from core engineering operations.
As reported in financial statements, the company's free cash flow trajectory remains inconsistent, with margins fluctuating between 0.1% and 10.1% over the last ten quarters, indicating that the firm struggles to maintain a stable cash conversion profile amidst shifting client demand and rising operational costs.
The erratic nature of FCF margins suggests that the business model is highly susceptible to timing differences in project billing and cost absorption. This volatility implies that the company lacks the predictable cash generation profile typically expected of a mature technology services firm.
Based on GDYN's reported figures, working capital changes have consistently acted as a cash drain, with negative quarterly adjustments reaching as high as $8.7 million, signaling potential inefficiencies in the collection cycle or an accumulation of unbilled receivables that delay actual cash realization.
The persistent negative working capital trend suggests that the company is effectively financing its clients' operations through extended payment terms or delayed invoicing. This dynamic warrants further investigation into the quality of the company's accounts receivable and the potential for future write-downs if project milestones are not met.
Analysis of recent cash flow statements reveals that while the company maintains a substantial cash reserve, capital deployment has been limited to sporadic share repurchases and minor acquisitions, suggesting a lack of clear strategic direction for utilizing its $342 million in cash and equivalents.
The absence of a consistent capital return policy or aggressive reinvestment strategy may indicate that management is struggling to identify high-return opportunities within the current market environment. Investors should consider whether this cash hoarding is a defensive posture against sector-specific risks or a missed opportunity for value creation.
Quick answers to the most common questions about buying GDYN stock.
Grid Dynamics Holdings, Inc. (GDYN) generated $40.6M in net cash from operating activities in 2025. This reflects the cash generated directly from core business operations.
Grid Dynamics Holdings, Inc. (GDYN) generated $25.3M in free cash flow in 2025. Free cash flow is the cash left over after capital expenditures, which can be used to pay dividends, repurchase shares, or pay down debt.
Grid Dynamics Holdings, Inc. (GDYN) spent $15.3M on capital expenditures in 2025. CapEx represents the cash invested in physical assets like property, plant, and equipment to maintain or grow the business.
In 2025, Grid Dynamics Holdings, Inc. (GDYN) spent $2.0M on share repurchases. This shows the company's commitment to returning capital to its equity investors.