So we’re not going to be using that as an excuse. We really want to ensure that we get the fit. At this stage, as I said, the pipeline is there. We will announce when we have to announce. But as I said, the proof is in the pudding when these things come.
Josh Siegler: Yes, understood. Thanks, Anil.
Anil Doradla: Thank you, Josh.
Cary Savas: Thank you, Josh. Our next question comes from Ryan Potter of Citigroup. The line is open. Go ahead, Ryan.
Ryan Potter: Hey, thanks for taking my question. You mentioned in your prepared remarks some of the successes you’ve had with some of your larger enterprise lines in terms of earning wallet share. What do you believe are some of the drivers of this success? Do you believe it’s solely based on your capability that you’re continuing to take share or do you believe since clients are also turning to be more because of your more global delivery model with your Follow-the-Sun approach?
Leonard Livschitz: It’s a bit of both. We definitely see the turnaround in the customers, as I mentioned earlier, in one of those Q&A discussion that our clients need to invest in innovation. So that’s kind of a demand driven from that. But on the other hand, is those smaller projects on the technology side, AI, still digital, some of the migration partnerships, enhancing their features, their implementation parts have been proven successfully. So when it comes to the budgeting innovation, it’s very hard. At the same time, if nothing else, that’s Q1 is for. Remember, in the old time, it was a Q4 deal, right? People kind of start defining their budgets in Q4. Now it’s happening more in Q1 time frame, which has kind of worked with kind of tail of some of the proof-of-concepts and the small innovation project from us, because those models and the expansion of the tools related technology actually works very well.
And I would say that at least six or seven clients, they actually created this demand for innovation. And then you have to be, in some cases, a bit more proactive. In some cases, you participate in the bids. But more important than not, the technical leaders of the clients look at us from the history of the recent engagements to understand what we suggest. So things are converting. And this may not be a very straight answer to the question you asked, but just to summarize it, it’s both, client wants more and we offer more. And that combination helps us to stay on a growth trajectory.
Ryan Potter: Got it. That makes sense. And you touched a couple of times on the finance vertical? In particular, you saw pretty strong growth there in the quarter. So obviously, could you comment on some of the drivers of the success you’re seeing there? Is it with certain types of clients, certain types of projects and then kind of the opportunity you see in that vertical going forward?
Leonard Livschitz: Yes. So it’s a fintech to the larger size of the growth. And as you know, Grid Dynamics still has a certain scope of the strategic clients. So they are not infinite. So — but they’re very formidable. So and a few of them, we see that continued growth and actually, to some extent, exponential growth. Now we’re reaching, I would say, critical mass. And why? We’re not like — we’re not creating a new fintech models, right? We just work on the projects and we combine the open source capability with a partnership, which will continue to expand on their specialized tools, which based on our internal development allows us to offer the PODs. So the teams of people who are basically driving not just innovation, but given ROI successes.
And that actually turns as a result in a scalable revenue. So the fintech is by far is the biggest impact, and it will continue for the foreseeable future. The other area, which I like, again, it’s less evident from the numbers, but it start creeping up. It’s a wealth management and a broader sales. In the broader sales, because, as you know, the more and more people are kind of putting money into the various investments and technology drives its automation beyond belief, right? So many, many things go beyond the advisers who have only so much capacity. So as a whole industry, it’s going through the breakthrough innovation. It’s a little bit too early to talk about insurance or our contribution to insurance, but it’s another lag of the growth we see.
So fintech, wealth management, insurances.
Ryan Potter: Got it. Thanks again.
Anil Doradla: Thank you, Ryan.
Leonard Livschitz: Thank you.
Cary Savas: The next question is from Maggie Nolan. Maggie Your line is open. Please proceed.
Maggie Nolan: Hi, thank you.
Leonard Livschitz: Hi, Maggie.
Maggie Nolan: You continue to have nice new logo additions. I was curious about the pace of conversion to revenue? Are there any patterns in either delays in the conversion or a pick up in the conversion time for new logos or any bookings across your client base?
Leonard Livschitz: So in Q1, there was a pick up. Every quarter, we’re talking about trade-offs between acquiring new clients, and then potentially may be tightening the budget with existing clients, right? When we have more stable platform of the existing clients, the pickups are more honorable because we can actually double down on a work with these guys without firefighting on an existing logo front. Now it doesn’t mean we reduce an eye on the existing clients. It’s just because it’s more predictable process. So we have more capabilities on the technology side. We have a better approach again, with our own AI tools for the hiring. So that we are bringing people on board and train them much faster pace than ever and retain, by the way, as well.
And we also — so we can scale more. And we also have the reputation, which helps us with some of the new clients through obviously, referrals. That’s always the big thing. The other one through the — our marketing, I would say, technical marketing. And the third one through our partnerships. So if you look at the scale, rate of growth, and of course, in each of those channels, it’s a bit different propagation. But the traditional land-and-expand model are going from innovation projects to the scalable business, a bit improved and now some of those projects scale virtually from the get go.
Anil Doradla: And Maggie, adding one point, if you recall in Leonard’s prepared remarks, he talked about some large deals, right? And some of this was even with new logos that helped us.
Maggie Nolan: And then it seemed like to me, the theme of the quarter is maybe stabilization and even slight improvement. So I wanted to double click on the CPG and manufacturing vertical to better understand the dynamic there on one of maybe the more of the pain points and whether or not you expect that trend to continue from here?
Anil Doradla: So as you know, over the last couple of quarters, CPG vertical had a certain cadence of growth driven by some of our larger CPG. What we are seeing there is there are many moving parts, but the good news is that, number one, one of our largest CPG has not only stabilized, but has reverted in growth in the quarter. And obviously, that has — aiding to that, we’ve had a couple of other logos. How it plays out every 90 days, every vertical, as you know, Maggie, it depends right? I mean — but it’s fair to say CPG, manufacturing, like the rest of the industry, things have stabilized and we are more positive.
Leonard Livschitz: Yes. I don’t know why both guys use the word stabilization and some of the numbers go up and down, but it’s a tremendous upside. I mean the logos we just acquired, for example, from that particular field, they not only go from get-go, but the tasks are extremely ambitious. So I think if you look at, for example, January, February, they may kind of a bit mask the dynamics. But I see that this whole spectrum of the CPG clients are expanding. Now manufacturing, I agree with you. We’re not stable yet. So I would actually separate those two things. So CPG, shutting up quite a bit and some of those big industrial guys. Manufacturing, I think we have work to do for Q2 and more. So I’m very, very bullish on CPGs and manufacturing, we have work to do.
Maggie Nolan: Very helpful. Thank you.
Anil Doradla: Thank you, Maggie.
Leonard Livschitz: Thank you.
Cary Savas: Ladies and gentlemen, this concludes the Q&A session for today’s call. I will now pass the call back to Leonard, our CEO, for closing comments.
Leonard Livschitz: Thank you, everybody, for joining us on today’s call. Our first quarter results continue the theme we highlighted in the past, steady improvement in our business. While the current economic uncertainties cannot be overlooked, we’re highly focused on execution and wallet share at our new and existing customers. The rise of AI and the paradigm shift in the way enterprises use technology to leapfrog from their current levels requires to work with a competent partner. Our capabilities, history of solving complex business problems with technology and our track record of making positive effects to our customers positions Grid Dynamics well. Our future looks bright, and I look forward to share all the exciting news in the next earnings call. Thank you.
