Earnings results often indicate what direction a company will take in the months ahead. With Q1 behind us, let’s have a look at Grid Dynamics (NASDAQ: GDYN) and its peers.
IT Services & Consulting companies stand to benefit from increasing enterprise demand for digital transformation, AI-driven automation, and cybersecurity resilience. Many enterprises can't attack these topics alone and need IT services and consulting on everything from technical advice to implementation. Challenges in meeting these needs will include finding talent in specialized and evolving IT fields. While AI and automation can enhance productivity, they also threaten to commoditize certain consulting functions. Another ongoing challenge will be pricing pressures from offshore IT service providers, which have lower labor costs and increasingly equal access to advanced technology like AI.
The 7 it services & consulting stocks we track reported a satisfactory Q1. As a group, revenues beat analysts’ consensus estimates by 1% while next quarter’s revenue guidance was in line.
While some it services & consulting stocks have fared somewhat better than others, they have collectively declined. On average, share prices are down 1.3% since the latest earnings results.
Best Q1: Grid Dynamics (NASDAQ: GDYN)
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.
Grid Dynamics reported revenues of $100.4 million, up 25.8% year on year. This print exceeded analysts’ expectations by 2%. Overall, it was a very strong quarter for the company with an impressive beat of analysts’ EPS estimates and full-year revenue guidance beating analysts’ expectations.
“For 2025, we are maintaining our full year revenue outlook that we provided to you all in February. We expect the second half of the year to show stronger performance, driven by the ramp-up of several recently signed contracts and continued execution across our active project portfolio. While we must navigate the uncertainties of the current global economic environment, I am confident that Grid Dynamics will continue to uphold the qualities that set us apart. We are building strong momentum across our business and I look forward to giving you an update on the next earnings call,” said Leonard Livschitz, CEO.
Grid Dynamics scored the biggest analyst estimates beat, fastest revenue growth, and highest full-year guidance raise of the whole group. Investor expectations, however, were likely higher than Wall Street’s published projections, leaving some wishing for even better results (analysts’ consensus estimates are those published by big banks and advisory firms, not the investors who make buy and sell decisions). The stock is down 17% since reporting and currently trades at $11.68.
Is now the time to buy Grid Dynamics? Access our full analysis of the earnings results here, it’s free.
EPAM (NYSE: EPAM)
Founded in 1993 during the early days of offshore software development, EPAM Systems (NYSE: EPAM) provides digital engineering, cloud, and AI transformation services to help global enterprises and startups modernize their technology systems and create digital products.
EPAM reported revenues of $1.30 billion, up 11.7% year on year, outperforming analysts’ expectations by 1.6%. The business had a very strong quarter with a solid beat of analysts’ constant currency revenue estimates.
The market seems content with the results as the stock is up 3.4% since reporting. It currently trades at $164.88.
Is now the time to buy EPAM? Access our full analysis of the earnings results here, it’s free.
Weakest Q1: ASGN (NYSE: ASGN)
Evolving from its roots in IT staffing to become a high-end technology consulting powerhouse, ASGN (NYSE: ASGN) provides specialized IT consulting services and staffing solutions to Fortune 1000 companies and U.S. federal government agencies.
ASGN reported revenues of $968.3 million, down 7.7% year on year, exceeding analysts’ expectations by 0.6%. Still, it was a slower quarter as it posted a significant miss of analysts’ EPS estimates.
ASGN delivered the slowest revenue growth in the group. As expected, the stock is down 15.8% since the results and currently trades at $49.26.
Read our full analysis of ASGN’s results here.
IBM (NYSE: IBM)
With a corporate history spanning over a century and once known for its iconic mainframe computers, IBM (NYSE: IBM) provides hybrid cloud computing platforms, AI solutions, consulting services, and enterprise infrastructure to help businesses modernize their operations.
IBM reported revenues of $14.54 billion, flat year on year. This result surpassed analysts’ expectations by 1%. It was a strong quarter as it also recorded a solid beat of analysts’ operating income estimates and an impressive beat of analysts’ EPS estimates.
The stock is up 15.6% since reporting and currently trades at $283.39.
Read our full, actionable report on IBM here, it’s free.
Gartner (NYSE: IT)
With over 2,500 research experts guiding organizations through complex technology landscapes, Gartner (NYSE: IT) provides research, advisory services, and conferences that help executives make better decisions about technology and other business priorities.
Gartner reported revenues of $1.53 billion, up 4.2% year on year. This print was in line with analysts’ expectations. Overall, it was a strong quarter as it also logged an impressive beat of analysts’ EPS estimates.
Gartner had the weakest performance against analyst estimates among its peers. The stock is down 6.4% since reporting and currently trades at $399.93.
Read our full, actionable report on Gartner here, it’s free.
Market Update
Thanks to the Fed’s series of rate hikes in 2022 and 2023, inflation has cooled significantly from its post-pandemic highs, drawing closer to the 2% goal. This disinflation has occurred without severely impacting economic growth, suggesting the success of a soft landing. The stock market thrived in 2024, spurred by recent rate cuts (0.5% in September and 0.25% in November), and a notable surge followed Donald Trump’s presidential election win in November, propelling indices to historic highs. Nonetheless, the outlook for 2025 remains clouded by potential trade policy changes and corporate tax discussions, which could impact business confidence and growth. The path forward holds both optimism and caution as new policies take shape.
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