Core Insights - The report by EPAM Systems highlights the current state of AI adoption in enterprises, revealing a significant gap between perceived and actual AI implementation success [3][4] - Companies are entering a new phase of AI deployment, focusing on high-value use cases and aligning technology with business objectives to drive real value [4][9] AI Adoption Status - Nearly half (49%) of surveyed companies consider themselves "advanced" in AI implementation, but only 26% of these have successfully delivered AI use cases to market [3] - 30% of technology-advanced companies have implemented AI at scale, indicating a struggle for many organizations to transition from experimentation to enterprise-wide deployment [7] Investment Trends - Companies plan to increase AI spending by 14% year-over-year in 2025, reflecting a commitment to AI-driven growth [7] - Disruptors expect 53% of their profits in 2025 to be attributed to AI investments, showcasing a tangible financial impact [7] Key Challenges - A lack of alignment between business and technical teams is identified as a major barrier to AI adoption, with 31% of executives citing outdated technology as a challenge [14] - Security remains a priority, with 35% of businesses indicating that inadequate security programs hinder modernization efforts [14] Governance and Talent - While 75% of advanced companies claim to have clear AI strategies, only 4% of disruptors have developed comprehensive governance frameworks, with effective governance expected to take at least 18 months to implement [14] - 43% of surveyed companies plan to hire AI-related roles in 2025, with machine learning engineers and AI researchers being the most sought-after positions [7]

Award recognizes EPAM for developing an AI-powered solution for geospatial data visualization and insights NEWTOWN, Pa., April 9, 2025 /PRNewswire/ -- EPAM Systems, Inc. (NYSE: EPAM), a leading digital transformation services and product engineering company, today announced it has won the 2025 Google Cloud Industry Solutions Partner of the Year Award for Oil and Gas. The Company was recognized among a diverse group of organizations for its innovation, exceptional customer service and commitment to creating ...

NEWTOWN, Pa., April 7, 2025 /PRNewswire/ -- EPAM Systems, Inc. (NYSE: EPAM), a leading digital transformation services and product engineering company, will host a conference call at 8:00 a.m. ET, on Thursday, May 8, 2025, to discuss its first quarter 2025 financial results. A news release containing these results will be issued before the call. The conference call will be live on the EPAM website at https://investors.epam.com. Please visit the website at least 15 minutes before the call to register for the ...

Company Overview - EPAM Systems has undergone a transformation since its peak in 2021, influenced by the war, persistent wage inflation, and tightening IT budgets [1] - The company is currently trading at a significant discount from its historical levels, with a price-to-earnings ratio of just 15x [1] Investment Insights - The investment thesis suggests that identifying high-quality and/or severely mispriced investment ideas is crucial for potential investors [1] - A strong investment opportunity is characterized by the ability to purchase great companies at attractive prices [1]

Market and Economic Risks - The company operates significantly in emerging markets, which exposes it to greater economic, financial, and banking risks compared to developed markets[96]. - A majority of the company's revenues are generated in North America and Western Europe, while most personnel and delivery centers are located in emerging markets, increasing foreign exchange risks[96]. - The company faces risks related to compliance with a variety of legal requirements across different jurisdictions, which could adversely affect operations and financial condition[99]. - Changes in U.S. policies regarding offshore outsourcing could impact the company's ability to deploy employees and conduct business effectively[104]. - The company’s operations may be negatively impacted by geopolitical events, natural disasters, and other disruptions, affecting client spending decisions[146]. Financial and Revenue Risks - The company does not have long-term commitments from clients, making future revenues uncertain and dependent on securing new engagements[109]. - Delays in client payments or contract terminations could lead to increased cash collection times and bad debt expenses, adversely affecting financial results[110]. - A downturn in any of the targeted industries or a slowdown in outsourcing trends could materially affect demand for the company's services and negatively impact financial results[112]. - The company’s effective tax rate may be adversely affected by changes in tax laws and regulations across multiple jurisdictions, impacting overall profitability[147]. - The company believes its current cash and cash flow are sufficient for the next twelve months, but may require additional capital for future investments or acquisitions[144]. Competitive Landscape and Market Position - The competitive landscape is intensifying, particularly with the development of generative AI capabilities, which may lead to pricing pressures and loss of market share[97]. - The company must adapt to rapidly changing technologies and industry standards to remain competitive; failure to do so could lead to loss of clients[118]. - Company revenues are highly dependent on five key industry verticals: Financial Services, Software & Hi-Tech, Business Information & Media, Consumer Goods, Retail & Travel, and Life Sciences & Healthcare[111]. Operational and Compliance Risks - The company faces risks related to pricing structures, which are influenced by internal forecasts and global economic conditions, potentially leading to unprofitable contracts[114]. - Significant resource commitments are required before realizing revenues, and delays in the sales cycle could adversely affect revenue timing and growth[116]. - The company relies on visas for personnel to work at client sites, and any changes in visa regulations could delay project timelines and affect service delivery[105]. - The corporate reputation is crucial for client engagement and retention, and any damage to reputation could adversely affect business and investor confidence[123]. Intellectual Property and Legal Risks - The company relies on a combination of intellectual property protections, but effectiveness may vary by country, exposing it to risks of unauthorized use[125]. - Intellectual property infringement claims could divert management attention and result in significant costs, impacting the company's ability to provide existing services[128]. - The existence and ownership of intellectual property rights related to generative AI technologies are under review, posing potential legal liabilities for the company[130]. - Any adverse outcomes from litigation or claims could materially affect the company's business, financial condition, and results of operations[131]. Cybersecurity and Information Security Risks - The company has experienced cybersecurity incidents and anticipates ongoing threats, with increasingly sophisticated attacks making detection and defense more challenging[134]. - The cost of information security measures and compliance with privacy regulations significantly reduces profitability, potentially leading to client loss and reputational harm[138]. - The company is subject to GDPR and other privacy laws, which impose significant restrictions and can result in substantial financial penalties for non-compliance[139]. - The company must continuously enhance its information security measures to protect sensitive data, which involves significant costs and resources[137]. - The company’s ability to monitor third-party suppliers' information security systems is limited, increasing vulnerability to potential breaches[135]. Financial Volatility and Risk Management - The company’s stock price has shown substantial volatility due to variations in financial results and external market conditions, impacting future operating results[142]. - The company faces counterparty default risk in its hedging program, which could lead to significant losses if a counterparty defaults[145].

Core Viewpoint - EPAM Systems reported strong fourth-quarter results for 2024, with earnings and revenues exceeding expectations, but provided disappointing guidance for 2025, leading to a decline in share price over the past year [1][3]. Financial Performance - EPAM's fourth-quarter non-GAAP earnings were $2.84 per share, beating the Zacks Consensus Estimate by 3.3%, and increased from $2.75 per share in the same quarter last year [1]. - The company's revenues for the fourth quarter reached $1.25 billion, surpassing the consensus mark by 3.3%, and reflecting a year-over-year growth of 7.9% [2]. - Non-GAAP gross profit increased by 5.3% year over year to $402.1 million, while the gross margin contracted by 80 basis points to 32.2% [6]. Segment Performance - Revenue growth was driven by various industry verticals, with Financial Services generating $280.9 million (up 15.9% year over year) and Emerging revenues at $211.8 million (up 24.8% year over year) [4][5]. - However, revenues from Consumer Goods, Travel, and Retail declined by 3% year over year to $250.6 million [4]. Guidance and Estimates - For Q1 2025, EPAM expects revenues between $1.275 billion and $1.29 billion, indicating a year-over-year growth of 10% at the midpoint, while the Zacks Consensus Estimate is $1.27 billion [9]. - The company anticipates non-GAAP earnings for Q1 to be between $2.22 and $2.32 per share, below the Zacks Consensus Estimate of $2.57 per share [10]. - For the full year 2025, EPAM expects revenue growth of 10.0-14.0%, with a consensus estimate of $4.69 billion, indicating minimal year-over-year growth of 0.04% [10]. Balance Sheet and Cash Flow - As of December 31, 2024, EPAM had cash and cash equivalents of $1.29 billion, down from $2.04 billion as of September 30, 2024 [7]. - The company reported cash flow from operations of $130.3 million and free cash flow of $114.5 million for the fourth quarter [7].

Financial Data and Key Metrics Changes - In Q4 2024, EPAM generated revenues of $1.25 billion, a year-over-year increase of 7.9% on a reported basis, including revenues from recent acquisitions [37] - Organic revenues grew 1% compared to Q4 2023, marking a return to year-over-year organic revenue growth for the first time since Q1 2023 [37][38] - GAAP gross margin for Q4 was 30.4%, down from 31.1% in Q4 of the previous year, while non-GAAP gross margin was 32.2%, compared to 33% in the same period last year [44] - GAAP income from operations was $137 million, or 10.9% of revenue, compared to $122 million, or 10.6% of revenue in Q4 of last year [46] - Non-GAAP diluted EPS was $2.84, reflecting an increase of 3.3% compared to the same quarter in 2023 [47] Business Line Data and Key Metrics Changes - Financial services delivered strong growth of 15.9% year-over-year, with 4.3% organic and 11.6% inorganic growth [39] - Life sciences and healthcare increased 8.6% year-over-year, reflecting 5.7% organic and 2.9% inorganic growth [39] - Emerging verticals delivered very strong growth of 24.8%, with 3% organic and 21.8% inorganic growth [41] - The travel and consumer vertical declined by 3% year-over-year, reflecting a negative 5.7% organic and a positive 2.7% inorganic growth [40] Market Data and Key Metrics Changes - The Americas, representing 60% of Q4 revenues, increased 11.4% year-over-year, reflecting 2.7% organic and 8.7% inorganic growth [42] - EMEA, representing 38% of Q4 revenues, increased 3.1% year-over-year, reflecting negative 1.4% organic and positive 4.5% inorganic growth [42] - APAC increased 4.3% year-over-year and represents 2% of revenues [43] Company Strategy and Development Direction - The company is focused on becoming the most globally geo-balanced talent company for AI native digital business services, with recent acquisitions aimed at expanding global client relationships and penetrating new markets [9] - EPAM is investing in GenAI and AI-driven client engagement, with 75% of top country clients engaged in GenAI initiatives [23] - The company anticipates that 2025 will be a transformative year, driven by increased client demand for advanced AI native and agentic software and data engineering services [32] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about 2025 being a better year than 2024, despite caution regarding growth market sensitivity and macroeconomic risks [11][16] - There is a belief that the demand for AI-related services will increase, with clients transitioning to more engineering-led programs [15] - Management acknowledged ongoing cost sensitivity among clients, which remains a critical decision factor [16] Other Important Information - The company ended Q4 with approximately $1.3 billion in cash and cash equivalents, lower than the previous year due to recent acquisitions [48] - Total headcount reached 61,200 employees, with a growth of 16.3% compared to Q4 of 2023 [49] - The company expects flat year-over-year organic revenue growth in Q1 2025, followed by continued improvement throughout the year [56] Q&A Session Summary Question: Can you elaborate on the expectations embedded in the revenue guidance? - Management indicated a cautious approach to revenue expectations for NEORIS and FD, with a zero to 4% revenue growth for organic and a 1% to 5% growth when considering foreign exchange headwinds [70][71] Question: What are the implications of investments in Agentic AI and IP? - Management highlighted the importance of investing in GenAI and retaining top talent, which has led to increased compensation costs and pressure on margins [74][76] Question: How did client spending behavior progress through Q4? - Management noted a good number of new clients entering the pipeline, with some quickly reaching significant revenue levels, while also seeing the return of previous clients [90][91] Question: What is the outlook for revenue growth and profitability? - Management expects improved profitability in the second half of 2025, aiming to return to typical profit levels of 16% or better [97]

分组1 - Epam reported quarterly earnings of $2.84 per share, exceeding the Zacks Consensus Estimate of $2.75 per share, and showing an increase from $2.75 per share a year ago, representing an earnings surprise of 3.27% [1] - The company achieved revenues of $1.25 billion for the quarter ended December 2024, surpassing the Zacks Consensus Estimate by 2.92%, and up from $1.16 billion year-over-year [2] - Epam has consistently outperformed consensus EPS and revenue estimates over the last four quarters [2] 分组2 - The stock has gained approximately 10.4% since the beginning of the year, outperforming the S&P 500's gain of 4.5% [3] - The current consensus EPS estimate for the upcoming quarter is $2.57 on revenues of $1.27 billion, and for the current fiscal year, it is $11.29 on revenues of $5.26 billion [7] - The Computers - IT Services industry, to which Epam belongs, is currently ranked in the top 29% of over 250 Zacks industries, indicating a favorable outlook [8]

Contents 01 | | Who We Are | 4 | | --- | --- | --- | | 02 | The EPAM Story | 7 | | 03 | Our Positioning | 11 | | 04 | Market Trends | 13 | | 05 | How We Do It | 15 | | 06 | Artificial Intelligence | 18 | | 07 | Corporate Recognition | 28 | | 08 | Investment Highlights | 30 | EPAM Proprietary & Confidential. 3 01 Investor Presentation F E B R U A R Y 2 0 2 5 EPAM Proprietary & Confidential. Safe Harbor Statement These materials contain forward-looking statements. You should not place undue reliance on these ...

Core Insights - EPAM Systems, Inc. reported strong fourth quarter results for 2024, achieving a year-over-year organic growth and completing significant acquisitions to enhance its global strategy [1][4][5] Fourth Quarter 2024 Highlights - Revenues reached $1.248 billion, reflecting a 7.9% increase year-over-year, with an organic constant currency growth of 1.0% compared to Q4 2023 [4][5] - GAAP income from operations was $136.5 million, up 11.4% from $122.5 million in Q4 2023, while Non-GAAP income from operations increased by 3.9% to $208.2 million [4][5] - GAAP diluted EPS was $1.80, an increase of 8.4%, and Non-GAAP diluted EPS was $2.84, up 3.3% year-over-year [4][5] Full Year 2024 Highlights - Total revenues for 2024 were $4.728 billion, a slight increase of 0.8% year-over-year, with a decline of 1.7% on an organic constant currency basis [4][5] - GAAP income from operations was $544.6 million, an increase of 8.6% compared to 2023, while Non-GAAP income from operations rose by 1.8% to $779.2 million [4][5] - GAAP diluted EPS for the year was $7.84, up 11.0%, and Non-GAAP diluted EPS was $10.86, an increase of 2.5% year-over-year [4][5] Acquisitions and Strategic Developments - The company completed the acquisition of NEORIS, enhancing its offerings in Latin America, and First Derivative, which strengthens its financial services consulting capabilities [5][6] - These acquisitions are expected to broaden EPAM's global delivery capabilities and client portfolio, particularly in financial services [5][6] Cash Flow and Financial Position - Cash provided by operating activities in Q4 2024 was $130.3 million, down from $171.4 million in Q4 2023, while total cash and equivalents decreased to $1.290 billion, a 36.8% drop from $2.043 billion in the previous year [8][6] - The company repurchased 53 thousand shares for $13.0 million in Q4 2024, totaling 1,854 thousand shares repurchased for $398.0 million throughout the year [8][6] 2025 Outlook - For Q1 2025, EPAM expects revenues between $1.275 billion and $1.290 billion, indicating a year-over-year increase of approximately 10.0% at the midpoint [7][16] - The company anticipates a revenue growth rate for 2025 in the range of 10.0% to 14.0%, with organic constant currency growth expected to be between 1.0% and 5.0% [7][16]