For the quarter ended June 2024, Epam (EPAM) reported revenue of $1.15 billion, down 2% over the same period last year. EPS came in at $2.45, compared to $2.64 in the year-ago quarter. The reported revenue represents a surprise of +0.62% over the Zacks Consensus Estimate of $1.14 billion. With the consensus EPS estimate being $2.26, the EPS surprise was +8.41%. While investors closely watch year-over-year changes in headline numbers -- revenue and earnings -- and how they compare to Wall Street expectations ...

Revenue Performance - Revenues for the first six months of 2024 decreased by 2.9% to $2.312 billion compared to $2.381 billion in the same period of 2023[119] - Americas region generated $691.2 million in revenue for Q2 2024, representing 60.3% of total revenue, a slight increase from 58.0% in Q2 2023[126] - United States revenues increased 2.0% to $662.6 million in Q2 2024 compared to $649.6 million in Q2 2023[127] - EMEA region revenues decreased to $431.3 million in Q2 2024 from $459.1 million in Q2 2023, with UK, Switzerland, and Germany as top contributors[126][127] - APAC region revenues decreased by $0.1 million (0.6%) in Q2 2024 and $3.7 million (7.2%) in H1 2024 compared to 2023[128] - North America segment revenues increased by $18.6 million (2.7%) in Q2 2024 compared to Q2 2023, reaching $698.6 million[144] - Europe segment revenues decreased by $35.5 million (7.3%) in Q2 2024 compared to Q2 2023, totaling $448.0 million[147] - Life Sciences & Healthcare revenues in North America grew by 20.6% in Q2 2024 compared to Q2 2023, reaching $120.6 million[146] - Financial Services revenues in North America declined by 8.7% in Q2 2024 compared to Q2 2023, falling to $123.4 million[146] - Consumer Goods, Retail & Travel revenues in Europe declined by 8.8% in Q2 2024 compared to Q2 2023, totaling $138.3 million[149] - Life Sciences & Healthcare revenues in Europe grew by 34.8% in Q2 2024 compared to Q2 2023, reaching $19.5 million[149] - Business Information & Media revenues in Europe declined by 34.0% in Q2 2024 compared to Q2 2023, falling to $55.0 million[149] Profitability and Operating Performance - Income from operations as a percentage of revenues decreased to 10.0% for the six months ended June 30, 2024, down from 11.1% in the same period of 2023[119] - Net income for the six months ended June 30, 2024 was $214.888 million, representing 9.3% of revenues, compared to $222.325 million (9.3% of revenues) in the same period of 2023[124] - Diluted earnings per share for the six months ended June 30, 2024 was $3.67, down from $3.75 in the same period of 2023[124] - North America segment operating profit decreased by $8.8 million (6.7%) in Q2 2024 compared to Q2 2023, falling to $122.8 million[144] - Europe segment operating profit decreased by 15.8% in Q2 2024 compared to Q2 2023, dropping to $54.5 million[147] Cost Structure - Cost of revenues as a percentage of revenues increased to 71.2% for the six months ended June 30, 2024, up from 69.9% in the same period of 2023[124] - Cost of revenues increased 0.3% to $810.9 million in Q2 2024, representing 70.7% of revenue, up from 69.1% in Q2 2023[130] - Selling, general and administrative expenses decreased 0.2% to $194.1 million in Q2 2024, representing 16.9% of revenue[133] - Depreciation and amortization expense decreased to $21.1 million in Q2 2024 from $22.8 million in Q2 2023[135] Tax and Compensation - The effective tax rate for the six months ended June 30, 2024 was 16.5%, down from 19.8% in the same period of 2023[124] - Effective tax rate increased to 26.3% in Q2 2024 from 20.0% in Q2 2023, primarily due to decreased excess tax benefits from stock awards[139] - Company recorded $20.8 million in excess tax benefits from stock awards in H1 2024, compared to $13.4 million in H1 2023[140] - Stock-based compensation expense for the six months ended June 30, 2024 was $39.294 million, up from $31.427 million in the same period of 2023[124] - The company recorded a tax shortfall of $0.1 million during the three months ended June 30, 2024, compared to excess tax benefits of $7.4 million in the same period of 2023[140] Cash Flow and Liquidity - Cash and cash equivalents totaled $1.787 billion as of June 30, 2024, with short-term investments of $61.5 million and $675.0 million available under the revolving credit facility[152] - Net cash provided by operating activities for the six months ended June 30, 2024, was $186.9 million, compared to $176.4 million in the same period of 2023[153] - Net cash used in investing activities for the six months ended June 30, 2024, was $73.8 million, primarily due to $11.5 million in capital expenditures and $56.7 million for business acquisitions[155] - Net cash used in financing activities for the six months ended June 30, 2024, was $338.2 million, mainly due to $335.1 million spent on share repurchases[156] - Cash, cash equivalents, and restricted cash decreased by $251.5 million in the first six months of 2024, ending at $1.79 billion[153] - The company's operating activities were impacted by lower variable compensation payments and increased days sales outstanding in 2024 compared to 2023[154] - The company believes its existing cash and cash equivalents, combined with expected cash flow from operations, will meet operating and capital expenditure requirements for the next twelve months[158] - The company may require additional cash resources due to changed business conditions or future developments, potentially leading to equity or debt financing[159] Geopolitical and Operational Impact - Ukraine remains the company's largest delivery location as of June 30, 2024, with the majority of employees in safe locations and operating at pre-war productivity levels[113] - The company has maintained its $100 million humanitarian aid commitment to its people in Ukraine[113] - The company completed the sale of its remaining holdings in Russia on July 26, 2023, and no longer has operations associated with the Russia segment[150] - The company no longer has operations in Russia following the sale of its remaining holdings on July 26, 2023[141] - The company's cash flow generation is influenced by performance, economic conditions, industry trends, and the impact of the Ukraine invasion[159] Inflation and Future Risks - Inflation has not had a material impact on the company's business to date, but future higher-than-normal inflation rates could adversely affect operations and financial condition[151] - The company's forward-looking statements are subject to risks and uncertainties, including geopolitical events and economic conditions[163] Other Financial Information - Interest and other income increased to $12.0 million in Q2 2024 from $11.7 million in Q2 2023, driven by higher interest income[136] - Foreign exchange loss for the six months ended June 30, 2024 was $706 thousand, compared to a loss of $10.618 million in the same period of 2023[124] - The company has no material off-balance sheet commitments or arrangements other than those disclosed in its financial statements[161]

Financial Data and Key Metrics - Revenue for Q2 2024 was $1.147 billion, a year-over-year decrease of 2% on a reported basis or 1.7% in constant currency terms [22] - GAAP gross margin for Q2 was 29.3%, down from 30.9% in Q2 2023, while non-GAAP gross margin was 30.8%, down from 32.6% in the same period last year [24] - GAAP income from operations was $121 million (10.5% of revenue), compared to $144 million (12.3% of revenue) in Q2 2023 [25] - Non-GAAP diluted EPS was $2.45, down from $2.64 in Q2 2023 [26] - Cash flow from operations for Q2 was $57 million, compared to $89 million in Q2 2023 [27] Business Line Performance - Life sciences & healthcare delivered strong year-over-year growth of 22.4% [23] - Consumer goods, retail, and travel decreased 7.7% year-over-year, largely due to declines in retail [23] - Financial services decreased 5.6% year-over-year, driven by softness in asset management, banking, and payments [23] - Software and hi-tech contracted 3.7% year-over-year, while business information and media declined 12.6% [23] - Emerging verticals grew 10.6% year-over-year, driven by energy and telecom clients [23] Geographic Performance - Americas, representing 60% of Q2 revenues, grew 1.8% year-over-year on a reported basis and 2% in constant currency terms [24] - EMEA, representing 38% of Q2 revenues, contracted 6% year-over-year and 5.6% in constant currency [24] - APAC declined 0.6% year-over-year or 0.2% in constant currency terms, now representing 2% of revenues [24] Company Strategy and Industry Competition - The company is focusing on data and analytics, core engineering, and digital engagement offerings, with a strong emphasis on AI transformation [7] - EPAM is expanding its global delivery strategy, particularly in India, which is on track to becoming the largest delivery location by the end of 2024 [8][9] - The company is investing in GenAI capabilities, with over 10% of EPAMers now advanced GenAI technical practitioners [13][14] - EPAM is building full-service GenAI delivery practices through a network of GenAI X-Labs across major development centers [10] Management Commentary on Operating Environment and Future Outlook - The demand environment remains complex, with clients cautious about larger programs and cost-saving priorities [6] - The company expects no net improvements in overall demand for the remainder of 2024 but is optimistic about certain sectors returning to modest growth in the next 2-3 quarters [6] - EPAM is focused on managing its business responsibly, building on strong fundamentals, and ensuring it remains a partner of choice as the demand environment improves [7] Other Important Information - The company exited the Russian market, which had a 50 basis point negative impact on year-over-year revenue growth [22] - EPAM repurchased 1.16 million shares for $214 million in Q2 and has a new $500 million share repurchase program authorized [27] - The company ended Q2 with over 47,000 consultants, designers, engineers, and architects, a decline of 4.8% compared to Q2 2023 [28] Q&A Session Summary Question: Utilization dynamics between on-site and offshore workforce - Offshore utilization is healthy, while on-site utilization remains below targeted levels, contributing to revenue growth challenges [35] - The company is working to address on-site utilization through demand generation and cost optimization [36] Question: Demand progression in top accounts - Top 5 clients are generally stable, with only one client showing a decline, which is stabilizing [39][40] Question: GenAI-related work progression - GenAI projects are moving from POCs to production, with some projects now in the high hundreds of thousands or low millions of dollars [41][42] - The company sees significant potential in GenAI but acknowledges that technical debt and data modernization are barriers to rapid adoption [44] Question: Sequential revenue guidance and demand environment - Q3 revenue is expected to show a modest improvement due to seasonal factors, while Q4 may see a decline due to higher vacation levels [48][49] - The company sees no significant improvement in demand but is focusing on maintaining production systems and exploring modernization opportunities [50][51] Question: Hiring and AI efficiency - The company plans to continue hiring, particularly in offshore locations like India and Latin America, while leveraging AI for productivity improvements [53] Question: Discretionary demand environment and margin leverage - Clients are holding back on investments due to macroeconomic uncertainty, but the company expects a rebound in demand for data infrastructure and cloud modernization in 2025 [55] - Margin improvement in Q2 was driven by SG&A efficiency and utilization improvements, with further gains expected from cost optimization and reduced bench time [56][57] Question: India's progress and impact on revenue and margins - India is expected to account for just over 20% of headcount by the end of 2024, with modest pressure on average bill rates [59] - The company is building strong data and GenAI capabilities in India, maintaining its reputation for complex engineering solutions [61][62] Question: Fixed-price contracts and M&A - Fixed-price contracts are trending up, driven by client needs and opportunities with GenAI, potentially improving profitability [66][67] - Larger-scale M&A is not off the table, with the company continuing to evaluate opportunities to plug capability gaps [68][69] Question: Global delivery footprint and talent differentiation - The company is diversifying its global delivery footprint, with India and Latin America playing increasingly important roles [72][73] - EPAM differentiates itself in India by offering high-quality engineering solutions and competing with tech companies and captives for talent [75][76] Question: Headwinds from India and lost clients - The headwind from India's mix shift is expected to be slightly higher than 2% in 2025, driven by increased billable headcount in India and lower on-site utilization [78][79] - The company continues to see a gradual decline in demand from a client due to their internal restructuring and concerns about EPAM's Ukrainian footprint [80] Question: DSO and fixed-price contracts - DSO increased to 76 days in Q2 due to timing issues but is expected to stabilize around 74 days in the second half of the year as the company shifts towards more fixed-price contracts [81] Question: Fixed-price contracts and life sciences growth - Fixed-price contracts are growing due to client demand for predictable costs and some experimentation with GenAI-driven productivity improvements [83] - Life sciences & healthcare growth is driven by strong data programs and industry expertise, with a high concentration of data-related projects in this vertical [84]

EPAM Systems, Inc. (EPAM) reported better-than-expected second-quarter 2024 results. Its second-quarter non-GAAP earnings of $2.45 per share beat the Zacks Consensus Estimate of $2.26. However, the figure came 7.2% lower than the year-ago quarter's earnings of $2.64 per share, primarily due to lower revenues and higher taxes, partially offset by its cost-saving initiatives, which include workforce rebalancing efforts. Second-quarter revenues of $1.147 billion were slightly above the Zacks Consensus Estimate ...

Epam (EPAM) came out with quarterly earnings of $2.45 per share, beating the Zacks Consensus Estimate of $2.26 per share. This compares to earnings of $2.64 per share a year ago. These figures are adjusted for nonrecurring items. This quarterly report represents an earnings surprise of 8.41%. A quarter ago, it was expected that this information technology services provider would post earnings of $2.32 per share when it actually produced earnings of $2.46, delivering a surprise of 6.03%. Over the last four q ...

Exhibit 99.1 EPAM Reports Results for Second Quarter 2024 and Updates Full Year Outlook • Second quarter revenues of $1.147 billion, down 2.0% year-over-year • GAAP income from operations was 10.5% of revenues and non-GAAP income from operations was 15.2% of revenues for the second quarter • Second quarter GAAP diluted EPS of $1.70, a decrease of $0.33, and non-GAAP diluted EPS of $2.45, a decrease of $0.19 on a year-over-year basis • For the full year, EPAM narrows expected range for revenues to $4.590 bi ...

From a technical perspective, Epam (EPAM) is looking like an interesting pick, as it just reached a key level of support. EPAM recently overtook the 20- day moving average, and this suggests a short-term bullish trend. A well-liked tool among traders, the 20-day simple moving average offers a look back at a stock's price over a 20-day period. This is very beneficial to short-term traders, as it smooths out short-term price trends and gives more trend reversal signals than longer-term moving averages. Simila ...

Key Takeaways EPAM Systems stock price chart YTD stephen_wisnefski published on TradingView.com, Jul 16, 2024 14:36 UTC-4 EPAM Systems, Inc., 1h, NYSE EPAM Systems shares fell to their lowest level since the outbreak of the COVID-19 pandemic last month. While they've risen today, they've lost about 30% of their value this year. Wall Street has a consensus share price target of around $223 on EPAM shares, according to Visible Alpha. Do you have a news tip for Investopedia reporters? Please email us at tips@i ...

NEWTOWN, Pa., July 9, 2024 /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, August 8, 2024, to discuss its second quarter 2024 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 ...

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