Group 1 - The Magnificent Seven, a group of tech-focused firms, dominate the S&P 500, accounting for one-third of its total market capitalization [2] - The Roundhill Magnificent Seven ETF (BATS: MAGS) has returned nearly 20% year-to-date, outperforming the broader market despite early 2025 volatility [2] - Investors may overlook promising opportunities in tech-adjacent companies with strong fundamentals, such as Align Technology, Marvell Technology, and EPAM Systems [3] Group 2 - Align Technology, known for its Invisalign system, leverages AI to enhance efficiency in the orthodontic market, positioning itself as a tech-focused option in the medical device sector [4] - In Q3, Align Technology reported a revenue increase of approximately 2% year-over-year, reaching nearly $1 billion, with earnings per share exceeding analyst expectations by 23 cents [5] - The growth of Align Technology is driven by increased adoption rates among teens and children, aided by AI in treatment planning [5]

Core Insights - EPAM Systems, Inc. has been awarded the Innovate with Azure AI Platform 2025 Microsoft Partner of the Year Award for its leadership in developing AI solutions on Azure [1][2][4] - The award recognizes EPAM's innovation in creating AI solutions that demonstrate significant impact through specific customer use cases, particularly in collaboration with Albert Heijn [3][4] Company Achievements - EPAM's winning project involved the development of a scalable GenAI platform for Albert Heijn, enhancing operational efficiency through an AI-powered virtual assistant [4][5] - The company has also been recognized as a finalist in three other competitive categories, showcasing its broad capabilities in AI and digital transformation [5][6] Partnership with Microsoft - EPAM's status as a Microsoft Global Systems Integrator (GSI) reflects its deepening collaboration with Microsoft and commitment to delivering innovative solutions [7][8] - The partnership enables EPAM to leverage Microsoft's Cloud and AI platforms to drive transformative outcomes for clients [8] Industry Impact - EPAM integrates advanced AI technologies into tailored business strategies, enhancing clients' competitive edge and driving significant industry impact [9] - The company has been recognized for its engineering excellence and cloud expertise, underscoring its role in enterprise-scale transformation across various industries [7][11]

Core Insights - Zacks Premium offers various tools for investors to enhance their stock market strategies and confidence [1] - The Zacks Style Scores provide a framework for evaluating stocks based on value, growth, and momentum [2][3][4][5][6] Zacks Style Scores - Stocks are rated A, B, C, D, or F based on their value, growth, and momentum characteristics, with higher scores indicating better performance potential [3] - The Value Score focuses on identifying undervalued stocks using financial ratios like P/E and Price/Sales [3] - The Growth Score emphasizes a company's financial health and future growth potential, analyzing earnings and sales projections [4] - The Momentum Score assesses stocks based on price trends and earnings estimate changes to identify favorable buying opportunities [5] - The VGM Score combines all three Style Scores to highlight stocks with the best value, growth, and momentum characteristics [6] Zacks Rank Integration - The Zacks Rank is a proprietary model that uses earnings estimate revisions to identify stocks with high potential, with 1 (Strong Buy) stocks historically returning an average of +23.93% annually since 1988 [7][9] - Investors are encouraged to select stocks with a Zacks Rank of 1 or 2 and Style Scores of A or B for optimal returns [9][10] Company Spotlight: EPAM Systems, Inc. - EPAM Systems, Inc. is rated 2 (Buy) on the Zacks Rank and has a VGM Score of A, making it a strong candidate for growth investors [11] - The company is projected to achieve year-over-year earnings growth of 2.7% for the current fiscal year, with an upward revision in earnings estimates for fiscal 2025 [12] - The Zacks Consensus Estimate for EPAM's earnings has increased by $0.07 to $11.15 per share, with an average earnings surprise of +4.4% [12]

Core Insights - Zacks Premium offers tools for investors to enhance their stock market strategies and confidence [1] - The Zacks Style Scores are designed to help investors identify stocks with the potential to outperform the market in the short term [2] Zacks Style Scores Overview - The Style Scores categorize stocks into four types: Value Score, Growth Score, Momentum Score, and VGM Score, each focusing on different investment strategies [3][4][5][6] - Value Score emphasizes finding undervalued stocks using financial ratios [3] - Growth Score focuses on a company's financial health and future growth potential [4] - Momentum Score identifies trends in stock prices and earnings estimates to optimize entry points [5] - VGM Score combines the three styles to highlight stocks with the best overall characteristics [6] Zacks Rank and Performance - The Zacks Rank is a proprietary model that uses earnings estimate revisions to guide investment decisions [7] - Stocks rated 1 (Strong Buy) have historically achieved an average annual return of +23.93%, significantly outperforming the S&P 500 [8] - There are over 800 top-rated stocks available, making it essential to utilize Style Scores for effective selection [9] Investment Strategy - To maximize returns, investors should target stocks with a Zacks Rank of 1 or 2 and Style Scores of A or B [10] - Stocks with lower ranks but high Style Scores may still carry risks due to downward earnings forecasts [11] Company Spotlight: EPAM Systems, Inc. - EPAM Systems, Inc. is rated 2 (Buy) with a VGM Score of B, indicating strong potential [12] - The company has shown a Momentum Style Score of B, with shares increasing by 24.3% in the past four weeks [12] - Recent earnings estimates for fiscal 2025 have been revised upward, with the Zacks Consensus Estimate rising by $0.07 to $11.15 per share [13] - EPAM has an average earnings surprise of +4.4%, making it a strong candidate for investors [13]

Core Insights - EPAM Systems, Inc. (EPAM) shares increased by 4.4% following the release of better-than-expected third-quarter 2025 results, with earnings of $3.08 per share, surpassing the Zacks Consensus Estimate by 1.99% but down from $3.12 in the same quarter last year [1][8] Financial Performance - EPAM reported third-quarter revenues of $1.39 billion, exceeding the consensus estimate of $1.37 billion, and reflecting a year-over-year growth of 19.4%, driven by advancements in artificial intelligence [2][8] - Revenue breakdown includes: - Financial Services: $337.8 million (24.2% of total revenues), up 32.7% year over year [3] - Consumer Goods, Retail & Travel: $276 million (19.8% of total revenues), up 9.9% year over year [3] - Software & Hi-Tech: $212.2 million (15.2% of total revenues), up 19.1% year over year [4] - Life Sciences & Healthcare: $159.2 million (11.4% of total revenues), up 11.8% year over year [4] - Business Information & Media: $167.6 million (12% of total revenues), up 0.1% year over year [4] - Emerging revenues: $241.6 million (17.4% of total revenues), up 38.9% year over year [4] Profitability Metrics - Non-GAAP gross profit increased by 8% year over year to $432.9 million, with a gross margin contraction of 330 basis points to 31% [5] - Non-GAAP operating income remained flat at $222.8 million year over year, with an operating margin contraction of 310 basis points to 16% [5] Balance Sheet and Cash Flow - As of September 30, 2025, EPAM had cash and cash equivalents of $1.24 billion, up from $1.05 billion as of June 30, 2025 [6] - Long-term debt stood at $25 million [6] - Generated operating cash flow of $294.7 million and free cash flow of $286.4 million during the third quarter [6] Future Guidance - For Q4 2025, EPAM expects revenues between $1.380 billion and $1.395 billion, indicating a year-over-year growth of 11.1% at the midpoint [7] - Full-year 2025 revenue guidance has been raised to a range of $5.430 billion to $5.445 billion, reflecting a 15% year-over-year growth at the midpoint [10] - GAAP diluted EPS is projected between $6.75 and $6.83, while non-GAAP diluted EPS is forecasted in the range of $11.36 to $11.44 [11]

Revenue Performance - For the first nine months of 2025, revenues reached $4.050 billion, a 16.4% increase from $3.480 billion in the same period of 2024[133] - During Q3 2025, total revenues increased by 19.4% to $1.394 billion compared to Q3 2024, driven by improving demand, acquisitions contributing 10.5%, and foreign exchange fluctuations adding 1.8%[139] - For the three months ended September 30, 2025, total revenues were $1,394.4 million, a 19.4% increase from $1,167.5 million in the same period of 2024[140] - Revenues from the Americas accounted for 58.0% of total revenues, increasing to $808.6 million from $697.2 million, while EMEA contributed 39.9% with revenues of $555.7 million, up from $444.9 million[140] - Revenues in the United States increased by 7.4% to $716.2 million compared to $666.9 million in Q3 2024, driven by increased spending at large accounts and contributions from 2024 acquisitions[142] - EMEA's top revenue-generating countries included the United Kingdom ($153.4 million), Switzerland ($113.3 million), and Netherlands ($60.7 million), showing significant growth from the previous year[143] - APAC revenues rose by 17.7% to $30.0 million for Q3 2025, primarily due to growth in the Consumer Goods, Retail & Travel vertical[144] Operating Performance - Income from operations as a percentage of revenues decreased to 9.2% for the nine months ended September 30, 2025, down from 11.7% for the same period in 2024[133] - Diluted earnings per share decreased to $4.75 for the nine months ended September 30, 2025, from $6.04 for the same period in 2024[133] - Operating expenses for Q3 2025 included cost of revenues at $983.2 million (70.5% of revenues), up from $764.0 million (65.4%) in Q3 2024[137] - Selling, general, and administrative expenses for Q3 2025 were $234.9 million, representing 16.8% of revenues, compared to $206.8 million (17.7%) in Q3 2024[137] - The effective tax rate for Q3 2025 was 25.6%, compared to 28.1% in Q3 2024[137] - The company reported a decrease in operating profit margins in both segments due to lower government incentives and increased variable compensation expenses[167][171] Cash Flow and Financial Position - As of September 30, 2025, the company had cash and cash equivalents totaling $1.239 billion[172] - Net cash provided by operating activities for the nine months ended September 30, 2025, was $372.0 million, a decrease of 13.2% from $428.9 million in 2024[173] - Cash used in investing activities included $27.5 million for capital expenditures in 2025, up from $16.4 million in 2024, and $3.3 million for business acquisitions, down from $57.1 million in 2024[175] - Cash used in financing activities totaled $438.6 million for share repurchases in 2025, compared to $385.0 million in 2024, with $35.0 million received from stock option exercises and ESPP purchases[176] - The company recorded a tax shortfall of $0.8 million for stock awards during the nine months ended September 30, 2025, compared to an excess tax benefit of $20.5 million in 2024[155] - Cash, cash equivalents, and restricted cash at the end of the period were $1.24 billion in 2025, down from $2.04 billion in 2024[173] - The company experienced a net decrease in cash of $46.9 million in 2025, compared to a decrease of $2.4 million in 2024[173] - The company anticipates that existing cash and expected cash flow from operations will be sufficient to meet projected operating and capital expenditure requirements for at least the next twelve months[177] Geopolitical Impact - The company continues to adapt its business continuity plans in response to the ongoing war in Ukraine, reallocating work to other geographies[130] - The impact of the war in Ukraine has led to increased expenses related to business continuity and humanitarian commitments, which are expected to persist in future quarters[131] - The ongoing geopolitical events, including the invasion of Ukraine, may continue to disrupt financial markets and impact the company's business operations[178] - Forward-looking statements indicate potential impacts from geopolitical events and economic conditions on client demand and profitability[182] Segment Performance - Americas segment revenues for Q3 2025 increased by $95.3 million, or 13.5%, to $799.9 million compared to Q3 2024[163] - Americas segment operating profit for Q3 2025 decreased by $20.4 million, or 13.0%, to $136.3 million compared to Q3 2024[163] - Acquisitions contributed $66.3 million to Americas segment revenues in Q3 2025[163] - Europe segment revenues for Q3 2025 increased by $131.6 million, or 28.4%, to $594.5 million compared to Q3 2024[167] - Europe segment operating profit for Q3 2025 decreased by 3.3% to $88.9 million compared to Q3 2024[167] - Acquisitions contributed $55.8 million to Europe segment revenues in Q3 2025[167] - Financial Services in the Americas segment grew by 16.4% in Q3 2025 compared to Q3 2024, driven by new client revenues from acquisitions[165] - Financial Services in the Europe segment grew by 49.4% in Q3 2025 compared to Q3 2024, benefiting from new client revenues from acquisitions[170] Miscellaneous - The company maintained a $100 million humanitarian aid commitment to employees in Ukraine, with $12.5 million remaining to be expensed as of September 30, 2025[128] - The effective tax rate for the nine months ended September 30, 2025, was 25.8%, down from 21.4% in 2024, influenced by government incentives related to R&D in Poland[155] - The company may require additional cash resources for future investments or acquisitions, which could lead to dilution for existing shareholders if equity is issued[178] - The company has not entered into any material off-balance sheet commitments or arrangements that expose it to significant risks[180]

Financial Data and Key Metrics Changes - In Q3 2025, EPAM generated revenue of $1.394 billion, a year-over-year increase of 19.4% on a reported basis, exceeding the high end of revenue guidance [24] - Organic constant currency revenue grew 7.1% compared to Q3 2024, marking the fourth consecutive quarter of positive year-over-year organic growth [10][24] - GAAP gross margin for the quarter was 29.5%, down from 34.6% in Q3 of the previous year, while non-GAAP gross margin was 31% compared to 34.3% [27] - GAAP income from operations was $145 million, or 10.4% of revenue, compared to $177 million, or 15.2% of revenue in Q3 of last year [28] - Non-GAAP diluted EPS was $3.08, reflecting a 4-cent decrease year-over-year [29] Business Line Data and Key Metrics Changes - Five out of six industry verticals posted year-over-year growth, with financial services growing 32.7% and software and high-tech growing 19.1% [25][26] - Life sciences and healthcare increased 11.8%, while consumer goods, retail, and travel delivered 9.9% growth [26] - Emerging verticals grew 38.9% year-over-year, with Neoris contributing significantly [26] Market Data and Key Metrics Changes - The Americas, representing 58% of Q3 revenues, grew 16% year-over-year, while AMEA increased 24.9% [26] - APAC, making up 2% of revenues, increased 17.7% year-over-year [26] - Revenues from the top 20 clients grew 10.2% year-over-year, while revenues from clients outside the top 20 increased 24.4% [27] Company Strategy and Development Direction - The company is focused on AI and AI-native services, with a strategy to enhance engineering skills and invest in advanced AI playbooks [5][10] - EPAM aims to lead foundational and transformational programs demanded by AI, emphasizing the importance of engineering expertise and risk management [9] - The launch of AI Run Transform strategy is expected to complement growth momentum and capture demand [24] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the demand environment, noting that AI is driving incremental demand and improving the pipeline globally [11] - The company anticipates a strong Q4 exit, with higher organic constant currency growth rates than previously forecasted [33] - Management highlighted the importance of maintaining pricing integrity and the competitive advantage derived from trusted quality and execution [12] Other Important Information - The company announced a new $1 billion share repurchase program, reflecting confidence in its underlying business strength [24] - Cash flow from operations for Q3 was $295 million, the highest level in EPAM's history [30] Q&A Session Summary Question: Plans for entering the Agentic BPO space - Management indicated that they are experimenting with automation using EPAM's build platforms and emphasized the differences from previous RPA efforts [38][39] Question: Considerations for Q4 exit rate and growth potential for 2026 - Management noted that seasonality will negatively impact Q4 due to fewer build days and more vacations, but they expect continued investment from clients [40][41] Question: Competitive advantage and market share gains - Management acknowledged that clients are redirecting work from competitors who fail to deliver, highlighting EPAM's engineering capabilities as a key differentiator [46][47] Question: Focus on cost management and profitability - Management discussed efforts to balance the workforce pyramid and emphasized a focus on profitable projects and selective client engagements [48][49] Question: Size and growth of AI projects - Management noted that AI projects are evolving from proof of concepts to larger engagements, with potential revenue growth from these initiatives in the coming years [51][52]

Core Insights - Epam reported quarterly earnings of $3.08 per share, exceeding the Zacks Consensus Estimate of $3.02 per share, but down from $3.12 per share a year ago, representing an earnings surprise of +1.99% [1] - The company achieved revenues of $1.39 billion for the quarter ended September 2025, surpassing the Zacks Consensus Estimate by 1.44% and up from $1.17 billion year-over-year [2] - Epam has consistently surpassed consensus EPS and revenue estimates over the last four quarters [2] Financial Performance - The earnings surprise for the previous quarter was +6.13%, with actual earnings of $2.77 per share compared to an expected $2.61 [1] - The current consensus EPS estimate for the upcoming quarter is $2.90, with projected revenues of $1.38 billion, and for the current fiscal year, the EPS estimate is $11.11 on revenues of $5.41 billion [7] Market Position - Epam shares have declined approximately 31.2% year-to-date, contrasting with the S&P 500's gain of 15.6% [3] - The Zacks Industry Rank places Computers - IT Services in the top 30% of over 250 Zacks industries, indicating a favorable industry outlook [8] Future Outlook - The sustainability of Epam's stock price movement will largely depend on management's commentary during the earnings call and future earnings expectations [3][4] - The estimate revisions trend for Epam was mixed prior to the earnings release, resulting in a Zacks Rank 3 (Hold), suggesting the stock is expected to perform in line with the market [6]

Core Insights - EPAM Systems has raised its annual earnings forecast for the third time this year, indicating strong demand for IT consultancy services as businesses invest in modernizing their systems for artificial intelligence [1] Group 1: Financial Performance - The company’s updated earnings forecast reflects an increase in business spending on AI system modernization, which is driving revenue growth [1] Group 2: Market Trends - There is a growing trend among businesses to allocate more resources towards upgrading their technological infrastructure to incorporate artificial intelligence capabilities [1]

Core Insights - EPAM Systems, Inc. reported a third quarter revenue of $1.394 billion, reflecting a year-over-year increase of 19.4% [5][6] - The company raised its full-year revenue growth outlook for 2025 to a range of 14.8% to 15.2% [5][6] - CEO Balazs Fejes emphasized the company's focus on AI and AI-native innovation as a key driver for growth [2] Financial Performance - Third quarter revenues increased by $226.8 million compared to the same period in 2024 [6] - GAAP income from operations was $144.9 million, a decrease of 18.1% year-over-year [6] - Non-GAAP income from operations was $222.8 million, showing a slight decrease of $0.1 million compared to the previous year [6] - GAAP diluted EPS was $1.91, down 19.4% from $2.37 in the third quarter of 2024 [6] - Non-GAAP diluted EPS was $3.08, a decrease of 1.3% from $3.12 in the same quarter last year [6] Cash Flow and Shareholder Returns - Cash provided by operating activities for the first nine months of 2025 was $372.0 million, down from $428.9 million in the same period of 2024 [6] - The company repurchased $82.1 million of its stock in the third quarter and announced a new share repurchase plan for up to $1 billion [5][6] Outlook - For the full year 2025, EPAM expects revenues to be in the range of $5.430 billion to $5.445 billion, with a year-over-year growth rate of 15.0% at the midpoint [6] - The company anticipates GAAP diluted EPS to be in the range of $6.75 to $6.83 and non-GAAP diluted EPS to be between $11.36 and $11.44 [5][6] Workforce and Strategic Initiatives - Total headcount was approximately 62,350 as of September 30, 2025, with a 0.5% increase in delivery professionals since June 30, 2025 [6] - The company is investing in AI and AI-native innovation to enhance its strategic positioning in the market [2][9]