EPAM(US:EPAM)2024-11-07 22:19Financial Performance - For the first nine months of 2024, revenues were $3.480 billion, a decrease of 1.5% from $3.533 billion in the same period of 2023[131] - Income from operations as a percentage of revenues increased to 11.7% for the nine months ended September 30, 2024, compared to 10.7% for the same period in 2023[131] - During the three months ended September 30, 2024, total revenues increased by 1.3% to $1.168 billion compared to the same period in 2023[138] - The company reported a net income of $136.346 million for the three months ended September 30, 2024, representing 11.7% of revenues, compared to $97.204 million or 8.4% in the same period of 2023[137] - Revenues for the three months ended September 30, 2024, were $1,167.5 million, a 1.5% increase from $1,152.1 million in the same period of 2023[139] Tax and Incentives - The effective tax rate for the three months ended September 30, 2024, was 28.1%, compared to 26.3% for the same period in 2023[137] - The effective tax rate was 28.1% for Q3 2024, up from 26.3% in Q3 2023, influenced by government incentives and non-deductible acquisition costs[153] - The company recognized a $52.0 million benefit for government incentives related to R&D activities in Poland during Q3 2024, contributing to the decrease in cost of revenues[144] Revenue by Region - Revenues in the United States increased by 2.2% to $666.9 million from $652.8 million in Q3 2023, with a nine-month total of $1.997 billion compared to $1.982 billion in the prior year[140] - In the EMEA region, revenues decreased due to reduced spending at large accounts, with the UK, Switzerland, and Germany generating $126.0 million, $104.3 million, and $53.6 million respectively in Q3 2024[141] - North America segment revenues increased by $19.8 million, or 2.9%, to $704.6 million for the three months ended September 30, 2024, compared to the same period last year[156] - Europe's segment revenues decreased by $2.9 million, or 0.6%, to $462.9 million for the three months ended September 30, 2024, with a constant currency decline of 1.6%[160] Segment Performance - Total segment revenues for the company were $1.17 billion for the three months ended September 30, 2024, compared to $1.15 billion in the same period last year[156] - Total segment operating profit increased by $54.0 million, or 27.5%, to $250.4 million for the three months ended September 30, 2024[156] - North America segment's operating profit margin increased to 22.1% for the three months ended September 30, 2024, from 19.3% in the same period of 2023[157] - Europe's segment revenues accounted for 39.6% of total segment revenues for the three months ended September 30, 2024, down from 40.4% in the same period of 2023[160] Expense Management - Cost of revenues (exclusive of depreciation and amortization) was $764.0 million in Q3 2024, down 3.8% from $794.3 million in Q3 2023, with a percentage of revenues decreasing from 68.9% to 65.4%[144] - Selling, general and administrative expenses were $206.8 million in Q3 2024, a 6.2% increase from $194.8 million in Q3 2023, primarily due to increased professional fees and compensation costs[147] - Depreciation and amortization expense decreased to $19.7 million in Q3 2024 from $23.1 million in Q3 2023, representing 1.7% of revenues compared to 2.0% in the prior year[148] Cash Flow and Liquidity - Cash and cash equivalents as of September 30, 2024, amounted to $2.036 billion, with an additional $675.0 million available under the revolving credit facility[166] - Net cash provided by operating activities for the nine months ended September 30, 2024, was $428.9 million, an increase from $391.3 million in the same period of 2023[167] - Cash used in financing activities included $385.0 million for share repurchases during the first nine months of 2024, compared to $128.4 million in the corresponding period of 2023[171] - The company expects existing cash and cash equivalents, along with projected cash flow from operations, to meet operating and capital expenditure requirements for at least the next twelve months[172] Business Segments and Growth - Life Sciences & Healthcare in North America grew by 10.6% for the three months ended September 30, 2024, driven by increased demand from pharmaceutical and medical device companies[159] - Emerging verticals in the North America segment grew by 15.5% and 21.5% during the three and nine months ended September 30, 2024, respectively, driven by demand from various industries[159] - Financial Services revenues increased by 9.8% to $125.3 million for the three months ended September 30, 2024, driven by improved demand from insurance and wealth management clients[162] - Software & Hi-Tech revenues grew by 25.0% to $46.9 million for the three months ended September 30, 2024, attributed to expanded services for a top-10 client[162] - Life Sciences & Healthcare revenues surged by 43.1% to $21.7 million for the three months ended September 30, 2024, mainly from growth in the pharmaceutical and healthcare sectors[162] Challenges and Declines - The company faced increased expenses due to business continuity plans and relocation costs related to the ongoing conflict in Ukraine[129] - Consumer Goods, Retail & Travel revenues declined by 2.4% to $143.3 million for the three months ended September 30, 2024, primarily due to decreased demand from retail clients[162] - Business Information & Media revenues fell by 33.8% to $52.3 million for the three months ended September 30, 2024, due to decreased demand from two top-10 clients[162] - Europe's segment revenues for the nine months ended September 30, 2024, were $1.37 billion, a decrease of $70.8 million, or 4.9%, while operating profit increased by 11.2% to $209.9 million[161] Strategic Decisions - The company completed the sale of its remaining holdings in Russia on July 26, 2023, resulting in no further operations associated with the Russia segment[154]