EPAM(US:EPAM)2025-05-08 20:23Financial Performance - For the first three months of 2025, total revenues increased by 11.7% to $1.302 billion compared to $1.165 billion in the same period of 2024[119] - Income from operations as a percentage of revenues decreased to 7.6% for Q1 2025 from 9.5% in Q1 2024, primarily due to increased cost of revenues[119] - Diluted earnings per share decreased to $1.28 for Q1 2025 from $1.97 in Q1 2024, reflecting a decrease in income from operations and reduced excess tax benefits[119] - Cost of revenues (exclusive of depreciation and amortization) increased to $952.0 million in Q1 2025, representing 73.1% of total revenues, up from 71.6% in Q1 2024[123] - Selling, general and administrative expenses were $218.9 million, representing a 10.3% increase compared to $198.5 million in the same period of 2024, with expenses as a percentage of revenues decreasing to 16.8%[134] - Depreciation and amortization expense increased to $31.4 million from $22.1 million year-over-year, with the expense as a percentage of revenues rising to 2.5%[135] - Interest and other income, net decreased to $5.8 million from $15.0 million, primarily due to a $12.1 million decrease in interest income[136] Revenue Breakdown - Revenues from the Americas accounted for 59.9% of total revenues in Q1 2025, increasing to $780.3 million from $692.9 million in Q1 2024[126] - EMEA revenues were $497.1 million in Q1 2025, representing 38.2% of total revenues, with significant contributions from the UK, Switzerland, and Germany[129] - APAC revenues increased by $1.0 million or 4.3% in Q1 2025, driven by growth in the Life Sciences & Healthcare vertical[130] - Americas segment revenues increased by $72.4 million, or 10.3%, to $777.2 million, with operating profit decreasing by $4.9 million, or 4.1%, to $115.2 million[147] - Europe segment revenues rose to $524.5 million, a 13.8% increase from $460.7 million, with operating profit increasing 19.6% to $71.3 million[149] - Financial Services became the largest industry vertical in the Americas segment, growing 20.2% year-over-year, driven by new revenues from 2024 acquisitions[148] - Financial Services revenue grew by 39.0% to $164.6 million, becoming the largest industry vertical in the Europe segment, driven by new client revenues from 2024 acquisitions[150] - Life Sciences & Healthcare revenue surged by 56.7% to $29.0 million, primarily due to growth from clients in the pharmaceutical and healthcare sectors[150] Tax and Expenses - The effective tax rate for Q1 2025 was 22.2%, compared to 6.0% in Q1 2024[123] - The effective tax rate increased to 22.2% for the three months ended March 31, 2025, compared to 6.0% in the same period of 2024, largely due to lower excess tax benefits[139] Cash Flow and Financial Position - Cash and cash equivalents totaled $1.174 billion as of March 31, 2025, with additional short-term investments of $3.5 million and $675.0 million available under the revolving credit facility[152] - Net cash provided by operating activities was $24.2 million for the three months ended March 31, 2025, a decrease from $129.9 million in the same period of 2024[153] - Cash used in financing activities included $160.0 million for share repurchases in Q1 2025, compared to $120.6 million in Q1 2024[156] - Cash used in investing activities was primarily $9.3 million for capital expenditures in Q1 2025, up from $6.7 million in Q1 2024[155] - 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[157] Operational Challenges - The ongoing war in Ukraine has had a material adverse effect on operations, with potential for further impacts due to geopolitical tensions and sanctions[115] - The company continues to monitor inflation impacts, particularly on wages, while implementing pricing and cost management strategies[151] Future Outlook - The company's ability to generate cash is influenced by performance, economic conditions, and industry trends, with potential impacts from the Ukraine invasion[158] - Additional cash resources may be required due to changing business conditions or future investments and acquisitions[158] - If the company issues equity securities to raise funds, existing stockholders may face substantial dilution[158] - Forward-looking statements are based on current expectations and are subject to risks and uncertainties, including geopolitical tensions and market conditions[162] - The adoption and implementation of artificial intelligence technologies may affect client demand and profitability[162] - The company may need to raise additional funds through public or private equity or debt financing to support future activities[158] - The company has no material obligations under guarantee contracts or other arrangements beyond those disclosed in financial statements[160] - The company’s future results may differ materially from expectations due to various risks and uncertainties[163] - The company does not undertake any obligation to update forward-looking statements unless required by law[163]