EPAM(US:EPAM)2025-11-06 21:11Revenue 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]