Financial Data and Key Metrics Changes - In Q2 2025, the company generated revenue of $1.353 billion, representing an 18% year-over-year increase on a reported basis, surpassing the upper end of the revenue outlook [32] - Organic constant currency revenue growth was 5.3%, marking the third consecutive quarter of positive organic growth [32][34] - GAAP gross margin for the quarter was 28.8%, down from 29.3% in Q2 of the previous year, while non-GAAP gross margin was 30.1%, compared to 30.8% [37] - GAAP income from operations was $126 million, or 9.3% of revenue, compared to $121 million, or 10.5% of revenue in Q2 of the previous year [38] - Non-GAAP diluted EPS was $2.77, reflecting a $0.32 increase year-over-year [38] Business Line Data and Key Metrics Changes - Financial Services vertical grew 34.4% year-over-year, with 6.5% organic growth in constant currency, driven by strength in banking and insurance [34] - Software and high-tech vertical increased by 21.2% year-over-year, supported by strong execution and improvements across existing clients [34] - Life Sciences and Healthcare vertical saw an 11.7% year-over-year increase, primarily driven by clients in life sciences and med tech [34] - Emerging verticals delivered strong growth of 28.7%, positively impacted by recent acquisitions [35] Market Data and Key Metrics Changes - The Americas, representing 59% of Q2 revenues, grew 15.9% year-over-year, with 3.8% organic growth in constant currency [36] - EMEA, comprising 39% of Q2 revenues, increased 21.7% year-over-year, reflecting 7.6% organic growth [36] - APAC, making up 2% of revenues, grew 13% year-over-year, with 8.3% organic growth [36] Company Strategy and Development Direction - The company is focused on AI-native services, combining engineering and consulting strengths to drive sustainable growth [5][11] - Investments in domain expertise and AI-enabled delivery are aimed at retaining and expanding client relationships [11][17] - The company is scaling and optimizing global delivery hubs to enhance talent and operational efficiency [17][18] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about stabilizing demand conditions and improving growth trends, despite a complex macroeconomic environment [9][10] - The company anticipates continued differentiation in AI-native services and cloud modernization as key growth drivers [30] - Management is raising the bottom end of the range for full-year organic constant currency revenue growth due to strong H1 performance [44] Other Important Information - The CEO transition plan is on track, with the current CEO transitioning to the role of executive chairman [20] - The company has made strategic investments in key solution areas, including generative AI and cybersecurity [27] Q&A Session Summary Question: Workforce and Talent Addition - The company continues to hire to support revenue growth while being more thoughtful about bench optimization, leading to improved utilization [56] Question: Discretionary Spending Recovery - Clients are returning to discretionary spending due to regulatory requirements and the need for AI adoption, which aligns with the company's strengths [60] Question: Q4 Activity and Assumptions - The midpoint of the revenue growth range requires achieving the midpoint of the Q3 guide, with potential for sequential growth depending on demand [64][66] Question: New Discretionary Transformation Programs - The company is seeing incremental increases in discretionary spending, particularly in AI-driven projects, which is different from peers facing challenges [68] Question: Employee Upskilling Progress - The company launched an AI upskilling program with over 80% employee participation, focusing on continuous improvement and certification [73] Question: Margin and Profitability Outlook - The company aims to exit the year with improved utilization and profitability, focusing on appropriate pricing and deal selection [82]

Financial Data and Key Metrics Changes - In Q2 2025, EPAM generated revenue of $1.353 billion, an 18% year-over-year increase, surpassing the upper end of the revenue outlook [31] - Organic constant currency revenue grew 5.3% compared to Q2 2024, marking the third consecutive quarter of positive organic growth [31][32] - GAAP gross margin for the quarter was 28.8%, down from 29.3% in Q2 of the previous year, while non-GAAP gross margin was 30.1%, compared to 30.8% [37] - GAAP income from operations was $126 million, or 9.3% of revenue, compared to $121 million, or 10.5% of revenue in Q2 of last year [38] - Non-GAAP diluted EPS was $2.77, reflecting a $0.32 increase year-over-year [38] Business Line Data and Key Metrics Changes - Financial Services grew 34.4% year-over-year, with 6.5% organic growth in constant currency, driven by strength in banking and insurance [33] - Software and high-tech increased by 21.2% year-over-year, while Life Sciences and Healthcare grew 11.7% [33] - Emerging verticals delivered strong growth of 28.7% year-over-year, positively impacted by recent acquisitions [35] - Consumer Goods, Retail, and Travel showed 6.2% year-over-year growth, indicating improvement [34] Market Data and Key Metrics Changes - The Americas, representing 59% of Q2 revenues, grew 15.9% year-over-year, while EMEA increased by 21.7% [36] - APAC, making up 2% of revenues, saw a 13% year-over-year increase [36] - Revenues from the top 20 clients grew 8.8% year-over-year, while revenues from clients outside the top 20 increased by 23% [36] Company Strategy and Development Direction - The company is focused on AI-native services and core engineering strengths, positioning itself for sustainable growth [6][10] - EPAM is expanding its market-leading position as an AI-native transformation company, with significant investments in AI capabilities [12][13] - The company is optimizing its global delivery hubs to provide scalable options and enhance talent capabilities [15][16] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the stabilization and potential improvement in demand conditions, despite a complex macroeconomic backdrop [7][9] - The company anticipates further improvement in organic constant currency growth rates in Q3 and is raising the bottom end of the revenue growth range for 2025 [42][44] - Management highlighted the importance of quality execution and strategic efficiency for clients, which aligns with EPAM's strengths [10][21] Other Important Information - The CEO transition plan is on track, with the current CEO transitioning to the role of executive chairman [19] - The company has made strategic acquisitions to enhance capabilities in regulated industries and cloud-native engineering [26] Q&A Session Summary Question: Workforce and Talent Addition - Management acknowledged the balance between hiring new talent and optimizing existing resources, indicating a thoughtful approach to bench management [55][57] Question: Client Discretionary Spending - Management noted that clients are returning to discretionary spending due to regulatory requirements and the need for AI adoption, which aligns with EPAM's strengths [59][61] Question: Q4 Activity and Outlook - Management provided insights on the range of Q4 activity, indicating that achieving the midpoint of the guidance requires stable demand and seasonal adjustments [66][68] Question: New Discretionary Transformation Programs - Management highlighted that EPAM is seeing incremental increases in discretionary transformation programs, particularly in AI-driven initiatives [69] Question: Employee Upskilling Progress - Management reported that over 80% of employees have undergone AI upskilling, with ongoing efforts to enhance capabilities across the organization [75][76] Question: Margin and Profitability Outlook - Management indicated a focus on improving utilization and profitability, with expectations to exit the year with better margins compared to previous periods [78][84]

Financial Data and Key Metrics Changes - In Q1 2025, the company generated revenue of $1.3 billion, reflecting an 11.7% year-over-year increase on a reported basis [27] - Organic constant currency revenue grew by 1.4% compared to Q1 2024, exceeding initial expectations of flat organic growth [27] - GAAP gross margin for the quarter was 26.9%, down from 28.4% in Q1 2024, while non-GAAP gross margin was 28.7%, compared to 30.4% in the same period last year [32][33] - GAAP income from operations was $99 million (7.6% of revenue), down from $111 million (9.5% of revenue) in Q1 2024 [34] - Non-GAAP diluted EPS was $2.41, a decrease from $2.46 in Q1 2024 [34] Business Line Data and Key Metrics Changes - Financial services delivered strong growth of 29.3% year-over-year, with 4.5% organic growth in constant currency, driven by strength in insurance, banking, and payments [28] - Software and high-tech grew by 9.6% year-over-year, while life sciences and healthcare increased by 10.5% [28] - Consumer goods, retail, and travel decreased by 1.4% year-over-year, largely due to declines in consumer products and retail [29] - Emerging verticals delivered very strong growth of 22.8%, positively impacted by Neoris Industrial Materials customers [29] Market Data and Key Metrics Changes - The Americas, representing 60% of Q1 revenues, grew by 12.6% year-over-year, while EMEA, representing 38% of revenues, increased by 10.7% [30] - APAC, representing 2% of revenues, saw a growth of 4.3% year-over-year [30] - Revenues from the top 20 clients grew by 6.1% year-over-year, while revenues from clients outside the top 20 increased by 14.6% [31] Company Strategy and Development Direction - The company is focused on driving organic growth and maintaining momentum in AI-related capabilities, which are expected to continue throughout the year [10][19] - A planned leadership transition is underway, with Balas Feyros set to become the new CEO on September 1, 2025, indicating a strategic shift towards AI-native transformation [7][8] - The company aims to improve gross margins and utilization rates while navigating macroeconomic uncertainties [33][66] Management's Comments on Operating Environment and Future Outlook - Management expressed cautious optimism about the second half of 2025, despite macroeconomic uncertainties, citing strong client demand and engagement [12][15] - The company has not seen a material slowdown in client spending, with ongoing improvements in demand for services [39] - Management highlighted a trend of clients returning to EPAM for quality execution after experiencing underperformance with other partners [15] Other Important Information - The company reported cash flow from operations of $24 million in Q1, down from $130 million in the same quarter of 2024, attributed to higher bonus payments and increased days sales outstanding (DSO) [35] - Free cash flow was $15 million, compared to $123 million in Q1 2024 [35] - The company ended Q1 with over 61,700 employees, reflecting total growth of 18.2% and organic growth of 6.4% compared to Q1 2024 [36] Q&A Session Summary Question: Can you provide more color on the second half confidence and underlying macro? - Management indicated that the outlook for the second half remains consistent with previous projections, with no significant changes observed in client purchasing behavior [51][53] Question: How should we expect free cash flow to trend as we move through the year? - Management expects free cash flow conversion to remain around 80% to 90%, with elevated DSO likely to persist due to fixed fee revenues [58][59] Question: Are you sensing any pricing power as organic demand picks up? - Management stated it is too early to call for pricing increases, noting that improvements in demand are still relatively small [60] Question: Can you discuss plans to improve gross margin over the remainder of the year? - Management highlighted seasonal factors that typically benefit the second half and emphasized a renewed focus on improving utilization [65] Question: What are the growth dynamics within customer cohorts? - Management noted a visible trend of clients returning, contributing to improvements in revenue growth outside the top 20 clients [71][72]