EPAM(US:EPAM)2023-02-16 17:38Financial Data and Key Metrics Changes - In Q4, the company generated revenues of $1.23 billion, reflecting an 11.2% year-over-year increase on a reported basis and 14.4% in constant currency terms [41] - GAAP income from operations was $573 million, an increase of 5.7% year-over-year, representing 11.9% of revenue [3] - Non-GAAP income from operations was $818 million, a 20.6% increase over the prior year, representing 17% of revenue [3] - Diluted earnings per share on a GAAP basis was $2.61, while non-GAAP diluted EPS was $2.93, reflecting a 6.2% growth over the same quarter in 2021 [65] Business Line Data and Key Metrics Changes - Financial services grew 2.4%, with strong growth from asset management and insurance; excluding Russian customer revenues, growth would have been 17.8% [2] - Software and Hi-Tech grew 10.3% in the quarter, reflecting a reduction in revenue from a previously top 20 customer [2] - Travel and consumer grew 16%, driven by strong growth in travel and hospitality, while life sciences and healthcare grew 11.5% [42][43] Market Data and Key Metrics Changes - The Americas, representing 59% of Q4 revenues, grew 14.7% year-over-year; EMEA, representing 37%, grew 18% year-over-year [1] - CEE contracted 71.8% year-over-year due to the exit from the Russian market, while APAC was flat year-over-year but grew 3.8% in constant currency [1] - Revenues from top 20 clients grew 8% year-over-year, while revenues from clients outside the top 20 grew 13% [1] Company Strategy and Development Direction - The company expects a lower level of revenue in Q1, indicating a slower start to the 2023 fiscal year, but anticipates stronger demand in the second half of 2023 [4] - The company plans to focus on stabilizing global operations and investing in new talent and capabilities while maintaining a strong engineering DNA [35] - The guidance for 2023 includes at least 9% revenue growth on both a reported and constant currency basis, with a return to double-digit growth in the second half of the year [14][15] Management's Comments on Operating Environment and Future Outlook - Management noted signs of moderation in demand, including delays in decision-making and increased scrutiny on budgets, particularly in the retail and consumer goods sectors [12] - The company believes the current slowdown in demand will be temporary, with expectations of a return to growth as new players enter the market with technology-led solutions [34] - Management expressed confidence in returning to a 20% plus organic growth rate in the next several quarters and achieving a $10 billion revenue target in the coming years [38] Other Important Information - The company has committed approximately $100 million for humanitarian efforts to support Ukrainian employees, with $45 million spent through December 31, 2022 [20] - A share repurchase program has been approved, allowing the company to buy back up to $500 million of its common stock over the next 24 months [45] Q&A Session Summary Question: What is the status of clients moving workloads off EPAM? - Management indicated that some clients preemptively decided to explore alternative vendors due to uncertainty about EPAM's ability to navigate disruptions, but they have not lost significant clients [24][26] Question: How does the company plan to revive the business pipeline? - The company is focusing on stabilizing delivery and investing in customer relationships, with expectations of increased demand in the second half of 2023 [31][37] Question: What are the expectations for revenue growth in 2023? - Management expects first half revenue growth to be in the single digits, returning to double-digit growth in the second half, with Q4 potentially seeing high teens growth [15][30] Question: How will margins be affected in 2023? - Margins are expected to be lower in the first half due to reduced demand, with improvements anticipated in the second half as revenue grows [76][88]