EPAM(EPAM)2025-02-20 16:48Financial Data and Key Metrics Changes - In Q4 2024, EPAM generated revenues of 137 million, or 10.9% of revenue, compared to 2.84, reflecting an increase of 3.3% compared to the same quarter in 2023 [47] Business Line Data and Key Metrics Changes - Financial services delivered strong growth of 15.9% year-over-year, with 4.3% organic and 11.6% inorganic growth [39] - Life sciences and healthcare increased 8.6% year-over-year, reflecting 5.7% organic and 2.9% inorganic growth [39] - Emerging verticals delivered very strong growth of 24.8%, with 3% organic and 21.8% inorganic growth [41] - The travel and consumer vertical declined by 3% year-over-year, reflecting a negative 5.7% organic and a positive 2.7% inorganic growth [40] Market Data and Key Metrics Changes - The Americas, representing 60% of Q4 revenues, increased 11.4% year-over-year, reflecting 2.7% organic and 8.7% inorganic growth [42] - EMEA, representing 38% of Q4 revenues, increased 3.1% year-over-year, reflecting negative 1.4% organic and positive 4.5% inorganic growth [42] - APAC increased 4.3% year-over-year and represents 2% of revenues [43] Company Strategy and Development Direction - The company is focused on becoming the most globally geo-balanced talent company for AI native digital business services, with recent acquisitions aimed at expanding global client relationships and penetrating new markets [9] - EPAM is investing in GenAI and AI-driven client engagement, with 75% of top country clients engaged in GenAI initiatives [23] - The company anticipates that 2025 will be a transformative year, driven by increased client demand for advanced AI native and agentic software and data engineering services [32] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about 2025 being a better year than 2024, despite caution regarding growth market sensitivity and macroeconomic risks [11][16] - There is a belief that the demand for AI-related services will increase, with clients transitioning to more engineering-led programs [15] - Management acknowledged ongoing cost sensitivity among clients, which remains a critical decision factor [16] Other Important Information - The company ended Q4 with approximately $1.3 billion in cash and cash equivalents, lower than the previous year due to recent acquisitions [48] - Total headcount reached 61,200 employees, with a growth of 16.3% compared to Q4 of 2023 [49] - The company expects flat year-over-year organic revenue growth in Q1 2025, followed by continued improvement throughout the year [56] Q&A Session Summary Question: Can you elaborate on the expectations embedded in the revenue guidance? - Management indicated a cautious approach to revenue expectations for NEORIS and FD, with a zero to 4% revenue growth for organic and a 1% to 5% growth when considering foreign exchange headwinds [70][71] Question: What are the implications of investments in Agentic AI and IP? - Management highlighted the importance of investing in GenAI and retaining top talent, which has led to increased compensation costs and pressure on margins [74][76] Question: How did client spending behavior progress through Q4? - Management noted a good number of new clients entering the pipeline, with some quickly reaching significant revenue levels, while also seeing the return of previous clients [90][91] Question: What is the outlook for revenue growth and profitability? - Management expects improved profitability in the second half of 2025, aiming to return to typical profit levels of 16% or better [97]