1. EPAM reported strong Q1 results, achieving 11.7% revenue growth. 2. Net income decreased to $73.482 million from $116.243 million. 3. Company emphasizes AI innovation for enhancing client competitive edge. 4. EPAM expects 16.2% revenue growth for Q2 2025. 5. Challenges include foreign exchange losses and geopolitical instability.
Despite a decline in net income, EPAM's revenue growth and strong outlook indicate resilience, similar to past performance during growth phases.
Strong revenue guidance and strategic focus on AI amid challenges positions EPAM well in the market.
Immediate market reaction anticipated based on quarterly results and guidance, historically leading to short-term price increases post-earnings.
NEWTOWN, Pa., May 8, 2025 /PRNewswire/ -- EPAM Systems, Inc. (NYSE: EPAM), a leading digital transformation services and product engineering company, today announced results for the first quarter ended March 31, 2025.
"We reported strong first quarter results amidst a dynamic macroeconomic landscape, which highlights our unique differentiation in supporting our clients through their transformation journeys," said Arkadiy Dobkin, CEO and President at EPAM. "By staying anchored in engineering excellence, disciplined execution and AI-native innovation, we've continued to build sequential momentum and deliver year-over-year organic growth."
EPAM expects the following for the full year:
EPAM expects the following for the second quarter:
EPAM will host a conference call to discuss the results on Thursday, May 8, 2025, at 8:00 a.m. EDT. The conference call will be available live on the EPAM website at https://investors.epam.com. Please visit the website at least 15 minutes prior to the call to register for the event. For those who cannot access the live webcast, a replay will be available in the Investor Relations section of the website.
Since 1993, EPAM Systems, Inc. (NYSE: EPAM) has used its software engineering expertise to become a leading global provider of digital engineering, cloud and AI-enabled transformation services, and a leading business and experience consulting partner for global enterprises and ambitious startups. We address our clients' transformation challenges by focusing EPAM Continuum's integrated strategy, experience and technology consulting with our 30+ years of engineering execution to speed our clients' time to market and drive greater value from their innovations and digital investments.
We leverage AI and GenAI to deliver transformative solutions that accelerate our clients' digital innovation and enhance their competitive edge. Through platforms like EPAM AI/RUN™ and initiatives like DIALX Lab, we integrate advanced AI technologies into tailored business strategies, driving significant industry impact and fostering continuous innovation.
We deliver globally but engage locally with our expert teams of consultants, architects, designers and engineers, making the future real for our clients, our partners, and our people around the world. We believe the right solutions are the ones that improve people's lives and fuel competitive advantage for our clients across diverse industries. Our thinking comes to life in the experiences, products and platforms we design and bring to market.
Added to the S&P 500 and the Forbes Global 2000 in 2021 and recognized by Glassdoor and Newsweek as Most Loved Workplace, our multidisciplinary teams serve customers across six continents. We are proud to be among the top 15 companies in Information Technology Services in the Fortune 1000 and to be recognized as a leader in the IDC MarketScapes for Worldwide Experience Build Services, Worldwide Experience Design Services and Worldwide Software Engineering Services.
Learn more at www.epam.com and follow us on LinkedIn.
EPAM supplements results reported in accordance with United States generally accepted accounting principles, referred to as GAAP, with non-GAAP financial measures. Management believes these measures help illustrate underlying trends in EPAM's business and uses the measures to establish budgets and operational goals, communicate internally and externally, for managing EPAM's business and evaluating its performance.
This press release includes estimates and statements which may constitute forward-looking statements made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995, the accuracy of which are necessarily subject to risks, uncertainties, and assumptions as to future events that may not prove to be accurate.
| Three Months Ended | March 31, 2025 | March 31, 2024 |
|---|---|---|
| Revenues | $ 1,301,692 | $ 1,165,465 |
| Operating expenses: | ||
| Cost of revenues (exclusive of depreciation and amortization) | 952,008 | 834,334 |
| Selling, general and administrative expenses | 218,917 | 198,453 |
| Depreciation and amortization expense | 31,437 | 22,146 |
| Income from operations | 99,330 | 110,532 |
| Interest and other income, net | 5,814 | 15,042 |
| Foreign exchange loss | (10,727) | (1,919) |
| Income before provision for income taxes | 94,417 | 123,655 |
| Provision for income taxes | 20,935 | 7,412 |
| Net income | $ 73,482 | $ 116,243 |
| Net income per share: | ||
| Basic | $ 1.29 | $ 2.01 |
| Diluted | $ 1.28 | $ 1.97 |
| Shares used in calculation of net income per share: | ||
| Basic | 56,780 | 57,837 |
| Diluted | 57,262 | 58,931 |
| As of | March 31, 2025 | December 31, 2024 |
|---|---|---|
| Assets | ||
| Current assets | ||
| Cash and cash equivalents | $ 1,173,639 | $ 1,286,267 |
| Trade receivables and contract assets, net of allowance of $4,928 and $5,612, respectively | 1,090,080 | 1,002,175 |
| Prepaid and other current assets | 151,972 | 137,806 |
| Total current assets | 2,415,691 | 2,426,248 |
| Property and equipment, net | 203,244 | 207,667 |
| Operating lease right-of-use assets, net | 124,430 | 128,244 |
| Intangible assets, net | 426,693 | 436,418 |
| Goodwill | 1,187,027 | 1,181,575 |
| Deferred tax assets | 255,084 | 269,799 |
| Other noncurrent assets | 111,443 | 100,522 |
| Total assets | $ 4,723,612 | $ 4,750,473 |
| Liabilities | ||
| Current liabilities | ||
| Accounts payable | $ 44,455 | $ 44,702 |
| Accrued compensation and benefits expenses | 495,562 | 484,952 |
| Accrued expenses and other current liabilities | 174,370 | 201,356 |
| Income taxes payable, current | 35,269 | 50,395 |
| Operating lease liabilities, current | 39,468 | 39,634 |
| Total current liabilities | 789,124 | 821,039 |
| Long-term debt | 25,059 | 25,194 |
| Deferred tax liabilities, noncurrent | 94,210 | 92,362 |
| Operating lease liabilities, noncurrent | 93,615 | 98,426 |
| Other noncurrent liabilities | 78,388 | 82,301 |
| Total liabilities | 1,080,396 | 1,119,322 |
| Commitments and contingencies | ||
| Equity | ||
| Stockholders' equity | ||
| Common stock, $0.001 par value; 160,000 shares authorized; 56,626 shares issued and outstanding at March 31, 2025, and 56,869 shares issued and outstanding at December 31, 2024 | 57 | 57 |
| Additional paid-in capital | 1,235,475 | 1,190,222 |
| Retained earnings | 2,468,955 | 2,555,796 |
| Accumulated other comprehensive loss | (61,853) | (116,864) |
| Total EPAM Systems, Inc. stockholders' equity | 3,642,634 | 3,629,211 |
| Noncontrolling interest in consolidated subsidiaries | 582 | 1,940 |
| Total equity | 3,643,216 | 3,631,151 |
| Total liabilities and equity | $ 4,723,612 | $ 4,750,473 |
(Unaudited)
(In thousands, except percentages and per share amounts)
| Three Months Ended | March 31, 2025 | Revenue growth as reported | Inorganic revenue growth | Foreign exchange rates impact | Revenue growth on an organic constant currency basis |
|---|---|---|---|---|---|
| March 31, 2025 | 11.7 % | (11.2) % | 0.9 % | 1.4 % |
| Three Months Ended | March 31, 2025 GAAP | Adjustments | Non-GAAP |
|---|---|---|---|
| Cost of revenues (exclusive of depreciation and amortization)(1) | $ 952,008 | $ (24,541) | $ 927,467 |
| Selling, general and administrative expenses(2) | $ 218,917 | $ (34,223) | $ 184,694 |
| Income from operations(3) | $ 99,330 | $ 76,420 | $ 175,750 |
| Operating margin | 7.6 % | 5.9 % | 13.5 % |
| Net income(4) | $ 73,482 | $ 64,533 | $ 138,015 |
| Diluted earnings per share | $ 1.28 | $ 2.41 |
Items (1) through (4) above are detailed in the table below with the specific cross-reference noted in the appropriate item.
| Stock-based compensation expenses | Humanitarian support in Ukraine(a) | Total adjustments to GAAP cost of revenues(1) |
|---|---|---|
| $ 23,923 | $ 618 | $ 24,541 |
(a) Humanitarian support in Ukraine includes expenses related to EPAM's $100 million humanitarian commitment in response to Russia's invasion of Ukraine to support EPAM professionals and their families in and displaced from Ukraine. These expenses are incremental to those expenses incurred prior to the crisis, clearly separable from normal operations, and not expected to recur once the crisis has subsided and operations return to normal.
(b) Cost Optimization charges include severance, facilities and contract termination charges incurred in connection with the programs initiated in the third quarter of 2023 and second quarter of 2024. Consistent with the Company's historical non-GAAP policy, costs incurred in connection with formal restructuring initiatives have been excluded from non-GAAP results as these are one-time and unusual in nature.
(c) Geographic repositioning includes expenses associated with the relocation to other countries of employees based outside of Ukraine impacted by the war and geopolitical instability in the region, and includes the cost of accommodations, travel and food. These expenses are incremental to those expenses incurred prior to the crisis, clearly separable from normal operations, and not expected to recur once the crisis has subsided and operations return to normal.
(d) One-time benefit related to the implementation of tax planning to disregard certain foreign subsidiaries as separate entities for U.S. income tax purposes. Consistent with the Company's historical non-GAAP policy, the benefit related to the implementation of tax planning has been excluded from non-GAAP results as it is one-time and unusual in nature.