EPAM Systems, Inc.

EPAM Systems, Inc. is a 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. The company addresses client transformation challenges by fusing EPAM Continuum's integrated strategy, experience and technology consulting with over 30 years of engineering execution. EPAM leverages AI through platforms like EPAM AI/RUN and initiatives like DIALX Lab to integrate advanced AI technologies into tailored business strategies. The company operates in a highly competitive market, facing competition from technology services providers such as Accenture, Atos, Capgemini, Cognizant Technology Solutions, Deloitte Digital, DXC Technology, Endava, Genpact, GlobalLogic, Globant, Grid Dynamics, HCL Technologies, Infosys, Tata Consultancy Services, and Wipro, among others. EPAM also competes with numerous smaller local companies in various geographic markets. The principal competitive factors include technical expertise and industry knowledge, end-to-end solution offerings, a reputation for high-quality and on-time delivery, effective employee recruiting, training and retention, responsiveness to clients' business needs, ability to scale, financial stability, and price.

EPAM's focus on delivering quality service is reflected in established relationships with many clients, with 64.4% ¹ and 35.7% ² of revenues in 2025 coming from clients that had used its services for at least five and ten years, respectively. Revenues from the top five clients represented 13.7% ³ of total revenues in 2025, down from 15.8% ⁴ in 2024, and revenues from the top ten clients represented 21.6% ⁵ of total revenues in 2025, down from 23.4% ⁶ in 2024. The company believes its focus on complex and innovative software product development solutions, its technical employee base, and its development and continuous improvement in process methodologies, applications and tools position it well to compete effectively. EPAM's ability to deliver end-to-end AI-native solutions is a key differentiator as companies move from AI experimentation to production. The company was recognized by many top global independent research agencies such as Forrester, Gartner, IDC and Everest and by publications such as Newsweek, TIME Magazine, Forbes and Fortune, and is among the top 15 companies in Information Technology Services in the Fortune 1000.

EPAM generates revenue primarily through professional services, which accounted for 99.5% ⁷ of total revenues in 2025, with licensing and other revenues making up the remaining 0.5% ⁸. The company derives revenues from a variety of service arrangements, including time-and-materials contracts, which generate the majority of revenues, and fixed-price contracts. Fees for contracts may be in the form of time-and-materials or fixed-price arrangements. The company reports gross reimbursable out-of-pocket expenses incurred as both revenues and cost of revenues. EPAM serves clients across five main industry verticals: Financial Services, Consumer Goods, Retail & Travel, Software & Hi-Tech, Business Information & Media, and Life Sciences & Healthcare, as well as a number of emerging verticals. The company's global delivery model and centralized support functions, combined with the benefits of scale from the shared use of fixed-cost resources, create a delivery base that allows seamless delivery of services and solutions from global delivery centers to clients across the world.

EPAM's service offerings continuously evolve to provide more customized and integrated solutions, combining software engineering with customer experience design, business consulting, strategy, and technology innovation services in areas such as cloud platforms, cybersecurity and artificial intelligence. Engineering services encompass software product and platform development including product research, customer experience design and prototyping, program management, component design and integration, full lifecycle software testing, product deployment and end-user customization, performance tuning, product support and maintenance, managed services, as well as cross-platform migration and modernizing legacy platforms. Cloud services assist clients in creating roadmaps to set and refine IT and business goals while identifying new opportunities leveraging cloud technologies, including developing and executing optimal cloud technology migration and modernization strategies. Data, Analytics and Artificial Intelligence services focus on providing foundational data engineering, decisioning and platform modernization services critical for large-scale AI-readiness and AI adoption, with hybrid, networked teams of consultants, designers, architects, engineers and trainers developing proprietary data accelerators, repeatable AI frameworks and methodologies. Customer Experience services bring together strategy, design, and engineering to help organizations transform into adaptive, product-centric businesses, designing seamless digital and physical interactions. Marketing services through the agency brand Empathy Lab unite creativity, data, design, engineering, and applied AI to build orchestrated, customer-centered growth systems. Cybersecurity services guide clients through achieving operational resilience against evolving threats by applying a security-by-design approach, integrating security controls into systems and processes, and leveraging an agile security platform while using AI-driven tools for rapid threat responses and attack simulations.

During 2025, EPAM completed one acquisition with a total purchase price of $8.8 million ⁹ including contingent consideration with acquisition-date fair value of $0.9 million ¹⁰, which expanded the company's AI-enabled business operations capabilities and added $4.0 million ¹¹ of intangible assets consisting of customer relationships. On January 2, 2025, the company completed the acquisition of the remaining 0.3% ¹² of Neoris N.V.'s outstanding shares for a purchase price of $1.4 million ¹³ in cash. On October 16, 2025, the Board of Directors authorized a new share repurchase program (the 2025 Repurchase Program) for up to $1.0 billion ¹⁴ of the company's outstanding common stock, with a term of 24 months. As of September 30, 2025, the company exhausted the $500 million ¹⁵ available for purchases under the previous 2024 Repurchase Program. During the three months ended December 31, 2025, the company repurchased 1,162 ¹⁶ shares under the 2025 Repurchase Program. During 2025, the company purchased an aggregate of 155 ¹⁷ thousand shares related to equity withholding for tax obligations. On October 3, 2025, the company replaced its 2021 Credit Agreement with an amended and restated credit agreement (the 2025 Credit Agreement) providing for a revolving credit facility with a borrowing capacity of $700.0 million ¹⁸, with the potential to increase up to $1,200.0 million ¹⁹. During the quarter ended June 30, 2025, the company initiated the 2025 Cost Optimization Program to improve utilization and profitability, which has included workforce reductions and is expected to incur additional charges of approximately $25.0 million ²⁰.

Total revenues for the year ended December 31, 2025 were $5,457,056 ²¹ thousand, an increase of 15.4% ²² from $4,727,940 ²³ thousand in 2024. Net income was $377,678 ²⁴ thousand in 2025, compared to $454,533 ²⁵ thousand in 2024. Diluted earnings per share were $6.72 ²⁶ in 2025 versus $7.84 ²⁷ in 2024. Income from operations was $520,003 ²⁸ thousand in 2025, compared to $544,584 ²⁹ thousand in 2024. The effective tax rate was 25.3% ³⁰ in 2025 compared to 22.2% ³¹ in 2024. Net cash provided by operating activities was $654,934 ³² thousand in 2025, compared to $559,168 ³³ thousand in 2024. As of December 31, 2025, the company had cash and cash equivalents totaling $1,296,077 ³⁴ thousand and short-term investments totaling $6.1 ³⁵ million.

The company expects to complete all restructuring actions commenced under the 2025 Cost Optimization Program by the end of the second quarter of 2026 and to incur additional charges of approximately $25.0 million ³⁶. The actual amount and timing of severance and other costs are dependent in part upon local country processes and regulations and may differ from current expectations and estimates.

EPAM's growth strategy is increasingly focused on providing end-to-end AI-native transformations, which require deep expertise across all of its service lines. The company leverages AI to deliver transformative solutions that accelerate clients' digital innovation and enhance their competitive edge through platforms like EPAM AI/RUN and initiatives like DIALX Lab. The company's strategy also involves engaging clients on the critical prerequisite work required to enable AI applications, including modernizing cloud infrastructure. Strategic acquisitions remain a key part of the company's growth strategy, expanding geographic reach and service capabilities. The company continually evaluates potential acquisition targets that can expand vertical-specific domain expertise, geographic footprint, service portfolio, client base and management expertise. EPAM is focused on growing India as a key delivery location, adding approximately 2,150 ³⁷ delivery professionals since December 31, 2024, and continues to execute business continuity plans and sustain hiring efforts across multiple locations in India, Central and Western Asia, Latin America, and Central and Eastern Europe.

The company's growth is also driven by expanding into new industry verticals and geographies. EPAM serves clients in five main industry verticals as well as a number of emerging verticals where it is increasing its presence, including energy, telecommunications, educational, real estate, industrial materials, automotive and various manufacturing industries, as well as government entities. The company's strategic acquisitions have expanded its geographic reach and service capabilities and will continue to enable it to offer a broader range of services to clients from a multitude of locations. EPAM is also expanding its service capabilities beyond traditional services into strategy consulting, design and physical product development. The company's strategy involves increased specialization in focused verticals and a continued emphasis on strategic partnerships.

The company's cost of revenues (exclusive of depreciation and amortization) as a percentage of revenues increased to 71.2% ³⁸ in 2025 from 69.3% ³⁹ in 2024, primarily due to compensation increases which the company was not able to fully offset through pricing increases, the acquisitions completed in 2024, higher variable compensation expense, a $13.6 million ⁴⁰ decrease in government incentives related to conducting R&D activities in Poland and the negative impact from the appreciation of foreign currencies in certain delivery locations, partially offset by increased benefits from the hedging program. Selling, general and administrative expenses as a percentage of revenues decreased 0.3% ⁴¹ to 17.0% ⁴² in 2025. The company initiated the 2025 Cost Optimization Program to improve utilization and profitability, which has included workforce reductions. The company expects to complete all restructuring actions under this program by the end of the second quarter of 2026.

As of December 31, 2025, EPAM had approximately 62,850 ⁴³ employees, of which approximately 56,600 ⁴⁴ were delivery professionals. India remained the largest delivery location with approximately 12,200 ⁴⁵ delivery professionals. Ukraine continues to be a significant delivery location with approximately 8,750 ⁴⁶ delivery professionals. Other large delivery locations include Poland, Belarus and Mexico with approximately 5,050 ⁴⁷, 3,400 ⁴⁸ and 2,950 ⁴⁹ delivery professionals, respectively. The company's utilization rates of delivery professionals were approximately 76.8% ⁵⁰ in 2025. Employees consumed 2.6 million ⁵¹ learning hours in 2025. The voluntary attrition rate was 8.5% ⁵² in 2025. The company continues to invest in systems, applications, tools and infrastructure to manage all aspects of its global delivery process.

The company's capital allocation priorities include investing in the business, strategic acquisitions, and returning capital to shareholders through share repurchases. On October 16, 2025, the Board authorized a new share repurchase program for up to $1.0 billion ⁵³ of outstanding common stock with a term of 24 months. As of December 31, 2025, the company had $776,473 ⁵⁴ thousand remaining under the 2025 Repurchase Program. The company has not declared or paid any cash dividends on its common stock and currently does not anticipate paying any cash dividends in the foreseeable future, instead intending to retain all available funds and any future earnings for use in the operation and expansion of the business and to repurchase common stock. Capital expenditures were $42.2 ⁵⁵ million in 2025. The company believes that its existing cash, cash equivalents and short-term investments, combined with expected cash flow from operations, will be sufficient to meet projected operating and capital expenditure requirements for at least the next twelve months.

The company faces significant headwinds from the ongoing war in Ukraine, which has had and could continue to have a material adverse effect on its operations, personnel, business, clients, service delivery, and financial results. As of December 31, 2025, approximately 14,100 ⁵⁶ of the company's global delivery, administrative and support personnel were based in Ukraine and Belarus. The company has maintained its $100 million ⁵⁷ humanitarian aid commitment to its people in Ukraine, with $10.1 million ⁵⁸ remaining to be expensed as of December 31, 2025. The company also faces headwinds from wage inflation in emerging markets, which increases the cost of providing services and reduces profitability when not able to pass those costs on to clients. Increased operations and hiring in existing or new geographies to counter geopolitical instability has and is likely to continue to increase expenses, especially compensation expenses for technology professionals in those geographies, which could reduce profitability.

The company faces constraints from the highly competitive market for its services, which is expected to persist and intensify, especially as competitors develop AI capabilities and specialties. Clients tend to engage multiple IT services providers instead of using an exclusive provider, which limits revenues and market share and places downward pressure on pricing. The company's operations in emerging markets subject it to greater economic, financial, and banking risks than in more developed markets, including foreign exchange risks, currency exchange volatility, and banking system instability. As of December 31, 2025, the company had $49.2 million ⁵⁹ of cash and cash equivalents in banks in Ukraine and $37.8 million ⁶⁰ of cash and cash equivalents in banks in Belarus. Belarus has instituted restrictions on distributing dividends from Belarus to shareholders in certain countries, including the U.S., scheduled to remain in place until the end of 2026. The company also faces constraints from the potential loss of certain tax benefits provided by governments of Belarus, Poland, and other countries, which if changed or terminated could significantly increase operating expenses and the effective income tax rate.

The ongoing war in Ukraine poses a material risk, as approximately 14,100 ⁶¹ of the company's global delivery, administrative and support personnel were based in Ukraine and Belarus as of December 31, 2025, and the company had $49.2 million ⁶² of cash in Ukraine and $37.8 million ⁶³ in Belarus. The company's $100 million ⁶⁴ humanitarian commitment to Ukraine had $10.1 million ⁶⁵ remaining to be expensed. The company faces significant risk from its inability to keep pace with the adoption and use of AI technology, as clients may expect AI to perform services at lower costs, potentially reducing demand for human delivery personnel and compressing pricing. Increased adoption of AI-based software tools may reduce demand for the company's services if clients use AI-powered tools to create or modify software themselves. The company's operations in emerging markets expose it to greater economic and banking risks, including currency exchange volatility and potential loss of deposits. The loss of certain tax benefits provided by the governments of Belarus, Poland, and other countries could significantly increase operating expenses and the effective income tax rate.

Management's message emphasizes EPAM's position as a leading global provider of digital engineering, cloud and AI-enabled transformation services, leveraging its software engineering expertise to address clients' transformation challenges. The key themes include fusing EPAM Continuum's integrated strategy, experience and technology consulting with over 30 years of engineering execution to speed clients' time to market and drive greater value from digital investments. Management highlights the use of AI to deliver transformative solutions that accelerate clients' digital innovation and enhance their competitive edge through platforms like EPAM AI/RUN and initiatives like DIALX Lab. The strategic priorities emphasized for the period ahead include focusing on providing end-to-end AI-native transformations, which require deep expertise across all service lines, and continuing to execute on strategic acquisitions to expand geographic reach and service capabilities. Management also emphasizes the importance of the company's global delivery model and centralized support functions, combined with the benefits of scale from the shared use of fixed-cost resources, as a key competitive advantage. The company's focus on building long-term partnerships with clients is underscored by the fact that 64.4% ⁶⁶ and 35.7% ⁶⁷ of revenues in 2025 came from clients that had used its services for at least five and ten years, respectively. Management also notes the company's commitment to diversifying its client base and expects revenue concentration from top clients to decrease over the long-term.