EPAM Systems’ Q1 2025: Unpacking Contradictions in Macroeconomic Outlook, Margins, and AI Trends

Macroeconomic Outlook and Demand, Gross Margin and Pricing Environment, Client Return Due to Quality Challenges, and AI Deal Size and Trends are the key contradictions discussed in EPAM Systems' latest 2025Q1 earnings call.



Leadership Transition:
- EPAM Systems announced that Arkadiy Dobkin will transition from CEO to Executive Chairman on September 1, 2025, with Balazs Fejes becoming the new CEO.
- This transition is part of a planned succession, with Arkadiy remaining involved in strategic guidance and key relationships to ensure a smooth transition.

Strong Q1 Results and AI Demand:
- EPAM reported revenue of $1.3 billion in Q1 2025, an 11.7% increase year-over-year, with a significant contribution from AI capabilities.
- The growth was driven by meaningful progress in AI adoption, including strong client interest in AI-related capabilities, and a focus on quality execution and delivery.

Organic Growth and Client Engagement:
- The company achieved year-over-year organic growth of 1.4% in constant currency, surpassing expectations.
- This was supported by high levels of client engagement across verticals, with improved demand for AI initiatives and continued focus on quality execution.

Geographic and Delivery Hub Expansion:
- EPAM's delivery hubs in India, Europe, and Western Central Asia saw sequential increases in net organic headcount.
- This expansion is part of a strategic initiative to diversify and adapt to client needs, leveraging AI and advanced productivity platforms.

Guidance and Currency Impact:
- EPAM raised the lower end of its full-year organic revenue guidance, anticipating 11.5% to 14.5% growth, with an inorganic contribution of approximately 9%.
- This change reflects improved first-half performance and the positive impact of foreign currency exchange, mainly from euro appreciation.