Epam Systems 2025 Q1 Earnings Misses Targets as Net Income Declines 36.8%

Epam Systems (EPAM) reported its fiscal 2025 Q1 earnings on May 08th, 2025. The company's performance missed analyst expectations, as evidenced by the decline in net income and EPS figures. Despite challenges, EPAM raised its guidance for the year, anticipating revenue growth between 11.5% and 14.5%. The company also adjusted EPS forecasts upwards, reflecting confidence in maintaining steady demand for its services. These updates demonstrate EPAM's commitment to navigating a dynamic market environment, despite the recent earnings miss.

Revenue
Epam Systems witnessed a notable increase in total revenue, reaching $1.30 billion in Q1 2025 from $1.17 billion in Q1 2024, marking an 11.7% rise. The Financial Services sector contributed significantly, generating $313.96 million. The Consumer Goods, Retail & Travel segment followed closely with $255.51 million. Software & Hi-Tech added $190.07 million, while Business Information & Media reported $166.55 million. Life Sciences & Healthcare achieved $154.95 million, and Emerging Verticals brought in $220.64 million. These figures underscore the company's diversified revenue sources across various segments.

Earnings/Net Income
Epam Systems experienced a decline in its EPS, down 35.8% to $1.29 in Q1 2025 from $2.01 in Q1 2024. Correspondingly, net income fell to $73.48 million in Q1 2025, a 36.8% decrease from $116.24 million in Q1 2024. Despite the decline, the company has maintained profitability for the past 16 years, indicating stable business performance. The drop in EPS suggests challenges in maintaining previous earnings levels.

Price Action
The stock price of Epam Systems saw a slight increase of 0.40% during the latest trading day, a significant jump of 13.41% over the most recent trading week, and a substantial month-to-date surge of 23.98%.

Post-Earnings Price Action Review
The strategy of purchasing EPAM shares following a quarter of revenue increase and holding them for 30 days has historically resulted in poor performance over the last five years. The backtest revealed a significant loss of -27.88%, accompanied by a Sharpe Ratio of -0.13 and a maximum drawdown of -77.14%. The strategy's compound annual growth rate (CAGR) was -6.35%, highlighting a decline in value, especially when compared to the benchmark return of 92.56%, which underscores the strategy's underperformance relative to the market. These figures reveal the potential risks associated with short-term investment strategies in EPAM shares, despite the company's revenue growth.

CEO Commentary
“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.”

Guidance
EPAM raises its expected year-over-year revenue growth rate for 2025 to a range of 11.5% to 14.5%, with organic constant currency growth projected at 2.0% to 5.0%. For the full year, the company anticipates GAAP diluted EPS between $6.78 and $7.03 and non-GAAP diluted EPS between $10.70 and $10.95. For the second quarter, expected revenues are between $1.325 billion and $1.340 billion, with GAAP diluted EPS projected to be in the range of $1.67 to $1.75.

Additional News
EPAM Systems announced key leadership changes, effective September 1, 2025. Arkadiy Dobkin, the Company's Principal Founder, Chairman, and President, will transition to the role of Executive Chairman. Balazs Fejes, EPAM's President of Global Business & Chief Revenue Officer, will become President. This transition is part of a planned succession, ensuring continuity in EPAM's mission. Dobkin will focus on advancing strategic initiatives and supporting EPAM's long-term strategic direction, while Fejes will lead EPAM's next growth phase. Additionally, EPAM's share repurchase program saw the company repurchase 796,000 shares for $160 million in Q1 2025, with $277 million remaining authorized.