EPAM Systems Inc: Q3 2024 Earnings Call Analysis

EPAM Systems Inc. (EPAM) recently reported its Q3 2024 earnings, showcasing strong performance and strategic growth. The company's acquisition of NEORIS and government incentives in Poland significantly impacted its financial performance, driving growth and expansion. This article delves into EPAM's Q3 2024 earnings call, analyzing the key takeaways and their implications for investors.



EPAM's acquisition of NEORIS in Q3 2024 significantly impacted its financial performance, with the acquisition contributing to a 1.3% year-over-year increase in revenues to $1.168 billion. The acquisition expanded EPAM's global delivery platform, diversifying its talent pool and entering new markets in Latin America and parts of Europe. This strategic move accelerated net new growth opportunities with joint clients and brought significant new logos to EPAM's portfolio. The acquisition also created a powerful and unified NEORIS delivery platform in the region, strengthening EPAM's services with local and near-shore value propositions.

Government incentives in Poland played a crucial role in EPAM's Q3 2024 results. The company benefited from a $52.0 million reduction in cost of revenues, primarily driven by $29.1 million related to activities performed during the first nine months of 2024. These incentives, granted under Polish law, allowed EPAM to reduce its tax base through bonus deductions for certain costs incurred while performing innovative activities. Although the incentives drove a higher effective tax rate, they positively impacted both GAAP and non-GAAP income from operations. EPAM expects these benefits to be recurring, with additional recognition in the fourth quarter and beyond.



EPAM's global delivery platform expansion significantly contributed to its Q3 2024 growth. The acquisition of NEORIS provided an entry point into attractive new markets in Latin America and parts of Europe, accelerating net new growth opportunities with joint clients and bringing significant new logos to EPAM's portfolio. The acquisition also created a powerful and unified NEORIS delivery platform in the region, strengthening EPAM's services with local and near-shore value propositions. This strategic move aligns with EPAM's commitment to diversifying its global delivery platform and best serving its enterprise clients.

In conclusion, EPAM's Q3 2024 earnings call demonstrated the company's strong performance and strategic growth. The acquisition of NEORIS and government incentives in Poland significantly impacted its financial performance, driving growth and expansion. With a focus on diversifying its global delivery platform and entering new markets, EPAM is well-positioned to continue its growth trajectory and create value for shareholders. Investors should closely monitor EPAM's progress as it executes on its strategic initiatives and capitalizes on emerging opportunities in the digital transformation services and product engineering market.