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- **Revenue Momentum**: Q3 organic growth 7.1% YoY, with AI-native revenue up double digits sequentially. Full-year 2025 organic growth raised to 4.6% midpoint.
- **AI Leadership**: AI/RUN Transform strategy drives 60-70% of AI projects expanding into large programs. Agentic QA reduces testing costs by 30%.
- **Financial Strength**: Record Q3 free cash flow ($286M) and $1B share buyback program. Q4 non-GAAP EPS guidance $3.10-$3.18.
- **Client Demand**: 5/6 verticals growing YoY, with Financial Services (+32.7%) and Software & Hi-Tech (+19.1%) leading. Clients redirecting work from failed partners.
- **Future Outlook**: 2026 growth expected higher than 2025, driven by AI foundational build-outs and improved account margins (15%+).

**【CEO Summary】**
- **Revenue Growth**: Q3 organic constant currency revenue grew 7.1% YoY, driven by AI-native services and foundational modernization. 5 out of 6 verticals showed year-over-year growth, with Financial Services (+32.7%), Software & Hi-Tech (+19.1%), and Consumer Goods (+9.9%) leading.
- **AI Strategy**: AI-native revenue grew sequentially for the 3rd quarter, with clients expanding proof-of-concepts into large-scale programs. EPAM's AI/RUN Transform strategy focuses on AI innovation, engineering transformation, and industry-specific solutions. Agentic QA, a new offering, reduces manual testing costs by 30% and covers 90% of manual checks.
- **Client Engagement**: 60-70% of AI projects expand into larger programs, with clients redirecting work from partners who failed to deliver. EPAM's engineering expertise and reliability are key competitive advantages.
- **Internal Transformation**: 90% of employees completed AI literacy training, and internal AI-driven efficiencies (e.g., EPAM AI/RUN Transform) are being scaled.

**【CFO Financial Commentary】**
- **Revenue**: Q3 revenue $1.394B (+19.4% YoY), exceeding guidance. Organic constant currency growth 7.1% YoY. Full-year 2025 organic growth now 4.6% midpoint vs. 4% prior.
- **Profitability**: Non-GAAP EPS $3.08 vs. $3.12 YoY, with Q4 guidance of $3.10-$3.18. Gross margin 31% (vs. 34.3% YoY), impacted by variable compensation and recent acquisitions.
- **Cash Flow**: Q3 free cash flow $286M (record high), with $1B+ cash on hand. $82M share buybacks in Q3 under new $1B program.
- **Headcount**: 56,100 consultants (+17.5% YoY), with net additions of 300 delivery professionals. Utilization 76.5% (flat YoY).
- **Q4 Outlook**: Revenue $1.38B-$1.395B (+11.1% YoY), with organic growth 4.4% at midpoint. Non-GAAP income from operations 15.5-16.5%.

**【Q&A Highlights】**
- **AI BPO Growth**: Early momentum in Agentic BPO, with clients testing AI-driven process automation. Differentiated from RPA by requiring advanced engineering and industry-specific playbooks.
- **2026 Growth**: Expect organic growth higher than 2025's 4.6% midpoint, driven by AI foundational build-outs and pipeline strength.
- **Profitability Focus**: Improved account margins (15%+ in Q4) from selective deal pricing and cost optimization. 2025 GAAP tax rate 25.6%, non-GAAP 24.1%.
- **Headcount Strategy**: Continued hiring to meet demand, with focus on rebalancing delivery pyramid to reduce costs and improve efficiency.
- **AI Project Scale**: Average AI projects evolve from POCs to medium/large-scale engagements, with some top clients investing in multi-million dollar AI programs.

EPAM Systems, Inc. (EPAM) Q3 2025 Earnings Call Transcript

- **Revenue Growth**: Q2 revenue up 18% YoY, with 5.3% organic growth, driven by financial services (34.4% YoY) and AI-native services.
- **Financial Strength**: Non-GAAP EPS of $2.77, up 12.6% YoY, with improved profitability in Q3 guidance.
- **AI Momentum**: 80%+ employees upskilled in AI, clients returning to EPAM for scalable AI solutions post-DIY attempts.
- **Balanced Growth**: Utilization at 78.1%, with focus on reducing bench and adding headcount for 2025 organic growth of 3%–5%.

**【CEO Summary Section】**
- Q2 revenue reached $1.353 billion, up 18% year-over-year, with 5.3% organic constant currency growth, marking the third consecutive quarter of positive organic growth.
- All 6 verticals showed year-over-year growth, driven by financial services (34.4% YoY), software & hi-tech (21.2% YoY), and emerging verticals (28.7% YoY).
- Geographically, Americas (15.9% YoY), EMEA (21.7% YoY), and APAC (13% YoY) all contributed to growth.
- Strategic focus on AI-native services, quality execution, and global delivery hubs underpinning growth.

**【CFO Financial Commentary】**
- GAAP net income: $126 million (9.3% of revenue); Non-GAAP income: $203 million (15% of revenue).
- Non-GAAP EPS: $2.77, up 12.6% YoY.
- Gross margin: 30.1% (down 0.7% YoY) due to variable compensation and recent acquisitions.
- Q3 2025 revenue guidance: $1.365–$1.380 billion (17.6% YoY midpoint).
- Full year 2025 organic constant currency growth: 3%–5%, with FX contributing 0.9% to reported growth.

**【Q&A Highlights】**
- **Workforce Management**: Utilization improved to 78.1%, with focus on reducing bench and adding headcount for growth.
- **Client Demand**: Clients prioritizing AI adoption, cloud migration, and data modernization, driving demand for EPAM's AI-native and transformation services.
- **AI Adoption**: 80%+ of employees upskilled in AI, with clients returning to EPAM for scalable, maintainable solutions after initial DIY attempts.
- **Delivery Hubs**: Balanced growth across India, EMEA, and Latin America, with no single region dominating demand.

EPAM Systems (EPAM)-7 Aug 25-2025 Q2 Earnings call transcript

- **CEO Transition & AI Vision**: Arkadiy Dobkin steps back as CEO, with FB leading EPAM's shift to AI-native transformation. Q1 AI-native revenues grew strongly, with 80% of top clients engaged in AI projects.
- **Revenue Outperformance**: Q1 2025 revenue $1.3B (+11.7% YoY), exceeding flat organic growth guidance. Full-year 2025 organic growth raised to 2%-5% (vs. prior 1%-4%).
- **Margin Challenges**: Gross margin pressured by wage increases and acquisitions (26.9% GAAP vs. 28.4% Q1 2024). Focus on utilization and pricing to recover in H2.
- **Client Momentum**: 61% of top 20 clients increased spend, with new logo growth (+14.6% YoY) outpacing top 20 (+6.1%). Clients returning to EPAM for quality execution in financial services and healthcare.
- **Share Buybacks**: $160M spent in Q1, with plans to accelerate under $1.5B authorization. Diluted shares reduced to 56.5M, driving EPS upside.

**【CEO Summary Section】**
- **Leadership Transition**: Arkadiy Dobkin transitions to Executive Chairman, with Balazs Fejes (FB) set to become CEO on September 1, 2025. FB will lead the company's AI-native transformation strategy.
- **Q1 2025 Results**: Revenue grew 11.7% YoY to $1.3B, with organic growth of 1.4% (vs. flat guidance). AI-native revenues saw strong double-digit QoQ growth, driven by client demand for AI transformation programs.
- **Client Dynamics**: 80% of top 100 clients engaged in AI initiatives, with projects maturing into mid-sized programs with measurable ROI. Clients are returning to EPAM for quality execution and reliability, especially in financial services and healthcare.
- **Global Delivery Hubs**: India, Europe, and Western/Central Asia saw net organic headcount growth. Ukraine remains stable, supporting global programs with 9,000+ employees.
- **AI Innovations**: EPAM AI/Run (AWS collaboration) and DIAL platform advance AI-driven SDLC automation. Notable wins include Google Cloud's 2025 Partner of the Year for oil and gas solutions.

**【CFO Financial Commentary】**
- **Revenue**: Q1 2025 GAAP revenue $1.3B (+11.7% YoY), organic growth 1.4% (vs. flat guidance). Full-year 2025 guidance raised to 11.5%-14.5% YoY growth, with organic 2%-5% (previously 1%-4%).
- **Margins**: GAAP gross margin 26.9% (vs. 28.4% Q1 2024), pressured by wage increases and lower-margin acquisitions. Non-GAAP gross margin 28.7% (vs. 30.4%). Focus on improving utilization to 77.5% (Q1 2025 vs. 76.8% Q1 2024).
- **EPS**: Non-GAAP diluted EPS $2.41 (vs. $2.46 Q1 2024). Full-year 2025 guidance: $10.70-$10.95 (vs. prior $10.50-$10.75), driven by share buybacks.
- **Cash Flow**: Q1 free cash flow $15M (vs. $123M Q1 2024), impacted by higher bonuses and fixed-fee project milestones. DSO 75 days (vs. 70 days Q4 2024).
- **Headcount**: Total consultants/engineers 55,600 (+18.2% YoY), with 500 net additions in Q1. Utilization 77.5% (vs. 76.8% Q1 2024).

**【Q&A Key Takeaways】**
- **AI Growth**: AI-native revenues expected to grow strongly Q2-Q4, with double-digit QoQ expansion. Clients prioritizing comprehensive AI factories over isolated use cases.
- **Client Spend**: No material slowdown in Q1, with 61% of top 20 clients increasing spend. New logo activity (+14.6% YoY) outpaces top 20 growth (+6.1%).
- **Gross Margin Recovery**: Focus on pricing, utilization, and cost control to improve margins in H2 2025. FX tailwinds (+0.4% YoY) partially offset headwinds.
- **Free Cash Flow**: DSO expected to remain elevated due to fixed-fee projects. Q2-Full Year FCF likely constrained by seasonality and milestone billing.
- **Share Buybacks**: $160M spent in Q1, with plans to accelerate repurchases under $1.5B authorization. Diluted shares reduced to 56.5M (vs. 57.3M Q1 2024).

EPAM Systems (EPAM)-8 May 25-2025 Q1 Earnings call transcript

- **Revenue Growth**: Q4 2024 reported revenue $1.25B (+7.9% YoY), returning to organic growth. 2025 guided for 10-14% growth, driven by AI-native programs and acquisitions.
- **AI Momentum**: 75% of top clients engaged in GenAI, with $50M+ in Q4 AI-native revenue. Focus on Agentic AI factories and client examples like Canadian Tire and Baker Hughes.
- **Profitability Outlook**: 2025 Non-GAAP EPS $10.45-$10.75, with margin compression (14.5-15.5% IFO) due to talent costs and acquisition dilution. H2 margin improvement expected.
- **Geographic Expansion**: India (10,000+ employees), Latin America (3rd largest region), and Ukraine (stable but profitable) key growth drivers.

**【CEO Opening Remarks】**
- **2024 Year in Review**: Achieved stabilization and sequential momentum despite macro challenges. Acquisitions of NEORIS and First Derivative expanded global footprint (+6,000 employees) and penetrated new markets. 75% of top clients engaged in GenAI initiatives, with $50M+ in AI-native revenue in Q4.
- **Q4 Highlights**: 7.9% reported revenue growth (1% organic), returning to organic growth after Q1 2023. 5/6 verticals grew sequentially, led by financial services (+15.9%) and life sciences (+8.6%). Americas (+11.4%) and APAC (+4.3%) outperformed.
- **2025 Outlook**: 10-14% revenue growth (10% inorganic), balancing optimism with caution on macro risks. Focus on AI-native capabilities, talent retention, and integration of recent acquisitions.

**【CFO Financial Details】**
- **Q4 Financials**: GAAP EPS $1.80, Non-GAAP EPS $2.84 (up 3.3%). Free cash flow $115M. Headcount 61,200 (+16.3% YoY). Gross margin 32.2% (down 0.8% YoY due to compensation increases and lower acquisition margins). Operating expenses 14.4% of revenue (up 0.2% YoY).
- **2025 Guidance**: 10-14% revenue growth, Non-GAAP EPS $10.45-$10.75. Q1 2025 revenue $1.275B-$1.290B (10% YoY). Margins expected to improve from H1 to H2 as pricing environment normalizes.

**【Q&A Key Themes】**
- **Client Spending**: Q4 saw higher-than-expected new project starts (+10% YoY). 2025 will balance cost sensitivity with GenAI transformation spending. One large tech client returned to scale after failing with competitors.
- **Pricing & Margin Pressure**: 2025 will see lower profitability (14.5-15.5% Non-GAAP IFO vs 16.5% in 2024) due to talent retention costs, acquisition dilution, and limited pricing power. Ukraine remains profitable but subject to geopolitical risk.
- **Geographic Expansion**: India now largest delivery hub (10,000+ employees). Latin America expanded to 3rd largest region. Western Central Asia hub grew to 7,300 employees. Ukraine headcount stable YoY but saw sequential additions in Q4.
- **AI Investment**: $194M in stock-based compensation for 2025 reflects talent retention focus. GenAI IP development and AI factories driving $50M+ in revenue. Example clients: Canadian Tire (EliteA platform adoption) and Baker Hughes (AI-native energy platforms).

EPAM Systems, Inc. (EPAM) Q4 2024 Earnings Call Transcript

EPAM Systems (EPAM)-7 Nov 24-2024 Q3 Earnings call transcript

EPAM Systems (EPAM)-8 Aug 24-2024 Q2 Earnings call transcript

EPAM Systems (EPAM)-9 May 24-2024 Q1 Earnings call transcript

EPAM Systems (EPAM)-15 Feb 24-2023 Q4 Earnings call transcript

- **Stabilization in North America**: Q3 production load returned to Q1 levels, with renewed client interest in healthcare, insurance, and energy.
- **India Growth**: Becoming second-largest delivery hub, with investments in cloud, AI, and data capabilities.
- **2023 Revenue Decline**: Full-year revenue expected to fall 3%, with Q4 revenue down 8% YoY.
- **2024 Margin Pressure**: Wage inflation and limited pricing recovery expected to weigh on margins, with normalization possible in 2025.
- **AI Investments**: Strategic partnerships and responsible AI framework positioning EPAM for long-term growth, though near-term impact is limited.

**【CEO Summary Section】**
- **Demand Stabilization**: Production load in Q3 returned to Q1 levels, signaling stabilization in North America and renewed client interest in healthcare, insurance, and energy sectors. However, short-term profitability metrics remain pressured due to cost optimization efforts.
- **Global Expansion**: India is becoming the second-largest delivery hub, with investments in cloud, AI, and data capabilities. Ukraine remains stable, while Belarus faces ongoing challenges due to geopolitical tensions.
- **AI and Strategic Investments**: EPAM is advancing its responsible AI framework and partnerships with AWS, Google Cloud, and Microsoft to drive modernization and cloud-native solutions. These efforts are expected to gain momentum in 2024.

**【CFO Financial Commentary】**
- **Q3 Results**: Revenue of $1.15 billion (-6.1% YoY), with declines in financial services (-3.3%), software/Hi-Tech (-15.1%), and APAC (-20.2%). Life sciences/healthcare showed sequential growth (+8.6%).
- **Margins**: GAAP gross margin 31.1% (-150bps YoY), driven by pricing pressure and lower utilization. Non-GAAP operating margin 17% (-190bps YoY).
- **Cost Optimization**: $100+ million savings program to reduce costs by 2.5%-3%, with $15 million in Q4 expenses. Headcount expected to decline further in Q4.
- **2023 Outlook**: Full-year revenue $4.66-4.67 billion (-3% YoY). Non-GAAP EPS $10.31-10.39. Q4 revenue $1.13-1.14 billion (-8% YoY).
- **2024 Outlook**: Margins pressured by wage inflation and limited pricing recovery, with potential normalization in 2025.

**【Q&A Key Highlights】**
- **Demand Trends**: North America stabilizing, but Europe faces client ramp-downs. Conversations with clients about Gen AI-driven modernization are increasing, though revenue impact is delayed.
- **Cost Structure**: 2024 will balance cost optimization with investments in AI, partnerships, and demand generation. Variable compensation normalization and wage inflation could weigh on margins.
- **Geographic Mix**: India becoming key growth driver, with Ukraine remaining stable. Belarus expected to continue declining.
- **Financial Services**: Weakness in banking (-3.3% YoY) offset by growth in asset management. Insurance and healthcare showing resilience.
- **AI Impact**: EPAM's AI framework and partnerships are creating opportunities, but direct revenue contribution is still limited.


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