EPAM Systems, Inc.

What they do

EPAM delivers end-to-end digital transformation, including software product development, platform engineering, cloud services, cybersecurity, and AI solutions. It uses a global delivery model with multidisciplinary teams and proprietary platforms like EPAM AI/RUN and DIALX Lab. The company serves clients across industries, leveraging 30+ years of engineering expertise and strategic consulting through EPAM Continuum.

Revenue drivers

• Engineering services — Core software development and product engineering services; historically the largest revenue contributor, driving most of the company's revenue.
• Cloud services — Cloud platform migration, modernization, and integration services; supports clients' IT and business goals, contributing to revenue growth.
• AI-enabled transformation — AI-native solutions and platforms like EPAM AI/RUN; increasingly central to strategy and revenue, with growing client demand.

Recent performance

In Q2 2026, EPAM reported revenues of $1.415 billion, up 4.5% year-over-year, with GAAP income from operations at $152.2 million (10.8% of revenues) and non-GAAP income from operations at $232.7 million (16.4% of revenues). GAAP diluted EPS was $1.97, up 26.3%, and non-GAAP diluted EPS was $3.38, up 22.0%. Cash used in operations for the first half of 2026 was $38.8 million, and cash and equivalents totaled $794.3 million at quarter-end. Headcount was approximately 62,850, with about 56,650 delivery professionals.

Strategy

EPAM is focusing on end-to-end AI-native transformations, integrating AI across service lines. The company is expanding strategic partnerships and leveraging its engineering DNA to build a forward-deployed engineering organization. It continues to invest in platforms like EPAM AI/RUN and DIALX Lab, and emphasizes specialization in verticals and hybrid delivery models. Capital management includes significant share repurchases, with $409 million spent in the first half of 2026.

Risks

• Russia-Ukraine war impact — Ongoing war in Ukraine has materially increased expenses and could continue to disrupt operations, despite business continuity plans.
• Geopolitical and banking risks — Cash held in Belarus and Ukraine ($37.5M and $34.1M as of June 30, 2026) faces banking instability, and Belarus restrict dividend distributions until end of 2026.
• AI adoption and competition — Rapid adoption of AI by clients could alter demand for services, and competitive pressure may impact pricing and growth.
• Macroeconomic and FX risks — Global economic conditions, trade tensions, and foreign exchange fluctuations could adversely affect client spending and financial results.

Outlook

For full-year 2026, management expects year-over-year revenue growth of 3.2% to 4.2% (organic constant currency growth of 2.0% to 3.0%). GAAP diluted EPS is guided to $8.22 to $8.38, with non-GAAP EPS of $13.08 to $13.24. For Q3 2026, revenues are expected between $1.410 billion and $1.425 billion, with GAAP operating margin of 11% to 12% of revenues.