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AFTER HRS · 18:15 ET
Market ClerkRecap
Wed Oct 21 · after hours2 signals today106 insider buys this week · $305.5MCIRO short report next: Oct 31The week ahead

EPAM

EPAM Systems, Inc.
NYSE · TECHNOLOGY · SERVICES-COMPUTER PROGRAMMING SERVICES
134.00
+3.32 +2.54%
USD · close Oct 21
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MKT CAP $6.9BP/E 18.2DIV YIELD —FCF YIELD 6.98%REV TTM $5.6B +10.8%NET INCOME $401.7M +0.1%NET CASH $754.4M52W 76.04 – 221.40SEC XBRL · TTM TO Invalid Date

How EPAM rewrote its risk factors

10-K ITEM 1A · FY2024 → FY2025
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New in FY2025

  • We leverage AI to deliver transformative solutions that accelerate our clients' digital innovation and enhance their competitive edge.
  • Through platforms like EPAM AI/RUN™ and initiatives like DIALX Lab™, we integrate advanced AI technologies into tailored business strategies, driving significant industry impact and fostering continuous innovation.
  • Business Update Regarding the War in Ukraine Russia’s attack on Ukraine has had, and could continue to have a material adverse effect on our operations.
  • As of December 31, 2025, Ukraine continues to be a significant delivery location with a large number of delivery professionals operating from safe locations at levels of productivity consistent with those achieved prior to the attack.
  • We have maintained our $100 million humanitarian aid commitment to our people in Ukraine, and as of December 31, 2025, we have $10.1 million remaining to be expensed under this humanitarian commitment.
  • Our Board of Directors and its committees continue their oversight of our strategic, geopolitical, and cybersecurity risks and the risks related to our geographic locations and expansion.
  • We continue to monitor and respond to the difficult conditions in Ukraine while maintaining a focus on our clients and long-term growth.
  • We execute on our business continuity plans and our global delivery centers have sufficient resources, including infrastructure and capital, to support ongoing operations while continuing to focus on the safety and security of our employees and their families in Ukraine as well as in the broader region.
  • The implementation and execution of our business continuity plans, our humanitarian commitment to our people in Ukraine, and other costs related to the war resulted in materially increased expenses.
  • For additional information on the various risks posed by the attack against Ukraine and the impact in the region as well as other risks to our business, please read “Part I.
  • Such control is generally transferred over time based on satisfaction of obligations stipulated by the contract.
  • We derive revenues from a variety of service arrangements, which have been evolving to provide more customized and integrated solutions to clients by combining software engineering with customer experience design, business consulting, strategy, and technology innovation services in areas such as cloud platforms, cybersecurity and artificial intelligence.
  • We generate the majority of our revenues under time-and-materials contracts, which are billed using hourly, daily or monthly rates to determine the amounts to be charged directly to the client.
  • We apply a practical expedient and revenues related to time-and-materials contracts are recognized based on the right to invoice for services performed.
  • Results of Operations For discussion of our results of operations for the year ended December 31, 2023, including a year-over-year comparison between 2024 and 2023, refer to “Part II.
  • Management’s Discussion and Analysis of Financial Condition and Results of Operations — Results of Operations” in our Annual Report on Form 10-K for the year ended December 31, 2024.
  • The following table presents a summary of our consolidated results of operations for the periods indicated.
  • Year Ended December 31, 2025 2024 % of revenues % of revenues (in thousands, except percentages and per share data) Revenues $5,457,056 100.0 % $4,727,940 100.0 % Operating expenses: Cost of revenues (exclusive of depreciation and amortization) (1) 3,883,535 71.2 3,277,497 69.3 Selling, general and administrative expenses (2) 928,707 17.0 816,300 17.3 Depreciation and amortization expense 124,811 2.3 89,559 1.9 Income from operations 520,003 9.5 544,584 11.5 Interest and other income, net 11,546 0.3 46,876 1.0 Foreign exchange loss (25,925) (0.5) (7,048) (0.1) Income before provision for income taxes 505,624 9.3 584,412 12.4 Provision for income taxes 127,946 2.4 129,879 2.8 Net income $ 377,678 6.9 % $ 454,533 9.6 % Effective tax rate 25.3 % 22.2 % Diluted earnings per share $6.72 $7.84 (1) Includes $86,252 and $80,944 of stock-based compensation expense for the years ended December 31, 2025 and 2024, respectively.
  • (2) Includes $90,512 and $86,353 of stock-based compensation expense for the years ended December 31, 2025 and 2024, respectively.
  • During the year ended December 31, 2025, our total revenues increased 15.4% from the previous year to $5.457 billion.
  • Revenues from the first twelve months following each acquisition that was made in the fourth quarter of 2024, increased our revenues by 9.2% and fluctuations in foreign currency increased our revenues by 1.3% during the year ended December 31, 2025 as compared to the previous year.
  • During the year ended December 31, 2025, we experienced a decrease in client concentration in our top client groups as a percentage of total revenues as compared to the previous year.
  • We discuss below the breakdown of our revenues by vertical, client location, client concentration, and service offering.
  • Revenues by Vertical We assign our clients into one of our five main vertical markets or a group of various industries where we are increasing our presence, which we label as “Emerging Verticals.” Emerging Verticals include clients in multiple industries such as energy, manufacturing and automotive, industrial materials, telecommunications and several others.
  • The following table presents our revenues by vertical and revenues as a percentage of total revenues by vertical for the periods indicated: Year Ended December 31, 2025 2024 (in thousands, except percentages) Financial Services $ 1,316,487 24.1 % $ 1,022,617 21.6 % Consumer Goods, Retail & Travel 1,077,513 19.7 1,013,138 21.4 Software & Hi-Tech 821,819 15.1 702,367 14.9 Business Information & Media 675,667 12.4 674,597 14.3 Life Sciences & Healthcare 625,607 11.5 574,605 12.2 Emerging Verticals 939,963 17.2 740,616 15.6 Revenues $ 5,457,056 100.0 % $ 4,727,940 100.0 % We experienced revenue growth across all verticals in 2025 and Financial Services remained our largest vertical, comprising 24.1% of total revenues.
  • See further discussion of our verticals in the section “Revenues by Business Segment” below.
  • Revenues by Client Location Our revenues are sourced from multiple countries, which we assign into three geographic markets identified as Americas, EMEA, and APAC.
  • The following table sets forth revenues by client location by amount and as a percentage of our revenues for the periods indicated: Year Ended December 31, 2025 2024 (in thousands, except percentages) Americas (1) $ 3,200,924 58.7 % $ 2,834,704 60.0 % EMEA (2) 2,147,304 39.3 1,793,198 37.9 APAC (3) 108,828 2.0 100,038 2.1 Revenues $ 5,457,056 100.0 % $ 4,727,940 100.0 % (1) Americas includes revenues from clients in North, Central and South America.
  • During the year ended December 31, 2025, revenues in the Americas, our largest geography, were $3.201 billion, growing $366.2 million, or 12.9%, from $2.835 billion reported for the year ended December 31, 2024.
  • The increase during the year ended December 31, 2025 compared to 2024, was primarily due to the acquisitions of NEORIS and First Derivative in the fourth quarter of 2024 and increased demand from our existing clients across various industries.
  • Revenues from the Americas accounted for 58.7% of total revenues in 2025, a decrease from 60.0% in the prior year.
  • The United States continued to be our largest client location contributing revenues of $2.834 billion in 2025 compared to $2.680 billion in 2024.
  • Revenues in our EMEA geography were $2.147 billion, an increase of $354.1 million, or 19.7%, from $1.793 billion in the previous year.
  • Revenues from EMEA accounted for 39.3% of consolidated revenues in 2025 as compared to 37.9% in the previous year.
  • The top three revenue contributing client location countries in EMEA were the United Kingdom, Switzerland and Germany, generating revenues of $597.3 million, $438.5 million and $233.4 million in 2025, respectively, compared to $523.4 million, $407.8 million and $206.1 million in 2024, respectively.
  • Revenues from clients in locations in our APAC region increased 8.8% from the prior year and comprised 2.0% of total revenues in 2025.
  • The following table presents revenues contributed by our clients by amount and as a percentage of our revenues for the periods indicated: Year Ended December 31, 2025 2024 (in thousands, except percentages) Top five clients $ 746,169 13.7 % $ 748,324 15.8 % Top ten clients $ 1,180,007 21.6 % $ 1,107,647 23.4 % Top twenty clients $ 1,742,670 31.9 % $ 1,615,267 34.2 % Clients below top twenty $ 3,714,386 68.1 % $ 3,112,673 65.8 % The following table shows the number of clients grouped by revenues recognized by the Company for each year presented: Year Ended December 31, 2025 2024 Over $20 Million 53 43 $10 - $20 Million 62 59 $5 - $10 Million 93 83 $1 - $5 Million 375 331 $0.5 - $1 Million 226 168 Revenues by Service Offering Our service arrangements have been evolving to provide more customized and integrated solutions to our clients where we combine software engineering with customer experience design, business consulting and technology innovation services in areas such as cloud platforms, cybersecurity and artificial intelligence.
  • We are continually expanding our service capabilities, moving beyond traditional services into strategy consulting, design and physical product development.
  • The following table shows revenues by service offering as an amount and as a percentage of our revenues for the years indicated: Year Ended December 31, 2025 2024 (in thousands, except percentages) Professional services $ 5,427,623 99.5 % $ 4,698,183 99.4 % Licensing and other revenues 29,433 0.5 29,757 0.6 Revenues $ 5,457,056 100.0 % $ 4,727,940 100.0 % See Note 13 “Revenues” in the notes to our consolidated financial statements in this Annual Report on Form 10-K for more information regarding our contract types and related revenue recognition policies.
  • Additionally, government incentives and assistance related to services performed by delivery professionals assigned to client projects are reported in cost of revenues.

and 334 more.

Gone since FY2024

  • During the year ended December 31, 2024, we have completed several acquisitions of businesses, including NEORIS and First Derivative.
  • We believe these acquisitions will enhance our client portfolio and service offerings as well as expand our presence in Latin America and Europe.
  • Business Update Regarding the War in Ukraine On February 24, 2022, Russian forces attacked Ukraine and its people and EPAM has repeatedly called for an immediate end to this unlawful and unconscionable attack.
  • EPAM’s highest priority is the safety and security of its employees and their families in Ukraine as well as in the broader region, and we have continued to support relocating our employees to lower risk locations, both within Ukraine and to other countries where we operate.
  • The vast majority of our Ukraine employees are in safe locations and operating at levels of productivity consistent with those achieved prior to the attack.
  • As of December 31, 2024, Ukraine continues to be a significant delivery location with a large number of delivery professionals.
  • Furthermore, we have maintained our $100 million humanitarian aid commitment to our people in Ukraine in addition to our other donations and volunteer efforts.
  • The impact of Russia’s invasion of Ukraine on our operations, personnel, and physical assets in Ukraine has had, and, along with any escalation of the war that includes Belarus’ territory or military, could continue to have a material adverse effect on our operations.
  • Actions taken by other countries, including new and stricter sanctions by Canada, the United Kingdom, the European Union, the U.S. and other companies and organizations against officials, individuals, regions, and industries in Belarus, and Belarus’ responses to those sanctions, including counter-sanctions and other actions, have had and could continue to have a material adverse effect on our operations.
  • Clients have and may continue to seek altered terms, conditions, and delivery locations for the performance of services, delay planned work or seek services from alternate providers, or suspend, terminate, fail to renew, or reduce existing contracts or services, which could have a material adverse effect on our financial condition.
  • Some of our clients have implemented steps to block internet communications with Ukraine and Belarus to protect against potential cyberattacks or other information security threats, which has caused a material adverse effect on our ability to deliver our services to these clients from those locations.
  • Such material adverse effects disrupt our delivery of services, cause us to shift all or portions of our work occurring in the region to other countries, restrict our ability to engage in certain projects in the region and serve certain clients in or from the region, and could negatively impact our personnel, operations, financial results and business outlook.
  • Our Board of Directors continues its oversight of our strategic, geopolitical, and cybersecurity risks and the risks related to our geographic expansion.
  • Moving Forward We continue to monitor and respond to the difficult conditions in Ukraine while maintaining a focus on our clients and long-term growth.
  • We execute on our business continuity plans and adapt to developments as they occur to protect the safety of our people and address impacts on our delivery infrastructure, including reallocating work to other geographies within our global footprint.
  • We engage with both our personnel and our clients when navigating delivery challenges and we continue to operate productively in a multitude of locations and provide consistent high-quality delivery to our clients.
  • Our global delivery centers have sufficient resources, including infrastructure and capital, to support ongoing operations while maintaining the safety and security of our employees and their families in Ukraine as well as in the broader region.
  • The implementation and execution of our business continuity plans, relocation costs, our humanitarian commitment to our people in Ukraine, and the cost of our phased exit from Russia resulted in materially increased expenses.
  • We have no way to predict the progress or outcome of the war in Ukraine because the conflict and government reactions change quickly and are beyond our control.
  • Prolonged military activities, broad-based sanctions and counter-sanctions, or escalation of the war that includes Belarus’ territory or military could have a material adverse effect on our operations and financial condition.
  • For additional information on the various risks posed by the attack against Ukraine and the impact in the region as well as other disruptors to our business, please read “Part I.
  • We derive revenues from a variety of service arrangements, which have been evolving to provide more customized and integrated solutions to clients by combining software engineering with customer experience design, business consulting and technology innovation services.
  • We generate the majority of our revenues under time-and-material contracts, which are billed using hourly, daily or monthly rates to determine the amounts to be charged directly to the client.
  • We apply a practical expedient and revenues related to time-and-material contracts are recognized based on the right to invoice for services performed.
  • Results of Operations The following table presents a summary of our consolidated results of operations for the periods indicated.
  • Year Ended December 31, 2024 2023 2022 % of revenues % of revenues % of revenues (in thousands, except percentages and per share data) Revenues $4,727,940 100.0 % $4,690,540 100.0 % $4,824,698 100.0 % Operating expenses: Cost of revenues (exclusive of depreciation and amortization) (1) 3,277,497 69.3 3,256,514 69.4 3,286,683 68.1 Selling, general and administrative expenses (2) 816,300 17.3 815,065 17.4 872,777 18.1 Depreciation and amortization expense 89,559 1.9 91,800 1.9 92,272 1.9 Loss on sale of business — — 25,922 0.6 — — Income from operations 544,584 11.5 501,239 10.7 572,966 11.9 Interest and other income, net 46,876 1.0 51,124 1.0 10,025 0.2 Foreign exchange loss (7,048) (0.1) (15,778) (0.3) (75,733) (1.6) Income before provision for income taxes 584,412 12.4 536,585 11.4 507,258 10.5 Provision for income taxes 129,879 2.8 119,502 2.5 87,842 1.8 Net income $ 454,533 9.6 % $ 417,083 8.9 % $ 419,416 8.7 % Effective tax rate 22.2 % 22.3 % 17.3 % Diluted earnings per share $7.84 $7.06 $7.09 (1) Includes $80,944, $68,797 and $47,470 of stock-based compensation expense for the years ended December 31, 2024, 2023 and 2022, respectively.
  • (2) Includes $86,353, $78,933 and $52,439 of stock-based compensation expense for the years ended December 31, 2024, 2023 and 2022, respectively.
  • During the year ended December 31, 2024, our total revenues increased 0.8% from the previous year to $4.728 billion.
  • Revenues have been positively impacted by stabilizing demand for our services and fluctuations in foreign currency exchange rates which increased our revenue growth by 0.1% during the year ended December 31, 2024 as compared to the previous year, partially offset by the sale of our remaining holdings in Russia in the third quarter of 2023.
  • Revenues have also been positively impacted by our acquisitions of NEORIS and First Derivative, which in aggregate contributed $65.9 million to our revenues in 2024.
  • During the year ended December 31, 2024, we experienced a decrease in client concentration in our top client groups as a percentage of total revenues as compared to the previous year.
  • We discuss below the breakdown of our revenues by vertical, client location, service arrangement type, and client concentration.
  • Revenues by Vertical We assign our clients into one of our five main vertical markets or a group of various industries where we are increasing our presence, which we label as “Emerging Verticals.” Emerging Verticals include clients in multiple industries such as energy, utilities, manufacturing, industrial materials, automotive, telecommunications and several others.
  • The following table presents our revenues by vertical and revenues as a percentage of total revenues by vertical for the periods indicated: Year Ended December 31, 2024 2023 2022 (in thousands, except percentages) Financial Services $ 1,022,617 21.6 % $ 1,018,433 21.7 % $ 1,026,686 21.3 % Consumer Goods, Retail & Travel 1,013,138 21.4 1,072,950 22.9 1,092,224 22.7 Software & Hi-Tech 702,367 14.9 707,720 15.1 793,261 16.4 Business Information & Media 674,597 14.3 753,981 16.1 809,952 16.8 Life Sciences & Healthcare 574,605 12.2 489,914 10.4 507,367 10.5 Emerging Verticals 740,616 15.6 647,542 13.8 595,208 12.3 Revenues $ 4,727,940 100.0 % $ 4,690,540 100.0 % $ 4,824,698 100.0 % Financial Services became our largest vertical during 2024, comprising 21.6% of total revenues.
  • Financial Services, Life Sciences & Healthcare, and Emerging Verticals experienced revenue growth in 2024 over the prior year, while Consumer Goods, Retail & Travel, Business Information & Media, and Software & Hi-Tech verticals experienced revenue declines in 2024 from the prior year.
  • Revenues by Client Location Our revenues are sourced from multiple countries, which we assign into four geographic markets identified as Americas, EMEA, APAC, and CEE.
  • As a result of the Company’s exit from Russia and sale of the Company’s remaining holdings in Russia to a third-party on July 26, 2023, revenues from the CEE region became no longer material.
  • Starting in 2024, revenues from the CEE region are included in the EMEA region.
  • The following table sets forth revenues by client location by amount and as a percentage of our revenues for the periods indicated: Year Ended December 31, 2024 2023 2022 (in thousands, except percentages) Americas (1) $ 2,834,704 60.0 % $ 2,742,662 58.4 % $ 2,887,204 59.9 % EMEA (2) 1,793,198 37.9 1,822,782 38.9 1,737,919 36.0 APAC (3) 100,038 2.1 102,138 2.2 120,370 2.5 CEE (4) — — 22,958 0.5 79,205 1.6 Revenues $ 4,727,940 100.0 % $ 4,690,540 100.0 % $ 4,824,698 100.0 % (1) Americas includes revenues from clients in North, Central and South America.
  • During the year ended December 31, 2024, revenues in the Americas, our largest geography, were $2.835 billion, growing $92.0 million, or 3.4%, from $2.743 billion reported for the year ended December 31, 2023.

and 364 more.

Sentence-level comparison of Item 1A in the two most recent 10-Ks (FY2024 ↗, FY2025 ↗). A reworded sentence counts as one dropped and one added, so heavy edits read as low “kept”. Headings and page furniture are stripped; nothing is summarised by a model.

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