EPAM Systems (NYSE:EPAM) Q4 2025 Earnings call February 19, 2026 08:00 AM ET Speaker10Good day, everyone. My name is Kahealani, and I'll be your conference operator today. At this time, I would like to welcome you to EPAM's fourth quarter and full year 2025 earnings release conference call. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question and answer session. If you'd like to ask a question during this time, and if you have joined via t ...

Core Viewpoint - Epam (EPAM) reported quarterly earnings of $3.26 per share, exceeding the Zacks Consensus Estimate of $3.16 per share, and showing an increase from $2.84 per share a year ago, indicating a positive earnings surprise of +3.17% [1] Financial Performance - The company achieved revenues of $1.41 billion for the quarter ended December 2025, surpassing the Zacks Consensus Estimate by 1.08%, and up from $1.25 billion in the same quarter last year [2] - Over the last four quarters, Epam has consistently exceeded consensus EPS estimates and revenue estimates [2] Stock Performance - Epam shares have declined approximately 18.2% since the beginning of the year, contrasting with the S&P 500's gain of 0.5% [3] - The stock currently holds a Zacks Rank 3 (Hold), indicating expected performance in line with the market in the near future [6] Earnings Outlook - The current consensus EPS estimate for the upcoming quarter is $2.80 on revenues of $1.4 billion, while for the current fiscal year, the estimate is $12.56 on revenues of $5.81 billion [7] - The trend of earnings estimate revisions for Epam was mixed prior to the earnings release, which may change following the latest results [6] Industry Context - The Computers - IT Services industry, to which Epam belongs, is currently ranked in the top 36% of over 250 Zacks industries, suggesting a favorable outlook compared to lower-ranked industries [8]

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Core Viewpoint - EPAM Systems forecasts first-quarter results that align with analyst estimates, driven by continued investment in AI-enhanced systems by companies, which boosts demand for its IT services [1] Financial Performance - EPAM expects first-quarter revenue to be between $1.38 billion and $1.40 billion, with the midpoint matching analysts' estimates [1] - The company anticipates adjusted profit per share in the range of $2.70 to $2.78, also in line with estimates [1] - For the fourth quarter, EPAM reported revenue of $1.41 billion, exceeding analysts' expectations of $1.39 billion, and an adjusted EPS of $3.26, which was above estimates [1] Market Reaction - Shares of EPAM fell more than 4% in premarket trading following the forecast announcement [1]

expenses243,161216,969928,707816,300Depreciation and amortization expense30,78726,556124,81189,559Income from operations149,254136,512520,003544,584Interest and other income (loss), net(89)6,45111,54646,876Foreign exchange loss(5,344)(5,632)(25,925)(7,048)Income before provision for income taxes143,821137,331505,624584,412Provision for income taxes34,46734,032127,946129,879Net income$ 109,354$ 103,299$ 377,678$ 454,533Net income per share:Basic$ 1.99$ 1.82$ 6.76$ 7.93Diluted$ 1.98$ 1.80$ 6.72$ 7.84Shares us ...

Financial Performance - Revenues for Q4 2025 were $1.408 billion, representing a year-over-year increase of 12.8%[5] - Full year 2025 revenues reached $5.457 billion, up 15.4% year-over-year, with organic constant currency growth of 4.9%[8] - GAAP diluted EPS for Q4 2025 was $1.98, an increase of 10.0% compared to Q4 2024, while non-GAAP diluted EPS was $3.26, up 14.8%[6] - For the full year 2025, GAAP diluted EPS was $6.72, a decrease of 14.3%, while non-GAAP diluted EPS was $11.50, an increase of 5.9%[8] - The company expects Q1 2026 revenues to be in the range of $1.385 billion to $1.400 billion, reflecting a year-over-year increase of 7.0% at the midpoint[11] - For FY 2026, the company anticipates revenue growth of 4.5% to 7.5% and non-GAAP diluted EPS in the range of $12.60 to $12.90[11] Cash Flow and Share Repurchase - Cash provided by operating activities was $282.9 million in Q4 2025, up from $130.3 million in Q4 2024, and totaled $654.9 million for the full year 2025[11] - The company repurchased 1.16 million shares for $223.5 million in Q4 2025, with a total of 3.54 million shares repurchased for $660.6 million during the year[11] Headcount and Workforce - Total headcount as of December 31, 2025, was approximately 62,850, including about 56,600 delivery professionals, marking a 2.7% increase from the previous year[11] Investment and Innovation - The company continues to invest in AI innovation and strategic partnerships to enhance its market position in the AI-Native Build era[3] Income and Expenses - Net income for Q4 2025 was $109,354, up from $103,299 in Q4 2024, representing a 5.1% increase[19] - Operating income for the year ended December 31, 2025, was $520,003, compared to $544,584 in 2024, reflecting a decrease of 4.5%[19] - Selling, general and administrative expenses for Q4 2025 were $243,161, up from $216,969 in Q4 2024, a 12.1% increase[19] - Stock-based compensation expenses for Q4 2025 were $23.019 million, compared to $22.074 million in Q4 2024, with total expenses for the year reaching $86.252 million, up from $80.944 million in 2024[25] - Humanitarian support expenses related to Ukraine amounted to $531 thousand in Q4 2025, with total expenses for the year at $2.308 million, slightly down from $2.350 million in 2024[25] - Cost Optimization charges in Q4 2025 were $15.279 million, significantly higher than $4.837 million in Q4 2024, with total charges for the year at $47.893 million compared to $31.270 million in 2024[25] Assets and Liabilities - Total assets as of December 31, 2025, were $4,902,136, an increase from $4,750,473 as of December 31, 2024[21] - Cash and cash equivalents increased to $1,296,077 as of December 31, 2025, compared to $1,286,267 in 2024[21] - The company’s total liabilities increased to $1,224,328 as of December 31, 2025, from $1,119,322 in 2024[21] Future Projections - The company expects revenue growth of 7.0% for Q1 2026 and between 4.5% to 7.5% for the full year 2026, with an organic constant currency basis growth of 2.9% for Q1 2026 and 3.0% to 6.0% for the full year[32] - GAAP income from operations as a percentage of revenues is projected to be between 7.0% to 8.0% for Q1 2026 and 10.0% to 11.0% for the full year 2026[32] - The GAAP effective tax rate is expected to be approximately 30.0% for Q1 2026 and 26.0% for the full year 2026, with a non-GAAP effective tax rate of approximately 24.0% for both periods[33] - GAAP diluted earnings per share is projected to be between $1.32 to $1.40 for Q1 2026 and $7.95 to $8.25 for the full year 2026, while non-GAAP diluted earnings per share is expected to be between $2.70 to $2.78 for Q1 2026 and $12.60 to $12.90 for the full year 2026[34] Adjustments and Non-Recurring Costs - Total adjustments to GAAP net income for 2025 were $70.855 million, compared to $60.066 million in 2024, with total adjustments for the year reaching $269.131 million versus $175.430 million in 2024[25] - The company has excluded certain one-time charges and benefits from non-GAAP results, including those related to tax planning and humanitarian support, as they are not expected to recur[29] - The company is focused on geographic repositioning due to the ongoing geopolitical instability, with associated costs expected to be nonrecurring once operations normalize[28]

by building genuine empathy at scale.Learn more at [www.empathylab.com] and follow us on [LinkedIn]About EPAM SystemsSince 1993, EPAM Systems, Inc. has used its software engineering expertise to become a leading global provider of digital engineering, cloud and AI-enabled transformation services, and a leading business and experience consulting partner for global enterprises and ambitious startups. We address our clients' transformation challenges by focusing EPAM Continuum's integrated strategy, experience ...

Core Viewpoint - Epam (EPAM) is expected to report quarterly earnings of $3.16 per share, reflecting an 11.3% increase year-over-year, with revenues forecasted at $1.39 billion, representing an 11.4% year-over-year increase [1]. Earnings Projections - The consensus EPS estimate has been revised upward by 0.4% in the past 30 days, indicating a reassessment by analysts [2]. - Changes in earnings projections are crucial for predicting investor reactions, as empirical studies show a strong correlation between earnings estimate trends and short-term stock price movements [3]. Revenue Estimates by Industry Verticals - Revenues from Financial Services are projected to be $331.55 million, indicating an 18% year-over-year increase [5]. - Software & Hi-Tech revenues are estimated at $202.43 million, reflecting an 11.2% year-over-year increase [5]. - Life Sciences & Healthcare revenues are expected to reach $166.16 million, suggesting a 9.3% year-over-year increase [6]. - Emerging Verticals revenues are projected at $233.81 million, indicating a 10.4% year-over-year increase [6]. - Consumer Goods, Retail & Travel revenues are expected to be $276.83 million, reflecting a 10.5% year-over-year increase [7]. Revenue Estimates by Contract Type - Time-and-material revenues are projected to reach $1.16 billion, indicating a 14.9% year-over-year increase [7]. - Fixed-price revenues are expected to be $223.21 million, reflecting a 4.5% year-over-year decrease [8]. - Licensing and other revenues are estimated at $10.92 million, suggesting a significant 56.6% year-over-year increase [8]. Revenue Estimates by Customer Location - Revenues from the Americas are projected to be $830.55 million, indicating a 10.2% year-over-year increase [9]. - APAC revenues are expected to reach $28.19 million, reflecting a 3.7% year-over-year increase [9]. - EMEA revenues are projected at $525.76 million, suggesting a 12.4% year-over-year increase [10]. Stock Performance - Over the past month, Epam shares have recorded a return of -24.2%, compared to a -2% change in the Zacks S&P 500 composite [10]. - Based on its Zacks Rank 2 (Buy), Epam is expected to outperform the overall market in the upcoming period [10].

Core Viewpoint - Investors in the Computers - IT Services sector should consider Epam (EPAM) and Infosys (INFY) for potential value opportunities, with a closer examination needed to determine which stock offers better value [1] Valuation Metrics - Epam has a Zacks Rank of 2 (Buy), indicating a positive earnings outlook, while Infosys has a Zacks Rank of 3 (Hold) [3] - The forward P/E ratio for EPAM is 15.25, compared to INFY's 21.20, suggesting EPAM may be undervalued [5] - EPAM's PEG ratio is 1.80, while INFY's PEG ratio is 2.48, indicating EPAM has a more favorable growth valuation [5] - EPAM's P/B ratio stands at 2.86, significantly lower than INFY's P/B of 7.24, further supporting EPAM's valuation advantage [6] - Based on these metrics, EPAM receives a Value grade of B, while INFY is rated C, highlighting EPAM as the superior value option [6][7]

Core Insights - Zacks Premium offers tools for investors to enhance their stock market engagement and confidence, including daily updates, research reports, and stock screens [1] Zacks Style Scores - Zacks Style Scores are indicators that rate stocks based on value, growth, and momentum methodologies, helping investors identify stocks likely to outperform the market in the next 30 days [2] Value Score - The Value Style Score focuses on identifying undervalued stocks using ratios like P/E, PEG, Price/Sales, and Price/Cash Flow to highlight attractive investment opportunities [3] Growth Score - The Growth Style Score assesses a company's financial strength and future outlook by analyzing projected and historical earnings, sales, and cash flow to find stocks with sustainable growth potential [4] Momentum Score - The Momentum Style Score evaluates stocks based on price trends and earnings outlook changes, utilizing one-week price changes and monthly earnings estimate changes to identify favorable buying opportunities [5] VGM Score - The VGM Score combines Value, Growth, and Momentum Scores, providing a comprehensive rating that helps investors find stocks with the best overall potential [6] Zacks Rank - The Zacks Rank is a proprietary model that uses earnings estimate revisions to guide investors in building successful portfolios, with 1 (Strong Buy) stocks achieving an average annual return of +23.83% since 1988, significantly outperforming the S&P 500 [7][8] Stock Example: EPAM Systems, Inc. - EPAM Systems, Inc. is rated 2 (Buy) on the Zacks Rank and has a VGM Score of A, with a Value Style Score of B, supported by a forward P/E ratio of 14.59, making it attractive for value investors [11] - The earnings estimate for fiscal 2025 has been revised upwards to $11.41 per share, with an average earnings surprise of +4.4%, indicating strong performance potential [12]