EPAM(EPAM) - 2024 Q1 - Quarterly Report

Financial Performance - For the first three months of 2024, total revenues decreased by 3.8% to $1.165 billion compared to$ 1.211 billion in the same period of 2023[114]. - Net income for the first quarter of 2024 was $116.2 million, representing a 13.7% increase from$ 102.3 million in Q1 2023[118]. - In Q1 2024, total revenues were $1,165.5 million, a decrease of 3.7% from$ 1,210.9 million in Q1 2023[128]. - Total segment revenues for the three months ended March 31, 2024, were $1.165 billion, a decrease of 3.7% from$ 1.211 billion in the same period of 2023[139]. - North America segment revenues decreased by $5.2 million, or 0.7%, to$ 704.7 million in Q1 2024, accounting for 60.5% of total segment revenues[140]. - Europe's segment revenues were $460.7 million, a decrease of$ 32.4 million, or 6.6%, from Q1 2023, with an operating profit margin increase to 13.1%[142]. Cost and Expenses - Income from operations as a percentage of revenues decreased to 9.5% for Q1 2024, down from 9.9% in Q1 2023, primarily due to increased compensation costs[114]. - Cost of revenues (exclusive of depreciation and amortization) was $834.3 million, a decrease of 2.5% from$ 855.9 million in Q1 2023[127]. - Cost of revenues as a percentage of revenues increased to 71.6% in Q1 2024 from 70.7% in Q1 2023, primarily due to a $6.3 million increase in stock-based compensation[128]. - Selling, general and administrative expenses decreased by 6.3% to$ 198.5 million in Q1 2024 from $211.9 million in Q1 2023[130]. Tax and Income - The effective tax rate for Q1 2024 was 6.0%, significantly lower than 19.6% in the same period last year[118]. - The effective tax rate significantly decreased to 6.0% in Q1 2024 from 19.6% in Q1 2023, attributed to higher excess tax benefits from stock-based awards[136]. - The effective tax rate for the three months ended March 31, 2024, was 6.0%, down from 19.6% in the same period of 2023, primarily due to higher excess tax benefits[136]. Cash Flow and Investments - For the three months ended March 31, 2024, net cash provided by operating activities was$ 129.9 million, compared to $87.3 million for the same period in 2023, representing a 48.7% increase[148]. - Cash used in investing activities for the three months ended March 31, 2024, was$ 51.0 million, compared to $17.7 million in the same period of 2023, indicating increased investment activity[148]. - Cash used in financing activities included$ 120.6 million for share repurchases in the first three months of 2024, significantly higher than $8.5 million in the same period of 2023[152]. - The company reported a total of$ 1.984 billion in cash and cash equivalents as of March 31, 2024, indicating strong liquidity[147]. - Cash generated from operating activities for Q1 2024 was $129.9 million, compared to$ 87.3 million in Q1 2023[148]. - Cash used in investing activities totaled $51.0 million in Q1 2024, primarily for capital expenditures of$ 6.7 million and acquisitions of $44.1 million[151]. - Cash used in financing activities amounted to$ 112.1 million in Q1 2024, mainly for share repurchases of $120.6 million[152]. - As of March 31, 2024, the company had cash and cash equivalents totaling$ 1.984 billion and short-term investments of $61.6 million[147]. Regional Performance - Revenues from the United States decreased by 1.8% to$ 667.1 million in Q1 2024, down from $679.4 million in Q1 2023[123]. - North America segment revenues were$ 704.7 million for the three months ended March 31, 2024, down from $710.0 million in the prior year, a decline of 0.3%[139]. - Europe's segment revenues decreased to$ 460.7 million in the three months ended March 31, 2024, from $493.1 million in the same period of 2023, a decline of 6.5%[139]. - Life Sciences & Healthcare in North America grew by 26.0% to$ 121.7 million, driven by increased demand from pharmaceutical and medical device companies[141]. - Business Information & Media in Europe saw a significant decline of 26.1% to $63.6 million, primarily due to decreased demand from two major clients[144]. - Emerging Verticals in North America saw a revenue increase of 26.6% to$ 101.1 million, attributed to growth from clients in energy, education, and telecommunications[141]. Geopolitical and Operational Risks - The ongoing war in Ukraine continues to create uncertainties and negatively impact business operations and client spending[114]. - The company maintained a $100 million humanitarian aid commitment to support employees in Ukraine[109]. - Key risks include geopolitical tensions, particularly related to the war in Ukraine, and their potential impact on client demand and profitability[158]. - Future capital requirements are expected to be met with existing cash and projected cash flows, although geopolitical events may pose risks to financial stability[153]. - The company acknowledges that actual future results may differ materially from estimates due to various uncertainties[159]. Forward-Looking Statements - The quarterly report includes forward-looking statements based on current expectations and estimates of future events and trends affecting the business[158]. - Forward-looking statements are not guarantees of future performance and should not be relied upon excessively[159]. - The report emphasizes the importance of reading the full quarterly and annual reports to understand potential risks and outcomes[158].