On November 7, 2024, EPAM Systems Inc (EPAM, Financial) released its 8-K filing for the third quarter of 2024, showcasing a solid performance that exceeded analyst estimates. EPAM Systems, a global IT services firm specializing in platform engineering, software development, and consulting services, reported revenues of $1.168 billion, surpassing the estimated $1.151 billion. The company's GAAP diluted earnings per share (EPS) reached $2.37, significantly higher than the anticipated $1.79.
Company Overview and Market Position
EPAM Systems Inc (EPAM, Financial) is a leading provider of digital transformation services and product engineering, with a strong presence in North America, which accounts for approximately 60% of its revenues. The company assists enterprises in adopting new technologies, including artificial intelligence, virtual reality, and robotics, to enhance their business operations.
Performance Highlights and Challenges
EPAM Systems Inc (EPAM, Financial) reported a year-over-year revenue increase of 1.3% for the third quarter of 2024. However, on an organic constant currency basis, excluding the impact of the exit from Russia, revenues slightly declined by 0.3%. The company's performance is crucial as it reflects its ability to navigate market challenges and maintain growth amidst geopolitical tensions and currency fluctuations.
Financial Achievements and Industry Significance
The company's GAAP income from operations was $177.0 million, marking a 55.2% increase from the previous year, while non-GAAP income from operations rose by 14.0% to $222.9 million. These achievements underscore EPAM's operational efficiency and strategic initiatives, such as the recent acquisition of NEORIS, which aims to diversify its global delivery platform.
Key Financial Metrics
EPAM Systems Inc (EPAM, Financial) reported a GAAP diluted EPS of $2.37, a 43.6% increase from the previous year, and a non-GAAP diluted EPS of $3.12, up 14.3%. The company's effective tax rate increased due to the recognition of $52.0 million in research and development incentives in Poland, which also contributed to the rise in income from operations.
“We are pleased with our strong third-quarter results and the ongoing improvement across our business. We continue to help our clients adapt and modernize their businesses, including deploying world-class solutions enabled by GenAI,” said Arkadiy Dobkin, CEO & President at EPAM.
Income Statement and Balance Sheet Overview
| Metric | Q3 2024 | Q3 2023 |
|---|---|---|
| Revenues | $1.168 billion | $1.152 billion |
| GAAP Income from Operations | $177.0 million | $114.0 million |
| Net Income | $136.3 million | $97.2 million |
| Cash and Cash Equivalents | $2.041 billion | $2.043 billion (Dec 2023) |
Analysis and Future Outlook
EPAM Systems Inc (EPAM, Financial) has demonstrated resilience and adaptability in a challenging market environment. The company's strategic acquisitions and focus on innovation, particularly in AI and digital transformation, position it well for future growth. The raised full-year outlook, with expected revenues between $4.685 billion and $4.695 billion, reflects confidence in its business strategy and market opportunities.
EPAM's ability to exceed analyst expectations in both revenue and earnings per share highlights its strong operational performance and strategic foresight. As the company continues to expand its global footprint and enhance its service offerings, it remains a key player in the IT services industry.
Explore the complete 8-K earnings release (here) from EPAM Systems Inc for further details.
