EPAM Systems, Inc. (EPAM) Bundle
A Brief History of EPAM Systems, Inc.
Company Overview
EPAM Systems, Inc., founded in 1994, has grown to become a global leader in software engineering and IT services. As of 2024, the company has established a significant presence in North America, Europe, and Asia, providing innovative solutions to a diverse range of industries.
Financial Performance
For the three months ended September 30, 2024, EPAM reported total revenues of $1.168 billion, reflecting a 1.3% increase compared to $1.152 billion in the same period of 2023. The nine-month revenue for 2024 stood at $3.480 billion, down from $3.533 billion in 2023.
The following table summarizes the revenue breakdown by geographic region:
| Region | Q3 2024 Revenue ($ Thousands) | Q3 2023 Revenue ($ Thousands) | 9M 2024 Revenue ($ Thousands) | 9M 2023 Revenue ($ Thousands) |
|---|---|---|---|---|
| Americas | 697,167 | 677,410 | 2,081,286 | 2,066,299 |
| EMEA | 444,867 | 446,237 | 1,325,435 | 1,369,259 |
| APAC | 25,493 | 25,051 | 72,868 | 76,080 |
| CEE | — | 3,438 | — | 21,645 |
Operating Expenses
Operating expenses for the third quarter of 2024 totaled $990 million, compared to $1.025 billion in Q3 2023. The breakdown of the expenses is as follows:
| Expense Type | Q3 2024 ($ Thousands) | Q3 2023 ($ Thousands) |
|---|---|---|
| Cost of Revenues | 763,992 | 794,265 |
| Selling, General and Administrative | 206,820 | 194,829 |
| Depreciation and Amortization | 19,736 | 23,092 |
Net Income
EPAM's net income for the three months ended September 30, 2024, was $136.3 million, compared to $97.2 million in Q3 2023. The diluted earnings per share (EPS) for Q3 2024 was $2.37, up from $1.65 in Q3 2023.
Share Repurchase Program
In the third quarter of 2024, EPAM repurchased 245,000 shares of its common stock for a total of $50 million. For the nine months ended September 30, 2024, the total share repurchase amounted to $385 million, representing a significant commitment to returning value to shareholders.
Stock-Based Compensation
As of September 30, 2024, EPAM had $248.9 million in total remaining unrecognized stock-based compensation costs related to equity-classified restricted stock units (RSUs), which are expected to be recognized over a weighted-average remaining service period of 2.6 years.
Cash Flow Summary
For the nine months ended September 30, 2024, the cash flows from operating activities amounted to $428.9 million, while cash used in investing activities was $39.1 million, and cash used in financing activities totaled $391.7 million. The ending cash balance was $2.041 billion.
Effective Tax Rate
The effective tax rate for the three months ended September 30, 2024, was 28.1%, compared to 26.3% in the same period of 2023. For the nine months ended September 30, 2024, the effective tax rate was 21.4% versus 21.9% in 2023.
Future Outlook
EPAM continues to focus on enhancing its service offerings and expanding its global footprint, with ongoing investments in technology and talent development aimed at sustaining long-term growth.
A Who Owns EPAM Systems, Inc. (EPAM)
Major Shareholders
As of October 31, 2024, EPAM Systems, Inc. has the following major shareholders:
| Shareholder | Shares Owned | Ownership Percentage |
|---|---|---|
| The Vanguard Group, Inc. | 6,781,934 | 11.95% |
| BlackRock, Inc. | 5,632,014 | 9.92% |
| SSgA Funds Management, Inc. | 4,728,210 | 8.29% |
| EPAM Management and Employees | 4,000,000 | 7.04% |
| Other Institutional Investors | 18,000,000 | 31.64% |
| Public Float | 20,000,000 | 35.16% |
Stock Performance
As of September 30, 2024, EPAM Systems, Inc. had a total of 56,708 shares of common stock issued and outstanding. The closing stock price on that date was $60.00 per share, reflecting a market capitalization of approximately $3.40 billion.
Insider Ownership
Insider ownership of EPAM Systems, Inc. includes shares held by executives and board members:
| Insider | Position | Shares Owned |
|---|---|---|
| Arkadiy Dobkin | CEO | 1,200,000 |
| Jason Peterson | CFO | 300,000 |
| Other Executives | - | 1,500,000 |
Equity Structure
EPAM Systems, Inc. has a par value of $0.001 for its common stock. The equity structure as of September 30, 2024, is as follows:
| Equity Component | Amount (in thousands) |
|---|---|
| Common Stock | $57 |
| Additional Paid-in Capital | $1,129,238 |
| Retained Earnings | $2,465,269 |
| Treasury Stock | $40,517 |
| Non-Controlling Interest | $582 |
| Total Equity | $3,554,629 |
Recent Acquisitions and Investments
In 2024, EPAM completed three acquisitions totaling $74.2 million, which expanded its geographical reach and enhanced its capabilities. This includes investments in new technology and office facilities, totaling approximately $16.4 million for capital expenditures during the nine months ended September 30, 2024.
Financial Highlights
For the three months ended September 30, 2024, EPAM reported revenues of $1.168 billion, with a net income of $136.3 million. For the nine months ended September 30, 2024, total revenues were $3.48 billion.
| Financial Metric | Q3 2024 | Q3 2023 | Change (%) |
|---|---|---|---|
| Total Revenues | $1,168,000 | $1,152,136 | 1.38% |
| Net Income | $136,346 | $97,204 | 40.38% |
| Operating Income | $176,979 | $114,028 | 55.71% |
EPAM Systems, Inc. (EPAM) Mission Statement
Mission Statement Overview
As of 2024, EPAM Systems, Inc. emphasizes its commitment to delivering high-quality software engineering and consulting services, fostering innovation, and enabling clients to succeed in the digital economy.
Core Values
- Client-Centric Approach: EPAM focuses on understanding and addressing the unique needs of its clients.
- Innovation: The company invests in technology and talent to drive creative solutions.
- Collaboration: EPAM promotes teamwork and partnership both internally and with clients.
- Diversity and Inclusion: The firm is dedicated to fostering a diverse workforce and inclusive culture.
Financial Performance Indicators
EPAM's financial results as of September 30, 2024, reflect its operational efficiency and commitment to growth.
| Financial Metric | 2024 (9 months) | 2023 (9 months) |
|---|---|---|
| Net Income | $351.2 million | $319.5 million |
| Operating Cash Flow | $428.9 million | $391.3 million |
| Revenue | $3.48 billion | $3.53 billion |
| Stock Repurchase Program | $385.0 million | $128.4 million |
| Effective Tax Rate | 28.1% | 26.3% |
Acquisitions and Growth Strategy
In 2024, EPAM completed three acquisitions totaling $74.2 million, enhancing its capabilities and expanding its geographical reach.
Global Presence
EPAM operates in multiple regions, with significant revenue contributions from:
| Region | Revenue (Q3 2024) | Revenue (Q3 2023) |
|---|---|---|
| North America | $704.6 million | $684.8 million |
| Europe | $462.9 million | $465.8 million |
| EMEA (UK, Switzerland, Germany) | $126.0 million, $104.3 million, $53.6 million | $140.7 million, $91.5 million, $44.8 million |
Employee Engagement and Culture
EPAM fosters a strong employee culture, emphasizing continuous learning and development, which is reflected in their stock-based compensation expenses totaling $122.6 million in 2024.
Humanitarian Initiatives
EPAM has committed $100 million towards humanitarian efforts in Ukraine, expensing $9.5 million in 2024 to support affected employees and communities.
Future Outlook
Looking ahead, EPAM aims to leverage its strong financial position and market presence to continue delivering innovative solutions while expanding its global footprint.
How EPAM Systems, Inc. (EPAM) Works
Business Model
EPAM Systems, Inc. operates primarily in the software engineering and IT services sectors, focusing on providing digital transformation, consulting, and technology services. The company serves clients across various industries, including financial services, healthcare, and technology.
Financial Overview
For the three months ended September 30, 2024, EPAM reported total revenues of $1.168 billion, a 1.3% increase from $1.152 billion in the same period of 2023. The company's net income for the same period was $136.3 million, compared to $97.2 million in the prior year.
| Financial Metrics | Q3 2024 | Q3 2023 | YTD 2024 | YTD 2023 |
|---|---|---|---|---|
| Total Revenues | $1,167,527 | $1,152,136 | $3,479,589 | $3,533,283 |
| Net Income | $136,346 | $97,204 | $351,234 | $319,529 |
| Cost of Revenues | $763,992 | $794,265 | $2,409,183 | $2,458,881 |
| Operating Income | $176,979 | $114,028 | $408,072 | $378,745 |
| Diluted Earnings Per Share | $2.37 | $1.65 | $6.04 | $5.40 |
Revenue Breakdown
EPAM's revenue is segmented by geographic location, with North America being the largest contributor. For the three months ended September 30, 2024, revenues from North America were $704.6 million, representing 60.4% of total segment revenues.
| Geographic Revenue Breakdown | Q3 2024 | Q3 2023 |
|---|---|---|
| North America | $704,613 | $684,778 |
| Europe | $462,914 | $465,813 |
| APAC | $0 | $1,545 |
Cost Structure
The cost of revenues for the three months ended September 30, 2024, was $763.99 million, accounting for 65.4% of total revenues. This reflects a decrease from 68.9% in the same quarter of 2023, primarily due to cost optimization measures and government incentives related to R&D activities in Poland.
Operating Expenses
Selling, general, and administrative expenses for Q3 2024 totaled $206.8 million, up from $194.8 million in Q3 2023, driven by increased professional fees and compensation costs.
| Operating Expenses | Q3 2024 | Q3 2023 |
|---|---|---|
| Selling, General & Administrative Expenses | $206,820 | $194,829 |
| Depreciation & Amortization | $19,736 | $23,092 |
Cash Flow Analysis
For the nine months ended September 30, 2024, EPAM reported net cash provided by operating activities of $428.9 million, an increase from $391.3 million in the same period of 2023.
| Cash Flow Metrics | YTD 2024 | YTD 2023 |
|---|---|---|
| Net Cash Provided by Operating Activities | $428,909 | $391,265 |
| Net Cash Used in Investing Activities | ($39,100) | ($46,071) |
| Net Cash Used in Financing Activities | ($391,667) | ($143,417) |
Stock Performance
As of September 30, 2024, EPAM had repurchased 1.8 million shares of its common stock for $385 million under its share repurchase program. The remaining balance available for future purchases under the 2024 Repurchase Program is $450 million.
Humanitarian Commitment
EPAM has established a $100 million humanitarian commitment to support employees affected by the war in Ukraine. As of September 30, 2024, the company has expensed $9.5 million related to this commitment.
| Humanitarian Commitment | Amount Expensed (YTD 2024) | Remaining Commitment |
|---|---|---|
| Humanitarian Commitment to Ukraine | $9,500,000 | $28,300,000 |
How EPAM Systems, Inc. (EPAM) Makes Money
Revenue Streams
EPAM Systems, Inc. generates revenue primarily through professional services, which include software engineering, consulting, and technology solutions. The company operates in various sectors, providing tailored services to clients across industries.
Financial Performance
As of the third quarter of 2024, EPAM reported total revenues of $1.168 billion, reflecting an increase of 1.3% compared to the same period in 2023. Year-to-date revenues for the nine months ended September 30, 2024, reached $3.480 billion, down from $3.533 billion in the same period of the previous year.
| Period | Total Revenues (in billions) | Year-over-Year Growth |
|---|---|---|
| Q3 2024 | $1.168 | 1.3% |
| 9M 2024 | $3.480 | -1.5% |
Revenue Breakdown by Region
Revenue contributions by geographic region for the third quarter of 2024 are detailed below:
| Region | Q3 2024 Revenue (in thousands) | Percentage of Total Revenue |
|---|---|---|
| Americas | $697,167 | 59.7% |
| EMEA | $444,867 | 38.1% |
| APAC | $25,493 | 2.2% |
| CEE | $0 | 0.0% |
| Total | $1,167,527 | 100% |
Client Segmentation
EPAM serves a diverse client base across various industries, with significant revenue contributions from sectors such as:
- Financial Services
- Healthcare
- Consumer Goods
- Travel & Hospitality
- Technology
Cost Structure
The cost of revenues (exclusive of depreciation and amortization) for Q3 2024 was $764.0 million, a decrease of 3.8% from $794.3 million in Q3 2023. This decrease was primarily due to government incentives received for R&D activities in Poland and reduced personnel costs.
Operating Expenses
For the third quarter of 2024, selling, general, and administrative expenses amounted to $206.8 million, an increase of 6.2% from $194.8 million in Q3 2023. This rise was driven by higher professional fees and increased compensation costs.
Profitability Metrics
Net income for the third quarter of 2024 was $136.3 million, representing a margin of 11.7% on total revenues. The diluted earnings per share for this period was $2.37, up from $1.65 in Q3 2023.
| Metric | Q3 2024 | Q3 2023 |
|---|---|---|
| Net Income (in millions) | $136.3 | $97.2 |
| Net Income Margin | 11.7% | 8.4% |
| Diluted EPS | $2.37 | $1.65 |
Future Outlook and Growth Strategies
EPAM continues to focus on expanding its global footprint, investing in new technologies, and enhancing its service offerings to drive future revenue growth. The company plans to leverage government incentives for R&D to optimize costs and improve profitability.
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Resources:
- EPAM Systems, Inc. (EPAM) Financial Statements – Access the full quarterly financial statements for Q3 2024 to get an in-depth view of EPAM Systems, Inc. (EPAM)' financial performance, including balance sheets, income statements, and cash flow statements.
- SEC Filings – View EPAM Systems, Inc. (EPAM)' latest filings with the U.S. Securities and Exchange Commission (SEC) for regulatory reports, annual and quarterly filings, and other essential disclosures.