EPAM Reports Results for Second Quarter 2026
Rhea-AI Summary
EPAM (NYSE: EPAM) reported second quarter 2026 revenues of $1.415 billion, up 4.5% year-over-year and 3.4% on an organic constant currency basis. GAAP income from operations was $152.2 million, or 10.8% of revenues, while non-GAAP income from operations was $232.7 million, or 16.4% of revenues.
GAAP diluted EPS was $1.97, up 26.3%, and non-GAAP diluted EPS was $3.38, up 22.0% year-over-year. EPAM used $85 million for share repurchases in Q2 and $409 million in the first half, ending June 30 with $794.3 million in cash, cash equivalents and restricted cash.
For full-year 2026, EPAM now expects revenue growth of 3.2%–4.2% (2.0%–3.0% organic constant currency), GAAP operating margin of 10.5%–11.0%, non-GAAP operating margin of 15.5%–16.0%, GAAP diluted EPS of $8.22–$8.38 and non-GAAP diluted EPS of $13.08–$13.24.
Positive
- Revenue $1.415B, up 4.5% YoY; 3.4% organic constant currency
- GAAP operating income $152.2M, up 20.4% YoY; margin 10.8% vs. 9.3%
- Non-GAAP operating income $232.7M, up 14.7% YoY; margin 16.4% vs. 15.0%
- GAAP diluted EPS $1.97, up 26.3% YoY
- Non-GAAP diluted EPS $3.38, up 22.0% YoY
- Share repurchases $409M in first half 2026, including $85M in Q2
Negative
- Operating cash flow used $38.8M in first six months vs. $77.4M provided in prior year period
- Cash and equivalents $794.3M at June 30, 2026, down $507.1M (39.0%) from year-end 2025
- Q3 2026 revenue guidance $1.410B–$1.425B, implying 1.7% YoY growth at midpoint
- Foreign exchange loss $9.85M in Q2 2026 vs. $6.23M in Q2 2025
News Explained
EPAM reports that its share-repurchase program had spent
Market Reaction – EPAM
Following this news, EPAM has declined 14.28%, reflecting a significant negative market reaction. Our momentum scanner has triggered 30 alerts so far, indicating elevated trading interest and price volatility. The stock is currently trading at $94.19.
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Key Figures
Previous Earnings Reports
| Date | Event | Sentiment | 24h Move | Catalyst |
|---|---|---|---|---|
| May 07 | Q1 earnings report | Positive | -2.5% | Revenue and earnings growth accompanied updated full-year guidance and substantial share repurchases. |
| Feb 19 | Q4 earnings report | Positive | -17.0% | Quarterly and annual revenue growth accompanied improved profitability and significant annual buybacks. |
| Nov 06 | Q3 earnings report | Positive | +4.4% | Revenue growth and raised full-year revenue and EPS outlook accompanied improved operating profitability. |
| Aug 07 | Q2 earnings report | Positive | +4.3% | Revenue growth, stronger non-GAAP EPS, and raised full-year revenue guidance supported the release. |
| May 08 | Q1 earnings report | Positive | +12.9% | Revenue growth and raised full-year revenue outlook outweighed lower reported quarterly earnings metrics. |
24h Move is the share-price change in the day after each event; other market factors may also have contributed.
Positive earnings announcements produced mixed reactions: two of five tag-matched events declined, while three advanced.
Key Terms
gaap financial
non-gaap financial measures financial
organic constant currency basis financial
AI-generated analysis. How Rhea-AI works. Not financial advice.
- Second quarter revenues of
$1.415 billion 4.5% year-over-year - Second quarter GAAP income from operations increased to
10.8% of revenues from9.3% , and non-GAAP income from operations increased to16.4% of revenues from15.0% , on a year-over-year basis - Second quarter GAAP diluted EPS of
$1.97 $0.41 26.3% , and non-GAAP diluted EPS of$3.38 $0.61 22.0% , on a year-over-year basis - Continued to return capital to shareholders, spending
$85 million $409 million - For the full year, EPAM now expects the year-over-year revenue growth rate to be in the range of
3.2% to4.2% and now expects the year-over-year revenue growth rate on an organic constant currency basis to be in the range of2.0% to3.0% - For the full year, EPAM now expects its GAAP diluted EPS to be in the range of
$8.22 $8.38 $13.08 $13.24
"Our second quarter results came in better than expected with continued AI-native momentum and ongoing profitability improvement, reflecting solid execution against our multi-year strategy," said Balazs Fejes, CEO & President, EPAM. "As we continue to expand our strategic partnerships and leverage our 30+ years of engineering DNA to build the next generation forward-deployed engineering organization, our conviction in the strategy, the team and our commercial transformation is high."
Second Quarter 2026 Highlights
- Revenues increased to
$1.415 billion $61.3 million 4.5% . On an organic constant currency basis, revenues were up3.4% compared to the second quarter of 2025;
- GAAP income from operations was
$152.2 million $25.7 million 20.4% , compared to$126.5 million
- Non-GAAP income from operations was
$232.7 million $29.8 million 14.7% , compared to$202.9 million
- Diluted earnings per share ("EPS") on a GAAP basis was
$1.97 $0.41 26.3% , compared to$1.56
- Non-GAAP diluted EPS was
$3.38 $0.61 22.0% , compared to$2.77
Cash Flow and Other Metrics
- Cash used in operating activities was
$38.8 million $77.4 million
- Cash, cash equivalents and restricted cash totaled
$794.3 million $507.1 million 39.0% , from$1.301 billion
- The Company spent
$409.0 million $85.0 million
- Total headcount was approximately 62,850 as of June 30, 2026. Included in this number were approximately 56,650 delivery professionals, an increase of
0.3% from March 31, 2026.
2026 Outlook - Full Year and Third Quarter
Full Year
EPAM expects the following for the full year:
- The Company now expects the year-over-year revenue growth rate to be in the range of
3.2% to4.2% for 2026 and now expects the year-over-year revenue growth rate on an organic constant currency basis to be in the range of2.0% to3.0% ;
- For the full year, EPAM now expects GAAP income from operations to be in the range of
10.5% to11.0% of revenues and non-GAAP income from operations to be in the range of15.5% to16.0% of revenues;
- The Company continues to expect its GAAP effective tax rate to be approximately
27% and its non-GAAP effective tax rate to be approximately24% ; and
- EPAM now expects GAAP diluted EPS to be in the range of
$8.22 $8 $13.08 $13.24
Third Quarter
EPAM expects the following for the third quarter:
- The Company expects revenues will be in the range of
$1.410 billion $1.425 billion 1.7% at the midpoint of the range. The Company expects the year-over-year revenue growth rate on an organic constant currency basis to be1.8% at the midpoint of the range;
- For the third quarter, EPAM expects GAAP income from operations to be in the range of
11.0% to12.0% of revenues and non-GAAP income from operations to be in the range of15.5% to16.5% of revenues;
- The Company expects its GAAP effective tax rate to be approximately
25% and its non-GAAP effective tax rate to be approximately24% ; and
- EPAM expects GAAP diluted EPS will be in the range of
$2.33 $2.41 $3.38 $3.46
Conference Call Information
EPAM will host a conference call to discuss the results on Thursday, August 6, 2026, at 8:00 a.m. ET. The conference call will be available live on the EPAM website at https://investors.epam.com. Please visit the website at least 15 minutes prior to the call to register for the event. For those who cannot access the live webcast, a replay will be available in the Investor Relations section of the website.
About EPAM Systems
EPAM (NYSE:EPAM) is a global leader in AI transformation engineering and integrated consulting, serving Forbes Global 2000 companies and ambitious startups. With over thirty years of expertise in custom software, product and platform engineering, EPAM empowers organizations to become AI-Native enterprises, driving measurable value from innovation and digital investments. Recognized by industry benchmarks and leading analysts as a leader in AI, EPAM delivers globally while engaging locally, making the future real for clients, partners, and employees.
We are proud to be recognized by Forbes, Glassdoor, Newsweek, Time Magazine, Great Place to Work and kununu as a Most Loved Workplace around the world.
Learn more at www.epam.com and follow us on LinkedIn.
Non-GAAP Financial Measures
EPAM supplements results reported in accordance with United States generally accepted accounting principles, referred to as GAAP, with non-GAAP financial measures. Management believes these measures help illustrate underlying trends in EPAM's business and uses the measures to establish budgets and operational goals, communicate internally and externally, for managing EPAM's business and evaluating its performance. Management also believes these measures help investors compare EPAM's operating performance with its results in prior periods. EPAM anticipates that it will continue to report both GAAP and certain non-GAAP financial measures in its financial results, including non-GAAP results that exclude stock-based compensation expenses, acquisition-related costs including amortization of acquired intangible assets, impairment of assets, expenses associated with EPAM's humanitarian commitment to its professionals in Ukraine, employee separation costs incurred in connection with restructuring programs, certain other one-time charges and benefits, changes in fair value of contingent consideration, foreign exchange gains and losses, excess tax benefits and tax shortfalls related to stock-based compensation, and the related effect on income taxes of the pre-tax adjustments. Management also compares revenues on an "organic constant currency basis," which is a non-GAAP financial measure. This measure excludes the effect of acquisitions by removing revenues from an acquired company in the twelve months after completing an acquisition and foreign currency exchange rate fluctuations by translating current period revenues into U.S. dollars at the weighted average exchange rates of the prior period of comparison. Because EPAM's reported non-GAAP financial measures are not calculated in accordance with GAAP, these measures are not comparable to GAAP and may not be comparable to similarly described non-GAAP measures reported by other companies within EPAM's industry. Consequently, EPAM's non-GAAP financial measures should not be evaluated in isolation or supplant comparable GAAP measures, but rather, should be considered together with the information in EPAM's consolidated financial statements, which are prepared in accordance with GAAP.
Forward-Looking Statements
This press release includes estimates and statements which may constitute forward-looking statements made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995, the accuracy of which are necessarily subject to risks, uncertainties, and assumptions as to future events that may not prove to be accurate. Our estimates and forward-looking statements are mainly based on our current expectations and estimates of future events and trends, which affect or may affect our business and operations. These statements may include words such as "may," "will," "should," "believe," "expect," "anticipate," "intend," "plan," "estimate"or similar expressions. Those future events and trends may relate to, among other things, developments relating to the war in Ukraine and escalation of the war in the surrounding region, political and civil unrest or military action in the geographies where we conduct business and operate, difficult conditions in global capital markets, foreign exchange markets, global trade and the broader economy, the adoption and implementation of artificial intelligence technologies by EPAM and its clients, and the effect that these events may have on client demand and our revenues, operations, access to capital, and profitability. Other factors that could cause actual results to differ materially from those expressed or implied include general economic conditions, the risk factors discussed in the Company's most recent Annual Report on Form 10-K and the factors discussed in the Company's Quarterly Reports on Form 10-Q, particularly under the headings "Management's Discussion and Analysis of Financial Condition and Results of Operations" and "Risk Factors"and other filings with the Securities and Exchange Commission. Although we believe that these estimates and forward-looking statements are based upon reasonable assumptions, they are subject to several risks and uncertainties and are made based on information currently available to us. EPAM undertakes no obligation to update or revise any forward-looking statements, whether as a result of new information, future events, or otherwise, except as may be required under applicable securities law.
EPAM SYSTEMS, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF INCOME (Unaudited) (In thousands, except per share data)
| |||||||
Three Months Ended June 30, | Six Months Ended June 30, | ||||||
2026 | 2025 | 2026 | 2025 | ||||
Revenues | $ 1,414,767 | $ 1,353,443 | |||||
Operating expenses: | |||||||
Cost of revenues (exclusive of depreciation and amortization) | 985,199 | 964,012 | 1,997,251 | 1,916,020 | |||
Selling, general and administrative expenses | 245,245 | 231,681 | 484,947 | 450,598 | |||
Depreciation and amortization expense | 32,101 | 31,274 | 63,640 | 62,711 | |||
Income from operations | 152,222 | 126,476 | 268,990 | 225,806 | |||
Interest and other income (loss), net | (1,821) | 3,519 | (239) | 9,333 | |||
Foreign exchange loss | (9,850) | (6,227) | (7,552) | (16,954) | |||
Income before provision for income taxes | 140,551 | 123,768 | 261,199 | 218,185 | |||
Provision for income taxes | 37,572 | 35,742 | 75,699 | 56,677 | |||
Net income | $ 102,979 | $ 88,026 | $ 185,500 | $ 161,508 | |||
Net income per share: | |||||||
Basic | $ 1.97 | $ 1.56 | $ 3.50 | $ 2.86 | |||
Diluted | $ 1.97 | $ 1.56 | $ 3.49 | $ 2.84 | |||
Shares used in calculation of net income per share: | |||||||
Basic | 52,197 | 56,319 | 52,991 | 56,548 | |||
Diluted | 52,267 | 56,536 | 53,220 | 56,898 | |||
EPAM SYSTEMS, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited) (In thousands, except par value)
| |||
As of June 30, 2026 | As of December 31, 2025 | ||
Assets | |||
Current assets | |||
Cash and cash equivalents | $ 789,397 | $ 1,296,077 | |
Trade receivables and contract assets, net of allowance of | 1,268,036 | 1,108,201 | |
Prepaid and other current assets | 158,556 | 129,610 | |
Total current assets | 2,215,989 | 2,533,888 | |
Property and equipment, net | 204,967 | 202,387 | |
Operating lease right-of-use assets, net | 124,999 | 114,875 | |
Intangible assets, net | 372,969 | 406,586 | |
Goodwill | 1,203,048 | 1,210,564 | |
Deferred tax assets | 295,947 | 295,115 | |
Other noncurrent assets | 156,167 | 138,721 | |
Total assets | $ 4,574,086 | $ 4,902,136 | |
Liabilities | |||
Current liabilities | |||
Accounts payable | $ 41,551 | $ 55,329 | |
Accrued compensation and benefits expenses | 495,961 | 608,232 | |
Accrued expenses and other current liabilities | 208,531 | 250,688 | |
Income taxes payable, current | 19,093 | 25,520 | |
Operating lease liabilities, current | 39,301 | 37,173 | |
Total current liabilities | 804,437 | 976,942 | |
Long-term debt | 25,000 | 25,034 | |
Operating lease liabilities, noncurrent | 87,942 | 81,497 | |
Deferred tax liabilities, noncurrent | 74,505 | 76,969 | |
Other noncurrent liabilities | 62,901 | 63,886 | |
Total liabilities | 1,054,785 | 1,224,328 | |
Commitments and contingencies | |||
Equity | |||
Stockholders' equity | |||
Common stock, | 52 | 54 | |
Additional paid-in capital | 1,487,973 | 1,390,423 | |
Retained earnings | 2,035,664 | 2,268,204 | |
Accumulated other comprehensive income (loss) | (4,970) | 18,545 | |
Total EPAM Systems, Inc. stockholders' equity | 3,518,719 | 3,677,226 | |
Noncontrolling interest in consolidated subsidiaries | 582 | 582 | |
Total equity | 3,519,301 | 3,677,808 | |
Total liabilities and equity | $ 4,574,086 | $ 4,902,136 | |
EPAM SYSTEMS, INC. AND SUBSIDIARIES | |||
Reconciliation of year-over-year revenue growth as reported on a GAAP basis to revenue growth on an organic constant currency basis is presented in the table below: | |||
Three Months Ended June 30, 2026 | Six Months Ended June 30, 2026 | ||
Revenue growth as reported | 4.5 % | 6.0 % | |
Inorganic revenue | — % | — % | |
Foreign exchange rates | (1.1) % | (2.5) % | |
Revenue growth on an organic constant currency basis | 3.4 % | 3.5 % | |
Reconciliation of various income statement amounts from GAAP to non-GAAP for the three and six months ended June 30, 2026 and 2025:
| |||||||||||
Three Months Ended June 30, 2026 | Six Months Ended June 30, 2026 | ||||||||||
GAAP | Adjustments | Non-GAAP | GAAP | Adjustments | Non-GAAP | ||||||
Cost of revenues (exclusive of depreciation and amortization)(1) | $ 985,199 | $ (23,361) | $ 961,838 | $ 1,997,251 | $ (46,771) | $ 1,950,480 | |||||
Selling, general and administrative expenses(2) | $ 245,245 | $ (39,474) | $ 205,771 | $ 484,947 | $ (82,314) | $ 402,633 | |||||
Income from operations(3) | $ 152,222 | $ 80,444 | $ 232,666 | $ 268,990 | $ 433,402 | ||||||
Operating margin | 10.8 % | 5.6 % | 16.4 % | 9.6 % | 5.8 % | 15.4 % | |||||
Net income(4) | $ 102,979 | $ 73,831 | $ 185,500 | $ 332,035 | |||||||
Diluted earnings per share | $ 1.97 | $ 3.38 | $ 3.49 | $ 6.24 | |||||||
Three Months Ended June 30, 2025 | Six Months Ended June 30, 2025 | ||||||||||
GAAP | Adjustments | Non-GAAP | GAAP | Adjustments | Non-GAAP | ||||||
Cost of revenues (exclusive of depreciation and amortization)(1) | $ 964,012 | $ (18,232) | $ 945,780 | $ 1,916,020 | $ (42,773) | $ 1,873,247 | |||||
Selling, general and administrative expenses(2) | $ 231,681 | $ (40,349) | $ 191,332 | $ 450,598 | $ (74,572) | $ 376,026 | |||||
Income from operations(3) | $ 126,476 | $ 76,417 | $ 202,893 | $ 225,806 | $ 378,643 | ||||||
Operating margin | 9.3 % | 5.7 % | 15.0 % | 8.5 % | 5.8 % | 14.3 % | |||||
Net income(4) | $ 88,026 | $ 68,765 | $ 156,791 | $ 161,508 | $ 294,806 | ||||||
Diluted earnings per share | $ 1.56 | $ 2.77 | $ 2.84 | $ 5.18 | |||||||
Items (1) through (4) above are detailed in the table below with the specific cross-reference noted in the appropriate item. |
Three Months Ended June 30, | Six Months Ended June 30, | ||||||
2026 | 2025 | 2026 | 2025 | ||||
Stock-based compensation expenses | $ 22,833 | $ 18,161 | $ 45,686 | $ 42,084 | |||
Humanitarian support in | 528 | 576 | 1,085 | 1,194 | |||
Poland R&D incentives (b) | — | (505) | — | (505) | |||
Total adjustments to GAAP cost of revenues(1) | 23,361 | 18,232 | 46,771 | 42,773 | |||
Stock-based compensation expenses | 23,568 | 20,397 | 50,634 | 44,930 | |||
Cost Optimization charges(c) | 13,940 | 16,275 | 27,336 | 21,586 | |||
Humanitarian support in | 1,961 | 3,282 | 4,370 | 7,014 | |||
Other acquisition-related expenses | 1 | 292 | 7 | 862 | |||
One-time charges (benefits) | 4 | 103 | (33) | 180 | |||
Total adjustments to GAAP selling, general and administrative expenses(2) | 39,474 | 40,349 | 82,314 | 74,572 | |||
Amortization of acquired intangible assets | 17,609 | 17,836 | 35,327 | 35,492 | |||
Total adjustments to GAAP income from operations(3) | 80,444 | 76,417 | 164,412 | 152,837 | |||
Foreign exchange loss | 9,850 | 6,227 | 7,552 | 16,954 | |||
Change in fair value of contingent consideration included in Interest and other income, net | 1,435 | (232) | 2,420 | (1,969) | |||
Impairment of financial assets | 356 | — | 356 | — | |||
Gain on financial instrument | — | — | — | (350) | |||
Provision for income taxes: | |||||||
Tax effect on non-GAAP adjustments | (19,997) | (18,291) | (39,128) | (38,201) | |||
Tax shortfall related to stock-based compensation | 1,743 | 1,106 | 11,592 | 563 | |||
Net discrete charge (benefit) from tax planning(d) | — | 3,538 | (669) | 3,464 | |||
Total adjustments to GAAP net income(4) | $ 73,831 | $ 68,765 | $ 146,535 | $ 133,298 | |||
(a) | Humanitarian support in |
(b) | We have excluded from non-GAAP results the portion of the benefit from Poland R&D incentives related to qualifying activities performed in 2023 as it represents a nonrecurring one-time benefit. |
(c) | Cost Optimization charges include employee separation costs incurred in connection with the programs initiated in the second quarter of 2024 and second quarter of 2025. Consistent with the Company's historical non-GAAP policy, costs incurred in connection with formal restructuring initiatives have been excluded from non-GAAP results as these are attributable to targeted restructuring efforts and not expected to recur once the respective Cost Optimization program is completed. |
(d) | Net discrete charge (benefit) related to the implementation of tax planning to disregard certain foreign subsidiaries as separate entities for |
EPAM SYSTEMS, INC. AND SUBSIDIARIES Reconciliations of Guidance Non-GAAP Financial Measures to Comparable GAAP Financial Measures (Unaudited) | |||
The below guidance constitutes forward-looking statements within the meaning of the federal securities laws and is based on a number of assumptions that are subject to change and many of which are outside the control of the Company. Actual results may differ materially from the Company's expectations depending on factors discussed in the Company's filings with the Securities and Exchange Commission. | |||
Reconciliation of expected year-over-year revenue growth on a GAAP basis to expected revenue growth on an organic constant currency basis is presented in the table below: | |||
Third Quarter 2026 | Full Year 2026 | ||
(at midpoint of range) | |||
Revenue growth | 1.7 % | ||
Foreign exchange rates impact | 0.1 % | (1.2) % | |
Inorganic revenue growth | — % | — % | |
Revenue growth on an organic constant currency basis | 1.8 % | ||
Reconciliation of expected GAAP to non-GAAP income from operations as a percentage of revenues is presented in the table below:
| |||
Third Quarter 2026 | Full Year 2026 | ||
GAAP income from operations as a percentage of revenues | |||
Stock-based compensation expenses | 3.1 % | 3.2 % | |
Included in cost of revenues (exclusive of depreciation and amortization) | 1.5 % | 1.5 % | |
Included in selling, general and administrative expenses | 1.6 % | 1.7 % | |
Humanitarian support in | 0.2 % | 0.2 % | |
Cost Optimization charges(c) | — % | 0.4 % | |
Amortization of acquired intangible assets | 1.2 % | 1.2 % | |
Non-GAAP income from operations as a percentage of revenues(e) | |||
(e) | EPAM has not included the impact of potential future one-time charges including asset impairments, unusual gains and losses, expenses incurred in connection with future cost optimization actions, and other acquisition-related expenses because the Company is unable to predict these amounts with reasonable certainty. |
Reconciliation of expected GAAP to non-GAAP effective tax rate is presented in the table below:
| |||
Third Quarter 2026 | Full Year 2026 | ||
GAAP effective tax rate (approximately) | 25.0 % | 27.0 % | |
Tax effect on non-GAAP adjustments | (0.8) % | (0.8) % | |
Tax shortfall related to stock-based compensation | (0.2) % | (2.3) % | |
Net discrete benefit from tax planning(d) | — % | 0.1 % | |
Non-GAAP effective tax rate (approximately) | 24.0 % | 24.0 % | |
Reconciliation of expected GAAP to non-GAAP diluted earnings per share is presented in the table below:
| |||
Third Quarter 2026 | Full Year 2026 | ||
GAAP diluted earnings per share | |||
Stock-based compensation expenses | 0.85 | 3.55 | |
Included in cost of revenues (exclusive of depreciation and amortization) | 0.39 | 1.66 | |
Included in selling, general and administrative expenses | 0.46 | 1.89 | |
Humanitarian support in | 0.05 | 0.20 | |
Cost Optimization charges(c) | — | 0.52 | |
One-time charges(e) | 0.02 | 0.03 | |
Amortization of acquired intangible assets | 0.34 | 1.34 | |
Change in fair value of contingent consideration | — | 0.05 | |
Foreign exchange loss | 0.06 | 0.22 | |
Provision for income taxes: | |||
Tax effect on non-GAAP adjustments | (0.28) | (1.30) | |
Tax shortfall related to stock-based compensation | 0.01 | 0.26 | |
Net discrete benefit from tax planning(d) | — | (0.01) | |
Non-GAAP diluted earnings per share(e) | |||
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SOURCE EPAM Systems, Inc.