EPAM (NYSE: EPAM) boosts Q1 profit and buys back $324M in stock
Filing Impact
Filing Sentiment
Form Type
8-K
Rhea-AI Filing Summary
EPAM Systems reported solid growth for the first quarter of 2026, with revenues of $1.400 billion, up 7.6% year-over-year, and organic constant-currency revenue growth of 3.7%. GAAP operating margin improved to 8.3%, while non-GAAP operating margin reached 14.3%.
GAAP diluted EPS rose to $1.52, up 18.8%, and non-GAAP diluted EPS increased to $2.86, also up about 18.7% from the prior year. Net income was $82.5 million versus $73.5 million a year earlier.
The company returned capital aggressively, spending $324 million on share repurchases, including a $300 million accelerated share repurchase. Cash, cash equivalents and restricted cash declined to $1.043 billion from $1.301 billion at year-end as a result.
For full-year 2026, EPAM now expects revenue growth of 4.0%–6.5% (organic constant-currency 2.5%–5.0%), GAAP diluted EPS of $8.29–$8.59 and non-GAAP diluted EPS of $12.98–$13.28. Second-quarter revenue is projected at $1.400–$1.415 billion, with GAAP diluted EPS of $1.79–$1.87 and non-GAAP diluted EPS of $3.10–$3.18.
Positive
- Strong earnings growth and margin expansion: Q1 2026 revenue rose 7.6% to $1.400 billion, while GAAP diluted EPS grew 18.8% and non-GAAP diluted EPS grew 18.7%, with non-GAAP operating margin reaching 14.3%.
- Clear, supportive 2026 guidance: Management guides full-year revenue growth of 4.0%–6.5% and non-GAAP operating margin of 15%–16%, with non-GAAP EPS expected between $12.98 and $13.28.
Negative
- Cash usage and balance decline: The company used $36.4 million of cash in operating activities in the first three months of 2026, and cash, cash equivalents and restricted cash decreased by $258.8 million to $1.043 billion, partly due to aggressive share repurchases.
- Higher leverage: Long-term debt increased from $25.0 million to $165.0 million as of March 31, 2026, raising financial obligations alongside significant capital returns.
Insights
EPAM delivers double-digit EPS growth, modest revenue expansion, and sizable buybacks with steady 2026 guidance.
EPAM grew Q1 2026 revenue to $1.400 billion, up 7.6%, with organic constant-currency growth of 3.7%. GAAP operating margin improved to 8.3% and non-GAAP operating margin to 14.3%, supporting GAAP diluted EPS of $1.52 and non-GAAP diluted EPS of $2.86, both up about 19% year over year.
Cash from operations swung to a use of $36.4 million versus prior-year generation, while cash balances fell to $1.043 billion, largely reflecting $324 million in Q1 share repurchases, including a $300 million accelerated share repurchase. Long-term debt increased to $165 million, but the balance sheet still shows substantial equity.
Management reaffirmed a mid-single-digit growth profile for 2026, with revenue expected to rise 4.0%–6.5% and non-GAAP operating margin guided at 15%–16%. Guided GAAP EPS of $8.29–$8.59 and non-GAAP EPS of $12.98–$13.28 frame earnings expectations, while Q2 guidance for revenue of $1.400–$1.415 billion and non-GAAP EPS of $3.10–$3.18 sets a near-term benchmark.
8-K Event Classification
2 items: 2.02, 9.01
2 items
Item 2.02
Results of Operations and Financial Condition
Financial
Disclosure of earnings results, typically an earnings press release or preliminary financials.
Item 9.01
Financial Statements and Exhibits
Exhibits
Financial statements, pro forma financial information, and exhibit attachments filed with this report.
Key Figures
Q1 2026 Revenue: $1.400 billion
Q1 2026 GAAP diluted EPS: $1.52
Q1 2026 non-GAAP diluted EPS: $2.86
+5 more
8 metrics
Q1 2026 Revenue
$1.400 billion
Three months ended March 31, 2026; up 7.6% year-over-year
Q1 2026 GAAP diluted EPS
$1.52
Increased 18.8% from $1.28 in Q1 2025
Q1 2026 non-GAAP diluted EPS
$2.86
Increased 18.7% from $2.41 in Q1 2025
Share repurchases Q1 2026
$324 million
Includes $300 million accelerated share repurchase
Cash balance
$1.043 billion
Cash, cash equivalents and restricted cash as of March 31, 2026
2026 revenue growth guidance
4.0%–6.5%
Full-year 2026 GAAP revenue growth expectation
2026 non-GAAP EPS guidance
$12.98–$13.28
Full-year 2026 non-GAAP diluted EPS range
Q1 2026 operating cash flow
-$36.4 million
Cash used in operating activities, first three months of 2026
Key Terms
non-GAAP income from operations, organic constant currency basis, accelerated share repurchase, Cost Optimization charges, +2 more
6 terms
non-GAAP income from operations financial
"non-GAAP income from operations was 14.3% of revenues for the first quarter"
Non-GAAP income from operations is a measure of a company's profit from its core business activities, calculated without including certain expenses or income that are typically added back or excluded in standard accounting reports. It provides a clearer picture of how well the company's main operations are performing by removing items like one-time costs or gains that might distort the overall results. Investors use it to better understand the company's ongoing profitability, separate from unusual or non-recurring items.
organic constant currency basis financial
"On an organic constant currency basis, revenues were up 3.7% compared to the first quarter of 2025"
A measurement of a company’s growth that shows results excluding the effects of recent acquisitions, disposals or one-time events (organic) and after removing the impact of currency swings (constant currency). Think of it as comparing the same business over time on a level playing field so investors can see whether underlying sales or profits are truly growing, rather than changing because of deals or foreign exchange moves.
Cost Optimization charges financial
"Cost Optimization charges include employee separation costs incurred in connection with the programs"
effective tax rate financial
"The Company now expects its GAAP effective tax rate to be approximately 27%"
The effective tax rate is the percentage of a company's profits that it pays in taxes. It shows how much of its earnings go to taxes after all deductions and credits are considered. For investors, it indicates how much of the company's income is taken by taxes, impacting overall profitability and financial health.
foreign exchange loss (gain) financial
"Foreign exchange loss (gain)"
Earnings Snapshot
Revenue: $1.400 billion · Guidance included
Q1 2026
Revenue
$1.400 billion
up 7.6% year-over-year
GAAP diluted EPS
$1.52
up 18.8% year-over-year
Non-GAAP diluted EPS
$2.86
up 18.7% year-over-year
GAAP operating margin
8.3%
up from 7.6% in Q1 2025
Non-GAAP operating margin
14.3%
up from 13.5% in Q1 2025
Guidance
For full-year 2026, EPAM expects revenue growth of 4.0%–6.5%, non-GAAP operating margin of 15%–16%, GAAP EPS of $8.29–$8.59 and non-GAAP EPS of $12.98–$13.28. Q2 2026 revenue is guided to $1.400–$1.415 billion with non-GAAP EPS of $3.10–$3.18.
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of report (Date of earliest event reported): May 7, 2026
(Exact name of registrant as specified in its charter) | ||||||||
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| (Address of principal executive offices) | (Zip Code) | |||||||
(Registrant’s telephone number, including area code)
| Not Applicable | ||||||||
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Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):
| Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) | ||||||||
| Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) | ||||||||
| Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) | ||||||||
| Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) | ||||||||
Securities registered pursuant to Section 12(b) of the Act:
| Title of Each Class | Trading Symbol | Name of Each Exchange on which Registered | ||||||
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter). Emerging growth company ☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Item 2.02. Results of Operations and Financial Condition.
On May 7, 2026, EPAM Systems, Inc. (the “Company” or “EPAM”) issued a press release and an infographic discussing its results of operations for the first quarter ended March 31, 2026. A copy of the press release and the infographic are attached as Exhibits 99.1 and 99.2, respectively, to this report and are incorporated by reference into this Item 2.02.
The information in this report, including Exhibit 99.1 attached hereto, is being furnished pursuant to Item 2.02 of Form 8-K and shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934 (the “Exchange Act”) or otherwise be subject to the liability of that section, nor shall it be deemed incorporated by reference in any filing under the Exchange Act or the Securities Act of 1933, except as expressly stated by specific reference in such a filing.
Item 9.01. Financial Statements and Exhibits.
(d) Exhibits
99.1 Press release dated May 7, 2026, announcing results of operations of EPAM Systems, Inc. for the quarter ended March 31, 2026
101 Cover Page Interactive Data File - the cover page XBRL tags are embedded within the Inline XBRL document.
104 The cover page from this Current Report on Form 8-K, formatted as Inline XBRL.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
Date: May 7, 2026
| By: | /s/ Jason Peterson | |||||||
| Name: | Jason Peterson | |||||||
| Title: | Senior Vice President, Chief Financial Officer and Treasurer | |||||||
Exhibit 99.1
EPAM Reports Results for First Quarter 2026
•First quarter revenues of $1.400 billion, up 7.6% year-over-year
•GAAP income from operations was 8.3% of revenues and non-GAAP income from operations was 14.3% of revenues for the first quarter
•First quarter GAAP diluted EPS of $1.52, an increase of $0.24, or 18.8%, and non-GAAP diluted EPS of $2.86, an increase of $0.45, or 18.7%, on a year-over-year basis
•Continued to return capital to shareholders, spending $324 million on stock repurchases in the first quarter, which includes the $300 million accelerated share repurchase agreement
•For the full year, EPAM now expects the year-over-year revenue growth rate to be in the range of 4.0% to 6.5% and now expects the year-over-year revenue growth rate on an organic constant currency basis to be in the range of 2.5% to 5.0%.
•For the full year, EPAM now expects its GAAP diluted EPS to be in the range of $8.29 to $8.59, and non-GAAP diluted EPS to now be in the range of $12.98 to $13.28
Newtown, PA, USA — May 7, 2026 — EPAM Systems, Inc. (NYSE: EPAM), a leading digital and AI transformation company, today announced results for its first quarter ended March 31, 2026.
“We are pleased to report a strong first quarter and solid start of the year amidst a rapidly evolving macroeconomic landscape. Our Q1 performance reflects steady execution and continued momentum across our AI-native and AI foundational readiness initiatives,” said Balazs Fejes, CEO & President, EPAM. “We are on a multi-year transformation journey, continuing to position ourselves to fully benefit and capitalize on AI growth opportunities as well as accelerate our own AI client zero transformation.”
First Quarter 2026 Highlights
•Revenues increased to $1.400 billion, a year-over-year increase of $98.4 million, or 7.6%. On an organic constant currency basis, revenues were up 3.7% compared to the first quarter of 2025;
•GAAP income from operations was $116.8 million, an increase of $17.4 million, or 17.6%, compared to $99.3 million in the first quarter of 2025;
•Non-GAAP income from operations was $200.7 million, an increase of $25.0 million, or 14.2%, compared to $175.8 million in the first quarter of 2025;
•Diluted earnings per share (“EPS”) on a GAAP basis was $1.52, an increase of $0.24, or 18.8%, compared to $1.28 in the first quarter of 2025; and
•Non-GAAP diluted EPS was $2.86, an increase of $0.45, or 18.7%, compared to $2.41 in the first quarter of 2025.
Cash Flow and Other Metrics
•Cash used in operating activities was $36.4 million for the first three months of 2026, compared to cash provided by operating activities of $24.2 million for the first three months of 2025;
•Cash, cash equivalents and restricted cash totaled $1.043 billion as of March 31, 2026, a decrease of $258.8 million, or 19.9%, from $1.301 billion as of December 31, 2025;
•The Company spent $324 million on share repurchases during the first quarter of 2026 under its share repurchase program, which included $300 million for the previously announced accelerated share repurchase (“ASR”). The Company received 1.8 million shares during the first quarter with another 0.5 million shares received in April upon settlement of the ASR;
•Total headcount was approximately 62,750 as of March 31, 2026. Included in this number were approximately 56,500 delivery professionals, a decrease of 0.2% from December 31, 2025.
2026 Outlook - Full Year and Second 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 4.0% to 6.5% for 2026 and now expects the year-over-year revenue growth rate on an organic constant currency basis to be in the range of 2.5% to 5.0%;
•For the full year, EPAM continues to expect GAAP income from operations to be in the range of 10% to 11% of revenues and non-GAAP income from operations to be in the range of 15% to 16% of revenues;
•The Company now expects its GAAP effective tax rate to be approximately 27% and continues to expect its non-GAAP effective tax rate to be approximately 24%; and
•EPAM now expects GAAP diluted EPS to be in the range of $8.29 to $8.59 and non-GAAP diluted EPS to be in the range of $12.98 to $13.28. The Company now expects weighted average diluted shares outstanding for the year to be 52.7 million.
Second Quarter
EPAM expects the following for the second quarter:
•The Company expects revenues will be in the range of $1.400 billion to $1.415 billion for the second quarter, reflecting year-over-year growth of 4.0% at the midpoint of the range. The Company expects the year-over-year revenue growth rate on an organic constant currency basis to be 2.7% at the midpoint of the range;
•For the second quarter, EPAM expects GAAP income from operations to be in the range of 9% to 10% of revenues and non-GAAP income from operations to be in the range of 15% to 16% of revenues;
•The Company expects its GAAP effective tax rate to be approximately 27% and its non-GAAP effective tax rate to be approximately 24%; and
•EPAM expects GAAP diluted EPS will be in the range of $1.79 to $1.87 for the quarter, and non-GAAP diluted EPS will be in the range of $3.10 to $3.18 for the quarter. The Company expects weighted average diluted shares outstanding for the quarter to be 52.4 million.
Conference Call Information
EPAM will host a conference call to discuss the results on Thursday, May 7, 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.
Contact:
EPAM Systems, Inc.
Mike Rowshandel, Head of Investor Relations
Phone: +1-267-759-9000 x393336
Email: mike_rowshandel@epam.com
EPAM SYSTEMS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
(In thousands, except per share data)
| Three Months Ended March 31, | |||||||||||
| 2026 | 2025 | ||||||||||
| Revenues | $ | 1,400,061 | $ | 1,301,692 | |||||||
| Operating expenses: | |||||||||||
| Cost of revenues (exclusive of depreciation and amortization) | 1,012,052 | 952,008 | |||||||||
| Selling, general and administrative expenses | 239,702 | 218,917 | |||||||||
| Depreciation and amortization expense | 31,539 | 31,437 | |||||||||
| Income from operations | 116,768 | 99,330 | |||||||||
| Interest and other income, net | 1,582 | 5,814 | |||||||||
| Foreign exchange gain (loss) | 2,298 | (10,727) | |||||||||
| Income before provision for income taxes | 120,648 | 94,417 | |||||||||
| Provision for income taxes | 38,127 | 20,935 | |||||||||
| Net income | $ | 82,521 | $ | 73,482 | |||||||
| Net income per share: | |||||||||||
| Basic | $ | 1.53 | $ | 1.29 | |||||||
| Diluted | $ | 1.52 | $ | 1.28 | |||||||
| Shares used in calculation of net income per share: | |||||||||||
| Basic | 53,793 | 56,780 | |||||||||
| Diluted | 54,183 | 57,262 | |||||||||
EPAM SYSTEMS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
(In thousands, except par value)
| As of March 31, 2026 | As of December 31, 2025 | ||||||||||
Assets | |||||||||||
Current assets | |||||||||||
Cash and cash equivalents | $ | 1,036,959 | $ | 1,296,077 | |||||||
Trade receivables and contract assets, net of allowance of $5,060 and $6,350, respectively | 1,174,660 | 1,108,201 | |||||||||
| Prepaid and other current assets | 145,806 | 129,610 | |||||||||
Total current assets | 2,357,425 | 2,533,888 | |||||||||
| Property and equipment, net | 202,826 | 202,387 | |||||||||
| Operating lease right-of-use assets, net | 118,431 | 114,875 | |||||||||
| Intangible assets, net | 385,728 | 406,586 | |||||||||
| Goodwill | 1,204,577 | 1,210,564 | |||||||||
| Deferred tax assets | 283,027 | 295,115 | |||||||||
| Other noncurrent assets | 151,437 | 138,721 | |||||||||
Total assets | $ | 4,703,451 | $ | 4,902,136 | |||||||
Liabilities | |||||||||||
Current liabilities | |||||||||||
Accounts payable | $ | 40,113 | $ | 55,329 | |||||||
| Accrued compensation and benefits expenses | 567,656 | 608,232 | |||||||||
| Accrued expenses and other current liabilities | 224,171 | 250,688 | |||||||||
| Income taxes payable, current | 15,639 | 25,520 | |||||||||
| Operating lease liabilities, current | 36,750 | 37,173 | |||||||||
Total current liabilities | 884,329 | 976,942 | |||||||||
| Long-term debt | 165,000 | 25,034 | |||||||||
| Operating lease liabilities, noncurrent | 86,193 | 81,497 | |||||||||
| Deferred tax liabilities, noncurrent | 73,795 | 76,969 | |||||||||
| Other noncurrent liabilities | 62,422 | 63,886 | |||||||||
Total liabilities | 1,271,739 | 1,224,328 | |||||||||
Commitments and contingencies | |||||||||||
| Equity | |||||||||||
Stockholders’ equity | |||||||||||
| Common stock, $0.001 par value; 160,000 shares authorized; 52,757 shares issued and outstanding at March 31, 2026, and 54,274 shares issued and outstanding at December 31, 2025 | 53 | 54 | |||||||||
Additional paid-in capital | 1,360,302 | 1,390,423 | |||||||||
Retained earnings | 2,084,540 | 2,268,204 | |||||||||
Accumulated other comprehensive income (loss) | (13,765) | 18,545 | |||||||||
| Total EPAM Systems, Inc. stockholders’ equity | 3,431,130 | 3,677,226 | |||||||||
| Noncontrolling interest in consolidated subsidiaries | 582 | 582 | |||||||||
| Total equity | 3,431,712 | 3,677,808 | |||||||||
Total liabilities and equity | $ | 4,703,451 | $ | 4,902,136 | |||||||
EPAM SYSTEMS, INC. AND SUBSIDIARIES
Reconciliations of Non-GAAP Financial Measures to Comparable GAAP Financial Measures
(Unaudited)
(In thousands, except percentages and per share amounts)
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 March 31, 2026 | |||||
Revenue growth as reported | 7.6 | % | |||
| Inorganic revenue | 0.0 | % | |||
| Foreign exchange rates | (3.9) | % | |||
Revenue growth on an organic constant currency basis | 3.7 | % | |||
Reconciliation of various income statement amounts from GAAP to non-GAAP for the three months ended March 31, 2026 and 2025:
| Three Months Ended March 31, 2026 | |||||||||||||||||
| GAAP | Adjustments | Non-GAAP | |||||||||||||||
Cost of revenues (exclusive of depreciation and amortization)(1) | $ | 1,012,052 | $ | (23,410) | $ | 988,642 | |||||||||||
Selling, general and administrative expenses(2) | $ | 239,702 | $ | (42,840) | $ | 196,862 | |||||||||||
Income from operations(3) | $ | 116,768 | $ | 83,968 | $ | 200,736 | |||||||||||
Operating margin | 8.3 | % | 6.0 | % | 14.3 | % | |||||||||||
Net income(4) | $ | 82,521 | $ | 72,704 | $ | 155,225 | |||||||||||
Diluted earnings per share | $ | 1.52 | $ | 2.86 | |||||||||||||
| Three Months Ended March 31, 2025 | |||||||||||||||||
| GAAP | Adjustments | Non-GAAP | |||||||||||||||
Cost of revenues (exclusive of depreciation and amortization)(1) | $ | 952,008 | $ | (24,541) | $ | 927,467 | |||||||||||
Selling, general and administrative expenses(2) | $ | 218,917 | $ | (34,223) | $ | 184,694 | |||||||||||
Income from operations(3) | $ | 99,330 | $ | 76,420 | $ | 175,750 | |||||||||||
Operating margin | 7.6 | % | 5.9 | % | 13.5 | % | |||||||||||
Net income(4) | $ | 73,482 | $ | 64,533 | $ | 138,015 | |||||||||||
Diluted earnings per share | $ | 1.28 | $ | 2.41 | |||||||||||||
| Items (1) through (4) above are detailed in the table below with the specific cross-reference noted in the appropriate item. | ||
| Three Months Ended March 31, | |||||||||||
| 2026 | 2025 | ||||||||||
| Stock-based compensation expenses | $ | 22,853 | $ | 23,923 | |||||||
Humanitarian support in Ukraine(a) | 557 | 618 | |||||||||
Total adjustments to GAAP cost of revenues(1) | 23,410 | 24,541 | |||||||||
Stock-based compensation expenses | 27,066 | 24,533 | |||||||||
Cost Optimization charges(b) | 13,396 | 5,311 | |||||||||
Other acquisition-related expenses | 6 | 570 | |||||||||
Humanitarian support in Ukraine(a) | 2,409 | 3,732 | |||||||||
| One-time charges (benefits) | (37) | 77 | |||||||||
Total adjustments to GAAP selling, general and administrative expenses(2) | 42,840 | 34,223 | |||||||||
Amortization of acquired intangible assets | 17,718 | 17,656 | |||||||||
Total adjustments to GAAP income from operations(3) | 83,968 | 76,420 | |||||||||
| Foreign exchange loss (gain) | (2,298) | 10,727 | |||||||||
| Gain on financial instrument | — | (350) | |||||||||
Change in fair value of contingent consideration included in Interest and other income, net | 985 | (1,737) | |||||||||
Provision for income taxes: | |||||||||||
Tax effect on non-GAAP adjustments | (19,131) | (19,910) | |||||||||
Tax shortfall (excess tax benefit) related to stock-based compensation | 9,849 | (543) | |||||||||
Net discrete benefit from tax planning(c) | (669) | (74) | |||||||||
Total adjustments to GAAP net income(4) | $ | 72,704 | $ | 64,533 | |||||||
(a)Humanitarian support in Ukraine includes expenses related to EPAM's $100 million humanitarian commitment in response to Russia's invasion of Ukraine to support EPAM professionals and their families in and displaced from Ukraine. These expenses are incremental to those expenses incurred prior to the crisis, clearly separable from normal operations, and not expected to recur once the crisis has subsided and operations return to normal.
(b)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.
(c)Net discrete benefit related to the implementation of tax planning to disregard certain foreign subsidiaries as separate entities for U.S. income tax purposes. Consistent with the Company's historical non-GAAP policy, the benefit related to the implementation of tax planning has been excluded from non-GAAP results as it is one-time and unusual in nature.
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:
| Second Quarter 2026 | Full Year 2026 | ||||||||||
| (at midpoint of range) | |||||||||||
Revenue growth | 4.0 | % | 4.0% to 6.5% | ||||||||
Foreign exchange rates impact | (1.3) | % | (1.5) | % | |||||||
| Inorganic revenue growth | — | % | — | % | |||||||
Revenue growth on an organic constant currency basis | 2.7 | % | 2.5% to 5.0% | ||||||||
Reconciliation of expected GAAP to non-GAAP income from operations as a percentage of revenues is presented in the table below:
| Second Quarter 2026 | Full Year 2026 | ||||||||||
GAAP income from operations as a percentage of revenues | 9.0% to 10.0% | 10.0% to 11.0% | |||||||||
Stock-based compensation expenses | 3.6 | % | 3.2 | % | |||||||
Included in cost of revenues (exclusive of depreciation and amortization) | 1.6 | % | 1.4 | % | |||||||
Included in selling, general and administrative expenses | 2.0 | % | 1.8 | % | |||||||
Humanitarian support in Ukraine(a) | 0.2 | % | 0.2 | % | |||||||
Cost Optimization charges(b) | 1.0 | % | 0.4 | % | |||||||
Amortization of acquired intangible assets | 1.2 | % | 1.2 | % | |||||||
Non-GAAP income from operations as a percentage of revenues(d) | 15.0% to 16.0% | 15.0% to 16.0% | |||||||||
(d)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:
| Second Quarter 2026 | Full Year 2026 | ||||||||||
GAAP effective tax rate (approximately) | 27.0 | % | 27.0 | % | |||||||
| Tax effect on non-GAAP adjustments | (1.9) | % | (1.0) | % | |||||||
Tax shortfall related to stock-based compensation | (1.1) | % | (2.1) | % | |||||||
Net discrete benefit from tax planning(c) | — | % | 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:
| Second Quarter 2026 | Full Year 2026 | ||||||||||
GAAP diluted earnings per share | $1.79 to $1.87 | $8.29 to $8.59 | |||||||||
Stock-based compensation expenses | 0.95 | 3.55 | |||||||||
Included in cost of revenues (exclusive of depreciation and amortization) | 0.43 | 1.62 | |||||||||
Included in selling, general and administrative expenses | 0.52 | 1.93 | |||||||||
Humanitarian support in Ukraine(a) | 0.05 | 0.21 | |||||||||
Cost Optimization charges(b) | 0.25 | 0.51 | |||||||||
Amortization of acquired intangible assets | 0.33 | 1.31 | |||||||||
| Change in fair value of contingent consideration | — | 0.02 | |||||||||
Foreign exchange loss | 0.06 | 0.13 | |||||||||
Provision for income taxes: | |||||||||||
Tax effect on non-GAAP adjustments | (0.36) | (1.27) | |||||||||
Tax shortfall related to stock-based compensation | 0.03 | 0.24 | |||||||||
Net discrete benefit from tax planning(c) | — | (0.01) | |||||||||
Non-GAAP diluted earnings per share(d) | $3.10 to $3.18 | $12.98 to $13.28 | |||||||||
FAQ
How did EPAM (EPAM) perform financially in Q1 2026?
EPAM delivered solid Q1 2026 results, with revenue of $1.400 billion, up 7.6% year-over-year. GAAP diluted EPS was $1.52 and non-GAAP diluted EPS was $2.86, both increasing about 19% compared to the first quarter of 2025.
What guidance did EPAM (EPAM) provide for full-year 2026?
For 2026, EPAM expects revenue growth of 4.0%–6.5%, with organic constant-currency growth of 2.5%–5.0%. The company projects GAAP diluted EPS of $8.29–$8.59 and non-GAAP diluted EPS between $12.98 and $13.28, with non-GAAP operating margin of 15%–16%.
How much stock did EPAM (EPAM) repurchase in the first quarter of 2026?
EPAM spent $324 million on share repurchases in Q1 2026 under its repurchase program. This included $300 million for a previously announced accelerated share repurchase, for which it received 1.8 million shares in the quarter and another 0.5 million shares in April.
What is EPAM (EPAM) guiding for Q2 2026 revenue and earnings?
For Q2 2026, EPAM expects revenue between $1.400 billion and $1.415 billion, implying about 4.0% year-over-year growth at the midpoint. GAAP diluted EPS is guided to $1.79–$1.87, and non-GAAP diluted EPS to $3.10–$3.18 for the quarter.
How did EPAM’s margins trend in Q1 2026 versus last year?
EPAM’s Q1 2026 GAAP operating margin improved to 8.3% from 7.6% a year earlier. Non-GAAP operating margin rose to 14.3% from 13.5%, reflecting higher profitability after adjusting for stock-based compensation, restructuring and other specified items.
What happened to EPAM (EPAM) cash flow and cash balances in early 2026?
Cash used in operating activities was $36.4 million for the first three months of 2026, compared with $24.2 million provided in 2025. Cash, cash equivalents and restricted cash declined to $1.043 billion from $1.301 billion, mainly reflecting significant share repurchases.
How is EPAM (EPAM) using non-GAAP financial measures in its reporting?
EPAM presents non-GAAP metrics by adjusting GAAP results for items like stock-based compensation, acquisition-related costs, restructuring charges, humanitarian support for Ukraine, foreign exchange impacts, and related tax effects. Management uses these measures to analyze trends and communicate performance alongside GAAP figures.