Transcripts
EPAM Systems, Inc.'s management answers for the business every quarter. These are the exchanges that explain it best — verbatim, from the call transcripts preserved in Sources. Each link opens the full transcript at that page in a new tab.
Q1 FY2026 Earnings Call — Q1 FY2026
The most recent call and new CEO Balazs Fejes's clearest strategy statement: the AI-native pivot, token economics, a pipeline of outsized 'vendor consolidation' deals, and how the guide is built. · Open the full transcript →
Guidance philosophy: the low end assumes worsening delays, the high end big-deal wins — but the midpoint needs neither.
David Grossman (Stifel); Jason Peterson, CFO: On the lower end of the range, you could see further worsening or more clients delaying decisions, which would mean incremental uncertainty and delays. On the higher end, you'd have solid execution in the traditional book plus a higher share of wins in the larger deals Balazs referenced […] For the midpoint, we do not need to win many of those large deals. The midpoint is driven more by steady execution and typical EPAM conversion of opportunities. If the macro continues to deteriorate further, that would challenge the midpoint, but it's not heavily dependent on those outsized deals
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The hardest question: can EPAM close and run deals bigger than any before? A new muscle, but AI-native margins run above average.
Jonathan Lee (Guggenheim); Balazs Fejes, CEO: You highlighted large multiyear deals in the pipeline that are larger in scale than what EPAM has historically pursued. What gives you confidence in your ability to close and execute on those? Do you have the sales muscle, governance frameworks and delivery infrastructure to manage programs of that magnitude? How should we think about the profile of these deals regarding competitive dynamics, deal size and margin profiles relative to what you currently see […] We were somewhat surprised at how successful our offering resonated and how quickly the pipeline built. We have the sales muscle to get into these opportunities, and our offering is differentiated because it brings AI-native capabilities that challenge the status quo. We are risk-adjusting the pipeline; we're not assuming full conversion or immediate ramp. EPAM has experience running large programs historically, though those were typically aggregates of many smaller engagements rather than single outsized deals. In terms of profitability, our current AI-native portfolio, which is over $125 million per quarter, runs at higher profitability than the EPAM average
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AI unit economics today: clients bear the token cost, EPAM is exploring when to charge — and there is no broad rate compression.
Bryan Keane (Citi); Balazs Fejes, CEO: Pricing dynamics are a moving target and token economics continues to be an area of discussion. Today, in most client relationships clients are bearing the cost of tokens. We're exploring different commercial models, including when EPAM might charge for tokens, when clients pay directly, and how to structure security and compliance concerns. Anthropic is not fundamentally different in construct — we'll develop software using the Anthropic stack and explore appropriate commercial models with clients and Anthropic. Regarding pricing, Jason and I were pleased to see rate increases in Q1; we are not seeing broad rate compression at this time and have been successful negotiating rate increases with a minority of clients
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How AI margins get controlled: EPAM must build “trading-desk-like” model-sourcing to manage cost, availability and pricing.
James Faucette (Morgan Stanley); Balazs Fejes, CEO: To control economics you need to control multiple aspects: model usage (which model is used for which task and how frequently), the right blend of models to balance capability and cost, and multi-sourcing capability so you can buy the same model service from multiple providers when appropriate. We need to build trading-desk-like capabilities to manage pricing, availability and consumption limits. If you correctly control sourcing and usage of models, you can achieve differentiation in pricing and profitability
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The cannibalization admitted plainly: clients divert budgets toward AI and away from e-commerce builds toward AI-native products.
Arvind Ramnani (Truist); Balazs Fejes, CEO: There is some impact as clients shift IT budgets toward AI spending and automate parts of the SDLC, for example testing. Clients are also diverting investments away from some digital platform or e-commerce builds toward new AI-native products or platforms. That's the shift we are seeing
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Q4 & Full-Year 2025 Earnings Call — Q4 FY2025
The annual call: how EPAM monetizes AI through a deliberately narrow 'AI-native' revenue line, why bigger AI programs help demand, where 2026 margin and pricing come from, and the buyback-plus-tuck-in capital plan. · Open the full transcript →
Defines the deliberately narrow AI-native revenue line: >$105M in Q4, targeted above $600M in 2026, excluding all AI-assisted delivery.
Balazs Fejes, CEO: Notably, in Q4, we generated more than $105,000,000 in pure AI-native revenues, where we continue to see solid momentum and strong sequential growth. As a reminder, our AI-native revenues are defined across two groupings: number one, AI-native IP products, platforms, and solutions where AI was the core of the solution versus simple work accelerated by the use of AI tools; and number two, AI-led transformation initiatives across the entire enterprise. Importantly, our definition excludes all the AI foundational services along with any AIassisted work performed by EPAM Systems, Inc. employees within the software delivery lifecycle. Looking ahead, we continue to see robust demand for our AI-native services and expect to scale these revenues in excess of $600,000,000 in 2026
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The bull thesis: AI multiplies complexity faster than it cuts cost, putting EPAM in the build-vs-buy sweet spot — “the age of building.”
Balazs Fejes, CEO: While we are seeing measurable productivity gains at scale, we are also seeing complexity dramatically increase at a faster pace than we have seen in prior cycles. Clients are facing growing pressure to continue to invest in AI, and that means platform modernization, data, and cloud foundations, security, and critical AI-native upskilling. As a result, AI presents a favorable opportunity for EPAM Systems, Inc. within the build versus buy volume proposition. EPAM Systems, Inc. continues to be positioned in this sweet spot as we believe we are entering an age of building
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Hardest question — “when does the dam break” on delayed AI spend; no crystal ball, but financial-services spend is turning nondiscretionary.
David Grossman (Stifel); Balazs Fejes, CEO: When does that dam have to break? At some point, when does the spending have to accelerate despite uncertainty? […] I wish I would have a crystal ball for that, but I think we are seeing more and more larger programs, which makes me optimistic that we are getting close to that point. So I think right now there are clearly, in certain industries—financial services, for example, in Europe— people are no longer able to hold back transformation and the nondiscretionary CapEx expenditure. Plus, in certain other industries, we are already seeing people are no longer able to delay their decision-making around AI investments, and that is triggering larger programs
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Capital allocation: near-term buybacks plus small tuck-in M&A, with scaled M&A only after digesting the prior deals.
Jim Schneider (Goldman Sachs); Balazs Fejes, CEO; Jason Peterson, CFO: I think we continue to focus on the share buybacks, which as Jason also already communicated, we announced the share buyback plan earlier, the previous quarter. And in the next couple of quarters, at least definitely in the first half year, we are going to continue to make acquisitions as appropriate and repurchase shares. And especially, what we really want to execute is small tokens. But that is our plans at this point of time […] Yeah. So, Jim, in the near term, you probably still have a focus on share repurchase, and then over time, I think we would be more open to kind of scaled M&A activity
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Q1 FY2025 Earnings Call — Q1 FY2025
The succession call: founder Arkadiy Dobkin hands the CEO role to 20-year insider Balazs Fejes, while acquisitions carry the top line and compress margins. · Open the full transcript →
The founder hands off: after 32 years Dobkin moves to Executive Chairman and names 20-year insider Balazs Fejes CEO, effective 9/1/25.
Arkadiy Dobkin, CEO & President: After 32 years since starting in EPAM serving as the Chairman, CEO, and President, I decided to transition into the role of Executive Chairman. This move has been thoughtfully planned over the past several years, and I believe that the right moment is now both for me personally and for the future of the company. But I'm not leaving EPAM as Executive Chairman; I plan to continue providing strategic guidance, combining my years of experience to hold the relationships and Board leadership, and ensuring that the CEO transition is smooth and effective, and that EPAM continues advancing our mission, culture, and values […] I am pleased to announce today that Balazs Fejes will become our new Chief Executive Officer and President on September 1, 2025. Balazs, better known as FB, joined the company over 20 years ago and has been a critical part of our growth story. His leadership has been instrumental to EPAM's development, serving as our first CTO, building our financial services business globally, leading our European and APAC markets, and most recently serving as the President of Global Business and Chief Revenue Officer. FB is uniquely positioned to provide both strategic and operational leadership during our next phase of revolution. I am confident that his rare combination of business and technical acumen will enable him to continue driving EPAM forward
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How the top line is built: 11.7% reported vs 1.4% organic constant-currency growth shows acquisitions carrying the quarter.
Jason Peterson, CFO: In the first quarter, EPAM generated revenue of $1.3 billion, a year-over-year increase of 11.7% on a reported basis. On an organic constant currency basis, revenue grew 1.4% compared to the first quarter of 2024, exceeding our expectations of flat organic growth anticipated at the midpoint of our Q1 guidance. We are pleased to deliver another quarter of year-over-year organic growth in constant currency, reflecting ongoing demand for EPAM services and strong execution across our global portfolio of clients. As Ark mentioned, we believe the outperformance is in part driven by client recognition of EPAM's superior delivery quality and momentum across our AI offerings. Moving to our Q1 vertical performance, four out of six industry verticals delivered strong to ver strong revenue growth. Revenues from our FD and NEORIS acquisitions had the most impact on our financial services and emerging verticals, so I will break out the organic and inorganic contribution within these two verticals. Financial services delivered very strong growth of 29.3% year-over-year, reflecting 4.5% organic growth in constant currency driven by continued strength in insurance, banking, and payments
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The margin tension quantified: gross margin fell to 28.7% from 30.4% as comp hikes and dilutive acquisitions outweighed utilization gains.
Jason Peterson, CFO: Non-GAAP gross margin for the quarter was 28.7% compared to 30.4% for the same quarter last year. Relative to Q1 2024, gross margin in Q1 2025 was negatively impacted by 2024 compensation increases which were only partially offset through pricing. Additionally, lower profitability from recent acquisitions negatively impacted gross margin. The negative impacts from compensation and lower profitability from acquisitions exceeded the benefits of improved utilization and the positive impact from the Polish R&D incentive. The company will be focused on improving gross margin throughout the remainder of the year
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Hardest question — quantify second-half backlog coverage; management declines, admitting decisions are made “in real-time.”
Jim Schneider (Goldman Sachs); Arkadiy Dobkin, CEO: any way of sort of quantifying your second half backlog coverage perhaps being better, worse, or the same as in a typical time after Q1? […] If we're talking about the second half of the year, I can only repeat what we've said already. So with all kind of better environment visibility still relatively difficult, and what we're seeing for the second part of the year is approximately what we were seeing a quarter ago. So decisions are still being made more in real-time. That's what we benefited in Q1 and Q2, so predicting Q3, Q4 better than we predicted so far is difficult, including the size of the deals as well
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Q4 & Full-Year 2023 Earnings Call — Q4 FY2023
The post-war annual: India set to become EPAM's largest delivery location, the downturn pricing and margin math, and the first serious framing of GenAI as both a pull-through and a commoditizer. · Open the full transcript →
The post-war delivery shift made concrete: India, the fastest-growing location since 2021, set to become EPAM's largest by end-2024.
Arkadiy Dobkin, President & CEO: We work on scaling India and LatAm, and at the same time, preparing for future growth in development centers across Europe and Western and Central Asia, our key destination for majority of our relocated talents. In 2023, India continued to be our fastest-growing location, practically since 2021. And while we were growing our capabilities there with accelerated speed, we also worked to ensure that our delivery culture remains focused on quality and client value. India will likely become our largest location by the end of 2024 or at least on match with our current scale in Ukraine
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The downturn margin math: winning work needs some discounting while comp rises and pricing stays weak — margin pressure guided into 2024.
Jason Peterson, CFO: We have been pleased with the progress we are making on demand generation, and we'll continue to prioritize revenue growth into 2024, which, in some pursuits, include some degree of discounting. In 2024, we expect to incur incremental costs due to more normalized variable compensation levels, in addition to wage inflation in certain geographies. This higher level of compensation, combined with the limited ability to improve client pricing in the near term, will continue to put pressures on margins in 2024
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GenAI as opportunity: small proof-of-concepts are proving out and pulling through a “tail” of larger data-engineering work.
Arkadiy Dobkin, President & CEO: As everybody say, it's still a lot of experimentation, but we highlighted something which we do. And there is a quest to implementations happening as we speak. Still the program is not very sizable, but what we also see is that a lot of proof of concepts actually proven to the point that it will trigger additional tail of data engineering programs a lot, because while experimentation going well and proof of concept looking good, usually the data for this type of activities is by size well enough
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GenAI as threat: today's exciting capabilities “become very quickly commodity,” resetting the landscape roughly every 12 months.
Sean Kennedy (Mizuho); Arkadiy Dobkin, President & CEO: So I think, still there are, at this point, a lot of experimentation and a lot of kind of more straightforward thinking about GenAI, as it's available practically for the end consumers and how this can change interfaces. And again, very straightforward that everybody is thinking how to have a right access to the hybrid data between general sales, the specific ones and most of the companies experimenting in this area and created some type of copilots. And I'm talking about application of areas and just utilizing GenAI as a activity tools for individuals and we work as a sort. I'm talking about, like, client-facing capabilities, new insight. The dificulties of this is it will be changing quarter by quarter. And, I think some exciting things which we see right now would become very quickly commodity and much more sophisticated since it'll be happening like 12 months from now
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Hardest question — if demand is recovering, why so little first-half growth? The new logos are smaller engagements amid intense competition.
Darrin Peller (Wolfe Research); Arkadiy Dobkin, President & CEO: So I think when we're talking about increasing the client number, it's true the difference with previous year that this is smaller clients, smaller — clients maybe not smaller, but smaller engagements. And overall, it still feel a lot of pressure from all, more competitiveness. And it's all coming back to our statement that we actually adjusted our behavior during the 2023, OK, and started to use different approaches to kind of protect client base as well. But it was much more visible all the transition between first half and second half of 2023
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Q1 FY2022 Earnings Call — Q1 FY2022
The stress-test call, the first after Russia's invasion of Ukraine: a delivery-concentrated model tested in real time — relocation, the Russia exit, withdrawn guidance, and the plan to diversify the footprint. · Open the full transcript →
Phase 1 was survival: management calls stabilization a success and confirms the April decision to exit Russia.
Arkadiy Dobkin, CEO & President: Those efforts we define for ourselves as a Phase 1, a period of safety and stabilization of our operations, with very little attention to anything beyond that. Under the current conditions, we believe this phase is largely completed and we will call it out as a notable success. Jason will illustrate in more details the specific numbers for our Q1 results and our guidance for Q2 shortly. So while we are managing through the humanitarian crisis in Ukraine, we're also working with our customers to address their concerns and request to reposition projects and teams to different geographies, which is very much guided by the business continuity plans we had previously established with our clients, including multiple relocation alternatives for our employees. In April, we also made the decision to exit our operations in Russia
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The concentration and the plan: talent in Ukraine, Belarus and Russia falls from ~70% pre-COVID toward ~30% of production by end-2022.
Arkadiy Dobkin, CEO & President: I would also point out that in large part, this diversification program was well underway even during the past several years. Before COVID, our allocation to the talent from Ukraine, Belarus and Russia was close to 70% of our total production capacity. By the end of 2021, it was less than 60%. And we believe, by the end of 2022, we will manage to reduce the allocation of our production staff in the region to about 30%
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The new footprint, named: relocated staff land in Poland, Central Asia, Turkey and Serbia, with some routed onward to the US.
Arvind Ramnani (Piper Sandler); Arkadiy Dobkin, CEO & President: And if I start to list all countries where people might be right now, it would probably be by the end of this call. But there are several specific areas. Poland, obviously, was one of the key destinations, but it's not only Poland. It's countries in Central Asia, it's countries in – countries like Turkey and Serbia. So it's all known names. But at the same time, it's not even one-phase exercise because in some situation we have to move people very quickly. And then after this, finding the final destination, which could be U.S
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The hardest question: can EPAM build delivery outside Ukraine/Belarus? India and LatAm are offered as proof the greenfield playbook works.
David Grossman (Stifel); Arkadiy Dobkin, CEO & President: So India last year was the fastest-growing location for us, but it wasn't fastest-growing location for us for the first three years, it was practically flat or even going down. So we changed operations while we still have the same management which we acquired a long time ago. So we have support of this team to transition this to a very different company today. And that's why India, probably by the end of the year, would be probably No. 2, No. 3 location for us. Very similar happening in Latin America
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More calls
Q3 FY2025 Earnings Call — Q3 FY2025 · 10 pages · The first full quarter under new CEO Balazs Fejes: how AI-native revenue is scaling and how the demand recovery is progressing. · Open →
Q2 FY2025 Earnings Call — Q2 FY2025 · 13 pages · The mid-2025 read during the CEO handoff: NEORIS/tariff-driven demand softness and the return to organic growth. · Open →
Q4 & Full-Year 2024 Earnings Call — Q4 FY2024 · 10 pages · The FY2024 annual: the trough-and-recovery setup, the First Derivative and NEORIS acquisitions, and the 2025 guidance frame. · Open →
Q3 FY2024 Earnings Call — Q3 FY2024 · 5 pages · For the demand trough and the just-closed NEORIS acquisition that reshaped the emerging-markets and financial-services verticals. · Open →
Q1 FY2023 Earnings Call — Q1 FY2023 · 36 pages · Where the 2023 demand slowdown first becomes visible after the war-recovery year, with clients pausing discretionary spend. · Open →
Q4 & Full-Year 2022 Earnings Call — Q4 FY2022 · 36 pages · The full-year war-recovery story: Russia exit complete, the diversified footprint in place, and the cautious 2023 outlook. · Open →
Q2 FY2022 Earnings Call — Q2 FY2022 · 37 pages · The second post-invasion quarter: relocation execution, the ramp of new delivery locations, and the path back toward historical margins. · Open →
Q4 & Full-Year 2021 Earnings Call — Q4 FY2021 · 40 pages · The last pre-war annual: the baseline of the old Ukraine/Belarus/Russia-heavy delivery model before the invasion changed everything. · Open →