NEWTOWN, PA — In the throes of a volatile demand and fluctuating macroeconomic environment, EPAM Systems Inc. (NYSE: EPAM) recently released its results for the fourth quarter and full year of 2023. The Pennsylvania-based IT services provider reported decreased revenues as it grapples with significant external factors. Yet, it remains optimistic about its plans to leverage its vast experience in data, engineering, and consulting to seize opportunities in the Generative AI market.
EPAM’s 2023 performance revealed revenues of $1.157 billion in Q4, a year-on-year decrease of 6.0% or $74 million, and overall full-year revenues of $4.691 billion, a reduction of 2.8% or $134.2 million from the previous year. The company also reported a GAAP income decrease of 28.1% or $48 million from operations in Q4, attributed to a $27.9 million cost connected to the company’s Cost Optimization Program.
Furthermore, the company announced a decrease in non-GAAP income from operations, with Q4 earning $200.4 million, an 8.7% decline, and the full year standing at $765.1 million, a 6.5% decrease from 2022.
While these figures might appear daunting, it is essential to note that this is not an isolated incident exclusive to EPAM. The global economy has been grappling with uncertainty, driving such fluctuations across various sectors. EPAM is making strategic adjustments to navigate these choppy waters successfully.
The company’s recent exit from Russia and rebalancing its delivery platforms across Europe, India, Asia, and Latin America demonstrate its agility and adaptability. Looking ahead, EPAM is set to harmonize its delivery quality, optimize cost-effectiveness, and exploit its extensive data, engineering, and consulting experience.
The company’s CEO & President, Arkadiy Dobkin, has expressed optimism despite the challenging environment. By harnessing its resources and strategically shifting focus, EPAM aims to capitalize on future opportunities, specifically in the Generative AI market.
Additionally, EPAM continues to invest in its share repurchase program, repurchasing 143 thousand shares for $36.5 million in Q4, and 686 thousand shares for $164.9 million for the full year of 2023. This move indicates confidence in the company’s long-term potential and is a strategy commonly used to boost shareholder value during periods of increased volatility.
Looking ahead to 2024, EPAM expects modest growth, projecting a year-over-year growth rate for revenues in the range of 1-4%. The company also anticipates GAAP income from operations to fall between 9.5% to 10.5% of revenues. EPAM holds steady despite 2023’s economic hardships, demonstrating resilience and indicating potential for rebound.
However, the road to recovery is not without its challenges. The company predicts a year-over-year decline of 4% in revenues for the first quarter of 2024. Yet, it forecasts a GAAP income from operations between 9% to 10% of revenues, demonstrating a continued commitment to its cost optimization strategy.
In essence, as global markets continue to fluctuate, EPAM Systems’ 2023 performance and future outlook underscore the company’s adaptability and resilience. The company’s active response to the volatile environment, relying on a mix of strategic rebalancing, cost optimization, and betting on Generative AI, gives market watchers much to ponder in the months ahead.
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