NEWTOWN, PA — EPAM Systems, Inc. (NYSE: EPAM) released its financial results for the second quarter of 2024. The company reported revenues of $1.147 billion, marking a decline of 2.0% compared to the same period last year. GAAP income from operations stood at 10.5% of revenues, while non-GAAP income from operations was 15.2% of revenues.
Diluted earnings per share (EPS) on a GAAP basis were $1.70, down $0.33 year-over-year. Non-GAAP diluted EPS dropped by $0.19 to $2.45. Despite these declines, CEO Arkadiy Dobkin highlighted the company’s resilience in a tough macroeconomic climate. “EPAM’s solid performance highlights our ability to adapt and optimize operations, while continuing to strengthen our offerings and client value propositions,” Dobkin stated.
Financial Highlights
- Revenue: $1.147 billion, a 2.0% decline year-over-year.
- GAAP Income from Operations: $120.6 million, a 16.5% drop from the previous year.
- Non-GAAP Income from Operations: $174.5 million, down 8.5%.
- GAAP Diluted EPS: $1.70, a decrease of 16.3%.
- Non-GAAP Diluted EPS: $2.45, down 7.2%.
Cash Flow and Metrics
EPAM reported cash provided by operating activities of $186.9 million for the first half of 2024, up from $176.4 million for the same period in 2023. Cash, cash equivalents, and restricted cash totaled $1.792 billion as of June 30, 2024, a 12.3% decrease from December 31, 2023, largely due to share repurchases. The company had a total headcount of approximately 52,650 by the end of the quarter, with about 47,000 delivery professionals.
Share Repurchase Program
EPAM repurchased 1.160 million shares of its common stock for $214.5 million during Q2 under its previous share repurchase program. On August 1, 2024, the Board approved a new share repurchase program to buy back up to $500 million of EPAM common stock. The timing and amount of repurchases will depend on market conditions and other factors.
2024 Outlook
Full Year: EPAM has narrowed its expected revenue range to $4.590 billion to $4.625 billion, reflecting a year-over-year decline of 1.8%. GAAP income from operations is anticipated to be between 10.5% and 11.0% of revenues, with non-GAAP income from operations expected to range from 15.5% to 16.0%. GAAP diluted EPS is projected to be between $7.18 and $7.38, while non-GAAP diluted EPS is expected to be between $10.20 and $10.40.
Third Quarter: The company expects Q3 revenues to range from $1.145 billion to $1.155 billion, showing a slight year-over-year decline of 0.2%. GAAP income from operations is expected to be between 10.0% and 11.0% of revenues, while non-GAAP income from operations is projected to range from 16.0% to 17.0%. GAAP diluted EPS for the quarter is expected to be between $1.75 and $1.83, with non-GAAP diluted EPS ranging from $2.65 to $2.73.
EPAM: Navigating Challenges, Building Resilience, and Driving Growth
EPAM’s performance reflects ongoing challenges in the macro-demand environment. The company’s ability to maintain a solid performance amid these challenges demonstrates its adaptability and operational efficiency. Its focus on strengthening geographic delivery and transformational capabilities, including expertise in generative AI, positions it well for future growth once market conditions improve.
The new share repurchase program indicates confidence in the company’s long-term value proposition. For shareholders, the repurchase could potentially enhance share value by reducing the number of outstanding shares. However, the mixed financial results and cautious outlook suggest that investors should closely monitor market conditions and EPAM’s ability to navigate through them effectively.
EPAM’s strategic moves, including the share repurchase program and focus on high-growth areas, position it as a resilient player in the tech industry. Shareholders should consider these factors when evaluating the company’s long-term potential.
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