EPAM Systems, Inc. Q2 FY2025 earnings call

• Foundational Themes: 1. Clients refocus on quality and execution, with EPAM's core engineering DNA critical in the AI era; more clients entrust complex ROI-driven programs. 2. Expand AI-native transformation, with early AI investments enabling high adoption and a full range of AI transformational capabilities offered. 3. Scale and optimize global delivery hubs, with training/upskilling teams and a unified global delivery platform. - Commercial and Operational Highlights: Partner with over 150 global ecosystem partners, vertical-led sales structure, unified CRM analytics platform, services portfolio evolution, launch of client success program, and AI/data-driven revenue transformation.

Vertical Performance: All 6 industry verticals showed improvement. Financial Services grew 34.4% YOY (6.5% organic constant currency growth), Software and Hi-Tech grew 21.2% YOY, Life sciences & healthcare grew 11.7% YOY, Consumer goods, retail and travel grew 6.2% YOY, Business information & media grew 2.8% YOY, and Emerging verticals grew 28.7% YOY (3.3% organic constant currency growth). Geographic Performance: Americas (59% of Q2 revenues) grew 15.9% YOY (3.8% organic constant currency growth), EMEA (39% of Q2 revenues) grew 21.7% YOY (7.6% organic constant currency growth), and APAC (2% of revenues) grew 13% YOY (8.3% organic constant currency growth).

Full year 2025 revenue growth expected in 13%-15% range, organic constant currency growth 3%-5%. Q3 2025 revenue range $1.365B-$1.380B, organic constant currency growth 6.2% midpoint. Q4 2025 revenue expected flat to modest decline sequentially from Q3 due to seasonality. Raised bottom end of organic constant currency growth range for full year and increased FX contribution to reported revenue growth.

• Macro-economic uncertainties and dynamic demand environment. - Potential impact of AI adoption on client spending behavior. - Bench optimization challenges affecting utilization.

Q: On workforce, balancing talent additions vs bench optimization, agentic delivery capabilities.

A: Jason Peterson mentions continuing to hire to support revenue growth, being thoughtful about bench, and expecting higher utilization going forward.

Q: Macro environment, what's needed for clients to lean back in discretionary areas.

A: Balazs Fejes states clients were suspending discretionary spending but now need to address fundamentals for AI adoption, which plays to EPAM's strengths.

Q: Progress in upskilling employees, investments.

A: Balazs Fejes talks about an AI upskilling program where over 80% of employees went through, rolling out to client-facing and back office teams to be certified in AI.

Q: Trend of clients trying to do it themselves then returning.

A: Arkadiy Dobkin and Balazs Fejes discuss clients initially attempting projects themselves but returning for complex work due to the complexity of enterprise transformation.

Q: Sequential incremental revenue from existing vs new clients, delivery footprint.

A: Jason Peterson talks about existing clients contributing to growth, and Balazs Fejes states demand is balanced across EPAM's global delivery hubs (Latin America, Central and Eastern Europe, Western Central Asia, India).

Q: AI adoption across verticals.

A: Balazs Fejes notes broad-based AI adoption across verticals, with each vertical having front-running clients in AI initiatives.