EPAM Systems, Inc. Q4 FY2025 earnings call

Balazs Fejes noted 2025 was a year of transition and 2026 is a year of AI momentum with clients shifting spending to AI investments. EPAM is positioned in AI-native services category, with internal AI-native engineering transformation nearly complete, shifting to develop verticalized AI-native business offerings. Q4 highlights include double-digit revenue growth, strong AI progress with AI Run Transform Playbook and frameworks picking up adoption, client examples like partnerships with EBSCO, Bayer, Zalando, National Geographic Society, and industry recognitions from various analyst firms.

In Q4, EPAM Systems, Inc. generated over $1,400,000,000 in revenues, a year-over-year increase of 12.8% on a reported basis, exceeding the high end of Q4 revenue outlook. On an organic constant currency basis, revenue grew 5.6% compared to 2024. Five of six industry verticals posted year-over-year growth. Americas, the largest region representing 58% of Q4 revenues, grew 7.6% year over year on a reported basis and 2.2% in organic constant currency. EMEA, comprising 40% of Q4 revenues, grew 21.8% year over year and 11.7% in organic constant currency. APAC, making up 2% of revenues, grew 0.6% year over year, and declined 4.3% in organic constant currency. Pure AI-native revenues in Q4 were over $105,000,000, and expected to scale in excess of $600,000,000 in 2026.

2026 full year revenue growth expected in range of 4.5% to 7.5%, foreign exchange expected to have positive impact of 1.5%, organic constant currency growth rate in range of 3% to 6%. GAAP income from operations expected in range of 10% to 11%, non-GAAP income from operations in range of 15% to 16%. Q1 2026 revenue expected in range of $1,385,000,000 to $1,400,000,000, producing year-over-year growth of 7% at midpoint. GAAP income from operations expected in range of 7% to 8%, non-GAAP income from operations in range of 13.5% to 14.5%.

Neoris' largest client's business decline from Q4 2025 to Q1 2026 impacts growth, larger AI programs introduce more mature procurement process and modest extension of sales cycle, macroeconomic uncertainties may affect client budgets.

Q: Margaret Nolan asked about first quarter guidance and vertical industry expertise investments.

A: Jason Peterson and Balazs Fejes responded on Neoris' client impact and vertical expertise investment plans.

Q: Jonathan Lee asked about reconciling 2026 organic growth commentary.

A: Jason Peterson explained Neoris' client impact on growth.

Q: James Schneider asked about sales cycle dynamics and gross margin/free cash flow.

A: Balazs Fejes and Jason Peterson discussed sales cycle shape impact and gross margin/free cash flow expectations.

Q: Bryan C. Bergin asked about workforce and bill day dynamics.

A: Jason Peterson and Balazs Fejes updated on workforce and bill day impact.

Q: David Michael Grossman asked about pricing and decision-making.

A: Jason Peterson and Balazs Fejes talked about pricing and decision-making progress.

Q: Jamie Friedman asked about fixed price and free cash flow.

A: Jason Peterson responded on fixed price and free cash flow implications.

Q: Bryan Keane asked about AI pressure and pricing.

A: Balazs Fejes and Jason Peterson addressed AI pressure and pricing.

Q: Jim Schneider asked about capital allocation.

A: Balazs Fejes and Jason Peterson discussed capital allocation plans.