EPAM Systems (EPAM) investor relations material

Executive summary

• Q2 2026 revenue reached $1.415 billion, up 4.5% year-over-year, with organic constant currency growth of 3.4%.

• AI-native revenues exceeded $160 million, now over 11% of total revenue, marking the sixth consecutive quarter of double-digit sequential growth.

• Profitability improved, with GAAP income from operations up 20.4% and non-GAAP income from operations up 14.7% year-over-year.

• EMEA led growth with double-digit gains, while North America underperformed due to rapid client demand shifts and internal go-to-market challenges.

• Expanded strategic partnerships, joining the OpenAI Partner Network and deepening collaborations with Google, Anthropic, and others.

Financial highlights

• GAAP gross margin improved to 30.4% (from 28.8% last year); non-GAAP gross margin rose to 32%.

• GAAP diluted EPS was $1.97, up 26.3% year-over-year; non-GAAP diluted EPS was $3.38, up 22%.

• Cash flow from operations was negative $2 million in Q2 and $(38.8) million for the first six months, impacted by timing of client payments and higher variable compensation.

• Free cash flow was negative $18 million; cash and equivalents stood at $800 million at quarter end.

• Utilization was 78.3%, slightly up from last year.

Outlook and guidance

• Full-year 2026 revenue growth expected at 3.2%-4.2%, with organic constant currency growth of 2%-3%.

• Q3 2026 revenue guidance: $1.410-$1.425 billion, up 1.7% year-over-year at midpoint.

• GAAP income from operations for 2026 expected at 10.5%-11%; non-GAAP at 15.5%-16%.

• GAAP diluted EPS guidance for 2026: $8.22-$8.38; non-GAAP: $13.08-$13.24.

• Free cash flow conversion for 2026 forecasted at ~70%, below typical 80%-90%, but expected to normalize in 2027; long-term target is $1.8B+ cumulative free cash flow from 2026–2028.