EPAM Systems (EPAM) Q1 2026 earnings summary

Executive summary

• Q1 2026 revenue reached $1.4 billion, up 7.6% year-over-year, with strong adjusted profitability, gross margins, and organic constant currency growth of 3.7%.

• AI-native revenues exceeded $125 million, up nearly 20% sequentially, supporting a $600 million full-year target and five consecutive quarters of double-digit sequential growth.

• Announced a multi-year applied AI partnership with Anthropic, with over 1,400 Claude-certified architects and a target of 10,000 certifications by year-end.

• Five of six verticals grew year-over-year, led by financial services and software/high tech; EMEA delivered double-digit growth, while North America underperformed.

• Positioned as a leader in enterprise AI transformation, leveraging foundational AI work for significant growth opportunities through 2028.

Financial highlights

• Q1 2026 revenue: $1.4 billion, up 7.6% year-over-year; organic constant currency growth of 3.7%.

• GAAP income from operations: $116.8 million (8.3% margin), up 17.6% year-over-year; non-GAAP income from operations: $200.7 million (14.3% margin), up 14.2%.

• GAAP diluted EPS: $1.52 (up 18.8%); non-GAAP diluted EPS: $2.86 (up 18.7%).

• Net income for Q1 2026 was $82.5 million, up from $73.5 million in Q1 2025.

• Cash flow from operations: -$36.4 million; free cash flow: -$54 million, impacted by variable compensation and vendor payments.

• Share repurchases: $324 million in Q1 2026, including a $300 million accelerated share repurchase; $1.5 billion returned to shareholders since program inception.

Outlook and guidance

• Full-year 2026 revenue growth outlook: 4.0%–6.5%; organic constant currency growth expected at 2.5%–5%.

• Q2 2026 revenue guidance: $1.4–$1.415 billion, 4% year-over-year growth at midpoint.

• Full-year 2026 GAAP income from operations: 10%–11%; non-GAAP: 15%–16%.

• Full-year 2026 GAAP EPS: $8.29–$8.59; non-GAAP EPS: $12.98–$13.28.

• Guidance assumes continued delivery from Ukraine centers, macroeconomic uncertainty, and higher energy prices.