EPAM Systems (EPAM) Q2 2024 earnings summary

Executive summary

• Q2 2024 revenues were $1.147 billion, down 2% year-over-year, reflecting strong execution in a complex demand environment and uneven demand, with stabilization in healthcare, life sciences, and emerging verticals.

• Non-GAAP diluted EPS for Q2 2024 was $2.45 (down 7.2% year-over-year); GAAP diluted EPS was $1.70 (down 16.3%), impacted by higher compensation and severance costs.

• The company operates in 55+ countries, serving a diversified client base across 11 industries, and is recognized for digital platform engineering, AI-driven solutions, and sustainability initiatives.

• Continued investment in GenAI, global delivery (especially India and LATAM), and cost optimization programs, with India expected to become the largest delivery location by year-end.

• Humanitarian support for Ukrainian employees remains a priority, with a $100 million commitment and ongoing risk management due to the war in Ukraine.

Financial highlights

• Q2 2024 revenue was $1.147 billion, down 2% year-over-year (1.7% in constant currency); organic constant currency decline was 2.8% excluding Russia exit.

• Life sciences and healthcare grew 22.4% year-over-year; emerging verticals up 10.6%; financial services down 5.6%; consumer goods, retail, and travel down 7.7%.

• Americas revenue grew 1.8% year-over-year; EMEA contracted 6%; APAC declined 0.6%.

• GAAP gross margin was 29.3% (down from 30.9%); non-GAAP gross margin was 30.8% (down from 32.6%).

• Cash and cash equivalents at quarter-end were $1.8 billion, with $675 million available under the revolving credit facility.

Outlook and guidance

• No net improvement in overall demand assumed for the remainder of 2024; full-year revenue expected at $4.590–$4.625 billion (down 1.8% at midpoint); Q3 revenue expected at $1.145–$1.155 billion.

• Full-year GAAP income from operations expected at 10.5–11%; non-GAAP at 15.5–16%.

• Full-year GAAP diluted EPS expected at $7.18–$7.38; non-GAAP diluted EPS at $10.20–$10.40.

• Q3 GAAP diluted EPS expected at $1.75–$1.83; non-GAAP at $2.65–$2.73.

• Additional cost optimization actions are planned, with approximately $20 million in further restructuring charges expected by year-end.