EPAM Systems (EPAM) Q3 2024 earnings summary

Executive summary

• Q3 2024 revenues reached $1.168 billion, up 1.3% year-over-year, with strong execution, improved client engagement, and stabilizing demand across verticals and geographies.

• Non-GAAP diluted EPS grew 14.3% year-over-year to $3.12; GAAP diluted EPS rose 43.6% to $2.37, driven by Poland R&D incentives.

• Major acquisitions included NEORIS, expanding presence in Latin America, Spain, and the U.S., and a pending First Derivative deal.

• Over 53,250 employees across 55+ countries, with a focus on AI-driven solutions, digital transformation, and strong partnerships with AWS, Google, and Microsoft.

• Continued commitment to employee safety in Ukraine, with a $100 million humanitarian program and ongoing adaptation to geopolitical risks.

Financial highlights

• Q3 revenue was $1.168 billion, up 1.3% year-over-year; 2023 full-year revenue was $4.691 billion.

• GAAP gross margin improved to 34.6% (vs. 31.1% last year), aided by a $52 million Poland R&D incentive.

• GAAP income from operations was $177 million (15.2% margin); non-GAAP income from operations $223 million (19.1% margin).

• GAAP diluted EPS was $2.37; non-GAAP diluted EPS $3.12, both up significantly year-over-year.

• Cash and equivalents at $2.041 billion as of September 30, 2024; free cash flow reached a record $237 million in Q3.

Outlook and guidance

• Q4 2024 revenue expected at $1.205–$1.215 billion, up 4.6% year-over-year, including $54 million from NEORIS.

• Full-year 2024 revenue expected at $4.685–$4.695 billion, flat year-over-year at midpoint.

• Full-year GAAP diluted EPS expected at $7.78–$7.86; non-GAAP at $10.73–$10.81.

• Production headcount expected to return to year-over-year growth in Q4 after seven quarters of decline.

• Additional restructuring charges of $14 million expected under the 2024 Cost Optimization Program.