EPAM Systems (EPAM) Q3 2026 earnings summary

Executive summary

• Q3 revenue was $1.426B, up 2.3% YoY and 2.5% on an organic constant-currency basis, exceeding the high end of outlook.

• GAAP operating margin rose to 12.3% from 10.4%; non-GAAP operating margin increased to 16.7% from 16.0%.

• AI-native revenue exceeded $185M, ~13% of revenue; the FY26 target increased to at least $650M from $600M.

• Three large multiyear strategic deals were signed in Financial Services and Energy, with ramp expected in 2027.

• Long-term targets include accelerating revenue growth through 2028, 16%+ non-GAAP operating margin in 2028 and $1.8B+ cumulative free cash flow in 2026-2028.

Financial highlights

• Q3 GAAP operating income was $175.9M, up 21.4% YoY; non-GAAP operating income was $238.4M, up 7%.

• GAAP diluted EPS was $2.53, up 32.5% YoY; non-GAAP diluted EPS was $3.51, up 14%.

• GAAP gross margin was 31.3%, versus 29.5% YoY; non-GAAP gross margin was 32.8%, versus 31.0%.

• Q3 net income was $130.3M versus $106.8M; diluted weighted-average shares were 51.5M versus 55.8M.

• 9M revenue was $4.241B versus $4.050B; GAAP operating income was $444.9M versus $370.7M, and net income was $315.8M versus $268.3M.

Outlook and guidance

• FY26 revenue guidance is $5.646B-$5.661B, with reported growth of 3.5%-3.7% and organic constant-currency growth of 2.5%-2.7%.

• FY26 GAAP/non-GAAP operating margin guidance is 10.7%-10.9% and 15.9%-16.1%; diluted EPS guidance is $8.41-$8.49 and $13.23-$13.31.

• Q4 revenue guidance is $1.405B-$1.420B, with organic constant-currency growth of 0.5%-1.6%; non-GAAP operating margin is expected at 16%-17%.

• Q4 GAAP/non-GAAP diluted EPS guidance is $2.43-$2.51 and $3.50-$3.58; free cash flow conversion is forecast above 100%.

• 2027 non-GAAP operating margin is expected at 15%-16%; double-digit growth is not expected in 2027. Deals should ramp in Q1, contribute more in Q2 and build further in H2.