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1. Company Snapshot

1.a. Company Description

EPAM Systems, Inc.provides digital platform engineering and software development services worldwide.The company offers engineering services, including requirements analysis and platform selection, customization, cross-platform migration, implementation, and integration; infrastructure management services, such as software development, testing, and maintenance with private, public, and mobile infrastructures for application, database, network, server, storage, and systems operations management, as well as monitoring, incident notification, and resolution services; and maintenance and support services.


It also provides operation solutions comprising integrated engineering practices and smart automation; and optimization solutions that include software application testing, test management, automation, and consulting services to enable customers enhance their existing software testing and quality assurance practices, as well as other testing services that identify threats and close loopholes to protect its customers' business systems from information loss.In addition, the company offers business, experience, technology, data, and technical advisory consulting services; and digital and service design solutions, which comprise strategy, design, creative, and program management services, as well as physical product development, such as artificial intelligence, robotics, and virtual reality.It serves the financial services, travel and consumer, software and hi-tech, business information and media, life sciences and healthcare, and other industries.


The company was founded in 1993 and is headquartered in Newtown, Pennsylvania.

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1.b. Last Insights on EPAM

EPAM Systems' recent performance faced negative drivers, including a Q2 earnings miss, with quarterly earnings of $2.45 per share, missing the Zacks Consensus Estimate of $2.61 per share. Despite growth across all segments, profitability pressure from recent acquisitions and higher compensation posed challenges. However, the company raised its 2025 revenue outlook, citing organic constant currency revenue growth. A new $1 billion share repurchase program was also announced, indicating a positive move to return value to shareholders.

1.c. Company Highlights

2. EPAM's Q3 2025 Earnings: A Strong Upswing in Revenue and AI Adoption

EPAM reported a revenue of $1.394 billion for Q3 2025, marking a 19.4% year-over-year increase, with organic constant currency revenue growing 7.1%, exceeding expectations. The company's GAAP gross margin for the quarter stood at 29.5%, while non-GAAP gross margin was at 31%. EPAM's GAAP income from operations was $145 million or 10.4% of revenue, and non-GAAP income from operations was $222.8 million or 16% of revenue. The company's non-GAAP diluted EPS was $3.08, beating estimates of $3.02.

Publication Date: Nov -09

📋 Highlights
  • Revenue Growth:: Q3 2025 revenue reached $1.394 billion, up 19.4% YoY, with organic constant currency growth of 7.1%.
  • Vertical Performance:: Financial services grew 32.7% YoY, while software/hi-tech rose 19.1%, leading 5 of 6 verticals in growth.
  • Profitability:: Non-GAAP operating margin hit 16% (vs. 15.3% guidance), with $222.8 million in non-GAAP operating income and $3.08 diluted EPS.
  • AI Momentum:: Over 500 AI engagements, with average project size expected to grow as clients shift from PoCs to large-scale deployments.

Segment Performance and AI Adoption

EPAM saw broad-based growth across its verticals, with 5 out of 6 verticals growing year-over-year. Notable standouts included emerging verticals, financial services, and software and hi-tech, with financial services growing 32.7% year-over-year and software and hi-tech growing 19.1%. The company's AI/RUN Transform strategy is driving its AI adoption, with a unified approach that harmonizes go-to-market notions with better activation across strategy, consulting, frameworks, and methodologies. As EPAM's management noted, "the company's unique combination of engineering DNA and AI-native expertise continues to differentiate its offerings and expand wallet share."

Valuation and Growth Prospects

With a P/E Ratio of 26.52 and an EV/EBITDA of 13.52, EPAM's valuation suggests that the market is pricing in a certain level of growth. The company's ROE of 10.14% and ROIC of 9.33% indicate a decent return on equity and invested capital. EPAM is raising the bottom end of its 2025 full-year organic constant currency revenue growth range, now expecting the midpoint to be 4.6%. Analysts estimate next year's revenue growth at 7.0%, indicating a positive outlook for the company's growth prospects.

Operational Highlights and Future Outlook

EPAM ended Q3 with over 56,100 consultants, designers, engineers, and architects, reflecting 17.5% total growth and 6.4% organic growth. The company's cash flow from operations was $295 million, and free cash flow was $286 million, both all-time highs. EPAM expects a strong Q4 exit, with higher organic constant currency growth rates than forecasted 90 days ago. The company is confident in its positioning as it enters Q4 and will continue to run efficiently, focusing on growth and profitability.

AI Project Traction and Future Potential

EPAM is seeing increasing traction in its AI projects, with hundreds of engagements, mostly starting small and scaling up. The company expects the size of its average AI project to increase over the next two years, as it moves from proof of concepts to medium- to large-scale engagements. EPAM believes that its AI projects will drive revenue growth and enhance profitability, with potential for better profitability in the future. The company's build versus buy strategy for AI is skewed towards build, with strong growth in foundational services like cloud modernization and data.

3. NewsRoom

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EPAM Receives 2025 AWS Global Innovation Partner of the Year

Dec -02

Source: prnewswire.com

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EPAM or INFY: Which Is the Better Value Stock Right Now?

Nov -26

Source: zacks.com

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Looking for a Growth Stock? 3 Reasons Why Epam (EPAM) is a Solid Choice

Nov -24

Source: zacks.com

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Buy 5 Mid-Cap Tech Stocks to Tap Lucrative Short-Term Upside Potential

Nov -24

Source: zacks.com

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Invesco Small Cap Value Fund Q3 2025 Performance Review

Nov -20

Source: seekingalpha.com

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Invesco Small Cap Value Fund Q3 2025 Portfolio Positioning

Nov -20

Source: seekingalpha.com

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Why These 3 Tech Stocks Could Be the Best Opportunities You're Overlooking

Nov -17

Source: marketbeat.com

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Brandes Investment Partners, LP Significantly Reduces Vanguard Value ETF by 99.61%

Nov -14

Source: gurufocus.com

4. Business Breakdown

4.a. Revenues by Country

4.b. Revenues by Segment

5. Expected revenues mid-term growth (4.51%)

6. Segments

Professional Services

Expected Growth: 4.5%

EPAM Systems' Professional Services segment growth of 4.5% is driven by increasing demand for digital transformation, cloud adoption, and cybersecurity services. Strong relationships with top-tier clients, expansion into new industries, and strategic acquisitions also contribute to growth. Additionally, the company's expertise in emerging technologies such as AI, blockchain, and IoT further fuels growth in this segment.

Licensing and Others

Expected Growth: 6.0%

EPAM Systems' 6.0% growth in Licensing and Others is driven by increasing demand for digital transformation, expansion of existing partnerships, and strategic acquisitions. The company's strong brand reputation, innovative solutions, and cost-effective services also contribute to this growth. Additionally, the rising need for IT consulting and outsourcing services in various industries fuels the segment's expansion.

7. Detailed Products

Digital Platform Engineering

EPAM's digital platform engineering services help clients design, build, and deploy scalable, secure, and efficient digital platforms that drive business growth.

Customer Experience

EPAM's customer experience services help clients create personalized, omnichannel experiences that drive customer engagement and loyalty.

Data and Analytics

EPAM's data and analytics services help clients unlock insights from their data to drive business growth and improve decision-making.

Cloud and DevOps

EPAM's cloud and DevOps services help clients migrate to the cloud, automate DevOps practices, and improve application delivery.

Cybersecurity

EPAM's cybersecurity services help clients protect their applications and data from cyber threats.

Artificial Intelligence and Machine Learning

EPAM's AI and ML services help clients develop intelligent systems that drive business growth and improve decision-making.

8. EPAM Systems, Inc.'s Porter Forces

Forces Ranking

Threat Of Substitutes

EPAM Systems, Inc. operates in a niche market with high barriers to entry, reducing the threat of substitutes.

Bargaining Power Of Customers

EPAM Systems, Inc. has a diverse customer base, reducing the bargaining power of individual customers.

Bargaining Power Of Suppliers

EPAM Systems, Inc. has a strong negotiating position with its suppliers, reducing their bargaining power.

Threat Of New Entrants

The IT services industry has high barriers to entry, reducing the threat of new entrants.

Intensity Of Rivalry

The IT services industry is highly competitive, with many established players, increasing the intensity of rivalry.

9. SWOT Analysis

Strength

Weaknesses

Opportunities

Threats

10. Capital Structure

10.a. Balance Sheet

10.b. Weighted Average Cost of capital

Value
Debt Weight 1.77%
Debt Cost 3.95%
Equity Weight 98.23%
Equity Cost 11.26%
WACC 11.13%
Leverage 1.81%

11. Quality Control: EPAM Systems, Inc. passed 6 out of 9 key points

12.a Historical Valuation

12.b Price/Earnings Ratio

12.c Margin Valuation

12.d Peers Valuation

Peers Group Analysis

Stock-Card
Concentrix

A-Score: 5.0/10

Value: 8.7

Growth: 6.0

Quality: 4.0

Yield: 4.0

Momentum: 4.5

Volatility: 3.0

1-Year Total Return ->

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Stock-Card
Paymentus

A-Score: 4.3/10

Value: 1.1

Growth: 6.6

Quality: 6.8

Yield: 0.0

Momentum: 8.0

Volatility: 3.7

1-Year Total Return ->

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Stock-Card
Kyndryl

A-Score: 4.3/10

Value: 5.2

Growth: 4.7

Quality: 4.1

Yield: 0.0

Momentum: 7.5

Volatility: 4.3

1-Year Total Return ->

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Stock-Card
EPAM Systems

A-Score: 4.3/10

Value: 3.9

Growth: 6.9

Quality: 7.0

Yield: 0.0

Momentum: 2.5

Volatility: 5.3

1-Year Total Return ->

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Stock-Card
DXC Technology

A-Score: 4.1/10

Value: 9.3

Growth: 4.4

Quality: 4.8

Yield: 0.0

Momentum: 1.0

Volatility: 5.0

1-Year Total Return ->

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Stock-Card
N-able

A-Score: 3.7/10

Value: 3.0

Growth: 8.4

Quality: 5.0

Yield: 0.0

Momentum: 0.5

Volatility: 5.0

1-Year Total Return ->

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Peers Metrics

12.e Scoring Insights

12.f DCF BETA

Parameters

Short Term Growth

Short term Time

Long-Term Growth

WACC

Target Price

203.2$

Current Price

203.21$

Potential

-0.00%

Expected Cash-Flows