Download PDF

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.

Show Full description

1.b. Last Insights on EPAM

EPAM Systems' recent performance was negatively impacted by underwhelming Q4 guidance and transitory headwinds. Despite beating Q4 earnings and revenue estimates, with revenue growth of 12.8% year-over-year, concerns over AI disruption and muted 2026 guidance led to investor wariness. The company's operating margins were slower due to higher variable compensation. Additionally, law firms have initiated investigations into potential securities laws violations, which may have contributed to the stock's decline. EPAM's AI-native revenue exceeded $105 million. (Source: EPAM Systems Inc.)

1.c. Company Highlights

2. EPAM's Strong Q4 and Full Year 2025 Earnings: A Promising Outlook for 2026

EPAM's Q4 revenue came in at $1.41 billion, a 14.8% year-over-year increase, with GAAP income from operations at $149 million, or 10.6% of revenue, and non-GAAP income from operations at $230 million, or 16.3% of revenue. Diluted earnings per share on a GAAP basis was $1.98, and non-GAAP diluted EPS was $3.26, beating analyst estimates of $3.16. For the full year 2025, revenues were $5.46 billion, up 15.4% year-over-year, with a non-GAAP income from operations of $831 million, up 6.7% compared to 2024.

Publication Date: Feb -22

📋 Highlights
  • Q4 Revenue Surpassing Expectations: EPAM reported $1.41 billion in Q4 revenue, a 14.8% YoY increase, exceeding Q4 guidance with organic growth at 5.6%.
  • AI-Native Revenue Momentum: AI-native revenue hit $105 million in Q4, with a target of $600 million in 2026, reflecting 80% projected annual growth.
  • Vertical Growth Outperformance: Financial services grew 19.8% YoY, while software/hi-tech and emerging verticals expanded 18.1% and 19.1%, respectively.
  • Profitability and Margin Stability: Non-GAAP operating margin reached 16.3% in Q4, with 2026 guidance targeting 15–16% non-GAAP margin amid gross margin improvements.
  • 2026 Revenue Guidance: Full-year 2026 revenue growth projected at 4.5–7.5%, with Q1 2026 revenue expected between $1.35–1.4 billion (7% midpoint growth).

Growth Strategy and AI-Native Services

EPAM's growth strategy is centered around its AI-native services, which include AI-native IP products, platforms, and solutions, and AI-led transformation initiatives. AI-native revenues reached over $105 million in Q4, with a strong sequential growth rate, and are expected to scale to over $600 million in 2026, representing a rapid growth rate of around 80% for the full year. The company's focus on AI-native services is expected to drive growth and expand profitability.

Guidance and Outlook for 2026

For 2026, EPAM expects revenue growth to be in the range of 4.5% to 7.5%, with an organic constant currency growth rate of 3% to 6%. The company expects GAAP income from operations to be in the range of 10% to 11% and non-GAAP income from operations to be in the range of 15% to 16%. Analysts estimate next year's revenue growth at 7.4%, which is within the company's guidance range.

Valuation Metrics

Using the current valuation metrics, EPAM's P/E Ratio is 20.2, P/B Ratio is 2.07, and P/S Ratio is 1.41. The EV/EBITDA ratio is 9.82, and the Free Cash Flow Yield is 5.99%. These metrics suggest that the market is pricing in a moderate growth rate, but the company's strong track record and growth prospects may justify a premium valuation.

Capital Allocation and Share Repurchases

EPAM plans to focus on share repurchases in the near term, with a possibility of being more open to scaled M&A activity over time. In 2025, the company repurchased approximately 3.5 million shares for $661 million at an average price of $186.67 per share. The company's strong cash flow generation and commitment to returning capital to shareholders are positive factors.

3. NewsRoom

Card image cap

EPAM Investors Have Opportunity to Join EPAM Systems, Inc. Fraud Investigation with the Schall Law Firm

Mar -20

Source: businesswire.com

Card image cap

EPAM Leads as a Top IT Service Provider in Belgium and Luxembourg

Mar -18

Source: prnewswire.com

Card image cap

Brevan Howard Capital Management LP Purchases 10,208 Shares of EPAM Systems, Inc. $EPAM

Mar -17

Source: defenseworld.net

Card image cap

EPAM Systems, Inc. (EPAM) Analyst/Investor Day Transcript

Mar -14

Source: seekingalpha.com

Card image cap

INVESTOR ALERT: Pomerantz Law Firm Investigates Claims On Behalf of Investors of EPAM Systems, Inc. - EPAM

Mar -12

Source: prnewswire.com

Card image cap

Capital World Investors Sells 253,418 Shares of EPAM Systems, Inc. $EPAM

Mar -12

Source: defenseworld.net

Card image cap

Dimensional Fund Advisors LP Has $116.83 Million Stock Holdings in EPAM Systems, Inc. $EPAM

Mar -12

Source: defenseworld.net

Card image cap

EPAM Joins the Microsoft Intelligent Security Association

Mar -11

Source: prnewswire.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: 4.7/10

Value: 9.2

Growth: 6.0

Quality: 4.2

Yield: 4.0

Momentum: 1.5

Volatility: 3.3

1-Year Total Return ->

View Full Report
Stock-Card
EPAM Systems

A-Score: 4.4/10

Value: 3.6

Growth: 6.9

Quality: 6.9

Yield: 0.0

Momentum: 3.5

Volatility: 5.3

1-Year Total Return ->

View Full Report
Stock-Card
N-able

A-Score: 4.3/10

Value: 5.3

Growth: 8.4

Quality: 5.8

Yield: 0.0

Momentum: 1.5

Volatility: 5.0

1-Year Total Return ->

View Full Report
Stock-Card
DXC Technology

A-Score: 4.0/10

Value: 9.5

Growth: 4.3

Quality: 4.2

Yield: 0.0

Momentum: 1.0

Volatility: 5.0

1-Year Total Return ->

View Full Report
Stock-Card
Kyndryl

A-Score: 3.8/10

Value: 6.3

Growth: 4.7

Quality: 4.3

Yield: 0.0

Momentum: 3.0

Volatility: 4.7

1-Year Total Return ->

View Full Report
Stock-Card
Paymentus

A-Score: 3.7/10

Value: 1.4

Growth: 6.6

Quality: 6.8

Yield: 0.0

Momentum: 5.0

Volatility: 2.7

1-Year Total Return ->

View Full Report

Peers Metrics

12.e Scoring Insights

12.f DCF BETA

Parameters

Short Term Growth

Short term Time

Long-Term Growth

WACC

Target Price

135.72$

Current Price

135.72$

Potential

-0.00%

Expected Cash-Flows