EPAM Systems — Third Quarter 2026 Earnings Summary

Financial Performance:

• Third quarter 2026 revenues reached $1.426 billion, a 2.3% year-over-year increase and 2.5% on an organic constant currency basis.
• GAAP income from operations increased to $175.9 million (12.3% of revenues) from $144.9 million (10.4% of revenues) in the prior year quarter.
• Non-GAAP income from operations increased to $238.4 million (16.7% of revenues) from $222.8 million (16.0% of revenues) in the prior year quarter.
• GAAP diluted EPS was $2.53, up 32.5% year-over-year from $1.91.
• Non-GAAP diluted EPS was $3.51, up 14.0% year-over-year from $3.08.
• Cash provided by operating activities for the three months ended September 30, 2026, was $288.8 million, compared to $294.7 million in the same period of 2025.
• Cash provided by operating activities for the first nine months of 2026 was $250.1 million, compared to $372.0 million in the first nine months of 2025.
• Total headcount was approximately 63,650 as of September 30, 2026, including 57,350 delivery professionals (up 1.2% from June 30, 2026).
• Cash, cash equivalents, and restricted cash totaled $969.9 million as of September 30, 2026, a 25.5% decrease from $1.301 billion as of December 31, 2025.
• Total debt was $25.0 million as of September 30, 2026, compared to $25.034 million as of December 31, 2025.

Guidance and Future Outlook:

• Full-year 2026 revenue growth is now expected to be 3.5% to 3.7% year-over-year, with organic constant currency growth of 2.5% to 2.7%.
• Full-year 2026 GAAP diluted EPS is expected to be $8.41 to $8.49, and non-GAAP diluted EPS is expected to be $13.23 to $13.31.
• Full-year 2026 GAAP income from operations is expected to be 10.7% to 10.9% of revenues, and non-GAAP income from operations is expected to be 15.9% to 16.1% of revenues.
• Full-year 2026 GAAP effective tax rate is expected to be approximately 27%, and non-GAAP effective tax rate is expected to be approximately 24%.
• Fourth quarter 2026 revenue is expected to be $1.405 billion to $1.420 billion, reflecting a year-over-year change of (0.2)% to 0.9%, with organic constant currency growth of 0.5% to 1.6%.
• Fourth quarter 2026 GAAP diluted EPS is expected to be $2.43 to $2.51, and non-GAAP diluted EPS is expected to be $3.50 to $3.58.
• Fourth quarter 2026 GAAP income from operations is expected to be 11.5% to 12.5% of revenues, and non-GAAP income from operations is expected to be 16.0% to 17.0% of revenues.
• Fourth quarter 2026 GAAP effective tax rate is expected to be approximately 26%, and non-GAAP effective tax rate is expected to be approximately 24%.

Business Segments and Product Lines:

• EPAM launched new Frontier AI Services.
• The company continues to scale its strategic partnerships and forward-deployed engineering network.
• Management highlighted continued momentum in AI-native strategies and traction in transformation initiatives.

Market and Competitive Landscape:

• EPAM serves Forbes Global 2000 companies and ambitious startups.
• The company is recognized as a leader in AI transformation engineering and integrated consulting.

Risks and Challenges:

• Forward-looking statements note risks related to the war in Ukraine and potential escalation in the surrounding region.
• Risks include political and civil unrest or military action in geographies where the company operates.
• Potential impacts from difficult conditions in global capital markets, foreign exchange markets, global trade, and the broader economy are noted.
• Risks include the adoption and implementation of artificial intelligence technologies by EPAM and its clients, and the effect on client demand, revenues, operations, access to capital, and profitability.

Management Commentary and Tone:

• CEO Balazs Fejes described the quarter as "strong" with "better-than-expected results," "continued margin expansion," and "AI-native momentum."
• Management expressed confidence in the company's transformation strategy and capital return plans.

Other Key Points:

• The Board of Directors approved an incremental $1.5 billion share repurchase authorization, bringing the total remaining authorization to $1.8 billion through December 31, 2029.
• EPAM plans to enter a $500 million accelerated share repurchase (Q4 ASR) in the week of November 9, 2026, funded by cash on hand and borrowings under its existing credit facility.
• The company committed to returning at least 50% of free cash flow to shareholders annually from 2027 through 2029.
• EPAM has returned approximately $1.7 billion to shareholders since the initiation of its repurchase programs in 2023.
• The company spent approximately $489 million on share repurchases during the first nine months of 2026, including approximately $80 million in the third quarter.
• The existing repurchase program was terminated and replaced with a new program for up to $1.8 billion of common stock.
• The weighted average diluted shares outstanding for the full year 2026 is expected to be 52.0 million, and for the fourth quarter 2026, 49.9 million.