NEWTOWN, PA — EPAM Systems, Inc. (NYSE: EPAM) recently reported results for the first quarter ended March 31, 2023.
“EPAM delivered solid results in the first quarter, made possible by the dedication of our talented team,” said Arkadiy Dobkin, CEO & President, of EPAM. “I am confident that our strong fundamentals and our ability to adapt the Company to a variety of challenges will enable us to navigate the current market uncertainties while positioning EPAM for the recovery of demand for technology-led transformation services.”
First Quarter 2023 Highlights
- Revenues increased to $1.211 billion, a year-over-year increase of $39.3 million, or 3.4%. On an organic constant currency basis excluding the impact of the exit from Russia, revenues were up 7.0% compared to the first quarter of 2022;
- GAAP income from operations was $120.4 million, a decrease of $8.9 million, or 6.9%, compared to $129.2 million in the first quarter of 2022;
- Non-GAAP income from operations was $178.3 million, a decrease of $10.4 million, or 5.5%, compared to $188.7 million in the first quarter of 2022;
- Diluted earnings per share (“EPS”) on a GAAP basis was $1.73, an increase of $0.21, or 13.8%, compared to $1.52 in the first quarter of 2022; and
- Non-GAAP diluted EPS was $2.47, a decrease of $0.02, or 0.8%, compared to $2.49 in the first quarter of 2022.
Cash Flow and Other Metrics
- Cash provided by operating activities was $87.3 million for the first three months of 2023, compared to cash used in operating activities of $51.8 million for the first three months of 2022;
- Cash, cash equivalents and restricted cash totaled $1.752 billion as of March 31, 2023, an increase of $68.4 million, or 4.1%, from $1.684 billion as of December 31, 2022; and
- Total headcount was approximately 57,450 as of March 31, 2023. Included in this number were approximately 51,100 delivery professionals, a decrease of 3.3% from December 31, 2022.
2023 Outlook – Full Year and Second Quarter
Full Year
Due to uneven improvement in demand, EPAM now expects the following for the full year:
- The Company now expects revenues will be in the range of $4.950 billion to $5.000 billion for the full year reflecting a year-over-year growth rate of 3% at the midpoint of the range. Revenue growth on an organic constant currency basis excluding the impact of the exit from Russia will be over 3% at the midpoint of the range;
- For the full year, EPAM expects GAAP income from operations to continue to be in the range of 11.5% to 12.5% of revenues and non-GAAP income from operations to continue to be in the range of 15.5% to 16.5% of revenues;
- The Company expects its GAAP effective tax rate to continue to be approximately 21% and its non-GAAP effective tax rate to continue to be approximately 23%; and
- EPAM expects GAAP diluted EPS to now be in the range of $8.11 to $8.31 for the year, and non-GAAP diluted EPS to now be in the range of $10.60 to $10.80 for the year. The Company now expects weighted average diluted shares outstanding for the year of 59.4 million.
Second Quarter
EPAM expects the following for the second quarter:
- Revenues will be in the range of $1.195 billion to $1.205 billion for the second quarter reflecting a year-over-year growth rate of less than 1% at the midpoint of the range. Revenue growth on an organic constant currency basis excluding the impact of the exit from Russia will be less than 1% at the midpoint of the range;
- For the second quarter, EPAM expects GAAP income from operations to be in the range of 10.0% to 11.0% of revenues and non-GAAP income from operations to be in the range of 14.0% to 15.0% of revenues;
- The Company expects its GAAP effective tax rate to be approximately 20% and its non-GAAP effective tax rate to be approximately 23%; and
- EPAM expects GAAP diluted EPS will be in the range of $1.82 to $1.90 for the quarter, and non-GAAP diluted EPS will be in the range of $2.38 to $2.46 for the quarter. The Company expects weighted average diluted shares outstanding for the quarter of 59.4 million.
Learn more at www.epam.com.
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