NEWTOWN, PA – EPAM Systems, Inc. (NYSE: EPAM), a provider of digital platform engineering and software development services, recently announced its financial results for the third quarter that ended on September 30, 2023.
In Q3 2023, the company reported revenues of $1.152 billion, marking a year-over-year decrease of $74.8 million or 6.1%. On an organic constant currency basis, excluding the impact of the company’s exit from Russia, revenues were down by 7.8% compared to Q3 2022.
The GAAP income from operations was $114.0 million, a decrease of $66.2 million or 36.7% compared to $180.2 million in Q3 2022. This decrease was primarily due to a $25.9 million loss on the sale of the company’s remaining holdings in Russia. The GAAP income from operations also included $7.1 million of costs incurred in connection with the company’s recently initiated Cost Optimization Program, which is expected to produce over $100 million in annual savings.
Non-GAAP income from operations was $195.6 million, marking a decrease of $36.8 million or 15.8% compared to $232.4 million in Q3 2022. The diluted earnings per share (EPS) on a GAAP basis was $1.65, a decrease of $0.98 compared to Q3 2022. Non-GAAP diluted EPS was $2.73, a decrease of $0.37 or 11.9%, compared to Q3 2022.
From a cash flow perspective, the operating activities generated $391.3 million in the first nine months of 2023, compared to $278.0 million for the same period in 2022. Cash, cash equivalents and restricted cash totaled $1.880 billion as of September 30, 2023, an increase of $196.1 million or 11.7% from $1.684 billion as of December 31, 2022.
As of September 30, 2023, the company’s total headcount was approximately 54,600. Included in this number were approximately 48,500 delivery professionals, a decrease of 1.7% from June 30, 2023.
Looking ahead to the full year, EPAM has narrowed its expected range for revenues to $4.663 billion to $4.673 billion, reflecting a year-over-year decline of 3% at the midpoint of the range. For the fourth quarter, revenues are expected to be in the range of $1.130 billion to $1.140 billion, reflecting a year-over-year decline of 8% at the midpoint of the range.
The company expects GAAP income from operations to be in the range of 10% to 11% of revenues, and non-GAAP income from operations to be in the range of 15% to 16% of revenues for both the full year and the fourth quarter. Additionally, the company narrows its expected range for GAAP diluted EPS to $7.07 to $7.15, and increases expected non-GAAP diluted EPS to be in the range of $10.31 to $10.39 for the full year.
Despite the challenging quarter, EPAM Systems continues its strategic focus on cost optimization and operational efficiency, demonstrating resilience amid market volatility. The company’s financial stability and growth potential remain robust, indicating a positive outlook for the future.
Additional details can be found on EPAM Systems’ website here.
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