Epam Systems (EPAM) AI Stock Analysis

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Epam Systems

(NYSE:EPAM)

Rating:75Outperform

Price Target:

$189.00

▲(12.44% Upside)

EPAM Systems demonstrates strong financial performance and positive earnings call sentiment, driven by robust revenue growth and strategic focus on AI. Technical indicators suggest a neutral trend, while valuation appears fair. Challenges in gross margin and cash flow, along with seasonal pressures, are areas to monitor.

Positive Factors

Financial Performance

EPAM reported strong second-quarter results that beat estimates across the board, and management provided above-consensus third-quarter guidance while raising the fiscal 2025 growth and EPS outlook.

Growth Potential

EPAM's accelerating organic growth, trough in profitability, active capital allocation, and discounted valuation make for an attractive risk-reward.

Innovative Initiatives

AI is becoming a material contributor to pipeline momentum, which is also helping EPAM expand wallet share and win new logos.

Negative Factors

Macroeconomic Uncertainty

The full year FY25 outlook was raised across the board and above consensus, which is encouraging given the ongoing macroeconomic uncertainty and growth challenges facing the IT services industry.

Pricing Challenges

Pricing is marginally better this year than last year but management’s tone was overall still muted on the ability to put through price increases given the demand backdrop.

Epam Systems (EPAM) vs. SPDR S&P 500 ETF (SPY)

Market Cap

$9.73B

Dividend YieldN/A

Average Volume (3M)793.81K

Price to Earnings (P/E)24.8

Beta (1Y)1.30

Revenue Growth9.73%

EPS Growth-0.29%

CountryUS

Employees61,200

SectorTechnology

Sector Strength84

IndustryInformation Technology Services

Share Statistics

EPS (TTM)2.77

Shares Outstanding55,696,910

10 Day Avg. Volume720,037

30 Day Avg. Volume793,807

Financial Highlights & Ratios

PEG RatioN/A

Price to Book (P/B)N/A

Price to Sales (P/S)N/A

P/FCF RatioN/A

Enterprise Value/Market Cap0.94

Enterprise Value/Revenue1.80

Enterprise Value/Gross Profit5.99

Enterprise Value/Ebitda13.26

Forecast

1Y Price Target

$209.73

Price Target Upside24.77% Upside

Rating ConsensusStrong Buy

Number of Analyst Covering12

Epam Systems Business Overview & Revenue Model

Company DescriptionEPAM Systems (EPAM) is a global provider of digital platform engineering and software development services. Founded in 1993 and headquartered in Newtown, Pennsylvania, the company operates across various sectors, including financial services, travel and consumer, software and hi-tech, and healthcare. EPAM's core offerings encompass digital transformation, product development, custom software engineering, and consulting services, enabling organizations to enhance their digital capabilities and improve operational efficiency.

How the Company Makes MoneyEPAM generates revenue primarily through its consulting and engineering services, which are billed on a time-and-materials or fixed-price basis. The company serves a diverse client base, including Fortune 500 companies, and benefits from long-term contracts that provide a stable revenue stream. Key revenue streams include custom software development, system integration, and digital platform services. Additionally, EPAM has established significant partnerships with major technology providers, such as AWS, Microsoft, and Google Cloud, which enhance its service offerings and attract new clients. The company's focus on innovation and delivery of high-quality services has also contributed to its revenue growth, as it helps clients navigate the complexities of digital transformation.

Epam Systems Key Performance Indicators (KPIs)

Any

Revenue by Geography

Revenue by Geography
Breaks down revenue across different regions, revealing where the company is strongest and where it may face risk or growth potential due to local economic conditions or market share shifts.

Chart InsightsEPAM Systems' revenue in the Americas has rebounded strongly, driven by a 12.6% year-over-year increase, aligning with the company's strategic focus on AI capabilities and geographic expansion. EMEA also shows promising growth, while APAC remains relatively stable. However, Central and Eastern Europe have seen a complete revenue decline, reflecting potential geopolitical or market challenges. The earnings call highlights robust performance despite macroeconomic pressures, with leadership transitions and AI initiatives poised to drive future growth, although financial challenges like decreased free cash flow and declining margins could temper optimism.

Data provided by:

Main Street Data

Epam Systems Earnings Call Summary

Earnings Call Date:Aug 07, 2025

(Q2-2025)

% Change Since: |

Next Earnings Date:Oct 30, 2025

Earnings Call Sentiment Positive

The earnings call reflects a strong overall performance by EPAM, with significant revenue growth, particularly in AI-driven offerings and geographical as well as vertical expansion. However, challenges in gross margin and cash flow, along with expected seasonal pressures, were noted. The highlights suggest a positive trajectory, but lowlights indicate areas for improvement.

Q2-2025 Updates

Positive Updates

Strong Revenue Growth

EPAM reported a revenue of $1.353 billion for Q2 2025, a year-over-year increase of 18%, surpassing the upper end of the Q2 revenue outlook.

Organic Growth Acceleration

EPAM's organic growth accelerated from low single digits to mid-single digits, marking the third consecutive quarter of positive organic growth.

AI-Driven Growth

EPAM's AI native revenue is growing double digits sequentially, with major clients actively engaged in AI initiatives.

Geographical and Vertical Expansion

All three regions delivered strong year-over-year growth, and all six verticals grew year-over-year, with financial services, emerging verticals, and software and hi-tech being notable standouts.

Strong Financial Performance

Non-GAAP diluted EPS increased to $2.77 compared to $2.45 in Q2 2024, reflecting a $0.32 increase year-over-year.

Negative Updates

Gross Margin Challenges

GAAP gross margin was 28.8%, a decrease from 29.3% in Q2 2024, impacted by higher variable compensation and lower profitability from recent acquisitions.

Cash Flow Decline

Cash flow from operations was $53 million, down from $57 million in Q2 2024, and free cash flow decreased from $52 million to $43 million year-over-year.

Seasonal and Demand Pressures

Q3 and Q4 are expected to face seasonal impacts, with Q4 likely experiencing flat to modest sequential revenue decline due to holidays and potential furloughs.

Company Guidance

During the second quarter of 2025, EPAM Systems reported strong financial performance, delivering revenue of $1.353 billion, which marked an 18% year-over-year increase on a reported basis and a 5.3% rise in organic constant currency terms. The company achieved double-digit growth across all six verticals, with financial services and software and hi-tech leading the charge. Geographically, all regions posted strong year-over-year growth, with the Americas constituting 59% of Q2 revenues. EPAM's GAAP gross margin stood at 28.8%, while its non-GAAP gross margin was 30.1%. The company reported GAAP income from operations at 9.3% of revenue and non-GAAP income from operations at 15%. The GAAP effective tax rate was 28.9%, while the non-GAAP rate was 24%. In terms of workforce, EPAM ended the quarter with over 62,000 employees, including more than 55,800 consultants and engineers, reflecting 18.7% total headcount growth. The company anticipates further revenue growth, projecting a Q3 revenue range between $1.365 billion to $1.380 billion, with an expected organic constant currency growth rate of 6.2% at the midpoint, and continues to focus on improving utilization and gross margin.

Epam Systems Financial Statement Overview

Summary

Epam Systems maintains a solid financial position with consistent revenue growth and strong profitability margins. The balance sheet reflects low leverage and a strong equity base, while cash flow management remains efficient despite recent declines in free cash flow growth.

Income Statement

Positive

Epam Systems shows a steady revenue growth rate of 4.25% in the TTM, indicating resilience in the competitive IT services industry. The gross profit margin of 30.03% and net profit margin of 7.91% reflect solid profitability, although slightly lower than previous years. The EBIT and EBITDA margins are stable at 8.16% and 13.12%, respectively, suggesting efficient operational management.

Balance Sheet

Very Positive

The company's balance sheet is strong with a low debt-to-equity ratio of 0.044, indicating minimal leverage and financial risk. The return on equity (ROE) is 11.07%, which, while slightly lower than previous years, still demonstrates effective use of equity. The equity ratio stands at 77.84%, highlighting a robust capital structure.

Cash Flow

Positive

Operating cash flow to net income ratio is 0.60, showing a healthy conversion of income to cash. However, the free cash flow growth rate is negative at -2.14%, indicating a decline in free cash flow generation. The free cash flow to net income ratio is strong at 0.91, suggesting efficient cash management despite recent challenges.

Breakdown	TTM	Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Income Statement
Total Revenue	5.07B	4.73B	4.69B	4.82B	3.76B	2.66B
Gross Profit	1.52B	1.45B	1.43B	1.54B	1.27B	926.96M
EBITDA	687.65M	671.69M	659.86M	713.01M	680.27M	508.57M
Net Income	401.15M	454.53M	417.08M	419.42M	481.65M	327.16M
Balance Sheet
Total Assets	4.71B	4.75B	4.35B	4.01B	3.52B	2.72B
Cash, Cash Equivalents and Short-Term Investments	1.04B	1.29B	2.10B	1.74B	1.45B	1.38B
Total Debt	162.69M	163.25M	171.94M	193.22M	239.16M	266.40M
Total Liabilities	1.04B	1.12B	880.89M	1.01B	1.03B	738.31M
Stockholders Equity	3.67B	3.63B	3.47B	3.00B	2.49B	1.98B
Cash Flow
Free Cash Flow	409.73M	527.02M	534.22M	382.48M	460.83M	475.61M
Operating Cash Flow	449.58M	559.17M	562.63M	464.10M	572.33M	544.41M
Investing Cash Flow	-834.67M	-884.98M	-66.77M	-182.93M	-368.92M	-167.15M
Financing Cash Flow	-405.81M	-390.41M	-165.77M	-2.02M	-59.56M	-765.00K

Epam Systems Technical Analysis

Technical Analysis Sentiment

Negative

Last Price168.09

Price Trends

50DMA

167.83

Positive

100DMA

168.26

Negative

200DMA

195.30

Negative

Market Momentum

MACD

2.55

Negative

RSI

50.31

Neutral

STOCH

55.75

Neutral

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For EPAM, the sentiment is Negative. The current price of 168.09 is above the 20-day moving average (MA) of 166.10, above the 50-day MA of 167.83, and below the 200-day MA of 195.30, indicating a neutral trend. The MACD of 2.55 indicates Negative momentum. The RSI at 50.31 is Neutral, neither overbought nor oversold. The STOCH value of 55.75 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for EPAM.

Epam Systems Risk Analysis

Epam Systems disclosed 36 risk factors in its most recent earnings report. Epam Systems reported the most risks in the "Legal & Regulatory" category.

Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy

Latest Risks Added 0 New Risks

Epam Systems Peers Comparison

Overall Rating

UnderperformOutperform

Sector (53)

Financial Indicators

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
G	79 Outperform	$7.82B	14.89	21.86%	1.43%	7.37%	-14.64%
EPAM	75 Outperform	$9.73B	24.82	11.36%	―	9.73%	-0.29%
INFY	75 Outperform	$70.59B	21.84	30.46%	3.05%	4.52%	-0.22%
CTSH	74 Outperform	$35.06B	14.58	16.69%	1.71%	6.34%	12.16%
ACN	70 Outperform	$159.56B	20.39	27.27%	2.34%	6.21%	14.87%
CACI	68 Neutral	$10.62B	21.01	13.49%	―	12.64%	19.79%
Sector *	53 Neutral	$289.47M	3.07	-10.30%	2.78%	5.71%	-76.50%

* Technology Sector Average

Performance Comparison

EPAM

Epam Systems

168.09

-36.73

-17.93%

ACN

Accenture

252.94

-80.76

-24.20%

CACI

Caci International

460.10

-6.63

-1.42%

CTSH

Cognizant

71.45

-3.22

-4.31%

Genpact

44.97

7.20

19.06%

INFY

Infosys

16.59

-5.47

-24.80%

Epam Systems Corporate Events

Executive/Board Changes

EPAM Systems Appoints Balazs Fejes as New CEO

Neutral

Sep 2, 2025

On August 27, 2025, EPAM Systems’ Board of Directors approved the transition of Arkadiy Dobkin to Executive Chairman and appointed Balazs Fejes as CEO and President, effective September 1, 2025. Mr. Fejes, who joined EPAM in 2004, will receive an annual base salary of $850,000 and a grant of restricted stock units valued at $670,000. The Board also amended the company’s bylaws to increase the maximum number of directors from ten to eleven, effective September 1, 2025.

Executive/Board Changes

EPAM Systems Approves Executive Severance Plan

Neutral

Jun 26, 2025

On June 23, 2025, EPAM Systems, Inc. announced the approval of an Executive Severance Plan by its Board’s Compensation Committee. This plan outlines severance payments and benefits for executive officers in case of qualifying employment terminations. The plan includes provisions for cash payments, COBRA premium reimbursements, and accelerated vesting of stock awards, with additional benefits in the event of a change in control. The plan’s implications include potential excise tax under Section 4999 of the Internal Revenue Code, affecting the net benefits for participants.

Glossary

BuyA stock rated as a "Buy" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock is likely to deliver higher returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.

HoldA stock rated as a "Hold" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly compelling nor unfavorable for investment. Note: This is not investment advice; please consult a financial advisor before making investment decisions.

SellA stock rated as a "Sell" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock may deliver lower returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.

Disclaimer

This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.Date of analysis: Sep 05, 2025