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Epam Systems Inc (EPAM)
NYSE:EPAM

Epam Systems (EPAM) AI Stock Analysis

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EP

Epam Systems

(NYSE:EPAM)

Rating:71Outperform
Price Target:
$191.00
▲(4.47%Upside)
Epam Systems demonstrates solid financial performance and strategic growth initiatives, particularly in AI capabilities, supporting a positive outlook. However, technical indicators and valuation suggest potential risks, with limited momentum and moderate overvaluation, presenting a balanced investment case.
Positive Factors
AI Revenue
Last quarter EPAM generated $50 million in pure-AI revenues, representing double-digit sequential growth.
Growth Drivers
Management expects financial services, technology, life sciences including medtech, and energy to drive growth for the year.
Leadership Change
EPAM announced a leadership change with Balazs Fejes becoming CEO, which is seen as a positive development.
Negative Factors
Long-term Challenges
There are longer-term concerns where growth and AOM will be challenged.
Pricing and Demand
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.
Structural Concerns
Structural questions persist, including near-term risks that could drive worsening client spend if tariff uncertainty is not resolved soon.

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

Epam Systems Business Overview & Revenue Model

Company DescriptionEPAM 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.
How the Company Makes MoneyEPAM Systems makes money primarily through its extensive range of IT services and consulting offerings. The company generates revenue by providing software engineering, technology consulting, and custom development services to a diverse client base spanning multiple industries. Key revenue streams include fees for time and materials, fixed-price contracts, and managed services agreements. EPAM's ability to attract and maintain long-term partnerships with major corporations contributes significantly to its earnings. The company also capitalizes on its global delivery model, leveraging a distributed workforce to optimize costs and deliver high-quality services. Additionally, strategic acquisitions expand EPAM's capabilities and market reach, further driving revenue growth.

Epam Systems Key Performance Indicators (KPIs)

Any
Any
Revenue by Geography
Revenue by Geography
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:May 08, 2025
(Q1-2025)
|
% Change Since: 14.84%|
Next Earnings Date:Jul 31, 2025
Earnings Call Sentiment Neutral
EPAM Systems reported strong Q1 results with significant revenue growth and AI-driven momentum, despite a challenging macroeconomic environment. The company also announced a strategic leadership transition and continued geographic expansion. However, there were challenges with decreased free cash flow, declining gross margins, and specific industry verticals facing headwinds. While the positive aspects highlight growth and strategic initiatives, the financial challenges temper the overall optimism.
Q1-2025 Updates
Positive Updates
Strong Q1 Revenue Growth
EPAM generated revenue of $1.3 billion in Q1, a year-over-year increase of 11.7% on a reported basis. Organic constant currency revenue grew 1.4% compared to Q1 2024, exceeding expectations of flat organic growth.
AI-Driven Momentum
AI native revenues grew strong double-digit quarter-over-quarter, driven by increased client demand for AI capabilities. EPAM is engaged in a wide range of AI initiatives with the vast majority of its top 100 clients.
Leadership Transition Announced
Arkadiy Dobkin announced his planned transition to Executive Chairman, with Balazs Fejes set to become CEO and President on September 1, 2025.
Geographic Expansion and Talent Growth
EPAM saw an increase in net organic headcount across India, Europe, and Western Central Asia, with strong demand in these regions. The total headcount grew by 18.2% year-over-year.
Recognition and Partnerships
EPAM was named Google 2025 Partner of the Year for Oil and Gas, reflecting strong collaborations and innovations in AI-powered solutions.
Negative Updates
Decreased Free Cash Flow
Free cash flow was $15 million compared to $123 million in the same quarter last year, impacted by higher bonus payments and increased DSO due to fixed fee revenues.
Gross Margin Decline
GAAP gross margin for Q1 was 26.9%, down from 28.4% in Q1 2024. Non-GAAP gross margin also decreased due to compensation increases and lower profitability from acquisitions.
Challenges in Consumer and Telecom Verticals
Generic goods, retail, and travel decreased 1.4% year-over-year, and emerging verticals organic revenue in constant currency contracted by 3.5%, negatively impacted by softness across manufacturing and telecom clients.
High DSO Levels
DSO was 75 days at the end of Q1, up from 70 days in Q4 2024, resulting from an increasing share of fixed fee revenues with associated milestone billing.
Company Guidance
During EPAM Systems' Q1 2025 earnings call, the company reported a strong performance despite challenging macroeconomic conditions, with revenue reaching $1.3 billion, marking an 11.7% year-over-year increase. Organic constant currency revenue grew by 1.4%, surpassing expectations of flat growth. The company experienced double-digit revenue growth in four of its six verticals, with financial services seeing a 29.3% increase year-over-year. The Americas region, representing 60% of revenues, also grew by 12.6% year-over-year. EPAM's focus on AI-related capabilities resulted in strong double-digit quarter-over-quarter growth in AI native revenues. The company also announced a leadership transition, with Balazs Fejes set to become CEO on September 1, 2025. Looking forward, EPAM raised its full-year revenue growth guidance to 11.5%-14.5%, with an inorganic contribution of about 9%, and expects organic constant currency growth between 2%-5%.

Epam Systems Financial Statement Overview

Summary
Epam Systems demonstrates solid financial performance with strong gross and net profit margins, healthy EBIT and EBITDA margins, and a low debt-to-equity ratio. The company maintains sound financial health despite a decrease in free cash flow growth.
Income Statement
85
Very Positive
Epam Systems shows a strong financial performance in the TTM period with robust gross and net profit margins of 29.7% and 8.5%, respectively. The revenue growth rate from the previous year is 2.9%, indicating steady growth. EBIT and EBITDA margins are healthy at 10.9% and 13.9%, respectively, demonstrating efficient operational management. While the net profit margin decreased from 9.6% in the previous year, the overall income statement reflects a profitable and growing company.
Balance Sheet
80
Positive
The company maintains a solid balance sheet with a low debt-to-equity ratio of 0.04, indicating financial stability and low leverage. The return on equity is strong at 11.3%, and the equity ratio is high at 77.1%, suggesting a dominant equity position in its capital structure. The high stockholders' equity and low total debt position reflect sound financial health, though slight declines in equity ratio and ROE compared to previous years.
Cash Flow
78
Positive
Epam Systems exhibits strong cash flow management with a free cash flow to net income ratio of 1.02, indicating effective conversion of income to cash. However, the free cash flow growth rate shows a decline of 20.6% compared to the previous year, suggesting potential challenges in cash generation. The operating cash flow to net income ratio remains robust at 1.10, reflecting efficient cash operations despite reduced free cash flow.
BreakdownTTMDec 2024Dec 2023Dec 2022Dec 2021Dec 2020
Income Statement
Total Revenue4.86B4.73B4.69B4.82B3.76B2.66B
Gross Profit1.45B1.45B1.32B1.54B1.27B926.96M
EBITDA675.00M671.69M669.29M713.01M616.79M508.57M
Net Income411.77M454.53M417.08M419.42M481.65M327.16M
Balance Sheet
Total Assets4.72B4.75B4.35B4.01B3.52B2.72B
Cash, Cash Equivalents and Short-Term Investments1.17B1.29B2.10B1.74B1.45B1.38B
Total Debt158.14M163.25M171.94M193.22M239.16M266.40M
Total Liabilities1.08B1.12B880.89M1.01B1.03B738.31M
Stockholders Equity3.64B3.63B3.47B3.00B2.49B1.98B
Cash Flow
Free Cash Flow418.68M527.02M534.22M382.48M460.83M475.61M
Operating Cash Flow453.41M559.17M562.63M464.10M572.33M544.41M
Investing Cash Flow-839.30M-884.98M-66.77M-182.93M-368.92M-167.15M
Financing Cash Flow-427.84M-390.41M-165.77M-2.02M-59.56M-765.00K

Epam Systems Technical Analysis

Technical Analysis Sentiment
Positive
Last Price182.83
Price Trends
50DMA
172.73
Positive
100DMA
180.97
Positive
200DMA
202.84
Negative
Market Momentum
MACD
1.42
Negative
RSI
62.87
Neutral
STOCH
89.26
Negative
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For EPAM, the sentiment is Positive. The current price of 182.83 is above the 20-day moving average (MA) of 174.18, above the 50-day MA of 172.73, and below the 200-day MA of 202.84, indicating a neutral trend. The MACD of 1.42 indicates Negative momentum. The RSI at 62.87 is Neutral, neither overbought nor oversold. The STOCH value of 89.26 is Negative, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for EPAM.

Epam Systems Risk Analysis

Epam Systems disclosed 35 risk factors in its most recent earnings report. Epam Systems reported the most risks in the "Tech & Innovation" 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 (69)
Financial Indicators
Name
Overall Rating
Market Cap
P/E Ratio
ROE
Dividend Yield
Revenue Growth
EPS Growth
GG
76
Outperform
$8.03B15.6322.21%1.48%7.31%-15.86%
WNWNS
76
Outperform
$3.03B16.8321.21%-0.64%30.96%
75
Outperform
$10.75B23.0813.48%14.16%22.25%
72
Outperform
$7.37B34.1923.81%14.18%21.49%
71
Outperform
$10.36B25.5611.57%4.72%-3.06%
69
Neutral
¥228.59B14.337.64%2.71%9.13%8.49%
68
Neutral
$4.04B26.447.97%11.90%-11.15%
* Technology Sector Average
Performance Comparison
Ticker
Company Name
Price
Change
% Change
EPAM
Epam Systems
182.83
-3.30
-1.77%
CACI
Caci International
489.02
61.71
14.44%
EXLS
Exlservice Holdings
45.27
13.36
41.87%
G
Genpact
45.92
15.06
48.80%
WNS
WNS
65.38
11.46
21.25%
GLOB
Globant SA
91.72
-88.27
-49.04%

Epam Systems Corporate Events

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.

The most recent analyst rating on (EPAM) stock is a Buy with a $237.00 price target. To see the full list of analyst forecasts on Epam Systems stock, see the EPAM Stock Forecast page.

Shareholder MeetingsBusiness Operations and Strategy
EPAM Systems Approves Key Proposals at Annual Meeting
Positive
May 27, 2025

On May 22, 2025, EPAM Systems, Inc. held its Annual Meeting of Stockholders, where several key proposals were approved. The stockholders approved the 2025 Long Term Incentive Plan, replacing the 2015 Plan, and amendments to the company’s Charter and Bylaws, including the declassification of the Board and reduction of supermajority vote requirements. These changes are aimed at enhancing corporate governance and aligning with shareholder interests.

The most recent analyst rating on (EPAM) stock is a Buy with a $237.00 price target. To see the full list of analyst forecasts on Epam Systems stock, see the EPAM Stock Forecast page.

Executive/Board ChangesBusiness Operations and StrategyFinancial Disclosures
EPAM Systems Announces Leadership Transition with New CEO
Positive
May 8, 2025

On May 8, 2025, EPAM Systems announced a leadership transition with CEO Arkadiy Dobkin moving to Executive Chairman and Balazs Fejes stepping in as CEO and President effective September 1, 2025. The company reported strong first-quarter 2025 results with revenues of $1.302 billion, an 11.7% increase year-over-year, and raised its full-year revenue growth outlook to 11.5% to 14.5%. Despite a decrease in GAAP income from operations and diluted EPS, EPAM highlighted its unique differentiation in supporting client transformations amidst a dynamic macroeconomic landscape.

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: Jun 26, 2025