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Epam Systems (EPAM)
NYSE:EPAM
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Epam Systems
(NYSE:EPAM)
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Rating:68Neutral
Price Target:
$151.00
▲(15.20% Upside)
Action:ReiteratedDate:02/27/26
The score is supported most by EPAM’s strong balance sheet and free-cash-flow generation, plus a generally constructive 2026 outlook (growth and margin improvement) with clear AI-native traction. These positives are tempered by a sharply bearish technical setup (price well below key moving averages with negative MACD) and the fundamental overhang of multi-year margin compression and near-term headwinds (client concentration and elongated sales cycles).
Positive Factors
Balance sheet & cash generation
Extremely low leverage and sizable free cash flow provide durable financial flexibility. Strong FCF and cash balances allow persistent reinvestment in AI, opportunistic M&A or continued buybacks, and buffer timing-driven working-capital swings, supporting strategic execution over 2–6 months.
AI-native momentum & partnerships
Rapid growth in AI-native engagements and a 2026 >$600M target indicate structural demand for EPAM’s engineering-led AI services. Combined with validated enterprise deployments and partner recognitions, this supports sustainable higher-value project pipelines and better long-term service differentiation.
Scale, geographic & vertical diversification
Broad geographic reach and multi-vertical growth underpin revenue resilience and cross-sell opportunities. Large delivery scale and diversified end-markets reduce single-region cyclicality, support large AI program delivery, and sustain long-term client relationships and contracting power.
Negative Factors
Multi-year margin compression
Sustained decline in gross and net margins reduces operating leverage and returns on invested capital. Persisting margin pressure from comp, utilization and pricing can limit reinvestment capacity, constrain ROE recovery and compress earnings power even as revenue stabilizes.
Client concentration risk
Material exposure to a single client introduces durable downside to growth visibility and revenue stability. Concentration magnifies geopolitical or macro shocks, weakens negotiating leverage, and can produce lumpy quarters or permanent revenue loss if the client’s environment deteriorates.
Slowing revenue growth & elongated sales cycles
A multi-year slowdown in top-line growth combined with lengthening sales cycles for large AI deals risks lumpy, delayed revenue realization. This reduces operating leverage, makes margin recovery harder, and weakens near-term visibility for resource planning and capacity monetization.
Epam Systems (EPAM) vs. SPDR S&P 500 ETF (SPY)
Market Cap
$7.12B
Dividend YieldN/A
Average Volume (3M)1.19M
Price to Earnings (P/E)19.5
Beta (1Y)1.15
Revenue Growth14.26%
EPS Growth-15.49%
CountryUS
Employees61,200
SectorTechnology
Sector Strength88
IndustryInformation Technology Services
Share Statistics
EPS (TTM)3.26
Shares Outstanding55,242,620
10 Day Avg. Volume1,883,667
30 Day Avg. Volume1,189,854
Financial Highlights & Ratios
PEG Ratio-2.06
Price to Book (P/B)3.11
Price to Sales (P/S)2.10
P/FCF Ratio18.69
Enterprise Value/Market Cap0.86
Enterprise Value/Revenue1.12
Enterprise Value/Gross Profit3.95
Enterprise Value/Ebitda9.24
Forecast
1Y Price Target
$200.30Price Target Upside52.81% Upside
Rating ConsensusModerate Buy
Number of Analyst Covering14
EPS Forecast (FY)12.72
Revenue Forecast (FY)$5.81B
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 generates revenue primarily through its service offerings, which include consulting, software development, and systems integration for clients across diverse industries. The company operates on a time-and-materials basis, fixed-price contracts, and outcome-based pricing models, allowing flexibility in revenue generation. Key revenue streams include project-based services, ongoing support and maintenance contracts, and long-term partnerships with prominent enterprises. Additionally, EPAM benefits from strategic alliances with major technology platforms and vendors, enhancing its service capabilities and expanding its market reach. The company's focus on high-value, complex projects allows it to command premium pricing, contributing significantly to its overall earnings.
Epam Systems Key Performance Indicators (KPIs)
Any
Revenue by Segment
Analyzes revenue from different business segments, highlighting which areas drive growth and profitability, and indicating strategic focus and market demand.
Analyzes revenue from different business segments, highlighting which areas drive growth and profitability, and indicating strategic focus and market demand.
Data provided by:
The Fly
The FlyEpam Systems Earnings Call Summary
Earnings Call Date:Feb 19, 2026
(Q4-2025)
| % Change Since: |
Next Earnings Date:Apr 30, 2026
Earnings Call Sentiment Positive
The call presented a majority of positive operational and financial signals: solid Q4 outperformance, strong cash generation, accelerating AI‑native revenues with a stated target to scale AI-native services to >$600M in 2026, meaningful industry recognitions, and continued share repurchases. Headwinds were highlighted but largely tactical or transitional: modest gross margin pressure from higher variable comp, temporary utilization impacts due to pyramid re-shaping and vacations, a concentration-related decline from a Neoris client that drags ~1 percentage point off 2026 organic growth, and longer sales cycles associated with larger AI programs. Management provided constructive 2026 guidance that targets margin improvement and continued investment in AI and go-to-market, while acknowledging near-term shape risk (Q1) and a conservative view on visibility. On balance, the positive catalysts (AI momentum, cash flow, partnerships, awards, revenue growth and clear guidance) outweigh the contained operational challenges and client-specific headwinds.Q4-2025 Updates
Positive Updates
Q4 Revenue Outperformance
Q4 2025 revenues exceeded $1,400,000,000, up 12.8% year-over-year on a reported basis and up 5.6% on an organic constant currency basis, beating the high end of Q4 revenue outlook.
Full-Year 2025 Revenue Growth
Full-year 2025 revenues were $5,460,000,000, a 15.4% increase on a reported basis and a 4.9% increase on an organic constant currency basis.
Strong AI-Native Momentum
Q4 AI-native revenues exceeded $105,000,000 (pure AI-native definitions only). Management expects AI-native revenues to scale to in excess of $600,000,000 in 2026; hundreds of AI-native projects were active in Q4 with 60%–70% expanding from PoC to larger programs.
Improving EPS and Profitability Metrics (Non-GAAP)
Q4 non-GAAP diluted EPS was $3.26, up $0.42 or 14.8% year-over-year. Full-year 2025 non-GAAP EPS was $11.50, up 5.9% versus 2024. Q4 non-GAAP income from operations was $230,000,000 (16.3% of revenue).
Strong Cash Generation and Balance Sheet
Q4 cash flow from operations was $283,000,000 (vs. $130,000,000 in Q4 2024) and Q4 free cash flow was $268,000,000 (vs. $115,000,000). Full-year 2025 free cash flow was $613,000,000 with adjusted net income conversion of 94.7%. Ending cash was approximately $1,300,000,000.
Active Capital Return
Share repurchases in Q4 were ~1,200,000 shares for $224,000,000 at an average price of $192.33. Full-year 2025 repurchases were ~3,500,000 shares for $661,000,000 at an average price of $186.67; management expects continued repurchases in 2026.
Geographic and Vertical Strength
EMEA delivered strong growth: +21.8% reported and +11.7% organic. Americas (58% of Q4 revenue) grew +7.6% reported and +2.2% organic. Five of six industry verticals grew year-over-year: Financial Services (+19.8% reported, 5% organic), Software & High-Tech (+18.1%), Consumer/Retail/Travel (+10.9%).
Industry Recognition & Strategic Partnerships
Multiple awards and recognitions in 2025 (Microsoft Innovate with Azure AI Platform Partner of the Year, AWS Global Innovation Partner of the Year, Gartner/Forrester/IDC leadership placements). New strategic partnership with Coursera and Google Cloud marketplace agent launches validate positioning in AI and talent enablement.
2026 Guidance with Positive Margin Targets
Full-year 2026 guidance: revenue growth of 4.5%–7.5% (organic constant currency 3%–6%), GAAP operating margin 10%–11%, non-GAAP operating margin 15%–16%, GAAP EPS $7.95–$8.25, non-GAAP EPS $12.60–$12.90 — management expects gross margin improvement in 2026.
Headcount and Talent Investment
Q4 technical headcount exceeded 56,600 consultants/designers/engineers (total headcount >62,850), with ~500 delivery professionals added in Q4 and a deliberate onboarding of junior talent to improve pyramid/seniority over 2026.
Negative Updates
Gross Margin and Operating Margin Pressure (YoY)
Q4 GAAP gross margin was 30.1% (down from 30.4% in Q4 2024) and non-GAAP gross margin was 31.7% (down from 32.2% prior year). Non-GAAP operating margin in Q4 declined to 16.3% from 16.7% a year ago, with higher variable compensation cited as a primary driver.
Utilization and Pyramid Transition Effects
Utilization fell to 75.4% in Q4 versus 76.2% in Q4 2024 and 76.5% in Q3 2025. Management attributes the decline to year-end vacation timing and the onboarding of junior hires (lower initial utilization) as part of a deliberate pyramid optimization.
Client Concentration Headwind — Neoris Large Customer
Neoris’ largest client (headquartered in Mexico) faced a difficult economic environment including U.S. tariffs; expected sequential mid-single-digit decline Q4→Q1 and a full-year 2026 impact reducing EPAM’s organic constant currency growth by approximately 100 basis points (–1%).
APAC Organic Decline and Mixed Vertical Performance
APAC (2% of revenues) grew 0.6% reported but declined 4.3% on an organic constant currency basis. Business information & media was flat year-over-year; some verticals (emerging verticals reported +0.1%) showed limited reported growth.
Longer Sales Cycles and Procurement Complexity
Management noted elongation of sales cycles and more rigorous procurement for larger AI programs, which can delay project starts and push decision-making later in the year—impacting the shape of 2026 revenue despite larger deal sizes.
Q1 2026 Headwinds and Elevated Tax Rate
Q1 2026 guide incorporates a mid-single-digit sequential decline from the Neoris client, fewer bill days, resetting Social Security caps and a higher GAAP effective tax rate (~30% for Q1), contributing to a more conservative near-term outlook (Q1 organic ~3% at midpoint).
Slight Decline in GAAP Income from Operations (Full Year)
Full-year GAAP income from operations was $520,000,000, a decrease of 4.5% year-over-year and represented 9.5% of revenue, reflecting some near-term margin pressure despite non-GAAP improvements.
Higher Share Count Assumptions vs. Recent Repurchases
Guidance assumes weighted average diluted share counts of ~54.4M for 2026 (54.7M in Q1 guide), noting continued repurchases but also an expected share count that may constrain near-term EPS upside if buybacks moderate.
Company Guidance
EPAM’s 2026 guidance calls for full‑year revenue growth of 4.5%–7.5% (organic constant‑currency 3%–6% after an expected +1.5% FX tailwind and with ~100 bps headwind from Neoris’ largest client), GAAP operating margin of 10%–11% and non‑GAAP operating margin of 15%–16%, GAAP diluted EPS $7.95–$8.25 and non‑GAAP diluted EPS $12.60–$12.90 on ~54.4M weighted average diluted shares; Q1 2026 guidance is $1,385M–$1,400M revenue (≈3% organic constant‑currency at the midpoint after ~4% FX benefit and a mid‑single‑digit sequential decline from the Neoris client), GAAP op margin 7%–8% and non‑GAAP op margin 13.5%–14.5%, GAAP EPS $1.32–$1.40 and non‑GAAP EPS $2.70–$2.78 on ~54.7M diluted shares, with GAAP tax ~30% (non‑GAAP ~24%); key assumptions include ~$202M stock‑based comp for the year (Q1 $53M), ~$69M amortization (Q1 $18M), ~$70M tax‑effective non‑GAAP adjustments (Q1 $19M), ~$3M FX loss per quarter, $14M Q1 cost‑optimization charges, $12M interest & other income for the year (Q1 $3M), an expectation to maintain Ukraine productivity, a targeted ~80%–90% free‑cash‑flow conversion range for 2026, and continued share repurchases.Epam Systems Financial Statement Overview
Summary
Strong financial resilience driven by a very low-debt balance sheet (debt-to-equity ~0.04) and consistently healthy free cash flow (2025 FCF ~$613M with strong rebound). Offsetting this, revenue growth has slowed materially and profitability has compressed over multiple years (notably lower gross and net margins), pressuring returns and net income trajectory.Income Statement
Revenue growth has materially slowed since the strong 2021–2022 period, with only ~0.8% growth in 2024 and ~3.0% in 2025. Profitability has also compressed: gross margin declined from ~34.9% (2020) to ~26.5% (2025) and net margin fell from ~12.8% (2021) to ~6.9% (2025). The business remains solidly profitable with positive operating earnings, but the multi-year margin step-down and lower net income in 2025 versus 2024 weigh on the score.70
Positive
Balance Sheet
The balance sheet is conservatively financed with very low leverage: debt-to-equity is ~0.04 in 2025 (and has trended down from ~0.13 in 2020). Equity has steadily grown over time, supporting a strong capital base. Return on equity remains positive (~10.3% in 2025) but has declined from earlier highs (roughly ~19.4% in 2021), reflecting reduced profitability despite the strong balance sheet.88
Very Positive
Cash Flow
Cash generation is a key strength: free cash flow is strong and improved in 2025 (~$613M) with a sharp rebound in free cash flow growth (~33.5%). Free cash flow is consistently close to net income (about ~0.94x in 2024–2025), indicating good earnings quality. A watch item is that operating cash flow does not fully cover reported operating earnings (coverage ~0.67–0.87 across recent years), suggesting some working-capital or timing headwinds even as free cash flow remains robust.84
Very Positive
| Breakdown | Dec 2025 | Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 |
|---|---|---|---|---|---|
Income Statement | |||||
| Total Revenue | 5.46B | 4.73B | 4.69B | 4.82B | 3.76B |
| Gross Profit | 1.45B | 1.45B | 1.43B | 1.54B | 1.27B |
| EBITDA | 630.43M | 671.69M | 659.86M | 713.01M | 680.27M |
| Net Income | 377.68M | 454.53M | 417.08M | 419.42M | 481.65M |
Balance Sheet | |||||
| Total Assets | 4.90B | 4.75B | 4.35B | 4.01B | 3.52B |
| Cash, Cash Equivalents and Short-Term Investments | 1.30B | 1.29B | 2.10B | 1.74B | 1.45B |
| Total Debt | 143.70M | 163.25M | 171.94M | 193.22M | 239.16M |
| Total Liabilities | 1.22B | 1.12B | 880.89M | 1.01B | 1.03B |
| Stockholders Equity | 3.68B | 3.63B | 3.47B | 3.00B | 2.49B |
Cash Flow | |||||
| Free Cash Flow | 612.69M | 527.02M | 534.22M | 382.48M | 460.83M |
| Operating Cash Flow | 654.93M | 559.17M | 562.63M | 464.10M | 572.33M |
| Investing Cash Flow | -49.05M | -884.98M | -66.77M | -182.93M | -368.92M |
| Financing Cash Flow | -651.20M | -390.41M | -165.77M | -2.02M | -59.56M |
Epam Systems Technical Analysis
Negative
131.08
Price Trends
196.41
Negative
183.67
Negative
176.01
Negative
Market Momentum
-19.36
Positive
24.49
Positive
4.54
Positive
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 131.08 is below the 20-day moving average (MA) of 173.30, below the 50-day MA of 196.41, and below the 200-day MA of 176.01, indicating a bearish trend. The MACD of -19.36 indicates Positive momentum. The RSI at 24.49 is Positive, neither overbought nor oversold. The STOCH value of 4.54 is Positive, 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
UnderperformOutperform
Sector (61)
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
80 Outperform | $56.96B | 17.83 | 32.85% | 2.58% | 4.62% | 1.06% | |
77 Outperform | $121.05B | 16.26 | 25.35% | 2.25% | 6.58% | 1.19% | |
73 Outperform | $6.54B | 12.12 | 22.37% | 1.41% | 7.40% | -14.45% | |
69 Neutral | $12.94B | 25.26 | 13.18% | ― | 12.61% | 11.85% | |
68 Neutral | $7.12B | 19.47 | 10.34% | ― | 14.26% | -15.49% | |
68 Neutral | $29.20B | 13.39 | 15.16% | 1.46% | 7.44% | -4.57% | |
61 Neutral | $37.18B | 12.37 | -10.20% | 1.83% | 8.50% | -7.62% |
* Technology Sector Average
EPAM
Epam Systems
138.62
-69.69
-33.45%
ACN
Accenture
207.38
-141.64
-40.58%
CACI
Caci International
597.16
261.53
77.92%
CTSH
Cognizant
64.97
-17.55
-21.26%
G
Genpact
39.53
-12.39
-23.86%
INFY
Infosys
14.70
-5.30
-26.49%
Epam Systems Corporate Events
Business Operations and Strategy
EPAM Systems Announces 2026 Investor Day Focused on AI
Positive
Jan 13, 2026
On January 13, 2026, EPAM Systems announced it will host an Investor Day in Boston on March 12, 2026, where CEO and President Balazs Fejes, CFO Jason Peterson and other executives will present the company’s progress against long-term strategic priorities and outline its plans for sustained growth amid the next wave of AI-driven business transformation. The event, which will include presentations from clients and partners and demonstrations of real-life AI applications, underscores EPAM’s effort to highlight its differentiated AI-native engineering capabilities and deepen investor understanding of its role in helping enterprises accelerate digital and AI transformation; it will be available via live webcast and replay for stakeholders who cannot attend in person.
The most recent analyst rating on (EPAM) stock is a Buy with a $243.00 price target. To see the full list of analyst forecasts on Epam Systems stock, see the EPAM Stock Forecast page.
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.