EPAM Reports Results for Fourth Quarter and Full Year 2025

Fourth Quarter 2025

Full Year 2025

NEWTOWN, Pa., Feb. 19, 2026 /PRNewswire/ -- EPAM Systems, Inc. (NYSE: EPAM), a leading digital and AI transformation company, today announced results for its fourth quarter and full year ended December 31, 2025.

"We are pleased to deliver a strong fourth quarter and full year 2025, notably scaling and accelerating our AI-native revenues. Our 2025 performance reflects our steady execution and meaningful progress in driving business transformation and AI foundational readiness for our clients," said Balazs Fejes, CEO & President, EPAM. "By continuing to invest in AI innovation, talent development and strategic partnerships, we are driving our own transformation, building on top of our core engineering DNA and strengthening our strategic positioning to win in the AI-Native Build era."

Fourth Quarter 2025 Highlights

Full Year 2025 Highlights

Cash Flow and Other Metrics

2026 Outlook - Full Year and First Quarter

Full Year

EPAM expects the following for the full year:

First Quarter

EPAM expects the following for the first quarter:

Conference Call Information

EPAM will host a conference call to discuss results on Thursday, February 19, 2026 at 8:00 a.m. EST. The conference call will be available live on the EPAM website at https://investors.epam.com. Please visit the website at least 15 minutes prior to the call to register for the event. For those who cannot access the live webcast, a replay will be available in the Investor Relations section of the website.

About EPAM Systems

EPAM (NYSE: EPAM) is a global leader in AI transformation engineering and integrated consulting, serving Forbes Global 2000 companies and ambitious startups. With over thirty years of expertise in custom software, product and platform engineering, EPAM empowers organizations to become AI-Native enterprises, driving measurable value from innovation and digital investments. Recognized by industry benchmarks and leading analysts as a leader in AI, EPAM delivers globally while engaging locally, making the future real for clients, partners, and employees.

We are proud to be recognized by Forbes, Glassdoor, Newsweek, Time Magazine, Great Place to Work and kununu as a Most Loved Workplace around the world.

Learn more at www.epam.com and follow us on LinkedIn.

Non-GAAP Financial Measures

EPAM supplements results reported in accordance with United States generally accepted accounting principles, referred to as GAAP, with non-GAAP financial measures. Management believes these measures help illustrate underlying trends in EPAM's business and uses the measures to establish budgets and operational goals, communicate internally and externally, for managing EPAM's business and evaluating its performance. Management also believes these measures help investors compare EPAM's operating performance with its results in prior periods. EPAM anticipates that it will continue to report both GAAP and certain non-GAAP financial measures in its financial results, including non-GAAP results that exclude stock-based compensation expenses, acquisition-related costs including amortization of acquired intangible assets, impairment of assets, expenses associated with EPAM's humanitarian commitment to its professionals in Ukraine, costs associated with the geographic repositioning of EPAM employees based outside of Ukraine impacted by the war and geopolitical instability in the region, employee separation costs incurred in connection with restructuring programs including the Company's exit from Russia, certain other one-time charges and benefits, changes in fair value of contingent consideration, foreign exchange gains and losses, excess tax benefits and tax shortfalls related to stock-based compensation, and the related effect on income taxes of the pre-tax adjustments. Management also compares revenues on an "organic constant currency basis," which is a non-GAAP financial measure. This measure excludes the effect of acquisitions by removing revenues from an acquired company in the twelve months after completing an acquisition and foreign currency exchange rate fluctuations by translating current period revenues into U.S. dollars at the weighted average exchange rates of the prior period of comparison. Because EPAM's reported non-GAAP financial measures are not calculated in accordance with GAAP, these measures are not comparable to GAAP and may not be comparable to similarly described non-GAAP measures reported by other companies within EPAM's industry. Consequently, EPAM's non-GAAP financial measures should not be evaluated in isolation or supplant comparable GAAP measures, but rather, should be considered together with the information in EPAM's consolidated financial statements, which are prepared in accordance with GAAP.

Forward-Looking Statements

This press release includes estimates and statements which may constitute forward-looking statements made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995, the accuracy of which are necessarily subject to risks, uncertainties, and assumptions as to future events that may not prove to be accurate. Our estimates and forward-looking statements are mainly based on our current expectations and estimates of future events and trends, which affect or may affect our business and operations. These statements may include words such as "may," "will," "should," "believe," "expect," "anticipate," "intend," "plan," "estimate" or similar expressions. Those future events and trends may relate to, among other things, developments relating to the war in Ukraine and escalation of the war in the surrounding region, political and civil unrest or military action in the geographies where we conduct business and operate, difficult conditions in global capital markets, foreign exchange markets, global trade and the broader economy, the adoption and implementation of artificial intelligence technologies by EPAM and its clients, and the effect that these events may have on client demand and our revenues, operations, access to capital, and profitability. Other factors that could cause actual results to differ materially from those expressed or implied include general economic conditions, the risk factors discussed in the Company's most recent Annual Report on Form 10-K and the factors discussed in the Company's Quarterly Reports on Form 10-Q, particularly under the headings "Management's Discussion and Analysis of Financial Condition and Results of Operations" and "Risk Factors" and other filings with the Securities and Exchange Commission. Although we believe that these estimates and forward-looking statements are based upon reasonable assumptions, they are subject to several risks and uncertainties and are made based on information currently available to us. EPAM undertakes no obligation to update or revise any forward-looking statements, whether as a result of new information, future events, or otherwise, except as may be required under applicable securities law.

EPAM SYSTEMS, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF INCOME

(Unaudited)

(In thousands, except per share data)

Three Months Ended

December 31,

Year Ended

December 31,

2025

2024

2025

2024

Revenues

$ 1,407,548

$ 1,248,351

$ 5,457,056

$ 4,727,940

Operating expenses:

Cost of revenues (exclusive of depreciation and

amortization)

984,346

868,314

3,883,535

3,277,497

Selling, general and administrative expenses

243,161

216,969

928,707

816,300

Depreciation and amortization expense

30,787

26,556

124,811

89,559

Income from operations

149,254

136,512

520,003

544,584

Interest and other income (loss), net

(89)

6,451

11,546

46,876

Foreign exchange loss

(5,344)

(5,632)

(25,925)

(7,048)

Income before provision for income taxes

143,821

137,331

505,624

584,412

Provision for income taxes

34,467

34,032

127,946

129,879

Net income

$ 109,354

$ 103,299

$ 377,678

$ 454,533

Net income per share:

Basic

$ 1.99

$ 1.82

$ 6.76

$ 7.93

Diluted

$ 1.98

$ 1.80

$ 6.72

$ 7.84

Shares used in calculation of net income per share:

Basic

54,942

56,818

55,893

57,288

Diluted

55,341

57,435

56,233

57,983

EPAM SYSTEMS, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(Unaudited)

(In thousands, except par value)

As of

December 31,

2025

As of

December 31,

2024

Assets

Current assets

Cash and cash equivalents

$ 1,296,077

$ 1,286,267

Trade receivables and contract assets, net of allowance of $6,350 and $5,612,

respectively

1,108,201

1,002,175

Prepaid and other current assets

129,610

137,806

Total current assets

2,533,888

2,426,248

Property and equipment, net

202,387

207,667

Operating lease right-of-use assets, net

114,875

128,244

Intangible assets, net

406,586

436,418

Goodwill

1,210,564

1,181,575

Deferred tax assets

295,115

269,799

Other noncurrent assets

138,721

100,522

Total assets

$ 4,902,136

$ 4,750,473

Liabilities

Current liabilities

Accounts payable

$ 55,329

$ 44,702

Accrued compensation and benefits expenses

608,232

484,952

Accrued expenses and other current liabilities

250,688

201,356

Income taxes payable, current

25,520

50,395

Operating lease liabilities, current

37,173

39,634

Total current liabilities

976,942

821,039

Long-term debt

25,034

25,194

Operating lease liabilities, noncurrent

81,497

98,426

Deferred tax liabilities, noncurrent

76,969

92,362

Other noncurrent liabilities

63,886

82,301

Total liabilities

1,224,328

1,119,322

Commitments and contingencies

Equity

Stockholders' equity

Common stock, $0.001 par value; 160,000 authorized; 54,274 shares issued and

outstanding at December 31, 2025, and 56,869 shares issued and outstanding at

December 31, 2024

Additional paid-in capital

1,390,423

1,190,222

Retained earnings

2,268,204

2,555,796

Accumulated other comprehensive income (loss)

18,545

(116,864)

Total EPAM Systems, Inc. stockholders' equity

3,677,226

3,629,211

Noncontrolling interest in consolidated subsidiaries

582

1,940

Total equity

3,677,808

3,631,151

Total liabilities and equity

$ 4,902,136

$ 4,750,473

EPAM SYSTEMS, INC. AND SUBSIDIARIES

Reconciliations of Non-GAAP Financial Measures to Comparable GAAP Financial Measures

(Unaudited)

(In thousands, except percent and per share amounts)

Reconciliation of revenue growth as reported on a GAAP basis to revenue growth on an organic constant currency basis is

presented in the table below:

Three Months Ended

December 31, 2025

Year Ended

December 31, 2025

Revenue growth as reported

12.8 %

15.4 %

Inorganic revenue

(4.6) %

(9.2) %

Foreign exchange rates

(2.6) %

(1.3) %

Revenue growth on an organic constant currency basis

5.6 %

4.9 %

Reconciliation of various income statement amounts from GAAP to non-GAAP for the three months and years ended December 31, 2025 and 2024 is presented in the table below:

Three Months Ended December 31, 2025

Year Ended December 31, 2025

GAAP

Adjustments

Non-GAAP

GAAP

Adjustments

Non-GAAP

Cost of revenues (exclusive of

depreciation and amortization) (1)

$ 984,346

$ (23,550)

$ 960,796

$ 3,883,535

$ (88,055)

$ 3,795,480

Selling, general and administrative

expenses (2)

$ 243,161

$ (39,574)

$ 203,587

$ 928,707

$ (152,070)

$ 776,637

Income from operations (3)

$ 149,254

$ 80,779

$ 230,033

$ 520,003

$ 311,492

$ 831,495

Operating margin

10.6 %

5.7 %

16.3 %

9.5 %

5.7 %

15.2 %

Net income (4)

$ 109,354

$ 70,855

$ 180,209

$ 377,678

$ 269,131

$ 646,809

Diluted earnings per share

$ 1.98

$ 3.26

$ 6.72

$ 11.50

Three Months Ended December 31, 2024

Year Ended December 31, 2024

GAAP

Adjustments

Non-GAAP

GAAP

Adjustments

Non-GAAP

Cost of revenues (exclusive of

depreciation and amortization) (1)

$ 868,314

$ (22,040)

$ 846,274

$ 3,277,497

$ (59,821)

$ 3,217,676

Selling, general and administrative

expenses (2)

$ 216,969

$ (37,637)

$ 179,332

$ 816,300

$ (145,329)

$ 670,971

Income from operations (3)

$ 136,512

$ 71,675

$ 208,187

$ 544,584

$ 234,625

$ 779,209

Operating margin

10.9 %

5.8 %

16.7 %

11.5 %

5.0 %

16.5 %

Net income (4)

$ 103,299

$ 60,066

$ 163,365

$ 454,533

$ 175,430

$ 629,963

Diluted earnings per share

$ 1.80

$ 2.84

$ 7.84

$ 10.86

Items (1) through (4) above are detailed in the following table with the specific cross-reference noted in the appropriate item.

Three Months Ended

December 31,

Year Ended

December 31,

2025

2024

2025

2024

Stock-based compensation expenses

$ 23,019

$ 22,074

$ 86,252

$ 80,944

Poland R&D incentives (a)

—

(556)

(505)

(23,473)

Humanitarian support in Ukraine (b)

531

522

2,308

2,350

Total adjustments to GAAP cost of revenues (1)

23,550

22,040

88,055

59,821

Stock-based compensation expenses

22,127

22,624

90,512

86,353

Cost Optimization charges (c)

15,279

4,837

47,893

31,270

Other acquisition-related expenses

234

7,031

1,160

15,808

Humanitarian support in Ukraine (b)

1,861

3,127

12,250

10,821

Geographic repositioning (d)

—

(4)

—

849

One-time charges

255

228

Total adjustments to GAAP selling, general and administrative

expenses (2)

39,574

37,637

152,070

145,329

Amortization of purchased intangible assets

17,655

11,998

71,367

29,475

Total adjustments to GAAP income from operations (3)

80,779

71,675

311,492

234,625

Foreign exchange loss

5,344

5,632

25,925

7,048

Change in fair value of contingent consideration included in

Interest and other income, net

3,878

1,673

3,465

5,700

One-time benefits included in Interest and other income (loss),

net

—

(1,331)

(700)

(3,143)

Provision for income taxes:

Tax effect on non-GAAP adjustments

(18,631)

(15,640)

(74,086)

(44,522)

Tax shortfall (excess tax benefit) related to stock-based

compensation

1,175

(1,943)

1,926

(22,448)

Net discrete charge (benefit) from tax planning (e)

(1,690)

—

1,109

(1,830)

Total adjustments to GAAP net income (4)

$ 70,855

$ 60,066

$ 269,131

$ 175,430

(a)

We have excluded from non-GAAP results the portion of the benefit from Poland R&D incentives related to qualifying activities performed in 2023 as it represents a nonrecurring one-time benefit.

(b)

Humanitarian support in Ukraine includes expenses related to EPAM's $100 million humanitarian commitment in response to Russia's invasion of Ukraine to support EPAM professionals and their families in and displaced from Ukraine. These expenses are incremental to those expenses incurred prior to the crisis, clearly separable from normal operations, and not expected to recur once the crisis has subsided and operations return to normal.

(c)

Cost Optimization charges include severance, facilities and contract termination charges incurred in connection with the programs initiated in the third quarter of 2023, second quarter of 2024, and second quarter of 2025. Consistent with the Company's historical non-GAAP policy, costs incurred in connection with formal restructuring initiatives have been excluded from non-GAAP results as these are attributable to targeted restructuring efforts and not expected to recur once the respective Cost Optimization program is completed.

(d)

Geographic repositioning includes expenses associated with the relocation to other countries of employees based outside of Ukraine impacted by the war and geopolitical instability in the region, and includes the cost of accommodations, travel and food. These expenses are incremental to those expenses incurred prior to the crisis, clearly separable from normal operations, and not expected to recur once the crisis has subsided and operations return to normal.

(e)

Net discrete charge or benefit related to the implementation of tax planning to disregard certain foreign subsidiaries as separate entities for U.S. income tax purposes. Consistent with the Company's historical non-GAAP policy, the charge or benefit related to the implementation of tax planning has been excluded from non-GAAP results as it is one-time and unusual in nature.

EPAM SYSTEMS, INC. AND SUBSIDIARIES

Reconciliations of Guidance Non-GAAP Financial Measures to Comparable GAAP Financial Measures

(Unaudited)

The below guidance constitutes forward-looking statements within the meaning of the federal securities laws and is based on a number of assumptions that are subject to change and many of which are outside the control of the Company. Actual results may differ materially from the Company's expectations depending on factors discussed in the Company's filings with the Securities and Exchange Commission.

Reconciliation of expected revenue growth on a GAAP basis to expected revenue growth on an organic constant currency

basis is presented in the table below:

First Quarter 2026

Full Year 2026

(at midpoint of

range)

Revenue growth

7.0 %

4.5% to 7.5%

Foreign exchange rates

(4.0) %

(1.5) %

Inorganic revenue

(0.1) %

— %

Revenue growth on an organic constant currency basis

2.9 %

3.0% to 6.0%

Reconciliation of expected GAAP to non-GAAP income from operations as a percentage of revenues is presented in the

table below:

First Quarter 2026

Full Year 2026

GAAP income from operations as a percentage of revenues

7.0% to 8.0%

10.0% to 11.0%

Stock-based compensation expenses

3.9 %

3.4 %

Included in cost of revenues (exclusive of depreciation and amortization)

1.9 %

1.7 %

Included in selling, general and administrative expenses

2.0 %

1.7 %

Humanitarian support in Ukraine (b)

0.2 %

0.1 %

Cost Optimization charges (c)

1.1 %

0.3 %

Amortization of acquired intangible assets

1.3 %

1.2 %

Non-GAAP income from operations as a percentage of revenues (f)

13.5% to 14.5%

15.0% to 16.0%

(f)

EPAM has not included the impact of potential future one-time charges including asset impairments, unusual gains and losses, expenses incurred in connection with future cost optimization actions, and other acquisition-related expenses because the Company is unable to predict these amounts with reasonable certainty.

Reconciliation of expected GAAP to non-GAAP effective tax rate is presented in the table below:

First Quarter 2026

Full Year 2026

GAAP effective tax rate (approximately)

30.0 %

26.0 %

Tax shortfall related to stock-based compensation

(3.9) %

(0.6) %

Tax effect on non-GAAP adjustments

(2.1) %

(1.4) %

Non-GAAP effective tax rate (approximately)

24.0 %

Reconciliation of expected GAAP to non-GAAP diluted earnings per share is presented in the table below:

First Quarter 2026

Full Year 2026

GAAP diluted earnings per share

$1.32 to $1.40

$7.95 to $8.25

Stock-based compensation expenses

0.97

3.71

Included in cost of revenues (exclusive of depreciation and amortization)

0.47

1.81

Included in selling, general and administrative expenses

0.50

1.90

Humanitarian support in Ukraine (b)

0.06

0.22

Cost Optimization charges (c)

0.25

0.45

Amortization of acquired intangible assets

0.32

1.27

Foreign exchange loss

0.05

0.22

Provision for income taxes:

Tax effect on non-GAAP adjustments

(0.35)

(1.28)

Tax shortfall related to stock-based compensation

0.08

0.06

Non-GAAP diluted earnings per share (f)

$2.70 to $2.78

$12.60 to $12.90

SOURCE EPAM Systems, Inc.