Q1 2025 Epam Systems Inc Earnings Call Transcript
Key Points
- EPAM Systems Inc (EPAM) reported stronger-than-expected Q1 results, marking consecutive quarters of outperformance despite a challenging macroeconomic environment.
- The company announced a planned leadership succession with Balazs Fejes set to become the new CEO and President, bringing extensive experience and a vision for EPAM's future growth.
- EPAM returned to double-digit revenue growth year-over-year, with significant contributions from both organic and inorganic sources.
- The company is experiencing increased demand for its AI capabilities, with strong double-digit growth in AI-related revenues quarter-over-quarter.
- EPAM's global delivery hubs, particularly in India and Central Eastern Europe, continue to expand, supporting the company's ability to meet evolving client needs.
- EPAM's GAAP gross margin decreased to 26.9% from 28.4% in the same quarter last year, impacted by compensation increases and lower profitability from recent acquisitions.
- Cash flow from operations significantly declined to $24 million from $130 million in the same quarter of 2024, due to higher bonus payments and increased DSO.
- The company faces ongoing macroeconomic uncertainties, which could impact client decision-making and spending in the second half of 2025.
- EPAM's consumer goods, retail, and travel verticals experienced a year-over-year revenue decline, largely due to softness in consumer products and retail.
- Despite improvements, the pricing environment remains challenging, with limited ability to pass on compensation increases to clients.
Good day, and welcome to EPAM Systems first-quarter 2025 earnings conference call. (Operator Instructions) And finally, I would like to advise all participants that this call is being recorded. Thank you. I'd now like to welcome Mike Rowshandel, Head of Investor Relations, to begin the conference. Mike, over to you.
Good morning, everyone, and thank you for joining us today on our first quarter 2025 earnings announcement. As the operator just mentioned, I'm Mike Rowshandel, Head of Investor Relations.
We hope you've had an opportunity to review the two news releases we shared earlier today. If you have not, copies are available on epam.com in the Investors section. With me on today's call are Arkadiy Dobkin, CEO and President; and Jason Peterson, Chief Financial Officer.
I would like to remind those listening that some of the comments made on today's call may contain forward-looking statements. These statements are subject to risks and uncertainties as described in the company's
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