On May 9, 2024, EPAM Systems Inc (EPAM, Financial), a prominent player in digital transformation services and product engineering, disclosed its financial outcomes for the first quarter of 2024 through its 8-K filing. The company, known for its expertise in integrating new technologies such as AI and virtual reality into client projects, reported a slight downturn in revenue but managed to align its earnings per share (EPS) with analyst expectations.
Financial Performance Overview
EPAM's revenue for the quarter stood at $1.165 billion, marking a decrease of 3.8% compared to the same period last year. This decline was slightly below the analyst's expectation of $1.161 billion. The company attributed the decrease primarily to challenging market conditions and the strategic exit from Russia, which affected the revenue stream.
The GAAP income from operations was reported at 9.5% of revenues, while non-GAAP income from operations was slightly better at 14.9%. Despite the revenue dip, EPAM showcased a resilient operational framework, managing a GAAP diluted EPS of $1.97, up by $0.24 from the previous year, and a non-GAAP diluted EPS of $2.46, nearly consistent year-over-year.
Operational and Strategic Highlights
EPAM's operational cash flow showed a robust increase, with $129.9 million generated in the first quarter of 2024, compared to $87.3 million in the prior year. This improvement underscores EPAM's effective management of operational efficiencies and cash flow generation amidst a challenging economic landscape.
The company also continued its share repurchase program, buying back 396 thousand shares for $120.6 million during the quarter, indicating confidence in its financial stability and commitment to delivering shareholder value.
Revised Outlook and Future Expectations
Looking ahead, EPAM has adjusted its full-year revenue expectations to a range of $4.575 billion to $4.675 billion, reflecting a modest year-over-year decline at the midpoint. The company also revised its full-year GAAP diluted EPS to range between $7.34 and $7.64 and tightened its non-GAAP diluted EPS forecast to between $10.00 and $10.30.
For the upcoming second quarter, EPAM anticipates revenues to be between $1.135 billion and $1.145 billion and projects a GAAP diluted EPS between $1.52 and $1.60, alongside a non-GAAP diluted EPS ranging from $2.21 to $2.29.
Management Commentary
Arkadiy Dobkin, CEO & President of EPAM, commented on the results, stating,
Our solid performance in the first quarter of 2024 reflects our level of adaptability to a challenging demand environment, which we now believe is unlikely to improve this year to the degree we expected one quarter ago."He further highlighted the company's strategic focus on refining global operations and investing in AI-enabled delivery and consulting capabilities.
Investor and Analyst Perspectives
The mixed financial results juxtaposed with strategic share buybacks and a stable outlook adjustment suggest a cautious yet optimistic approach by EPAM in navigating the current economic uncertainties. Investors and analysts will likely watch closely how EPAM's strategic investments and market adaptations unfold in the coming quarters, particularly in light of the ongoing global economic pressures.
For detailed financial figures and further information, refer to EPAM's official earnings release and financial statements available on their investor relations website.
Explore the complete 8-K earnings release (here) from EPAM Systems Inc for further details.
