EPAM Systems EPAM reported fourth-quarter 2024 non-GAAP earnings of $2.84 per share, which beat the Zacks Consensus Estimate by 3.3%. The bottom line increased from the year-ago quarter’s earnings of $2.75 per share.

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EPAM’s earnings beat the Zacks Consensus Estimate in each of the trailing four quarters, with the average surprise being 8.32%.

The company's fourth-quarter revenues of $1.25 billion surpassed the consensus mark by 3.3%.

EPAM’s top line rose 7.9% year over year, demonstrating an improvement across its business segments, primarily benefiting from its latest technological innovations enabled by Gen AI.

Despite the stronger-than-expected top and bottom-line results, EPAM released an underwhelming earnings guidance for the first quarter and full-year 2025, which couldn’t surpass the Zacks Consensus Estimate. Shares of EPAM have lost 24.7% in the past year and the weak guidance is unlikely to boost the stock price.

EPAM’s Q4 Details

EPAM’s year-over-year top-line growth was driven by the performances across its industry verticals, such as Financial Services, Software & Hi-Tech, Life Sciences and Emerging, partially offset by softness in Business Info and Travel & Consumer.

Revenues from Financial Services (22.5% of total revenues) were $280.9 million, up 15.9% year over year.

Fourth-quarter revenues from Consumer Goods, Travel and Retail (20.1% of total revenues) were $250.6 million, down 3% year over year.

Revenues from Software and Hi-Tech (14.6% of total revenues) in the fourth quarter were $182 million, up 2.1% year over year.

Life Science and Health revenues (12.2% of total revenues) were $142 million, up 7.7% year over year.

Revenues from Business Info and Media (13.7% of total revenues) were $171.1 million, down 3.9% year over year.

Emerging revenues (16.9% of total revenues) were $211.8 million, up 24.8% year over year.

EPAM’s non-GAAP gross profit increased 5.3% year over year to $402.1 million while the gross margin contracted 80 basis points (bps) to 32.2%.

The non-GAAP operating income witnessed 3.9% year-over-year growth to $208.2 million. The non-GAAP operating margin contracted 60 bps to 16.7%.

EPAM’s Balance Sheet & Cash Flow

As of Dec. 31, 2024, EPAM had cash, cash equivalents and restricted cash of $1.29 billion, lower than $2.04 billion as of Sept. 30, 2024

Long-term debt was $25.2 million as of Dec. 31, slightly lower than $25.3 million as of Sept. 30.

Cash flow from operations was $130.3 million while free cash flow was $114.5 million. Cash provided by operating activities was $559.2 million for the 12 months of 2024.

EPAM Initiates Q1 and FY25 Guidance

For the first quarter, EPAM expects revenues to be in the band of $1.275 - $1.29 billion, indicating year-over-year growth of 10% at the midpoint.

The Zacks Consensus Estimate for first-quarter revenues is pegged at $1.27 billion, indicating year-over-year growth of 8.75%.

Non-GAAP operating margin is anticipated to be in the range of 12.5- 13.5% of revenues. Non-GAAP earnings are expected between $2.22 and $2.32 per share for the first quarter.

The Zacks Consensus Estimate for earnings is pegged at $2.57 per share, indicating a year-over-year increase of 4.5%.

EPAM initiated its guidance for full-year 2025. It expects revenues to grow in the range of 10.0-14.0%.

The Zacks Consensus Estimate for revenues is pegged at $4.69 billion, indicating year-over-year growth of 0.04%.

Non-GAAP operating margin is expected to be in the range of 14.5-15.5% of revenues. Non-GAAP earnings are now expected to be between $10.45 and $10.75 per share.

The Zacks Consensus Estimate for earnings is pegged at $10.78 per share, indicating year-over-year growth of 1.8%.

Zacks Rank and Stocks to Consider

Currently, EPAM carries a Zacks Rank #3 (Hold).

Celestica CLS, Arista Networks ANET and Pitney Bowes PBI are some better-ranked stocks that investors can consider in the broader Zacks Computer & Technology sector. CLS and PBI sport a Zacks Rank #1 (Strong Buy) each while ANET carries a Zacks Rank #2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here.

The Zacks Consensus Estimate for CLS’ 2025 earnings has been revised 31 cents upward to $5.67 per share over the past 30 days, indicating a 6.78% year-over-year increase. CLS shares have risen 251.2% in the past year.

The consensus mark for ANET’s 2025 earnings has been revised upward by a penny to $2.42 per share over the past 60 days, indicating a 6.6% year-over-year increase. ANET shares have gained 60.2% in the past year.

The consensus estimate for PBI’s 2025 earnings has been revised nine cents downward to $1.21 per share over the past seven days, indicating a 47.6% year-over-year decline. PBI shares have gained 172.8% in the past year.

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