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Epam Systems - $EPAM - Earnings Analysis: Return to organic revenue growth in Q4 2024.

By sagebytes in Business —

Business Model

EPAM generates revenue by providing digital transformation services and product engineering. They offer strategy, design, engineering, and operations services across various industries.

Revenue Sources

  • Revenues are generated through IT consulting and digital product engineering services.
  • Services include software development, cloud services, AI-enabled transformation, and consulting.

Income Statement Analysis

  • Revenue increased 7.9% year-over-year, driven by both organic growth and acquisitions.
  • Income from Operations increased by 11.4% compared to the same quarter last year.
  • Diluted EPS increased by 8.4% year-over-year.

Balance Sheet Analysis

  • Total Assets increased by 9.1% due to acquisitions and business growth.
  • Total Stockholders' Equity increased by 4.6% reflecting profitable operations.
  • Total Liabilities increased by 27.3% primarily related to recent acquisitions.

Cash Flow Analysis

  • Cash from operating activities decreased from $171.4 million to $130.3 million. Investing and Financing values not disclosed.
  • Cash and cash equivalents decreased due to payments for acquisitions.

Capital Allocation

EPAM repurchased 53 thousand shares for $13.0 million during Q4 2024 and $398.0 million for 1,854 thousand shares in 2024. The company has $437.0 million remaining under its share repurchase authorization. They invested in acquisitions of NEORIS and First Derivative.

Management Commentary

Fourth quarter results came in better than expected.

Returned to organic revenue growth for the first time since Q1 of twenty twenty three.

Cost remains very much in focus and continues to be an important decision factor for many of our clients.

Overall Sentiment: Cautiously optimistic. Expects 2025 to be a year of transition with investments in talent and technology. The management recognizes challenges due to client cost focus but is optimistic about long-term opportunities.

Disclaimer: This report is for informational purposes only and not investment advice. The analysis is based on limited information and subject to change. Investing in securities involves risks, including potential loss of principal. Past performance doesn't guarantee future results. Always conduct your own research, understand the risks, and consult a financial professional before making investment decisions.