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Epam Systems - $EPAM - Earnings Analysis: Strategic acquisitions of NEORIS and First Derivative enhance global capabilities.

By sagebytes in Business —

Business Model

EPAM generates revenue by providing digital transformation services and product engineering. They focus on integrated strategy, experience, and technology consulting, combined with engineering execution.

Revenue Sources

  • Digital Engineering Services
  • Cloud and AI-enabled Transformation Services
  • Business and Experience Consulting

Income Statement Analysis

  • Revenues increased by 7.9% year-over-year, driven by both organic growth and recent acquisitions.

Balance Sheet Analysis

  • Cash and cash equivalents decreased significantly due to the acquisitions of NEORIS and First Derivative.
  • Total assets increased, reflecting the impact of acquisitions and overall business growth.
  • Total stockholders' equity increased, driven by retained earnings.
  • Total Liabilities increased from 880,895 to 1,119,322, showing an increase of $238,427k primarily driven by acquisitions.

Cash Flow Analysis

  • Cash provided by operating activities decreased compared to the same quarter last year.

Capital Allocation

EPAM is focused on strategic acquisitions to enhance its capabilities and global presence. The company also engages in share repurchases to offset dilution from employee equity programs. They are also investing in retaining their top talent as well as further accelerating investments in our advanced Gen AI platforms and tools.

Management Commentary

Fourth quarter results came in better than expected, with strong execution.

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

See a strong need to continue to invest in our talent, advanced technological and consulting capabilities, and the integration of recent acquisitions to best position ourselves to capture market share once demand returns to more normalized levels.

Pricing environment is still challenging.

Overall Sentiment: Optimistic, with a focus on strategic growth, talent retention, and technology investments, while acknowledging ongoing pricing challenges.

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.