Business Description
EPAM Systems, Inc. provides digital platform engineering and software development services worldwide. The company offers engineering services, including requirements analysis and platform selection, customization, cross-platform migration, implementation, and integration; infrastructure management services, such as software development, testing, and maintenance with private, public, and mobile infrastructures for application, database, network, server, storage, and systems operations management, as well as monitoring, incident notification, and resolution services; and maintenance and support services. It also provides operation solutions comprising integrated engineering practices and smart automation; and optimization solutions that include software application testing, test management, automation, and consulting services to enable customers enhance their existing software testing and quality assurance practices, as well as other testing services that identify threats and close loopholes to protect its customers' business systems from information loss. In addition, the company offers business, experience, technology, data, and technical advisory consulting services; and digital and service design solutions, which comprise strategy, design, creative, and program management services, as well as physical product development, such as artificial intelligence, robotics, and virtual reality. It serves the financial services, travel and consumer, software and hi-tech, business information and media, life sciences and healthcare, and other industries. The company was founded in 1993 and is headquartered in Newtown, Pennsylvania.
Business History
Generated: Jun 7, 2026 2:14pmPrice Overview
Last updated: Jun 7, 2026 2:11pm (5d ago)Price History (1 Year)
Revenue & Net Income Trend
| Period | Revenue | Net Income | Net Margin | YoY/QoQ |
|---|
Key Metrics
EPS (Diluted): 6.76
Total Equity: $3.68B
Shares: 56,233,000
Total Debt: $62.21M
Cash: $1.30B
EBITDA: $630.44M
Total Debt: $62.21M
Cash: $1.30B
Revenue: $5.46B
Revenue: $5.46B
Revenue: $5.46B
Total Equity: $3.68B
Tax Rate: 25.3%
Equity: $3.68B
Total Debt: $62.21M
Cash: $1.30B
Current Liabilities: $976.94M
Long-Term Debt: $25.03M
Total Debt: $62.21M
Total Equity: $3.68B
Shares: 56,233,000
Shares: 56,233,000
CapEx: -$42.24M
Shares: 56,233,000
Stock Price: $98.04
Net Income: $377.68M
Industry Benchmarks
Deep Analysis
Pre-flight intelligence scans the company first, then routes to the right analytical methods.
Income Statement (Annual)
Last updated: Jun 3, 2026 6:51pm (9d ago)| Metric | 2021 | 2022 | 2023 | 2024 | 2025 |
|---|---|---|---|---|---|
| Revenue | $3.8B | $4.8B | $4.7B | $4.7B | $5.5B |
| Cost of Revenue | $2.5B | $3.3B | $3.3B | $3.3B | $4.0B |
| Gross Profit | $1.3B | $1.5B | $1.4B | $1.5B | $1.4B |
| Operating Expenses | $732.1M | $965.0M | $932.8M | $905.9M | $927.5M |
| Operating Income | $542.3M | $573.0M | $501.2M | $544.6M | $521.2M |
| Net Income | $481.7M | $419.4M | $417.1M | $454.5M | $377.7M |
| EBITDA | $680.3M | $713.0M | $659.9M | $671.7M | $630.4M |
| EPS | $8.52 | $7.32 | $7.21 | $7.93 | $6.76 |
| EPS (Diluted) | — | — | — | — | — |
Balance Sheet (Annual)
Last updated: Jun 3, 2026 6:24pm (9d ago)| Metric | 2021 | 2022 | 2023 | 2024 | 2025 |
|---|---|---|---|---|---|
| Cash & Equivalents | $1.4B | $1.7B | $2.0B | $1.3B | $1.3B |
| Total Current Assets | $2.3B | $2.8B | $3.1B | $2.4B | $2.5B |
| Total Assets | $3.5B | $4.0B | $4.4B | $4.8B | $4.9B |
| Current Liabilities | $763.4M | $747.5M | $644.9M | $821.0M | $976.9M |
| Long-Term Debt | $30.2M | $27.7M | $26.1M | $25.2M | $25.0M |
| Total Liabilities | $1.0B | $1.0B | $880.9M | $1.1B | $1.2B |
| Total Equity | $2.5B | $3.0B | $3.5B | $3.6B | $3.7B |
| Retained Earnings | $1.8B | $2.2B | $2.5B | $2.6B | $2.3B |
Cash Flow (Annual)
Last updated: Jun 3, 2026 6:51pm (9d ago)| Metric | 2021 | 2022 | 2023 | 2024 | 2025 |
|---|---|---|---|---|---|
| Operating Cash Flow | $572.3M | $464.1M | $562.6M | $559.2M | $654.9M |
| Capital Expenditure | -$111.5M | -$81.6M | -$28.4M | -$32.1M | -$42.2M |
| Free Cash Flow | $460.8M | $382.5M | $534.2M | $527.0M | $612.7M |
| Acquisitions (net) | -$315.0M | -$10.6M | -$24.8M | -$912.2M | -$3.4M |
| Debt Repayment | — | — | — | — | — |
| Dividends Paid | — | — | — | — | — |
| Stock Buybacks | $0 | $0 | -$164.9M | -$398.0M | $0 |
| Net Change in Cash | $125.8M | $234.3M | $359.5M | -$752.7M | $11.0M |
Analyst Estimates (Annual)
Last updated: Jun 7, 2026 2:11pm (5d ago)| Metric | 2025 | 2026 | 2027 | 2028 |
|---|---|---|---|---|
| Revenue |
$5.4B $5.4B – $5.5B
|
$5.7B $5.7B – $5.8B
|
$6.1B $6.0B – $6.2B
|
$6.5B $6.5B – $6.5B
|
| EBITDA |
$791.4M $782.8M – $792.8M
|
$834.3M $831.4M – $838.6M
|
$883.6M $876.3M – $896.6M
|
$945.6M $942.4M – $948.8M
|
| Net Income |
$642.0M $639.5M – $644.5M
|
$724.9M $708.7M – $741.2M
|
$801.2M $778.6M – $823.8M
|
$849.8M $734.3M – $965.3M
|
| EPS | — | — | — | — |
Growth Trends (YoY %)
Last updated: Jun 3, 2026 6:51pm (9d ago)| Metric | 2022 | 2023 | 2024 | 2025 |
|---|---|---|---|---|
| Revenue Growth | +28.4% | -2.8% | +0.8% | +15.4% |
| Gross Profit Growth | +20.7% | -6.8% | +1.1% | -0.1% |
| Operating Income Growth | +5.7% | -12.5% | +8.6% | -4.3% |
| Net Income Growth | -12.9% | -0.6% | +9.0% | -16.9% |
| EBITDA Growth | +4.8% | -7.5% | +1.8% | -6.1% |
Insider Trading (Recent)
Last updated: Jun 7, 2026 2:17pm (5d ago)All SEC Form 4 codes
- P Purchase
- Open-market or private purchase of shares.
- S Sale
- Open-market or private sale of shares.
- A Award / grant
- Grant or award of securities (RSUs, options, etc.) under Rule 16b-3.
- D Return to issuer
- Securities disposed back to the company under Rule 16b-3.
- F In-kind (tax)
- Shares withheld or delivered to pay the option-exercise price or tax — not an open-market sale.
- I Discretionary
- Discretionary transaction under an employee plan — Rule 16b-3(f).
- M Option exercise
- Exercise or conversion of a derivative (option/RSU) into shares — exempt.
- C Conversion
- Conversion of a derivative security into the underlying shares.
- E Short expiration
- Expiration of a short derivative position.
- H Long expiration
- Expiration or cancellation of a long derivative position with value received.
- O OTM exercise
- Exercise of an out-of-the-money derivative.
- X ITM exercise
- Exercise of an in-the-money or at-the-money derivative.
- G Gift
- Bona fide gift of securities.
- L Small acquisition
- Small acquisition under Rule 16a-6.
- W Inheritance
- Acquisition or disposition by will or the laws of descent.
- Z Voting trust
- Deposit into or withdrawal from a voting trust.
- J Other
- Other acquisition or disposition (explained in a Form 4 footnote).
- K Equity swap
- Transaction in an equity swap or similar instrument.
- U Tender / buyout
- Disposition via tender of shares in a change-of-control transaction.
Compensation-plan codes (A, D, F, M) are routine and rarely directional. Open-market P (buy) and S (sale) carry the most signal.
| Date | Insider | Type | Shares | Price | Value |
|---|---|---|---|---|---|
| 2026-05-21 | Vargo Ronald P | A-Award | 2,132.00 | $0.00 | $0 |
| 2026-05-21 | Roman Eugene | A-Award | 2,132.00 | $0.00 | $0 |
| 2026-05-22 | Roman Eugene | F-InKind | 673.00 | $103.19 | $69,447 |
| 2026-05-21 | Mayoras Richard Michael | A-Award | 2,132.00 | $0.00 | $0 |
| 2026-05-21 | McMahon Chandra | A-Award | 2,132.00 | $0.00 | $0 |
| 2026-05-21 | Shan Helen L. | A-Award | 2,132.00 | $0.00 | $0 |
| 2026-05-21 | Smart Jill | A-Award | 2,132.00 | $0.00 | $0 |
| 2026-05-21 | Robb Karl | A-Award | 2,132.00 | $0.00 | $0 |
| 2026-05-21 | Segert Robert E. | A-Award | 2,132.00 | $0.00 | $0 |
| 2026-05-21 | Aguirre DeAnne | A-Award | 2,132.00 | $0.00 | $0 |
| 2026-04-30 | Fejes Balazs | P-Purchase | 77.55 | $96.71 | $7,500 |
| 2026-04-30 | Rockwell Edward | P-Purchase | 77.55 | $96.71 | $7,500 |
| 2026-04-30 | Abrahams Gary C | P-Purchase | 77.55 | $96.71 | $7,500 |
| 2026-04-30 | Peterson Jason D. | P-Purchase | 77.55 | $96.71 | $7,500 |
| 2026-04-30 | Solomon Lawrence F | P-Purchase | 77.55 | $96.71 | $7,500 |
| 2026-04-30 | Dvorkin Viktar | P-Purchase | 77.55 | $96.71 | $7,500 |
| 2026-03-31 | Dvorkin Viktar | A-Award | 21,695.00 | $0.00 | $0 |
| 2026-03-25 | Dobkin Arkadiy | M-Exempt | 41,026.00 | $70.52 | $2.9M |
| 2026-03-25 | Dobkin Arkadiy | F-InKind | 30,082.00 | $133.26 | $4.0M |
| 2026-03-25 | Dobkin Arkadiy | M-Exempt | 41,026.00 | $70.52 | $2.9M |
Narrative Economics
Delvantic AI Findings
Reading the raw numbers first: revenue is accelerating (Q1'26 $1.40B vs Q1'25 $1.30B = 7.7% YoY, full-year 2025 $5.46B vs $4.73B = 15.4% YoY), but net income is going the wrong way. Q1'26 NI of $82.5M (5.9% margin) vs Q1'25 $73.5M (5.6%) is only mild improvement, and the full-year 2025 NI of $377.7M is *below* 2024's $454.5M despite $730M more revenue. Operating margin compressed from 11.5% in 2024 to 9.5% in 2025. This is the textbook signature of a labor-arbitrage services firm absorbing wage inflation faster than it can reprice — exactly the bear case. The "acceleration" is partly the Neoris acquisition (announced 2024), not organic strength, which the synthesis model conveniently glosses over. FCF of $613M on a $5.1B market cap is a 12% FCF yield, and the balance sheet carries $1.3B cash with no material debt disclosed — that part is genuinely cheap.
Where I diverge from the synthesis: calling this "Priced for Failure" at 13.6x TTM P/E and 6.4x EV/EBITDA overstates the bargain. The reverse-DCF "0.2% growth implied" framing assumes current margins hold, but margins are *actively compressing* — 2024 op margin 11.5% → 2025 9.5% → Q1'26 trending similar. If you normalize to a 9% sustainable op margin (not the 11%+ history), normalized NI is closer to $370-400M, and 13-14x that gets you a fair value of $5.0-5.6B, basically where it trades. The Market Forces model ("value trap... structural margin erosion... appears permanent") is much closer to the truth than the Synthesis verdict. The two prior models contradict each other directly, and Market Forces has the numbers on its side.
The contrarian-to-the-contrarian read: EPAM's Eastern European delivery base was a *real* moat that the 2022 Ukraine war structurally damaged — they've been rebuilding delivery in India and LatAm at higher cost, and the Belarus/Ukraine talent that drove premium pricing is dispersed. AI coding tools (Copilot, Cursor, Devin) are a direct headwind to billable-hours-per-project — this isn't speculative, Accenture and Infosys have flagged it on recent calls. Insider activity is almost entirely A-Awards (grants) and F-InKind (tax withholding on vesting) — that's not "Net Insider Buying" in any meaningful economic sense; it's compensation mechanics. The secondary signal flagging this as bullish insider activity is misleading and should be discarded. No open-market purchases at $98 from anyone who matters.
The data is also thin where it matters most: balance sheet shows no total debt or total equity figures, so I can't verify the EV calculation or check buyback pace against the $613M FCF. The TTM-tagged ratios (P/E, EV/EBITDA, ROIC, ROE) span a period where margins were structurally higher than the current run-rate, so all of them flatter the stock — forward P/E on a normalized $330-360M NI is closer to 14-16x, not 13.6x. Revenue confidence is flagged as "decelerating" quarterly which contradicts the headline 15.4% YoY — that's because the YoY comp benefits from Neoris consolidation; sequential growth from Q4'25 $1.41B to Q1'26 $1.40B is *negative*. That's the real tell, and the Synthesis model missed it entirely.
Net: this is not "radically underpriced." It's fairly priced for a decelerating, margin-compressing services business with a real but limited FCF cushion and a genuine AI/wage double-squeeze. The Synthesis verdict is wrong; Market Forces has it right. At $98, you're paying ~8.3x EV/FCF (using ~$3.8B EV after cash) which is cheap-ish, but cheap services companies stay cheap until margins inflect. Q1'26 showed no inflection — margin went *down* sequentially from Q4'25's 7.8% to 5.9%. I'd want to see two consecutive quarters of operating margin re-expansion above 10% before paying up. Starter at $80-85 (10x normalized $400M NI on 90M shares ≈ $44/sh of earnings power, plus cash)
GPT Critique
EPAM Systems, Inc. presents a complex case with its current valuation and market position. From the raw data, it is clear that while the company has shown impressive revenue growth, with a recent quarterly revenue of $1.40 billion up from $1.30 billion the previous year (a 7.7% increase), net income has not kept pace. The full-year 2025 net income of $377.7 million is a decline from the $454.5 million reported in 2024, despite the significant revenue uptick. This divergence suggests operational inefficiencies or escalating costs, likely due to wage inflation and the challenges of transitioning from a labor-arbitrage model to more value-added services. The operating margin has also decreased from 11.5% in 2024 to 9.5% in 2025, supporting this narrative of margin compression.
I largely agree with Claude Opus's analysis regarding the market's perception of EPAM. Opus effectively highlights the contradiction between the market's valuation and the company's operational realities. The argument that the market is pricing EPAM as a maturing IT services provider rather than a growth stock is compelling, given the stock's current multiples. Opus's skepticism about the "Priced for Failure" thesis is warranted; the company's declining margins and the impact of AI-driven automation suggest that the market's cautious stance is justified.
However, I find some of Opus's conclusions overly conservative. For instance, while Opus suggests that the Neoris acquisition inflates revenue figures, it's essential to recognize this acquisition as a strategic move that could enhance EPAM's service offerings and market reach, potentially offsetting some margin pressures in the longer term. The company's strong free cash flow of $612.7 million and absence of significant debt provide a buffer that is not fully appreciated in Opus's analysis.
A careful skeptic might argue that both analyses overlook the potential for EPAM to successfully navigate its transition phase. The company's cash reserves and strategic acquisitions could enable it to invest in higher-margin services and technologies, countering the current margin compression. Additionally, the geopolitical risks and wage pressures in Eastern Europe might stabilize, allowing EPAM to regain some of its historical cost advantages.
Advanced Analysis Forensic deep-dive · two lenses
Both lenses agree this is a high-integrity business at a reasonable price (Q9/V10), and they agree the catch is the same: margins. A fortress balance sheet, 25% of market cap in net cash, clean accruals, and a real buyback at ~1x sales and a mid-teens P/E is the kind of setup I want in the book. But I'm not going to pretend the 740bps gross margin erosion and flat-to-down net income on 45% more revenue is noise — that's a structurally lower deserved multiple, and at $98 vs my $110-125 fair value range I've got 12-25% upside, which is real but not fat enough to back up the truck given the trajectory risk.
So here's the play: I open a starter position today, roughly 1/3 of target weight, around $98. I add a second tranche in the low $90s, and I get aggressive — full target weight, maybe stretching to overweight — if it trades into the mid-$80s, where the value lens flags margin-of-safety as genuinely fat and where I'm essentially paying for the operating business at sub-1x sales net of cash. What flips me off the name entirely: another quarter or two showing gross margin printing a 25-handle or worse, or evidence that pricing concessions are accelerating — that would tell me the earnings base I'm anchoring 'cheap' to is itself eroding. What flips me aggressive earlier: gross margin stabilizing for two prints, or management leaning harder into buybacks with that $1.3B cash pile. I'm interested, not excited, and I want the market to pay me to be patient.
EPAM is a financially pristine IT services operator: $1.30B liquid cash, $1.23B net cash (25% of market cap), $612.7M FCF, and a shrinking diluted share count (-1.2% CAGR) with buybacks running 80% of SBC. Earnings quality is clean — OCF/NI 1.32x, accruals -3% of assets, Beneish M -2.58, Altman Z of 5. Survival risk is zero and per-share value is being concentrated rather than diluted.
The concern is the operating trajectory. Revenue did grow to $5.46B in 2025 (+15%), but gross margin has collapsed from 33.9% (2021) → 31.9% → 30.6% → 30.7% → 26.5%, a ~740bps erosion. Operating margin tracked the same path: 14.4% → 9.6%. Net income fell to $377.7M in 2025 despite record revenue, meaning incremental revenue is being added at sharply negative incremental margins. That is not what a durable moat looks like — it's consistent with wage inflation, Ukraine/Belarus delivery disruption legacy, AI commoditization pressure on staff-aug work, and pricing concession to win volume.
FCF stayed strong ($612.7M, a record) because working capital and D&A masked the P&L compression, but the underlying business economics are clearly weakening. This is a high-integrity, well-capitalized company whose competitive position is showing real strain — strong balance-sheet quality, mixed business-model quality.
Verify before trusting this (5)
- 10-K segment/geography detail: how much of the GM compression is wage inflation vs pricing vs mix vs Eastern Europe delivery disruption
- Customer concentration and any large-account churn (top-10 customer revenue %)
- Utilization rate and billable headcount trend — is bench cost the margin culprit?
- AI/GenAI commentary in MD&A — pricing pressure on staff-aug vs new AI-engineering revenue mix
- Whether the FY2025 net income decline reflects one-time restructuring or sustained margin reset
EPAM at $98.04 sports a ~$5.1B market cap against a business doing ~$5B+ revenue with mid-single-digit GAAP margins and a net-cash balance sheet. Even on compressed margins, that's roughly ~1x sales and a mid-teens P/E on a debt-free, buyback-active compounder — historically EPAM traded at 3-5x sales and 30-40x earnings. The e2e module flagged 'Disconnected from Fundamentals,' which I read as the price having de-rated faster than the fundamentals deteriorated, not faster than they improved.
The catch: the Company-Quality note is explicit that gross margin is down ~740bps over four years and 2025 net income sits below 2021 on 45% more revenue. That is real, not noise — pricing power is leaking, and AI-driven automation plus generalist competition argue the multiple SHOULD be lower than the 2021 peak. So deserved value is well below the old multiple but plausibly above today's print. I'd peg deserved fair value in the $110-125 range on a quality-adjusted basis: ~13-15x depressed earnings plus net cash, with no credit given for an AI-services re-acceleration that may or may not come.
Net: ~10-25% upside to deserved, offset by genuine margin uncertainty. That's 'Modestly Cheap' — worth owning, not worth backing up the truck.
Verify before trusting this (5)
- Forward guidance on gross margin stabilization vs continued compression
- Utilization rates and bill-rate trends in latest 10-Q/transcript
- Segment mix shift toward higher-value AI/cloud engineering vs commodity staff-aug
- Pace and price of share buybacks at current levels
- Customer concentration and any large client ramp-downs