EPAM Q2 Deep Dive: AI-Led Growth and Leadership Transition Drive Momentum

Digital engineering services company EPAM Systems (NYSE:EPAM) beat Wall Street’s revenue expectations in Q2 CY2025, with sales up 18% year on year to $1.35 billion. Guidance for next quarter’s revenue was better than expected at $1.37 billion at the midpoint, 1.5% above analysts’ estimates. Its non-GAAP profit of $2.77 per share was 6% above analysts’ consensus estimates.

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StockStory’s Take

EPAM’s second quarter was marked by broad-based revenue growth and a positive market reaction, fueled by accelerating demand for its AI-native services and continued recovery in discretionary spending. Management highlighted improved performance across all major industry verticals and geographies, with notable contributions from financial services and software clients. CEO Arkadiy Dobkin pointed to the company’s “steady improvements in our core business and a return to much more consistent performance,” emphasizing that new client wins and expanded engagements in complex AI-driven programs were key drivers of the quarter’s results.

Looking ahead, EPAM’s updated guidance is anchored in expectations of further gains from AI-related client projects, ongoing investments in talent upskilling, and the integration of recent acquisitions. Management believes continued acceleration in cloud, data engineering, and foundational platform modernization will support sequential growth through the remainder of the year. As incoming CEO Balazs Fejes stated, “Our operating momentum is strong. We are executing with discipline, aligning closely to client priorities and bringing forward innovations that differentiate us in the marketplace.”

Key Insights from Management’s Remarks

Management attributed the quarter’s performance to increased adoption of its AI-enabled platforms, a focus on quality execution, and successful integration of recent acquisitions.

• Organic growth acceleration: EPAM saw mid-single-digit organic growth, with all six verticals and three global regions posting year-over-year and sequential gains. Management highlighted improved client demand, particularly in financial services and emerging markets, as a result of expanded AI-driven transformation programs.
• AI-native offerings drive demand: The company’s early investments in AI have enabled it to deliver double-digit sequential growth in AI native revenue. Management noted that top clients are advancing from small-scale pilots to larger enterprise-wide initiatives, leveraging EPAM’s proprietary and open-source platforms to address integration and deployment challenges.
• Strategic acquisitions bolster capabilities: Recent acquisitions in regulated industries and cloud-native engineering have been integrated into EPAM’s operating model, supporting growth in key verticals and expanding the company’s reach in Latin America and other new markets.
• Delivery hub optimization: The company continued to scale and optimize its global talent hubs, with a focus on upskilling employees in AI. Over 80% of the workforce has completed AI training, enhancing EPAM’s ability to execute complex projects and retain its position as a trusted partner for large-scale transformations.
• Leadership transition underway: CEO Arkadiy Dobkin will transition to Executive Chairman by September 2025, with Balazs Fejes taking over as CEO. Management emphasized that the succession plan is on track and designed to ensure continuity in EPAM’s strategic direction.

Drivers of Future Performance

EPAM expects continued momentum, with AI-led transformation, talent development, and operational improvements shaping its outlook for the next quarter and beyond.

• AI-enabled revenue streams: Management anticipates that increasing enterprise adoption of AI, particularly in foundational data engineering and cloud modernization, will remain a central driver for growth. The company’s ability to deliver end-to-end, AI-optimized solutions is expected to create new opportunities across industry verticals.
• Talent upskilling and operational efficiency: Ongoing investments in workforce training, especially in AI and data, are intended to support project execution and margin stability. Management expects further gains from improved utilization and a focus on account profitability, though acknowledges the need to monitor macroeconomic and seasonal factors.
• Integration of acquisitions: The successful assimilation of recent acquisitions is viewed as critical for expanding service offerings and geographic reach. These integrations are expected to contribute to both revenue growth and margin improvement as the acquired capabilities are leveraged in existing and new client engagements.

Catalysts in Upcoming Quarters

In upcoming quarters, our analysts will monitor (1) the pace of enterprise AI adoption and expansion of large-scale transformation programs, (2) the impact of ongoing workforce upskilling on project execution and profitability, and (3) the integration progress and revenue contribution of recent acquisitions. Progress in optimizing global delivery hubs and adapting to changing client engagement models will also be closely watched as indicators of sustained momentum.

EPAM currently trades at $152.25, in line with $151.46 just before the earnings. Is there an opportunity in the stock?See for yourself in our full research report (it’s free).

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