EPAM Systems Q4 Earnings and Revenues Surpass Estimates

EPAM Systems, Inc. EPAM ended 2025 on a strong note, reporting better-than-expected fourth-quarter results. EPAM reported fourth-quarter earnings of $3.26 per share, beating the Zacks Consensus Estimate by 3.16%. The bottom line increased 14.8% from the year-ago quarter’s earnings of $2.84.

The company's fourth-quarter revenues of $1.41 billion surpassed the consensus mark of $1.39 billion. EPAM Systems’ top line rose 12.8% year over year, demonstrating an improvement across its business segments, primarily benefiting from its latest technological innovations enabled by artificial intelligence.

EPAM’s Q4 in Detail

EPAM Systems’ year-over-year top-line growth was driven by the performance across every industry vertical except for Business Information & Media. Revenues from Financial Services (23.9% of total revenues) were $336.4 million, up 19.8% year over year. Fourth-quarter revenues from Consumer Goods, Retail & Travel (19.7% of total revenues) were $277.9 million, which rose 10.9% year over year.

EPAM Systems, Inc. Price, Consensus and EPS Surprise

EPAM Systems, Inc. price-consensus-eps-surprise-chart | EPAM Systems, Inc. Quote

Revenues from Software & Hi-Tech (15.3% of total revenues) were $214.9 million, up 18.1% year over year. Life Sciences & Healthcare revenues (11% of total revenues) were $155 million, which increased 2% year over year.

Revenues from Business Information & Media (12.2% of total revenues) were $171.1 million, flat year over year. Emerging revenues (17.9% of total revenues) were $252.2 million, which surged 19.1% year over year.

EPAM’s non-GAAP gross profit increased 11% year over year to $446.8 million, while the gross margin contracted 50 basis points (bps) to 31.7%.

The non-GAAP operating income soared 10.5% year over year to $230 million. The non-GAAP operating margin contracted 150 bps to 15.2%.

EPAM’s Balance Sheet & Cash Flow

As of Dec. 31, 2025, EPAM had cash, cash equivalents and restricted cash of $1.3 billion, higher than $1.24 billion as of Sept. 30, 2025.

Long-term debt was $25 million as of Dec. 31, 2025.

During the fourth quarter, it generated operating cash flow and free cash flow of $282.9 million and $268.1 million, respectively. In 2025, it generated operating cash flow and free cash flow of $654.9 million and $612.7 million, respectively.

EPAM Initiates Q1 and 2026 Guidance

For the first quarter of 2026, EPAM Systems expects revenues in the range of $1.385-$1.400 billion, indicating year-over-year growth of 7% at the midpoint. The company anticipates the year-over-year revenue growth rate on an organic constant currency basis to be 2.9% at the midpoint.

GAAP income from operations is expected in the range of 7%-8% of revenues, and non-GAAP income from operations is anticipated in the band of 13.5%-14.5%.

GAAP diluted EPS is forecast between $1.32 and $1.40, while non-GAAP diluted EPS is projected in the range of $2.70-$2.78.

EPAM expects its GAAP effective tax rate to be approximately 30% and its non-GAAP effective tax rate to be about 24%. Weighted average diluted shares outstanding for the quarter are expected to be 54.7 million.

For full-year 2026, EPAM expects revenues to grow in the range of 4.5-7.5%. On an organic constant-currency basis, revenues are expected to jump in the band of 3-6%.

GAAP income from operations is expected in the range of 10%-11% of revenues, while non-GAAP income from operations is projected in the range of 15%-16%.

GAAP diluted EPS is anticipated between $7.95 and $8.25, while non-GAAP diluted EPS is forecast in the range of $12.60-$12.90. The company expects its GAAP effective tax rate to be about 26% and its non-GAAP effective tax rate to be around 24%. Weighted average diluted shares outstanding for the year are expected to be 54.4 million.

EPAM’s Zacks Rank & Stocks to Consider

EPAM Systems currently has a Zacks Rank #3 (Hold).

Amphenol APH, Analog Devices ADI and Applied Optoelectronics AAOI are some better-ranked stocks that investors can consider in the Zacks Computer and Technology sector. Amphenol, Analog Devices and Applied Optoelectronics each carry a Zacks Rank #2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

The Zacks Consensus Estimate for Amphenol’s full-year 2026 earnings is pegged at $4.32 per share, revised upward by 8 cents over the past 30 days and suggests a year-over-year increase of 29.3%. Amphenol shares have soared 113% over the past year.

The Zacks Consensus Estimate for Analog Devices’ fiscal 2026 earnings has moved upward by 4 cents over the past seven days to $9.96 per share, calling for an increase of 28.5% year over year. Analog Devices shares have climbed 41.9% in trailing 12 months.

The Zacks Consensus Estimate for Applied Optoelectronics’ full-year 2026 earnings has been revised upward to 55 cents per share from 43 cents over the past 60 days. Applied Optoelectronics shares have surged 57.9% over the past year.

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