Executive Summary

Q3 delivered broad-based growth and a clean beat vs. consensus: revenue $1.394B (+19.4% y/y; +7.1% organic CC) vs. $1.375B consensus; non-GAAP EPS $3.08 vs. $3.03 consensus; GAAP EPS $1.91 (*Estimates: S&P Global). Sequential profitability improved again as non-GAAP operating margin reached 16.0% (Q2: 15.0%, Q1: 13.5%) .
Full-year guidance raised: revenue to $5.430–$5.445B (midpoint +100 bps to 15.0% growth), GAAP EPS to $6.75–$6.83, and non-GAAP EPS to $11.36–$11.44; Q4 guidance implies 11.1% y/y growth at midpoint with non-GAAP OI% 15.5–16.5% .
Growth drivers: five of six verticals grew y/y; Financial Services and Emerging led; all regions grew (EMEA +24.9% y/y), with continued AI-native demand and foundational data/cloud work; pipeline shifting from proofs-of-concept to medium/large-scale programs .
Capital returns: $82.1M repurchased in Q3; new $1.0B authorization announced Oct 21—a supportive near-term sentiment catalyst alongside raised guidance and AI product momentum (AI/Run.Transform, Agentic QA) .

What Went Well and What Went Wrong

What Went Well

Sustained organic momentum and broad-based growth: organic CC revenue +7.1% y/y (fourth consecutive positive quarter), with five of six verticals up y/y and all regions positive; EPAM exceeded the high end of prior Q3 revenue guidance .
AI-native traction and pipeline maturation: 60–70% of AI projects expanded from PoC to larger programs; data/cloud practices grew faster than the overall business; internal AI literacy >90% and >95% of engineers completed foundational AI education. “Our third quarter results came in better than expected… clients are prioritizing their AI buildouts, turning to EPAM…” — CEO Balazs Fejes .
Capital allocation and cash generation: record quarterly operating cash flow ($295M) and FCF ($286M); $82M buyback in Q3; new $1B repurchase authorization underscores confidence .

What Went Wrong

Margin pressure vs. prior year: GAAP gross margin 29.5% (31.0% non-GAAP) down y/y due to acquisition mix and higher variable comp; prior year benefited from a Polish R&D credit catch-up; GAAP OI% fell to 10.4% (vs. 15.2% in Q3’24) .
EBITDA (S&P methodology) missed consensus despite EPS beat: Q3 EBITDA actual ~$180.3M vs. ~$233.8M consensus*; reflects differing methodology and acquisition mix headwinds (company doesn’t report EBITDA) (*Values retrieved from S&P Global).
Seasonality and budget dynamics: management does not expect a year-end budget flush like last year; Q4 faces normal headwinds (fewer billable days, vacations, furloughs) tempering sequential growth into Q4 .

Financial Results

Headline P&L vs prior periods

Metric	Q1 2025	Q2 2025	Q3 2025
Revenue ($B)	$1.302	$1.353	$1.394
y/y growth	+11.7%	+18.0%	+19.4%
Organic CC y/y	+1.4%	+5.3%	+7.1%
GAAP EPS	$1.28	$1.56	$1.91
Non-GAAP EPS	$2.41	$2.77	$3.08
GAAP Operating Margin %	7.6%	9.3%	10.4%
Non-GAAP Operating Margin %	13.5%	15.0%	16.0%
GAAP Gross Margin %	26.9%	28.8%	29.5%
Non-GAAP Gross Margin %	28.7%	30.1%	31.0%

Q3 2025 vs. S&P Global Consensus

Metric	Consensus	Actual	Surprise
Revenue ($B)	$1.375*	$1.394	+$0.019 (+1.4%)*
Non-GAAP EPS	$3.03*	$3.08	+$0.05 (+1.7%)*
EBITDA ($M)	$233.8*	$180.3	-$53.6 (-22.9%)*

Values with asterisks (*) retrieved from S&P Global.

Segment breakdown (Q3 2025)

Segment	Revenue ($M)	y/y
Financial Services	$338	+32.7%
Consumer Goods, Retail & Travel	$276	+9.9%
Business Information & Media	$168	+0.1%
Life Sciences & Healthcare	$159	+11.8%
Software & Hi-Tech	$212	+19.1%
Emerging	$241	+38.9%

Geography	Revenue ($M)	y/y
Americas	$808	+16.0%
EMEA	$556	+24.9%
APAC	$30	+17.7%

KPIs and Cash

KPI	Q1 2025	Q2 2025	Q3 2025
Utilization	77.5%	78.1%	76.5%
DSO (days)	75	78	75
Headcount (Total)	~61,700	just over 62,000	~62,350
Cash & Equivalents ($B)	$1.174	$1.041	$1.239
CFO ($M)	$24	$53	$295
Free Cash Flow ($M)	$15	$43	$286
Share Repurchase ($M)	$160	$194.9	$82.1

Guidance Changes

Metric	Period	Previous Guidance (Aug 7)	Current Guidance (Nov 6)	Change
Revenue	FY25	Growth 13.0%–15.0% (midpoint 14.0%); non-GAAP OI% 14.5%–15.5%	$5.430–$5.445B (midpoint 15.0%); non-GAAP OI% 15.0%–15.3%	Raised
GAAP OI%	FY25	9.0%–10.0%	9.4%–9.7%	Raised
GAAP EPS	FY25	$6.48–$6.64	$6.75–$6.83	Raised
Non-GAAP EPS	FY25	$10.96–$11.12	$11.36–$11.44	Raised
GAAP ETR	FY25	~26.0%	~25.0%	Lowered
Non-GAAP ETR	FY25	~24.0%	~24.0%	Maintained
Revenue	Q4’25	—	$1.380–$1.395B; organic CC ~4.4% at midpoint	New
GAAP/Non-GAAP OI%	Q4’25	—	GAAP 10.0%–11.0%; Non-GAAP 15.5%–16.5%	New
GAAP/Non-GAAP EPS	Q4’25	—	GAAP $2.00–$2.08; Non-GAAP $3.10–$3.18	New

Note: Q3 actuals exceeded the Q3 guidance midpoint issued in August (revenue guide $1.365–$1.380B; non-GAAP EPS $2.98–$3.06) vs. actual $1.394B and $3.08 .

Earnings Call Themes & Trends

Topic	Previous Mentions (Q1 2025)	Previous Mentions (Q2 2025)	Current Period (Q3 2025)	Trend
AI-native demand & pipeline	Early AI-native revenues growing strong q/q; partnerships with hyperscalers; DIAL platform progress	All six verticals grew; strong AI-native sequential growth; raised organic guide; reinforced partner momentum	60–70% of AI projects scaled beyond PoC; AI-native revenues grew double-digit sequentially; launch of AI/Run.Transform; Agentic QA	Accelerating
Foundational data/cloud	Modernization and data platforms critical for AI at scale	Broad demand; data/cloud as core; vertical COEs	Data/cloud practices grew faster than company avg; wins displacing underperforming peers	Strengthening
Pricing & profitability	Gross margin pressure from comp and acquisitions; focus on utilization	Non-GAAP OI% 15.0%; modest pricing improvement; utilization 78.1%	Non-GAAP OI% 16.0%; modestly better pricing vs last year; account margin improving	Improving
Seasonality & budgets	Cautious H2 outlook; no material slowdown seen	Q4 seasonality expected; guide prudent	Expect no year-end budget flush; normal Q4 headwinds (days, vacations, furloughs)	Neutral to cautious
Regional demand	All geographies up y/y	Americas +15.9% y/y; EMEA +21.7% y/y	Americas +16.0% y/y; EMEA +24.9% y/y; APAC +17.7%	Broad-based
Tariffs/macro impacts	—	Neoris lead customer impacted by U.S. tariffs/Mexico instability	Impact stabilizing; modest negative to organic growth in Q4 from this customer	Stabilizing
Talent & upskilling	AI upskilling underway; balanced pyramid focus	80%+ AI upskilling progress; utilization push	>90% AI literacy; ~95% engineers AI foundational education	Advancing

Management Commentary

“Our third quarter results came in better than expected… Our clients are prioritizing their AI buildouts, turning to EPAM to help them accelerate their investments and innovation in AI.” — CEO Balazs Fejes .
“Of the hundreds of individual AI-native projects… between 60%–70% have expanded into larger programs… our pure AI-native revenues continue to grow nicely with a third consecutive quarter of double-digit sequential growth.” — CEO .
“GAAP gross margin… 29.5%… Non-GAAP gross margin… 31%… Prior year period benefited from a cumulative catch-up related to the Poland R&D credit… higher variable compensation and lower profitability associated with recent acquisitions contributed to lower gross margin level.” — CFO .
“Based on our better-than-expected performance in the second half… we are raising… full-year organic constant currency revenue growth… midpoint 4.6%… Q4 guide revenue $1.380–$1.395B; GAAP OI% 10–11; non-GAAP OI% 15.5–16.5; GAAP EPS $2.00–$2.08; non-GAAP EPS $3.10–$3.18.” — CFO .
“We repurchased approximately 493,000 shares for $82M… announced a new $1B share repurchase program.” — CFO and Oct 21 press release .

Q&A Highlights

Agentic BPO: Early days; leveraging First Derivative and Linksys; building EPAM tools for agentic flows beyond RPA; client interest rising but nascent .
Q4 dynamics and 2026 setup: No broad budget release in Q4; seasonality headwinds persist; organic growth expected higher in 2026 with AI and foundational build-outs; Q4 high end implies ~5% organic CC growth .
Competitive share gains: Clients redirecting work from peers that failed to deliver production-grade AI; EPAM’s deep engineering and risk management cited as advantages .
Cost discipline and “pyramid” rebalance: More selective on deals; focus on account profitability; targeting upper half of 14.5%–15.5% non-GAAP OI% for FY25 .
Pricing/utilization: Pricing environment modestly better than 2024; targeting improved utilization; Q3 utilization 76.5% .

Estimates Context

Q3 2025 actuals vs. S&P Global consensus: Revenue $1.394B vs. $1.375B*; non-GAAP EPS $3.08 vs. $3.03*; EBITDA $180.3M vs. $233.8M* (methodology differences likely). Company does not guide EBITDA .
Q4 2025 setup: Consensus revenue ~$1.3896B* and non-GAAP EPS ~$3.157* sit near the midpoints of company guidance ($1.380–$1.395B revenue; $3.10–$3.18 non-GAAP EPS) .
Values with asterisks (*) retrieved from S&P Global.

Key Takeaways for Investors

Solid execution: Q3 revenue/EPS beat, raised FY revenue and EPS guidance, and third consecutive sequential improvement in non-GAAP margins underpin the recovery trajectory .
AI as a durable driver: Rapid shift from PoCs to scaled programs; EPAM’s AI/Run.Transform and Agentic QA enhance differentiation; data/cloud growth outpacing company average .
Mix and margin watch: Sequential margin gains are encouraging, but y/y gross margin pressure from acquisitions/variable comp persists; continued focus on utilization, account margin, and pricing integrity should help into 2026 .
Seasonality and budgets: Expect typical Q4 headwinds and no year-end spend release (vs. last year); guide looks prudent with organic CC ~4.4% midpoint .
Vertical and regional breadth: FS, Emerging, and Software/Hi-Tech led; EMEA outperformed; broad-based growth reduces concentration risk .
Capital returns: New $1B repurchase authority offers downside support and signals confidence; combined with improving growth/margin outlook, this is a constructive technical factor .
Monitor: EBITDA shortfall vs. S&P consensus, tariff/LatAm macro overhang on a Neoris customer, and pricing elasticity as utilization normalizes .

Non-GAAP considerations: Adjustments include stock-based compensation, amortization of acquired intangibles, cost optimization charges, humanitarian support to Ukraine, FX, and tax items; management provides detailed reconciliations and guidance bridges .

EPAM Systems, Inc. (EPAM)·Q3 2025 Earnings Summary