First quarter revenues of $324.7 million, up 22.7% year-over-year
GAAP Diluted EPS of $0.44 for the first quarter
Non-GAAP Diluted EPS of $0.72 for the first quarter
Newtown, PA -- May 04, 2017 -- EPAM Systems, Inc. (NYSE:EPAM), a leading global provider of product development and software engineering solutions, today announced results for its first quarter ended March 31, 2017.
“Our first quarter results confirm our ability to successfully deliver business value to our customers around the world through our transformative technology solutions,” said Arkadiy Dobkin, CEO & President, EPAM. “We continue to invest in our consultative capabilities and new, emerging technologies to constantly evolve our offerings and strengthen our position as a leader in digital business solutions.”
First Quarter 2017 Highlights
- Revenues increased to $324.7 million, a year-over-year increase of $60.2 million, or 22.7%;
- In constant currency, revenue was up 23.9% year-over-year;
- GAAP income from operations was $31.0 million, an increase of $0.7 million or 2.1% compared to $30.3 million in the first quarter of 2016;
- Non-GAAP income from operations was $49.3 million, an increase of $6.3 million, or 14.6%, compared to $43.0 million in the first quarter of 2016;
- Diluted earnings per share (EPS) on a GAAP basis was $0.44, a decrease from $0.45 in the first quarter of 2016;
- Non-GAAP diluted EPS was $0.72, an increase from $0.66 in the first quarter of 2016.
- Stronger than expected revenue performance in the first quarter was partially driven by favorable movements in exchange rates. Further, operating results in the quarter were impacted by several unanticipated items, including higher than expected stock-based compensation and a one-time expense, that adversely affected GAAP net income.
Cash Flow from Operations
- Cash from operations was $31.2 million in the first quarter of 2017, up from $10.9 million in the first quarter of 2016;
- Cash and cash equivalents totaled $398.4 million as of March 31, 2017, an increase of $36.4 million or 10.1% from $362.0 million as of December 31, 2016.
- Total headcount was 22,433 as of March 31, 2017, an increase of 14.9% from 19,517 as of March 31, 2016;
- Total number of delivery professionals was 19,677 as of March 31, 2017, an increase of 14.7% from 17,151 as of March 31, 2016.
2017 Outlook - Full Year and Second Quarter
- Revenue growth for fiscal 2017 will be at least 21%, after factoring in an estimated 2% for currency headwinds, meaning expected constant currency growth will be at least 23%.
- We expect GAAP income from operations to be in the range of 12% to 14% of revenue and non-GAAP income from operations to be in the range of 16% to 18% of revenue.
- We expect our effective tax rate to be at least 19%. This reflects the adoption of the accounting pronouncement related to stock based compensation effective January 1st.
- We expect GAAP diluted EPS will be at least $2.45 for the full year, and non-GAAP diluted EPS will be at least $3.38 for the full year based on expected weighted average share count of 54.8 million fully diluted shares outstanding.
- Revenues will be at least $340 million for the second quarter, reflecting a year-over-year growth rate of at least 20% after estimating 2% for currency headwinds, meaning expected constant currency growth will be at least 22%.
- For the second quarter, we expect GAAP income from operations to be in the range of 11% to 12% of revenue and non-GAAP income from operations to be in the range of 16% to 17% of revenue.
- We expect our effective tax rate to be at least 19%.
- We expect GAAP diluted EPS will be at least $0.55 for the quarter, and non-GAAP diluted EPS will be at least $0.80 for the quarter based on an expected weighted average share count of 54.3 million fully diluted shares outstanding.
Conference Call Information
EPAM will host a conference call to discuss results on Thursday, May 4, 2017 at 8:00 a.m. Eastern Time. The live conference call will be available by dialing +1 (877) 407-0784 or +1 (201) 689-8560 (outside of the U.S.). A webcast of the conference call can be accessed at the Investor Relations section of the Company's website at http://investors.epam.com. A replay will be available approximately one hour after the call by dialing +1 (844) 512-2921 or +1 (412) 317-6671 (outside of the U.S.) and entering the conference ID 13658163. The replay will be available until May 18, 2017.
About EPAM Systems
Since 1993, EPAM Systems, Inc. (NYSE: EPAM), has leveraged its core engineering expertise to become a leading global product development and digital platform engineering services company. Through its “Engineering DNA” and innovative strategy, consulting, and design capabilities, EPAM works in collaboration with its customers to deliver innovative solutions that turn complex business challenges into real business opportunities. EPAM’s global teams serve customers in over 25 countries across North America, Europe, Asia and Australia. EPAM is a recognized market leader among independent research agencies and was ranked #8 in FORBES 25 Fastest Growing Public Tech Companies, as a top information technology services company on FORTUNE’S 100 Fastest Growing Companies, and as a top UK Digital Design & Build Agency.
Non-GAAP Financial Measures
EPAM supplements results reported in accordance with United States generally accepted accounting principles, referred to as GAAP, with non-GAAP financial measures. Management believes these measures help illustrate underlying trends in EPAM’s business and uses the measures to establish budgets and operational goals, communicated internally and externally, for managing EPAM’s business and evaluating its performance. Management also believes these measures help investors compare EPAM’s operating performance with its results in prior periods. EPAM anticipates that it will continue to report both GAAP and certain non-GAAP financial measures in its financial results, including non-GAAP results that exclude stock-based compensation expense, write-offs and recoveries, amortization of purchased intangible assets, goodwill impairment, legal settlements, foreign exchange gains and losses, acquisition-related costs, and the related effect on taxes. Management may also compare operating results on a basis of “constant currency”, which is also a non-GAAP financial measure. This measure excludes the effect of foreign currency exchange rate fluctuations by translating the current period revenues and expenses into U.S. dollars at the weighted average exchange rates of the prior period of comparison. Because EPAM’s reported non-GAAP financial measures are not calculated according to GAAP, these measures are not comparable to GAAP and may not be comparable to similarly described non-GAAP measures reported by other companies within EPAM’s industry. Consequently, EPAM’s non-GAAP financial measures should not be evaluated in isolation or supplant comparable GAAP measures, but, rather, should be considered together with the information in EPAM’s consolidated financial statements, which are prepared according to GAAP.
This press release includes statements which may constitute forward-looking statements made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995, the accuracy of which are necessarily subject to risks, uncertainties, and assumptions as to future events that may not prove to be accurate. Factors that could cause actual results to differ materially from those expressed or implied include general economic conditions and the factors discussed in our most recent Annual Report on Form 10-K and other filings with the Securities and Exchange Commission. EPAM undertakes no obligation to update or revise any forward-looking statements, whether as a result of new information, future events, or otherwise, except as may be required under applicable securities law.