Fourth quarter revenues of $313.5 million, up 20.5% year-over-year
Annual revenues of $1.16 billion, up 26.9% year-over-year
GAAP Diluted EPS of $0.46 for the fourth quarter and $1.87 for the full year
Non-GAAP Diluted EPS of $0.77 for the fourth quarter and $2.90 for the full year
Newtown, PA - February 16, 2017 -- EPAM Systems, Inc. (NYSE:EPAM), a leading global provider of product development and software engineering solutions, today announced results for its fourth quarter and full year ended December 31, 2016.
"2016 was a milestone year for EPAM, we tripled revenues since our IPO, closing at over $1 billion. Our continued evolution in extending our Engineering DNA into a full spectrum of services for Digital Business has positioned EPAM as a new breed of service provider, keeping us relevant to clients navigating dynamic market demands," said Arkadiy Dobkin, Chairman, CEO & President, EPAM.
Fourth Quarter 2016 Highlights
- Revenues increased to $313.5 million, a year-over-year increase of $53.3 million, or 20.5%;
- In constant currency, revenue was up 22.8% year-over-year;
- GAAP income from operations was $37.4 million, an increase of $5.6 million or 17.7% compared to $31.8 million in the fourth quarter of 2015;
- Non-GAAP income from operations was $51.5 million, an increase of $4.6 million, or 9.7%, compared to $46.9 million in the fourth quarter of 2015;
- Diluted earnings per share (EPS) on a GAAP basis was $0.46, a decrease from $0.52 in the fourth quarter of 2015;
- Non-GAAP diluted EPS was $0.77, an increase from $0.73 in the fourth quarter of 2015.
Full Year 2016 Highlights
- Revenues increased to $1.16 billion, a year-over-year increase of $246.0 million, or 26.9%;
- In constant currency, revenue was up 29.4% year-over-year;
- GAAP income from operations was $133.7 million, an increase of $27.7 million or 26.2% compared to $106.0 million in 2015;
- Non-GAAP income from operations was $191.8 million, an increase of $33.1 million, or 20.9%, compared to $158.7 million in 2015;
- Diluted EPS on a GAAP basis was $1.87, compared to $1.62 in 2015;
- Non-GAAP diluted EPS was $2.90, compared to $2.47 in 2015.
Cash Flow from Operations
- Cash from operations was $164.8 million in 2016, up from $76.4 million in 2015; and was $53.7 million in the fourth quarter of 2016, up from $11.8 million in the fourth quarter of 2015;
- Cash and cash equivalents totaled $362.0 million as of December 31, 2016, an increase of $162.6 million or 81.5% from $199.4 million as of December 31, 2015.
- Total headcount was 22,383 as of December 31, 2016, an increase of 22.0% from 18,354 as of December 31, 2015;
- Total number of delivery professionals was 19,670 as of December 31, 2016, an increase of 22.3% from 16,078 as of December 31, 2015.
2017 Outlook - Full Year and First Quarter
- Revenue growth for fiscal 2017 will be at least 20%, after factoring in an estimated 3% 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 $315 million for the first quarter, reflecting a growth rate of at least 19% after estimating 3% for currency headwinds, meaning expected constant currency growth will be at least 22%.
- For the first quarter, we expect GAAP income from operations to be in the range of 10% to 11% of revenue and non-GAAP income from operations to be in the range of 15% to 16% of revenue.
- We expect our effective tax rate to be at least 20%.
- We expect GAAP diluted EPS will be at least $0.49 for the quarter, and non-GAAP diluted EPS will be at least $0.72 for the quarter based on an expected weighted average share count of 53.9 million fully diluted shares outstanding.
Conference Call Information
EPAM will host a conference call to discuss results on Thursday, February 16, 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 13654193. The replay will be available until March 2, 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.