Today. Thank you for standing by. Welcome to the EPAM Systems second quarter 2023 earnings conference call. At this time, all participants are on a listen-only mode. After the speaker's presentation, there will be a question-and-answer session. To ask a question during that session, you will need to press star one one on your phone. You will then hear an automated message advising your hand is raised. To withdraw your question, please press star one one again. Please be advised that today's conference is being recorded. I would now like to hand the conference over to your speaker today, David Straube, head of investor relations. Sir, please go ahead. Thank you, operator. Good morning, everyone. By now, you should have received your copy of the earnings release for the company's second quarter 2023 results. If you have not, the copy is available on epam.com in the investor section. With me on today's call are Arkadiy Dobkin, CEO and President, and Jason Peterson, Chief Financial Officer. I'd like to remind those listening that some of our comments made on today's call may contain forward-looking statements. These statements are subject to risk and uncertainties as described in the company's earnings release and SEC filings. Additionally, all references to reported results that are non-GAAP measures have been reconciled to the comparable GAAP measures and are available on our quarterly earnings materials located in the investor section of our website. With that said, I'll now turn the call over to Arkadiy. Thank you, David. Good morning, everyone. Before I get into results of our second quarter, I would like to spend a few minutes on the mid-quarter update we provided in June. As I shared in my prepared remarks, the broader concerns over the economy led to a shift in demand dynamics for our sector. For EPAM, the shift has been much more pronounced due to the geopolitical impact on our delivery centers and our focus on the build and digital product engineering segments of the market, which represents about 80%-85% of our engagement portfolio. This was especially evident in the technology vertical, which continues to be impacted by the pullback and spend after years of strong investments in digital and product development efforts, while being spread broader across other industry segments as well. Over the last quarters, we have also seen this impact in some of our largest clients as they have pared back or redirected spending from new build programs to the economic conditions and caution in their businesses. This factor has contributed to a high% of our shortfall over the first half of 2023. Switch to Q3 and the rest of 2023. While we are starting to see a few encouraging signs, we'll share more on that in a minute. Today, I would state that we expect still, based on the current level of unpredictability, a negative dynamic to continue into the second half of 2023, but at a lower level than we saw in the first half of this year. With that, I would like to state that while we do understand that this is a difficult period for us and for the sector more broadly, based on insight from the past several years and past several quarters especially, we are turning that experience into pragmatic action plan, which we will be applying to our business throughout the remainder of this year and further into the future, and consider this time an opportunity, which, as we all know, any crisis presents to transforming ourselves. Some of our current plans and actions are focusing on making real-time adjustment to our offerings, go-to-market planning, customer engagement programs, and global delivery talent platform stabilization. These key investments help us to prep ourselves for a strong rebound position. What is important also to note, is that our primary focus on digital product and data engineering services, combined with digital consulting, agency, design, content, and digital marketing services, will remain. In other words, the primary services and market segments which allow us to double company in the previous three years are staying intact, while we continue to tune our capabilities in line with the growing market demands. Our point is simple: the entire IT sector is undergoing what we believe is an evolution of the services market, moving from the core IT to digitalization, even more broadly and with significant acceleration. To considering new digitally native businesses faster, to reinvent entire models and ways of working, and now is a promise of generative AI capabilities empowerment at the core. We have been at the forefront of similar trends before, and once again are looking to put EPAM at the center of new wave of transformative services. We fully expect, as a result, to be underpinned and even more driven exactly by our traditionally strong product platform engineering, data analytics, and machine learning capabilities, but now in combination with what generative AI promises. Our thesis has been, and continues to be, that our core services profile will benefit in the medium and longer term from a much higher concentration on cloud data and engineering. We will capitalize strongly on our core capabilities once the general situation in our segment rebounds. The AI impact will become even more real in terms of complexity of future applications and platforms by encapsulating not just currently available elements of Gen AI in a very visible needs for trust, reliability, and security management of AI, but also by closely integrating with new classes of composite and adaptive AI platforms, as well as with foundational models and specific industry cloud platforms. In short, we are optimistic about the transformative opportunities to the whole application stack coming from AI-led transformation, which is also well illustrated by our latest announcements. That is one of the key areas of our investments. The second critical part is a further diversification and stabilization of our global delivery platform, including the allocation of our talent more optimally across the world, while at the same time enabling our strong engineering quality standards across all EPAM locations. This rebalancing effort will be performed over the next 3 to 4 quarters, in part to drive higher levels of gross margin performance. Our other plans and actions today are focused on our immediate demand generation and new logo acquisitions. During the first half of 2023, and specifically in Q2, we drove new logo activity at higher levels than when compared to 2021 and 2022. We see this as a positive sign of our return to demand, which should accelerate the recovery and allow us to return to growth as soon as the current client base stabilizes. A few examples of our new Q2 clients include one of the world's leading B2B travel platforms, a large European-based multinational working marketplace, organizing for trading of shares and other securities, a multibillion-dollar molecular diagnostic company specialized in detection of early-stage cancers, a leading global insurance provider of financial protection, absence management, and supplemental health benefit solutions, and global infrastructure services company in the energy space. In these new programs, we are starting to include a more diverse stack of our capabilities from consulting to different types of implementation efforts. Some of those clients, we expect, will support our next growth journey. In addition, we also see some programs with existing clients who have started ramping up. Recently, Canadian Tire announced their 7-year strategic partnership with Microsoft to accelerate their modernization and drive retail innovation across the Canadian markets. Leveraging our decade-long relationship with Canadian Tire, EPAM will be trusted and proven engineering partner and digital system integrator to lead the effort. There are some signs indeed, that the overall demand environment is coming to more normal terms for us. We probably will be able to share more next quarter of how strong those signs are going to be. In any way, it also confirms that EPAM continues to remain very relevant and competitive, even in current markets of low demand for the build function. Which is a good entry point to share some of our go-to-market progress, especially in relationship with hyperscalers. In June, we announced a global strategic partnership with Google Cloud across our global markets, cloud solutions, and focusing on specific efforts in our larger verticals, including financial services, consumer, telecom, media, entertainment, healthcare, life sciences, energy, and high tech, to help our customers to modernize and transform their businesses. We also are encouraged and energized by the momentum we are seeing with our other major cloud partners, Microsoft and AWS. More to come on these directions very soon, but just as a preview, you might have seen that we were recently named Microsoft Migrate Partner of the Year for 2023, with couple other honorable recognitions with Microsoft Partner Network. In overall, we made very strong progress in establishing a real 360-degree relationship with all three major players, and plan to be sharing more over the course of the next few weeks publicly. Two final points. First, I just want to reiterate our view that there is a tremendous amount of work to be done in continued modernization, application development and integration, and in conceiving and designing the models and strategies for business change. Our commitment to our expanding capabilities in engineering consulting and our work to create a next-generation agency will help us to compete and win in new demand climate once customers gain confidence in their optimization initiatives and return their attention to growth. Second, I wanted to touch on AI one more time, as it is obviously on everyone mind these days. How do we see its impact to our business, and more critically, to our customers and the industry at large? Of course, what are we doing to position EPAM for long-term success? EPAM has a long history of investing in R&D. Our call to action over the years has been to make the promises of technology real. Rather than sharing any specific dollar amount we plan to spend on AI, which is very difficult to estimate within current speed of change, we can instead share how we are thinking about directional investments today. Currently, we pick investments with two principles in mind. Whatever we do has to be pragmatic to EPAM in terms of relevancy and deliverability for our clients. Second, it has to be responsible and cost effective. This translates to two broad categories of things we are working on, and you probably already saw some of this being announced. We are building accelerators in IP that help to orchestrate full transformation program using the best available capabilities of large language models and related frameworks and tools. A significant portion of this is the work we are doing to change how we ourselves work, from how we build code to how we position and operate our company. We are working across thousands of use cases to focus, first of all, on responsible and very importantly, cost-effective solutions. Otherwise, future real progress will be difficult. To do so, we are focused on expanding our partnership, including with cloud providers and leading research centers, to ensure those critical aspects, and also focus ourselves on aligning internally across consulting, experience, and technology to address that. The reality is that the production-ready AI services application landscape is still very much at the entry stage of maturity today. While we see it as a very large and accelerating opportunity for us, specifically in our primary market segments, we are currently focusing on all type of activities to learn and experiment more, from proof of concepts to real scaled pilots and some scaled production initiatives. Just like advances to our cloud over a decade ago drove demand for advanced engineering, next-generation architecture, and hybrid and distributed delivery models, we are confident that this wave of AI-led requirements will drive more demand for advanced data engineering and cloud computing, content creation, and the artificial intelligence native application, as well as the new UX and UI paradigms. Our clients, who themselves make up a significant segment of technology companies and technology-led enterprises, are in the mindset of already started AI arms race, which we believe will be a real engine for the future growth. Some of that we are already starting to see within our demand pipeline. With that, I would like to pass to Jason to share more details and numbers for Q2 and for an update for our business outlook for the remainder of 2023. Thank you, Ark, good morning, everyone. Before covering our Q2 results, I wanted to remind you that in addition to our customary non-GAAP adjustments, expenditures resulting from Russia's invasion of Ukraine, including EPAM's humanitarian commitment to Ukraine, business continuity resources, and accelerated employee relocations have been excluded from non-GAAP financial results. We have included additional disclosures specific to these and other related items in our Q2 earnings release. In the second quarter, EPAM generated revenue of $1.17 billion, a year-over-year decrease of 2.1% on a reported basis and a decrease of 2.4% in constant currency terms, reflecting a favorable foreign exchange impact of 30 basis points. Revenue in the quarter was impacted by reductions in program spending across a number of our clients, as well as ongoing client caution related to new project starts. The reduction in Russian customer revenues resulting from our decision to exit the market had a 100 basis point negative impact on year-over-year revenue growth. Excluding Russia revenues, year-over-year revenue for reported and constant currency would have decreased by 1.1% and 1.7% respectively. Beginning with our industry verticals, on a year-over-year basis, travel and consumer declined 1%, primarily due to declines in retail, partially offset by solid growth in travel and hospitality. Financial services grew 3.2%, with growth coming from asset management and insurance services. Business information and media decreased 4.1% in the quarter. Revenue in the quarter was impacted by a reduction in spend at a number of large clients based on uncertainty in their end markets, particularly in the mortgage data space. Software and high tech contracted 10.3%. The decline in the quarter reflected a reduction in revenue from a former top 20 customer we mentioned during our previous earnings calls, and generally slower growth in revenue across a range of customers in the vertical. Life sciences and healthcare declined 10.9%. Revenue in the quarter was impacted by the ramp down of a large transformational program mentioned during our previous earnings calls. On a sequential basis, growth in life sciences and healthcare actually was a positive 2.9%, driven by new work at both existing and new logos. Finally, our emerging verticals delivered solid growth of 8.6%, driven by clients in energy, manufacturing, and automotive. From a geographic perspective, Americas, our largest region, representing 58% of Q2 revenues, declined 5.9% year-over-year, or 5.7% in constant currency. The growth rate in the quarter was impacted in part by the ramp down of life sciences and healthcare customer we mentioned during our previous earnings calls. EMEA, representing 39% of our Q2 revenues, grew 8.5% year-over-year, or 6.5% in constant currency. CEE, representing 1% of our Q2 revenues, contracted 61.1% year-over-year, or 45.8% in constant currency. Revenue in the quarter was impacted by our decision to exit our Russia operations and the resulting ramp down of services to Russia customers. Finally, APAC declined 19.7% year-over-year or 18.6% in constant currency terms, and now represents 2% of our revenues. Revenue in the quarter was impacted primarily by the ramp down of work within our financial services vertical. In Q2, revenues from our top 20 customers declined 2.4% year-over-year, while revenues from clients outside our top 20 declined 1.9%. Moving down the income statement, our GAAP gross margin for the quarter was 30.9%, compared to 29.2% in Q2 of last year. non-GAAP gross margin for the quarter was 32.6%, compared to 31.5% for the same quarter last year. Gross margin in Q2 2023 reflects a lower level of variable compensation expense, partially offset by the negative impact of lower utilization. GAAP SG&A was 16.7% of revenue, compared to 19.5% in Q2 of last year. SG&A in Q2 2022 included a more significant level of expenses resulting from Russia's invasion of Ukraine. Non-GAAP SG&A in Q2 2023 came in at 14.8% of revenue, compared to 15.2% in the same period last year. Reductions in both cost of revenue and SG&A during the quarter reflect the company's ongoing focus on managing its cost base, as well as reduced variable compensation expense due to the lower level of financial performance expected for the year. In Q2, EPAM incurred $5 million in severance-related expense, included in both GAAP and non-GAAP SG&A, as the company works to better align its cost structure with the current demand environment. GAAP income from operations was $144 million, or 12.3% of revenue in the quarter, compared to $93 million, or 7.8% of revenue in Q2 of last year. Non-GAAP income from operations was $191 million, or 16.3% of revenue in the quarter, compared to $177 million, or 14.9% of revenue in Q2 of last year. Our GAAP effective tax rate for the quarter came in at 20%. Non-GAAP effective tax rate was 23.3%. Diluted earnings per share on a GAAP basis was $2.03. Our non-GAAP diluted EPS was $2.64, reflecting a $0.26 increase compared to the same quarter in 2022. In Q2, there were approximately 59.2 million diluted shares outstanding. Turning to our cash flow and balance sheet. Cash flow from operations for Q2 was $89 million, compared to $78 million in the same quarter of 2022. Free cash flow was $82 million, compared to free cash flow of $59 million in the same quarter last year. At the end of Q2, DSO was 71 days in comparison to 69 days for Q1 2023, and 71 days for the same quarter last year. Looking ahead, we expect DSO will remain steady throughout 2023. Share repurchases in the second quarter were approximately 195,000 shares, for $41.4 million at an average price of $212.77 per share. As of June 30th, we had approximately $450 million of share repurchase authority remaining. We ended the quarter with approximately $1.8 billion in cash and cash equivalents. Moving on to a few operational metrics. We ended Q2 with more than 49,350 consultants, designers, engineers, trainers, and architects. Production headcount declined 10% compared to Q2 2022, the result of lower levels of hiring, combined with voluntary and involuntary attrition as we continue to balance supply and demand. Our total headcount for the quarter was more than 55,600 employees. Utilization was 75.1%, compared to 78% in Q2 of last year, and 74.9% in Q1 2023. Let's turn to our business outlook. As Ark mentioned, we've seen a higher level of new logo acquisitions and revenue from our focused efforts on demand generation. This progress is encouraging, the level of revenue generated is not enough to offset further expected reductions in client budgets, ramp downs, and delays in new program starts. For the range of outcomes we outlined on our June 5th call, we are maintaining our expectations for a muted demand environment, with sequential decline in Q3 and further sequential or flat revenue growth in Q4. Our Ukrainian delivery organization continues to operate efficiently, and our teams remain highly focused on maintaining uninterrupted production. Our guidance assumes that we will continue to be able to deliver from Ukraine at productivity levels at or somewhat lower than those achieved in 2022. Consistent with previous cycles, we will continue to thoughtfully calibrate our expense levels while investing in our capabilities and focusing on the preservation of our talent in preparation for a return to higher levels of demand. We expect headcount will continue to decline modestly in Q3 due to limited hiring and more typical attrition, and we will continue to limit hiring until we see improving demand. We expect utilization to decline slightly in the second half of the year, primarily driven by a higher level of expected vacations. Lastly, at the end of July, we completed the sale of our Russian business, which will result in a decline in Russian revenues from Q2 to Q3, and we will also recognize an estimated loss on sale of $18.4 million. Which will impact our Q3 and full year GAAP results. Additionally, this will drive a further modest reduction in headcount. Moving on to our full year outlook. We now expect revenue to be in the range of $4.65 billion-$4.70 billion, reflecting a year-over-year decline of approximately 3%. On an organic constant currency basis, excluding the impact of the exit from Russia, we expect revenue decline to also be approximately 3%, both at the midpoint of the range. We expect GAAP income from operations to now be in the range of 10.5%-11.5%, which includes the loss associated with the sale of our Russia business. Non-GAAP income from operations to continue to be in the range of 15%-16%. We expect our GAAP effective tax rate to continue to be approximately 22%. Our non-GAAP effective tax rate, which excludes excess tax benefits related to stock-based compensation, is expected to continue to be 23%. For earnings per share, we expect that GAAP diluted EPS will now be in the range of $7.00-$7.20 for the full year, and non-GAAP diluted EPS will now be in the range of $9.90-$10.10 for the full year. We now expect weighted average share count of 59.1 million fully diluted shares outstanding. Moving to our Q3 2023 outlook, we expect revenues to be in the range of $1.14 billion-$1.15 billion, producing a year-over-year decline of 6%-7%. On an organic constant currency basis, excluding the impact of the exit from Russia, we expect revenue to decline by 8.5%-9.5%. For the third quarter, we expect GAAP income from operations to be in the range of 10%-11%, and non-GAAP income from operations to be in the range of 15.5%-16.5%. We expect our GAAP effective tax rate to be approximately 24% on our non-GAAP effective tax rate, which excludes excess tax benefits related to stock-based compensation, to be approximately 23%. For earnings per share, we expect GAAP diluted EPS to be in the range of $1.62-$1.70 for the quarter, and non-GAAP diluted EPS to be in the range of $2.52-$2.60 for the quarter. We expect a weighted average share count of 59.1 million diluted shares outstanding. A few key assumptions that support our GAAP to non-GAAP measurements in the third quarter and the remainder of the year. Stock-based compensation expenses are expected to be approximately $39 million for each of the remaining quarters. Amortization of intangibles is expected to be approximately $5.5 million for each of the remaining quarters. The impact of foreign exchange is expected to be a $1.5 million gain for each of the remaining quarters. Tax effect of non-GAAP adjustments is expected to be around $11.7 million for Q3 and $9.3 million for Q4. We expect excess tax benefits to be around $2.7 million for Q3 and $1.8 million for Q4. In addition to these customary GAAP to non-GAAP adjustments, and consistent with the prior quarters in 2023, we expect to have ongoing non-GAAP adjustments in 2023, resulting from Russia's invasion of Ukraine. Please see our Q2 earnings release for a detailed reconciliation of our GAAP to non-GAAP guidance. Finally, one more assumption outside of our GAAP to non-GAAP items. With our significant cash position, we are now generating a healthy level of interest income and are now expecting interest in other income to be $11.7 million for each of the remaining quarters. Lastly, I'd like to thank our employees for their continued dedication and focus on our customers. Operator, let's open the call up for questions. Thank you. As a reminder, to ask a question, please press star one, one on your phone and wait for your name to be announced. To withdraw your question, please press star one, one again. Stand by as we compile the Q&A roster. One moment, please, for our first question. Our first question will come from Bryan Bergin of TD Cowen. Your line is open. Hi, good morning, guys. Thank you. Wanted to just kick off with, with large client visibility and, I guess, existing base stability. Can you talk about the conversations you're having among your top 10 and, and or top 20 clients? Are, are you getting closer to stability in this space? I'm curious, just as we look at the implied sequential decline in 3Q and, and perhaps 4Q, just trying to understand the attribution to the decline among the large clients still in that base, versus the intake of new work coming in at, at lower dollar levels, versus, like, conversion delays and slower ramps of, of work. Hello, good, good morning. I think visibility or predictability probably better than it was a couple quarters ago. And we can plan better, but there is still slowdown, which started couple, couple quarters ago, and we working with it. There is also some asynchronous points between clients when they were making some, some of the decisions. There is elements of unknown still there. Again, in general, we feel that it's much more stable. We also have seen in top 20 that some clients starting to return in discussion about growth. Again, it's difficult to comment when exactly it happened, but we're seeing some signs that they tried some- ... additional vendors were not satisfied coming back to us with discussions. I think in general, feeling about Ukraine, despite of situations that were getting even a more active period, still from the client perspective and from expectation of the stability from work conditions, taking into account that during the last 18 months, we didn't have practically one unproductive day. People believe that the clients starting to feel that they can rely on this for those who continue that. I think in general, more stable, still unknown, and the risk still slows down good a little bit. We hope that it will be stopped within the next 2 quarters. Okay. A follow-up just on, on the workforce diversification. Can you give us a sense on how the current operating footprint is comprised as of the close of, of the June quarter? Just, just roughly a mix between billable in Ukraine, Belarus versus Central Europe versus LatAm and APAC. Thanks. Yes. We're under 30% from a CIS region. That's primarily, as you indicated, Ukraine and Belarus. We're continuing to see maybe a little bit of growth in India, so that continues to be a significant delivery location for us. And right now, while we're working through demand, probably we see some stabilization in Latin America, but again, continues to be a significant part of our expected current and future delivery footprint. Okay, thank you. Thank you. One moment, please, for our next question. Our next question will come from the line of Jason Kupferberg of Bank of America. Your line is open. Hi, good, good morning, Ark and Jason. This is Tyler Dupont on for Jason. Thanks for taking the question. I just wanted to start by asking about operating margins. During the quarter, they seemed some pretty strong, you know, 130 basis points greater than the top end of the guidance range. Can you just spend a minute or two parsing out sort of what led to that outperformance and sort of how you're thinking about margins through the back half of the year, whether there's any sort of incremental investment opportunities available or any color there? Yeah. You know, clearly, with the demand environment that we're seeing, we're trying to make certain that we're cautious about spending, while still making certain that we're making investments in, in sales channels and partner programs and, clearly our AI capabilities that would allow us to return to significant growth in the future. We're, you know, focused clearly on SG&A, and you're seeing efficiency there. You're also, you know, some caution around what we're doing with headcount. You know, generally, what you're seeing is a, is a little bit of tuning in different delivery locations and lower hiring, you know, very modest hiring, which is then offset by attrition and has resulted in these net reductions in headcount. The other piece, and, you know, we did talk about it, I think, in the script, is there is a variable compensation element. It's funded by performance versus our expectations for the full year. With the change in expectations for the full year, you know, we did adjust the expected expense related to variable compensation. That shows up as some benefit in the Q2, and we'll have, you know, lesser, but some benefit in the remainder of the year. Then again, we were just sort of top-ish from a revenue standpoint with the $1,170 in Q2. From a profitability standpoint, you know, generally, Q3 is a good quarter for us with more bill days. You know, I don't I think you're still gonna see somewhat lower utilization in Q3, and so probably not expecting, you know, much improvement or probably maybe even a little bit of decline if you went to the midpoint of the range, the 15.5-16.5, that we've guided to for Q3. I think gross margins could end up in a 32%-33% range in Q3, with lower bill days in Q4, maybe somewhat lower, and I would definitely expect to see a decline in profitability between Q3 and Q4 due to the lower number of bill days, vacations and all of that, which generally impacts profitability in the last quarter of the year. Okay, great. I appreciate that, Jason. Thanks. For my follow-up, I just want to sort of double click on the demand story here, as we look towards the back half of the year. Specifically, your expectations on the evolution of the demand environment, in demand environment, across your total client base. You know, the, the balance between, if you're assuming macro stability or, or any sort of additional softness in any of the verticals or, or geographies you're, you're operating in. I know Bryan sort of alluded to the sequential declines in the last question in regard to 3Q and potentially 4Q. Just sort of any clarity there helping us frame the demand environment will be appreciated. Just I'm just gonna give you the numbers, what we're currently seeing from a forecast standpoint for Q3, and then I'll let Ark comment on maybe provide more color. You know, from a sequential standpoint, I think with some of the budget reductions that you've seen in major customers, you're likely to continue to see sequential decline across a fairly large number of our, our verticals. I think you could see sequential growth in, in the emerging, which has got a significant energy manufacturing footprint. I think you could continue to see or likely to see a, a, a sequential growth in the healthcare and life sciences, where we're making good traction here in fiscal year 2023. That's kind of what I'm seeing from, from that standpoint. I think you still have a little bit of impact from customer decisions to, to reduce spend in Q2. I think as Ark has indicated, that, you know, we're more hopeful that, that clients are beginning to sort of stabilize their spend and could even see some increase later in the year, but. Yeah, I think that's in line with, with what I shared at the beginning of the, with the first questions. It's still soft, it's still unpredictable, it's still slightly going down. At the same time, we're seeing different conversations starting to happen. There are more activities with new logos, and that's what we shared during the our note is at the beginning, but also with existing clients, different tone of conversation that we saw couple months, couple quarters ago. Still difficult to predict. We reacted, and we forecasted based on what we really can see right now. Great. Thank you both. Thank you. Thank you. Thank you. One moment, please, for our next question. The next question will come from David Grossman of Stifel. Your line is open. Thank you. Good morning. I wonder if I could just a couple of quick follow-ups to some of the questions that have been asked. I mean, the first is, yeah, just getting back to the customer dynamics and their own desire to kind of diversify risk geographically. You know, if things stabilize from here, when, when would the sequential revenue headwinds begin to diminish if things just stabilize from here going forward? Yeah. Clearly, we would expect sequential decline Q2 to Q3 to when would the sequential stabilize? Then, David, I think you're aware this is Q3 to Q4, is just you've got to build an impact, so you have to have an improvement in demand to stay flat Q3 to Q4. So, you know, we think that that's, that's possible as we talked about in the guidance, or maybe you could see a little bit of growth, Q3 to Q4. You do have, you know, you're, you're, you're walking uphill Q3 to Q4 with the lower build days. Right. including the season- Yeah, go ahead. No, I just wanted to clarify. excluding seasonality, right, you know, if things stabilize from here, things would be flattish sequentially, right? Excluding the seasonal dynamic. I think the only what I would comment that, in June, when we talked last time, and then in May, kind of, when we clearly felt that situation worse than we expected before, we said that we thinking about 2, 3, 4 quarters. I think that's the feeling which we still have today, okay? Because it's very difficult to predict. Like you asking, when? I do believe that within this timeframe, we will probably will get to the situation when sequential, quarterly sequential growth will start to recover. We clearly will be updating this on quarter after quarter. We've definitely feeling slowed down. We definitely see different signs from the clients, but again, some clients, when they made some decisions, they putting themselves in some type of inertia, which would take some time, or market will be very clearly changed, or their satisfaction with some other vendors will be not as high. Okay. Some of this has started to feel. That's what giving us some level of optimism, but I don't, I don't think we can say anything more than another, another, another 2, 3 quarters from now, maybe 4. Got it. All right, thanks. I appreciate that. Then just back to your own internal efforts to geographically diversify, you know, and without getting too far into the details, you know, are there some high-level dashboard items that you can share that would provide some insight into recruiting, you know, kind of yields, utilization, attrition? You know, anything that would give us a sense of, you know, kind of how these new geographies are ramping. Okay, you're asking about what we feel about our progress with diversifying, like, our global delivery? Correct. Correct. Okay. I think, I think we actually pretty much satisfied with the progress. I think, our efforts in India and Latin America definitely starting to, to play out. India, right now, the second largest location we have, and that was part of the plan, which we shared it in May 2022, when we met with all of you and kind of highlighted what we are trying to do. Right now, Ukraine and Belarus production together, it's, more like 25%-26% of the total capacity, where India and Latin America combined. Probably by the end of the year, it will be closer to 18%-20%. The quality and effort which we put in there definitely improving. We also have very specific programs, how to share knowledge between people who stayed with EPAM for, for a long time, and how to raise the bar with recruitment and new operations. I think we're still committed very much to Ukraine. We do believe that it will be growth there. Again, we don't know when, but maybe we'll be very much aligned with sequential growth, which we're expecting in 2, 3, 4 quarters coming back. Besides India and Latin America, which is more traditional, we have actually Central Western Asia, which is interesting because it's accumulate a significant number of people who know EPAM well and who relocated during the last 18 months. We have very interesting ways, and we have potentially very good demographics for the growth of the targets in these countries. Clients starting to experience this and getting comfortable. Again, with the demand coming back, I think it will be a good opportunity for us. Finally, more traditional for us, location, Central Eastern Europe, mostly inside of the EU, sometimes outside of EU, but Hungary, Poland, this is very quality, high quality engineering location for us. Clients very comfortable there. In good demand environment, it's always very high demand. It's also become even stronger because good number of talents relocated from our traditional dev centers. I think we going actually to the direction of building probably the most balanced global delivery platform. As soon as the rebound will be started, I think we will feel comfortable to, to grow. One of the important things, and we mentioned this, we very carefully kind of rebalancing the cost structures because in all of the sectors which I outlined, there are different cost structures, and we going back to improve our gross margins by the allocating focuses across these locations. If in short question, we will be able to provide quality which clients expected from us, I think we convince the clients that it's actually very much doable. Got it. Thanks very much. Really appreciate that color. Thank you. Thank you. One moment, please, for our next question. The next question will come from Maggie Nolan of William Blair. Your line is open. Hi, thank you. Just to follow up on that last question and, and your last comment there, Ark, around the margins, can you give us a little bit of a preliminary thought on, you know, what all of this might mean for gross margins into 2024, when we might see things kind of start to, to pick up, and to what magnitude? Yeah, I think I'll step in. We're probably not quite ready to talk about the 2024 in terms of, let's say, specifics or even ranges. To Ark's point, you know, as we moved into the different delivery locations, obviously we did so quickly. In some cases, we probably have a little bit more balance in the higher cost geographies, including, you know, traditional kind of on-site markets, where we would look to kind of rebalance that somewhat. The other thing, as we've talked about over the last couple of quarters, is that as we moved into new geographies, and particularly as we sort of either relocated or stood up new geographies quickly, we ended up with a somewhat more, sort of senior, delivery organization and delivery pyramid. We're working to begin to introduce more juniors later in the year. That would then give us a more balanced pyramid and therefore also improve margins. That, obviously, combined with utilization improvement, you know, would be the things that we're looking to do to sort of stabilize and improve gross margins over time. Okay, thank you. On the new logo additions, it was, it was good to hear, you know, the progress on that this quarter. Can you talk a little bit about, you know, the ability to, to keep the sales force intact during all this transformation? Any kind of patterns that you're seeing on those new logos in terms of the time it's taking for them to convert to revenue? I think our comment on general new logo and new business, kind of illustrates that, while Salesforce is also in some dynamic, so I think directionally, it's, working, working through it positively right now. I think, after our comments, like several quarters ago, when we were in the middle of all these allocations points, and we have to deal with thousands of people. It was some slowed down right now, so kind of like. Yeah, very much actively focused on external opportunities, and, and much of the internal things we had to manage over the last, I'd say, four quarters are, are, you know, substantially behind us. There's a, you know, focus with both the account teams, the sales force, and the executives on driving incremental revenue growth. Thank you. Thank you. One moment for our next question. Our next question will come from the line of Ramsey El-Assal of Barclays. Your line is open. Hi, good morning. Thanks for taking my question. I wanted to follow up with your mentioning kind of tighter integrations and partnerships with the hyperscalers. Can you talk about the strategy, how these relationships might impact or expand your capabilities or your addressable market? Also just comment on whether this is part of positioning EPAM for growth once the demand environment picks up again. Yeah, I think it's dynamical in general because of the market change in comparison, like even a year ago. Now we're talking about much closer relationship from both points of view, because we definitely, like everybody else, are focusing on strong clients, client perspective, where hyperscalers can open additional doors, and all competitors do the same. This is kind of nothing new. On another side, the partnership becomes stronger because just migration to the cloud is kind of as is business, becoming not so interesting, and usually it's means very complex modernization efforts. This is where strengths of EPAM coming from. This is why the partnership with hyperscalers becoming more important, not only for us, but for them as well, because EPAM has a reputation which actually can do complex modernization and complex migration. That's what we mentioned getting the status of Partner of the Year in migration category with Microsoft. That's exactly confirmation on this. As we mentioned, we will be following with some announcement during the next couple of weeks, which will be confirming improving partnership level, specifically because of our ability to deliver complexity back. It's definitely very good preparation from our point of view for rebound, because when demand will go back, everything which wasn't finished, and it's a lot in all categories, in cloud, in data, modernization projects, and huge pressure on demand for data engineering because of AI components. Hyperscalers relationship will be very critical. All right, thank you. A follow-up from me, can you contrast the demand environment in Europe versus North America? It looks like the growth rates are different in those geographies, although admittedly, they don't necessarily have not tabulated the constant currency number. Is it a different environment you're seeing in different geographies, or is it very similar trends across the business, regardless of geography? Yeah, certainly some of what happened in Europe is due to foreign exchange. What we are seeing is that some of the larger kind of budget reductions in conservatism is actually showing up more in North American clients. Think about the couple of clients we talked about in healthcare and in tech. Those were both North American clients. We've seen less of these types of, you know, reductions in spend in Europe. At the same time, we've got some pretty good traction also in, even in the consumer and retail side, in Europe. Yes, there does seem to be a bit of a divergence, but we'll see what happens as we work through the remainder of the year. Fantastic. Thanks a lot. In general, it's still pretty similar, I think, when we're talking about several specific client situations. Mostly it's happened in- North America ... in North America, and those situations were independent from general economic environment. Thank you. One moment for our next question. Our next question will come from Moshe Katri of Wedbush Securities. Your line is open. Hey, thanks. Good morning. A couple of follow-ups here. Looking at the new logos, can you confirm that you're actually getting the same bill rates, as you're selling via some of the other delivery centers, including India, as you have been getting in Eastern Europe? Are we talking about comparable billability? You know, what we would usually talk about is an environment where potentially you could get higher bill rates with new engagements. That's probably less likely to occur in today's demand environment. You know, generally, Moshe, if you're trying to get at just kind of what happens is you deliver more out of India. India does have somewhat lower price points than some of the geographies in Eastern Europe. Maybe not significantly different than, than, you know, a few of the, the geographies in Southwest, in, in, Western Asia or, or, you know, just, Soviet Central Asia, but, it does have somewhat lower price points than certainly sort of Central Europe. Okay. Would you say that the, the new logos that are coming on board are more dilutive to margins versus what you were accustomed to? Or is there any way to mitigate that? Yeah. You know, if you, you could have different bill rates in different geographies and still have the same margin%, right? You know, you've got different cost structures, you've got different costs of benefits and that type of thing. Lower price or higher price even, doesn't necessarily mean lower or higher margin. It, you know, again, I would say, yes, we can kind of mitigate. No, I don't expect that, you know, new business is being taken at super aggressive, you know, margins. We're working to kind of, you know, sharpen our pencils, but, but be appropriate in our pricing. All right, that makes sense. Uh, Last... Sorry, last one here. So we visited your center in Hyderabad, and I remember you, you have a significant capacity to kind of expand there. Can you talk a bit about your future plans in terms of how important India or critical India is gonna be, to be able to continue to get those new logos on board and actually to be able to accelerate growth down the road? Thanks. Yeah, I still, I know, like, we answering a little bit, kind of in gray area, but in general, you need to understand that current market environment is not what was, and everybody knows it, like 18 months ago, 2 years, 2 years ago. The whole rate structure for everyone, not only for us, is different for new deals as well. The only things which could change it is actually demand coming to more normal scale, and demand for complexity, for build stuff will go up. Correction will be happening in other side. There is nothing magical here. New deals coming today is very different environment than it was, again, 18, 24 months ago. It's number 1. Number 2, about India. Now, I don't know when you visited. I don't remember when you visited Hyderabad, but right now we have five development centers. Hyderabad is still, is the biggest one, but we have two others which growing very strongly and two others which we started recently and growing strongly as well. That's a definitely important part of our future, but it's one of the parts. It's not like we're going to switch completely. That's what I mentioned before. We're really looking how to build very balanced global delivery network for, for now. Thanks. Thank you. One moment for our next question. Our next question will come from Puneet Jain of JP Morgan. Your line is open. Hey, thanks for taking my question. I also wanted to ask about demand. Do you expect, like, clients to spend on CapEx investments to modernize or replatform their core systems sometime this year, maybe in fourth Q? Or is that type of work is something that could come through under next year's budgets, meaning that it might not come in anytime this year? You expect to see modernization and spend occur in Q4, or more likely to see a return to budget growth in, in first half of 2024? It's difficult to, to answer that. I think we answered this question already in another way a couple times. We don't know right now. There is not so much visibility, that's difficult. Some, some of them, who knows, it's sometimes unexpected happening in Q4 will be the quarter when clients will really start spending. Let's see, so. Got it. Are you seeing any pricing pressure on like-to-like basis? The pricing pressure on like-to-like basis. I think Ark obviously picked it up in a more pronounced way than I did earlier. This is definitely an environment where you need to sharpen your pencil. Clearly, we're being thoughtful, but, you know, it is an environment where clients are particularly cost sensitive, and that is showing up in, in pricing. To Moshe's question earlier, is that traditionally, in sort of newer engagements, it's an opportunity to sort of improve price, and that's less the case in this fiscal year. Got it. Thank you. Thank you. One moment, please, for our next question. The next question will come from Arvind Ramnani of Piper Sandler. Your line is open. Hi, thanks for taking my question. You know, I wanted to ask you about your new clients. You know, are they coming from specific industries and geos, or maybe are you going to provide some color on the nature of work on your new clients? I think, at this specific time, again, there are some industries like, let's say, oil and gas, which is in pretty good shape, okay? This is more an exception today. The rest of the new clients, in our view, coming from 2 kind of categories. Some clients who's actually trying to utilize this time as an opportunity and decided to go and invest instead of like... and get some competitive advantage. That's exactly what we were called before saying that as soon as this type of clients will demonstrate some results, it will trigger faster recovery of the market for build and kind of transformative programs, okay? The second category, I think it's a client which is, at this point, not trying just to do transformative programs, but trying to utilize this time to build relationship with the stronger vendors for the future return and be prepared for this. Because in our view, demand for talent, when market will rebound, will be very, very strong with everything what's happening right now in technology, in technical debt, in things which were not done or not finished, and with everything was triggered by, it seems like everybody tired to talk about generative AI, so no questions, but it's still there, and it will change actually landscape. Press will put pressure on the talent demand as well. Well, a lot of people speculation that it would replace companies like EPAM with it. Okay. Yeah, that, that, that's helpful. And, you know, I mean, I know typically when you start your client relationships, they start small, and then they kind of ramp over time. Is, is it kind of a similar dynamic that, that you have with, with, with these new clients? There are few, for example, on. We kind of give, I think five, six examples across different industries. There are a few of them, which is pretty large, and that's why we mentioned that it might be that they will be driving our growth for the next years. There are some of them, which is more framework contracts, which we won and just started, and there is a specific pace how it's happening. It might start to bring results, like, closer to the end of the year, maybe beginning of the next year, visible results. There are some, which is very, very specific programs, but not big, but very interesting from the new technology standpoint. It, it's kind of variety of this. If we will see better trends, that would mean that it's actually the market change. Perfect. Just last question for me, you know, just I did want to ask about Belarus. Can you share some sort of headcount trends and utilization in Belarus? Are you also seeing any pushback with, you know, sort of your exposure to Belarus? I think I would raise it with Ukraine and Belarus here. I think with Ukraine, clients who stayed with Ukraine much more comfortable right now. We see some clients coming back. The proof that nothing was happening from the quality of delivery or kind of impact on any production activities during the last 18 months, making clients more comfortable. Yes, it's a kind of new normal, but the normal is a key part of this. With Belarus, it's a slowdown. We still have clients which operate there, and we have some clients who are exiting there. Belarus is from headcount point of view, kind of sliding faster than other anything else. Perfect. Thank you very much. Thank you. I am seeing no further questions in the queue. I would now like to turn the conference back to Arkadiy Dobkin for closing remarks. Thank, thank you. Thank you, everybody. I, I think, we will update you in 3 months, but in general, feeling that we getting with all unpredictability, we're feeling a little bit more, stable and predictable than the quarter ago. Thank you very much, and talk to you in 3 months. This concludes today's conference call. Thank you all for participating. You may now disconnect, and have a pleasant day.