Earnings release
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Exhibit 99.1 < epam > EPAM Reports Results for Second Quarter 2026 • Second quarter revenues of $ 1.415 billion , up 4.5 % year - over - year • • • • • Second quarter GAAP income from operations increased to 10.8 % of revenues from 9.3 % , and non - GAAP income from operations increased to 16.4 % of revenues from 15.0 % , on a year - over - year basis Second quarter GAAP diluted EPS of $ 1.97 , an increase of $ 0.41 , or 26.3 % , and non - GAAP diluted EPS of $ 3.38 , an increase of $ 0.61 , or 22.0 % , on a year - over - year basis Continued to return capital to shareholders , spending $ 85 million in the second quarter on share repurchases and $ 409 million since the beginning of the year For the full year , EPAM now expects the year - over - year revenue growth rate to be in the range of 3.2 % to 4.2 % and now expects the year - over - year revenue growth rate on an organic constant currency basis to be in the range of 2.0 % to 3.0 % For the full year , EPAM now expects its GAAP diluted EPS to be in the range of $ 8.22 to $ 8.38 , and non - GAAP diluted EPS to be in the range of $ 13.08 to $ 13.24 Newtown , PA , USA - August , 202 - EPAM Systems , Inc. ( announced results for its second quarter ended June 30 , 202 NYSE EPAM ) , a leading digital and Al transformation company , today pected with continued Al - native momentum and ongoing profitability ecution against our multi - year strategy , " said Balazs Fejes , CEO & President , EPAM . " As we pand our strategic partnerships and leverage our 30+ years of engineering DNA to build the " Our second quarter results came in better than e improvement , reflecting solid e continue to e ne transformation is high . " t generation forward - deployed engineering organization , our conviction in the strategy , the team and our commercial Second Quarter 2026 Highlights • Revenues increased to $ 1.415 billion , a year - over - year increase of $ 1.3 million , or 4.5 % . On an organic constant currency basis , revenues were up 3.4 % compared to the second quarter of 2025 ; GAAP income from operations was $ 152.2 million , an increase of $ 25.7 million , or 20.4 % , compared to $ 12 5 million in the second quarter of 2025 ; Non - GAAP income from operations was $ 232.7 million , an increase of $ 29.8 million , or 14.7 % , compared to $ 202.9 million in the second quarter of 2025 ; Diluted earnings per share ( second quarter of 2025 ; and " EPS " ) on a GAAP basis was $ 1.97 , an increase of $ 0.41 , or 2 3 % , compared to $ 1.5 in the Non - GAAP diluted EPS was $ 3.38 , an increase of $ 0 . 1 , or 22.0 % , compared to $ 2.77 in the second quarter of 2025 .
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Cash Flow and Other Metrics • Cash used in operating activities was $38.8 million for the first six months of 2026 , compared to cash provided by operating activities of $77.4 million for the first six months of 2025; • Cash, cash equivalents and restricted cash totaled $794.3 million as of June 30, 2026 , a decrease of $507.1 million, or 39.0%, from $1.301 billion as of December 31, 2025; • The Company spent $409.0 million on share repurchases during the first six months of 2026 under its share repurchase program, which included $85.0 million during the second quarter; and • Total headcount was approximately 6 2,850 as of June 30, 2026 . Included in this number were approximately 56 ,6 50 delivery professionals, an increase of 0.3% from March 31, 2026 . 2026 Outlook - Full Year and Third Quarter Full Year EPAM expects the following for the full year: • The Company now expects the year-over-year revenue growth rate to be in the range of 3.2% to 4.2% for 2026 andnow expects the year-over-year revenue growth rate on an organic constant currency basis to be in the range of 2.0% to3.0%; • For the full year, EPAM now expects GAAP income from operations to be in the range of 10.5% to 11.0% of revenues and non-GAAP income from operations to be in the range of 15.5% to 16 .0% of revenues; • The Company continues to expect its GAAP effective tax rate to be approximately 27% and its non-GAAP effective tax rate to be approximately 24%; and • EPAM now expects GAAP diluted EPS to be in the range of $8.22 to $8.38 and non-GAAP diluted EPS to be in the range of $13.08 to $13.24. The Company now expects weighted average diluted shares outstanding for the year to be 52.2 million. Third Quarter EPAM expects the following for the third quarter: • The Company expects revenues will be in the range of $1.410 billion to $1.425 billion for the third quarter, reflecting year-over-year growth of 1.7% at the midpoint of the range. The Company expects the year-over-year revenue growth rate on an organic constant currency basis to be 1.8% at the midpoint of the range; • For the third quarter, EPAM expects GAAP income from operations to be in the range of 11.0% to 12.0% of revenues and non-GAAP income from operations to be in the range of 15.5% to 16 .5% of revenues; • The Company expects its GAAP effective tax rate to be approximately 25% and its non-GAAP effective tax rate to be approximately 24%; and • EPAM expects GAAP diluted EPS will be in the range of $2.33 to $2.41 for the quarter, and non-GAAP diluted EPS will be in the range of $3.38 to $3.46 for the quarter. The Company expects weighted average diluted shares outstanding for the quarter to be 51.4 million.
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Conference Call Information EPAM will host a conference call to discuss the results on Thursday, August 6 , 2026 , at 8:00 a.m. ET. The conference call will be available live on the EPAM website at https://investors.epam.com. Please visit the website at least 15 minutes prior to the call to register for the event. For those who cannot access the live webcast, a replay will be available in the Investor Relations section of the website. About EPAM Systems EPAM ( NYSE:EPAM) is a global leader in AI transformation engineering and integrated consulting, serving Forbes Global 2000 companies and ambitious startups. With over thirty years of expertise in custom software, product and platform engineering, EPAM empowers organizations to become AI-Native enterprises, driving measurable value from innovation and digital investments. Recognized by industry benchmarks and leading analysts as a leader in AI, EPAM delivers globally while engaging locally, making the future real for clients, partners, and employees. We are proud to be recognized by Forbes, Glassdoor, Newsweek, Time Magazine, Great Place to Work and kununu as a Most Loved Workplace around the world. Learn more at www.epam.com and follow us on LinkedIn.
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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 establishbudgets and operational goals, communicate internally and externally, for managing EPAM’s business and evaluating itsperformance. 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-GAAPresults that exclude stock-based compensation expenses, acquisition-related costs including amortization ofacquired intangible assets, impairment of assets, expenses associated with EPAM's humanitarian commitment to its professionals in Ukraine, employee separation costs incurred in connection with restructuring programs, certain other one-time charges andbenefits, changes in fair value of contingent consideration, foreign exchange gains and losses, excesstax benefits and tax shortfalls related to stock-based compensation, and the related effect on income taxes of the pre-tax adjustments. Management also compares revenues on an “organic constant currencybasis,” which is a non-GAAP financial measure. This measure excludes the effect of acquisitions by removing revenues from anacquired company in the twelve months after completing an acquisition and foreign currency exchange rate fluctuations by translating current period revenues 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 in accordance with GAAP, these measures are not comparable to GAAPand 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 consideredtogether with the information in EPAM’s consolidated financial statements, which are prepared in accordance with GAAP. Forward-Looking Statements This press release includes estimates and statements which may constitute forward-looking statements made pursuant to the safe harbor provisionsof the Private Securities Litigation Reform Act of 1995, the accuracy of which are necessarily subject to risks, uncertainties, and assumptions as tofuture events that may not prove to be accurate. Our estimates and forward-looking statements are mainly based on our currentexpectations and estimates of future events and trends, which affect or may affect our business and operations. Thesestatements may include words such as “may,” “will,” “should,” “believe,” “expect,” “anticipate,” “intend,” “plan,” “estimate”orsimilar expressions. Those future events and trends may relate to, among other things, developments relating to the war inUkraine and escalation of the war in the surrounding region, political and civil unrest or military action in the geographies where we conductbusiness and operate, difficult conditions in global capital markets, foreign exchange markets, global trade and the broadereconomy, the adoption and implementation of artificial intelligence technologies by EPAM and its clients, and the effect that these events may haveon client demand and our revenues, operations, access to capital, and profitability. Other factors that could cause actual results to differ materiallyfrom those expressed or implied include general economic conditions, the risk factors discussed in the Company's most recentAnnual Report on Form 10-K and the factors discussed in the Company's Quarterly Reports on Form 10-Q, particularly under the headings“Management's Discussion and Analysis of Financial Condition and Results of Operations” and “Risk Factors”and other filings with the Securities andExchange Commission. Although we believe that these estimates and forward-looking statements are based upon reasonableassumptions, they are subject to several risks and uncertainties and are made based on information currently available to us. EPAM undertakes noobligation 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. Contact: EPAM Systems, Inc. Mike Rowshandel, Head of Investor Relations Phone: +1-26 7-759-9000 x393336 Email: mike_rowshandel@epam.com
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EPAM SYSTEMS, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF INCOME (Unaudited) (In thousands, except per share data) Three Months EndedJune 30, Six Months EndedJune 30, 2026 2025 2026 2025 Revenues $ 1,414,767 $ 1,353,443 $ 2,814,828 $ 2,655,135 Operating expenses: Cost of revenues( exclusive ofdepreciation and amortization) 985,199 96 4,012 1,997,251 1,91 ,020 Selling, general and administrativeexpenses 245,245 231,6 81 484,947 450,598 Depreciation and amortizationexpense 32,101 31,274 6 3,6 40 6 2,711 Income from operations 152,222 126,476 268,990 225,806 Interest and other income ( loss), net ( 1,821) 3,519 ( 239) 9,333 Foreign exchange loss ( 9,850) ( 6 ,227) ( 7,552) ( 16 ,954) Income before provision for income taxes 140,551 123,768 261,199 218,185 Provision for income taxes 37,572 35,742 75,6 99 5 , 77 Net income $ 102,979 $ 88,026 $ 185,500 $ 161,508 Net income per share: Basic $ 1.97 $ 1.56 $ 3.50 $ 2.8 Diluted $ 1.97 $ 1.56 $ 3.49 $ 2.84 Shares used in calculation of net income per share: Basic 52,197 56 ,319 52,991 5 ,548 Diluted 52,26 7 56 ,536 53,220 5 ,898
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EPAM SYSTEMS, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited) (In thousands, except par value) As ofJune 30,2026 As ofDecember 31,2025 Assets Current assets Cash and cash equivalents $ 789,397 $ 1,29 ,077 Trade receivables and contract assets, net of allowance of $3,939 and $6 ,350, respectively 1,26 8,036 1,108,201 Prepaid and other current assets 158,556 129, 10 Total current assets 2,215,989 2,533,888 Property and equipment, net 204,96 7 202,387 Operating lease right-of-use assets, net 124,999 114,875 Intangible assets, net 372,96 9 40 ,58 Goodwill 1,203,048 1,210,5 4 Deferred tax assets 295,947 295,115 Other noncurrent assets 156 ,16 7 138,721 Total assets $ 4,574,086 $ 4,902,136 Liabilities Current liabilities Accounts payable $ 41,551 $ 55,329 Accrued compensation and benefits expenses 495,96 1 6 08,232 Accrued expenses and other current liabilities 208,531 250, 88 Income taxes payable, current 19,093 25,520 Operating lease liabilities, current 39,301 37,173 Total current liabilities 804,437 97 ,942 Long-term debt 25,000 25,034 Operating lease liabilities, noncurrent 87,942 81,497 Deferred tax liabilities, noncurrent 74,505 7 ,9 9 Other noncurrent liabilities 6 2,901 6 3,88 Total liabilities 1,054,785 1,224,328 Commitments and contingencies Equity Stockholders’ equity Common stock, $0.001 par value; 16 0,000 shares authorized; 51,585 shares issued and outstanding atJune 30, 2026 , and 54,274 shares issued and outstanding at December 31, 2025 52 54 Additional paid-in capital 1,487,973 1,390,423 Retained earnings 2,035,6 6 4 2,26 8,204 Accumulated other comprehensive income ( loss) ( 4,970) 18,545 Total EPAM Systems, Inc. stockholders’ equity 3,518,719 3,6 77,22 Noncontrolling interest in consolidated subsidiaries 582 582 Total equity 3,519,301 3,677,808 Total liabilities and equity $ 4,574,086 $ 4,902,136
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EPAM SYSTEMS, INC. AND SUBSIDIARIES Reconciliations of Non-GAAP Financial Measures to Comparable GAAP Financial Measures (Unaudited) (In thousands, except percentages and per share amounts) Reconciliation of year-over-year revenue growth as reported on a GAAP basis to revenue growth on an organic constant currency basis is presented in the table below: Three Months EndedJune 30, 2026 Six Months EndedJune 30, 2026 Revenue growth as reported 4.5 % 6.0 % Inorganic revenue — % — % Foreign exchange rates ( 1.1)% ( 2.5)% Revenue growth on an organic constant currency basis 3.4 % 3.5 % Reconciliation of various income statement amounts from GAAP to non-GAAP for the three and six months ended June 30, 202 and 2025: Three Months EndedJune 30, 2026 Six Months EndedJune 30, 2026 GAAP Adjustments Non-GAAP GAAP Adjustments Non-GAAP Cost of revenues( exclusiveof depreciation and amortization) $985,199 $( 23,36 1) $96 1,838 $1,997,251 $( 46 ,771) $1,950,480 Selling, general and administrativeexpenses $245,245 $( 39,474) $205,771 $ 484,947 $( 82,314) $ 402, 33 Income from operations $152,222 $ 80,444 $232,6 6 6 $ 26 8,990 $ 16 4,412 $ 433,402 Operating margin 10.8 % 5.6 % 16 .4 % 9.6 % 5.8 % 15.4 % Net income $102,979 $ 73,831 $176 ,810 $ 185,500 $ 146 ,535 $ 332,035 Diluted earnings per share $ 1.97 $ 3.38 $ 3.49 $ .24 Three Months EndedJune 30, 2025 Six Months EndedJune 30, 2025 GAAP Adjustments Non-GAAP GAAP Adjustments Non-GAAP Cost of revenues( exclusiveof depreciation and amortization) $96 4,012 $( 18,232) $945,780 $1,916 ,020 $( 42,773) $1,873,247 Selling, general and administrativeexpenses $231,6 81 $( 40,349) $191,332 $ 450,598 $( 74,572) $ 37 ,02 Income from operations $126 ,476 $ 76 ,417 $202,893 $ 225,806 $ 152,837 $ 378, 43 Operating margin 9.3 % 5.7 % 15.0 % 8.5 % 5.8 % 14.3 % Net income $ 88,026 $ 6 8,76 5 $156 ,791 $ 16 1,508 $ 133,298 $ 294,80 Diluted earnings per share $ 1.56 $ 2.77 $ 2.84 $ 5.18 Items ( 1) through ( 4) above are detailed in the table below with the specific cross-reference noted in the appropriate item. ( 1) ( 2) ( 3) ( 4) ( 1) ( 2) ( 3) ( 4)
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Three Months EndedJune 30, Six Months EndedJune 30, 2026 2025 2026 2025 Stock-based compensationexpenses $ 22,833 $ 18,16 1 $ 45,6 86 $ 42,084 Humanitarian support in Ukraine 528 576 1,085 1,194 Poland R&D incentives — ( 505) — ( 505) Total adjustments to GAAP cost of revenues 23,361 18,232 46,771 42,773 Stock-based compensationexpenses 23,56 8 20,397 50,6 34 44,930 Cost Optimization charges 13,940 16 ,275 27,336 21,58 Humanitarian support in Ukraine 1,96 1 3,282 4,370 7,014 Other acquisition-related expenses 1 292 7 8 2 One-time charges ( benefits) 4 103 ( 33) 180 Total adjustments to GAAP selling, general andadministrative expenses 39,474 40,349 82,314 74,572 Amortization of acquired intangible assets 17,6 09 17,836 35,327 35,492 Total adjustments to GAAP income from operations 80,444 76,417 164,412 152,837 Foreign exchange loss 9,850 6 ,227 7,552 1 ,954 Change in fair value of contingent considerationincluded in Interest and other income, net 1,435 ( 232) 2,420 ( 1,9 9) Impairment of financial assets 356 — 356 — Gain on financial instrument — — — ( 350) Provision for income taxes: Tax effect on non-GAAPadjustments ( 19,997) ( 18,291) ( 39,128) ( 38,201) Tax shortfall related to stock-basedcompensation 1,743 1,106 11,592 5 3 Net discrete charge ( benefit) fromtax planning — 3,538 ( 6 6 9) 3,4 4 Total adjustments to GAAP net income $ 73,831 $ 68,765 $ 146,535 $ 133,298 ( a) Humanitarian support in Ukraine includes expenses related to EPAM's $100 million humanitarian commitment in response to Russia's invasion of Ukraine to support EPAMprofessionals and their families in and displaced from Ukraine. These expenses are incremental to those expenses incurred prior to the crisis, clearly separable from normal operations, and not expected to recur once the crisis has subsided and operations return to normal. ( b) We have excluded from non-GAAP results the portion of the benefit from Poland R&D incentives related to qualifying activities performed in 2023 as it represents a nonrecurringone-time benefit. ( c) Cost Optimization charges include employee separation costs incurred in connection with the programs initiated in the second quarter of 2024 and second quarter of 2025. Consistent with the Company's historical non-GAAP policy, costs incurred in connection with formal restructuring initiatives have been excluded from non-GAAP results as these areattributable to targeted restructuring efforts and not expected to recur once the respective Cost Optimization program is completed. ( d) Net discrete charge ( benefit) related to the implementation of tax planning to disregard certain foreign subsidiaries as separate entities for U.S. income tax purposes. Consistentwith the Company's historical non-GAAP policy, the charge ( benefit) related to the implementation of tax planning has been excluded from non-GAAP results as it is one-time and unusual in nature. ( a) ( b) (1) ( c) ( a) (2) (3) ( d) (4)
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EPAM SYSTEMS, INC. AND SUBSIDIARIES Reconciliations of Guidance Non-GAAP Financial Measures to Comparable GAAP Financial Measures (Unaudited) The below guidance constitutes forward-looking statements within the meaning of the federal securities laws and is based on a number of assumptions that are subject to change and many of which are outside the control of the Company. Actual results may differ materially from the Company’s expectations depending on factors discussed in the Company’s filings with the Securities and Exchange Commission. Reconciliation of expected year-over-year revenue growth on a GAAP basis to expected revenue growth on an organic constant currency basis is presented in the table below: Third Quarter 2026 Full Year 2026 (at midpoint of range) Revenue growth 1.7 % 3.2% to 4.2% Foreign exchange rates impact 0.1 % ( 1.2)% Inorganic revenue growth — % — % Revenue growth on an organic constant currency basis 1.8 % 2.0% to 3.0% Reconciliation of expected GAAP to non-GAAP income from operations as a percentage of revenues is presented in the table below: Third Quarter 2026 Full Year 2026 GAAP income from operations as a percentage of revenues 11.0% to 12.0% 10.5% to 11.0% Stock-based compensation expenses 3.1 % 3.2 % Included in cost of revenues (exclusive of depreciation and amortization) 1.5 % 1.5 % Included in selling, general and administrative expenses 1.6 % 1.7 % Humanitarian support in Ukraine 0.2 % 0.2 % Cost Optimization charges — % 0.4 % Amortization of acquired intangible assets 1.2 % 1.2 % Non-GAAP income from operations as a percentage of revenues 15.5% to 16.5% 15.5% to 16.0% ( e) EPAM has not included the impact of potential future one-time charges including asset impairments, unusual gains and losses, expenses incurred in connection with future costoptimization actions, and other acquisition-related expenses because the Company is unable to predict these amounts with reasonable certainty. Reconciliation of expected GAAP to non-GAAP effective tax rate is presented in the table below: Third Quarter 2026 Full Year 2026 GAAP effective tax rate (approximately) 25.0 % 27.0 % Tax effect on non-GAAP adjustments ( 0.8)% ( 0.8)% Tax shortfall related to stock-based compensation ( 0.2)% ( 2.3)% Net discrete benefit from tax planning — % 0.1 % Non-GAAP effective tax rate (approximately) 24.0 % 24.0 % ( a) ( c) (e) ( d)
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Reconciliation of expected GAAP to non-GAAP diluted earnings per share is presented in the table below: Third Quarter 2026 Full Year 2026 GAAP diluted earnings per share $2.33 to $2.41 $8.22 to $8.38 Stock-based compensation expenses 0.85 3.55 Included in cost of revenues (exclusive of depreciation and amortization) 0.39 1.66 Included in selling, general and administrative expenses 0.46 1.89 Humanitarian support in Ukraine 0.05 0.20 Cost Optimization charges — 0.52 One-time charges 0.02 0.03 Amortization of acquired intangible assets 0.34 1.34 Change in fair value of contingent consideration — 0.05 Foreign exchange loss 0.06 0.22 Provision for income taxes: Tax effect on non-GAAP adjustments ( 0.28) ( 1.30) Tax shortfall related to stock-based compensation 0.01 0.2 Net discrete benefit from tax planning — ( 0.01) Non-GAAP diluted earnings per share $3.38 to $3.46 $13.08 to $13.24 ( a) ( c) ( e) ( d) (e)