EPAM Systems Inc (EPAM) Q2 2024 Earnings Call Highlights: Navigating Revenue Declines and ...

GuruFocus.com10-10

Revenue: $1.147 billion, a year-over-year decrease of 2% on a reported basis. Life Sciences & Healthcare Growth: 22.4% year-over-year growth. Consumer Goods, Retail and Travel Decline: 7.7% year-over-...

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overflow: hidden}\n.head .h-thumb { width: 30px; height: 30px; margin: 0; padding: 0; border-radius: 50%; float: left;}\n.head .h-content { margin: 0; padding: 0 0 0 9px; float: left;}\n.head .h-name {font-size: 13px; color: #eee; margin: 0;}\n.head .h-time {font-size: 11px; color: #7E829C; margin: 0;line-height: 11px;}\n.small {font-size: 12.5px; display: inline-block; transform: scale(0.9); -webkit-transform: scale(0.9); transform-origin: left; -webkit-transform-origin: left;}\n.smaller {font-size: 12.5px; display: inline-block; transform: scale(0.8); -webkit-transform: scale(0.8); transform-origin: left; -webkit-transform-origin: left;}\n.bt-text {font-size: 12px;margin: 1.5em 0 0 0}\n.bt-text p {margin: 0}\n</style>\n</head>\n<body>\n<div class=\"wrapper\">\n<header>\n<h2 class=\"title\">\nEPAM Systems Inc (EPAM) Q2 2024 Earnings Call Highlights: Navigating Revenue Declines and ...\n</h2>\n\n<h4 class=\"meta\">\n\n\n2024-10-10 05:30 GMT+8&nbsp;&nbsp;&nbsp;<a href=https://finance.yahoo.com/news/epam-systems-inc-epam-q2-213000688.html><strong>GuruFocus.com</strong></a>\n\n\n</h4>\n\n</header>\n<article>\n<div>\n<p>Revenue: $1.147 billion, a year-over-year decrease of 2% on a reported basis.\nLife Sciences & Healthcare Growth: 22.4% year-over-year growth.\nConsumer Goods, Retail and Travel Decline: 7.7% year-over-...</p>\n\n<a href=\"https://finance.yahoo.com/news/epam-systems-inc-epam-q2-213000688.html\">Source Link</a>\n\n</div>\n\n\n</article>\n</div>\n</body>\n</html>\n","isBrief":false,"type":0,"news_type":1,"symbol":"EPAM","symbol_name":"Epam Systems","start_time":0,"source_url":"https://finance.yahoo.com/news/epam-systems-inc-epam-q2-213000688.html","article_id":"2474783534","we_media_id":null,"thumbnails":["https://s.yimg.com/uu/api/res/1.2/sYI_xgraaLa4BNCN.0d9mg--~B/aD01MDA7dz01MDA7YXBwaWQ9eXRhY2h5b24-/https://media.zenfs.com/en/us.finance.gurufocus/20cfefa0eec0256bd51d0529fe0880b8"],"rights":null,"url":"https://stock-news.laohu8.com/highlight/detail?id=2474783534","pubTimestamp":1728509400,"sourceInfo":{"source_id":"yahoofinance","name":"雅虎金融"},"weMediaInfo":null,"summary":"Revenue: $1.147 billion, a year-over-year decrease of 2% on a reported basis.Life Sciences & Healthcare Growth: 22.4% year-over-year growth.Consumer Goods, Retail and Travel Decline: 7.7% year-over-year decrease.Business Information and Media Decline: 12.6% year-over-year decrease.GAAP Gross Margin: 29.3% compared to 30.9% in Q2 of last year.GAAP Income from Operations: $121 million or 10.5% of revenue.Non-GAAP Income from Operations: $175 million or 15.2% of revenue.Non-GAAP Diluted EPS: $2.45, a $0.19 decrease year-over-year.Cash Flow from Operations: $57 million compared to $89 million in Q2 2023.Free Cash Flow: $52 million compared to $82 million in Q2 2023.Share Repurchases: 1.16 million shares for $214 million at an average price of $184.97 per share.Q3 2024 Revenue Outlook: $1.145 billion to $1.155 billion, a year-over-year decline of 0.2% at the midpoint.GuruFocus has detected 3 Warning Signs with EPAM.EPAM Systems Inc  is expanding its global delivery strategy, with significan","collect":0,"end_time":0,"defaultTopTitle":"yahoo.com","property":["earning"],"viewcount":null,"language":"en","relate_stocks":{"EPAM":"Epam Systems"},"translate_title":"EPAM Systems Inc(EPAM)2024年第二季度收益看涨期权亮点：应对收入下降和……","themeId":null,"isJumpTheme":false,"ttsUrl":null,"symbols_score_info":{"EPAM":1},"content_text":"Revenue: $1.147 billion, a year-over-year decrease of 2% on a reported basis.\nLife Sciences & Healthcare Growth: 22.4% year-over-year growth.\nConsumer Goods, Retail and Travel Decline: 7.7% year-over-year decrease.\nFinancial Services Decline: 5.6% year-over-year decrease.\nSoftware and Hi-Tech Decline: 3.7% year-over-year decrease.\nBusiness Information and Media Decline: 12.6% year-over-year decrease.\nEmerging Verticals Growth: 10.6% year-over-year growth.\nGAAP Gross Margin: 29.3% compared to 30.9% in Q2 of last year.\nNon-GAAP Gross Margin: 30.8% compared to 32.6% in Q2 of last year.\nGAAP Income from Operations: $121 million or 10.5% of revenue.\nNon-GAAP Income from Operations: $175 million or 15.2% of revenue.\nGAAP Diluted EPS: $1.70.\nNon-GAAP Diluted EPS: $2.45, a $0.19 decrease year-over-year.\nCash Flow from Operations: $57 million compared to $89 million in Q2 2023.\nFree Cash Flow: $52 million compared to $82 million in Q2 2023.\nShare Repurchases: 1.16 million shares for $214 million at an average price of $184.97 per share.\nTotal Head Count: More than 52,650 employees.\nUtilization: 77.5% compared to 75.1% in Q2 of last year.\nQ3 2024 Revenue Outlook: $1.145 billion to $1.155 billion, a year-over-year decline of 0.2% at the midpoint.\nFull Year 2024 Revenue Outlook: $4.590 to $4.625 billion, a negative growth rate of 1.8% at the midpoint.\n\n\nWarning! GuruFocus has detected 3 Warning Signs with EPAM.\n\nRelease Date: August 08, 2024\nFor the complete transcript of the earnings call, please refer to the full earnings call transcript.\n Positive Points \n\nEPAM Systems Inc (NYSE:EPAM) reported strong growth in the healthcare and life sciences vertical, with a year-over-year increase of 22.4%.\nThe company is seeing signs of stabilization in its underlying business, particularly in financial services and emerging verticals.\nEPAM Systems Inc (NYSE:EPAM) is expanding its global delivery strategy, with significant investments in India and Latin America, which are expected to drive future growth.\nThe company has been recognized by several partners, including Databricks and Google Cloud, for its leadership in AI and cloud technologies.\nEPAM Systems Inc (NYSE:EPAM) is making significant progress in GenAI-related projects, with hundreds of engagements and a strong pipeline of opportunities.\n\n Negative Points \n\nEPAM Systems Inc (NYSE:EPAM) experienced a year-over-year revenue decline of 2% in the second quarter, impacted by the exit from the Russian market.\nThe demand environment remains complex, with clients cautious about larger programs and constrained visibility for significant increases.\nThe company's gross margin decreased compared to the previous year, impacted by foreign exchange and compensation increases.\nOn-site utilization remains below targeted levels, contributing to challenges in revenue growth.\nThe company is facing pricing pressure due to the shift in headcount to lower-cost regions like India, impacting average bill rates.\n\n Q & A Highlights \nQ: What percentage of the workforce is considered to be on-site this quarter, and is offshore utilization running higher than sustainable levels? A: Offshore utilization is quite healthy, but on-site utilization is lower than traditional levels. There is more demand for offshore, particularly in India, which is contributing to revenue growth challenges. Actions are being taken to address this through demand generation and utilization improvements. - Jason Peterson, CFO\nQ: What is driving the improvement in the margin outlook, and have you seen progress in the third quarter? A: The improvement is due to cost optimization and efficiency in corporate functions and SG&A. Utilization improvements are underway, and some benefits were already seen in Q2 profitability. - Jason Peterson, CFO\nQ: Can you discuss the demand progression in top accounts and expectations for top clients in the second half of the year? A: The top 5 clients are stable, with only one client declining, which is a continuation of a previous trend. This client is a European business information and media client. - Arkadiy Dobkin, CEO\nQ: Can you provide more details on the progression of GenAI-related work and its impact on revenue? A: GenAI-related projects are moving from small POCs to larger engagements, reaching high hundreds of thousands to low millions of dollars. However, it remains a small portion of revenue, and technical debt is a barrier to realizing full benefits. - Arkadiy Dobkin, CEO\nQ: What are the expectations for sequential revenue growth, and how does the demand environment look? A: A modest improvement is expected from Q2 to Q3 due to seasonal factors, but Q4 may see a decline due to higher vacation levels and potential furloughs. The demand environment remains stable but cautious, with no significant improvement expected in the near term. - Jason Peterson, CFO\nQ: How is the expansion in India progressing, and what impact does it have on revenue and margins? A: India is expected to account for over 20% of headcount by year-end, with modest pressure on average bill rates. The type of work in India aligns with EPAM's complex engineering solutions, and the expansion is contributing to a more balanced global delivery footprint. - Jason Peterson, CFO\nQ: What are clients saying about conditions for increased spending in 2025, and what factors are influencing their decisions? A: Clients are holding back due to the macro environment. Once conditions improve, investments in data and cloud infrastructure are expected to be triggered, as these are necessary for realizing GenAI benefits. - Arkadiy Dobkin, CEO\nQ: What is driving the shift towards fixed-price contracts, and what are the implications for margins? A: The shift is driven by client needs for predictable costs and the opportunity to introduce productivity improvements, including GenAI. Fixed-price contracts can offer more flexibility and potentially improve profitability compared to time and materials contracts. - Jason Peterson, CFO\nFor the complete transcript of the earnings call, please refer to the full earnings call transcript.This article first appeared on \nGuruFocus.","kind":null,"is_publish_news":true,"is_publish_highlight":false,"is_publish_live":false,"is_publish_wemedia":null,"editions":null,"column":"","sentiment":"0","news_tag":"","news_rank":0,"symbols":[],"gpt_button":1},"commentList":[],"isCommentEnd":true,"newsSizeData":{"likeSize":0,"commentSize":0,"repostSize":0,"favoriteSize":0,"likeStatus":false,"favoriteStatus":false},"APP":{"userAgent":"Mozilla/5.0 AppleWebKit/537.36 (KHTML, like Gecko; compatible; ClaudeBot/1.0; +claudebot@anthropic.com)","isDev":false,"isTTM":true,"deviceId":"web-server-community-laohu8-v3","version":"4.29.1","shortVersion":"4.29.1","platform":"web","vendor":"web","appName":"ttm","isIOS":false,"isAndroid":false,"isTiger":false,"isTHS":false,"isWeiXin":false,"isWeiXinMini":false,"isWeiBo":false,"isQQ":false,"isBaiduSwan":false,"isBaiduBox":false,"isDingTalk":false,"isToutiao":false,"isOnePlus":false,"isHuaWei":false,"isXiaomi":false,"isXiaomiWebView":false,"isOppo":false,"isVivo":false,"isSamsung":false,"isMobile":false},"href":"/m/news/2474783534"}