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Date

Thursday, February 19, 2026 at 8:00 a.m. ET

Call participants

  • Chief Executive Officer — Balazs Fejes
  • Chief Financial Officer — Jason Peterson

Takeaways

  • Total Q4 revenue -- $1.4 billion, up 12.8% on a reported basis and up 5.6% organically in constant currency, exceeding the high end of guidance.
  • Pure AI-native revenue -- Over $105 million in Q4, with “solid momentum and strong sequential growth”; expected to scale beyond $600 million in 2026.
  • Vertical performance -- Five of six industry verticals grew year over year; financial services up 19.8% reported and 5% organic constant currency; software and high-tech up 18.1%; consumer, retail, and travel up 10.9%; life sciences and healthcare up 2%; business information and media flat; emerging verticals up 0.1% reported, 9.7% organic.
  • Geographic revenue mix -- Americas contributed 58% of Q4 revenue with 7.6% reported growth, EMEA provided 40% with 21.8% reported growth, and APAC delivered 2% with 0.6% reported growth.
  • Top client revenue growth -- Top 20 clients’ revenue up 7.3% year over year; revenue from clients outside top 20 up 15.5%.
  • GAAP gross margin -- 30.1% for the quarter, versus 30.4% in Q4 2024; “negatively impacted by higher variable compensation expense.”
  • Non-GAAP gross margin -- 31.7% in Q4, down from 32.2% a year ago.
  • GAAP income from operations -- $149 million, or 10.6% of revenue, compared to $137 million or 10.9% in Q4 2024.
  • Non-GAAP income from operations -- $230 million, or 16.3% of revenue, up from $208 million or 16.7% in Q4 2024.
  • GAAP diluted EPS -- $1.98 for Q4; Non-GAAP diluted EPS at $3.26, up $0.42, or 14.8%, year over year.
  • Free cash flow -- $268 million in Q4, compared to $115 million last year; 2025 full-year free cash flow was $613 million, equivalent to 94.7% adjusted net income conversion.
  • Q4 cash balance -- $1.3 billion in cash and cash equivalents at period end.
  • Share repurchases -- Repurchased approximately 1.2 million shares for $224 million ($192.33 per share average) in Q4; 3.5 million shares for $661 million ($186.67 per share average) in 2025.
  • Consultant/delivery workforce -- Q4 ended with 56,600+ professional staff, total staff exceeding 62,850; 2.7% total and 2.2% organic headcount growth from Q4 2024, with approximately 500 net additions in Q4.
  • Utilization -- Q4 utilization at 75.4%, down from 76.2% a year ago and 76.5% in Q3, due in part to higher vacation and deliberate shift towards junior hiring.
  • 2026 revenue guidance -- Full-year revenue expected up 4.5%-7.5%, including 1.5% FX tailwind; organic constant currency guidance is 3%-6%.
  • 2026 profitability guidance -- GAAP operating margin projected at 10%-11%, non-GAAP at 15%-16%; GAAP EPS outlook is $7.95-$8.25, non-GAAP EPS $12.60-$12.90.
  • Q1 2026 guidance -- Revenue expected between $1.385-$1.4 billion (up 7% at the midpoint), with 3% organic constant currency growth at the midpoint; GAAP EPS guide of $1.32-$1.40, non-GAAP $2.70-$2.78.
  • AI partnerships & recognition -- Named “2025 Microsoft (NASDAQ:MSFT) Innovate with Azure AI Platform Partner of the Year,” “2025 AWS (NASDAQ:AMZN) Global Innovation Partner of the Year,” and earned “Leader” designations from Gartner and Forrester for AI and custom software engineering.
  • Client example highlight -- Bayer (ETR:BAYN) engagement delivered an AI-powered pricing tool used in 35 countries, resulting in €20-€30 million incremental annual profit and a 10x reduction in analytics time.
  • Fixed price contracts -- Moved up 150 basis points to 20.2% of total revenue; shift supports changes in commercial models tied to AI-native and AI foundational work.

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Risks

  • Jason Peterson stated, Neoris’ largest client headquartered in Mexico has been significantly impacted by a challenging economic environment, including the impact of U.S. tariffs. The resulting sequential and full-year revenue declines from this client are expected to have a negative 1% effect on 2026 organic constant currency growth.
  • Jason Peterson said, gross margin in Q4 2025 was negatively impacted by higher variable compensation expense suggesting near-term margin pressure relative to prior periods.
  • Balazs Fejes commented, naturally introduce a more mature procurement process, including RFPs, and the modest extension of sales cycle, potentially delaying revenue realization in new AI transformation projects.

Summary

EPAM Systems (EPAM +1.26%) reported double-digit top-line growth and achieved above-guidance revenue, fueled by rapid expansion in its AI-native revenue stream and strong contributions from financial services and software and high-tech verticals. Management highlighted the rapid scaling of pure AI-native revenues, strategic “leader” recognitions from major industry analysts and partners, and an increasing mix of fixed price contracts as key business model evolutions. The company’s full-year and Q1 guidance anticipate continued revenue growth, but both gross margin and organic growth rates account for a material headwind from a single large client, as well as lengthening procurement cycles in large-scale AI engagements. Investment in junior talent and vertical expertise was affirmed as critical to maintaining delivery scalability and margin accretion into 2026, while share repurchases remain a priority in the capital allocation strategy amid a stable cash position.

  • The CFO emphasized that the expected 1% negative growth impact from Neoris’ largest client is now embedded in guidance, with no improvement in environment assumed.
  • Management expects cash conversion to return to the 80%-90% historical range, after 2025 free cash flow exceeded that level.
  • The CEO described EPAM Systems as positioned for the "age of building," expecting the company’s investment into AI-native and industry-vertical accelerators to accelerate throughout 2026, with pipeline visibility strongest in Europe and the Middle East.
  • Jason Peterson clarified, "we are not seeing a pressure on our pricing due to AI," and that recent rate improvements are holding into 2026.

Industry glossary

  • AI-native revenue: Revenue derived from solutions where artificial intelligence is central to product architecture, or where entire enterprise AI transformation is the core deliverable; excludes AI-assisted work or foundational services.
  • Fixed price contract: A commercial arrangement where services are invoiced at a predetermined amount regardless of actual hours worked, used increasingly for AI-native and transformational projects.
  • Utilization: The percentage of billable hours delivered by consulting and delivery professionals relative to available working hours, key to operational efficiency and margin performance.

Full Conference Call Transcript

Balazs Fejes: It is a pleasure to be here with you all, and I look forward to seeing many of you again in just a few weeks at our Investor Day in Boston. Today, we are pleased to share another quarter of strong results as we close out a very successful 2025 and continue to execute our long-term growth strategy, further positioning ourselves to win in the AI-native era. We are confident of our unique differentiation and look forward to building on the momentum we created throughout 2025. At the start of last year, we noted that for us, it was going to be a year of transition.

In fact, today marks my second earnings call and my very first year-end report, underscoring the fast pace at which we continue to operate and adapt to conditions both externally and operationally here at EPAM Systems, Inc. As we look ahead to 2026, we see a year of AI momentum marked by our clients’ ongoing shift in spending towards AI investments and strategic deployments. Importantly, we are expect to build on our growing momentum in AI-native services supported by our AI foundational services that enable clients to scale AI across their enterprises.

These offerings are becoming a more substantial piece of our total services mix, illustrating our ability to capture higher volume and more strategic opportunities as AI investments accelerate across the market. Let me share why we believe EPAM Systems, Inc. is positioned to win this new AI-native services category. While we are seeing measurable productivity gains at scale, we are also seeing complexity dramatically increase at faster pace than we have seen in prior cycles. Clients are facing growing pressure to continue to invest in AI, and that means platform modernization, data, and cloud foundations, security, and critical AI-native upskilling. As a result, AI presents a favorable opportunity for EPAM Systems, Inc. within the build versus buy volume proposition.

EPAM Systems, Inc. continues to be positioned in this sweet spot as we believe we are entering an age of building. With our internal AI-native engineering transformation nearly complete, we are now shifting to develop more verticalized AI-native business offerings and consultancies. This positions us to deliver AI strategy and execution to clients simultaneously, helping them build their own AI-native businesses and platforms. Before getting into details, I would like to quickly reflect on a few themes from the past year, which highlight our differentiated position and underpin our confidence as we continue to grow our revenue and improve our bottom line trajectory over the long term.

First, we believe we have clearly demonstrated, and we are continuing to that we position to win in the AI-native engineering category. Our advantage comes from our highly differentiated engineering and AI-native talent, along with the tooling and workflows that enable us to deliver production-grade AI at scale. Notably, in Q4, we generated more than $105,000,000 in pure AI-native revenues, where we continue to see solid momentum and strong sequential growth. As a reminder, our AI-native revenues are defined across two groupings: number one, AI-native IP products, platforms, and solutions where AI was the core of the solution versus simple work accelerated by the use of AI tools; and number two, AI-led transformation initiative across the entire enterprise.

Importantly, our definition excludes all the AI foundational services along with any AI-assisted work performed by EPAM Systems, Inc. employees within the software delivery life cycle. Looking ahead, we continue to see robust demand for our AI-native services and expect to scale these revenues in excess of $600,000,000 in 2026. Second, our developers and builders’ DNA, forged by over thirty years of experience in software product and platform engineering, prepare us incredibly well for this new super cycle. To stay ahead of the curve, we expanded our three-year AI readiness mandate to keep pace with advancing technology, new agentic delivery and new commercial models that help us meet our clients where they are, to enable their unique AI journeys.

Even under extreme geopolitical and macroeconomic adversary have persisted or business model and brand of very high quality and execution and today give us a leading edge on AI strategy and delivery.

Mike Rowshandel: At scale.

Balazs Fejes: Third, we are supercharging our client-zero mentality by extending AI capabilities across our entire business. We have been pioneers, builders, and change agents in transforming the software delivery life cycle and advancing the AI maturity model with talent, IP, and the ways of working. Now we are adopting our go-to-market approach for a more AI-centric environment, focusing on industry and verticalized expertise and innovating engagement and commercial models to adopt new and emerging trends. We are transforming the way we engage with existing and new buyers, expanding our market growth opportunities across all regions and buyers’ personas.

Our most recent announcement of Empathy Lab expansions demonstrate this AI-native momentum with our proven AI-native agency now expanding to help CMOs across North America become the growth architects for their businesses. We are bringing AI-powered creative talent, accelerators, and innovation frameworks to the business of marketing. We will be sharing much more on this at our upcoming Investor Day in March. Finally, our strategy is being validated by the market and our partners in significant way that underscores our unique AI-native capabilities. With Microsoft, we are thrilled to be named the 2025 Microsoft Innovate with Azure AI Platform Partner of the Year. With AWS, we were recognized as 2025 AWS Global Innovation Partner of the Year.

With Google Cloud, we launched several advanced AI agents on Google Cloud Marketplace. Most recently, we announced a strategic partnership with Coursera to build and scale AI-native teams global enterprises. Beyond partnerships, our technical acumen is recognized by independent benchmarks. EPAM Systems, Inc.’s AIRON developer agent was recently ranked in the top five on SW Bench verified leaderboard, an industry-leading benchmark designed to evaluate large language models and AI agents on real-world software engineering tasks. Furthermore, Gartner has positioned us as a Leader in the Emerging Market Quadrant for Generative AI Consulting and Implementation Services, further solidifying our standing as a trusted guide in this complex landscape. Now let us turn to some Q4 highlights.

Our fourth quarter results came in better than expected, marking another quarter of outperformance. In Q4, we delivered double-digit revenue growth including solid year-over-year organic revenue growth of 5.6%. Our underlying growth momentum remains broadly intact, with five of the six verticals growing year over year and four out of the six verticals growing organically. Notable standouts included financial services, emerging verticals, and software and high-tech. Across geographies, EMEA delivered strong year-over-year growth followed by the Americas and APAC. We continue to add talent across all key geographies. Now turning to the demand environment. Overall, the client sentiment remains intact with no material change over the past ninety days.

AI continues to trigger both incremental and sustained demand and is driving positives in our pipeline. Based on our current visibility, we expect client budgets to remain relatively intact in 2026, compared to 2025, with a continued shift in spending towards scaled AI deployment. Even with the progression of AI towards larger programs, there is a growing emphasis on ROI and the need for scalable enterprise-grade solutions. While these larger programs naturally introduce a more mature procurement process, including RFPs, and the modest extension of sales cycle, it also represents a large opportunity for EPAM Systems, Inc. to deliver even greater value through bigger and more strategic, higher-impact initiatives—something we are observing in our sales pipeline today.

Now turning to our AI progress. EPAM Systems, Inc. is uniquely positioned to guide clients through the market towards AI-native transformation. We continue to invest in people, accelerators, and advanced tooling to capitalize on our expanding growth opportunities. As a part of evolution to a pure play AI-native company, last quarter, we launched our AI Run Transform Playbook and frameworks, along with our AI-native business transformation offering. Together, AIRun for SDLCs and AIRun Transform are the building blocks for our IP-enabled go-to-market strategy, and I am pleased to say both are picking up early adoption in 2026. These frameworks and tools support the hundreds of AI-native projects we had active in Q4.

In line with last quarter, between 60% to 70% have expanded from initial proof of concept into larger programs, a clear indicator of our ability to revenue. scale AI-native solution into production and convert early wins into more meaningful incremental. And highly connected to our AI-native services is our AI foundational services, which encompasses the critical AI readiness and preparation work where our clients are undertaking. Demand for these services remain quite strong and the size of this portfolio is already significantly larger than our pure AI-native revenue base. Once again, in Q4, we saw outsized growth in both our data and cloud practices compared to the rest of the business.

Now turning to some client examples to illustrate the impact we are making. EPAM Systems, Inc. partnered with EBSCO Information Services to enhance software development processes using the AIRun Transform framework. EPAM Systems, Inc. played a critical role by providing AI guidance, helping to establish governance framework, and building an AI adoption dashboard to measure real-time performance metrics. Through each phase of the rollout, EPAM Systems, Inc. and EBSCO maintained a strong emphasis on measurable outcomes—code review lead time—using the dashboard to track metrics such as velocity, cycle time, AI impact, and productivity gains. In addition to measurable productivity gains, EBSCO also established a robust foundation for future continuous improvement in the use of AI development tooling.

Bayer partnered with EPAM Systems, Inc. to develop an AI-powered pricing tool that optimized pricing strategies across 35 countries. Leveraging machine learning, the tool delivered €20,000,000 to €30,000,000 in incremental yearly profit, reduced analytics time by 10x, and provided advanced scenario planning capabilities. This collaboration transformed Bayer’s pricing processes, enabling smarter, data-driven decisions. We are also seeing compounding value of our long-term trusted partnerships with our clients like Zalando, where we are driving impact across data, analytics, AI, and cloud transformation. Our collaboration has yielded three significant outcomes. First, we have developed the pilot for a Gen AI powered stylist solution giving mobile users an interactive, highly personalized shopping experience.

Second, leveraging our proprietary MigWiser tool, we rapidly migrated their mass data warehouse platform, which fuels their business intelligence, to Amazon Redshift. Finally, we built a sophisticated machine learning solution that combines automated tagging with intelligent oversight to solve the complex challenge of managing extended producer responsibility compliance. Lastly, we are also incredibly proud to announce a new multiyear partnership with National Geographic Society where EPAM Systems, Inc. has been designated as NatGeo’s preferred digital transformation partner. This collaboration is about far more than modernization. It is about utilizing innovative technologies to inspire the next generation of explorers and solution seekers.

By leveraging our engineering DNA to modernize their nonprofit infrastructure, we are also helping NatGeo to engage global audiences through distinctive experiences that bridge the physical and digital worlds. Our efforts to lead in the age of AI and digital transformation are also being consistently recognized by the industry’s top analyst firms, validating our strategy and quality of our execution. Throughout 2025, we have been honored to receive several key leadership distinctions.

For example, EPAM Systems, Inc. has been named the top IT vendor in Europe for application services and general satisfaction by Whitelane Research, for the third consecutive year, which included expanded coverage across categories, ranking first across multiple categories including application services general satisfaction, innovation, and service delivery quality. The report highlights EPAM Systems, Inc.’s commitment to delivering high-quality services and innovative solutions. This milestone reflects the trust and partnership of our clients and the dedication of our teams. Gartner recognized EPAM Systems, Inc. as a Leader in the Magic Quadrant custom software engineering, a testament to our deep-rooted engineering DNA.

Furthermore, Gartner also named us a Leader in the Emerging Market Quadrant for Generative AI Consulting and Implementation Services, highlighting our early and impactful entry into this transformative space. Forrester positioned EPAM Systems, Inc. as a Leader in the Forrester Wave for modern application development services, reinforcing our strength in helping clients to modernize and innovate across their technology stacks. IDC MarketScape acknowledged our end-to-end capabilities by naming us a Leader in two critical areas: our third year in a row of recognition, CX Design Services and CX Build Services. This underscores our unique ability to not only envision, but also deliver world-class customer experiences.

These recognitions spanning engineering, generative AI, customer experience, and application development affirm our position as a trusted partner for enterprises navigating complex transformations. They reflect the hard work and dedication of our global teams and unwavering commitment to delivering tangible, high-value outcomes for our clients. We see this as a strong validation that our integrated approach—from strategy and design to engineering and AI-native delivery—is what the market needs today. To close, our operating momentum exiting 2025 is strong as AI continues to be the net growth driver for our business. We are encouraged by our progress transforming our company, our go-to-market capabilities, and our offerings.

The EPAM Systems, Inc. foundation we have built over the past several years—diversifying our global delivery model, enabling our entire organization with AI, and bringing meaningful solutions to market with our AIRun playbooks and underlining IP—position us to continue delivering sustainable revenue growth while also expanding profitability. Jason, over to you.

Jason Peterson: Thank you, Balazs, and good morning, everyone. In the fourth quarter, EPAM Systems, Inc. generated over $1,400,000,000 in revenues, a year-over-year increase of 12.8% on a reported basis, exceeding the high end of our Q4 revenue outlook. On an organic constant currency basis, revenue grew 5.6% compared to 2024. We delivered another quarter of very solid year-over-year organic constant currency growth, reflecting our steady and focused execution throughout 2025. As Balazs mentioned, we continue to benefit from the momentum we have created across our AI-native and AI foundational services. One thing is clear.

Clients need help in their AI transformation journeys, and our advanced engineering capabilities, AI assets, and strong delivery execution are helping clients address their most complex business challenges. Our growth this quarter was well balanced, reflecting our relevance and agility across our major geographic regions. Moving to our Q4 vertical performance, five of our six industry verticals posted year-over-year growth. As highlighted last quarter, Neoris and First Derivative revenues moved from inorganic to organic in November and December 2025, respectively. Financial services once again delivered very strong growth, up 19.8% year over year on a reported basis with 5% organic growth in constant currency. Growth was mostly driven by ongoing strength in insurance, banking, and asset management.

Software and high-tech grew 18.1% year over year, driven by strong execution and broad improvement across large clients. Consumer goods, retail, and travel delivered 10.9% year-over-year growth, notably driven by retail and consumer goods. Life sciences and healthcare increased 2% on a year-over-year basis. Revenue growth in the vertical continues to be driven primarily by clients in life sciences and med tech. Business information and media delivered flat year-over-year revenue performance. Our emerging verticals delivered another quarter of strong year-over-year growth of 0.1%. On an organic constant currency basis, growth was 9.7%, primarily driven by ongoing strength in energy and telecommunications.

From a geographic perspective, the Americas, our largest region representing 58% of our Q4 revenues, grew 7.6% year over year on a reported basis and 2.2% in organic constant currency. EMEA, comprising 40% of our Q4 revenues, grew 21.8% year over year and 11.7% in organic constant currency. And finally, APAC, making up 2% of our revenues, grew 0.6% year over year, and declined 4.3% in organic constant currency. Lastly, in Q4, revenues from our top 20 clients grew 7.3% year over year, while revenues from clients outside our top 20 increased 15.5%. Moving down the income statement, our GAAP gross margin for the quarter was 30.1%, compared to 30.4% in Q4 of last year.

Non-GAAP gross margin for the quarter was 31.7%, compared to 32.2% for the same quarter last year. Relative to Q4 2024, gross margin in Q4 2025 was negatively impacted by higher variable compensation expense driven by our stronger second half performance. GAAP SG&A was 17.3% of revenue, compared to 17.4% in Q4 of last year. Non-GAAP SG&A came in at 14.5% of revenue, compared to 14.4% in the same period last year. GAAP income from operations was $149,000,000, or 10.6% of revenue in the quarter, compared to $137,000,000, or 10.9% of revenues in Q4 of last year.

Non-GAAP income from operations was $230,000,000, or 16.3% of revenue in the quarter, compared to $208,000,000, or 16.7% of revenue in Q4 of last year. Our GAAP effective tax rate for the quarter came in at 24%, and our non-GAAP effective tax rate was 22.9%. Diluted earnings per share on a GAAP basis was $1.98. Our non-GAAP diluted EPS was $3.26, reflecting an increase of $0.42, or 14.8%, compared to the same quarter in 2024. In Q4, there were approximately 55,300,000 diluted shares outstanding. Turning to our cash flow and balance sheet. Cash flow from operations for Q4 was $283,000,000, compared to $130,000,000 in the same quarter of 2024.

Free cash flow was $268,000,000, compared to free cash flow of $115,000,000 in the same quarter last year. We ended the quarter with approximately $1,300,000,000 in cash and cash equivalents. At the end of Q4, DSO was 72 days, compared to 75 days in Q3 2025 and 70 days in the same quarter last year. Share repurchases in the fourth quarter were approximately 1,200,000 shares, or $224,000,000, at an average price of $192.33 per share. Moving on to a few operational metrics from the quarter. We ended Q4 with more than 56,600 consultants, designers, engineers, trainers, and architects, reflecting total growth of 2.7% and organic growth of 2.2% compared to Q4 2024.

In the quarter, we added approximately 500 delivery professionals. Our total headcount at quarter end was more than 62,850 employees. Utilization was 75.4%, compared to 76.2% in Q4 of last year and 76.5% in Q3 2025. Q4 2025 utilization was impacted by higher levels of vacation driven by the shift in delivery locations, as well as the introduction of juniors, who initially operate at lower levels of utilization. The addition of juniors is intended to improve our seniority index in 2026. Turning to our 2025 full year results, revenues for the year were $5,460,000,000, up 15.4% on a reported basis year over year. On an organic constant currency basis, revenues were up 4.9% year over year.

GAAP income from operations was $520,000,000, a decrease of 4.5% year over year, and represented 9.5% of revenue. Our non-GAAP income from operations was $831,000,000, a growth of 6.7% compared to the prior year, and represented 15.2% of revenue. Our GAAP effective tax rate for the year was 25.3%. Our non-GAAP effective tax rate was 23.5%. Diluted earnings per share on a GAAP basis was $6.72. Non-GAAP EPS was $11.50, reflecting a 5.9% increase over 2024. In 2025, there were approximately 56,000,000 weighted average diluted shares outstanding. Cash flow from operations was $655,000,000, compared to $559,000,000 for 2024. And free cash flow was $613,000,000, reflecting a 94.7% adjusted net income conversion.

And finally, share repurchases in 2025 were approximately 3,500,000 shares for $661,000,000 at an average price of $186.67 per share. Let us turn to guidance. Before moving to the specifics of our 2026 and Q1 outlook, I would like to provide some thoughts to help frame our guidance. We are encouraged by the underlying momentum of our business and the steady outperformance delivered throughout 2025. We step into 2026 with higher confidence in our long-term strategy and growth trajectory, supported by healthy client sentiment, a solid pipeline, and strong momentum in AI-native and AI foundational services. We see relative stability in overall client budgets, with a continued shift in spending towards build and strategic AI programs.

Similar to last year, we are seeing some slowness in decision-making at the start of 2026, as clients finalize budgets and establish priorities for the year. Our organic constant currency revenues now include Neoris and First Derivative. As we noted throughout 2025, Neoris’ largest client headquartered in Mexico has been significantly impacted by a challenging economic environment, including the impact of U.S. tariffs. Revenues from this client will decline sequentially from Q4 2025 to Q1 2026, and then are expected to stabilize throughout the remainder of the year.

The full year 2026 revenues from this client will decrease relative to 2025, and this decrease is expected to have a negative 1% impact on EPAM Systems, Inc.’s 2026 organic constant currency growth rate. In 2026, we remain committed to improving overall profitability, and specifically gross margin. Our guidance assumes that we will be able to continue to deliver from our Ukraine delivery centers at productivity levels similar to those achieved in 2025. Now starting with a full year outlook. Revenue growth will be in the range of 4.5% to 7.5%. Foreign exchange is expected to have a positive impact of 1.5%. Therefore, the organic constant currency growth rate is expected to be in the range of 3% to 6%.

We expect GAAP income from operations to be in the range of 10% to 11%, and non-GAAP income from operations to be in the range of 15% to 16%. We expect our GAAP effective tax rate to be approximately 26%. Our non-GAAP effective tax rate will be approximately 24%. For earnings per share, we expect that GAAP diluted EPS will be in the range of $7.95 to $8.25 for the full year, and non-GAAP diluted EPS will be in the range of $12.60 to $12.90 for the full year. We expect weighted average share count of 54,400,000 diluted shares outstanding.

For Q1 2026, we expect revenue to be in the range of $1,385,000,000 to $1,400,000,000, producing year-over-year growth of 7% at the midpoint of the range. Our guidance reflects a negligible inorganic contribution and estimated 4% positive FX impact during the quarter, producing an approximately 3% organic constant currency growth rate at the midpoint of the range. For the first quarter, we expect GAAP income from operations to be in the range of 7% to 8%, and non-GAAP income from operations to be in the range of 13.5% to 14.5%.

Our Q1 income from operations guide reflects the impact of resetting Social Security caps, slightly softer revenues in the month of January as clients in certain verticals finalized budgets, as well as the negative foreign exchange impact. We expect our GAAP effective tax rate to be approximately 30%, and our non-GAAP effective tax rate, which excludes tax shortfall related to the stock-based compensation, to be approximately 24%. For earnings per share, we expect GAAP diluted EPS to be in the range of $1.32 to $1.40 for the quarter, and non-GAAP diluted EPS to be in the range of $2.70 to $2.78 for the quarter. We expect a weighted average share count of 54,700,000 diluted shares outstanding.

Finally, a few key assumptions that support our GAAP to non-GAAP measurements for 2026. Stock-based compensation expense is expected to be approximately $202,000,000, with $53,000,000 in Q1, $53,000,000 in Q2, $48,000,000 in Q3, and $47,000,000 in Q4. Amortization of intangibles is expected to be approximately $69,000,000 for the year, with approximately $18,000,000 in Q1 and $17,000,000 in each remaining quarter. The impact of foreign exchange is expected to be an approximate $3,000,000 loss each quarter. Tax-effective non-GAAP adjustments are expected to be approximately $70,000,000 for the year, with $19,000,000 in Q1, $19,000,000 in Q2, $16,000,000 in Q3, and $15,000,000 in Q4.

We expect tax shortfall upon vesting or exercise of stock awards to be around $4,000,000 for the full year, with an approximate $4,000,000 shortfall in Q1 and minimal excess tax benefits or shortfalls in the remaining quarters. Expenses associated with the 2025 cost optimization program are expected to be $14,000,000 in Q1 and $11,000,000 in Q2. And one more assumption outside of our GAAP to non-GAAP items. We expect interest and other income to be $12,000,000 for the 2026 full year, with $3,000,000 in Q1, $2,000,000 in Q2, $3,000,000 in Q3, and $4,000,000 in Q4. My thanks to all the EPAMers who made 2025 a successful year and will help us drive growth throughout 2026.

Operator, let us open the call up for questions.

Operator: We will now move to our question and answer session. As a reminder, if you have joined via the webinar, please use the raise hand icon which can be found at the bottom of your webinar application. When you are called on, please unmute your line and ask your question. We will now pause a moment to assemble the queue. Please limit your inquiry to one question and one related follow-up. Your first question comes from the line of Margaret Nolan with William Blair. Please unmute and ask your question. Hi. Can you hear me okay?

Jason Peterson: We can, Maggie.

Operator: Great. Thank you. I wanted to ask about the first quarter guidance

Margaret Nolan: at the midpoint. It is a little bit lower than the full year organic revenue and margin guidance. So do you expect the year to build? And how is the visibility when we think about the larger deals ramping, bookings, pipeline, those types of factors?

Jason Peterson: Okay. Let me talk a little bit about Q1, and then I will hand it to Balazs to talk about the remainder of the year. So I think probably the incremental piece of information that we received between our last earnings call and the one, obviously, we are doing today is that the Neoris’ largest customer was going to ramp down business between Q4 and Q1. Now we have met with them in their headquarters in Mexico, and we do think it stabilizes from this point forward. But we have kind of a mid-single-digit decline in their business between Q4 and Q1, and that probably is the biggest kind of incremental factor.

Even with that, if we can run closer to the high end of the range, we are talking about a 3% or maybe somewhat better organic currency growth rate in the quarter.

Balazs Fejes: Margaret, hi. This is Balazs. For the remaining quarters, I mean, I think we already have a very nicely built pipeline. And as we are seeing the opportunities arriving, we are actually seeing how that would be converting from it. We see very good traction in the European and the Middle East markets, which we feel that is going to be allow us to deliver on the year.

Margaret Nolan: Okay. Great. Thank you. And then, Balazs, you had made a comment on wanting to bolster the vertical industry expertise. Are there investments that you need to make in sales or delivery in order to achieve this? And are those going to be material to the P&L? Maybe a few comments on how that will impact your competitive positioning as well.

Balazs Fejes: So I think our current P&L reflects, or the guidance reflects, the investments which we are planning to make in 2026. Yes. We are prioritizing investment into business development and prioritizing developing, besides just AI, which is our biggest investment area, building out our industry capabilities and vertical accelerators and expertise themselves.

Jason Peterson: Thank you.

Operator: Your next question comes from Jonathan Lee with Guggenheim Partners. Please unmute and ask your question.

Jonathan Lee: Great. Thanks for taking my questions. You know, last quarter, you called out an expectation of 2026 organic growth being faster than that of 2025. With that in mind, can you help us reconcile that commentary to the 2026 outlook that, at the midpoint on organic constant currency basis, is slower than what you delivered in 2025? Is that due to Neoris’ largest client? Are there any other factors there?

Jason Peterson: Yeah. Jonathan, thanks for the question, and it is certainly a good one. And so you are right. I think we had 4.9% organic constant currency growth in 2025. The midpoint of the range would produce 4.5%. Since the last time we talked, as I told Maggie, we did get incremental information on the Neoris largest client. As I called out in my fixed remarks, we expect the decline on a year-over-year basis will have a negative 100 basis point impact on growth. So you have got the 4.5% at the midpoint of our range. Obviously, it would be 100 basis points higher on the rest of the business.

I think the other thing that we are trying to do from a guidance standpoint is to make certain that we guide to what we can see today. We are not assuming improvement in environment. Clearly, we have got some opportunities that we talked about throughout the remainder of the year. And so we are clearly going to work to drive towards better, and we will update you on our progress throughout the year.

Jonathan Lee: Understood. With that in mind, across the low end and the high end, can you help us walk through what is contemplated? How much go-get is still needed? And are there any verticals that you would expect to accelerate versus decelerate in the near to medium term?

Balazs Fejes: Let me start with the verticals. We continue seeing very strong demand in financial services and energy. We also forecast, or expect, our life science and healthcare to gain momentum later part of the year, which is typically very much calendar dependent. So that is very, and clearly, high-tech and software and high-tech continues to be a growth area for us. In terms of between the low end and the high end, I think we are not contemplating anything like changing macro environment in order to achieve the high end of the range. Just like this year, we are expecting that we are going to winning the deals and some of the clients start accelerating expenditure in later quarters.

Mike Rowshandel: Appreciate that color.

Operator: Your next question comes from James Schneider with Wells Fargo. Please unmute and ask your question.

Jason Peterson: Hi, guys. Thank you. So I wanted to come back to

James Schneider: some of the commentary around the elongated sales cycles and then I think, Jason, you mentioned some client indecision at the outset of the year. So are those dynamics impacting the full year guide or just the shape of the year, i.e., the Q1 outlook? So putting Neoris’ largest client on the side, I just wanted to understand those broader dynamics that you both alluded to in prepared remarks.

Jason Peterson: Thanks.

Balazs Fejes: So I think as the year started, it is starting similarly to last year. We actually do have better visibility in 2026 than what we had in 2025. But it is starting in the same way in terms of shape of the revenue decision-making process. At the same time, as clients are now really decided to actually embark on large AI transformation programs, that naturally drives them towards a more stringent, let us call it slower, process, which involves procurement, which is naturally going to slow down the decision-making process itself. But I think this just makes things bigger.

And it is actually because the programs are bigger now and more substantial, this just makes a little bit of a delay. And that is going to be realized on those project starts will become in the later part of the year. But I think it is more natural to the shift what we are experiencing.

James Schneider: Okay. Okay. So it sounds like those dynamics did not really impact how you guided the full year. It is just more about the shape of the year. Is that right? Yes.

Balazs Fejes: That is correct. Okay.

James Schneider: Okay. And then, Jason, just real quick, anything you can give us on gross margin and free cash flow expectations for this year? Thanks, guys.

Jason Peterson: Yeah. So that is great. So we had, obviously, really strong free cash flow in 2025. The only thing I would say is as we look ahead towards 2026, we did come out of 2025 above our traditional 80% to 90% conversion guide, and to think that we will continue to do that, I think that we should operate within the 80% to 90% range. And then from a gross margin standpoint, and this also would answer one of Maggie’s questions, is we do intend to continue to make investments in business development and partnership programs to drive top-line revenue growth.

With that said, I do not expect as much benefit from productivity and efficiency in SG&A, again because we are going to recycle some of those benefits into investments in business development. So most of the improvement will come from gross margin. What we are seeing is better execution in some of our expanding geographies, like Western and Central Europe and India, as we have talked about, and the profitability in each of those geographies continues to improve on a year-over-year basis. Plus, we are getting a little bit of price as we enter the year. And so all those things give us confidence that we can improve our gross margin between 2025 and 2026.

James Schneider: Thanks.

Operator: Your next question comes from the line of Bryan C. Bergin with TD Cowen. Please unmute and ask your question.

Jason Peterson: Hi, guys. Good morning. Thank you. First on the growth guidance,

Bryan C. Bergin: Jason, on the large client, I think I heard you said you expect that to be down, I think, sequentially mid single digits. What does that translate to as a headwind to year-over-year growth for the first quarter? Also, for the first quarter growth guide, are there any bill day dynamics to consider?

Jason Peterson: Yeah. So it is a 100 basis points approximately for the full year, and it is also about a 100 basis points impact on the Q1 number. And so, again, you could do the same thing. You could add 100 basis points to our guide for organic constant currency, and that would be our book of business excluding that one large customer. The bill day impact: you have fewer bill days, so that clearly has some impact on both profitability and on revenues as you go from Q4 to Q1. You probably will have lower vacation, though. So maybe there is a kind of a net-net on that when I think about the revenue from Q4 to Q1.

Bryan C. Bergin: Okay. And then as it relates to the workforce, can you give us an update on pyramid and global delivery optimization, kind of the effort and progress there? And your expectations around billable engineering resource additions for 2026?

Jason Peterson: Yeah. The interesting thing is in Q4, we actually did see better utilization Q3 to Q4 if you adjust for vacation. As I hinted in my prepared remarks, we finally have gotten to that shift where we do have more people taking their year-end holiday around December 25 rather than January 7. And so what we did see is lower bench. We continue to focus on that through our cost optimization program. We are getting, I would say, better cost outcomes and great execution in Western and Central Europe, Eastern Europe, and India. And at the same time, we are moving to make certain that we are cost efficient in those geographies.

So we are seeing improving profitability in each of those more rapidly growing geographies, and we continue to work on utilization improvements throughout the year.

Balazs Fejes: In addition to that, throughout 2026, we will continue working and optimizing our pyramid. And that is why we started to onboard the juniors already in Q4 in 2025. So that is very much going to play out throughout the year, and we will continue working on it as we talked about it in previous quarters, on optimizing our delivery organization or delivery pyramid itself to actually go back to shape which is more healthy and more sustainable on a going-forward basis.

Bryan C. Bergin: Understood. Thank you.

Operator: Your next question comes from David Michael Grossman with Stifel. Please unmute and ask your question.

Jason Peterson: Thank you. Good morning.

Jonathan Lee: So, Jason, you did a good job of explaining the impact of the acquisitions on growth in 2026. I am just curious, maybe you could do the same and help characterize what impact pricing is having, either positive or negative year over year in 2026, and also whether there is any kind of mix shift dynamics that may still be impacting revenue growth. And I am speaking specifically of mix shift to India.

Jason Peterson: Yeah. That is fair. Thank you. So we did get a little bit of price improvement in 2025. And what we are seeing as we enter 2026 is a quite significant number of clients in both Europe and North America are giving us at least low single-digit rate increases. And so it is not the way it would have been, let us say, four or five years ago. But it is definitely a somewhat improving pricing environment relative to the last couple years. I think, to your point with India, we continue to execute successfully across the broad range of geographies. India is growing faster than the other geographies.

We are still priced at a premium there, and the profitability in India continues to expand beyond our average. So last year, I said, India is operating at profitability higher than EPAM Systems, Inc. average. This year, we expect it will operate at an even higher level of profitability, getting closer to our most mature geographies. But India still obviously prices at a somewhat lower rate on a dollars-per-hour basis. So there is probably some impact there, but, again, we continue to feel that it is actually positive or margin accretive—any expansion that we see in that geography.

David Michael Grossman: Great. Thanks for that. And then I think there was some commentary in the prepared remarks about, and I think Balazs said this again in the Q&A, about decision-making slowing. However, the deals are getting larger. I think the industry has been talking about this for the past twelve to eighteen months. When does that dam have to break? At some point, when does the spending have to accelerate despite uncertainty?

Balazs Fejes: I wish I would have a crystal ball for that, but I think we are seeing more and more larger programs, which makes me optimistic that we are getting close to that point. So I think right now there are clearly, in certain industries—financial services, for example, in Europe—people are no longer able to hold back transformation and the nondiscretionary CapEx expenditure. Plus, in certain other industries, we are already seeing people are no longer able to delay their decision-making around AI investments, and that is triggering larger programs.

But as larger programs are being requested or being executed, clearly, governance around the selection process, the procurement, actually becomes a little bit more bureaucratic, and when all the enterprises that are making larger decisions, the selection process naturally slows down.

David Michael Grossman: Yeah. Are there any data points you can share that would kind of help us understand the momentum that may be building or accelerating in terms of conversion?

Balazs Fejes: I think in AI, Dave, we are definitely going to start sharing one. But I think the data point which also was part of my opening remarks is that the scale of the AI-native revenues we expect to reach $600,000,000 in 2026 for EPAM Systems, Inc. So it is actually scaling up, growing really rapidly. But it is still a smaller part of our business.

Jason Peterson: Great.

David Michael Grossman: Alright. Thank you.

Jason Peterson: Hey. Thank you.

Operator: Your next question comes from Jamie Friedman with Susquehanna. Please unmute and ask your question.

David Michael Grossman: Hi. Good morning. Thanks for the opportunity. I had a couple of

Jamie Friedman: more quantitative questions. By my math, the revenue per utilized head year over year grew about 10, almost 11%. And because pricing conversations can be quite subjective, that we think of as price. So I am just wondering if you would react to that. Is that revenue per utilized head reflecting better pricing environment? And then I have one quick

Jason Peterson: Yeah. I think as we have talked about over the years, the revenue per head calculation is not one that we usually do internally because there is just an awful lot of noise. But I know it is something that people do externally. Just to remind people of the noise, foreign exchange can have an impact. Obviously, price can have an impact. Utilization can have an impact. And then there are different kind of revenue recognition elements that can also have an impact where you might have done work earlier in the year and then recognize revenue later in the year. So all those things can kind of impact that number.

The other thing that I do want to remind people of is that we are reporting numbers that are employees only. We do have some contractors. If the contractors grow, they obviously would generate revenue, but it would not necessarily be in the denominator in that head count figure. So with all those things said, Jamie, I would do the same math that you would do, and I would see that the revenue has improved. I would say some of that is foreign exchange based. Some of that is price. And then we did have a specific one or two revenue recognition items where the work was done earlier that was recognized in Q4.

So all those things contributed somewhat to that beat. And at the same time, even if I adjusted out any of those benefits, we still had a

Jamie Friedman: the

Jason Peterson: beat relative to our original guidance for Q4.

Jamie Friedman: Okay. And then just to follow-up with that, Jason, the other thing that makes the math, that limits the math, is the shift to fixed price. And you had a 150 basis point increase in fixed price as a percentage of total revenue to 20.2%, and I would imagine that since it is not time and materials, it is not gated by headcount. But at the same time, your free cash flow is really good and your DSO was good.

So, anyway, in terms of the journey to fixed price, which you have been talking about for a while and it clearly evolved last year quite a bit, how should we be thinking about that as the impact on, say, free cash flow, because we do not see unbilled revenue, and it is hard for us to get other details. So any comment about how the fixed price transaction impacts free cash flow? And I am sorry. Someone asked me to ask you about the implications of that for repurchase would be helpful. Free cash flow, repurchase. Thank you.

Jason Peterson: Excellent. Excellent. There are a lot of questions in that. So let me just unpack that. Yep.

Jamie Friedman: Thank you. That is fine.

Jason Peterson: Okay. So you are correct that we are seeing an evolution towards more fixed fee. Yes. I think I have said in my prepared remarks that I do think that there, at least in the past, it does give us an opportunity to improve pricing as we introduce, let us say, somewhat different commercial models in response to the changing mix of AI-native and AI foundational revenues. And so I think you will continue to see an increasing mix of fixed fee. Again, we do not think it goes from 20% to 50% in 2026, but I would suspect it will continue to increase throughout the year.

From a cash flow standpoint, I think it is hard for me to say exactly how the fixed fee impacts that because there are different types of fixed fee. So some do have a monthly fixed kind of element associated with them, and that would have a very similar feel to T&M in terms of how we get paid. There might be some opportunities to have milestone payments that maybe occur before revenue recognition, which would give you an increase in deferred revenue, and at the same time, allow you to collect cash in advance of revenue recognition.

But I think I would take us back to what I said earlier, which is I would really think, as we look ahead, that we will operate in the 80s, not in the 90s the way we did in 2025, from a free cash flow conversion. And then just quickly to fork in that share repurchase: clearly with the share price where it is today, you will continue to see us reasonably active in terms of share repurchases, particularly in 2026.

James Schneider: Thank you.

Operator: Your next question comes from the line of Bryan Keane with Citi. Please unmute and ask your question.

Jason Peterson: Hi, guys.

Bryan Keane: Good morning. I wanted to ask just on the big debate going on with AI eating software and potential implications for the IT services market. Obviously, software stocks have sold off and as a result, we have seen the IT services stocks also under pressure. So how do you think about, Balazs, especially the AI pressure potentially from Anthropic and OpenAI as some of their modules get pushed out.

David Michael Grossman: So I

Balazs Fejes: Bryan, thank you very much for the question. I think we are actually very, very bullish and optimistic. This is going to open up a tremendous opportunity for EPAM Systems, Inc. It is going to flip the buy versus build question. And EPAM Systems, Inc. is a builder. We are going to build much, much more software. There is no limit how much software people would like to build. Yes, the coding part of the activity will be automated. But this opens up the potential for all the high-end work what EPAM Systems, Inc. is famous and known for. It is going to make us stand out because we can use these tools.

We can bring our engineering capabilities to it, and we can deliver the solutions our clients are looking for. So actually, I am much more on the side of AI will enable building more software, more capability. We are a builder. We are not maintaining software. We are not running business processes. We are not input—what people call it—we are not input limited. We are what we want to build. There is a tremendous appetite out there, and if you listen carefully to the comments from Anthropic, comments from OpenAI and a couple of podcasters, they all talk about how much more software people want to build.

And right now, because building software becomes easier per unit, people are going to build more. That is what I think about. And that is how I see the situation. I think the market is a little bit confused. It is very hard to decipher all the signals. But in the long run, we are optimistic and actually very, very bullish about what this is going to mean for us.

Bryan Keane: Got it. Got it. And we see the pure AI revenues growing significantly

Surinder Singh Thind: Yes.

Bryan Keane: for you guys now. I guess the flip side of that, is there any AI pressure as a result of some of the productivity and pricing that gets passed on to the consumer? Do you see some pressure also in addition to the pure actual revenue growth that you see from the AI revenue?

Jason Peterson: Yeah. I think the one thing I would say is, just to echo Balazs, we do not have BPO. We do not have application maintenance that probably is more likely, or really large testing practices that might be more impacted. The other thing I just need to make certain that it is communicated is we are not seeing a pressure on our pricing due to AI. Again, most of the pricing that we have is time and materials. As I talked about earlier with some of the earlier questions, we did see rate improvement in 2025 and are seeing rate improvement again here in 2026.

So I certainly understand that if you have got a large book of multiyear fixed fee business, that might be subject to pressure in certain types of revenue streams. But with the build work that we have historically done and this more advanced AI work, we are not seeing bill rate compression associated with that.

Bryan Keane: Okay. Thanks so much.

Operator: Your last question comes from Jim Schneider with Goldman Sachs. Please unmute and ask your question.

Bryan C. Bergin: Good morning. Thanks for taking my question.

Jim Schneider: Relative to what was just referenced in terms of the pressure on the software stocks and the services stocks, maybe share with us your thoughts on capital allocation. What are you thinking? What is the board thinking in terms of the desire to potentially do more inorganic actions versus potentially be significantly more aggressive with the buyback?

Balazs Fejes: Jim, thanks for the question. I think we continue to focus on the share buybacks, which as Jason also already communicated, we announced the share buyback plan earlier, the previous quarter. And in the next couple of quarters, at least definitely in the first half year, we are going to continue to make acquisitions as appropriate and repurchase shares. And especially, what we really want to execute is small tokens. But that is our plans at this point of time. And once we stabilized our previous acquisition, that is when we look for other opportunities.

Jason Peterson: Yeah. So, Jim, in the near term, you probably still have a focus on share repurchase, and then over time, I think we would be more open to kind of scaled M&A activity.

Jim Schneider: Fair enough. And then just one question on the AI-native revenue that you called out in the quarter. By my math, it kind of gets you to, for the full year, sort of an 80% increase in the run rate of AI-native revenues as we exit Q4. Can you maybe comment on whether that is directionally correct? And then, more importantly, can you talk about how you believe that maybe your AI-native revenue is different from some of the AI revenue or bookings numbers being reported by your peers? Thank you.

Jason Peterson: Yeah. So I would say kind of directionally correct. So very high rates of growth on a year-over-year basis. And we talked about the fact that we were seeing strong sequential growth throughout the year and expect to continue to see solid sequential growth in the quarters going forward. I think our definition is very tight. I think Balazs did pick that up during his prepared remarks. If you want to provide some more color, Balazs?

Balazs Fejes: So I think it is very important that our definition of AI-native revenue is super tight, which means that we are not including a lot of things which probably some of our competitors do include. So just a reminder, we basically include type one, which is new types of solution where the center of it is AI itself, and the AI model is making it possible. We are not including anything in this which is AI-assisted, i.e., you are delivering with AI. The solutions, what you need to be—we got which we are delivering—has to be built on top of AI.

Number two is when somebody embarks on an end-to-end or enterprise transformation, which we call AI 360, that is what we include in the second type. We are not including in the second number any kind of work which is what we call a data or AI foundational element. Actually, those revenues are much, much larger for us than our AI-native revenues in that

Surinder Singh Thind: Thank you.

Operator: This concludes the time allotted for Q&A. I would now like to turn the call over to Balazs Fejes for closing remarks.

Surinder Singh Thind: Thank you so much.

Balazs Fejes: I would like to thank all EPAMers who made 2025 a successful year and who will make us deliver throughout 2026. And thank you all for attending the call. I am looking forward to seeing many of you on our March Investor Analyst Day in Boston. Thank you very much.