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What changed in EPAM Systems's 10-K — 2023 vs 2024

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Paragraph-level year-over-year comparison of EPAM Systems's 2023 and 2024 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2024 report.

+457 added−466 removedSource: 10-K (2025-02-28) vs 10-K (2024-02-22)

Top changes in EPAM Systems's 2024 10-K

457 paragraphs added · 466 removed · 395 edited across 8 sections

Item 1. Business

Business — how the company describes what it does

77 edited+6 added−12 removed31 unchanged
Biggest changeIn this vertical, our capabilities span a range of platforms, applications and solutions that consumer goods manufacturers, global, regional and local retailers, online retail brands and marketplaces, distributors and supply chain organizations as well as leading airlines, travel agencies and global hotel brands use to enhance their customers’ experience and efficiently manage their operations.
Biggest changeOur financial services domain experts have been recognized with industry awards for engineering and deploying unique applications and business solutions that facilitate growth, competitiveness, regulatory compliance and client interaction while driving cost efficiency and digital transformation. 3 Table of Contents Consumer Goods, Retail & Travel — In this vertical, our capabilities span a range of platforms, applications and solutions that consumer goods manufacturers, global, regional and local retailers, online retail brands and marketplaces, distributors and supply chain organizations as well as leading airlines, travel agencies and global hotel brands use to enhance their clients’ experience and efficiently manage their operations.
We partner with global pharmaceutical, medical and scientific technology, biotechnology companies and retail pharmacies to deliver sophisticated scientific informatics and innovative enterprise technology solutions. Our Life Sciences experts utilize their extensive technology skill set to provide deep scientific and mathematical knowledge to broad-based initiatives.
Life Sciences and Healthcare — We partner with global pharmaceutical, medical and scientific technology, biotechnology companies and retail pharmacies to deliver sophisticated scientific informatics and innovative enterprise technology solutions. Our Life Sciences experts utilize their extensive technology skill set to provide deep scientific and mathematical knowledge to broad-based initiatives.
We deliver a wide range of services to these customers from complex system modernization, brand strategy and space design, digital marketing, payments and loyalty programs to inventory and order management, leading edge innovations in multi-channel sales and distribution. We have transformed organizations by enabling them to use technology to expand and revolutionize their business models.
We deliver a wide range of services to these clients from complex system modernization, brand strategy and space design, digital marketing, payments and loyalty programs to inventory and order management, leading edge innovations in multi-channel sales and distribution. We have transformed organizations by enabling them to use technology to expand and revolutionize their business models.
Over the years we have developed a robust global delivery model that serves as a key competitive advantage, enabling us to better meet our customers’ diverse needs and to provide a compelling value proposition. We continuously evolve our delivery platform to support our business needs and strategy by engaging personnel with diversified skills in existing and new locations.
Over the years we have developed a robust global delivery model that serves as a key competitive advantage, enabling us to better meet our clients’ diverse needs and to provide a compelling value proposition. We continuously evolve our delivery platform to support our business needs and strategy by engaging personnel with diversified skills in existing and new locations.
Our Life Sciences solutions enable customers to speed research and accelerate time-to-market while enhancing collaboration, knowledge management and operational excellence. We help our customers in the Healthcare industry to adapt to changing regulatory environments and improve the quality of care, all while managing the cost of care through integrated health solutions for patients and providers and human-centered design.
Our Life Sciences solutions enable clients to speed research and accelerate time-to-market while enhancing collaboration, knowledge management and operational excellence. We help our clients in the Healthcare industry to adapt to changing regulatory environments and improve the quality of care, all while managing the cost of care through integrated health solutions for patients and providers and human-centered design.
We believe that the principal competitive factors in our business include technical expertise and industry knowledge, end-to-end solution offerings, a reputation for and a track record of high-quality and on-time delivery of work, effective employee recruiting, training and retention, responsiveness to customers’ business needs, ability to scale, financial stability and price.
We believe that the principal competitive factors in our business include technical expertise and industry knowledge, end-to-end solution offerings, a reputation for and a track record of high-quality and on-time delivery of work, effective employee recruiting, training and retention, responsiveness to clients’ business needs, ability to scale, financial stability and price.
In addition to utilizing our dedicated delivery centers, which allow us to deploy key delivery talent, we work closely with leading companies in various industries to enable our customers to better leverage technology and address the simultaneous pressures of driving value for their consumer and offering a more engaging experience.
In addition to utilizing our dedicated delivery centers, which allow us to deploy key delivery talent, we work closely with leading companies in various industries to enable our clients to better leverage technology and address the simultaneous pressures of driving value for their consumer and offering a more engaging experience.
We apply innovative design ideas for customers looking to improve user experiences and drive greater customer engagement. We assist them in digitally transforming into adaptive, product-centric organizations that reinvent experiences in real time. Additionally, we specialize in physical experience where we conceive, develop physical products and design spaces for a digital world.
We apply innovative design ideas for clients looking to improve user experiences and drive greater customer engagement. We assist them in digitally transforming into adaptive, product-centric organizations that reinvent experiences in real time. Additionally, we specialize in physical experience where we conceive, develop physical products and design spaces for a digital world.
Through our extensive experience with many industry leaders in Hi-Tech research and development, software engineering and integration, we have established proprietary internal processes, methodologies as well as information technology infrastructure, which give us an edge when it comes to serving customers in the Hi-Tech and Software product markets.
Through our extensive experience with many industry leaders in Hi-Tech research and development, software engineering and integration, we have established proprietary internal processes, methodologies as well as information technology infrastructure, which give us an edge when it comes to serving clients in the Hi-Tech and Software product markets.
Competition The markets in which we compete are changing rapidly and we face competition from multiple market participants such as other global technology solutions providers, specialized consulting firms, boutique digital companies and outsourcing companies based primarily in specific geographies with lower cost labor such as Eastern Europe, India and China.
Competition The markets in which we compete are changing rapidly and we face competition from multiple market participants such as other global technology solutions providers, specialized consulting firms, boutique digital companies and outsourcing companies based primarily in specific geographies with lower cost labor such as Eastern Europe, India, Latin America and China.
We approach enterprise security holistically, extending our services across proactive defense and actionable intelligence to engineer an effective security model. Our specialties within the cybersecurity domain include managed detection and response, digital risk management, cybersecurity advisory, cloud and data security, ransomware protection, zero trust design and implementation, and cyber intelligence and managed incident response services.
We approach enterprise security holistically, extending our services across proactive defense and actionable intelligence to engineer an effective security model. Our specialties within the cybersecurity domain include managed detection and response, digital risk management, cybersecurity advisory, cloud and data security, zero trust design and implementation and cyber intelligence and managed incident response services.
These audits are performed by an independent auditor utilizing globally recognized attestation standards (ISAE 3402 and ISAE 3000). Our SOC reports, along with other certifications we hold, provide our customers with independent third-party assurance and validation of our information security, privacy management, quality management and general controls practices.
These audits are performed by an independent auditor utilizing globally recognized attestation standards (ISAE 3402 and ISAE 3000). Our SOC reports, along with other certifications we hold, provide our clients with independent third-party assurance and validation of our information security, privacy management, quality management and general controls practices.
Global Delivery Model Our global delivery model and centralized support functions, combined with the benefits of scale from the shared use of fixed-cost resources, have created a delivery base whereby our applications, tools, methodologies and infrastructure allow us to seamlessly deliver services and solutions from our global delivery centers to global customers across the world.
Global Delivery Model Our global delivery model and centralized support functions, combined with the benefits of scale from the shared use of fixed-cost resources, have created a delivery base whereby our applications, tools, methodologies and infrastructure allow us to seamlessly deliver services and solutions from our global delivery centers to our clients across the world.
Our health and safety programs are designed to comply with the regulations in the multiple cities and countries where we operate, but also provide working conditions that are compatible with the necessities of our delivery and administrative operations, whether our employees choose to work remotely or in EPAM’s or our customers’ offices.
Our health and safety programs are designed to comply with the regulations in the multiple cities and countries where we operate but also provide working conditions that are compatible with the necessities of our delivery and administrative operations, whether our employees choose to work remotely or in EPAM’s or our clients’ offices.
We maintain a focus on adhering to stringent security, privacy and quality standards as well as internal controls which are compliant with ISO 27001, ISO 27701 and ISO 9001 standards. For certain services, EPAM obtains SOC1, SOC2, and/or SOC3 reports and shares them with our customers.
We maintain a focus on adhering to stringent security, privacy and quality standards as well as internal controls which are compliant with ISO 27001, ISO 27701 and ISO 9001 standards. For certain services, EPAM obtains SOC1, SOC2, and/or SOC3 reports and shares them with our clients.
Corporate and Social Responsibility and Environmental, Social, and Governance Initiatives We are committed to integrating positive social, environmental and ethical practices into our business operations, corporate governance, and strategy. This commitment is key to our continual development as a business and drives value for our employees, customers, business partners, the community and other stakeholders.
Corporate and Social Responsibility and Environmental, Social, and Governance Initiatives We are committed to integrating positive social, environmental and ethical practices into our business operations, corporate governance, and strategy. This commitment is key to our continual development as a business and drives value for our employees, clients, business partners, the community and other stakeholders.
To attract, retain and motivate our employees, we offer a challenging work environment, a culture that values the individual, ongoing skills development initiatives, attractive career advancement with continuous rotation and promotion opportunities while providing an environment and culture that rewards entrepreneurial initiative and performance.
To attract, retain and motivate our employees, we offer a dynamic work environment, a culture that values the individual, ongoing skills development initiatives, attractive career advancement with continuous rotation and promotion opportunities while providing an environment and culture that rewards entrepreneurial initiative and performance.
We actively monitor how we utilize our delivery professionals and specialists to balance the needs of our customers with the availability, location, and skill sets of our employees and their need for diverse and challenging work. We manage utilization through strategic hiring and efficient staffing of projects for our customers.
We actively monitor how we utilize our delivery professionals and specialists to balance the needs of our clients with the availability, location, and skill sets of our employees and their need for diverse and challenging work. We manage utilization through strategic hiring and efficient staffing of projects for our clients.
Item 1. Business Overview EPAM has used its software engineering expertise to become a leading global provider of digital engineering, cloud and artificial intelligence-enabled transformation services, as well as a leading business and experience consulting partner for global enterprises and ambitious start-ups.
Item 1. Business Overview EPAM has used its software engineering expertise to become a leading global provider of digital engineering, cloud and artificial intelligence-enabled transformation services, and a leading business and experience consulting partner for global enterprises and ambitious start-ups.
This strategy has been effective in promoting repeat business and growth from within our existing customer base and we believe that our reputation as a reliable provider of software engineering solutions drives additional business from inbound requests and referrals.
This strategy has been effective in promoting repeat business and growth from within our existing client base and we believe that our reputation as a reliable provider of software engineering solutions drives additional business from inbound requests and referrals.
With our end-to-end AI capabilities, we uncover opportunities for AI, advise and then build solutions that unlock new business models, enhance productivity, automate operations, and deliver deeper customer and supply chain insights. Customer Experience We enable our customers to better leverage technology more effectively, addressing the simultaneous pressures of driving value for their consumers and offering more engaging experiences.
With our end-to-end AI capabilities, we uncover opportunities for AI, advise and then build solutions that unlock new business models, enhance productivity, automate operations, and deliver deeper customer and supply chain insights. Customer Experience Design We enable our clients to better leverage technology more effectively, addressing the simultaneous pressures of driving value for their consumers and offering more engaging experiences.
Our highest priority is the safety and security of our employees and their families in Ukraine as well as in the broader region, and we have continued to support relocating our employees to lower risk locations, both inside Ukraine and to other countries where we operate.
Our highest priority remains the safety and security of our employees and their families in Ukraine as well as in the broader region, and we have continued to support relocating our employees to lower risk locations, both inside Ukraine and to other countries where we operate.
In the normal course of business, we may relocate or assist in relocating our employees as business needs arise, new office geographies are added or customer engagements require teams to be available in particular locations.
In the normal course of business, we may relocate or assist in relocating our employees as business needs arise, new office geographies are added or client engagements require teams to be available in particular locations.
Recruitment, Training and Utilization: As an innovation-driven business in a competitive industry, our success depends on hiring the most talented employees, training and developing that talent, and deploying them to satisfy customer demand.
Recruitment, Training and Utilization: As an innovation-driven business in a competitive industry, our success depends on hiring the most talented employees, training and developing that talent, and deploying them to satisfy client demand.
Furthermore, we often grant our customers a nonexclusive license to use relevant technologies in our pre-existing intellectual property portfolio, but only to the extent necessary to use the software or systems we develop for them.
Furthermore, we often grant our clients a nonexclusive license to use relevant technologies in our pre-existing intellectual property portfolio, but only to the extent necessary to use the software or systems we develop for them.
These tools promote collaboration and effective oversight, reduce work time and costs, and increase quality for our IT management and our customers. We maintain, monitor, and improve processes and infrastructure to protect our, our customers’ and their customers’ confidential and sensitive information and allocate internal and external resources to assess and ensure information security, cybersecurity and data privacy.
These tools promote collaboration and effective oversight, reduce work time and costs, and increase quality for our IT management and our clients. We maintain, monitor, and improve processes and infrastructure to protect our, our clients’ and their customers’ confidential and sensitive information and allocate internal and external resources to assess and ensure information security, cybersecurity and data privacy.
Sales and Marketing We market and sell our services through our senior management, sales and business development teams, account managers, and professional staff. Our client service professionals and account managers, who maintain direct customer relationships, play an integral role in engaging with current customers to identify and pursue potential business opportunities.
Sales and Marketing We market and sell our services through our senior management, sales and business development teams, account managers, and professional staff. Our client service professionals and account managers, who maintain direct client relationships, play an integral role in engaging with current clients to identify and pursue potential business opportunities.
Our professionals deliver an end-to-end experience that includes strategy, architecture, development and managed services to customers ranging from the traditional healthcare providers to innovative startups. Emerging Verticals. We also serve the diverse technology needs of customers in the energy, telecommunications, educational, real estate, automotive and various manufacturing industries, as well as government entities.
Our professionals deliver an end-to-end experience that includes strategy, architecture, development and managed services to clients ranging from the traditional healthcare providers to innovative startups. Emerging Verticals — We also serve the diverse technology needs of clients in the energy, telecommunications, educational, real estate, industrial materials, automotive and various manufacturing industries, as well as government entities.
We believe the quality of our employees serves as a key point of differentiation in how we deliver a superior value proposition to our customers and investors.
We believe the quality of our employees serves as a key point of differentiation in how we deliver a superior value proposition to our clients and investors.
We have been recognized by many top global independent research agencies, such as Forrester and Gartner and by publications such as Newsweek, Forbes and Fortune.
We have been recognized by many top global independent research agencies, such as Forrester, Gartner, IDC and Everest and by publications such as Newsweek, Forbes and Fortune.
Our strategic acquisitions have expanded our geographic reach and service capabilities and will continue to enable us to offer a broader range of services to our customers from a multitude of locations. Services We turn our customers’ operations into intelligent enterprise hubs with our proprietary platforms, integrated engineering practices and smart automation.
Our strategic acquisitions have expanded our geographic reach and service capabilities and will continue to enable us to offer a broader range of services to our clients from a multitude of locations. Services We turn our clients’ operations into intelligent enterprise hubs with our proprietary platforms, integrated engineering practices and smart automation.
From migrating data platforms to the cloud to implementing data governance practices across the enterprise, we help our customers unlock data-reliant outcomes for their business, ushering them into the future. Our integrated teams of business and technology experts assess our customers’ data ecosystems, build roadmaps and deliver data solutions to the market.
From migrating data platforms to the cloud to implementing data governance practices across the enterprise, we help our clients unlock data-reliant outcomes for their business, ushering them into the future. Our integrated teams of business and technology experts assess our clients’ data ecosystems, build roadmaps and deliver data solutions to the market.
Within our customers’ organizations, we reshape processes for the workforce through engaging, enabling and empowering experiences. Moreover, we help set up marketing teams and brands to remain relevant in the future. Cybersecurity We guide our clients through the process of achieving operational resilience against evolving cybersecurity threats.
Within our clients’ organizations, we reshape processes for the workforce through engaging, enabling and empowering experiences. Moreover, we help set up marketing teams and brands to remain relevant in the future. Cybersecurity We guide our clients through achieving operational resilience against evolving cybersecurity threats.
For the years ended December 31, 2023, 2022 and 2021, the utilization rates of our delivery professionals were approximately 74.3%, 75.8%, and 78.7%, respectively. EPAM invests significant resources in training and developing our employees through our learning and development programs.
For the years ended December 31, 2024, 2023 and 2022, the utilization rates of our delivery professionals were approximately 76.7%, 74.3%, and 75.8%, respectively. EPAM invests significant resources in training and developing our employees through our learning and development programs.
We drive artificial intelligence (“AI”) and generative AI strategy, delivery and enablement from a business perspective to ensure meaningful, sustained outcomes. Our hybrid, networked teams of consultants, designers, architects, engineers and trainers have developed numerous proprietary data accelerators, repeatable AI frameworks and methodologies that can be implemented quickly and at scale.
We drive AI and GenAI strategy, delivery and enablement from a business perspective to ensure meaningful, sustained outcomes. Our hybrid, networked teams of consultants, designers, architects, engineers and trainers have developed numerous proprietary data accelerators, repeatable AI frameworks and methodologies that can be implemented quickly and at scale.
Developing a digital experience or product from end-to-end requires input and expertise from a variety of professionals with a broad range of skills. Our multi-disciplinary teams and global delivery framework come together to deliver well-rounded technology solutions that we believe bring a competitive advantage to our customers.
Developing a digital experience or product from end-to-end requires input and expertise from a variety of professionals with a broad range of skills. Our multidisciplinary teams and global delivery framework come together to deliver well-rounded technology solutions that we believe bring a competitive advantage to our clients.
We use our experience, custom tools and specialized knowledge to integrate our customers’ chosen strategy and create custom solutions in order to architect the right solutions with built-in quality and security gates and accomplish the best outcome from the digital modernization efforts. 2 Table of Conten t s Cloud Cloud technology has become the default platform for nearly every digital use.
We use our experience, custom tools and specialized knowledge to integrate our clients’ chosen strategy and create custom solutions in order to architect the right solutions with built-in quality and security gates and accomplish the best outcome from the digital modernization efforts. 2 Table of Contents Cloud Cloud technology has become the default platform for nearly every digital use.
Our largest learning and development investment has been directed towards developing our engineering talent, including targeted training programs, innovation labs, and significant internal production projects. Our employees consumed 2.6 million learning hours in 2023.
Our largest learning and development investment has been directed towards developing our engineering talent, including targeted training programs, innovation labs, and significant internal production projects. Our employees consumed 2.4 million learning hours in 2024.
This requires pervasive security that matches the rapid pace of agile development, ensures regulatory compliance and training, and aligns with business objectives. We help our clients achieve their security objectives through adding security controls into systems and processes and deploying our agile security platform and AI-driven tools that allow for rapid threat responses and attack simulations.
This requires pervasive security that matches the rapid pace of agile development, ensures regulatory compliance, training, and aligns with business objectives. We help our clients achieve their security objectives through our security by design approach, architect security controls into systems and processes, and our agile security platform, AI-driven tools that allow for rapid threat responses and attack simulations.
We focus on retaining and engaging top talent by hiring people with the skill sets our customers need and who also share our values so we can build long-term employee satisfaction, which is supported by our voluntary attrition rate of 8.6%, 13.8%, and 13.3% in 2023, 2022 and 2021, respectively.
We focus on retaining and engaging top talent by hiring people with the skill sets our clients need and who also share our values so we can build long-term employee satisfaction, which is supported by our voluntary attrition rate of 8.9%, 8.6%, and 13.8% in 2024, 2023 and 2022, respectively.
In 2023, the employee experience we create was recognized with awards from a number of different organizations in North America, Europe, and Asia, and we were named on Newsweek’s list of Top 100 Most Loved Workplaces for the third consecutive year and recognized by Glassdoor as a Best Workplace in 2023 and 2024.
In 2023, the employee experience we create was recognized with awards from a number of different organizations in North America, Europe, and Asia, and we were also named on Newsweek’s list of Top 100 Most Loved Workplaces for the fourth consecutive year and recognized by Glassdoor as a Best Workplace for three consecutive years.
Industry Expertise Strong industry-specific knowledge, backed by extensive experience merging technology with our customers' business processes, enables us to deliver tailored solutions to various industry verticals. Our customers operate in five main industry verticals as well as a number of emerging verticals where we are increasing our presence. Financial Services.
Industry Expertise Strong industry-specific knowledge, backed by extensive experience merging technology with our clients’ business processes, enables us to deliver tailored solutions to various industry verticals. Our clients operate in five main industry verticals as well as a number of emerging verticals where we are increasing our presence.
We also make such filings available free of charge through the Investor Relations section of our website, https://investors.epam.com , as soon as reasonably practicable after they are filed with the SEC. 9 Table of Conten t s
We also make such filings available free of charge through the Investor Relations section of our website, https://investors.epam.com , as soon as reasonably practicable after they are filed with the SEC.
As of December 31, 2023, we had approximately 47,350 delivery personnel consisting mainly of our core information technology professionals as well as consultants, designers, architects, engineers and trainers. We serve our customers through on-site, off-site and offshore locations across the world and use strategically located delivery centers to offer a strong, diversified and cost-effective delivery platform.
As of December 31, 2024, we had approximately 55,100 delivery personnel consisting mainly of our core information technology professionals as well as consultants, designers, architects, engineers and trainers. We serve our clients through on-site, off-site and offshore locations across the world and use strategically located delivery centers to offer a strong, diversified and cost-effective delivery platform.
Our employees have demonstrated their satisfaction with our approach by giving their highest percentage of positive responses in our 2023 employee survey when asked if they can easily get support from their colleagues (93%), and if they feel that EPAM provides a supportive environment for all employees, regardless of gender, race, background, religion, or other personal traits (90%), and if they get management support (90%).
Our employees have demonstrated their satisfaction with our approach by giving their highest percentage of positive responses in our 2024 employee survey when asked if they can easily get support from their colleagues (93%), if they get management support (92%), if they feel that EPAM provides a supportive environment for all employees, regardless of gender, race, background, religion, or other personal traits (89%), and if they feel comfortable being themselves while working for EPAM (89%).
Risk Factors — Risks Related to Regulation and Legislation and Risks Related to Information Security and Data Protection.” We are subject to laws and regulations in the United States and other countries in which we operate, including export restrictions, economic sanctions, the Foreign Corrupt Practices Act (“FCPA”) and similar anti-corruption laws and data privacy regulations.
Risk Factors — Risks Related to Regulation and Legislation and Risks Related to Information Security and Data Protection.” We are subject to laws and regulations in the United States and other countries in which we operate, including export restrictions, economic sanctions, anti-bribery and anti-corruption laws, and data privacy regulations.
As of December 31, 2023, 2022 and 2021, we had approximately 53,150, 59,300, and 58,800 employees, respectively, of which approximately 47,350, 52,850, and 52,600 were delivery professionals, respectively. 5 Table of Conten t s Health, Safety, and Wellness: We invest in programs designed to improve the physical, mental, and social well-being of our employees so we can offer a safe, welcoming, and productive workplace that supports and enhances the work-life balance and wellness of our employees.
As of December 31, 2024, 2023 and 2022, we had approximately 61,200, 53,150, and 59,300 employees, respectively, of which approximately 55,100, 47,350, and 52,850 were delivery professionals, respectively. 5 Table of Contents Health, Safety, and Wellness: We invest in programs designed to improve the physical, mental, and social well-being of our employees so we can offer a safe, welcoming, and productive workplace that supports and enhances the work-life balance and wellness of our employees.
Our focus on delivering quality service is reflected in established relationships with many of our customers, with 65.6% and 28.2% of our revenues in 2023 coming from customers that had used our services for at least five and ten years, respectively. We aim to grow our customer portfolios organically and through strategic acquisitions.
Our focus on delivering quality service is reflected in established relationships with many of our clients, with 65.4% and 34.6% of our revenues in 2024 coming from clients that had used our services for at least five and ten years, respectively. We aim to grow our client portfolios organically and through strategic acquisitions.
We require our employees, vendors and independent contractors to enter into written agreements upon the commencement of their relationships with us, which assign to us all deliverable intellectual property and work product made, developed or conceived by them in connection with their employment or provision of services and to keep any disclosed information confidential. 8 Table of Conten t s We also enter into confidentiality agreements with our customers and suppliers to protect information and maintain information security.
We require our employees, vendors and independent contractors to enter into written agreements upon the commencement of their relationships with us, which assign to us all deliverable intellectual property and work product made, developed or conceived by them in connection with their employment or provision of services and to keep any disclosed information confidential.
As of the end of 2023, we offered the EPAM E-KIDS program in 27 countries. 6 Table of Conten t s Employee Engagement and Retention: As a participant in the United Nations Global Compact, we are committed to respecting our employees' fundamental human rights at work.
As of the end of 2024, we offered the EPAM E-Kids program in 25 countries. Employee Engagement and Retention: As a participant in the United Nations Global Compact, we are committed to respecting our employees' fundamental human rights at work.
In a business landscape that is constantly challenged by the pressures of digitization, we focus on building long-term partnerships with our customers through innovative and scalable software solutions, integrated strategy, experience and technology consulting, and a continually evolving mix of advanced capabilities.
We support our clients while enabling them to reimagine their businesses through a digital lens. In a business landscape that is constantly challenged by the pressures of digitization, we focus on building long-term partnerships with our clients through innovative and scalable software solutions, integrated strategy, experience and technology consulting, and a continually evolving mix of advanced capabilities.
We deliver training and development opportunities and content through our unique learning ecosystem that promotes learning in the daily workflow to improve retention and productivity, and through dedicated events, including our week-long global learning event, which delivered approximately 129 online sessions. We deliver learning and development content through proprietary platforms that are available to all of our employees.
We deliver training and development opportunities and content through our unique learning ecosystem that promotes learning in the daily workflow to improve retention and productivity, and through dedicated learning events. We deliver learning and development content through proprietary platforms that are available to all of our employees.
We address our clients’ transformation challenges by fusing EPAM Continuum’s integrated strategy, experience and technology consulting with our 30+ years of engineering execution to speed our clients’ time to market and drive greater value from their digital investments.
We address our clients’ transformation challenges by fusing EPAM Continuum’s integrated strategy, experience and technology consulting with our 30+ years of engineering execution to speed our clients’ time to market and drive greater value from their innovations and digital investments. We leverage AI and GenAI to deliver transformative solutions that accelerate our clients' digital innovation and enhance their competitive edge.
Our services and high-quality tools directly impact the creation of breakthrough products and compelling brand and employee experiences, helping companies become more adaptive and address market challenges. Software and Hi-Tech. We offer complex software product development services to address the constant need for innovation and agility among software and technology companies.
Our services directly impact strategy and facilitate the creation of breakthrough products and compelling brand and employee experiences, helping our clients outpace competitors. Software and Hi-Tech — We offer complex software product development services to address the constant need for innovation and agility among software and technology companies.
We face competition from various technology services providers such as Accenture, Atos, Capgemini, Cognizant Technology Solutions, Deloitte Digital, DXC Technology, Endava, Genpact, GlobalLogic, Globant, Grid Dynamics, HCL Technologies, Infosys, Tata Consultancy Services, and Wipro, among others.
We face competition from various technology services providers such as Accenture, Atos, Capgemini, Cognizant Technology Solutions, Deloitte Digital, DXC Technology, Endava, Genpact, GlobalLogic, Globant, Grid Dynamics, HCL Technologies, Infosys, Tata Consultancy Services, and Wipro, among others. Additionally, we compete with numerous smaller local companies in the various geographic markets in which we operate.
We have significant experience working with global investment banks, commercial and retail lending institutions, credit card and payment solution companies, trading platforms, exchanges and brokerages, capital markets, wealth and investment management institutions, insurers and various other providers of financial services and financial technology. We assist these customers with challenges stemming from new regulations, compliance requirements, customer-based needs and risk management.
Financial Services — We have significant experience working with global investment banks, wealth and investment management institutions, commercial and retail lending institutions, credit card and payment solution companies, trading platforms, exchanges and brokerages, capital markets, insurers and various other providers of financial services and financial technology.
Diversity and Inclusion: EPAM provides our customers with the skills of our talented personnel, which includes people with varied and diverse backgrounds and characteristics, to drive innovation and thought diversity in delivering our services.
Culture: EPAM provides our clients with the skills of our talented personnel, which includes people with varied backgrounds and characteristics, to drive innovation and varied approaches to delivering our services.
Our agreements with our customers cover our use of their software systems and platforms as our customers usually own the intellectual property in the software, products, and solutions we develop for them.
We also enter into confidentiality agreements with our clients and suppliers to protect information and maintain information security. Our agreements with our clients cover our use of their software systems and platforms as our clients usually own the intellectual property in the software, products, and solutions we develop for them.
That is why we strive to provide pay and benefits that demonstrate the value of our employees to us, including a competitive salary, flexible work-life balance, paid time off, health coverage, ongoing training programs, relocation options, and recognition opportunities for open-source software contributions.
That is why we strive to provide pay and benefits that demonstrate the value of our employees to us, including a competitive salary, flexible work-life balance, paid time off, health coverage, ongoing training programs, relocation options, and recognition opportunities for open-source software contributions. 6 Table of Contents Our career development programs create detailed and progressive training plans for our employees and help them choose from internal and external training options, mentoring programs, and hands-on opportunities to experience emerging technology areas.
Our suppliers are generally bound by our supplier code of conduct, which imposes an obligation to protect our and our customers’ intangible assets, including confidential information, personal information, and intellectual property, and to protect the security of those assets.
Our suppliers are generally bound by our supplier code of conduct, which imposes an obligation to protect our and our clients’ intangible assets, including confidential information, personal information, and intellectual property, and to protect the security of those assets. 8 Table of Contents Regulations Due to the industry and geographic diversity of our operations and services, our operations are subject to a variety of rules and regulations.
We serve a diverse set of customers in this vertical including entertainment media, news and sports broadcasting companies, financial data and legal information providers, content distributors, educational materials publishers and advertising networks. Life Sciences and Healthcare .
Our solutions aid our clients in developing new revenue sources, accelerating content management, delivery and monetization, and reaching broader audiences. We serve a diverse set of clients in this vertical including entertainment media, news and sports broadcasting companies, financial data and legal information providers, content distributors, educational materials publishers and advertising networks.
For these customers we develop tools such as plant management platforms, energy saving applications, inventory management mechanisms, and connected vehicle platforms. Additionally, we undertake various industry-specific aspects of intelligent automation and operational efficiency. These customers are included in our Emerging Verticals, which are further discussed in “Item 7.
For these clients we develop tools such as plant management platforms, energy saving applications, inventory management mechanisms, and connected vehicle platforms. Additionally, we undertake various industry-specific aspects of intelligent automation and operational efficiency. Clients We maintain a geographically diverse client base in multiple industries.
EPAM was named one of Barron's 100 Most Sustainable Companies in 2022. Intellectual Property Protecting our intellectual property rights is important to our business. We have invested, and will continue to invest, in research and development to enhance our knowledge, create solutions for our customers, and continuously advance our information security.
EPAM was a Frost & Sullivan Enlightened Sustainable Growth Leader for the past three consecutive years. Intellectual Property Protecting our intellectual property rights is important to our business. We have invested, and will continue to invest, in research and development to enhance our knowledge, create solutions for our clients, and continuously advance our information security.
We have dedicated full-time employees who oversee all aspects of our human capital management process including talent acquisition teams to locate and attract qualified and experienced professionals around the world.
We are particularly focused on identifying and cultivating the next generation of exceptional leaders, emphasizing technical expertise, while enhancing succession pipelines and improving diversity in our key positions. We have dedicated full-time employees who oversee all aspects of our human capital management process including talent acquisition teams to locate and attract qualified and experienced professionals around the world.
Increasing diversity in executive and key operational leadership roles is an organizational priority that starts at the top of our organization. Women currently represent approximately 44% of the independent directors on our Board and we have developed programs to identify, retain, mentor, and supply a pipeline of qualified, diverse candidates at all levels of our Company.
Women currently represent approximately 44% of the independent directors on our Board and we have developed programs to identify, retain, mentor, and supply a pipeline of qualified candidates from all backgrounds at every level of our Company.
Our services span the complete software development lifecycle for software product development, including our comprehensive development methodologies, testing, performance tuning, deployment, maintenance and support. Business Information and Media .
Our services span the complete software development lifecycle for software product development, including our comprehensive development methodologies, testing, performance tuning, deployment, maintenance and support. Business Information and Media — We help our business information and media clients build products and solutions for modern platforms including web media streaming, mobile information delivery, print to digital transformations and information discovery and search.
Quality Management and Information Security We are continuously investing in systems, applications, tools and infrastructure to manage all aspects of our global delivery process in order to manage quality and information security risks, while providing control and visibility across all project lifecycle stages both internally and to our customers.
We believe that our focus on complex and innovative software product development solutions, our technical employee base, and our development and continuous improvement in process methodologies, applications and tools position us well to compete effectively in the future. 7 Table of Contents Quality Management and Information Security We are continuously investing in systems, applications, tools and infrastructure to manage all aspects of our global delivery process in order to manage quality and information security risks, while providing control and visibility across all project lifecycle stages both internally and to our clients.
Regulations Due to the industry and geographic diversity of our operations and services, our operations are subject to a variety of rules and regulations. Several foreign and U.S. federal and state agencies regulate various aspects of our business. See “Item 1A.
Several foreign and U.S. federal and state agencies regulate various aspects of our business. See “Item 1A.
See Note 18 “Segment Information” in the notes to our consolidated financial statements in this Annual Report on Form 10-K for information regarding long-lived assets and customer revenues by geographic location as well as financial information related to our reportable segments.
Management’s Discussion and Analysis of Financial Condition and Results of Operations” in Part II of this Annual Report on Form 10-K for additional information related to revenues. See Note 19 “Segment Information” in the notes to our consolidated financial statements in this Annual Report on Form 10-K for information related to our reportable segments.
In response to the war in Ukraine, we continue to execute our business continuity plans and have sustained our hiring efforts across multiple locations in Central and Eastern Europe, Central and Western Asia, India, and Latin America. As of December 31, 2023, we employ delivery professionals in more than 50 countries.
In response to the war in Ukraine, we shifted the way we operate in our delivery locations by discontinuing our operations in Russia and continuing to execute our business continuity plans and sustaining our hiring efforts across multiple locations in India, Central and Western Asia, Latin America, and Central and Eastern Europe.
Our programs include dedicating resources and personnel in our talent acquisition team to identify, recognize, and use diverse and inclusive sources for hiring, including associating with organizations that are focused on promoting underrepresented groups in engineering, IT, and business.
Our programs include dedicating resources and personnel in our talent acquisition team to identify, recognize, and hire from underrepresented groups in engineering, IT, and business.
We also created the EPAM E-KIDS program where our employees volunteer their time to teach elementary school age children of any gender, race, or ethnic identity STEM concepts and introductory software coding skills.
Recognizing that giving all people access to jobs in the software and technology industries starts with access to science, technology, engineering, and mathematics (“STEM”) education, EPAM created the EPAM E-Kids program where our employees volunteer their time to teach elementary school age children STEM concepts and introductory software coding skills.
The following table shows revenues from the top five and ten customers in the respective year as a percentage of revenues for that year: % of Revenues for Year Ended December 31, 2023 2022 2021 Top five customers 16.6 % 16.4 % 18.2 % Top ten customers 23.6 % 23.8 % 25.7 % 4 Table of Conten t s During the year ended December 31, 2023 the customer concentration remained similar to the levels in the previous year.
The following table shows revenues from the top five and ten clients in the respective year as a percentage of revenues for that year: % of Revenues for Year Ended December 31, 2024 2023 2022 Top five clients 15.8 % 16.6 % 16.4 % Top ten clients 23.4 % 23.6 % 23.8 % As we remain committed to diversifying our client base and adding more clients to our client mix, we expect revenue concentration from our top clients to decrease over the long-term. 4 Table of Contents See “Item 7.
The vast majority of our Ukraine employees are in safe locations and despite the war, our operations in Ukraine have not been materially impacted and our teams remain highly focused on maintaining uninterrupted production.
Since the Russian forces' attack on Ukraine and its people began on February 24, 2022, our operations in Ukraine have not been significantly impacted, and our teams remain highly focused on maintaining uninterrupted production.
We deliver business and technology transformation from start to finish, leveraging agile methodologies, proven customer collaboration frameworks, engineering excellence tools, multidisciplinary teams and our award-winning proprietary global delivery platform. We support our customers while enabling them to reimagine their businesses through a digital lens.
Through platforms like EPAM AI/RUN™ and initiatives like DIALX Lab, we integrate advanced AI technologies into tailored business strategies, driving significant industry impact and fostering continuous innovation. We deliver business and technology transformation from start to finish, leveraging agile methodologies, proven client collaboration frameworks, engineering excellence tools, multidisciplinary teams and our award-winning proprietary global delivery platform.
We believe that innovation comes from the unique perspectives, knowledge, and experiences of our global employees, so we strive to create diversity and inclusivity by supporting employee affinity groups, offering comprehensive language learning programs, highlighting and sharing our varied cultures, and empowering women and underrepresented groups to celebrate their achievements in the workplace.
We believe that innovation comes from the unique perspectives, knowledge, and experiences of our global employees, so we strive to create a culture to support that uniqueness by creating employee groups that recognize and share the varied perspectives of our personnel so employees of all backgrounds, interests, and identities can grow and thrive professionally.
Our second and third largest delivery locations are now India and Poland with approximately 7,050 and 5,400 delivery professionals, respectively, as of December 31, 2023. Our global delivery centers in Ukraine and throughout the world have sufficient resources, including infrastructure and capital, to support ongoing operations. During 2022, a significant number of our employees in Russia and Belarus relocated.
Our global delivery centers throughout the world, including in Ukraine, have sufficient resources, including infrastructure and capital, to support ongoing operations. Human Capital Our employees are a key factor in our ability to grow our revenues and serve our clients.
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Our financial services domain experts have been recognized with industry awards for engineering and deploying unique applications and business solutions that facilitate growth, competitiveness, regulatory compliance and customer interaction while driving cost efficiency and digital transformation. 3 Table of Conten t s Travel and Consumer .
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We assist these clients with challenges stemming from new regulations, compliance requirements, client-based needs and risk management.
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We help our business information and media customers build products and solutions for all modern platforms including web media streaming, mobile information delivery, print to digital transformations and information discovery and search. Our solutions help our customers in developing new revenue sources, accelerating content management, delivery and monetization, and reaching broader audiences.

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeRisks Related to Our Personnel and Growth We may be unable to effectively manage our growth or achieve anticipated growth, which could place significant strain on our management, systems, resources, and results of operations. We have experienced uneven growth and expansion of our business over the past several years.
Biggest changeIf the military conflict, sanctions, and counter-sanctions in Ukraine, Belarus, and the surrounding region continue for the long-term or escalate, we could be required to further rebalance our geographic concentrations and it could have a material adverse effect on our personnel, operations, financial results and business outlook. 10 Table of Contents Risks Related to Our Personnel and Growth We may be unable to effectively manage our growth or achieve anticipated growth, which could place significant strain on our management, systems, resources, and results of operations.
Our employees and contractors and our vendors, software and hardware suppliers, and other third parties in our information security supply chain, as well as sophisticated individual or collective groups of hackers, such as state-sponsored organizations, all pose threats to our information security.
Our employees, contractors, vendors, software and hardware suppliers, and other third parties in our information security supply chain, as well as sophisticated individual or collective groups of hackers, such as state-sponsored organizations, all pose threats to our information security.
Any violations of these or other laws, regulations and procedures by our employees, independent contractors, subcontractors and agents, including third parties with which we associate or companies we acquire, could expose us to administrative, civil or criminal penalties, fines or business restrictions, which could have a material adverse effect on our results of operations and financial condition and would adversely affect our reputation and the market for shares of our common stock and may require certain of our investors to disclose their investment in us under certain state laws.
Any violations of these or other laws and regulations by our employees, independent contractors, subcontractors and agents, including third parties with which we associate or companies we acquire, could expose us to administrative, civil or criminal penalties, fines or business restrictions, which could have a material adverse effect on our results of operations and financial condition and would adversely affect our reputation and the market for shares of our common stock and may require certain of our investors to disclose their investment in us under certain state laws.
If the tax policies in Belarus or other countries where we operate are changed, terminated, or not extended or comparable new tax incentives are not introduced, we expect that our operating expenses and/or our effective income tax rate could increase significantly, which could materially adversely affect our financial condition and results of operations. See “Item 7.
If the tax policies in Belarus, Poland, or other countries where we operate are changed, terminated, or not extended or comparable new tax incentives are not introduced, we expect that our operating expenses and/or our effective income tax rate could increase significantly, which could materially adversely affect our financial condition and results of operations. See “Item 7.
If a government authority changes the applicable laws or a court makes an adverse determination with respect to independent contractors in general or one or more of our independent contractors specifically, we could incur significant costs, including for prior periods, related to tax withholding, social security taxes or payments, workers’ compensation and unemployment contributions, and recordkeeping, or we may be required to modify our business model, any of which could materially adversely affect our business, financial condition and results of operations and increase the difficulty of attracting and retaining personnel.
If a government authority changes the applicable laws or a court makes an adverse determination with respect to independent contractors in general or our independent contractors specifically, we could incur significant costs, including for prior periods, related to tax withholding, social security taxes or payments, workers’ compensation and unemployment contributions, and recordkeeping, or we may be required to modify our business model, any of which could materially adversely affect our business, financial condition and results of operations and increase the difficulty of attracting and retaining personnel.
The U.S. Office of Foreign Assets Control, or OFAC, and other international bodies have imposed sanctions that prohibit us from engaging in trade or financial transactions with certain countries, businesses, organizations and individuals.
The U.S. Office of Foreign Assets Control, or OFAC, and other domestic and international bodies have imposed sanctions that prohibit us from engaging in trade or financial transactions with certain countries, businesses, organizations and individuals.
Such legislative measures could broaden restrictions on outsourcing by federal and state government agencies and contracts and impact private industry with tax disincentives, intellectual property transfer restrictions, and restrictions on the use or availability of certain work visas.
Such measures could broaden restrictions on outsourcing by federal and state government agencies and contracts and impact private industry with tax disincentives, intellectual property transfer restrictions, and restrictions on the use or availability of certain work visas.
Complying with a wide variety of legal requirements in the jurisdictions where we operate can create risks to our operations and financial condition, including liquidation of the subsidiaries that operate our major delivery centers.
Complying with a wide variety of legal requirements in the jurisdictions where we operate can create risks to our operations and financial condition, including liquidation of the subsidiaries that operate some of our major delivery centers.
If we fail to accurately estimate the resources, time or quality levels required to complete such engagements, or if the cost to us of employees, facilities, or technology unexpectedly increases, we could be exposed to cost overruns.
If we fail to accurately estimate the resources, time or quality levels required to complete such engagements, or if the cost of employees, facilities, or technology unexpectedly increases, we could be exposed to cost overruns.
In addition, government regulators have sought and may continue to seek to impose fines, penalties, and other civil or criminal consequences for real or suspected security breaches and perceived inadequate information security.
In addition, government regulators have sought and may continue to seek to impose fines, penalties, and other civil or criminal consequences for real or suspected security breaches and perceived inadequate information security or disclosures.
Additionally, forward-looking statements are inherently subject to risks and uncertainties, some of which cannot be predicted or quantified. See “Forward-Looking Statements.” Risks Related to Geopolitical Events Instability in geographies where we have significant operations and personnel or where we derive substantial amounts of revenue could have a material adverse effect on our business, customers, service delivery, and financial results.
Additionally, forward-looking statements are inherently subject to risks and uncertainties, some of which cannot be predicted or quantified. See “Forward-Looking Statements.” Risks Related to Geopolitical Events Instability in geographies where we have significant operations and personnel or where we derive substantial amounts of revenue could have a material adverse effect on our business, clients, service delivery, and financial results.
U.S. policy with respect to a variety of issues, including AI, international trade agreements, conducting business offshore, inflation mitigation, interest rates, import and export regulations, tariffs and customs duties, foreign relations, immigration laws and travel restrictions, antitrust controls and enforcement, and corporate governance laws, could have a positive or negative impact on our business.
U.S. policy with respect to a variety of issues, including AI, international trade agreements, conducting business offshore, inflation mitigation, interest rates, climate change, import and export regulations, tariffs and customs duties, foreign relations, immigration laws and travel restrictions, antitrust controls and enforcement, and corporate governance laws, could have a positive or negative impact on our business.
If our sales cycle unexpectedly lengthens for one or more large projects, it could negatively affect the timing of our revenues and our revenue growth. In certain cases, we may begin work and incur costs prior to executing a contract, which may cause fluctuations in recognizing revenues between periods or jeopardize our ability to collect payment from customers.
If our sales cycle unexpectedly lengthens for one or more large projects, it could negatively affect the timing of our revenues and our revenue growth. In certain cases, we may begin work and incur costs prior to executing a contract, which may cause fluctuations in recognizing revenues between periods or jeopardize our ability to collect payment from clients.
Expansion into direct-to-consumer offerings in the highly regulated education industry and joint venture relationships with our customers could result in increased liability, start-up, and compliance costs. If the challenges associated with expansion and new investments negatively impact our anticipated growth and margins, our business, prospects, financial condition and results of operations could be materially adversely affected.
Expansion into direct-to-consumer offerings in the highly regulated education industry and joint venture relationships with our clients could result in increased liability, start-up, and compliance costs. If the challenges associated with expansion and new investments negatively impact our anticipated growth and margins, our business, prospects, financial condition and results of operations could be materially adversely affected.
Changes in policy and laws may require disclosures and commitments that we are not able to meet, and regulations, treaties or initiatives in response to climate change could result in increased operational costs associated with environmental regulations and increased compliance and energy costs, each of which could harm our business and results of operations by increasing our expenses or requiring us to alter our operations.
Changes in policy and laws may require disclosures and commitments that we are not able to meet, and regulations, treaties or initiatives related to climate change could result in increased operational costs associated with environmental regulations and increased compliance and energy costs, each of which could harm our business and results of operations by increasing our expenses or requiring us to alter our operations.
Any such errors could result in disruptions to the proper functioning of the software we build, cause disruptions in our customers’ business, and allow unauthorized access to our or our customers’ proprietary information, resulting in claims for damages against us, litigation, and reputational harm that could materially adversely affect our business. General Risk Factors Our stock price is volatile.
Any such errors could result in disruptions to the proper functioning of the software we build, cause disruptions in our clients’ business, and allow unauthorized access to our or our clients’ proprietary information, resulting in claims for damages against us, litigation, and reputational harm that could materially adversely affect our business. General Risk Factors Our stock price is volatile.
If we are unable to meet our customers’ expectations relating to the ownership of the intellectual property underlying software deliverables, we may face legal liability. We believe AI software developers occasionally indemnify their licensees against intellectual property claims, but we think it is unlikely such indemnification obligations would cover our potential damages, if any.
If we are unable to meet our clients’ expectations relating to the ownership of the intellectual property underlying software deliverables, we may face legal liability. We believe AI software developers occasionally indemnify their licensees against intellectual property claims, but we think it is unlikely such indemnification obligations would cover our potential damages, if any.
Travel restrictions resulting from natural or man-made disruptions, pandemics or other public health events, and political or social conflict increase the difficulty of obtaining and retaining highly skilled and qualified professionals and could unexpectedly increase our labor costs and expenses, both of which could also adversely affect our ability to serve our customers.
Travel restrictions resulting from natural or man-made disruptions, pandemics or other public health events, and political or social conflict increase the difficulty of obtaining and retaining highly skilled and qualified professionals and could unexpectedly increase our labor costs and expenses, both of which could also adversely affect our ability to serve our clients.
In the ordinary course of business, we collect, store, process, transmit, and view sensitive or confidential data, including intellectual property, proprietary business information and personally identifiable information belonging to us, our customers, our respective employees, and other end users. This information is stored in our data centers and networks or in the data centers and networks of third-party providers.
In the ordinary course of business, we collect, store, process, transmit, and view sensitive or confidential data, including intellectual property, proprietary business information and personally identifiable information belonging to us, our clients, our respective employees, and other end users. This information is stored in our data centers and networks or in the data centers and networks of third-party providers.
Wage inflation, whether driven by competition for talent, ordinary course pay increases, or broader market forces, all increase our cost of providing services and reduce our profitability when we are not able to pass those costs on to our customers or adjust prices when justified by market demand.
Wage inflation, whether driven by competition for talent, ordinary course pay increases, or broader market forces, all increase our cost of providing services and reduce our profitability when we are not able to pass those costs on to our clients or adjust prices when justified by market demand.
Implementing our services also involves a significant commitment of resources over an extended period of time from both our customers and us. Our current and future customers may not be willing or able to invest the time and resources necessary to implement our services, and we may fail to close sales with potential customers despite devoting significant time and resources.
Implementing our services also involves a significant commitment of resources over an extended period of time from both our clients and us. Our current and future clients may not be willing or able to invest the time and resources necessary to implement our services, and we may fail to close sales with potential clients despite devoting significant time and resources.
In order to protect against potential cyberattacks or other information security threats, some of our customers have implemented steps to block internet communications with Ukraine and Belarus, which has had a material adverse effect on our ability to deliver our services from those locations.
In order to protect against potential cyberattacks or other information security threats, some of our clients have implemented steps to block internet communications with Ukraine and Belarus, which has had a material adverse effect on our ability to deliver our services from those locations to those clients.
There is a risk that negative information about us, even if untrue, could adversely affect our business, could cause damage to our reputation and be challenging to repair, could make potential or existing customers reluctant to select us for new engagements, and could adversely affect our recruitment and retention efforts.
There is a risk that negative information about us, even if untrue, could adversely affect our business, could cause damage to our reputation and be challenging to repair, could make potential or existing clients reluctant to select us for new engagements, and could adversely affect our recruitment and retention efforts.
Our reliance on visas to staff projects with employees who are not citizens of the country where the work is to be performed makes us vulnerable to legislative and administrative changes in the number of visas to be issued in any particular year and other work permit laws and regulations.
Our reliance on visas to staff projects with employees who are not citizens of the country where the work is performed makes us vulnerable to changes in the number of visas to be issued in any particular year and other work permit laws and regulations.
Although a substantial majority of our revenues are generated from customers who also contributed to our revenues during the prior year, our engagements with our customers are typically for projects that are singular in nature. Therefore, we must seek to obtain new engagements when our current engagements end.
Although a substantial majority of our revenues are generated from clients who also contributed to our revenues during the prior year, our engagements with our clients are typically for projects that are singular in nature. Therefore, we must seek to obtain new engagements when our current engagements end.
Rapidly changing technologies, methodologies and evolving industry standards are inherent in the market for our products and services. Our ability to anticipate developments in our industry, enhance our existing services, develop and introduce new services, provide enhancements and new features for our products, and keep pace with changes and developments are critical to meeting changing customer needs.
Rapidly changing technologies, methodologies and evolving industry standards are inherent in the market for our products and services. Our ability to anticipate developments in our industry, enhance our existing services, develop and introduce new services, provide enhancements and new features for our products, and keep pace with changes and developments are critical to meeting changing client needs.
There may be adverse tax and employment law consequences if the independent contractor status of some of our personnel or the exempt status of our employees is successfully challenged. In several countries, certain of our personnel and certain of the personnel of companies that we have acquired are retained as independent contractors.
There may be adverse tax and employment law consequences if the independent contractor status of some of our personnel or the exempt status of our employees is successfully challenged. In several countries, some of our personnel or the personnel of companies that we acquired are retained as independent contractors.
In addition, the availability of a sufficient number of visas without significant additional costs could limit our ability to provide services to our customers on a timely and cost-effective basis or manage our sales and delivery centers as efficiently as we otherwise could.
In addition, the availability of a sufficient number of visas without significant additional costs could limit our ability to provide services to our clients on a timely and cost-effective basis or manage our sales and delivery centers as efficiently as we otherwise could.
Our customers and certain vendors are generally obligated to keep our information confidential, but if these contractual obligations are not entered, or are breached or deemed unenforceable, our trade secrets, know-how or other proprietary information may be subject to unauthorized use, misappropriation or disclosure.
Our clients and certain vendors are generally obligated to keep our information confidential, but if these contractual obligations are not entered, or are breached or deemed unenforceable, our trade secrets, know-how or other proprietary information may be subject to unauthorized use, misappropriation or disclosure.
We cannot guarantee that our information security supply chain has not been breached and does not contain exploitable defects, bugs, or vulnerabilities that could result in an incident, breach, or other disruption to our system or the systems of our customers or suppliers.
We cannot guarantee that our information security supply chain has not been breached and does not contain exploitable defects, bugs, or vulnerabilities that could result in an incident, breach, or other disruption to our system or the systems of our clients or suppliers.
Some of the countries where we operate have sanctioned certain of the banks that we use in the emerging market economies where we also have operations, which has delayed our intercompany payments and could delay or prevent payments to vendors or receipts from customers.
Some of the countries where we operate have sanctioned certain of the banks that we use in the emerging market economies where we also have operations, which has delayed our intercompany payments and payments to vendors and could delay or prevent receipts from clients.
Larger and more complex projects that involve multiple engagements or stages heighten those pricing risks because a customer may choose not to retain us for additional stages or delay forecasted engagements, which disrupts our planned project resource requirements.
Larger and more complex projects that involve multiple engagements or stages heighten those pricing risks because a client may choose not to retain us for additional stages or delay forecasted engagements, which disrupts our planned project resource requirements.
Customers may prefer service providers that have more locations, more personnel, more experience in a particular country or market, or that are based in countries that are more cost-competitive or have the perception of being more stable than some of the emerging markets in which we operate.
Clients may prefer service providers that have more locations, more personnel, more experience in a particular country or market, or that are based in countries that are more cost-competitive or have the perception of being more stable than some of the emerging markets in which we operate.
Additionally, as we expand into serving new industry verticals, our solutions and technology may be used by, or generally affect, a broader base of customers and end users, which may expose us to new business and operational risks.
Additionally, as we expand into serving new industry verticals, our solutions and technology may be used by, or generally affect, a broader base of clients and end users, which may expose us to new business and operational risks.
Our corporate reputation is susceptible to damage by actions or statements made by current or former customers and employees, competitors, vendors, adversaries in legal proceedings, government regulators, as well as members of the investment community and the media.
Our corporate reputation is susceptible to damage by actions or statements made by current or former clients and employees, competitors, vendors, adversaries in legal proceedings, government regulators, as well as members of the investment community and the media.
The risk of underpricing our services or underestimating the costs of performing the work is heightened in fixed-price contracts and in contracts that require our customer to receive a productivity benefit as a result of the services performed under the contract.
The risk of underpricing our services or underestimating the costs of performing the work is heightened in fixed-price contracts and in contracts that require our client to receive a productivity benefit as a result of the services performed under the contract.
We must also educate our employees, contractors, and customers about the need to effectively use security measures. The cost of information security measures, either to protect our information or the information of our customers, and the cost of complying with privacy and information security disclosure regulations, reduces our profitability.
We must also educate our employees, contractors, and clients about the need to effectively use security measures. The cost of information security measures, either to protect our information or the information of our clients, and the cost of complying with privacy and information security disclosure regulations, reduces our profitability.
GDPR, and GDPR each established complex legal obligations that organizations must follow with respect to the processing of personal data, including a prohibition on the transfer of personal information to third parties or to other countries, and the imposition of additional notification, security and other control measures. Recent developments in privacy regulations, including the new EU-U.S.
GDPR, and GDPR each established complex legal obligations which organizations must follow with respect to the processing of personal data, including a prohibition on the transfer of personal information to third parties or to other countries, and the imposition of additional notification, security and other control measures. Recent developments in privacy regulations, including the EU-U.S.
Other developments in the industries in which we operate may increase the demand for lower cost or lower quality IT services and decrease the demand for our services or increase the pressure our customers put on us to reduce pricing.
Other developments in the industries in which we operate may increase the demand for lower cost or lower quality IT services and decrease the demand for our services or increase the pressure our clients put on us to reduce pricing.
Our service model relies on maintaining active and stable utility connections, voice and data communications, online resource management, financial and operational record management, customer service and data processing systems between our customer sites, our delivery centers and our customer management locations.
Our service model relies on maintaining active and stable utility connections, voice and data communications, online resource management, financial and operational record management, client service and data processing systems between our client sites, our delivery centers and our client management locations.
Other parties, such as our customers’ customers, who have a private right of action, will seek damages for any information security or privacy breach on an individual or collective basis, and our customers have in the past, and may in the future, request to be indemnified against such claims.
Other parties, such as our clients’ customers, who have a private right of action, will seek damages for any information security or privacy breach on an individual or collective basis, and our clients have in the past, and may in the future, request to be indemnified against such claims.
These events have resulted and could in the future result in a reduction in our revenues, damage to our reputation, and in customers terminating our engagement and making claims for substantial damages against us.
These events have resulted and could in the future result in a reduction in our revenues, damage to our reputation, and in clients terminating our engagement and making claims for substantial damages against us.
Our customers, particularly those in the Financial Services and Life Sciences & Healthcare industry verticals, may have enhanced or particular security requirements which we must address in our engineering and development services.
Our clients, particularly those in the Financial Services and Life Sciences & Healthcare industry verticals, may have enhanced or particular security requirements which we must address in our engineering and development services.
To defend against information security threats internally, at our third-party providers, and on our customers’ systems, we must continuously engineer or purchase more secure products and services, enhance security and reliability features, improve deployment and compliance with software updates, assess and develop mitigation strategies and technologies to help secure information, hire information security specialists, and maintain a security infrastructure that protects our network, products, and services, and the software we build for our customers.
To defend against information security threats internally, at our third-party providers, and on our clients’ systems, we must continuously engineer or purchase more secure products and services, enhance security and reliability features, improve deployment and compliance with software updates, assess and develop mitigation strategies and technologies to help secure information, hire information security specialists, and maintain a security infrastructure that protects our network, products, and services, and the software we build for our clients.
Enforcement actions taken by data protection authorities, as well as audits, investigations, or lawsuits by one or more individuals, organizations, or foreign government agencies often result in penalties and fines for non-compliance or claims against us seeking damages as a result of a breach of these regulations.
Enforcement actions taken by data protection authorities, as well as audits, investigations, or lawsuits by one or more individuals, organizations, or foreign government agencies have resulted in penalties and fines for non-compliance or claims against us seeking damages as a result of a breach of these regulations.
Customers tend to engage multiple IT services providers instead of using an exclusive IT services provider, which reduces our revenues and places downward pressure on pricing among competing IT services providers.
Clients tend to engage multiple IT services providers instead of using an exclusive IT services provider, which reduces our revenues and places downward pressure on pricing among competing IT services providers.
Developing solutions for our customers is extremely complex and is expected to become increasingly complex and expensive in the future due to the introduction of new platforms, operating systems, technologies and methodologies.
Developing solutions for our clients is extremely complex and is expected to become increasingly complex and expensive in the future due to the introduction of new platforms, operating systems, technologies and methodologies.
Our failure to enhance our existing services and products and to develop and introduce new services and products to promptly address the needs of our customers could have a material adverse effect on our business.
Our failure to enhance our existing services and products and to develop and introduce new services and products to promptly address the needs of our clients could have a material adverse effect on our business.
We cannot provide assurance that, despite testing by our customers and us, errors will not be found in the software products we develop or the services we perform.
We cannot provide assurance that, despite testing by our clients and us, errors will not be found in the software products we develop or the services we perform.
Our business activities may be materially disrupted in the event of a partial or complete failure of any of these technologies or systems, which could be due to software malfunction, computer virus attacks, conversion errors due to system upgrades, damage from fire, earthquake, power loss, military action, telecommunications failure, unauthorized entry, government shutdowns, demands placed on internet infrastructure by growing numbers of users, increased bandwidth requirements or other events beyond our control.
Our business activities may be materially disrupted in the event of a partial or complete failure of any of these technologies or systems, which could be due to software malfunction, cybersecurity attacks, conversion errors due to system upgrades, damage from fire, earthquake, power loss, military action, telecommunications failure, unauthorized entry, government shutdowns, demands placed on internet infrastructure by users, increased bandwidth requirements or other events beyond our control.
Our ability to keep pace with, anticipate or respond to changes and developments is subject to a number of risks, including that: • we may not be able to develop new, or update existing services, applications, tools and software quickly or inexpensively enough to meet our customers’ needs; • we may find it difficult or costly to make existing software and products work effectively and securely over the internet or with new or changed operating systems; • we may find it challenging to develop new, or update existing software, services, and products to keep pace with evolving industry standards, methodologies, technologies, and regulatory developments in the industries where our customers operate at a pace and cost that is acceptable to our customers; and • we may find it difficult to maintain high quality levels with new technologies and methodologies.
Our ability to keep pace with, anticipate or respond to changes and developments is subject to a number of risks, including that: • we may not be able to develop new, or update existing services, applications, tools and software quickly or inexpensively enough to meet our clients’ needs; • we may find it difficult or costly to make existing software and products work effectively and securely over the internet or with new or changed operating systems; • we may find it challenging to develop new, or update existing software, services, and products to keep pace with evolving industry standards, methodologies, technologies, and regulatory developments in our clients’ industries at a pace and cost that is acceptable to our clients; and • we may find it difficult to maintain high quality levels with new technologies and methodologies.
Our customers’ ability to terminate engagements with or without cause and our customers’ inability or unwillingness to pay for services we performed makes our future revenues and profitability uncertain.
Our clients’ ability to terminate engagements with or without cause and our clients’ inability or unwillingness to pay for services we performed makes our future revenues and profitability uncertain.
Termination, non-renewal, or renegotiation of a customer contract or delayed starts to projects could cause us to experience a higher-than-expected number of unassigned employees and thus compress our margins until we are able to reallocate our headcount.
Termination, non-renewal, or renegotiation of a client contract or delayed starts to projects cause us to experience a higher-than-expected number of unassigned employees and thus compress our margins until we are able to reallocate our headcount.
Our ability to maintain continuing relationships with our major customers and successfully obtain payment for our services is essential to the growth and profitability of our business.
Our ability to maintain continuing relationships with our major clients and successfully obtain payment for our services is essential to the growth and profitability of our business.
Whether in these countries or in others in which we operate, prolonged civil unrest, political instability or uncertainty, military activities, broad-based sanctions or counter-sanctions, should they continue for the long-term or escalate, could require us to further rebalance our geographic concentrations and could have a material adverse effect on our personnel, operations, financial results and business outlook.
In any of the countries in which we operate, prolonged civil unrest, political instability or uncertainty, military activities, broad-based sanctions or counter-sanctions, should they continue for the long-term or escalate, could require us to further rebalance our geographic concentrations and could have a material adverse effect on our personnel, operations, financial results and business outlook.
We must successfully attract, hire, train and retain qualified personnel to service our customers’ projects and we must productively utilize those personnel to remain profitable.
We must successfully attract, hire, train and retain qualified personnel to service our clients’ projects and we must productively utilize those personnel to remain profitable.
If our pricing structures are based on inaccurate expectations and assumptions regarding the cost and complexity of performing our work, or if we are not able to maintain favorable pricing for our services, then our contracts could be unprofitable. We face a number of risks when pricing our contracts and setting terms with our customers.
If our pricing structures are based on inaccurate expectations and assumptions regarding the cost and complexity of performing our work, or if we are not able to maintain favorable pricing for our services, then our contracts could be unprofitable. We face a number of risks when pricing our contracts with our clients.
We are required to establish processes and change certain operations in relation to the processing of personal data as a result of privacy laws, which involves substantial expense and distraction from other aspects of our business. 22 Table of Conten t s Undetected software design defects, errors or failures may result in loss of business or in liabilities that could materially adversely affect our business.
We are required to establish processes and change certain operations in relation to the processing of personal data as a result of privacy laws, which involves substantial expense and distraction from other aspects of our business. Undetected software design defects, errors or failures may result in loss of business or in liabilities that could materially adversely affect our business.
We have and will continue to invest in new lines of business, such as software development education, AI, and expanded consulting services. As we introduce new services, enter into new markets and new customer relationships, and take on increasingly large and complex projects, our business will face new risks and challenges.
We have and will continue to invest in new lines of business, such as software development education, AI and generative AI, expanded consulting services, and in new geographies. As we introduce new services, enter into new markets and new client relationships, and take on increasingly large and complex projects, our business will face new risks and challenges.
Expectations from our customers, investors, employees, and regulators regarding our environmental, social, and governance, or ESG, strategy and commitments continue to evolve.
Expectations from our clients, investors, employees, and regulators regarding our environmental, social, and governance, or ESG, strategy and commitments continue to evolve.
Errors or defects in design, execution, or quality inspections may result in the loss of current customers, revenues, market share, or customer data, a failure to attract new customers or achieve market acceptance and could divert development resources and increase support or service costs.
Errors or defects in design, execution, or quality inspections may result in the loss of current clients, revenues, market share, or client data, a failure to attract new clients or achieve market acceptance and could divert development resources and increase support or service costs.
Customers may be unwilling to pay rates for human delivery personnel if they perceive that the same services can be performed by less expensive generative AI and may seek other service providers or price concessions to retain their business, which could adversely affect our financial results.
Clients may be unwilling to pay rates for human delivery personnel if they perceive that the same services can be performed less expensively by generative AI and may seek other service providers or expect price concessions to retain their business, which could adversely affect our financial results.
Risks Related to Our Operations Increases in wages, equity compensation, and other compensation expenses could prevent us from sustaining our competitive advantage, increase our costs, and result in dilution to our stockholders. Wages for technology professionals in the emerging markets where we have significant operations and delivery centers are lower than comparable wages in more developed countries.
Risks Related to Our Operations Increases in wages, equity compensation, and other compensation expenses could limit our competitive advantage, increase our costs, and result in dilution to our stockholders. Wages for technology professionals in the emerging markets where we have significant operations and delivery centers are lower than comparable wages in more developed countries.
Involuntary liquidation of any of our subsidiaries could materially adversely affect our financial condition and results of operations. 14 Table of Conten t s The focus on environmental, social and governance topics, including commitments and disclosures we have made and may need to make, may result in additional operational costs and negative reputational impacts.
Involuntary liquidation of any of our subsidiaries could materially adversely affect our financial condition and results of operations. The focus on environmental, social and governance topics, including commitments and disclosures we have made and may need to make, may result in additional operational costs and negative reputational impacts.
We may not be successful in anticipating or responding to these developments in a timely manner, or if we do respond, the services, products, technologies or methodologies we develop or implement may not be successful in the marketplace. Further, services, products, technologies or methodologies that our competitors develop may render our services or products non-competitive or obsolete.
We may not be successful in anticipating or responding to these developments in a timely manner, and the services, products, technologies or methodologies we do develop, or implement may not be successful in the marketplace. Services, products, technologies or methodologies that our competitors develop may render our services or products non-competitive or obsolete.
Some of our customer agreements do not limit our potential liability for occurrences such as breaches of confidentiality and intellectual property infringement indemnity, and we cannot generally limit liability to third parties with which we do not have a contractual relationship.
Some of our client agreements do not limit our potential liability for occurrences such as breaches of confidentiality and intellectual property infringement, and we cannot generally limit the liability to third parties with which we do not have a contractual relationship.
War, terrorism, riot, civil insurrection or social unrest; man-made and natural disasters, the severity and frequency of which have increased due to climate change, and include famine, flood, fire, earthquake, pandemics and other regional or global health crises, storm or disease, may cause customers to delay their decisions on spending for the services we provide and give rise to sudden significant changes in regional and global economic conditions and cycles.
War, terrorism, riot, civil insurrection or social unrest; man-made and natural disasters, the severity and frequency of which have increased due to climate change, including famine, flood, fire, earthquake, pandemics and other regional or global health crises, and storms, may cause clients to delay their decisions on spending for the services we provide and give rise to sudden significant changes in regional and global economic conditions and cycles.
Some of our present and potential competitors have substantially greater financial, marketing or technical resources; therefore, we may be unable to retain our customers or successfully attract new customers. Increased competition, our inability to compete successfully, pricing pressures or loss of market share could have a material adverse effect on our business.
Some of our competitors have substantially greater financial, marketing or technical resources and we may be unable to retain our clients or successfully attract new clients. Increased competition, our inability to compete successfully, pricing pressures or loss of market share could have a material adverse effect on our business.
Therefore, our selling cycle is subject to many risks and delays over which we have little or no control, including our customers’ decision to select another service provider or in-house resources to perform the services, the timing of our customers’ budget cycles, and customer procurement and approval processes.
Therefore, our selling cycle is subject to many risks and delays over which we have little or no control, including our clients’ decision to select another service provider or use in-house resources to perform the services, the timing of our clients’ budget cycles, and client procurement and approval processes.
Because of such inherent uncertainties, we may underprice our projects, fail to accurately estimate the costs of performing the work or fail to accurately assess the risks associated with potential contracts, such as defined performance goals, service levels, and completion schedules.
Because of such inherent uncertainties, we may underprice our projects or fail to accurately assess the risks associated with potential contracts, such as defined performance goals, service levels, and completion schedules.
Any significant failure to generate revenues or delays in recognizing revenues after incurring costs related to our sales or services processes could have a material adverse effect on our business. If we are unable to adapt to rapidly changing technologies, methodologies and evolving industry standards, we may lose customers and our business could be materially adversely affected.
Any significant failure to generate revenues or delays in recognizing revenues after incurring costs related to our sales or services processes could have a material adverse effect on our business. 17 Table of Contents If we are unable to adapt to rapidly changing technologies, methodologies and evolving industry standards, we may lose clients and our business could be materially adversely affected.
In the event that our trademarks are successfully challenged, we could be forced to rebrand our services and solutions, which could result in loss of brand recognition, and could require us to devote additional resources to advertising and marketing new brands.
If our trademarks are successfully challenged, we could be forced to rebrand our services and solutions, which could result in loss of brand recognition, and could require us to devote additional resources to advertising and marketing new brands.
We may not be able to successfully anticipate and prepare for any such changes, which could adversely affect our results of operations. Furthermore, developments in the industries we serve could shift customer demand to new services, solutions or technology.
We may not be able to successfully anticipate and prepare for any such changes, which could adversely affect our results of operations. Furthermore, developments in the industries we serve shift client demand to new services, solutions or technology, such as generative AI.
However, the volume of work performed for any specific customer is likely to vary from year to year, especially since we generally are not our customers’ exclusive IT services provider and we generally do not have long-term commitments from customers to purchase our services. We may also fail to assess the creditworthiness of our customers adequately or accurately.
However, the volume of work performed for any specific client is likely to vary from year to year, especially since we generally are not our clients’ exclusive IT services provider and we generally do not have long-term commitments from clients to purchase our services. We may also fail to assess the creditworthiness of our clients adequately or accurately.
If a tax authority in any jurisdiction reviews any of our tax returns and proposes an adjustment, including, but not limited to, a determination that the transfer prices and terms we have applied are not appropriate, such an adjustment could have a negative impact on our results of operations, business, and profitability. Item 1B. Unresolved Staff Comments None.
If a tax authority in any jurisdiction reviews any of our tax returns and proposes an adjustment, including, but not limited to, a determination that the transfer prices and terms we have applied are not appropriate, such an adjustment could have a negative impact on our results of operations, business, and profitability.
We have significant operations and personnel in Ukraine and Belarus. Ongoing conflict and disruption in the region following Russia’s invasion of Ukraine in February 2022 has had and could continue to have a material adverse effect on our business, customers, service delivery, and financial results.
Ongoing conflict and disruption in the region following Russia’s invasion of Ukraine in February 2022 has had and could continue to have a material adverse effect on our operations, personnel, business, clients, service delivery, and financial results.
As we plan, develop, and implement changes to our delivery model to balance those services that can only be performed by humans against those that can be performed by generative AI, we may have insufficient or excess delivery personnel than required to meet customer demand.
As we plan, develop, and implement changes to our delivery model to balance those services that can only be performed by humans against those that can be performed leveraging generative AI, we may have insufficient or excess delivery personnel than we require to meet client demand.
Delays in obtaining visas or other work authorizations may result in delays in the ability of our personnel to travel to meet with and provide services to our customers or to continue to provide services on a timely basis.
Delays in obtaining visas or other work authorizations may delay the ability of our personnel to travel to meet with and provide services to our clients or to continue to provide services on a timely basis.
This uncertainty results in increased compliance costs, as well as the risk of regulatory enforcement actions, which can result in significant financial penalties, private lawsuits, reputational damage, blockage of international data transfers, disruption to business, and loss of customers.
This uncertainty results in increased compliance costs and increases the risk of regulatory enforcement actions which can result in significant financial penalties, private lawsuits, reputational damage, blockage of international data transfers, disruption to business, and loss of clients.
Risks Related to Our Industry and Customers We generally do not have long-term commitments from our customers, our customers may terminate contracts before completion or choose not to renew contracts, and we are not guaranteed payment for services performed under contract. A loss of business or non-payment from significant customers could materially affect our results of operations.
Risks Related to Our Industry and Clients We generally do not have long-term commitments from our clients, our clients may terminate contracts before completion or choose not to renew contracts, and we are not guaranteed payment for services. Loss of business or non-payment from significant clients could materially affect our results of operations.

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Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

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Biggest changeThe Board of Directors or its leadership, as well as designated members of functional areas such as legal and communications, are also informed of cybersecurity incidents with the potential to have a business impact on EPAM, even if they are not material to EPAM. 24 Table of Conten t s Our information security programs are led by our Chief Information Security Officer and our Head of Global Operations and encompass our overall information security strategy, policy, operations, and threat detection and response management.
Biggest changeMembers of the Board or its leadership, as well as designated members of functional areas such as legal and communications, are also informed of cybersecurity incidents with the potential to have a business impact on EPAM, even if the incidents are not material to EPAM.
For more information about the cybersecurity risks we face, see the risk factor entitled “Security breaches and other disruptions to our network security that compromise our information will expose us to liability and would cause our business and reputation to suffer.” in Item 1A – Risk Factors.
For more information about the cybersecurity risks we face, see the risk factor entitled “Security breaches and other disruptions to our network security that compromise our information expose us to liability and cause our business and reputation to suffer.” in Item 1A – Risk Factors.
Item 1C. Cybersecurity Our Cybersecurity Risk Management Program We believe cybersecurity is a critical element in our business and in enabling digital transformation for our customers. EPAM and our customers and suppliers all face risks from cybersecurity threats and a cybersecurity incident impacting any or all of us could materially adversely affect our operations, performance and results of operations.
Item 1C. Cybersecurity Our Cybersecurity Risk Management Program We believe cybersecurity is a critical element in our business and in enabling digital transformation for our clients. EPAM and our clients and suppliers all face risks from cybersecurity threats and a cybersecurity incident impacting any or all of us could materially adversely affect our operations, performance, reputation, and results of operations.
Our information security leadership has more than 50 years of combined experience in software product engineering, security, and IT services, with extensive operational, cybersecurity, and global management experience in our or other corporate information security roles and organizations. Our information security leadership is also responsible for notifying our management and Board of Directors about cybersecurity threats and incidents.
Our information security leadership has more than 50 years of combined experience in software product engineering, security, and IT services, with extensive operational, cybersecurity, and global management experience in our or other corporate information security roles and organizations. Our information security leadership is also responsible for notifying our management and members of the Board about cybersecurity threats and incidents.
Cybersecurity Risk Governance Several of the members of our Board of Directors have extensive experience in the information technology and information security industries, so our entire Board of Directors oversees EPAM’s cybersecurity risk exposure and our management’s processes for identifying, monitoring, and mitigating cybersecurity risks.
Cybersecurity Risk Governance Several of the members of our Board of Directors have extensive experience in the information technology and information security industries, so our entire Board historically oversaw EPAM’s cybersecurity risk exposure and our management’s processes for identifying, monitoring, and mitigating cybersecurity risks.
Our Chief Information Security Officer and our Head of Global Operations brief the Board of Directors on our cybersecurity and information security programs and risks, both as a regular, standalone topic and as part of EPAM’s enterprise risk management program, where it remains rated as a high priority risk that has been integrated into our regular enterprise risk management assessments.
In addition to regular and periodic updates to the cybersecurity subcommittee, our Chief Information Security Officer and our Head of Global Operations brief the Board on our cybersecurity and information security programs and risks, both as a regular, standalone topic and as part of EPAM’s enterprise risk management program, where it remains rated as a high priority risk that has been integrated into our regular enterprise risk management assessments.
Prior cybersecurity incidents have not had a material effect on our business, financial condition, results of operations, or cash flows but we cannot provide assurances that there will not be material cybersecurity incidents in the future.
As of the year ending December 31, 2024, prior cybersecurity incidents have not, to our knowledge, had a material effect on our business, financial condition, results of operations, or cash flows but we cannot provide assurances that there will not be material cybersecurity incidents in the future that have a material adverse effect on our business, finances, operations, or reputation.
We are regularly subject to evaluations, assessments, audits, tests, and compliance inspections by customers and third-party auditors that we or our customers engage to evaluate and test our cybersecurity risk management processes. In addition to internal and external assessments of our own preparedness, we also seek to evaluate cybersecurity risks arising from our vendors and other third-party service providers.
We are regularly subject to evaluations, assessments, audits, tests, and compliance inspections by clients and third-party auditors that we or our clients engage to evaluate and test our cybersecurity risk management processes.
Added
In 2024, the Board delegated cybersecurity and information technology systems oversight to the Audit Committee while simultaneously creating a subcommittee of the Audit Committee solely focused on EPAM’s cybersecurity and information security, including risk monitoring, assessment and management systems and policies.
Added
The purpose of the delegation was to increase bilateral access and communication between our cybersecurity management and our Board members and to supplement and accelerate the cadence of cybersecurity updates and discussion in addition to the regular briefings provided to the entire Board.
Added
Our information security programs are led by our Chief Information Security Officer and our Head of Global Operations and encompass our overall information security strategy, policy, operations, and threat detection and response management.
Added
We have established processes and a committee to gather facts to make a multi-layered evaluation and determination of the impact and materiality of cybersecurity incidents and to apply information learned from each incident to protect EPAM, its personnel, and its clients from future cybersecurity risks. 24 Table of Contents In addition to internal and external assessments of our own preparedness, we also seek to evaluate cybersecurity risks arising from our vendors and other third-party service providers.

Item 2. Properties

Properties — owned and leased real estate

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Biggest changeOur facilities are used interchangeably among our segments. 25 Table of Conten t s See Note 18 “Segment Information” in the notes to our consolidated financial statements in this Annual Report on Form 10-K for information regarding the geographical locations and values of our long-lived assets.
Biggest changeOur facilities are used interchangeably among our segments. See Note 19 “Segment Information” in the notes to our consolidated financial statements in this Annual Report on Form 10-K for information regarding the geographical locations and values of our long-lived assets.
We actively monitor the spaces we occupy and adjust the leased capacity and geographical locations of offices as our operational needs change. During 2023, we continued to operate under a hybrid work model and we believe our existing facilities, both owned and leased, are in good operating condition and suitable for the conduct of our business.
We actively monitor the spaces we occupy and adjust the leased capacity and geographical locations of offices as our operational needs change. We continue to operate under a hybrid work model and we believe our existing facilities, both owned and leased, are in good operating condition and suitable for the conduct of our business.

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

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Biggest changeMine Safety Disclosures None. 26 Table of Conten t s PART II
Biggest changeMine Safety Disclosures None. 25 Table of Contents PART II

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changeCOMPARISON OF CUMULATIVE TOTAL RETURN (1)(2) Among EPAM, a Peer Group (3) , S&P 500 IT Index (4) and the S&P 500 Index Company/Index Base period 12/31/2018 12/31/2019 12/31/2020 12/31/2021 12/31/2022 12/31/2023 EPAM Systems, Inc. $ 100.00 $ 182.88 $ 308.90 $ 576.20 $ 282.51 $ 256.31 Peer Group (3) $ 100.00 $ 97.94 $ 144.66 $ 185.71 $ 106.06 $ 143.67 S&P 500 IT Index (4) $ 100.00 $ 150.29 $ 216.25 $ 290.92 $ 208.90 $ 329.73 S&P 500 Index $ 100.00 $ 131.49 $ 155.68 $ 200.37 $ 164.08 $ 207.21 (1) Graph assumes $100 invested on December 31, 2018 in our common stock, a Peer Group, the S&P 500 IT Index and the S&P 500 Index.
Biggest changeCOMPARISON OF CUMULATIVE TOTAL RETURN (1)(2) Among EPAM, S&P 500 IT Index and the S&P 500 Index Company/Index Base period 12/31/2019 12/31/2020 12/31/2021 12/31/2022 12/31/2023 12/31/2024 EPAM Systems, Inc. $ 100.00 $ 168.91 $ 315.07 $ 154.48 $ 140.15 $ 110.21 S&P 500 IT Index $ 100.00 $ 143.89 $ 193.58 $ 139.00 $ 219.40 $ 299.72 S&P 500 Index $ 100.00 $ 118.40 $ 152.39 $ 124.79 $ 157.59 $ 197.02 (1) Graph assumes $100 invested on December 31, 2019 in our common stock, the S&P 500 IT Index and the S&P 500 Index.
Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities Market Information Our common stock is traded on the New York Stock Exchange (“NYSE”) under the symbol “EPAM.” Number of Holders As of February 9, 2024, we had approximately 15 stockholders of record of our common stock.
Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities Market Information Our common stock is traded on the New York Stock Exchange (“NYSE”) under the symbol “EPAM.” Number of Holders As of February 10, 2025, we had approximately 16 stockholders of record of our common stock.
Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters” in Part III of this Annual Report on Form 10-K for our equity compensation plan information. 27 Table of Conten t s Performance Graph The following graph compares the cumulative total stockholder return on our common stock with the cumulative total return on a Peer Group (capitalization weighted), the S&P 500 Information Technology Index and the S&P 500 Index for the period beginning December 31, 2018, and ending December 31, 2023.
Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters” in Part III of this Annual Report on Form 10-K for our equity compensation plan information. 26 Table of Contents Performance Graph The following graph compares the cumulative total stockholder return on our common stock with the cumulative total return on the S&P 500 Information Technology Index and the S&P 500 Index for the period beginning December 31, 2019, and ending December 31, 2024.
The transaction was exempt from the registration requirements of Section 4(a)(2) of the Securities Act, since the transaction did not involve any public offering. Purchases of Equity Securities by the Issuer and Affiliated Purchasers On February 13, 2023, the Board of Directors authorized a repurchase program for up to $500.0 million of our outstanding common stock.
The transaction was exempt from the registration requirements of Section 4(a)(2) of the Securities Act, since the transaction did not involve any public offering. 27 Table of Contents Purchases of Equity Securities by the Issuer and Affiliated Purchasers On August 1, 2024, the Board of Directors authorized a new share repurchase program (the “2024 Repurchase Program”) for up to $500.0 million of our outstanding common stock.
During the three months ended December 31, 2023, the Company purchased 8 thousand shares. During 2023, the Company purchased an aggregate of 103 thousand shares. These shares were not acquired pursuant to our securities repurchase program.
During the three months ended December 31, 2024, the Company purchased 11 thousand shares. During 2024, the Company purchased an aggregate of 120 thousand shares. These shares were not acquired pursuant to our securities repurchase program. Item 6. Reserved.
Share repurchase activity during the three months ended December 31, 2023 was as follows: Period Total Number of Shares Purchased Average Price Paid per Share (1) Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs Approximate Dollar Value of Shares that May Yet Be Purchased Under the Plans or Programs (in thousands, except per share amounts) October 1, 2023 to October 31, 2023 — $ — — $ 371,566 November 1, 2023 to November 30, 2023 80 $ 241.94 80 $ 352,240 December 1, 2023 to December 31, 2023 63 $ 273.81 63 $ 335,076 Total 143 143 (1) Average price paid per share in the period includes commission.
Share repurchase activity during the three months ended December 31, 2024 was as follows: Period Total Number of Shares Purchased Average Price Paid per Share (1) Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs Approximate Dollar Value of Shares that May Yet Be Purchased Under the Plans or Programs (in thousands, except per share amounts) October 1, 2024 to October 31, 2024 — $ — — $ 450,047 November 1, 2024 to November 30, 2024 — $ — — $ 450,047 December 1, 2024 to December 31, 2024 53 $ 241.99 53 $ 437,043 Total 53 53 (1) Average price paid per share in the period includes commission.
(“S4N”), a Panamanian corporation reported as one of the Other 2021 Acquisitions (see Note 3 “Acquisitions”), the Company issued 14 thousand shares of common stock to the S4N sellers under the terms of the purchase agreement and following achievement of certain performance metrics set forth under the purchase agreement.
(“S4N”), a Panamanian corporation acquired in 2021, the Company issued 13 thousand shares of common stock to the S4N sellers under the terms of the purchase agreement and following achievement of certain performance metrics set forth under the purchase agreement, as amended.
Removed
(2) Cumulative total return assumes reinvestment of dividends. (3) The Peer Group includes Cognizant Technology Solutions Corp. (NASDAQ:CTSH), DXC Technology Company (NYSE:DXC), Endava plc (NYSE:DAVA), Globant S.A. (NYSE:GLOB), Infosys Ltd. (NYSE:INFY), Perficient, Inc. (NASDAQ:PRFT), and Wipro Limited (NYSE:WIT).
Added
(2) Cumulative total return assumes reinvestment of dividends. Unregistered Sales of Equity Securities On December 31, 2024, in connection with the Company’s acquisition of all of the outstanding equity of S4N Holding, Inc.
Removed
(4) Beginning in 2023, we have elected to replace the Peer Group with the S&P Information Technology Index because we believe the new index represents a more diversified group of companies across the technology industry in which we operate and is more aligned with a comparable peer group.
Added
Prior to the authorization of the 2024 Repurchase Program, the Company repurchased common stock under the 2023 Repurchase Program and exhausted the $500.0 million authorized under that program as of June 30, 2024.
Removed
This index will replace our Peer Group in future filings, however, in this transition year both measures are included in the performance graph. 28 Table of Conten t s Unregistered Sales of Equity Securities On October 25, 2023, in connection with the Company’s acquisition of all of the outstanding equity of S4N Holding, Inc.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

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Biggest changeIn addition, we remain committed to diversifying our client base and adding more customers to our client mix through organic growth and strategic acquisitions, and over the long-term, we expect revenue concentration from our top customers to decrease. 35 Table of Conten t s The following table presents revenues contributed by our customers by amount and as a percentage of our revenues for the periods indicated: Year Ended December 31, 2023 2022 2021 (in thousands, except percentages) Top five customers $ 780,606 16.6 % $ 793,603 16.4 % $ 682,147 18.2 % Top ten customers $ 1,109,033 23.6 % $ 1,149,966 23.8 % $ 966,486 25.7 % Top twenty customers $ 1,660,174 35.4 % $ 1,698,916 35.2 % $ 1,394,546 37.1 % Customers below top twenty $ 3,030,366 64.6 % $ 3,125,782 64.8 % $ 2,363,598 62.9 % The following table shows the number of customers grouped by revenues recognized by the Company for each year presented: Year Ended December 31, 2023 2022 2021 Over $20 Million 44 49 40 $10 - $20 Million 56 51 38 $5 - $10 Million 76 85 63 $1 - $5 Million 305 303 271 $0.5 - $1 Million 175 185 133 Revenues by Service Offering Our service arrangements have been evolving to provide more customized and integrated solutions to our customers where we combine software engineering with customer experience design, business consulting and technology innovation services.
Biggest changeThe following table presents revenues contributed by our clients by amount and as a percentage of our revenues for the periods indicated: Year Ended December 31, 2024 2023 2022 (in thousands, except percentages) Top five clients $ 748,324 15.8 % $ 780,606 16.6 % $ 793,603 16.4 % Top ten clients $ 1,107,647 23.4 % $ 1,109,033 23.6 % $ 1,149,966 23.8 % Top twenty clients $ 1,615,267 34.2 % $ 1,660,174 35.4 % $ 1,698,916 35.2 % Clients below top twenty $ 3,112,673 65.8 % $ 3,030,366 64.6 % $ 3,125,782 64.8 % 34 Table of Contents The following table shows the number of clients grouped by revenues recognized by the Company for each year presented: Year Ended December 31, 2024 2023 2022 Over $20 Million 43 44 49 $10 - $20 Million 59 56 51 $5 - $10 Million 83 76 85 $1 - $5 Million 331 305 303 $0.5 - $1 Million 168 175 185 Revenues by Service Offering Our service arrangements have been evolving to provide more customized and integrated solutions to our clients where we combine software engineering with customer experience design, business consulting and technology innovation services in areas such as cloud platforms, cybersecurity and artificial intelligence.
The decrease in depreciation and amortization expense was primarily the result of lower depreciation on furniture, fixtures, other equipment and computer hardware, partially offset by increased depreciation on software licenses and increased amortization of acquired finite-lived intangible assets.
The decrease in depreciation and amortization expense was primarily the result of lower depreciation on furniture, fixtures, other equipment and computer hardware, partially offset by increased amortization of software licenses and acquired finite-lived intangible assets.
Changes in financial projections, market risk assumptions, discount rates or probability assumptions related to achieving the various earn-out criteria would result in a change in the fair value of contingent consideration. Such changes, if any, are recorded within Interest and other income/(loss), net in the Company’s consolidated statements of income.
Changes in financial projections, market risk assumptions, discount rates or probability assumptions related to achieving the various earn-out criteria would result in a change in the fair value of contingent consideration. Such changes, if any, are recorded within Interest and other income, net in the Company’s consolidated statements of income.
Management’s Discussion and Analysis of Financial Condition and Results of Operations — Results of Operations” of our Annual Report on Form 10-K for the year ended December 31, 2022. Loss on Sale of Business On July 26, 2023, the Company completed the sale of its remaining holdings in Russia to a third-party.
Management’s Discussion and Analysis of Financial Condition and Results of Operations — Results of Operations” of our Annual Report on Form 10-K for the year ended December 31, 2023. Loss on Sale of Business On July 26, 2023, the Company completed the sale of its remaining holdings in Russia to a third-party.
EPAM’s highest priority is the safety and security of its employees and their families in Ukraine as well as the broader region, and we have continued to support relocating our employees to lower risk locations, both in Ukraine and to other countries where we operate.
EPAM’s highest priority is the safety and security of its employees and their families in Ukraine as well as in the broader region, and we have continued to support relocating our employees to lower risk locations, both within Ukraine and to other countries where we operate.
Determining the estimated amount of such variable consideration involves assumptions and judgment that can have an impact on the amount of revenues reported. We derive revenues from a variety of service arrangements, which have been evolving to provide more customized and integrated solutions to customers by combining software engineering with customer experience design, business consulting and technology innovation services.
Determining the estimated amount of such variable consideration involves assumptions and judgment that can have an impact on the amount of revenues reported. We derive revenues from a variety of service arrangements, which have been evolving to provide more customized and integrated solutions to clients by combining software engineering with customer experience design, business consulting and technology innovation services.
We apply a practical expedient and do not assess the existence of a significant financing component if the period between transfer of the service to a customer and when the customer pays for that service is one year or less. We report gross reimbursable “out-of-pocket” expenses incurred as both revenues and cost of revenues in the consolidated statements of income.
We apply a practical expedient and do not assess the existence of a significant financing component if the period between transfer of the service to a client and when the client pays for that service is one year or less. We report gross reimbursable “out-of-pocket” expenses incurred as both revenues and cost of revenues in the consolidated statements of income.
Salaries and other compensation expenses of our delivery professionals are reported as cost of revenues regardless of whether the employees are actually performing services for customers during a given period. Our employees are a critical asset, necessary for our continued success and therefore we expect to continue hiring talented employees and providing them with competitive compensation programs.
Salaries and other compensation expenses of our delivery professionals are reported as cost of revenues regardless of whether the employees are actually performing services for clients during a given period. Our employees are a critical asset, necessary for our continued success and therefore we expect to continue hiring talented employees and providing them with competitive compensation programs.
Assumptions, risks and uncertainties inherent in the estimates used to measure progress could affect the amount of revenues, receivables and deferred revenues at each reporting period. Revenues from licenses which have significant stand-alone functionality are recognized at a point in time when control of the license is transferred to the customer.
Assumptions, risks and uncertainties inherent in the estimates used to measure progress could affect the amount of revenues, receivables and deferred revenues at each reporting period. Revenues from licenses which have significant stand-alone functionality are recognized at a point in time when control of the license is transferred to the client.
As a result, we have created a delivery base whereby our applications, tools, methodologies and infrastructure allow us to seamlessly deliver services and solutions from our global delivery centers to our customers across the world. Our teams of consultants, designers, architects, engineers and trainers have the capabilities and skill sets to deliver business results.
As a result, we have created a delivery base whereby our applications, tools, methodologies and infrastructure allow us to seamlessly deliver services and solutions from our global delivery centers to our clients across the world. Our teams of consultants, designers, architects, engineers and trainers have the capabilities and skill sets to deliver business results.
Customers have and may continue to seek altered terms, conditions, and delivery locations for the performance of services, delay planned work or seek services from alternate providers, or suspend, terminate, fail to renew, or reduce existing contracts or services, which could have a material adverse effect on our financial condition.
Clients have and may continue to seek altered terms, conditions, and delivery locations for the performance of services, delay planned work or seek services from alternate providers, or suspend, terminate, fail to renew, or reduce existing contracts or services, which could have a material adverse effect on our financial condition.
Such material adverse effects disrupt our delivery of services, cause us to shift all or portions of our work occurring in the region to other countries, restrict our ability to engage in certain projects in the region and serve certain customers in or from the region, and could negatively impact our personnel, operations, financial results and business outlook.
Such material adverse effects disrupt our delivery of services, cause us to shift all or portions of our work occurring in the region to other countries, restrict our ability to engage in certain projects in the region and serve certain clients in or from the region, and could negatively impact our personnel, operations, financial results and business outlook.
Revenues — We recognize revenues when control of goods or services is passed to a customer in an amount that reflects the consideration we expect to be entitled to in exchange for those goods or services. Such control may be transferred over time or at a point in time depending on satisfaction of obligations stipulated by the contract.
Revenues — We recognize revenues when control of goods or services is passed to a client in an amount that reflects the consideration we expect to be entitled to in exchange for those goods or services. Such control may be transferred over time or at a point in time depending on satisfaction of obligations stipulated by the contract.
Discussion of cost of revenues (exclusive of depreciation and amortization) from 2022 as compared to 2021 is included in “Part II. Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations — Results of Operations” of our Annual Report on Form 10-K for the year ended December 31, 2022.
Discussion of cost of revenues (exclusive of depreciation and amortization) from 2023 as compared to 2022 is included in “Part II. Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations — Results of Operations” of our Annual Report on Form 10-K for the year ended December 31, 2023.
Management’s Discussion and Analysis of Financial Condition and Results of Operations — Results of Operations” of our Annual Report on Form 10-K for the year ended December 31, 2022. Effects of Inflation Economies in many countries where we operate have periodically experienced high rates of inflation, including during 2023.
Management’s Discussion and Analysis of Financial Condition and Results of Operations — Results of Operations” of our Annual Report on Form 10-K for the year ended December 31, 2023. Effects of Inflation Economies in many countries where we operate have periodically experienced high rates of inflation, including during 2024.
Off-Balance Sheet Commitments and Arrangements We do not have any material obligations under guarantee contracts or other contractual arrangements other than as disclosed in Note 17 “Commitments and Contingencies” in the notes to our consolidated financial statements in this Annual Report on Form 10-K.
Off-Balance Sheet Commitments and Arrangements We do not have any material obligations under guarantee contracts or other contractual arrangements other than as disclosed in Note 18 “Commitments and Contingencies” in the notes to our consolidated financial statements in this Annual Report on Form 10-K.
We focus on building long-term partnerships with our customers in a market that is constantly challenged by the pressures of digitization through our innovative strategy and scalable software solutions, integrated advisory, business consulting and experience design, and a continually evolving mix of advanced capabilities.
We focus on building long-term partnerships with our clients in a market that is constantly challenged by the pressures of digitization through our innovative strategy and scalable software solutions, integrated advisory, business consulting and experience design, and a continually evolving mix of advanced capabilities.
Discussion of selling, general and administrative expenses from 2022 as compared to 2021 is included in “Part II. Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations — Results of Operations” of our Annual Report on Form 10-K for the year ended December 31, 2022.
Discussion of selling, general and administrative expenses from 2023 as compared to 2022 is included in “Part II. Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations — Results of Operations” of our Annual Report on Form 10-K for the year ended December 31, 2023.
Some of our customers have implemented steps to block internet communications with Ukraine and Belarus to protect against potential cyberattacks or other information security threats, which has caused a material adverse effect on our ability to deliver our services to these customers from those locations.
Some of our clients have implemented steps to block internet communications with Ukraine and Belarus to protect against potential cyberattacks or other information security threats, which has caused a material adverse effect on our ability to deliver our services to these clients from those locations.
Fees for these contracts may be in the form of time-and-materials or fixed-price arrangements. We generate the majority of our revenues under time-and-material contracts, which are billed using hourly, daily or monthly rates to determine the amounts to be charged directly to the customer.
Fees for these contracts may be in the form of time-and-materials or fixed-price arrangements. We generate the majority of our revenues under time-and-material contracts, which are billed using hourly, daily or monthly rates to determine the amounts to be charged directly to the client.
Expressed as a percentage of revenues, depreciation and amortization expense remained the same at 1.9% during the year ended December 31, 2023, as compared to 2022. Discussion of depreciation and amortization expense from 2022 as compared to 2021 is included in “Part II. Item 7.
Expressed as a percentage of revenues, depreciation and amortization expense remained the same at 1.9% during the year ended December 31, 2024, as compared to 2023. Discussion of depreciation and amortization expense from 2023 as compared to 2022 is included in “Part II. Item 7.
Cash provided by operating activities in 2023 was primarily driven by the Company's cash collections from customer contracts, which was partially offset by variable compensation payments, severance payments related to the Cost Optimization Program and other working capital outflows.
Cash provided by operating activities in 2023 was primarily driven by the Company's cash collections from client contracts, which was partially offset by variable compensation payments, severance payments related to the Cost Optimization Program and other working capital outflows.
See Note 9 “Leases”, Note 10 “Debt”, Note 17 “Commitments and Contingencies” in the notes to our consolidated financial statements in this Annual Report on Form 10-K for information regarding our various contractual obligations and capital expenditure requirements.
See Note 9 “Leases”, Note 10 “Debt”, Note 18 “Commitments and Contingencies” in the notes to our consolidated financial statements in this Annual Report on Form 10-K for information regarding our various contractual obligations and capital expenditure requirements.
Cost of Revenues (Exclusive of Depreciation and Amortization) The principal components of our cost of revenues (exclusive of depreciation and amortization) are salaries, bonuses, fringe benefits, stock-based compensation, project-related travel costs and fees for subcontractors who are assigned to customer projects.
Cost of Revenues (Exclusive of Depreciation and Amortization) The principal components of our cost of revenues (exclusive of depreciation and amortization) are salaries, bonuses, fringe benefits, stock-based compensation, project-related travel costs and fees for subcontractors who are assigned to client projects.
(2) EMEA includes revenues from customers in Western Europe and the Middle East. (3) APAC, or Asia Pacific, includes revenues from customers in East Asia, Southeast Asia and Australia. (4) CEE includes revenues from customers in Belarus, Georgia, Kazakhstan, Russia, Ukraine and Uzbekistan.
(2) EMEA includes revenues from clients in Western Europe and the Middle East. (3) APAC, or Asia Pacific, includes revenues from clients in East Asia, Southeast Asia and Australia. (4) CEE includes revenues from clients in Belarus, Georgia, Kazakhstan, Russia, Ukraine and Uzbekistan.
We manage our business primarily based on the managerial responsibility for the client base and market. As managerial responsibility for a particular customer relationship generally correlates with the customer’s geographic location, there is a high degree of similarity between customer locations and the geographic boundaries of our reportable segments.
We manage our business primarily based on the managerial responsibility for our client base and market. As managerial responsibility for a particular client relationship generally correlates with the client’s geographic location, there is a high degree of similarity between client locations and the geographic boundaries of our reportable segments.
Management’s Discussion and Analysis of Financial Condition and Results of Operations — Results of Operations” of our Annual Report on Form 10-K for the year ended December 31, 2022.
Management’s Discussion and Analysis of Financial Condition and Results of Operations — Results of Operations” of our Annual Report on Form 10-K for the year ended December 31, 2023.
Revenues by Customer Concentration We have long-standing relationships with many of our customers and we seek to grow revenues from our existing customers by continually expanding the scope and size of our engagements. Revenues derived from these customers may fluctuate as these accounts mature, upon beginning or completion of multi-year projects or due to external economic environment trends.
Revenues by Client Concentration We have long-standing relationships with many of our clients and we seek to grow revenues from our existing clients by continually expanding the scope and size of our engagements. Revenues derived from these clients may fluctuate as these accounts mature, upon beginning or completion of multi-year projects or due to external economic environment trends.
Revenues by Vertical We assign our customers into one of our five main vertical markets or a group of various industries where we are increasing our presence, which we label as “Emerging Verticals.” Emerging Verticals include customers in multiple industries such as energy, utilities, manufacturing, automotive, telecommunications and several others.
Revenues by Vertical We assign our clients into one of our five main vertical markets or a group of various industries where we are increasing our presence, which we label as “Emerging Verticals.” Emerging Verticals include clients in multiple industries such as energy, utilities, manufacturing, industrial materials, automotive, telecommunications and several others.
We apply a practical expedient and revenues related to time-and-material contracts are recognized based on the right to invoice for services performed. Fixed-price contracts include maintenance and support arrangements, which may exceed one year in duration.
We apply a practical expedient and revenues related to time-and-material contracts are recognized based on the right to invoice for services performed. 30 Table of Contents Fixed-price contracts include maintenance and support arrangements, which may exceed one year in duration.
Revenues by customer location differ from revenues by reportable segment in our consolidated financial statements included elsewhere in this annual report.
Revenues by client location differ from revenues by reportable segment in our consolidated financial statements included elsewhere in this annual report.
Management’s Discussion and Analysis of Financial Condition and Results of Operations — Liquidity and Capital Resources” of our Annual Report on Form 10-K for the year ended December 31, 2022. 42 Table of Conten t s Future Capital Requirements We believe that our existing cash, cash equivalents and short-term investments, combined with our expected cash flow from operations will be sufficient to meet our projected operating and capital expenditure requirements for at least the next twelve months and that we possess the financial flexibility to execute our strategic objectives, including the ability to make acquisitions and strategic investments in the foreseeable future.
Management’s Discussion and Analysis of Financial Condition and Results of Operations — Liquidity and Capital Resources” of our Annual Report on Form 10-K for the year ended December 31, 2023. 41 Table of Contents Future Capital Requirements We believe that our existing cash, cash equivalents and short-term investments, combined with our expected cash flow from operations will be sufficient to meet our projected operating and capital expenditure requirements for at least the next twelve months and that we possess the financial flexibility to execute our strategic objectives, including the ability to make acquisitions and strategic investments in the foreseeable future.
In addition, the Company does not allocate stock-based compensation, amortization of intangible assets acquired through business combinations, goodwill and other asset impairment charges, acquisition-related costs and certain other one-time charges and benefits. These unallocated amounts are combined with total segment operating profit to arrive at consolidated income from operations.
In addition, we do not allocate amortization of intangible assets acquired through business combinations, goodwill and other asset impairment charges, stock-based compensation expenses, acquisition-related costs and certain other one-time charges and benefits. These unallocated amounts are combined with total segment operating profit to arrive at consolidated income from operations.
Recent Accounting Pronouncements See Note 1 “Organization and Summary of Significant Accounting Policies” in the notes to our consolidated financial statements in this Annual Report on Form 10-K for information regarding recent accounting pronouncements. Results of Operations The following table sets forth a summary of our consolidated results of operations for the periods indicated.
Recent Accounting Pronouncements See Note 1 “Organization and Summary of Significant Accounting Policies” in the notes to our consolidated financial statements in this Annual Report on Form 10-K for information regarding recent accounting pronouncements. 31 Table of Contents Results of Operations The following table presents a summary of our consolidated results of operations for the periods indicated.
During 2023, 2022 and 2021, we had $325.7 million, $428.7 million and $404.9 million, respectively, in income before provision for income taxes attributed to our foreign jurisdictions. Changes in the geographic mix or level of annual pre-tax income can also affect our overall effective income tax rate.
During 2024, 2023 and 2022, we had $391.4 million, $325.7 million and $428.7 million, respectively, in income before provision for income taxes attributed to our foreign jurisdictions. Changes in the geographic mix or level of annual pre-tax income can also affect our overall effective income tax rate.
Financing Activities Cash used in financing activities mainly consists of repurchasing shares of EPAM common stock under a share repurchase program announced in 2023, payments of withholding taxes related to net share settlements of restricted stock units, repayments of debt, and settlements of the acquisition-date fair value of contingent consideration related to acquisitions of businesses.
Financing Activities Cash used in financing activities mainly consists of repurchasing shares of EPAM common stock under our share repurchase programs, payments of withholding taxes related to net share settlements of restricted stock units, repayments of debt, and settlements of the acquisition-date fair value of contingent consideration related to acquisitions of businesses.
We expect some of those expenses will continue to occur in subsequent quarters for some time in the future. We have no way to predict the progress or outcome of the war in Ukraine because the conflict and government reactions change quickly and are beyond our control.
Some of these expenses continued during this year and we expect some of these expenses will continue to occur in subsequent quarters for some time in the future. We have no way to predict the progress or outcome of the war in Ukraine because the conflict and government reactions change quickly and are beyond our control.
Quantitative and Qualitative Disclosures About Market Risk — Foreign Exchange Risk.” Results by Business Segment Our operations consist of three reportable segments: North America, Europe, and Russia.
Quantitative and Qualitative Disclosures About Market Risk — Foreign Exchange Risk.” Results by Business Segment Our operations have historically consisted of three reportable segments: North America, Europe, and Russia.
Depreciation and Amortization Expense Depreciation and amortization expense includes depreciation of physical assets used in the operation of our business such as computer equipment, software, buildings we purchased, leasehold improvements as well as various office furniture and equipment.
Depreciation and Amortization Expense Depreciation and amortization expense includes depreciation of physical assets used in the operation of our business such as computer equipment, software, buildings we purchased, leasehold improvements as well as various office furniture and equipment. Depreciation and amortization expense also includes amortization of acquired finite-lived intangible assets.
The following table shows revenues by service offering as an amount and as a percentage of our revenues for the years indicated: Year Ended December 31, 2023 2022 2021 (in thousands, except percentages) Professional services $ 4,661,733 99.4 % $ 4,800,047 99.5 % $ 3,739,143 99.5 % Licensing and other revenues 28,807 0.6 % 24,651 0.5 % 19,001 0.5 % Revenues $ 4,690,540 100.0 % $ 4,824,698 100.0 % $ 3,758,144 100.0 % See Note 13 “Revenues” in the notes to our consolidated financial statements in this Annual Report on Form 10-K for more information regarding our contract types and related revenue recognition policies.
The following table shows revenues by service offering as an amount and as a percentage of our revenues for the years indicated: Year Ended December 31, 2024 2023 2022 (in thousands, except percentages) Professional services $ 4,698,183 99.4 % $ 4,661,733 99.4 % $ 4,800,047 99.5 % Licensing and other revenues 29,757 0.6 % 28,807 0.6 % 24,651 0.5 % Revenues $ 4,727,940 100.0 % $ 4,690,540 100.0 % $ 4,824,698 100.0 % See Note 13 “Revenues” in the notes to our consolidated financial statements in this Annual Report on Form 10-K for more information regarding our contract types and related revenue recognition policies.
In some cases, managerial responsibility for a particular customer is assigned to a management team in another region and is usually based on the strength of the relationship between customer executives and particular members of EPAM’s senior management team. In such cases, the customer’s activity would be reported through the respective management team member’s reportable segment.
In some cases, managerial responsibility for a particular client is assigned to a management team in another region and is usually based on the strength of the relationship between client executives and particular members of EPAM’s senior management team. In such cases, the client’s activity would be reported through the management team’s reportable segment.
Management’s Discussion and Analysis of Financial Condition and Results of Operations — Results of Operations” of our Annual Report on Form 10-K for the year ended December 31, 2022. 38 Table of Conten t s Foreign Exchange Loss For discussion of the impact of foreign exchange fluctuations see “Item 7A.
Management’s Discussion and Analysis of Financial Condition and Results of Operations — Results of Operations” of our Annual Report on Form 10-K for the year ended December 31, 2023. Foreign Exchange Loss For discussion of the impact of foreign exchange fluctuations see “Item 7A.
As of December 31, 2023, our principal sources of liquidity were cash and cash equivalents totaling $2.036 billion, short-term investments totaling $60.7 million as well as $675.0 million of available borrowings under our revolving credit facility.
As of December 31, 2024, our principal sources of liquidity were cash and cash equivalents totaling $1.286 billion, short-term investments totaling $1.7 million as well as $675.0 million of available borrowings under our revolving credit facility.
Discussion of Interest and other income/(loss), net from 2022 as compared to 2021 is included in “Part II. Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations — Results of Operations” of our Annual Report on Form 10-K for the year ended December 31, 2022.
Discussion of North America segment operating results from 2023 as compared to 2022 is included in “Part II. Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations — Results of Operations” of our Annual Report on Form 10-K for the year ended December 31, 2023.
(2) Includes $78,933, $52,439 and $60,075 of stock-based compensation expense for the years ended December 31, 2023, 2022 and 2021, respectively. 33 Table of Conten t s Revenues We continue to diversify our presence across multiple geographies and verticals, both organically and through strategic acquisitions.
(2) Includes $86,353, $78,933 and $52,439 of stock-based compensation expense for the years ended December 31, 2024, 2023 and 2022, respectively. 32 Table of Contents Revenues We continue to diversify our presence across multiple geographies and verticals, both organically and through strategic acquisitions.
Year Ended December 31, 2023 2022 2021 % of revenues % of revenues % of revenues (in thousands, except percentages and per share data) Revenues $4,690,540 100.0 % $4,824,698 100.0 % $3,758,144 100.0 % Operating expenses: Cost of revenues (exclusive of depreciation and amortization) (1) 3,256,514 69.4 3,286,683 68.1 2,483,697 66.1 Selling, general and administrative expenses (2) 815,065 17.4 872,777 18.1 648,736 17.3 Depreciation and amortization expense 91,800 1.9 92,272 1.9 83,395 2.2 Loss on sale of business 25,922 0.6 — — — — Income from operations 501,239 10.7 572,966 11.9 542,316 14.4 Interest and other income/(loss), net 51,124 1.0 10,025 0.2 (1,727) — Foreign exchange loss (15,778) (0.3) (75,733) (1.6) (7,197) (0.2) Income before provision for income taxes 536,585 11.4 507,258 10.5 533,392 14.2 Provision for income taxes 119,502 2.5 87,842 1.8 51,740 1.4 Net income $ 417,083 8.9 % $ 419,416 8.7 % $ 481,652 12.8 % Effective tax rate 22.3 % 17.3 % 9.7 % Diluted earnings per share $7.06 $7.09 $8.15 (1) Includes $68,797, $47,470 and $51,580 of stock-based compensation expense for the years ended December 31, 2023, 2022 and 2021, respectively.
Year Ended December 31, 2024 2023 2022 % of revenues % of revenues % of revenues (in thousands, except percentages and per share data) Revenues $4,727,940 100.0 % $4,690,540 100.0 % $4,824,698 100.0 % Operating expenses: Cost of revenues (exclusive of depreciation and amortization) (1) 3,277,497 69.3 3,256,514 69.4 3,286,683 68.1 Selling, general and administrative expenses (2) 816,300 17.3 815,065 17.4 872,777 18.1 Depreciation and amortization expense 89,559 1.9 91,800 1.9 92,272 1.9 Loss on sale of business — — 25,922 0.6 — — Income from operations 544,584 11.5 501,239 10.7 572,966 11.9 Interest and other income, net 46,876 1.0 51,124 1.0 10,025 0.2 Foreign exchange loss (7,048) (0.1) (15,778) (0.3) (75,733) (1.6) Income before provision for income taxes 584,412 12.4 536,585 11.4 507,258 10.5 Provision for income taxes 129,879 2.8 119,502 2.5 87,842 1.8 Net income $ 454,533 9.6 % $ 417,083 8.9 % $ 419,416 8.7 % Effective tax rate 22.2 % 22.3 % 17.3 % Diluted earnings per share $7.84 $7.06 $7.09 (1) Includes $80,944, $68,797 and $47,470 of stock-based compensation expense for the years ended December 31, 2024, 2023 and 2022, respectively.
Revenues from customers in locations in our APAC region comprised 2.2% of total revenues in 2023, a level consistent with the prior year. Discussion of revenues from 2022 as compared to 2021 is included in “Part II. Item 7.
Revenues from clients in locations in our APAC region comprised 2.1% of total revenues in 2024, a decrease from 2.2% in the prior year. Discussion of revenues from 2023 as compared to 2022 is included in “Part II. Item 7.
Segments are not based on the geographic location of the customers, but rather they are based on the location of the Company’s management responsible for a particular customer. 34 Table of Conten t s The following table sets forth revenues by customer location by amount and as a percentage of our revenues for the periods indicated: Year Ended December 31, 2023 2022 2021 (in thousands, except percentages) Americas (1) $ 2,742,662 58.4 % $ 2,887,204 59.9 % $ 2,226,830 59.3 % EMEA (2) 1,822,782 38.9 1,737,919 36.0 1,259,717 33.4 APAC (3) 102,138 2.2 120,370 2.5 103,559 2.8 CEE (4) 22,958 0.5 79,205 1.6 168,038 4.5 Revenues $ 4,690,540 100.0 % $ 4,824,698 100.0 % $ 3,758,144 100.0 % (1) Americas includes revenues from customers in North, Central and South America.
Segments are not based on the geographic location of the clients, but rather they are based on the location of the Company’s management responsible for a particular client. 33 Table of Contents The following table sets forth revenues by client location by amount and as a percentage of our revenues for the periods indicated: Year Ended December 31, 2024 2023 2022 (in thousands, except percentages) Americas (1) $ 2,834,704 60.0 % $ 2,742,662 58.4 % $ 2,887,204 59.9 % EMEA (2) 1,793,198 37.9 1,822,782 38.9 1,737,919 36.0 APAC (3) 100,038 2.1 102,138 2.2 120,370 2.5 CEE (4) — — 22,958 0.5 79,205 1.6 Revenues $ 4,727,940 100.0 % $ 4,690,540 100.0 % $ 4,824,698 100.0 % (1) Americas includes revenues from clients in North, Central and South America.
See Note 10 “Debt” in the notes to our consolidated financial statements in this Annual Report on Form 10-K for information regarding the terms of our revolving credit facility and information about debt. 41 Table of Conten t s Cash Flows The following table summarizes our cash flows for the periods indicated: For the Years Ended December 31, 2023 2022 2021 (in thousands) Consolidated Statements of Cash Flow Data: Net cash provided by operating activities $ 562,634 $ 464,104 $ 572,327 Net cash used in investing activities (66,768) (182,927) (368,924) Net cash used in financing activities (165,773) (2,021) (59,557) Effect of exchange rate changes on cash, cash equivalents and restricted cash 29,379 (44,867) (18,032) Net increase in cash, cash equivalents and restricted cash $ 359,472 $ 234,289 $ 125,814 Cash, cash equivalents and restricted cash, beginning of period 1,683,636 1,449,347 1,323,533 Cash, cash equivalents and restricted cash, end of period $ 2,043,108 $ 1,683,636 $ 1,449,347 Operating Activities Our largest source of cash provided by operating activities is cash generated from our professional services that we provide to our customers.
See Note 10 “Debt” in the notes to our consolidated financial statements in this Annual Report on Form 10-K for information regarding the terms of our revolving credit facility and information about debt. 40 Table of Contents Cash Flows The following table summarizes our cash flows for the periods indicated: For the Years Ended December 31, 2024 2023 2022 (in thousands) Consolidated Statements of Cash Flow Data: Net cash provided by operating activities $ 559,168 $ 562,634 $ 464,104 Net cash used in investing activities (884,980) (66,768) (182,927) Net cash used in financing activities (390,407) (165,773) (2,021) Effect of exchange rate changes on cash, cash equivalents and restricted cash (36,497) 29,379 (44,867) Net (decrease)/increase in cash, cash equivalents and restricted cash $ (752,716) $ 359,472 $ 234,289 Cash, cash equivalents and restricted cash, beginning of period 2,043,108 1,683,636 1,449,347 Cash, cash equivalents and restricted cash, end of period $ 1,290,392 $ 2,043,108 $ 1,683,636 Operating Activities Our largest source of cash provided by operating activities is cash generated from our professional services that we provide to our clients.
To the extent that the final tax outcome of these matters differs from the amounts recorded, such differences will impact the provision for income taxes in the period in which such determination is made. The provision for income taxes was $119.5 million in 2023 and $87.8 million in 2022.
To the extent that the final tax outcome of these matters differs from the amounts recorded, such differences will impact the provision for income taxes in the period in which such determination is made. The provision for income taxes was $129.9 million in 2024 and $119.5 million in 2023. The increase was primarily driven by an increase in pre-tax income.
Additionally, selling, general and administrative expenses contain costs of relocating our employees and various one-time and unusual expenses such as impairment charges. During the year ended December 31, 2023, selling, general and administrative expenses were $815.1 million, representing a decrease of 6.6% as compared to $872.8 million reported last year.
Additionally, selling, general and administrative expenses contain costs of relocating our employees and various one-time and unusual expenses such as impairment charges. During the year ended December 31, 2024, selling, general and administrative expenses were $816.3 million, representing an increase of 0.2% as compared to $815.1 million reported last year.
The vast majority of our Ukraine employees are in safe locations and operating at levels of productivity consistent with those achieved prior to the attack. As of December 31, 2023, Ukraine remains our largest delivery location with the most delivery professionals.
The vast majority of our Ukraine employees are in safe locations and operating at levels of productivity consistent with those achieved prior to the attack. As of December 31, 2024, Ukraine continues to be a significant delivery location with a large number of delivery professionals.
The following table presents our revenues by vertical and revenues as a percentage of total revenues by vertical for the periods indicated: Year Ended December 31, 2023 2022 2021 (in thousands, except percentages) Travel & Consumer $ 1,072,950 22.9 % $ 1,092,224 22.7 % $ 741,128 19.7 % Financial Services 1,018,433 21.7 1,026,686 21.3 848,370 22.6 Business Information & Media 753,981 16.1 809,952 16.8 666,941 17.7 Software & Hi-Tech 707,720 15.1 793,261 16.4 664,597 17.7 Life Sciences & Healthcare 489,914 10.4 507,367 10.5 391,309 10.4 Emerging Verticals 647,542 13.8 595,208 12.3 445,799 11.9 Revenues $ 4,690,540 100.0 % $ 4,824,698 100.0 % $ 3,758,144 100.0 % Travel & Consumer remained our largest vertical during 2023, comprising 22.9% of total revenues.
The following table presents our revenues by vertical and revenues as a percentage of total revenues by vertical for the periods indicated: Year Ended December 31, 2024 2023 2022 (in thousands, except percentages) Financial Services $ 1,022,617 21.6 % $ 1,018,433 21.7 % $ 1,026,686 21.3 % Consumer Goods, Retail & Travel 1,013,138 21.4 1,072,950 22.9 1,092,224 22.7 Software & Hi-Tech 702,367 14.9 707,720 15.1 793,261 16.4 Business Information & Media 674,597 14.3 753,981 16.1 809,952 16.8 Life Sciences & Healthcare 574,605 12.2 489,914 10.4 507,367 10.5 Emerging Verticals 740,616 15.6 647,542 13.8 595,208 12.3 Revenues $ 4,727,940 100.0 % $ 4,690,540 100.0 % $ 4,824,698 100.0 % Financial Services became our largest vertical during 2024, comprising 21.6% of total revenues.
Moving Forward We continue to execute our business continuity plans and adapt to developments as they occur to protect the safety of our people and address impacts on our delivery infrastructure, including reallocating work to other geographies within our global footprint. We have engaged both our personnel and our customers to meet their needs and to mitigate delivery challenges.
We execute on our business continuity plans and adapt to developments as they occur to protect the safety of our people and address impacts on our delivery infrastructure, including reallocating work to other geographies within our global footprint.
We present and discuss our revenues by customer location based on the location of the specific customer site that we serve, irrespective of the location of the headquarters of the customer or the location of the delivery center where the work is performed.
Starting in 2024, revenues from the CEE region are included in the EMEA region. We present and discuss our revenues by client location based on the location of the specific client site that we serve, irrespective of the location of the headquarters of the client or the location of the delivery center where the work is performed.
Our staff utilization also depends on the general economy and its effect on our customers and their business decisions regarding the use of our services. 36 Table of Conten t s During the year ended December 31, 2023, cost of revenues (exclusive of depreciation and amortization) was $3.257 billion, representing a decrease of 0.9% from $3.287 billion reported last year.
Our staff utilization also depends on the general economy and its effect on our clients and their business decisions regarding the use of our services. During the year ended December 31, 2024, cost of revenues (exclusive of depreciation and amortization) was $3.277 billion, representing an increase of 0.6% from $3.257 billion reported last year.
Travel and Consumer declined 6.5% during 2023 compared to the prior year primarily due to declines from customers in the retail industry, partially offset by growth from our travel customers.
Consumer Goods, Retail & Travel declined 4.7% during 2024 compared to the prior year primarily due to declines from clients in the retail industry, partially offset by growth from our travel clients.
We consider the policies discussed below to be critical to an understanding of our consolidated financial statements as their application places significant demands on the judgment of our management. 31 Table of Conten t s An accounting policy is considered critical if it requires an accounting estimate to be made based on assumptions about matters that are highly uncertain at the time the estimate is made, and if different estimates that reasonably could have been used, or changes in the accounting estimates that are reasonably likely to occur periodically, could materially impact the consolidated financial statements.
An accounting policy is considered critical if it requires an accounting estimate to be made based on assumptions about matters that are highly uncertain at the time the estimate is made, and if different estimates that reasonably could have been used, or changes in the accounting estimates that are reasonably likely to occur periodically, could materially impact the consolidated financial statements.
Interest and other income/(loss), net increased from $10.0 million during the year ended December 31, 2022 to $51.1 million during the year ended December 31, 2023.
Interest and other income, net decreased from $51.1 million during the year ended December 31, 2023 to $46.9 million during the year ended December 31, 2024.
During the year ended December 31, 2023, our total revenues decreased 2.8% from the previous year to $4.691 billion.
During the year ended December 31, 2024, our total revenues increased 0.8% from the previous year to $4.728 billion.
Segment operating profit is defined as income from operations before unallocated costs. Expenses included in segment operating profit consist principally of direct selling and delivery costs as well as an allocation of certain shared services expenses. Certain corporate expenses are not allocated to specific segments as these expenses are not controllable at the segment level.
Segment results are based on the segment’s revenues and operating profit, where segment operating profit is defined as segment income from operations before unallocated costs. Expenses included in segment operating profit consist principally of direct selling and delivery costs as well as an allocation of certain shared services expenses.
We base our fair value estimates on assumptions we believe are reasonable but recognize that the assumptions are inherently uncertain. 32 Table of Conten t s We determine the fair value of contingent consideration using Monte Carlo simulations (which involve a simulation of future revenues and earnings during the earn-out period using management's best estimates) or probability-weighted expected return methods.
We determine the fair value of contingent consideration using either Monte Carlo simulations (which involve a simulation of future revenues and earnings during the earn-out period using management's best estimates) or probability-weighted expected return methods.
Expressed as a percentage of revenue, North America segment operating profit decreased to 18.8% in 2023 as compared to 20.3% in 2022.
Expressed as a percentage of revenue, North America segment operating profit increased to 18.9% in 2024 as compared to 18.5% in 2023.
Through increased specialization in focused verticals and a continued emphasis on strategic partnerships, we are able to deliver technology transformation from start to finish, leveraging agile methodologies, proven customer collaboration frameworks, engineering excellence tools, hybrid teams and our award-winning proprietary global delivery platform.
Through increased specialization in focused verticals and a continued emphasis on strategic partnerships, we are able to deliver technology transformation from start to finish, leveraging agile methodologies, proven client collaboration frameworks, engineering excellence tools, hybrid teams and our award-winning proprietary global delivery platform. 28 Table of Contents Our clients depend on us to solve their complex technical challenges and rely on our expertise in core engineering, advanced technologies, digital design and intelligent enterprise development.
We discontinued services to certain customers located in Russia and on July 26, 2023, we completed the sale of our remaining holdings in Russia to a third party. 30 Table of Conten t s The impact of Russia’s invasion of Ukraine on our operations, personnel, and physical assets in Ukraine has had, and, along with any escalation of the war that includes Belarus’ territory or military, could continue to have a material adverse effect on our operations.
The impact of Russia’s invasion of Ukraine on our operations, personnel, and physical assets in Ukraine has had, and, along with any escalation of the war that includes Belarus’ territory or military, could continue to have a material adverse effect on our operations.
Revenues have been positively impacted by fluctuations in foreign currency exchange rates which partially offset our revenue decline by 0.6% during the year ended December 31, 2023 as compared to the previous year.
Revenues have been positively impacted by stabilizing demand for our services and fluctuations in foreign currency exchange rates which increased our revenue growth by 0.1% during the year ended December 31, 2024 as compared to the previous year, partially offset by the sale of our remaining holdings in Russia in the third quarter of 2023.
The top three revenue contributing customer location countries in EMEA were the United Kingdom, Switzerland and the Netherlands generating revenues of $585.2 million, $367.1 million and $236.3 million in 2023, respectively, compared to $619.3 million, $323.4 million and $215.4 million in 2022, respectively.
The top three revenue contributing client location countries in EMEA were the United Kingdom, Switzerland and Germany generating revenues of $523.4 million, $407.8 million and $206.1 million in 2024, respectively, compared to $585.2 million, $367.1 million and $178.5 million in 2023, respectively.
Revenues from our North America segment represented 58.9% of total segment revenues, a decrease from 60.1% reported in the corresponding period of 2022. Acquisitions contributed $8.2 million to North America segment revenues during 2023. During 2023 as compared to 2022, North America segment operating profits decreased $68.5 million, or 11.6%, to $520.9 million.
Revenues from our North America segment represented 60.6% of total segment revenues, an increase from 58.9% reported in the corresponding period of 2023. Acquisitions contributed $95.7 million to North America segment revenues during 2024. During 2024 as compared to 2023, North America segment operating profits increased $30.4 million, or 5.9%, to $541.4 million.
Revenues from this geography accounted for 58.4% of total revenues in 2023, a decrease from 59.9% in the prior year. The United States continued to be our largest customer location contributing revenues of $2.634 billion in 2023 compared to $2.761 billion in 2022.
Revenues from Americas accounted for 60.0% of total revenues in 2024, an increase from 58.4% in the prior year. The United States continued to be our largest client location contributing revenues of $2.680 billion in 2024 compared to $2.634 billion in 2023.
During 2023, Europe segment operating profits increased $27.4 million, or 12.3% as compared to last year, to $250.6 million. Europe segment operating profit represented 13.1% of Europe segment revenues as compared to 12.0% in 2022.
Revenues from our Europe segment represent 39.4% and 40.7% of total segment revenues during 2024 and 2023, respectively. During 2024, Europe segment operating profits increased $34.0 million, or 13.6% as compared to last year, to $284.2 million. Europe segment operating profit represented 15.3% of Europe segment revenues as compared to 13.1% in 2023.
Revenues were positively impacted by changes in foreign currency exchange rates during 2023. Had our Europe segment revenues been expressed in constant currency terms using the exchange rates in effect during 2022, we would have reported revenue growth of 1.1%. Revenues from our Europe segment represent 40.7% and 38.4% of total segment revenues during 2023 and 2022, respectively.
Acquisitions contributed $28.9 million to Europe segment revenues during 2024. Revenues were positively impacted by changes in foreign currency exchange rates during 2024. Had our Europe segment revenues been expressed in constant currency terms using the exchange rates in effect during 2023, we would have reported a revenue decline of 3.0%.
Provision for Income Taxes Determining the consolidated provision for income tax expense, deferred income tax assets and liabilities and any potential related valuation allowances involves judgment. We consider factors that may contribute, favorably or unfavorably, to the overall annual effective tax rate in the current year as well as the future.
We consider factors that may contribute, favorably or unfavorably, to the overall annual effective tax rate in the current year as well as the future.
Our customers depend on us to solve their complex technical challenges and rely on our expertise in core engineering, advanced technologies, digital design and intelligent enterprise development. We combine our software engineering heritage with strategic business and innovation consulting, design thinking, and physical-digital capabilities to deliver end-to-end digital transformation services for our customers.
We combine our software engineering heritage with strategic business and innovation consulting, design thinking, and physical-digital capabilities to deliver end-to-end digital transformation services for our clients.
Interest and Other Income/(Loss), Net Interest and other income/(loss), net includes interest earned on cash and cash equivalents, short-term investments, gains and losses from certain financial instruments, interest expense related to our borrowings, government grant income, and changes in the fair value of contingent consideration.
The Company recorded a loss on sale of $25.9 million during the year ended December 31, 2023, including the recognition of the accumulated currency translation loss related to this foreign entity that was previously included in Accumulated other comprehensive loss. 36 Table of Contents Interest and Other Income, Net Interest and other income, net includes interest earned on cash, cash equivalents and short-term investments, gains and losses from certain financial instruments, interest expense related to our borrowings, certain government grant income, and changes in the fair value of contingent consideration.
The segments represent components of EPAM for which separate financial information is available and used on a regular basis by our chief executive officer, who is also our chief operating decision maker (“CODM”), to determine how to allocate resources and evaluate performance. Our CODM makes business decisions based on segment revenues and segment operating profits.
On July 26, 2023, we completed the sale of our remaining holdings in Russia to a third party and as a result of this sale, we no longer have operations associated with the Russia segment. 37 Table of Contents The segments represent components of EPAM for which separate financial information is available and used on a regular basis by our chief executive officer, who is also our chief operating decision maker (“CODM”), to evaluate performance, allocate resources and make business decisions.
Furthermore, we have maintained our $100 million humanitarian aid commitment to our people in Ukraine in addition to our other donations and volunteer efforts. Prior to the attack in February 2022, Russia was our third largest delivery location as measured by the number of delivery professionals.
Furthermore, we have maintained our $100 million humanitarian aid commitment to our people in Ukraine in addition to our other donations and volunteer efforts.
However, a reduction in revenues from a former top 20 customer and overall declines in the technology sector in the U.S. during 2023 impacted the revenues in this vertical. Financial services grew 3.0% in 2023 compared to the prior year primarily due to growth in demand from a group of wealth management and insurance customers.
However, a reduction in revenues from a former top 20 client impacted the revenues in this vertical. Financial Services decreased 3.5% in 2024 compared to the prior year, largely impacted by decline in demand from a group of wealth management and insurance clients.
Revenue growth in Software & Hi-Tech during the year ended December 31, 2023, as compared to 2022, was largely attributable to the expansion of services provided to one of our top 20 customers as well as growth in customers outside of our top 100 customers.
Revenues in Business Information & Media decreased during 2024 primarily due to decreased demand from two clients who were historically included in our top-10 clients. Revenue growth in Software & Hi-Tech during the year ended December 31, 2024, as compared to 2023, was largely attributable to the expansion of services provided to one of our top 10 clients.
Expressed as a percentage of revenues, selling, general and administrative expenses decreased 0.7% to 17.4% for the year ended December 31, 2023 as compared to the prior year primarily driven by reductions in Russia-related impairment charges, expenses associated with the geographic repositioning of our workforce, costs related to our humanitarian efforts for Ukraine, and variable compensation expense.
Expressed as a percentage of revenues, selling, general and administrative expenses decreased 0.1% to 17.3% for the year ended December 31, 2024, as compared to the prior year primarily driven by reductions in facility exit costs, bad debt expense and facilities and infrastructure expenses as a percentage of revenues.
Net cash used in financing activities increased from 2022 to 2023 primarily due to $164.9 million of payments to repurchase our common stock. Discussion of the comparison of the cash flows between 2022 and 2021 is included in “Part II. Item 7.
Net cash used in financing activities increased from 2023 to 2024 primarily due to $398.0 million of payments to repurchase our common stock during 2024 compared to $164.9 million during 2023.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

17 edited+5 added−6 removed9 unchanged
Biggest changeFinancial Statements and Supplementary Data The information required is included in this Annual Report on Form 10-K beginning on page F-1. Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure None.
Biggest changeIncome from operations was most significantly impacted by the movements of the Polish zloty, British pound, Indian rupee and Colombian peso exchange rates during the year ended December 31, 2024 compared to 2023. Item 8. Financial Statements and Supplementary Data The information required is included in this Annual Report on Form 10-K beginning on page F-1. Item 9.
To manage the risk of fluctuations in foreign currency exchange rates and hedge a portion of our forecasted foreign currency denominated operating expenses in the normal course of business, we implemented a hedging program through which we enter into a series of foreign exchange forward contracts with durations of twelve months or less that are designated as cash flow hedges of forecasted Polish zloty, Indian rupee, and Hungarian forint transactions.
To manage the risk of fluctuations in foreign currency exchange rates and hedge a portion of our forecasted foreign currency denominated operating expenses in the normal course of business, we implemented a hedging program through which we enter into a series of foreign exchange forward contracts with durations of twelve months or less that are designated as cash flow hedges of forecasted Polish zloty, Indian rupee, Hungarian forint, and Mexican peso transactions.
Prior to March 4, 2022, when EPAM announced it would discontinue services to customers located in Russia in response to the attacks on Ukraine, the Russian ruble was one of our significant currencies in which we generated revenues and incurred expenses and it had a significant foreign exchange impact on our operations.
Prior to March 4, 2022, when EPAM announced it would discontinue services to clients located in Russia in response to the attacks on Ukraine, the Russian ruble was one of our significant currencies in which we generated revenues and incurred expenses and it had a significant foreign exchange impact on our operations.
Though our results of operations depend on our ability to successfully collect payment from our customers for work performed, historically, credit losses and write-offs of trade receivables have not been material to our consolidated financial statements.
Though our results of operations depend on our ability to successfully collect payment from our clients for work performed, historically, credit losses and write-offs of trade receivables have not been material to our consolidated financial statements.
If any of our customers enter bankruptcy protection or otherwise take steps to alleviate their financial distress, our credit losses and write-offs of trade receivables could increase, which would negatively impact our results of operations. Interest Rate Risk We are exposed to market risk from changes in interest rates.
If our clients enter bankruptcy protection or otherwise take steps to alleviate their financial distress, our credit losses and write-offs of trade receivables could increase, which would negatively impact our results of operations. Interest Rate Risk We are exposed to market risk from changes in interest rates.
Trade receivables are generally dispersed across many customers operating in different industries; therefore, concentration of credit risk is limited and we do not believe significant credit risks existed as of December 31, 2023.
Trade receivables are generally dispersed across many clients operating in different industries; therefore, concentration of credit risk is limited and we do not believe significant credit risk existed as of December 31, 2024.
We do not anticipate non-performance by the counterparties. 43 Table of Conten t s We have cash in several countries, including Ukraine and Belarus, where the banking sector remains subject to periodic instability; banking and other financial systems in these countries generally do not meet the banking standards of more developed markets; and bank deposits made by corporate entities are not insured.
We have cash in several countries, including Ukraine and Belarus, where the banking sector remains subject to periodic instability; banking and other financial systems in these countries generally do not meet the banking standards of more developed markets; and bank deposits made by corporate entities are not insured.
Had our consolidated results been expressed in constant currency terms using the exchange rates in effect during 2022, we would have reported a decrease in income from operations of 9.5%.
Had our consolidated results been expressed in constant currency terms using the exchange rates in effect during 2023, we would have reported an increase in income from operations of 9.7%.
During the year ended December 31, 2023, we reported a revenue decrease of 2.8% compared to the prior year. Had our consolidated revenues been expressed in constant currency terms using the exchange rates in effect during 2022, we would have reported revenue decline of 3.4%.
During the year ended December 31, 2024, we reported a revenue increase of 0.8% compared to the prior year. Had our consolidated revenues been expressed in constant currency terms using the exchange rates in effect during 2023, we would have reported revenue growth of 0.7%.
We recorded a loss on sale of $25.9 million during the year ended December 31, 2023, including the recognition of the accumulated currency translation loss related to this foreign entity that was previously included in Accumulated other comprehensive loss in the consolidated financial statements.
We recorded a loss on sale of $25.9 million during the year ended December 31, 2023, including the recognition of the accumulated currency translation loss related to this foreign entity that was previously included in Accumulated other comprehensive loss in the consolidated financial statements. 43 Table of Contents During the year ended December 31, 2024, our foreign exchange loss was $7.0 million compared to a $15.8 million loss reported in the previous year.
As of December 31, 2023, all of our foreign exchange forward contracts, were designated as hedges and there is no financial collateral (including cash collateral) required to be posted related to the foreign exchange forward contracts.
As of December 31, 2024, all of our foreign exchange forward contracts, were designated as hedges and there is no financial collateral (including cash collateral) required to be posted related to the foreign exchange forward contracts. As of December 31, 2024, the net unrealized loss from these hedges was $14.7 million.
Other than U.S. dollars, the Company generates revenues in various currencies, principally, euros, British pounds, Swiss francs, Canadian dollars, and, prior to our exit from Russia, Russian rubles and incurs expenditures principally in euros, Polish zlotys, Indian rupees, British pounds, Swiss francs, Hungarian forints, Mexican pesos, Colombian pesos, Canadian dollars, Chinese yuan renminbi, and, prior to our exit from Russia, Russian rubles.
Other than U.S. dollars, we generate revenues principally in euros, British pounds, Swiss francs, Canadian dollars and Mexican pesos and incur expenditures principally in euros, Polish zlotys, Indian rupees, British pounds, Swiss francs, Mexican pesos, Hungarian forints, Colombian pesos, Canadian dollars, Armenian drams and Chinese yuan renminbi.
In addition, our global operations are subject to risks related to differing economic conditions, civil unrest, political instability or uncertainty, military activities, broad-based sanctions, differing tax structures, and other regulations and restrictions.
In addition, our global operations are subject to risks related to differing economic conditions, civil unrest, political instability or uncertainty, military activities, broad-based sanctions, differing tax structures, and other regulations and restrictions. 42 Table of Contents Concentration of Credit and Other Credit Risk s Financial instruments that potentially subject us to significant concentrations of credit risk consist primarily of cash, cash equivalents, short-term investments and trade receivables.
During the year ended December 31, 2023, approximately 34.2% of consolidated revenues and 58.6% of operating expenses were denominated in currencies other than the U.S. dollar.
As a result, exchange rate fluctuations in any of these currencies relative to the U.S. dollar could negatively impact our results of operations. During the year ended December 31, 2024, approximately 34.0% of consolidated revenues and 58.6% of operating expenses were denominated in currencies other than the U.S. dollar.
Concentration of Credit and Other Credit Risk s Financial instruments that potentially subject us to significant concentrations of credit risk consist primarily of cash, cash equivalents, short-term investments and trade receivables. We maintain our cash, cash equivalents and short-term investments with financial institutions. We believe that our credit policies reflect normal industry terms and business risk.
We maintain our cash, cash equivalents and short-term investments with financial institutions. We believe that our credit policies reflect normal industry terms and business risk. We do not anticipate non-performance by the counterparties.
During 2023, our revenues were positively impacted mainly by the appreciation of the euro, Swiss franc and British pound, partially offset by the depreciation of the Canadian dollar relative to the U.S. dollar. During the year ended December 31, 2023, we reported a decrease in income from operations of 12.5% as compared to the previous year.
Our revenues denominated in the British pound, Swiss franc and Mexican peso experienced the most impact from the movements in foreign currencies. During the year ended December 31, 2024, we reported an increase in income from operations of 8.6% as compared to the previous year.
As of December 31, 2023, we had $45.8 million of cash and cash equivalents in banks in Ukraine and $38.3 million of cash and cash equivalents in banks in Belarus. Cash in Ukraine and Belarus is used for the operational needs of the local entities and cash balances change with the expected operating needs of these entities.
As of December 31, 2024, we had $41.1 million of cash and cash equivalents in banks in Ukraine and $37.5 million of cash and cash equivalents in banks in Belarus.
Removed
As a result, currency fluctuations, specifically the depreciation of the euro, British pound, and Canadian dollar and the appreciation of the Hungarian forint, Polish zloty, Indian rupee and Chinese yuan renminbi relative to the U.S. dollar, could negatively impact our results of operations.
Added
In April 2024, Belarus instituted new restrictions on distributing dividends from Belarus to shareholders in certain countries, including the U.S. The restrictions are initially scheduled to remain in place until the end of 2025 and may prevent EPAM from distributing excess funds, if any, out of Belarus.
Removed
During the year ended December 31, 2023, our foreign exchange loss was $15.8 million compared to a $75.7 million loss reported last year.
Added
The Company does not expect these new restrictions to have a material impact on our ability to meet our worldwide cash obligations during this period.
Removed
Foreign exchange loss for the year 2022 was primarily driven by the impact of appreciation of the Russian ruble on the Company’s intercompany payables denominated in Russian rubles and U.S. dollar denominated assets held by our subsidiaries in Russia, and losses from our foreign exchange forward contracts associated with the Russian ruble during the first quarter of 2022.
Added
Foreign exchange losses were primarily driven by the impact of fluctuations in foreign currencies on our assets and liabilities denominated in foreign currencies.
Removed
As of December 31, 2023, the net unrealized gain from these hedges was $10.2 million. 44 Table of Conten t s During the first quarter of 2022, in response to the invasion of Ukraine, we de-designated our Russian ruble foreign exchange forward contracts as hedges and entered into offsetting foreign exchange forward contracts with the same counterparty.
Added
Exchange rate movements can impact the reported value of our assets and liabilities denominated in currencies other than the U.S. dollar or where the currency of such items is different than the functional currency of the entity where these items were recorded.
Removed
We determined it was probable the underlying forecasted foreign currency transactions which were hedged would not occur and reclassified the accumulated loss of $43.9 million on the underlying hedge into income which is classified as foreign exchange loss in the consolidated statement of income.
Added
Changes in and Disagreements with Accountants on Accounting and Financial Disclosure None.
Removed
Income from operations was negatively impacted by the appreciation of the Mexican peso, Polish zloty and the Armenian dram, and positively impacted by the appreciation of the euro, British pound and the Swiss franc and depreciation of the Indian rupee relative to the U.S. dollar during the year ended December 31, 2023 compared to 2022. Item 8.

Other EPAM 10-K year-over-year comparisons