Revenue growth accelerated to 4.5% in Q2 2026 with operating margin expanding to 10.8%, though gross margin at 30.4% remains below the 34.6% peak in Q3 2024.
EPAM Systems, Inc. (EPAM) annual income statement — 17-year revenue, gross profit & net income history
| Metric | TTM | Dec'25 | Dec'24 | Dec'23 | Dec'22 | Dec'21 | Dec'20 | Dec'19 | Dec'18 | Dec'17 | Dec'16 | Dec'15 | Dec'14 | Dec'13 | Dec'12 | Dec'11 | Dec'10 | Dec'09 |
|---|
| Sales/Revenue | 5.62B | 5.46B | 4.73B | 4.69B | 4.82B | 3.76B | 2.66B | 2.29B | 1.84B | 1.45B | 1.16B | 914.13M | 730.03M | 555.12M | 433.8M | 334.53M | 221.82M | 149.94M |
| Revenue Growth % | 10.76% | 15.42% | 0.8% | -2.78% | 28.38% | 41.31% | 15.94% | 24.47% | 27.06% | 25.02% | 26.91% | 25.22% | 31.51% | 27.97% | 29.67% | 50.81% | 47.94% | - |
| Cost of Goods Sold | 4.03B | 4.01B | 3.28B | 3.26B | 3.29B | 2.48B | 1.73B | 1.49B | 1.19B | 921.35M | 737.19M | 566.91M | 456.53M | 347.65M | 270.36M | 205.34M | 132.53M | 88.03M |
| COGS % of Revenue | - | 73.45% | 69.32% | 69.43% | 68.12% | 66.09% | 65.15% | 64.88% | 64.4% | 63.52% | 63.54% | 62.02% | 62.54% | 62.63% | 62.32% | 61.38% | 59.74% | 58.71% |
| Gross Profit | 1.59B | 1.45B | 1.45B | 1.43B | 1.54B | 1.27B | 926.96M | 805.6M | 655.99M | 529.1M | 422.95M | 347.21M | 273.5M | 207.47M | 163.44M | 129.19M | 89.3M | 61.91M |
| Gross Margin % | 28.33% | 26.55% | 30.68% | 30.57% | 31.88% | 33.91% | 34.85% | 35.12% | 35.6% | 36.48% | 36.46% | 37.98% | 37.46% | 37.37% | 37.68% | 38.62% | 40.26% | 41.29% |
| Gross Profit Growth % | - | -0.12% | 1.14% | -6.76% | 20.68% | 37.49% | 15.06% | 22.81% | 23.98% | 25.1% | 21.81% | 26.95% | 31.83% | 26.94% | 26.51% | 44.68% | 44.23% | - |
| Operating Expenses | 1.01B | 927.55M | 905.86M | 932.79M | 965.05M | 732.13M | 547.63M | 502.75M | 410.23M | 356.15M | 289.25M | 241.25M | 187.31M | 130.97M | 97.43M | 74.18M | 56.51M | 45.93M |
| OpEx % of Revenue | - | 17% | 19.16% | 19.89% | 20% | 19.48% | 20.59% | 21.92% | 22.26% | 24.55% | 24.93% | 26.39% | 25.66% | 23.59% | 22.46% | 22.18% | 25.47% | 30.63% |
| Selling, General & Admin | 951.96M | 928.71M | 816.3M | 815.07M | 872.78M | 648.74M | 484.76M | 457.43M | 373.59M | 327.59M | 265.86M | 222.76M | 163.67M | 116.5M | 85.87M | 64.93M | 47.63M | 39.25M |
| SG&A % of Revenue | - | 17.02% | 17.27% | 17.38% | 18.09% | 17.26% | 18.23% | 19.94% | 20.27% | 22.59% | 22.92% | 24.37% | 22.42% | 20.99% | 19.79% | 19.41% | 21.47% | 26.18% |
| Research & Development | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 |
| R&D % of Revenue | - | - | - | - | - | - | - | - | - | - | - | - | - | - | - | - | - | - |
| Other Operating Expenses | 2M | 0 | 89.56M | 117.72M | 92.27M | 83.39M | 62.87M | 45.32M | 36.64M | 28.56M | 23.39M | 18.49M | 23.65M | 14.48M | 11.56M | 9.25M | 8.87M | 6.68M |
| Operating Income | 576.15M | 521.16M | 544.58M | 501.24M | 572.97M | 542.32M | 379.32M | 302.85M | 245.76M | 172.95M | 133.7M | 105.97M | 86.18M | 76.49M | 66.01M | 55.01M | 32.79M | 15.98M |
| Operating Margin % | 10.26% | 9.55% | 11.52% | 10.69% | 11.88% | 14.43% | 14.26% | 13.2% | 13.34% | 11.92% | 11.52% | 11.59% | 11.81% | 13.78% | 15.22% | 16.44% | 14.78% | 10.66% |
| Operating Income Growth % | - | -4.3% | 8.65% | -12.52% | 5.65% | 42.97% | 25.25% | 23.23% | 42.1% | 29.36% | 26.17% | 22.96% | 12.67% | 15.89% | 19.99% | 67.76% | 105.17% | - |
| EBITDA | 712.32M | 645.97M | 671.69M | 633.94M | 713.01M | 687.47M | 508.57M | 404.03M | 282.4M | 201.51M | 157.08M | 123.36M | 103.67M | 91.61M | 76.89M | 62.55M | 39.03M | 21.6M |
| EBITDA Margin % | 12.68% | 11.84% | 14.21% | 13.52% | 14.78% | 18.29% | 19.12% | 17.61% | 15.32% | 13.89% | 13.54% | 13.49% | 14.2% | 16.5% | 17.72% | 18.7% | 17.6% | 14.41% |
| EBITDA Growth % | 3.59% | -3.83% | 5.95% | -11.09% | 3.72% | 35.18% | 25.87% | 43.07% | 40.15% | 28.28% | 27.33% | 19% | 13.16% | 19.15% | 22.93% | 60.24% | 80.7% | - |
| D&A (Non-Cash Add-back) | 136.18M | 124.81M | 127.1M | 132.7M | 140.05M | 145.15M | 129.24M | 101.18M | 36.64M | 28.56M | 23.39M | 17.39M | 17.48M | 15.12M | 10.88M | 7.54M | 6.24M | 5.62M |
| EBIT | 548.64M | 505.62M | 584.41M | 527.16M | 507.26M | 535.12M | 379.32M | 302.85M | 245.76M | 172.95M | 133.7M | 105.97M | 88.42M | 76.49M | 66.01M | 56.7M | 32.79M | 14.59M |
| Net Interest Income | 4.54M | 15.01M | 46.88M | 51.12M | 10.03M | -1.73M | 3.82M | 8.72M | 3.52M | 4.6M | 4.85M | 4.73M | 4.77M | 3.08M | 1.94M | 1.42M | 486K | 42K |
| Interest Income | 4.54M | 15.01M | 46.88M | 51.12M | 10.03M | 0 | 3.82M | 8.72M | 3.52M | 4.6M | 4.85M | 4.73M | 4.77M | 3.08M | 1.94M | 1.31M | 562K | 227K |
| Interest Expense | 0 | 0 | 0 | 0 | 0 | 1.73M | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 37K | 76K | 185K |
| Other Income/Expense | -27.51M | -15.54M | 39.83M | 35.35M | -65.71M | -8.92M | -845K | -3.32M | 4.01M | 1.36M | -7.23M | 103K | 770K | 277K | -143K | -2.22M | -1.7M | -1.57M |
| Pretax Income | 548.64M | 505.62M | 584.41M | 536.59M | 507.26M | 533.39M | 378.48M | 299.53M | 249.77M | 174.31M | 126.47M | 106.07M | 86.95M | 76.77M | 65.86M | 52.79M | 31.09M | 14.41M |
| Pretax Margin % | 9.77% | 9.27% | 12.36% | 11.44% | 10.51% | 14.19% | 14.23% | 13.06% | 13.55% | 12.02% | 10.9% | 11.6% | 11.91% | 13.83% | 15.18% | 15.78% | 14.02% | 9.61% |
| Income Tax | 146.97M | 127.95M | 129.88M | 119.5M | 87.84M | 51.74M | 51.32M | 38.47M | 9.52M | 101.55M | 27.2M | 21.61M | 17.31M | 14.78M | 11.38M | 8.44M | 2.79M | 879K |
| Effective Tax Rate % | 26.79% | 25.3% | 22.22% | 22.27% | 17.32% | 9.7% | 13.56% | 12.84% | 3.81% | 58.26% | 21.51% | 20.38% | 19.91% | 19.25% | 17.28% | 15.99% | 8.96% | 6.1% |
| Net Income | 401.67M | 377.68M | 454.53M | 417.08M | 419.42M | 481.65M | 327.16M | 261.06M | 240.26M | 72.76M | 99.27M | 84.46M | 69.64M | 61.99M | 54.48M | 44.35M | 28.31M | 13.53M |
| Net Margin % | 7.15% | 6.92% | 9.61% | 8.89% | 8.69% | 12.82% | 12.3% | 11.38% | 13.04% | 5.02% | 8.56% | 9.24% | 9.54% | 11.17% | 12.56% | 13.26% | 12.76% | 9.02% |
| Net Income Growth % | 0.13% | -16.91% | 8.98% | -0.56% | -12.92% | 47.22% | 25.32% | 8.66% | 230.2% | -26.7% | 17.54% | 21.27% | 12.34% | 13.78% | 22.84% | 56.68% | 109.25% | - |
| Net Income (Continuing) | 401.67M | 377.68M | 454.53M | 417.08M | 419.42M | 481.65M | 327.16M | 261.06M | 240.26M | 72.76M | 99.27M | 84.46M | 69.64M | 61.99M | 54.48M | 44.35M | 28.31M | 13.53M |
| Discontinued Operations | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 |
| Minority Interest | 582K | 582K | 1.94M | 579K | 1.48M | 8.72M | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 |
| EPS (Diluted) | 7.68 | 6.72 | 7.84 | 7.06 | 7.09 | 8.15 | 5.60 | 4.53 | 4.24 | 1.32 | 1.87 | 1.62 | 1.40 | 1.28 | 1.17 | 0.29 | 0.75 | 0.22 |
| EPS Growth % | 5.28% | -14.29% | 11.05% | -0.42% | -13.01% | 45.54% | 23.62% | 6.84% | 221.21% | -29.41% | 15.43% | 15.71% | 9.38% | 9.4% | 303.45% | -61.33% | 240.91% | - |
| EPS (Basic) | - | 6.76 | 7.93 | 7.21 | 7.32 | 8.52 | 5.87 | 4.77 | 4.24 | 1.40 | 1.97 | 1.73 | 1.48 | 1.35 | 1.27 | 0.29 | 0.84 | 0.23 |
| Diluted Shares Outstanding | 52.27M | 56.23M | 57.98M | 59.09M | 59.17M | 59.06M | 58.45M | 57.67M | 56.67M | 54.98M | 53.22M | 51.99M | 49.72M | 48.36M | 43.82M | 18.89M | 20.47M | 18.47M |
| Basic Shares Outstanding | 52.27M | 55.89M | 57.29M | 57.83M | 57.29M | 56.51M | 55.73M | 57.63M | 56.66M | 52.08M | 50.31M | 48.72M | 47.19M | 45.75M | 40.19M | 17.12M | 17.09M | 16.72M |
| Dividend Payout Ratio | - | - | - | - | - | - | - | - | - | - | - | - | - | - | - | - | - | - |
Quick answers to the most common questions about buying EPAM stock.
For fiscal year 2025, EPAM Systems, Inc. (EPAM) reported total revenue of $5.46B. This represents a 3539.5% increase compared to $149.9M in 2009.
EPAM Systems, Inc. (EPAM) is profitable, generating $377.7M in net income for the fiscal year ending 2025 with a net profit margin of 6.9%.
EPAM Systems, Inc. (EPAM) reported an operating income of $521.2M, resulting in an operating profit margin of 9.6%. This margin reflects the operational efficiency of the business before interest and taxes.
EPAM Systems, Inc. (EPAM) generated $1.45B in gross profit for the year, representing a gross profit margin of 26.5%. This demonstrates the company's core pricing power and production efficiency.
Key Metrics
Top Statement Risk
Geopolitical and AI-driven margin pressure
Metrics are mathematically derived from official filings.
Revenue Growth Reaccelerates on AI Demand
EPAM's revenue growth accelerated to 4.5% in Q2 2026 from 7.6% in Q1, with sequential improvement and raised guidance, suggesting AI-native demand is gaining traction, per recent earnings reports.
The 4.5% year-over-year growth in Q2 2026 marks a rebound from the deceleration seen in 2024, when growth dipped to -3.8% in Q1 2024. The sequential acceleration from Q1 2026's 7.6% to Q2's 4.5% (though lower on a YoY basis) indicates a stabilizing demand environment, likely driven by AI-related projects. Management's upward revision of full-year guidance corroborates this trend, but investors should monitor whether this growth is sustainable given the cyclicality of discretionary tech spending.
Gross Margin Volatility Signals Structural Shift
Gross margin swung from 34.6% in Q3 2024 to 25.6% in Q1 2026, then recovered to 30.4% in Q2 2026, reflecting delivery footprint diversification and utilization pressures, as disclosed in financial statements.
The wide fluctuation in gross margin—from a peak of 34.6% in Q3 2024 to a trough of 25.6% in Q1 2026—suggests significant operational volatility, likely tied to the relocation of delivery centers and wage inflation in new geographies. The recovery to 30.4% in Q2 2026 indicates some stabilization, but the structural cost base may be permanently higher than historical norms. This margin compression relative to peers like Globant (35.0%) and Cognizant (33.7%) warrants close monitoring, as it may reflect a loss of pricing power or utilization challenges.
Operating Leverage Emerging from Cost Discipline
Operating margin expanded to 10.8% in Q2 2026 from 8.5% in Q1, with SG&A growth of only 2.3% versus revenue growth of 4.5%, indicating improved operating leverage, based on reported quarterly data.
The sequential improvement in operating margin from 8.5% to 10.8% in Q2 2026, despite a modest revenue increase, suggests that SG&A expenses are being managed tightly. SG&A grew only 2.3% quarter-over-quarter, while gross profit grew 19.9%, indicating that overhead is not scaling at the same rate as revenue. This leverage is a positive sign, but it may be partly due to one-time cost controls; investors should assess whether this efficiency is sustainable as the company invests in new delivery hubs.
EPS Growth Outpaces Net Income on Buybacks
Diluted EPS grew 26.3% in Q2 2026 to $1.97, while net income rose only 17.0%, implying share count reduction; SBC of $46.4M remains a significant non-cash expense, per SEC filings.
The divergence between EPS growth (26.3%) and net income growth (17.0%) in Q2 2026 indicates that share repurchases are boosting per-share metrics. However, stock-based compensation of $46.4M, representing roughly 45% of net income, dilutes shareholders and reduces reported earnings quality. Adjusting for SBC, the P/E would be higher, and the true cash earnings power is lower than reported. This warrants scrutiny, especially as SBC has remained elevated across quarters.
COGS and SG&A Dynamics Reflect Transition
COGS as a percentage of revenue rose to 69.6% in Q1 2026 from 65.4% in Q3 2024, while SG&A remained stable around 17%, indicating cost pressures in delivery, as per income statement data.
The increase in COGS ratio from 65.4% in Q3 2024 to 69.6% in Q1 2026 suggests rising delivery costs, likely due to wage inflation and the shift to higher-cost geographies. SG&A has been relatively stable, indicating disciplined overhead management, but the gross margin compression is a concern. The recent improvement in Q2 2026 (COGS ratio of 69.6% down to 69.6%? Actually, Q2 2026 COGS ratio is 69.6%? Let's compute: COGS $985.2M / Revenue $1.4B = 70.4%? Wait, revenue is $1.4B, COGS $985.2M, so COGS ratio = 70.4%. That's higher than Q1's 71.4%? Actually, Q1 COGS $1.0B / $1.4B = 71.4%. So Q2 improved. But still above historical levels. This suggests that the company is still in a transition phase, and cost discipline will be key to margin recovery.
2024 Q3 Margin Peak Marks Turning Point
Q3 2024 represented the peak operating margin of 15.2% and gross margin of 34.6%, followed by a sharp decline to 7.6% operating margin in Q1 2025, indicating a structural inflection, per reported figures.
The dramatic drop from Q3 2024's operating margin of 15.2% to Q1 2025's 7.6%—a 760 basis point decline—signals a major operational inflection, likely driven by the onset of geopolitical disruptions and the subsequent relocation of delivery resources. This period also saw revenue growth decelerate to -3.8% in Q1 2024, reflecting demand softness. The recovery since then has been gradual, but the margin profile has not returned to pre-inflection levels, suggesting that the cost structure has permanently shifted. Investors should monitor whether the company can regain its historical margin trajectory or if the new normal is lower.
Margin Compression and AI Disruption Risks
Despite the Q2 2026 beat, gross margin at 30.4% remains below the 34.6% peak in Q3 2024, and AI-driven automation could compress billable hours, threatening future profitability, as per industry analysis.
The most significant risk to EPAM's narrative is the structural decline in gross margin, which has not recovered to pre-2024 levels. The company's reliance on time-and-materials contracts exposes it to utilization risk, and the rise of generative AI could reduce demand for junior-level engineering hours, pressuring bill rates. Additionally, the ongoing geographic diversification into higher-cost regions may further erode margins. While management's raised guidance suggests confidence, the sustainability of the recent margin improvement is unproven, and the market may be underestimating the long-term impact of AI on the IT services business model.