Document and Entity Information
Document and Entity Information - shares | 3 Months Ended | |
Mar. 31, 2020 | Apr. 30, 2020 | |
Cover [Abstract] | ||
Document Type | 10-Q | |
Document Quarterly Report | true | |
Document Period End Date | Mar. 31, 2020 | |
Document Transition Report | false | |
Entity File Number | 001-35418 | |
Entity Registrant Name | EPAM SYSTEMS, INC. | |
Entity Incorporation, State or Country Code | DE | |
Entity Tax Identification Number | 22-3536104 | |
Entity Address, Street Name | 41 University Drive | |
Entity Address, Suite No. | Suite 202 | |
Entity Address, City or Town | Newtown | |
Entity Address, State or Province | PA | |
Entity Address, Postal Zip Code | 18940 | |
City Area Code | 267 | |
Local Phone Number | 759-9000 | |
Title of 12(b) Security | Common Stock, par value $0.001 per share | |
Trading Symbol | EPAM | |
Security Exchange Name | NYSE | |
Entity Current Reporting Status | Yes | |
Entity Interactive Data Current | Yes | |
Entity Central Index Key | 0001352010 | |
Current Fiscal Year End Date | --12-31 | |
Entity Filer Category | Large Accelerated Filer | |
Entity Small Business | false | |
Entity Emerging Growth Company | false | |
Entity Shell Company | false | |
Entity Common Stock, Shares Outstanding | 55,639,436 | |
Document Fiscal Year Focus | 2020 | |
Document Fiscal Period Focus | Q1 | |
Amendment Flag | false |
CONDENSED CONSOLIDATED BALANCE
CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited) - USD ($) $ in Thousands | Mar. 31, 2020 | Dec. 31, 2019 |
Current assets | ||
Cash and cash equivalents | $ 916,253 | $ 936,552 |
Trade receivables and contract assets, net of allowance of $5,356 and $2,920, respectively | 542,698 | 497,716 |
Prepaid and other current assets | 48,786 | 39,943 |
Total current assets | 1,507,737 | 1,474,211 |
Property and equipment, net | 164,671 | 165,259 |
Operating lease right-of-use assets | 243,671 | 238,991 |
Intangible assets, net | 58,676 | 56,258 |
Goodwill | 198,534 | 195,043 |
Deferred tax assets | 79,044 | 75,013 |
Other noncurrent assets | 59,548 | 39,433 |
Total assets | 2,311,881 | 2,244,208 |
Current liabilities | ||
Accounts payable | 5,232 | 7,831 |
Accrued compensation and benefits expenses | 250,560 | 230,035 |
Accrued expenses and other current liabilities | 66,434 | 82,476 |
Income taxes payable, current | 6,987 | 9,064 |
Operating lease liabilities, current | 60,108 | 57,542 |
Total current liabilities | 389,321 | 386,948 |
Long-term debt | 25,046 | 25,074 |
Income taxes payable, noncurrent | 45,847 | 45,878 |
Operating lease liabilities, noncurrent | 189,312 | 180,848 |
Other noncurrent liabilities | 14,873 | 9,315 |
Total liabilities | 664,399 | 648,063 |
Commitments and contingencies (Note 12) | ||
Stockholders’ equity | ||
Common stock, $0.001 par value; 160,000,000 authorized; 55,608,835 and 55,207,446 shares issued, 55,589,100 and 55,187,711 shares outstanding at March 31, 2020 and December 31, 2019, respectively | 56 | 55 |
Additional paid-in capital | 610,579 | 607,051 |
Retained earnings | 1,106,285 | 1,020,590 |
Treasury stock | (177) | (177) |
Accumulated other comprehensive loss | (69,261) | (31,374) |
Total stockholders’ equity | 1,647,482 | 1,596,145 |
Total liabilities and stockholders’ equity | $ 2,311,881 | $ 2,244,208 |
CONDENSED CONSOLIDATED BALANC_2
CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited) (Parenthetical) - USD ($) $ in Thousands | Mar. 31, 2020 | Dec. 31, 2019 |
Current assets | ||
Trade receivables and contract assets allowance | $ 5,356 | $ 2,920 |
Stockholders' equity | ||
Common stock, par value (in dollars per share) | $ 0.001 | $ 0.001 |
Common stock, shares authorized (in shares) | 160,000,000 | 160,000,000 |
Common stock, shares issued (in shares) | 55,608,835 | 55,207,446 |
Common stock, shares outstanding (in shares) | 55,589,100 | 55,187,711 |
CONDENSED CONSOLIDATED STATEMEN
CONDENSED CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME (Unaudited) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | |
Income Statement [Abstract] | ||
Revenues | $ 651,359 | $ 521,333 |
Operating expenses: | ||
Cost of revenues (exclusive of depreciation and amortization) | 423,802 | 344,689 |
Selling, general and administrative expenses | 125,108 | 101,786 |
Depreciation and amortization expense | 14,940 | 10,200 |
Income from operations | 87,509 | 64,658 |
Interest and other income, net | 2,386 | 3,076 |
Foreign exchange gain/(loss) | 6,524 | (3,484) |
Income before provision for income taxes | 96,419 | 64,250 |
Provision for income taxes | 10,854 | 3,496 |
Net income | 85,565 | 60,754 |
Foreign currency translation adjustments, net of tax | (28,519) | 2,943 |
Unrealized (loss)/gain on cash-flow hedging instruments, net of tax | (9,368) | 3,100 |
Comprehensive income | $ 47,678 | $ 66,797 |
Net income per share: | ||
Basic (in dollars per share) | $ 1.55 | $ 1.12 |
Diluted (in dollars per share) | $ 1.47 | $ 1.06 |
Shares used in calculation of net income per share: | ||
Basic (in shares) | 55,286,747 | 54,245,133 |
Diluted (in shares) | 58,142,570 | 57,236,427 |
CONSOLIDATED STATEMENTS OF CHAN
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY Statement - USD ($) $ in Thousands | Total | Restricted Stock Units | Common Stock | Common StockRestricted Stock Units | Additional Paid-in Capital | Additional Paid-in CapitalRestricted Stock Units | Retained Earnings | Treasury Stock | Accumulated Other Comprehensive Loss |
Balance, beginning of period (in shares) at Dec. 31, 2018 | 54,080,192 | ||||||||
Balance, beginning of period at Dec. 31, 2018 | $ 1,262,596 | $ 54 | $ 544,700 | $ 759,533 | $ (41,514) | ||||
Treasury stock, beginning of period (in shares) at Dec. 31, 2018 | 19,735 | ||||||||
Treasury stock, beginning period at Dec. 31, 2018 | $ (177) | ||||||||
Stock Issued During Period, Shares, Restricted Stock Award, Net of Forfeitures [Abstract] | |||||||||
Stock units vested (in shares) | 242,414 | ||||||||
Stock units withheld for employee taxes | $ (13,483) | $ (13,483) | |||||||
Stock units withheld for employee taxes (in shares) | (81,562) | ||||||||
Proceeds from stock options exercises | 11,890 | 11,890 | |||||||
Proceeds from stock options exercises (in shares) | 323,464 | ||||||||
Stock-based compensation expense | 10,425 | 10,425 | |||||||
Foreign currency translation adjustments, net of tax | 2,943 | 2,943 | |||||||
Change in unrealized gains and losses on cash flow hedges, net of tax | 3,100 | 3,100 | |||||||
Net income | 60,754 | 60,754 | |||||||
Balance, end of period (in shares) at Mar. 31, 2019 | 54,564,508 | ||||||||
Balance, end of period at Mar. 31, 2019 | $ 1,338,225 | $ 54 | 553,532 | 820,287 | (35,471) | ||||
Treasury stock, end of period (in shares) at Mar. 31, 2019 | 19,735 | ||||||||
Treasury stock, end of period at Mar. 31, 2019 | $ (177) | ||||||||
Balance, beginning of period (in shares) at Dec. 31, 2019 | 55,187,711 | 55,187,711 | |||||||
Balance, beginning of period at Dec. 31, 2019 | $ 1,596,145 | $ 55 | 607,051 | 1,020,590 | (31,374) | ||||
Treasury stock, beginning of period (in shares) at Dec. 31, 2019 | 19,735 | ||||||||
Treasury stock, beginning period at Dec. 31, 2019 | $ (177) | ||||||||
Stock Issued During Period, Shares, Restricted Stock Award, Net of Forfeitures [Abstract] | |||||||||
Stock units vested (in shares) | 273,904 | ||||||||
Stock units withheld for employee taxes | $ (15,822) | $ (15,822) | |||||||
Stock units withheld for employee taxes (in shares) | (89,990) | ||||||||
Proceeds from stock options exercises | 7,141 | $ 1 | 7,140 | ||||||
Proceeds from stock options exercises (in shares) | 217,475 | ||||||||
Stock-based compensation expense | 12,210 | 12,210 | |||||||
Foreign currency translation adjustments, net of tax | (28,519) | (28,519) | |||||||
Change in unrealized gains and losses on cash flow hedges, net of tax | (9,368) | (9,368) | |||||||
Cumulative effect of adoption of ASU | ASU 2016-13 | 130 | 130 | |||||||
Net income | $ 85,565 | 85,565 | |||||||
Balance, end of period (in shares) at Mar. 31, 2020 | 55,589,100 | 55,589,100 | |||||||
Balance, end of period at Mar. 31, 2020 | $ 1,647,482 | $ 56 | $ 610,579 | $ 1,106,285 | $ (69,261) | ||||
Treasury stock, end of period (in shares) at Mar. 31, 2020 | 19,735 | ||||||||
Treasury stock, end of period at Mar. 31, 2020 | $ (177) |
CONDENSED CONSOLIDATED STATEM_2
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | |
Cash flows from operating activities: | ||
Net income | $ 85,565 | $ 60,754 |
Adjustments to reconcile net income to net cash provided by operating activities: | ||
Depreciation and amortization expense | 14,940 | 10,200 |
Operating lease right-of-use assets amortization expense | 16,816 | 12,187 |
Bad debt expense | 2,719 | (133) |
Deferred taxes | 8,288 | 846 |
Stock-based compensation expense | 11,881 | 21,856 |
Other | 5,893 | 520 |
Changes in assets and liabilities: | ||
Trade receivables and contract assets | (51,423) | (48,343) |
Prepaid and other assets | (9,746) | 401 |
Accounts payable | (2,407) | (2,488) |
Accrued expenses and other liabilities | 5,437 | (22,360) |
Operating lease liabilities | (15,646) | (13,175) |
Income taxes payable | (9,062) | (20,467) |
Net cash provided by/(used in) operating activities | 63,255 | (202) |
Cash flows from investing activities: | ||
Purchases of property and equipment | (29,075) | (13,424) |
Acquisition of business, net of cash acquired (Note 2) | (10,339) | 0 |
Payments for cost method investments | (20,000) | (5,000) |
Other investing activities, net | (71) | (136) |
Net cash used in investing activities | (59,485) | (18,560) |
Cash flows from financing activities: | ||
Proceeds from stock option exercises | 6,850 | 11,402 |
Payments of withholding taxes related to net share settlements of restricted stock units | (1,018) | (1,208) |
Payment of contingent consideration for previously acquired business | (7,869) | 0 |
Other financing activities, net | (9) | (13) |
Net cash (used in)/provided by financing activities | (2,046) | 10,181 |
Effect of exchange rate changes on cash, cash equivalents and restricted cash | (22,009) | 548 |
Net decrease in cash, cash equivalents and restricted cash | (20,285) | (8,033) |
Cash, cash equivalents and restricted cash, beginning of period | 937,688 | 771,711 |
Cash, cash equivalents and restricted cash, end of period | $ 917,403 | $ 763,678 |
CONDENSED CONSOLIDATED STATEM_3
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOW (Unaudited) (Parenthetical) - USD ($) $ in Thousands | Mar. 31, 2020 | Dec. 31, 2019 |
Cash and cash equivalents | $ 916,253 | $ 936,552 |
Total restricted cash | 1,136 | |
Total cash, cash equivalents, restricted cash and restricted cash equivalents | 917,403 | 937,688 |
Other noncurrent assets | ||
Restricted cash | $ 1,150 | $ 1,136 |
BUSINESS AND SUMMARY OF SIGNIFI
BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | 3 Months Ended |
Mar. 31, 2020 | |
Accounting Policies [Abstract] | |
BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES EPAM Systems, Inc. (the “Company” or “EPAM”) is a leading global provider of digital platform engineering and software development services to customers located around the world, primarily in North America, Europe, Asia and Australia. The Company’s industry expertise includes financial services, travel and consumer, software and hi-tech, business information and media, life sciences and healthcare, as well as other emerging industries. The Company is incorporated in Delaware with headquarters in Newtown, Pennsylvania. Basis of Presentation — The accompanying unaudited condensed consolidated financial statements of EPAM have been prepared in accordance with generally accepted accounting principles in the United States (“GAAP” or “U.S. GAAP”) and Article 10 of Regulation S-X under the Securities Exchange Act of 1934, as amended. The unaudited condensed consolidated financial statements include the financial statements of EPAM Systems, Inc. and its subsidiaries with all intercompany balances and transactions eliminated. These unaudited condensed consolidated financial statements and accompanying notes should be read in conjunction with the Company’s audited consolidated financial statements and the notes thereto for the year ended December 31, 2019 included in its Annual Report on Form 10-K. The preparation of these condensed consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts reported in these condensed consolidated financial statements and accompanying notes. Actual results could differ from those estimates, and such differences may be material to the condensed consolidated financial statements. Operating results for the interim periods are not necessarily indicative of results that may be expected to occur for the entire year. In management’s opinion, all adjustments considered necessary for a fair presentation of the accompanying unaudited condensed consolidated financial statements have been included, and all adjustments are of a normal and recurring nature. As previously disclosed in the Company’s Annual Report on Form 10-K for the year ended December 31, 2019, certain amounts recorded in the prior-period consolidated statement of cash flows presented have been reclassified to conform to the current-period financial statement presentation. These reclassifications had no effect on previously reported results of operations. Adoption of New Accounting Standards Unless otherwise discussed below, the adoption of new accounting standards did not have a material impact on the Company’s consolidated financial position, results of operations, changes in stockholders’ equity and cash flows. Measurement of Credit Losses on Financial Instruments — In June 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2016-13, Financial Instruments—Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments. The amendments in this update changed how companies measure and recognize credit impairment for many financial assets. The new credit loss model requires companies to immediately recognize an estimate of credit losses expected to occur over the remaining life of the financial assets (including trade receivables) that are in the scope of the update. The update also made amendments to the current impairment model for held-to-maturity and available-for-sale debt securities and certain guarantees. The Company adopted Topic 326, effective January 1, 2020, using a modified-retrospective approach through a cumulative effect adjustment to retained earnings as of the beginning of the period of adoption. As a result of the adoption of Topic 326, the Company recorded an immaterial reduction to its allowance for doubtful accounts for trade receivables and contract assets . Pending Accounting Standards From time to time, new accounting pronouncements are issued by the FASB or other standards-setting bodies that the Company will adopt according to the various timetables the FASB specifies. Unless otherwise discussed below, the Company believes the impact of recently issued standards that are not yet effective will not have a material impact on its consolidated financial position, results of operations and cash flows upon adoption. |
ACQUISITION
ACQUISITION | 3 Months Ended |
Mar. 31, 2020 | |
Business Combinations [Abstract] | |
ACQUISITION | ACQUISITION 2020 Acquisition — During the three months ended March 31, 2020, the Company completed one acquisition with a purchase price of $14,663 including contingent consideration with a fair value of $4,042 . The Company committed to making earnout payments with a maximum amount payable of $16,582 subject to attainment of specified performance targets in the first and second calendar years after the acquisition date. This acquisition increased EPAM’s software and service capabilities in financial services as well as added $6,300 of intangible assets, consisting mainly of customer relationships. Revenues generated by this acquisition totaled $1,043 during the three months ended March 31, 2020 |
GOODWILL
GOODWILL | 3 Months Ended |
Mar. 31, 2020 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
GOODWILL | GOODWILL Goodwill by reportable segment was as follows: North America Europe Russia Total Balance as of January 1, 2020 $ 113,426 $ 80,873 $ 744 $ 195,043 Other 2019 acquisitions purchase accounting adjustments 210 (42 ) 20 188 2020 Acquisition 6,818 — — 6,818 Effect of net foreign currency exchange rate changes (373 ) (3,078 ) (64 ) (3,515 ) Balance as of March 31, 2020 $ 120,081 $ 77,753 $ 700 $ 198,534 There were no accumulated impairment losses in the North America or Europe reportable segments as of March 31, 2020 or December 31, 2019 . The Russia segment had accumulated goodwill impairment losses of $2,241 as of March 31, 2020 and December 31, 2019 . |
FAIR VALUE MEASUREMENTS
FAIR VALUE MEASUREMENTS | 3 Months Ended |
Mar. 31, 2020 | |
Fair Value Disclosures [Abstract] | |
FAIR VALUE MEASUREMENTS | FAIR VALUE MEASUREMENTS The Company carries certain assets and liabilities at fair value on a recurring basis on its consolidated balance sheets. The following tables present the fair values of the Company’s financial assets and liabilities measured at fair value on a recurring basis as of March 31, 2020 and December 31, 2019: As of March 31, 2020 Balance Level 1 Level 2 Level 3 Foreign exchange derivative assets $ 55 $ — $ 55 $ — Total assets measured at fair value on a recurring basis $ 55 $ — $ 55 $ — Foreign exchange derivative liabilities $ 10,475 $ — $ 10,475 $ — Contingent consideration 5,705 — — 5,705 Total liabilities measured at fair value on a recurring basis $ 16,180 $ — $ 10,475 $ 5,705 As of December 31, 2019 Balance Level 1 Level 2 Level 3 Foreign exchange derivative assets $ 1,910 $ — $ 1,910 $ — Total assets measured at fair value on a recurring basis $ 1,910 $ — $ 1,910 $ — Foreign exchange derivative liabilities $ 243 $ — $ 243 $ — Contingent consideration 10,495 — — 10,495 Total liabilities measured at fair value on a recurring basis $ 10,738 $ — $ 243 $ 10,495 The foreign exchange derivatives are valued using pricing models and discounted cash flow methodologies based on observable foreign exchange data at the measurement date. See Note 5 “Derivative Financial Instruments” in the condensed consolidated interim financial statements for additional information regarding derivative financial instruments. The fair value of the contingent consideration was determined using a probability-weighted expected return method and is based on the expected future payments to be made to the sellers of the acquired businesses in accordance with the provisions outlined in the respective purchase agreements. Although there is significant judgment involved, the Company believes its estimates and assumptions are reasonable. In determining fair value, the Company considered a variety of factors, including future performance of the acquired business using financial projections developed by the Company and market risk assumptions that were derived for revenue growth and earnings before interest and taxes. The Company estimated future payments using the earnout formula and performance targets specified in the purchase agreement and adjusted those estimates to reflect the probability of their achievement. Those weighted-average estimated future payments were then discounted to present value using a rate based on the weighted-average cost of capital of guideline companies. The discount rate used to determine the fair value of contingent consideration for the 2020 Acquisition was 17.5% . Changes in financial projections, market risk assumptions, discount rates or probability assumptions related to achieving the various earnout criteria would result in a change in the fair value of the recorded contingent liabilities. Such changes, if any, are recorded within Interest and other income, net in the Company’s consolidated statement of income and comprehensive income. A reconciliation of the beginning and ending balances of Level 3 acquisition-related contingent consideration using significant unobservable inputs for the three months ended March 31, 2020 is as follows: Amount Contingent consideration liabilities as of January 1, 2020 $ 10,495 Payment of contingent consideration for previously acquired business (7,869 ) Acquisition date fair value of contingent consideration — 2020 Acquisition (Note 2) 4,042 Changes in fair value of contingent consideration included in Interest and other income, net (438 ) Effect of net foreign currency exchange rate changes (525 ) Contingent consideration liabilities as of March 31, 2020 $ 5,705 Financial Assets and Liabilities Not Measured at Fair Value on a Recurring Basis Estimates of fair value of financial instruments not carried at fair value on a recurring basis on the Company’s consolidated balance sheets are generally subjective in nature, and are determined as of a specific point in time based on the characteristics of the financial instruments and relevant market information. The generally short maturities of certain assets and liabilities result in a number of assets and liabilities for which fair value equals or closely approximates the amount recorded on the Company’s consolidated balance sheets. The following tables present the estimated fair values of the Company’s financial assets and liabilities not measured at fair value on a recurring basis as of the dates indicated: Fair Value Hierarchy Balance Estimated Fair Value Level 1 Level 2 Level 3 March 31, 2020 Financial Assets: Cash equivalents: Money market funds $ 334,194 $ 334,194 $ 334,194 $ — $ — Time deposits 2 2 — 2 — Total cash equivalents $ 334,196 $ 334,196 $ 334,194 $ 2 $ — Restricted cash $ 1,150 $ 1,150 $ 1,150 $ — $ — Employee loans $ 2,159 $ 2,159 $ — $ — $ 2,159 Financial Liabilities: Borrowings under the 2017 Credit Facility $ 25,011 $ 25,011 $ — $ 25,011 $ — Fair Value Hierarchy Balance Estimated Fair Value Level 1 Level 2 Level 3 December 31, 2019 Financial Assets: Cash equivalents: Money market funds $ 407,817 $ 407,817 $ 407,817 $ — $ — Time deposits 10,002 10,002 — 10,002 — Total cash equivalents $ 417,819 $ 417,819 $ 407,817 $ 10,002 $ — Restricted cash $ 1,136 $ 1,136 $ 1,136 $ — $ — Employee loans $ 2,434 $ 2,434 $ — $ — $ 2,434 Financial Liabilities: Borrowings under the 2017 Credit Facility $ 25,017 $ 25,017 $ — $ 25,017 $ — |
DERIVATIVE FINANCIAL INSTRUMENT
DERIVATIVE FINANCIAL INSTRUMENTS | 3 Months Ended |
Mar. 31, 2020 | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |
DERIVATIVE FINANCIAL INSTRUMENTS | DERIVATIVE FINANCIAL INSTRUMENTS In the normal course of business, the Company uses derivative financial instruments to manage the risk of fluctuations in foreign currency exchange rates. The Company has a hedging program whereby it enters into a series of foreign exchange forward contracts with durations of twelve months or less that are designated as cash flow hedges of forecasted Russian ruble, Polish zloty and Indian rupee transactions. As of March 31, 2020 , all of the Company’s foreign exchange forward contracts were designated as hedges and there is no financial collateral (including cash collateral) required to be posted by the Company related to the foreign exchange forward contracts. The fair value of derivative instruments on the Company’s consolidated balance sheets as of March 31, 2020 and December 31, 2019 were as follows: As of March 31, 2020 As of December 31, 2019 Balance Sheet Classification Asset Derivatives Liability Derivatives Asset Derivatives Liability Derivatives Foreign exchange forward contracts - Designated as hedging instruments Prepaid expenses and other current assets $ 55 $ 1,910 Accrued expenses and other current liabilities $ 10,475 $ 243 The Company records changes in the fair value of its cash flow hedges in accumulated other comprehensive loss in the consolidated balance sheets until the forecasted transaction occurs. When the forecasted transaction occurs, the Company reclassifies the related gain or loss on the cash flow hedge to cost of revenues (exclusive of depreciation and amortization). In the event the underlying forecasted transaction does not occur, or it becomes probable that it will not occur, the Company reclassifies the gain or loss on the related cash flow hedge into income. If the Company does not elect hedge accounting, or the contract does not qualify for hedge accounting treatment, the changes in fair value from period to period are recorded in income. The changes in the fair value of foreign currency derivative instruments in our unaudited condensed consolidated statements of income and comprehensive income for the three months ended March 31, 2020 and 2019 were as follows: Three Months Ended 2020 2019 Foreign exchange forward contracts - Designated as hedging instruments: Net (loss)/gain in fair value recognized in accumulated other comprehensive loss $ (12,087 ) $ 3,999 Net loss reclassified from accumulated other comprehensive loss into cost of revenues (exclusive of depreciation and amortization) $ (660 ) $ (452 ) |
LEASES
LEASES | 3 Months Ended |
Mar. 31, 2020 | |
Leases [Abstract] | |
LEASES | LEASES The Company leases office space, corporate apartments, office equipment, and vehicles. Many of the Company’s leases contain variable payments including changes in base rent and charges for common area maintenance or other miscellaneous expenses. Due to this variability, the cash flows associated with these variable payments are not included in the minimum lease payments used in determining the right-of-use assets and associated lease liabilities and are recognized in the period in which the obligation for such payments is incurred. The Company’s leases have remaining lease terms ranging from 0.1 years to 11.1 years . Certain lease agreements, mainly for office space, include options to extend or terminate the lease before the expiration date. The Company considers such options when determining the lease term when it is reasonably certain that the Company will exercise that option. The Company leases and subleases a portion of its office space to third parties. Lease income and sublease income were immaterial for the three months ended March 31, 2020 and 2019. During the three months ended March 31, 2020 and 2019, the components of lease expense were as follows: Three Months Ended March 31, Income Statement Classification 2020 2019 Operating lease cost Selling, general and administrative expenses $ 18,863 $ 13,719 Variable lease cost Selling, general and administrative expenses 2,635 2,097 Short-term lease cost Selling, general and administrative expenses 540 898 Total lease cost $ 22,038 $ 16,714 Supplemental cash flow information related to leases for the three months ended March 31, 2020 and 2019 was as follows: Three Months Ended Three Months Ended Cash paid for amounts included in the measurement of lease liabilities: Operating cash flows used for operating leases $ 16,891 $ 14,696 Right-of-use assets obtained in exchange for lease obligations: Operating leases $ 31,252 $ 12,825 Non-cash net increase/(decrease) due to lease modifications: Operating lease right-of-use assets $ 4,584 $ (5,174 ) Operating lease liabilities $ 4,573 $ (5,106 ) Weighted average remaining lease term and discount rate as of March 31, 2020 and 2019 were as follows: As of March 31, 2020 As of March 31, 2019 Weighted average remaining lease term, in years: Operating leases 6.0 5.9 Weighted average discount rate: Operating leases 3.3 % 4.0 % As of March 31, 2020 , operating lease liabilities will mature as follows: Year ending December 31, Lease Payments 2020 (excluding three months ended March 31, 2020) $ 50,933 2021 59,351 2022 42,665 2023 31,190 2024 26,870 Thereafter 62,988 Total lease payments 273,997 Less: imputed interest (24,577 ) Total $ 249,420 As of March 31, 2020 , the Company had committed to payments of $13,727 related to operating lease agreements that had not yet commenced. These operating leases will commence during various dates during 2020 with lease terms ranging from 2.0 to 10.9 years . The Company did not have any material finance lease agreements that had not yet commenced. |
LONG-TERM DEBT
LONG-TERM DEBT | 3 Months Ended |
Mar. 31, 2020 | |
Debt Disclosure [Abstract] | |
LONG-TERM DEBT | LONG-TERM DEBT Revolving Line of Credit — On May 24, 2017, the Company entered into an unsecured credit facility (the “2017 Credit Facility”), as may be amended from time to time, with PNC Bank, National Association; PNC Capital Markets LLC; Citibank N.A.; Wells Fargo Bank, National Association; Fifth Third Bank and Santander Bank, N.A. (collectively the “Lenders”). The 2017 Credit Facility provides for a borrowing capacity of $300,000 , with potential to increase the borrowing capacity up to $400,000 if certain conditions are met. The 2017 Credit Facility matures on May 24, 2022 . Borrowings under the 2017 Credit Facility may be denominated in U.S. dollars or up to a maximum of $100,000 equivalent in British pounds sterling, Canadian dollars, euros or Swiss francs and other currencies as may be approved by the administrative agent and the Lenders. Borrowings under the 2017 Credit Facility bear interest at either a base rate or Euro-rate plus a margin based on the Company’s leverage ratio. The base rate is equal to the highest of (a) the Overnight Bank Funding Rate, plus 0.5% , (b) the Prime Rate, and (c) the Daily LIBOR Rate, plus 1.0% . As of March 31, 2020 , the Company’s outstanding borrowings are subject to a LIBOR-based interest rate which resets regularly at issuance, based on lending terms. The 2017 Credit Facility includes customary business and financial covenants that may restrict the Company’s ability to make or pay dividends (other than certain intercompany dividends) if a potential or an actual event of default has occurred or would be triggered. As of March 31, 2020 , the Company was in compliance with all covenants contained in the 2017 Credit Facility. The following table presents the outstanding debt and borrowing capacity of the Company under the 2017 Credit Facility: As of As of Outstanding debt $ 25,000 $ 25,000 Interest rate 1.9 % 2.8 % Irrevocable standby letters of credit $ 298 $ 303 Available borrowing capacity $ 274,702 $ 274,697 Current maximum borrowing capacity $ 300,000 $ 300,000 |
REVENUES
REVENUES | 3 Months Ended |
Mar. 31, 2020 | |
Revenue from Contract with Customer [Abstract] | |
REVENUES | REVENUES Disaggregation of Revenues The following tables present the disaggregation of the Company’s revenues by customer location, including a reconciliation of the disaggregated revenues with the reportable segments (Note 13 “Segment Information”) for the periods indicated: Three Months Ended March 31, 2020 Reportable Segments North America Europe Russia Consolidated Revenues Customer Locations North America $ 377,784 $ 10,419 $ 1,627 $ 389,830 Europe 10,332 212,722 3 223,057 CIS 2,554 12 22,294 24,860 APAC 432 13,180 — 13,612 Revenues $ 391,102 $ 236,333 $ 23,924 $ 651,359 Three Months Ended March 31, 2019 Reportable Segments North America Europe Russia Consolidated Revenues Customer Locations North America $ 303,745 $ 12,891 $ 16 $ 316,652 Europe 4,747 168,620 141 173,508 CIS 1,739 13 16,422 18,174 APAC 458 12,541 — 12,999 Revenues $ 310,689 $ 194,065 $ 16,579 $ 521,333 The following tables present the disaggregation of the Company’s revenues by industry vertical, including a reconciliation of the disaggregated revenues with the reportable segments (Note 13 “Segment Information”) for the periods indicated: Three Months Ended March 31, 2020 Reportable Segments North America Europe Russia Consolidated Revenues Industry Verticals Business Information & Media $ 80,220 $ 58,146 $ 360 $ 138,726 Financial Services 47,868 67,594 16,181 131,643 Software & Hi-Tech 101,737 18,146 1,966 121,849 Travel & Consumer 54,724 61,067 3,739 119,530 Life Sciences & Healthcare 61,611 7,619 9 69,239 Emerging Verticals 44,942 23,761 1,669 70,372 Revenues $ 391,102 $ 236,333 $ 23,924 $ 651,359 Three Months Ended March 31, 2019 Reportable Segments North America Europe Russia Consolidated Revenues Industry Verticals Business Information & Media $ 62,361 $ 32,531 $ 140 $ 95,032 Financial Services 38,394 61,835 13,032 113,261 Software & Hi-Tech 79,121 20,370 440 99,931 Travel & Consumer 47,000 55,202 2,124 104,326 Life Sciences & Healthcare 50,156 4,556 62 54,774 Emerging Verticals 33,657 19,571 781 54,009 Revenues $ 310,689 $ 194,065 $ 16,579 $ 521,333 The following tables present the disaggregation of the Company’s revenues by contract type including a reconciliation of the disaggregated revenues with the Company’s reportable segments (Note 13 “Segment Information”) for the periods indicated: Three Months Ended March 31, 2020 Reportable Segments North America Europe Russia Consolidated Revenues Contract Types Time-and-material $ 357,263 $ 190,320 $ 13,596 $ 561,179 Fixed-price 31,855 45,255 8,821 85,931 Licensing 1,770 162 1,458 3,390 Other revenues 214 596 49 859 Revenues $ 391,102 $ 236,333 $ 23,924 $ 651,359 Three Months Ended March 31, 2019 Reportable Segments North America Europe Russia Consolidated Revenues Contract Types Time-and-material $ 284,725 $ 168,213 $ 11,272 $ 464,210 Fixed-price 24,740 25,246 5,287 55,273 Licensing 836 398 6 1,240 Other revenues 388 208 14 610 Revenues $ 310,689 $ 194,065 $ 16,579 $ 521,333 Timing of Revenue Recognition The following tables present the timing of revenue recognition for the periods indicated: Three Months Ended March 31, 2020 Reportable Segments North America Europe Russia Consolidated Revenues Timing of Revenue Recognition Transferred at a point of time $ 1,292 $ 162 $ 1,456 $ 2,910 Transferred over time 389,810 236,171 22,468 648,449 Revenues $ 391,102 $ 236,333 $ 23,924 $ 651,359 Three Months Ended March 31, 2019 Reportable Segments North America Europe Russia Consolidated Revenues Timing of Revenue Recognition Transferred at a point of time $ 404 $ 47 $ — $ 451 Transferred over time 310,285 194,018 16,579 520,882 Revenues $ 310,689 $ 194,065 $ 16,579 $ 521,333 During the three months ended March 31, 2020 the Company recognized $5,814 of revenues from performance obligations satisfied in previous periods compared to $1,704 during the three months ended March 31, 2019. The following table includes the estimated revenues expected to be recognized in the future related to performance obligations that are partially or fully unsatisfied as of March 31, 2020 . The Company applies a practical expedient and does not disclose the value of unsatisfied performance obligations for contracts that (i) have an original expected duration of one year or less and (ii) contracts for which it recognizes revenues at the amount to which it has the right to invoice for services provided: Less than 1 year 1 Year 2 Years 3 Years Total Contract Type Fixed-price $ 14,332 $ 1,443 $ — $ — $ 15,775 The Company applies a practical expedient and does not disclose the amount of the transaction price allocated to the remaining performance obligations nor provide an explanation of when the Company expects to recognize that amount as revenue for certain variable consideration. Contract Balances The following table provides information on the classification of contract assets and liabilities in the condensed consolidated balance sheets: As of As of Contract assets included in Trade receivables and contract assets $ 16,176 $ 14,320 Contract liabilities included in Accrued expenses and other current liabilities $ 11,370 $ 9,132 Contract assets have not materially changed from December 31, 2019. Contract liabilities comprise amounts collected from the Company’s customers for revenues not yet earned. Such amounts are anticipated to be recorded as revenues when services are performed in subsequent periods. Contract liabilities have not materially changed from December 31, 2019. During the three months ended March 31, 2020 , the Company recognized $6,537 of revenues that were included in Accrued expenses and other current liabilities at December 31, 2019. During the three months ended March 31, 2019, the Company recognized $3,051 |
STOCK-BASED COMPENSATION
STOCK-BASED COMPENSATION | 3 Months Ended |
Mar. 31, 2020 | |
Share-based Payment Arrangement [Abstract] | |
STOCK-BASED COMPENSATION | STOCK-BASED COMPENSATION The following table summarizes the components of stock-based compensation expense recognized in the Company’s condensed consolidated statements of income and comprehensive income for the periods indicated: Three Months Ended 2020 2019 Cost of revenues (exclusive of depreciation and amortization) $ 3,984 $ 12,781 Selling, general and administrative expenses 7,897 9,075 Total $ 11,881 $ 21,856 Stock Options Stock option activity under the Company’s plans is set forth below: Number of Options Weighted Average Exercise Price Aggregate Intrinsic Value Weighted Average Remaining Contractual Term (in years) Options outstanding at January 1, 2020 3,322,930 $ 50.85 Options granted 144,724 $ 175.22 Options exercised (217,475 ) $ 32.84 Options forfeited/cancelled (7,489 ) $ 121.05 Options outstanding at March 31, 2020 3,242,690 $ 57.45 $ 415,750 4.8 Options vested and exercisable at March 31, 2020 2,856,545 $ 45.67 $ 399,900 4.3 Options expected to vest at March 31, 2020 352,278 $ 143.52 $ 14,845 8.8 As of March 31, 2020 , $18,416 of total remaining unrecognized stock-based compensation cost related to unvested stock options, net of estimated forfeitures, is expected to be recognized over the weighted-average remaining requisite service period of 3.1 years . Restricted Stock and Restricted Stock Units Service-Based Awards The table below summarizes activity related to the Company’s equity-classified and liability-classified service-based awards for the three months ended March 31, 2020 : Equity-Classified Restricted Stock Equity-Classified Equity-Settled Restricted Stock Units Liability-Classified Cash-Settled Restricted Stock Units Number of Shares Weighted Average Grant Date Fair Value Per Share Number of Shares Weighted Average Grant Date Fair Value Per Share Number of Shares Weighted Average Grant Date Fair Value Per Share Unvested service-based awards outstanding at January 1, 2020 9,791 $ 162.96 758,785 $ 122.48 242,288 $ 105.40 Awards granted — $ — 235,231 $ 178.79 56,061 $ 181.59 Awards vested — $ — (273,904 ) $ 104.26 (111,966 ) $ 90.08 Awards forfeited/cancelled — $ — (11,838 ) $ 128.62 (1,365 ) $ 111.01 Unvested service-based awards outstanding at March 31, 2020 9,791 $ 162.96 708,274 $ 148.13 185,018 $ 137.72 As of March 31, 2020 , $1,276 of total remaining unrecognized stock-based compensation cost related to service-based equity-classified restricted stock is expected to be recognized over the weighted-average remaining requisite service period of 2.4 years . As of March 31, 2020 , $89,043 of total remaining unrecognized stock-based compensation cost related to service-based equity-classified restricted stock units (“RSUs”), net of estimated forfeitures, is expected to be recognized over the weighted-average remaining requisite service period of 3.0 years . During the first quarter of 2020, 11,927 equity-classified RSUs were granted in connection with a 2020 acquisition of a business. See Note 2 “Acquisitions” in the condensed consolidated interim financial statements for additional information regarding business acquisitions. During the first quarter of 2020, in connection with a 2019 acquisition of a business, the Company formally issued 5,793 equity-classified RSUs. As of March 31, 2020 , $28,651 of total remaining unrecognized stock-based compensation cost related to service-based liability-classified cash-settled RSUs, net of estimated forfeitures, is expected to be recognized over the weighted-average remaining requisite service period of 2.6 years . During the first quarter of 2020, 6,054 liability-classified cash-settled RSUs were granted in connection with an acquisition of a business. See Note 2 “Acquisitions” in the condensed consolidated interim financial statements for additional information regarding business acquisitions. The liability associated with the service-based liability-classified RSUs as of March 31, 2020 and December 31, 2019 , was $8,253 and $21,902 , respectively, and was classified as Accrued compensation and benefits expenses in the condensed consolidated balance sheets. Performance-Based Awards The table below summarizes activity related to the Company’s equity-classified performance-based awards for the three months ended March 31, 2020 : Equity-Classified Equity-Classified Equity-Settled Restricted Stock Units Number of Shares Weighted Average Grant Date Fair Value Per Share Number of Shares Weighted Average Grant Date Fair Value Per Share Unvested performance-based awards outstanding at January 1, 2020 9,393 $ 165.87 — $ — Awards granted — $ — 24,836 $ 177.81 Unvested performance-based awards outstanding at March 31, 2020 9,393 $ 165.87 24,836 $ 177.81 As of March 31, 2020 , $934 of total remaining unrecognized stock-based compensation cost related to performance-based restricted stock is expected to be recognized over the weighted-average remaining requisite service period of 3.4 years . During the first quarter of 2020, in connection with a 2019 acquisition of a business, the Company formally issued 24,836 performance-based equity-classified RSUs. As of March 31, 2020 , $2,526 of total remaining unrecognized stock-based compensation cost related to performance-based equity-classified RSUs is expected to be recognized over the weighted-average remaining requisite service period of 3.0 years . During the first quarter of 2020, the Company agreed to issue equity-classified RSUs at future dates worth up to $2,171 in connection with an acquisition of a business. The number of awards to be issued is subject to attainment of specified performance targets in the 2 years after the acquisition date as well as the Company’s stock price at the time of formal issuance. The awards require continued service and vest over 3 years from the date of acquisition. |
INCOME TAXES
INCOME TAXES | 3 Months Ended |
Mar. 31, 2020 | |
Income Tax Disclosure [Abstract] | |
INCOME TAXES | INCOME TAXES In determining its interim provision for income taxes, the Company uses an estimated annual effective tax rate, which is based on expected annual profit before tax, statutory tax rates and tax planning opportunities available in the various jurisdictions in which the Company operates. Certain significant or unusual items are separately recognized in the quarter in which they occur and can be a source of variability in the effective tax rates from quarter to quarter. The Company’s worldwide effective tax rates for the three months ended March 31, 2020 and 2019 were 11.3% and 5.4% , respectively. The Company’s effective tax rates benefited from excess tax benefits recorded upon vesting or exercise of stock-based awards of $11,697 and $11,513 during the three months ended March 31, 2020 and 2019 , respectively. |
EARNINGS PER SHARE
EARNINGS PER SHARE | 3 Months Ended |
Mar. 31, 2020 | |
Earnings Per Share [Abstract] | |
EARNINGS PER SHARE | EARNINGS PER SHARE Basic earnings per share is computed by dividing net income available to common shareholders by the weighted-average number of shares of common stock outstanding during the period. For purposes of computing basic earnings per share, any nonvested shares of restricted stock that have been issued by the Company and are contingently returnable to the Company are excluded from the weighted-average number of shares of common stock outstanding during the period. Diluted earnings per share is computed by dividing net income available to common shareholders by the weighted-average number of shares of common stock outstanding during the period increased to include the number of additional shares of common stock that would have been outstanding if the potentially dilutive securities had been issued. Potentially dilutive securities include outstanding stock options, unvested restricted stock and unvested equity-settled RSUs. The dilutive effect of potentially dilutive securities is reflected in diluted earnings per share by application of the treasury stock method. The following table sets forth the computation of basic and diluted earnings per share of common stock as follows: Three Months Ended 2020 2019 Numerator for basic and diluted earnings per share: Net income $ 85,565 $ 60,754 Numerator for basic and diluted earnings per share $ 85,565 $ 60,754 Denominator: Weighted average common shares for basic earnings per share 55,286,747 54,245,133 Net effect of dilutive stock options, restricted stock units and restricted stock awards 2,855,823 2,991,294 Weighted average common shares for diluted earnings per share 58,142,570 57,236,427 Net income per share: Basic $ 1.55 $ 1.12 Diluted $ 1.47 $ 1.06 The number of shares underlying equity-based awards that were excluded from the calculation of diluted earnings per share as their effect would be anti-dilutive was 9,118 and 26,203 during the three months ended March 31, 2020 and 2019, respectively. |
COMMITMENTS AND CONTINGENCIES
COMMITMENTS AND CONTINGENCIES | 3 Months Ended |
Mar. 31, 2020 | |
Commitments and Contingencies Disclosure [Abstract] | |
COMMITMENTS AND CONTINGENCIES | COMMITMENTS AND CONTINGENCIES Indemnification Obligations — In the normal course of business, the Company is a party to a variety of agreements under which it may be obligated to indemnify the other party for certain matters. These obligations typically arise in contracts where the Company customarily agrees to hold the other party harmless against losses arising from a breach of representations or covenants for certain matters, infringement of third party intellectual property rights, data privacy violations, and certain tortious conduct in the course of providing services. The duration of these indemnifications varies, and in certain cases, is indefinite. The Company is unable to reasonably estimate the maximum potential amount of future payments under these or similar agreements due to the unique facts and circumstances of each agreement and the fact that certain indemnifications provide for no limitation to the maximum potential future payments under the indemnification. Management is not aware of any such matters that would have a material effect on the condensed consolidated financial statements of the Company. Litigation — From time to time, the Company is involved in litigation, claims or other contingencies arising in the ordinary course of business. The Company accrues a liability when a loss is considered probable and the amount can be reasonably estimated. When a material loss contingency is reasonably possible but not probable, the Company does not record a liability, but instead discloses the nature and the amount of the claim, and an estimate of the loss or range of loss, if such an estimate can be made. Legal fees are expensed as incurred. In the opinion of management, the outcome of any existing claims and legal or regulatory proceedings, if decided adversely, is not expected to have a material effect on the Company’s business, financial condition, results of operations or cash flows. Building Acquisition Commitments — During the year ended December 31, 2019, the Company entered into an agreement to purchase office space in Ukraine intended to support the global delivery center in that country. The agreement is subject to completion of construction and other ordinary closing conditions. As of March 31, 2020, the Company has committed to making future payments totaling approximately $36,900 including VAT to the sellers upon transfer of the building. |
SEGMENTS INFORMATION
SEGMENTS INFORMATION | 3 Months Ended |
Mar. 31, 2020 | |
Segment Reporting [Abstract] | |
SEGMENT INFORMATION | SEGMENT INFORMATION The Company determines its business segments and reports segment information in accordance with how the Company’s chief operating decision maker (“CODM”) organizes the segments to evaluate performance, allocate resources and make business decisions. Segment results are based on the segment’s revenues and operating profit, where 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. Such expenses include certain types of professional fees, non-corporate taxes, compensation to non-employee directors and certain other general and administrative expenses, including compensation of specific groups of non-production employees. In addition, the Company does 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. These unallocated amounts are combined with total segment operating profit to arrive at consolidated income from operations as reported below in the reconciliation of segment operating profit to consolidated income before provision for income taxes. Additionally, management has determined that it is not practical to allocate identifiable assets by segment since such assets are used interchangeably among the segments. The Company manages its business primarily based on the managerial responsibility for its 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 the Company’s reportable segments. 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 management team’s reportable segment. During the fourth quarter of 2019, the Company changed its management reporting of segment revenue to exclude other income. Prior year amounts presented below have been changed to conform to the new presentation. Revenues from external customers and operating profit, before unallocated expenses, by reportable segments for the three months ended March 31, 2020 and 2019 , were as follows: Three Months Ended 2020 2019 Segment revenues: North America $ 391,102 $ 310,689 Europe 236,333 194,065 Russia 23,924 16,579 Total segment revenues $ 651,359 $ 521,333 Segment operating profit: North America $ 78,927 $ 64,457 Europe 31,779 31,785 Russia 519 589 Total segment operating profit $ 111,225 $ 96,831 Intersegment transactions were excluded from the above on the basis that they are neither included in the measure of a segment’s profit and loss results, nor considered by the CODM during the review of segment results. There were no customers that accounted for more than 10% of total segment revenues during the three months ended March 31, 2020 and 2019 . Reconciliation of segment operating profit to consolidated income before provision for income taxes is presented below: Three Months Ended 2020 2019 Total segment operating profit: $ 111,225 $ 96,831 Unallocated amounts: Stock-based compensation expense (11,881 ) (21,856 ) Amortization of intangibles assets (3,135 ) (2,138 ) Other acquisition-related expenses (468 ) (511 ) Other unallocated costs (8,232 ) (7,668 ) Income from operations 87,509 64,658 Interest and other income, net 2,386 3,076 Foreign exchange gain/(loss) 6,524 (3,484 ) Income before provision for income taxes $ 96,419 $ 64,250 Geographic Area Information Long-lived assets include property and equipment, net of accumulated depreciation and amortization, and management has determined that it is not practical to allocate these assets by segment since such assets are used interchangeably among the segments. Physical locations and values of the Company’s long-lived assets are presented below: As of As of Belarus $ 74,766 $ 75,984 Ukraine 27,384 24,652 United States 17,845 15,637 Russia 13,414 17,980 India 6,874 7,443 Poland 4,988 5,029 Hungary 4,887 5,201 China 2,806 3,036 Other 11,707 10,297 Total $ 164,671 $ 165,259 The table below presents information about the Company’s revenues by customer location for the three months ended March 31, 2020 and 2019 : Three Months Ended 2020 2019 United States $ 370,089 $ 299,680 United Kingdom 92,132 65,739 Switzerland 47,222 36,233 Netherlands 25,909 20,616 Russia 21,961 15,892 Germany 20,193 19,154 Canada 17,920 16,972 Other locations 55,933 47,047 Total $ 651,359 $ 521,333 |
BUSINESS AND SUMMARY OF SIGNI_2
BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies) | 3 Months Ended |
Mar. 31, 2020 | |
Accounting Policies [Abstract] | |
Nature of Operations | EPAM Systems, Inc. (the “Company” or “EPAM”) is a leading global provider of digital platform engineering and software development services to customers located around the world, primarily in North America, Europe, Asia and Australia. The Company’s industry expertise includes financial services, travel and consumer, software and hi-tech, business information and media, life sciences and healthcare, as well as other emerging industries. The Company is incorporated in Delaware with headquarters in Newtown, Pennsylvania. |
Basis of Presentation | Basis of Presentation — The accompanying unaudited condensed consolidated financial statements of EPAM have been prepared in accordance with generally accepted accounting principles in the United States (“GAAP” or “U.S. GAAP”) and Article 10 of Regulation S-X under the Securities Exchange Act of 1934, as amended. The unaudited condensed consolidated financial statements include the financial statements of EPAM Systems, Inc. and its subsidiaries with all intercompany balances and transactions eliminated. These unaudited condensed consolidated financial statements and accompanying notes should be read in conjunction with the Company’s audited consolidated financial statements and the notes thereto for the year ended December 31, 2019 |
Use of Estimates | The preparation of these condensed consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts reported in these condensed consolidated financial statements and accompanying notes. Actual results could differ from those estimates, and such differences may be material to the condensed consolidated financial statements. Operating results for the interim periods are not necessarily indicative of results that may be expected to occur for the entire year. In management’s opinion, all adjustments considered necessary for a fair presentation of the accompanying unaudited condensed consolidated financial statements have been included, and all adjustments are of a normal and recurring nature. |
Reclassifications | As previously disclosed in the Company’s Annual Report on Form 10-K for the year ended December 31, 2019, certain amounts recorded in the prior-period consolidated statement of cash flows presented have been reclassified to conform to the current-period financial statement presentation. These reclassifications had no effect on previously reported results of operations. |
Adoption of New Accounting Standards | Adoption of New Accounting Standards Unless otherwise discussed below, the adoption of new accounting standards did not have a material impact on the Company’s consolidated financial position, results of operations, changes in stockholders’ equity and cash flows. Measurement of Credit Losses on Financial Instruments — In June 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2016-13, Financial Instruments—Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments. The amendments in this update changed how companies measure and recognize credit impairment for many financial assets. The new credit loss model requires companies to immediately recognize an estimate of credit losses expected to occur over the remaining life of the financial assets (including trade receivables) that are in the scope of the update. The update also made amendments to the current impairment model for held-to-maturity and available-for-sale debt securities and certain guarantees. The Company adopted Topic 326, effective January 1, 2020, using a modified-retrospective approach through a cumulative effect adjustment to retained earnings as of the beginning of the period of adoption. As a result of the adoption of Topic 326, the Company recorded an immaterial reduction to its allowance for doubtful accounts for trade receivables and contract assets . Pending Accounting Standards From time to time, new accounting pronouncements are issued by the FASB or other standards-setting bodies that the Company will adopt according to the various timetables the FASB specifies. Unless otherwise discussed below, the Company believes the impact of recently issued standards that are not yet effective will not have a material impact on its consolidated financial position, results of operations and cash flows upon adoption. |
FAIR VALUE MEASUREMENTS (Polici
FAIR VALUE MEASUREMENTS (Policies) | 3 Months Ended |
Mar. 31, 2020 | |
Accounting Policies [Abstract] | |
Fair Value of Financial Instruments | The foreign exchange derivatives are valued using pricing models and discounted cash flow methodologies based on observable foreign exchange data at the measurement date. See Note 5 “Derivative Financial Instruments” in the condensed consolidated interim financial statements for additional information regarding derivative financial instruments. The fair value of the contingent consideration was determined using a probability-weighted expected return method and is based on the expected future payments to be made to the sellers of the acquired businesses in accordance with the provisions outlined in the respective purchase agreements. Although there is significant judgment involved, the Company believes its estimates and assumptions are reasonable. In determining fair value, the Company considered a variety of factors, including future performance of the acquired business using financial projections developed by the Company and market risk assumptions that were derived for revenue growth and earnings before interest and taxes. The Company estimated future payments using the earnout formula and performance targets specified in the purchase agreement and adjusted those estimates to reflect the probability of their achievement. Those weighted-average estimated future payments were then discounted to present value using a rate based on the weighted-average cost of capital of guideline companies. The discount rate used to determine the fair value of contingent consideration for the 2020 Acquisition was 17.5% . Changes in financial projections, market risk assumptions, discount rates or probability assumptions related to achieving the various earnout criteria would result in a change in the fair value of the recorded contingent liabilities. Such changes, if any, are recorded within Interest and other income, net in the Company’s consolidated statement of income and comprehensive income. |
DERIVATIVE FINANCIAL INSTRUME_2
DERIVATIVE FINANCIAL INSTRUMENTS (Policies) | 3 Months Ended |
Mar. 31, 2020 | |
Accounting Policies [Abstract] | |
Reporting of Cash Flow Hedges | The Company records changes in the fair value of its cash flow hedges in accumulated other comprehensive loss in the consolidated balance sheets until the forecasted transaction occurs. When the forecasted transaction occurs, the Company reclassifies the related gain or loss on the cash flow hedge to cost of revenues (exclusive of depreciation and amortization). In the event the underlying forecasted transaction does not occur, or it becomes probable that it will not occur, the Company reclassifies the gain or loss on the related cash flow hedge into income. |
Reporting of Derivative Activity | If the Company does not elect hedge accounting, or the contract does not qualify for hedge accounting treatment, the changes in fair value from period to period are recorded in income. |
INCOME TAXES INCOME TAXES (Poli
INCOME TAXES INCOME TAXES (Policies) | 3 Months Ended |
Mar. 31, 2020 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | In determining its interim provision for income taxes, the Company uses an estimated annual effective tax rate, which is based on expected annual profit before tax, statutory tax rates and tax planning opportunities available in the various jurisdictions in which the Company operates. Certain significant or unusual items are separately recognized in the quarter in which they occur and can be a source of variability in the effective tax rates from quarter to quarter. |
GOODWILL (Tables)
GOODWILL (Tables) | 3 Months Ended |
Mar. 31, 2020 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Goodwill By Reportable Segment | Goodwill by reportable segment was as follows: North America Europe Russia Total Balance as of January 1, 2020 $ 113,426 $ 80,873 $ 744 $ 195,043 Other 2019 acquisitions purchase accounting adjustments 210 (42 ) 20 188 2020 Acquisition 6,818 — — 6,818 Effect of net foreign currency exchange rate changes (373 ) (3,078 ) (64 ) (3,515 ) Balance as of March 31, 2020 $ 120,081 $ 77,753 $ 700 $ 198,534 |
FAIR VALUE MEASUREMENTS (Tables
FAIR VALUE MEASUREMENTS (Tables) | 3 Months Ended |
Mar. 31, 2020 | |
Fair Value Disclosures [Abstract] | |
Financial Assets and Liabilities Measured at Fair Value on a Recurring Basis | The following tables present the fair values of the Company’s financial assets and liabilities measured at fair value on a recurring basis as of March 31, 2020 and December 31, 2019: As of March 31, 2020 Balance Level 1 Level 2 Level 3 Foreign exchange derivative assets $ 55 $ — $ 55 $ — Total assets measured at fair value on a recurring basis $ 55 $ — $ 55 $ — Foreign exchange derivative liabilities $ 10,475 $ — $ 10,475 $ — Contingent consideration 5,705 — — 5,705 Total liabilities measured at fair value on a recurring basis $ 16,180 $ — $ 10,475 $ 5,705 As of December 31, 2019 Balance Level 1 Level 2 Level 3 Foreign exchange derivative assets $ 1,910 $ — $ 1,910 $ — Total assets measured at fair value on a recurring basis $ 1,910 $ — $ 1,910 $ — Foreign exchange derivative liabilities $ 243 $ — $ 243 $ — Contingent consideration 10,495 — — 10,495 Total liabilities measured at fair value on a recurring basis $ 10,738 $ — $ 243 $ 10,495 |
Acquisition-Related Contingent Consideration Roll Forward | A reconciliation of the beginning and ending balances of Level 3 acquisition-related contingent consideration using significant unobservable inputs for the three months ended March 31, 2020 is as follows: Amount Contingent consideration liabilities as of January 1, 2020 $ 10,495 Payment of contingent consideration for previously acquired business (7,869 ) Acquisition date fair value of contingent consideration — 2020 Acquisition (Note 2) 4,042 Changes in fair value of contingent consideration included in Interest and other income, net (438 ) Effect of net foreign currency exchange rate changes (525 ) Contingent consideration liabilities as of March 31, 2020 $ 5,705 |
Reported Amounts and Estimated Fair Values of the Financial Assets and Liabilities | The following tables present the estimated fair values of the Company’s financial assets and liabilities not measured at fair value on a recurring basis as of the dates indicated: Fair Value Hierarchy Balance Estimated Fair Value Level 1 Level 2 Level 3 March 31, 2020 Financial Assets: Cash equivalents: Money market funds $ 334,194 $ 334,194 $ 334,194 $ — $ — Time deposits 2 2 — 2 — Total cash equivalents $ 334,196 $ 334,196 $ 334,194 $ 2 $ — Restricted cash $ 1,150 $ 1,150 $ 1,150 $ — $ — Employee loans $ 2,159 $ 2,159 $ — $ — $ 2,159 Financial Liabilities: Borrowings under the 2017 Credit Facility $ 25,011 $ 25,011 $ — $ 25,011 $ — Fair Value Hierarchy Balance Estimated Fair Value Level 1 Level 2 Level 3 December 31, 2019 Financial Assets: Cash equivalents: Money market funds $ 407,817 $ 407,817 $ 407,817 $ — $ — Time deposits 10,002 10,002 — 10,002 — Total cash equivalents $ 417,819 $ 417,819 $ 407,817 $ 10,002 $ — Restricted cash $ 1,136 $ 1,136 $ 1,136 $ — $ — Employee loans $ 2,434 $ 2,434 $ — $ — $ 2,434 Financial Liabilities: Borrowings under the 2017 Credit Facility $ 25,017 $ 25,017 $ — $ 25,017 $ — |
DERIVATIVE FINANCIAL INSTRUME_3
DERIVATIVE FINANCIAL INSTRUMENTS (Tables) | 3 Months Ended |
Mar. 31, 2020 | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |
Fair Value of Derivative Instruments | The fair value of derivative instruments on the Company’s consolidated balance sheets as of March 31, 2020 and December 31, 2019 were as follows: As of March 31, 2020 As of December 31, 2019 Balance Sheet Classification Asset Derivatives Liability Derivatives Asset Derivatives Liability Derivatives Foreign exchange forward contracts - Designated as hedging instruments Prepaid expenses and other current assets $ 55 $ 1,910 Accrued expenses and other current liabilities $ 10,475 $ 243 |
Changes in the Fair Value of Derivative Instruments | The changes in the fair value of foreign currency derivative instruments in our unaudited condensed consolidated statements of income and comprehensive income for the three months ended March 31, 2020 and 2019 were as follows: Three Months Ended 2020 2019 Foreign exchange forward contracts - Designated as hedging instruments: Net (loss)/gain in fair value recognized in accumulated other comprehensive loss $ (12,087 ) $ 3,999 Net loss reclassified from accumulated other comprehensive loss into cost of revenues (exclusive of depreciation and amortization) $ (660 ) $ (452 ) |
LEASES (Tables)
LEASES (Tables) | 3 Months Ended |
Mar. 31, 2020 | |
Leases [Abstract] | |
Components of Lease Expenses | During the three months ended March 31, 2020 and 2019, the components of lease expense were as follows: Three Months Ended March 31, Income Statement Classification 2020 2019 Operating lease cost Selling, general and administrative expenses $ 18,863 $ 13,719 Variable lease cost Selling, general and administrative expenses 2,635 2,097 Short-term lease cost Selling, general and administrative expenses 540 898 Total lease cost $ 22,038 $ 16,714 |
Supplemental Cash Flow Information | Supplemental cash flow information related to leases for the three months ended March 31, 2020 and 2019 was as follows: Three Months Ended Three Months Ended Cash paid for amounts included in the measurement of lease liabilities: Operating cash flows used for operating leases $ 16,891 $ 14,696 Right-of-use assets obtained in exchange for lease obligations: Operating leases $ 31,252 $ 12,825 Non-cash net increase/(decrease) due to lease modifications: Operating lease right-of-use assets $ 4,584 $ (5,174 ) Operating lease liabilities $ 4,573 $ (5,106 ) |
Weighted Average Lease Terms and Discount Rates | Weighted average remaining lease term and discount rate as of March 31, 2020 and 2019 were as follows: As of March 31, 2020 As of March 31, 2019 Weighted average remaining lease term, in years: Operating leases 6.0 5.9 Weighted average discount rate: Operating leases 3.3 % 4.0 % |
Maturity of Operating Lease Liabilities | As of March 31, 2020 , operating lease liabilities will mature as follows: Year ending December 31, Lease Payments 2020 (excluding three months ended March 31, 2020) $ 50,933 2021 59,351 2022 42,665 2023 31,190 2024 26,870 Thereafter 62,988 Total lease payments 273,997 Less: imputed interest (24,577 ) Total $ 249,420 |
LONG-TERM DEBT (Tables)
LONG-TERM DEBT (Tables) | 3 Months Ended |
Mar. 31, 2020 | |
Debt Disclosure [Abstract] | |
Outstanding Debt And Borrowing Capacity | The following table presents the outstanding debt and borrowing capacity of the Company under the 2017 Credit Facility: As of As of Outstanding debt $ 25,000 $ 25,000 Interest rate 1.9 % 2.8 % Irrevocable standby letters of credit $ 298 $ 303 Available borrowing capacity $ 274,702 $ 274,697 Current maximum borrowing capacity $ 300,000 $ 300,000 |
REVENUES (Tables)
REVENUES (Tables) | 3 Months Ended |
Mar. 31, 2020 | |
Revenue from Contract with Customer [Abstract] | |
Disaggregation of Revenues | The following tables present the disaggregation of the Company’s revenues by customer location, including a reconciliation of the disaggregated revenues with the reportable segments (Note 13 “Segment Information”) for the periods indicated: Three Months Ended March 31, 2020 Reportable Segments North America Europe Russia Consolidated Revenues Customer Locations North America $ 377,784 $ 10,419 $ 1,627 $ 389,830 Europe 10,332 212,722 3 223,057 CIS 2,554 12 22,294 24,860 APAC 432 13,180 — 13,612 Revenues $ 391,102 $ 236,333 $ 23,924 $ 651,359 Three Months Ended March 31, 2019 Reportable Segments North America Europe Russia Consolidated Revenues Customer Locations North America $ 303,745 $ 12,891 $ 16 $ 316,652 Europe 4,747 168,620 141 173,508 CIS 1,739 13 16,422 18,174 APAC 458 12,541 — 12,999 Revenues $ 310,689 $ 194,065 $ 16,579 $ 521,333 The following tables present the disaggregation of the Company’s revenues by industry vertical, including a reconciliation of the disaggregated revenues with the reportable segments (Note 13 “Segment Information”) for the periods indicated: Three Months Ended March 31, 2020 Reportable Segments North America Europe Russia Consolidated Revenues Industry Verticals Business Information & Media $ 80,220 $ 58,146 $ 360 $ 138,726 Financial Services 47,868 67,594 16,181 131,643 Software & Hi-Tech 101,737 18,146 1,966 121,849 Travel & Consumer 54,724 61,067 3,739 119,530 Life Sciences & Healthcare 61,611 7,619 9 69,239 Emerging Verticals 44,942 23,761 1,669 70,372 Revenues $ 391,102 $ 236,333 $ 23,924 $ 651,359 Three Months Ended March 31, 2019 Reportable Segments North America Europe Russia Consolidated Revenues Industry Verticals Business Information & Media $ 62,361 $ 32,531 $ 140 $ 95,032 Financial Services 38,394 61,835 13,032 113,261 Software & Hi-Tech 79,121 20,370 440 99,931 Travel & Consumer 47,000 55,202 2,124 104,326 Life Sciences & Healthcare 50,156 4,556 62 54,774 Emerging Verticals 33,657 19,571 781 54,009 Revenues $ 310,689 $ 194,065 $ 16,579 $ 521,333 The following tables present the disaggregation of the Company’s revenues by contract type including a reconciliation of the disaggregated revenues with the Company’s reportable segments (Note 13 “Segment Information”) for the periods indicated: Three Months Ended March 31, 2020 Reportable Segments North America Europe Russia Consolidated Revenues Contract Types Time-and-material $ 357,263 $ 190,320 $ 13,596 $ 561,179 Fixed-price 31,855 45,255 8,821 85,931 Licensing 1,770 162 1,458 3,390 Other revenues 214 596 49 859 Revenues $ 391,102 $ 236,333 $ 23,924 $ 651,359 Three Months Ended March 31, 2019 Reportable Segments North America Europe Russia Consolidated Revenues Contract Types Time-and-material $ 284,725 $ 168,213 $ 11,272 $ 464,210 Fixed-price 24,740 25,246 5,287 55,273 Licensing 836 398 6 1,240 Other revenues 388 208 14 610 Revenues $ 310,689 $ 194,065 $ 16,579 $ 521,333 Timing of Revenue Recognition The following tables present the timing of revenue recognition for the periods indicated: Three Months Ended March 31, 2020 Reportable Segments North America Europe Russia Consolidated Revenues Timing of Revenue Recognition Transferred at a point of time $ 1,292 $ 162 $ 1,456 $ 2,910 Transferred over time 389,810 236,171 22,468 648,449 Revenues $ 391,102 $ 236,333 $ 23,924 $ 651,359 Three Months Ended March 31, 2019 Reportable Segments North America Europe Russia Consolidated Revenues Timing of Revenue Recognition Transferred at a point of time $ 404 $ 47 $ — $ 451 Transferred over time 310,285 194,018 16,579 520,882 Revenues $ 310,689 $ 194,065 $ 16,579 $ 521,333 |
Revenue Expected to be Recognized in Future Related to Remaining Performance Obligations | The following table includes the estimated revenues expected to be recognized in the future related to performance obligations that are partially or fully unsatisfied as of March 31, 2020 . The Company applies a practical expedient and does not disclose the value of unsatisfied performance obligations for contracts that (i) have an original expected duration of one year or less and (ii) contracts for which it recognizes revenues at the amount to which it has the right to invoice for services provided: Less than 1 year 1 Year 2 Years 3 Years Total Contract Type Fixed-price $ 14,332 $ 1,443 $ — $ — $ 15,775 |
Contract Balances | The following table provides information on the classification of contract assets and liabilities in the condensed consolidated balance sheets: As of As of Contract assets included in Trade receivables and contract assets $ 16,176 $ 14,320 Contract liabilities included in Accrued expenses and other current liabilities $ 11,370 $ 9,132 |
STOCK-BASED COMPENSATION (Table
STOCK-BASED COMPENSATION (Tables) | 3 Months Ended |
Mar. 31, 2020 | |
Share-based Payment Arrangement [Abstract] | |
Components of Stock-Based Compensation Expenses | The following table summarizes the components of stock-based compensation expense recognized in the Company’s condensed consolidated statements of income and comprehensive income for the periods indicated: Three Months Ended 2020 2019 Cost of revenues (exclusive of depreciation and amortization) $ 3,984 $ 12,781 Selling, general and administrative expenses 7,897 9,075 Total $ 11,881 $ 21,856 |
Stock Options Activity | Stock option activity under the Company’s plans is set forth below: Number of Options Weighted Average Exercise Price Aggregate Intrinsic Value Weighted Average Remaining Contractual Term (in years) Options outstanding at January 1, 2020 3,322,930 $ 50.85 Options granted 144,724 $ 175.22 Options exercised (217,475 ) $ 32.84 Options forfeited/cancelled (7,489 ) $ 121.05 Options outstanding at March 31, 2020 3,242,690 $ 57.45 $ 415,750 4.8 Options vested and exercisable at March 31, 2020 2,856,545 $ 45.67 $ 399,900 4.3 Options expected to vest at March 31, 2020 352,278 $ 143.52 $ 14,845 8.8 |
Service-based Awards Activity | The table below summarizes activity related to the Company’s equity-classified and liability-classified service-based awards for the three months ended March 31, 2020 : Equity-Classified Restricted Stock Equity-Classified Equity-Settled Restricted Stock Units Liability-Classified Cash-Settled Restricted Stock Units Number of Shares Weighted Average Grant Date Fair Value Per Share Number of Shares Weighted Average Grant Date Fair Value Per Share Number of Shares Weighted Average Grant Date Fair Value Per Share Unvested service-based awards outstanding at January 1, 2020 9,791 $ 162.96 758,785 $ 122.48 242,288 $ 105.40 Awards granted — $ — 235,231 $ 178.79 56,061 $ 181.59 Awards vested — $ — (273,904 ) $ 104.26 (111,966 ) $ 90.08 Awards forfeited/cancelled — $ — (11,838 ) $ 128.62 (1,365 ) $ 111.01 Unvested service-based awards outstanding at March 31, 2020 9,791 $ 162.96 708,274 $ 148.13 185,018 $ 137.72 |
Performance-based Awards Activity | The table below summarizes activity related to the Company’s equity-classified performance-based awards for the three months ended March 31, 2020 : Equity-Classified Equity-Classified Equity-Settled Restricted Stock Units Number of Shares Weighted Average Grant Date Fair Value Per Share Number of Shares Weighted Average Grant Date Fair Value Per Share Unvested performance-based awards outstanding at January 1, 2020 9,393 $ 165.87 — $ — Awards granted — $ — 24,836 $ 177.81 Unvested performance-based awards outstanding at March 31, 2020 9,393 $ 165.87 24,836 $ 177.81 |
EARNINGS PER SHARE (Tables)
EARNINGS PER SHARE (Tables) | 3 Months Ended |
Mar. 31, 2020 | |
Earnings Per Share [Abstract] | |
Computation of Basic and Diluted Earnings Per Share | The following table sets forth the computation of basic and diluted earnings per share of common stock as follows: Three Months Ended 2020 2019 Numerator for basic and diluted earnings per share: Net income $ 85,565 $ 60,754 Numerator for basic and diluted earnings per share $ 85,565 $ 60,754 Denominator: Weighted average common shares for basic earnings per share 55,286,747 54,245,133 Net effect of dilutive stock options, restricted stock units and restricted stock awards 2,855,823 2,991,294 Weighted average common shares for diluted earnings per share 58,142,570 57,236,427 Net income per share: Basic $ 1.55 $ 1.12 Diluted $ 1.47 $ 1.06 |
SEGMENTS INFORMATION (Tables)
SEGMENTS INFORMATION (Tables) | 3 Months Ended |
Mar. 31, 2020 | |
Segment Reporting [Abstract] | |
Revenues from External Customers and Operating Profit, Before Unallocated Expenses | Revenues from external customers and operating profit, before unallocated expenses, by reportable segments for the three months ended March 31, 2020 and 2019 , were as follows: Three Months Ended 2020 2019 Segment revenues: North America $ 391,102 $ 310,689 Europe 236,333 194,065 Russia 23,924 16,579 Total segment revenues $ 651,359 $ 521,333 Segment operating profit: North America $ 78,927 $ 64,457 Europe 31,779 31,785 Russia 519 589 Total segment operating profit $ 111,225 $ 96,831 |
Reconciliation of Segment Operating Profit to Consolidated Income Before Provision for Income Taxes | Reconciliation of segment operating profit to consolidated income before provision for income taxes is presented below: Three Months Ended 2020 2019 Total segment operating profit: $ 111,225 $ 96,831 Unallocated amounts: Stock-based compensation expense (11,881 ) (21,856 ) Amortization of intangibles assets (3,135 ) (2,138 ) Other acquisition-related expenses (468 ) (511 ) Other unallocated costs (8,232 ) (7,668 ) Income from operations 87,509 64,658 Interest and other income, net 2,386 3,076 Foreign exchange gain/(loss) 6,524 (3,484 ) Income before provision for income taxes $ 96,419 $ 64,250 |
Physical Location and Values of Long-Lived Assets | Physical locations and values of the Company’s long-lived assets are presented below: As of As of Belarus $ 74,766 $ 75,984 Ukraine 27,384 24,652 United States 17,845 15,637 Russia 13,414 17,980 India 6,874 7,443 Poland 4,988 5,029 Hungary 4,887 5,201 China 2,806 3,036 Other 11,707 10,297 Total $ 164,671 $ 165,259 |
Revenues by Customer Location | The table below presents information about the Company’s revenues by customer location for the three months ended March 31, 2020 and 2019 : Three Months Ended 2020 2019 United States $ 370,089 $ 299,680 United Kingdom 92,132 65,739 Switzerland 47,222 36,233 Netherlands 25,909 20,616 Russia 21,961 15,892 Germany 20,193 19,154 Canada 17,920 16,972 Other locations 55,933 47,047 Total $ 651,359 $ 521,333 |
ACQUISITION (Narrative) (Detail
ACQUISITION (Narrative) (Details) $ in Thousands | 3 Months Ended | |
Mar. 31, 2020USD ($) | Mar. 31, 2019USD ($) | |
Business Acquisition [Line Items] | ||
Number of acquisitions | 1 | |
Revenues | $ 651,359 | $ 521,333 |
2020 Acquisition | ||
Business Acquisition [Line Items] | ||
Purchase price including contingent consideration | 14,663 | |
Contingent consideration fair value | 4,042 | |
Maximum amount of earnout payable | 16,582 | |
Intangible assets | 6,300 | |
Revenues | $ 1,043 |
GOODWILL (Goodwill Roll Forward
GOODWILL (Goodwill Roll Forward) (Details) $ in Thousands | 3 Months Ended |
Mar. 31, 2020USD ($) | |
Goodwill [Roll Forward] | |
Balance as of January 1, 2020 | $ 195,043 |
Effect of net foreign currency exchange rate changes | (3,515) |
Balance as of March 31, 2020 | 198,534 |
Other 2019 Acquisitions | |
Goodwill [Roll Forward] | |
Purchase accounting adjustments | 188 |
2020 Acquisition | |
Goodwill [Roll Forward] | |
Acquisition | 6,818 |
North America | |
Goodwill [Roll Forward] | |
Balance as of January 1, 2020 | 113,426 |
Effect of net foreign currency exchange rate changes | (373) |
Balance as of March 31, 2020 | 120,081 |
North America | Other 2019 Acquisitions | |
Goodwill [Roll Forward] | |
Purchase accounting adjustments | 210 |
North America | 2020 Acquisition | |
Goodwill [Roll Forward] | |
Acquisition | 6,818 |
Europe | |
Goodwill [Roll Forward] | |
Balance as of January 1, 2020 | 80,873 |
Effect of net foreign currency exchange rate changes | (3,078) |
Balance as of March 31, 2020 | 77,753 |
Europe | Other 2019 Acquisitions | |
Goodwill [Roll Forward] | |
Purchase accounting adjustments | (42) |
Europe | 2020 Acquisition | |
Goodwill [Roll Forward] | |
Acquisition | 0 |
Russia | |
Goodwill [Roll Forward] | |
Balance as of January 1, 2020 | 744 |
Effect of net foreign currency exchange rate changes | (64) |
Balance as of March 31, 2020 | 700 |
Russia | Other 2019 Acquisitions | |
Goodwill [Roll Forward] | |
Purchase accounting adjustments | 20 |
Russia | 2020 Acquisition | |
Goodwill [Roll Forward] | |
Acquisition | $ 0 |
GOODWILL (Goodwill Accumulated
GOODWILL (Goodwill Accumulated Impaitment Losses) (Details) - USD ($) $ in Thousands | Mar. 31, 2020 | Dec. 31, 2019 |
North America | ||
Goodwill [Line Items] | ||
Accumulated impairment loss | $ 0 | $ 0 |
Europe | ||
Goodwill [Line Items] | ||
Accumulated impairment loss | 0 | 0 |
Russia | ||
Goodwill [Line Items] | ||
Accumulated impairment loss | $ 2,241 | $ 2,241 |
FAIR VALUE MEASUREMENTS (Financ
FAIR VALUE MEASUREMENTS (Financial Assets and Liabilities at Fair Value on Recurring Basis) (Details) - Recurring - USD ($) $ in Thousands | Mar. 31, 2020 | Dec. 31, 2019 |
Financial Assets: | ||
Total assets measured at fair value on a recurring basis | $ 55 | $ 1,910 |
Financial Liabilities: | ||
Contingent consideration | 5,705 | 10,495 |
Total liabilities measured at fair value on a recurring basis | 16,180 | 10,738 |
Foreign exchange contracts | ||
Financial Assets: | ||
Derivative assets | 55 | 1,910 |
Financial Liabilities: | ||
Derivative liabilities | 10,475 | 243 |
Level 1 | ||
Financial Assets: | ||
Total assets measured at fair value on a recurring basis | 0 | 0 |
Financial Liabilities: | ||
Contingent consideration | 0 | 0 |
Total liabilities measured at fair value on a recurring basis | 0 | 0 |
Level 1 | Foreign exchange contracts | ||
Financial Assets: | ||
Derivative assets | 0 | 0 |
Financial Liabilities: | ||
Derivative liabilities | 0 | 0 |
Level 2 | ||
Financial Assets: | ||
Total assets measured at fair value on a recurring basis | 55 | 1,910 |
Financial Liabilities: | ||
Contingent consideration | 0 | 0 |
Total liabilities measured at fair value on a recurring basis | 10,475 | 243 |
Level 2 | Foreign exchange contracts | ||
Financial Assets: | ||
Derivative assets | 55 | 1,910 |
Financial Liabilities: | ||
Derivative liabilities | 10,475 | 243 |
Level 3 | ||
Financial Assets: | ||
Total assets measured at fair value on a recurring basis | 0 | 0 |
Financial Liabilities: | ||
Contingent consideration | 5,705 | 10,495 |
Total liabilities measured at fair value on a recurring basis | 5,705 | 10,495 |
Level 3 | Foreign exchange contracts | ||
Financial Assets: | ||
Derivative assets | 0 | 0 |
Financial Liabilities: | ||
Derivative liabilities | $ 0 | $ 0 |
FAIR VALUE MEASUREMENTS (Acquis
FAIR VALUE MEASUREMENTS (Acquisition-Related Contingent Consideration Roll Forward) (Details) $ in Thousands | 3 Months Ended |
Mar. 31, 2020USD ($) | |
Discount Rate | 2020 Acquisition | |
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items] | |
Business Combination, Contingent Consideration, Liability, Measurement Input | 0.175 |
Level 3 | |
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward] | |
Contingent consideration liabilities as of January 1, 2020 | $ 10,495 |
Payment of contingent consideration for previously acquired business | (7,869) |
Effect of net foreign currency exchange rate changes | (525) |
Contingent consideration liabilities as of March 31, 2020 | 5,705 |
Level 3 | Interest and Other Income, Net | |
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward] | |
Changes in the fair value of contingent consideration | (438) |
Level 3 | 2020 Acquisition | |
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward] | |
Acquisition date fair value of contingent consideration | $ 4,042 |
FAIR VALUE MEASUREMENTS (Estima
FAIR VALUE MEASUREMENTS (Estimated Fair Values of the Financial Assets and Liabilities not Measured at Fair Value on a Recurring Basis) (Details) - USD ($) $ in Thousands | Mar. 31, 2020 | Dec. 31, 2019 |
Financial Assets: | ||
Restricted Cash | $ 1,136 | |
Fair Value, Nonrecurring | Balance | ||
Financial Assets: | ||
Cash equivalents: | $ 334,196 | 417,819 |
Restricted cash | 1,150 | 1,136 |
Employee loans | 2,159 | 2,434 |
Fair Value, Nonrecurring | Balance | Revolving credit facility | Credit Facility 2017 | ||
Financial Liabilities: | ||
Borrowings | 25,011 | 25,017 |
Fair Value, Nonrecurring | Estimated Fair Value | ||
Financial Assets: | ||
Cash equivalents: | 334,196 | 417,819 |
Restricted cash | 1,150 | 1,136 |
Employee loans | 2,159 | 2,434 |
Fair Value, Nonrecurring | Estimated Fair Value | Revolving credit facility | Credit Facility 2017 | ||
Financial Liabilities: | ||
Borrowings | 25,011 | 25,017 |
Fair Value, Nonrecurring | Estimated Fair Value | Level 1 | ||
Financial Assets: | ||
Cash equivalents: | 334,194 | 407,817 |
Restricted cash | 1,136 | |
Restricted Cash | 1,150 | |
Employee loans | 0 | 0 |
Fair Value, Nonrecurring | Estimated Fair Value | Level 1 | Revolving credit facility | Credit Facility 2017 | ||
Financial Liabilities: | ||
Borrowings | 0 | 0 |
Fair Value, Nonrecurring | Estimated Fair Value | Level 2 | ||
Financial Assets: | ||
Cash equivalents: | 2 | 10,002 |
Restricted cash | 0 | 0 |
Employee loans | 0 | 0 |
Fair Value, Nonrecurring | Estimated Fair Value | Level 2 | Revolving credit facility | Credit Facility 2017 | ||
Financial Liabilities: | ||
Borrowings | 25,011 | 25,017 |
Fair Value, Nonrecurring | Estimated Fair Value | Level 3 | ||
Financial Assets: | ||
Cash equivalents: | 0 | 0 |
Restricted cash | 0 | 0 |
Employee loans | 2,159 | 2,434 |
Fair Value, Nonrecurring | Estimated Fair Value | Level 3 | Revolving credit facility | Credit Facility 2017 | ||
Financial Liabilities: | ||
Borrowings | 0 | 0 |
Fair Value, Nonrecurring | Money Market Funds | Balance | ||
Financial Assets: | ||
Cash equivalents: | 334,194 | 407,817 |
Fair Value, Nonrecurring | Money Market Funds | Estimated Fair Value | ||
Financial Assets: | ||
Cash equivalents: | 334,194 | 407,817 |
Fair Value, Nonrecurring | Money Market Funds | Estimated Fair Value | Level 1 | ||
Financial Assets: | ||
Cash equivalents: | 334,194 | 407,817 |
Fair Value, Nonrecurring | Money Market Funds | Estimated Fair Value | Level 2 | ||
Financial Assets: | ||
Cash equivalents: | 0 | 0 |
Fair Value, Nonrecurring | Money Market Funds | Estimated Fair Value | Level 3 | ||
Financial Assets: | ||
Cash equivalents: | 0 | 0 |
Fair Value, Nonrecurring | Bank Time Deposits | Balance | ||
Financial Assets: | ||
Cash equivalents: | 2 | 10,002 |
Fair Value, Nonrecurring | Bank Time Deposits | Estimated Fair Value | ||
Financial Assets: | ||
Cash equivalents: | 2 | 10,002 |
Fair Value, Nonrecurring | Bank Time Deposits | Estimated Fair Value | Level 1 | ||
Financial Assets: | ||
Cash equivalents: | 0 | 0 |
Fair Value, Nonrecurring | Bank Time Deposits | Estimated Fair Value | Level 2 | ||
Financial Assets: | ||
Cash equivalents: | 2 | 10,002 |
Fair Value, Nonrecurring | Bank Time Deposits | Estimated Fair Value | Level 3 | ||
Financial Assets: | ||
Cash equivalents: | $ 0 | $ 0 |
DERIVATIVE FINANCIAL INSTRUME_4
DERIVATIVE FINANCIAL INSTRUMENTS (Fair Value of Derivative Instruments) (Details) - Foreign exchange contracts - USD ($) $ in Thousands | Mar. 31, 2020 | Dec. 31, 2019 |
Derivatives, Fair Value [Line Items] | ||
Financial collateral (including cash collateral) required to be posted | $ 0 | |
Designated as hedging instruments | Cash flow hedging | Prepaid expenses and other current assets | ||
Derivatives, Fair Value [Line Items] | ||
Asset Derivatives | 55 | $ 1,910 |
Designated as hedging instruments | Cash flow hedging | Accrued expenses and other current liabilities | ||
Derivatives, Fair Value [Line Items] | ||
Liability Derivatives | $ 10,475 | $ 243 |
DERIVATIVE FINANCIAL INSTRUME_5
DERIVATIVE FINANCIAL INSTRUMENTS (Changes in the Fair Value of Derivative Instruments) (Details) - Foreign exchange contracts - Designated as hedging instruments - Cash flow hedging - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | |
Cost of revenues (exclusive of depreciation and amortization) | ||
Derivative Instruments, Gain (Loss) [Line Items] | ||
Net loss reclassified | $ (660) | $ (452) |
Accumulated other comprehensive loss | ||
Derivative Instruments, Gain (Loss) [Line Items] | ||
Net (loss)/gain in fair value | $ (12,087) | $ 3,999 |
LEASES (Narrative) (Details)
LEASES (Narrative) (Details) $ in Thousands | 3 Months Ended |
Mar. 31, 2020USD ($) | |
Lessee, Lease, Description [Line Items] | |
Commitments related to operating lease agreements that have not yet commenced | $ 13,727 |
Minimum | |
Lessee, Lease, Description [Line Items] | |
Remaining lease term | 1 month 6 days |
Lease term of lease agreements that have not yet commenced | 1 year 11 months 29 days |
Maximum | |
Lessee, Lease, Description [Line Items] | |
Remaining lease term | 11 years 1 month 6 days |
Lease term of lease agreements that have not yet commenced | 10 years 10 months 24 days |
LEASES (Components of Lease Exp
LEASES (Components of Lease Expenses) (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | |
Lease, Cost [Line Items] | ||
Total lease cost | $ 22,038 | $ 16,714 |
Selling, general and administrative expenses | ||
Lease, Cost [Line Items] | ||
Operating lease cost | 18,863 | 13,719 |
Variable lease cost | 2,635 | 2,097 |
Short-term lease cost | $ 540 | $ 898 |
LEASES (Supplemental Cash Flow
LEASES (Supplemental Cash Flow Information) (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | |
Cash paid for amounts included in the measurement of lease liabilities: | ||
Operating cash flows used for operating leases | $ 16,891 | $ 14,696 |
Right-of-use assets obtained in exchange for lease obligations: | ||
Operating leases | 31,252 | 12,825 |
Non-cash net increase/(decrease) due to lease modifications: | ||
Operating lease right-of-use assets | 4,584 | (5,174) |
Operating lease liabilities | $ 4,573 | $ (5,106) |
LEASES (Weighted Average Lease
LEASES (Weighted Average Lease Terms and Discount Rates) (Details) | Mar. 31, 2020 | Dec. 31, 2019 |
Weighted average remaining lease term, in years: | ||
Operating leases | 6 years | 5 years 10 months 24 days |
Weighted average discount rate: | ||
Operating leases | 3.30% | 4.00% |
LEASES (Maturity of Operating L
LEASES (Maturity of Operating Lease Liabilities) (Details) $ in Thousands | Mar. 31, 2020USD ($) |
Leases [Abstract] | |
2020 (excluding three months ended March 31, 2020) | $ 50,933 |
2021 | 59,351 |
2022 | 42,665 |
2023 | 31,190 |
2024 | 26,870 |
Thereafter | 62,988 |
Total lease payments | 273,997 |
Less: imputed interest | (24,577) |
Total | $ 249,420 |
LONG-TERM DEBT (Details)
LONG-TERM DEBT (Details) - Credit Facility 2017 - USD ($) $ in Thousands | May 24, 2017 | Mar. 31, 2020 | Dec. 31, 2019 |
Revolving credit facility | |||
Debt Instrument [Line Items] | |||
Maturity date | May 24, 2022 | ||
Revolving credit facility | Overnight Bank Funding Rate | |||
Debt Instrument [Line Items] | |||
Variable interest rate spread | 0.50% | ||
Revolving credit facility | Daily LIBOR Rate | |||
Debt Instrument [Line Items] | |||
Variable interest rate spread | 1.00% | ||
Revolving credit facility | U.S. dollars | |||
Debt Instrument [Line Items] | |||
Line of credit, current borrowing capacity | $ 300,000 | ||
Line of credit, maximum borrowing capacity | 400,000 | ||
Outstanding debt | $ 25,000 | $ 25,000 | |
Interest rate | 1.90% | 2.80% | |
Available borrowing capacity | $ 274,702 | $ 274,697 | |
Revolving credit facility | U.S. dollars | Maximum | |||
Debt Instrument [Line Items] | |||
Line of credit, current borrowing capacity | 300,000 | 300,000 | |
Revolving credit facility | Other currencies, excluding U.S. dollars | |||
Debt Instrument [Line Items] | |||
Line of credit, maximum borrowing capacity | $ 100,000 | ||
Standby letters of credit | |||
Debt Instrument [Line Items] | |||
Irrevocable standby letters of credit | $ 298 | $ 303 |
REVENUES (Disaggregation of Rev
REVENUES (Disaggregation of Revenues) (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | |
Disaggregation of Revenue [Line Items] | ||
Revenues | $ 651,359 | $ 521,333 |
Transferred at a point of time | ||
Disaggregation of Revenue [Line Items] | ||
Revenues | 2,910 | 451 |
Transferred over time | ||
Disaggregation of Revenue [Line Items] | ||
Revenues | 648,449 | 520,882 |
Time-and-material | ||
Disaggregation of Revenue [Line Items] | ||
Revenues | 561,179 | 464,210 |
Fixed-price | ||
Disaggregation of Revenue [Line Items] | ||
Revenues | 85,931 | 55,273 |
Licensing | ||
Disaggregation of Revenue [Line Items] | ||
Revenues | 3,390 | 1,240 |
Other revenues | ||
Disaggregation of Revenue [Line Items] | ||
Revenues | 859 | 610 |
Business Information & Media | ||
Disaggregation of Revenue [Line Items] | ||
Revenues | 138,726 | 95,032 |
Financial Services | ||
Disaggregation of Revenue [Line Items] | ||
Revenues | 131,643 | 113,261 |
Software & Hi-Tech | ||
Disaggregation of Revenue [Line Items] | ||
Revenues | 121,849 | 99,931 |
Travel & Consumer | ||
Disaggregation of Revenue [Line Items] | ||
Revenues | 119,530 | 104,326 |
Life Sciences & Healthcare | ||
Disaggregation of Revenue [Line Items] | ||
Revenues | 69,239 | 54,774 |
Emerging Verticals | ||
Disaggregation of Revenue [Line Items] | ||
Revenues | 70,372 | 54,009 |
North America | ||
Disaggregation of Revenue [Line Items] | ||
Revenues | 389,830 | 316,652 |
Europe | ||
Disaggregation of Revenue [Line Items] | ||
Revenues | 223,057 | 173,508 |
CIS | ||
Disaggregation of Revenue [Line Items] | ||
Revenues | 24,860 | 18,174 |
APAC | ||
Disaggregation of Revenue [Line Items] | ||
Revenues | 13,612 | 12,999 |
North America | ||
Disaggregation of Revenue [Line Items] | ||
Revenues | 391,102 | 310,689 |
North America | Transferred at a point of time | ||
Disaggregation of Revenue [Line Items] | ||
Revenues | 1,292 | 404 |
North America | Transferred over time | ||
Disaggregation of Revenue [Line Items] | ||
Revenues | 389,810 | 310,285 |
North America | Time-and-material | ||
Disaggregation of Revenue [Line Items] | ||
Revenues | 357,263 | 284,725 |
North America | Fixed-price | ||
Disaggregation of Revenue [Line Items] | ||
Revenues | 31,855 | 24,740 |
North America | Licensing | ||
Disaggregation of Revenue [Line Items] | ||
Revenues | 1,770 | 836 |
North America | Other revenues | ||
Disaggregation of Revenue [Line Items] | ||
Revenues | 214 | 388 |
North America | Business Information & Media | ||
Disaggregation of Revenue [Line Items] | ||
Revenues | 80,220 | 62,361 |
North America | Financial Services | ||
Disaggregation of Revenue [Line Items] | ||
Revenues | 47,868 | 38,394 |
North America | Software & Hi-Tech | ||
Disaggregation of Revenue [Line Items] | ||
Revenues | 101,737 | 79,121 |
North America | Travel & Consumer | ||
Disaggregation of Revenue [Line Items] | ||
Revenues | 54,724 | 47,000 |
North America | Life Sciences & Healthcare | ||
Disaggregation of Revenue [Line Items] | ||
Revenues | 61,611 | 50,156 |
North America | Emerging Verticals | ||
Disaggregation of Revenue [Line Items] | ||
Revenues | 44,942 | 33,657 |
North America | North America | ||
Disaggregation of Revenue [Line Items] | ||
Revenues | 377,784 | 303,745 |
North America | Europe | ||
Disaggregation of Revenue [Line Items] | ||
Revenues | 10,332 | 4,747 |
North America | CIS | ||
Disaggregation of Revenue [Line Items] | ||
Revenues | 2,554 | 1,739 |
North America | APAC | ||
Disaggregation of Revenue [Line Items] | ||
Revenues | 432 | 458 |
Europe | ||
Disaggregation of Revenue [Line Items] | ||
Revenues | 236,333 | 194,065 |
Europe | Transferred at a point of time | ||
Disaggregation of Revenue [Line Items] | ||
Revenues | 162 | 47 |
Europe | Transferred over time | ||
Disaggregation of Revenue [Line Items] | ||
Revenues | 236,171 | 194,018 |
Europe | Time-and-material | ||
Disaggregation of Revenue [Line Items] | ||
Revenues | 190,320 | 168,213 |
Europe | Fixed-price | ||
Disaggregation of Revenue [Line Items] | ||
Revenues | 45,255 | 25,246 |
Europe | Licensing | ||
Disaggregation of Revenue [Line Items] | ||
Revenues | 162 | 398 |
Europe | Other revenues | ||
Disaggregation of Revenue [Line Items] | ||
Revenues | 596 | 208 |
Europe | Business Information & Media | ||
Disaggregation of Revenue [Line Items] | ||
Revenues | 58,146 | 32,531 |
Europe | Financial Services | ||
Disaggregation of Revenue [Line Items] | ||
Revenues | 67,594 | 61,835 |
Europe | Software & Hi-Tech | ||
Disaggregation of Revenue [Line Items] | ||
Revenues | 18,146 | 20,370 |
Europe | Travel & Consumer | ||
Disaggregation of Revenue [Line Items] | ||
Revenues | 61,067 | 55,202 |
Europe | Life Sciences & Healthcare | ||
Disaggregation of Revenue [Line Items] | ||
Revenues | 7,619 | 4,556 |
Europe | Emerging Verticals | ||
Disaggregation of Revenue [Line Items] | ||
Revenues | 23,761 | 19,571 |
Europe | North America | ||
Disaggregation of Revenue [Line Items] | ||
Revenues | 10,419 | 12,891 |
Europe | Europe | ||
Disaggregation of Revenue [Line Items] | ||
Revenues | 212,722 | 168,620 |
Europe | CIS | ||
Disaggregation of Revenue [Line Items] | ||
Revenues | 12 | 13 |
Europe | APAC | ||
Disaggregation of Revenue [Line Items] | ||
Revenues | 13,180 | 12,541 |
Russia | ||
Disaggregation of Revenue [Line Items] | ||
Revenues | 23,924 | 16,579 |
Russia | Transferred at a point of time | ||
Disaggregation of Revenue [Line Items] | ||
Revenues | 1,456 | 0 |
Russia | Transferred over time | ||
Disaggregation of Revenue [Line Items] | ||
Revenues | 22,468 | 16,579 |
Russia | Time-and-material | ||
Disaggregation of Revenue [Line Items] | ||
Revenues | 13,596 | 11,272 |
Russia | Fixed-price | ||
Disaggregation of Revenue [Line Items] | ||
Revenues | 8,821 | 5,287 |
Russia | Licensing | ||
Disaggregation of Revenue [Line Items] | ||
Revenues | 1,458 | 6 |
Russia | Other revenues | ||
Disaggregation of Revenue [Line Items] | ||
Revenues | 49 | 14 |
Russia | Business Information & Media | ||
Disaggregation of Revenue [Line Items] | ||
Revenues | 360 | 140 |
Russia | Financial Services | ||
Disaggregation of Revenue [Line Items] | ||
Revenues | 16,181 | 13,032 |
Russia | Software & Hi-Tech | ||
Disaggregation of Revenue [Line Items] | ||
Revenues | 1,966 | 440 |
Russia | Travel & Consumer | ||
Disaggregation of Revenue [Line Items] | ||
Revenues | 3,739 | 2,124 |
Russia | Life Sciences & Healthcare | ||
Disaggregation of Revenue [Line Items] | ||
Revenues | 9 | 62 |
Russia | Emerging Verticals | ||
Disaggregation of Revenue [Line Items] | ||
Revenues | 1,669 | 781 |
Russia | North America | ||
Disaggregation of Revenue [Line Items] | ||
Revenues | 1,627 | 16 |
Russia | Europe | ||
Disaggregation of Revenue [Line Items] | ||
Revenues | 3 | 141 |
Russia | CIS | ||
Disaggregation of Revenue [Line Items] | ||
Revenues | 22,294 | 16,422 |
Russia | APAC | ||
Disaggregation of Revenue [Line Items] | ||
Revenues | $ 0 | $ 0 |
REVENUES (Revenue Expected to b
REVENUES (Revenue Expected to be Recognized in Future Related to Remaining Performance Obligations) (Details) - Fixed-price $ in Thousands | Mar. 31, 2020USD ($) |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items] | |
Estimated revenue related to partially or fully unsatisfied performance obligations | $ 15,775 |
Less than 1 year | |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items] | |
Estimated revenue related to partially or fully unsatisfied performance obligations | 14,332 |
1 Year | |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items] | |
Estimated revenue related to partially or fully unsatisfied performance obligations | 1,443 |
2 Years | |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items] | |
Estimated revenue related to partially or fully unsatisfied performance obligations | 0 |
3 Years | |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items] | |
Estimated revenue related to partially or fully unsatisfied performance obligations | $ 0 |
REVENUES (Contract Balances) (D
REVENUES (Contract Balances) (Details) - USD ($) $ in Thousands | 3 Months Ended | ||
Mar. 31, 2020 | Mar. 31, 2019 | Dec. 31, 2019 | |
Change in Contract with Customer, Liability [Abstract] | |||
Revenue recognized | $ 6,537 | ||
Revenues from performance obligations satisfied in previous period | 5,814 | $ 1,704 | |
Trade receivables and contract assets | |||
Change in Contract with Customer, Liability [Abstract] | |||
Contract assets | 16,176 | $ 14,320 | |
Accrued expenses and other current liabilities | |||
Change in Contract with Customer, Liability [Abstract] | |||
Contract liabilties | $ 11,370 | $ 9,132 |
STOCK-BASED COMPENSATION (Compo
STOCK-BASED COMPENSATION (Components of Stock-Based Compensation Expenses) (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | |
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items] | ||
Stock-based compensation expense | $ 11,881 | $ 21,856 |
Cost of revenues (exclusive of depreciation and amortization) | ||
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items] | ||
Stock-based compensation expense | 3,984 | 12,781 |
Selling, general and administrative expenses | ||
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items] | ||
Stock-based compensation expense | $ 7,897 | $ 9,075 |
STOCK-BASED COMPENSATION (Stock
STOCK-BASED COMPENSATION (Stock Options Activity) (Details) - Employee Stock Option $ / shares in Units, $ in Thousands | 3 Months Ended |
Mar. 31, 2020USD ($)$ / sharesshares | |
Number of Options | |
Options outstanding at January 1, 2020 | shares | 3,322,930 |
Options granted | shares | 144,724 |
Options exercised | shares | (217,475) |
Options forfeited/cancelled | shares | (7,489) |
Options outstanding at March 31, 2020 | shares | 3,242,690 |
Options vested and exercisable at March 31, 2020 | shares | 2,856,545 |
Options expected to vest at March 31, 2020 | shares | 352,278 |
Weighted Average Exercise Price | |
Options outstanding at January 1, 2020 | $ / shares | $ 50.85 |
Options granted | $ / shares | 175.22 |
Options exercised | $ / shares | 32.84 |
Options forfeited/cancelled | $ / shares | 121.05 |
Options outstanding at March 31, 2020 | $ / shares | 57.45 |
Options vested and exercisable at March 31, 2020 | $ / shares | 45.67 |
Options expected to vest at March 31, 2020 | $ / shares | $ 143.52 |
Aggregate Intrinsic Value | |
Options outstanding at March 31, 2020 | $ | $ 415,750 |
Options vested and exercisable at March 31, 2020 | $ | 399,900 |
Options expected to vest at March 31, 2020 | $ | $ 14,845 |
Weighted Average Remaining Contractual Term (in years) | |
Options outstanding at March 31, 2020 | 4 years 9 months 18 days |
Options vested and exercisable at March 31, 2020 | 4 years 3 months 18 days |
Options expected to vest at March 31, 2020 | 8 years 9 months 18 days |
STOCK-BASED COMPENSATION (Sto_2
STOCK-BASED COMPENSATION (Stock Option Additional Information) (Details) - Employee Stock Option $ in Thousands | 3 Months Ended |
Mar. 31, 2020USD ($) | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Unrecognized compensation expense | $ 18,416 |
Weighted-average remaining requisite service period | 3 years 1 month 6 days |
STOCK-BASED COMPENSATION (Restr
STOCK-BASED COMPENSATION (Restricted Stock and Restricted Stock Units Activity) (Details) | 3 Months Ended |
Mar. 31, 2020$ / sharesshares | |
Service Period | Equity Classified Award | Equity-Settled Award | Restricted Stock | |
Number of Shares | |
Unvested awards outstanding at January 1, 2020 | 9,791 |
Awards granted | 0 |
Awards vested | 0 |
Awards forfeited/cancelled | 0 |
Unvested awards outstanding at March 31, 2020 | 9,791 |
Weighted Average Grant Date Fair Value Per Share | |
Unvested awards outstanding at January 1, 2020 | $ / shares | $ 162.96 |
Awards granted | $ / shares | 0 |
Awards vested | $ / shares | 0 |
Awards forfeited/cancelled | $ / shares | 0 |
Unvested awards outstanding at March 31, 2020 | $ / shares | $ 162.96 |
Service Period | Equity Classified Award | Equity-Settled Award | Restricted Stock Units | |
Number of Shares | |
Unvested awards outstanding at January 1, 2020 | 758,785 |
Awards granted | 235,231 |
Awards vested | (273,904) |
Awards forfeited/cancelled | (11,838) |
Unvested awards outstanding at March 31, 2020 | 708,274 |
Weighted Average Grant Date Fair Value Per Share | |
Unvested awards outstanding at January 1, 2020 | $ / shares | $ 122.48 |
Awards granted | $ / shares | 178.79 |
Awards vested | $ / shares | 104.26 |
Awards forfeited/cancelled | $ / shares | 128.62 |
Unvested awards outstanding at March 31, 2020 | $ / shares | $ 148.13 |
Service Period | Liability Classified Award | Cash-Settled Award | Restricted Stock Units | |
Number of Shares | |
Unvested awards outstanding at January 1, 2020 | 242,288 |
Awards granted | 56,061 |
Awards vested | (111,966) |
Awards forfeited/cancelled | (1,365) |
Unvested awards outstanding at March 31, 2020 | 185,018 |
Weighted Average Grant Date Fair Value Per Share | |
Unvested awards outstanding at January 1, 2020 | $ / shares | $ 105.40 |
Awards granted | $ / shares | 181.59 |
Awards vested | $ / shares | 90.08 |
Awards forfeited/cancelled | $ / shares | 111.01 |
Unvested awards outstanding at March 31, 2020 | $ / shares | $ 137.72 |
Performance Target | Equity Classified Award | Equity-Settled Award | Restricted Stock | |
Number of Shares | |
Unvested awards outstanding at January 1, 2020 | 9,393 |
Awards granted | 0 |
Unvested awards outstanding at March 31, 2020 | 9,393 |
Weighted Average Grant Date Fair Value Per Share | |
Unvested awards outstanding at January 1, 2020 | $ / shares | $ 165.87 |
Awards granted | $ / shares | 0 |
Unvested awards outstanding at March 31, 2020 | $ / shares | $ 165.87 |
Performance Target | Equity Classified Award | Equity-Settled Award | Restricted Stock Units | |
Number of Shares | |
Unvested awards outstanding at January 1, 2020 | 0 |
Awards granted | 24,836 |
Unvested awards outstanding at March 31, 2020 | 24,836 |
Weighted Average Grant Date Fair Value Per Share | |
Unvested awards outstanding at January 1, 2020 | $ / shares | $ 0 |
Awards granted | $ / shares | 177.81 |
Unvested awards outstanding at March 31, 2020 | $ / shares | $ 177.81 |
2020 Acquisition | Service Period | Equity Classified Award | Equity-Settled Award | Restricted Stock Units | |
Number of Shares | |
Awards granted | 11,927 |
2020 Acquisition | Service Period | Liability Classified Award | Cash-Settled Award | Restricted Stock Units | |
Number of Shares | |
Awards granted | 6,054 |
2019 Acquisitions | Service Period | Equity Classified Award | Equity-Settled Award | Restricted Stock Units | |
Number of Shares | |
Awards granted | 5,793 |
2019 Acquisitions | Performance Target | Equity Classified Award | Equity-Settled Award | Restricted Stock Units | |
Number of Shares | |
Awards granted | 24,836 |
STOCK-BASED COMPENSATION (Res_2
STOCK-BASED COMPENSATION (Restricted Stock and Restricted Stock Units Additional Information) (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2020 | Dec. 31, 2019 | |
Service Period | Equity Classified Award | Equity-Settled Award | Restricted Stock | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Unrecognized compensation expense | $ 1,276 | |
Weighted-average remaining requisite service period | 2 years 4 months 24 days | |
Service Period | Equity Classified Award | Equity-Settled Award | Restricted Stock Units | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Unrecognized compensation expense | $ 89,043 | |
Weighted-average remaining requisite service period | 3 years | |
Service Period | Liability Classified Award | Cash-Settled Award | Restricted Stock Units | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Unrecognized compensation expense | $ 28,651 | |
Weighted-average remaining requisite service period | 2 years 7 months 6 days | |
Performance Target | Equity Classified Award | Equity-Settled Award | Restricted Stock | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Unrecognized compensation expense | $ 934 | |
Weighted-average remaining requisite service period | 3 years 4 months 24 days | |
Performance Target | Equity Classified Award | Equity-Settled Award | Restricted Stock Units | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Unrecognized compensation expense | $ 2,526 | |
Weighted-average remaining requisite service period | 3 years | |
Accrued compensation and benefits expenses | Service Period | Liability Classified Award | Cash-Settled Award | Restricted Stock Units | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Liability associated with RSUs | $ 8,253 | $ 21,902 |
2020 Acquisition | Performance Target | Equity Classified Award | Restricted Stock Units | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Award value | $ 2,171 | |
Estimated future operating results, period | 2 years | |
Share-based Compensation Arrangement by Share-based Payment Award, Award Vesting Period | 3 years |
INCOME TAXES (Details)
INCOME TAXES (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | |
Income Tax Disclosure [Abstract] | ||
Effective tax rate | 11.30% | 5.40% |
Excess tax benefit | $ 11,697 | $ 11,513 |
EARNINGS PER SHARE (Details)
EARNINGS PER SHARE (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | |
Numerator for basic and diluted earnings per share: | ||
Net income | $ 85,565 | $ 60,754 |
Numerator for basic and diluted earnings per share | $ 85,565 | $ 60,754 |
Denominator: | ||
Weighted average common shares for basic earnings per share | 55,286,747 | 54,245,133 |
Net effect of dilutive stock options, restricted stock units and restricted stock awards | 2,855,823 | 2,991,294 |
Weighted average common shares for diluted earnings per share | 58,142,570 | 57,236,427 |
Net income per share: | ||
Basic (in dollars per share) | $ 1.55 | $ 1.12 |
Diluted (in dollars per share) | $ 1.47 | $ 1.06 |
Anti-dilutive options not included in the calculation (in shares) | 9,118 | 26,203 |
COMMITMENTS AND CONTINGENCIES (
COMMITMENTS AND CONTINGENCIES (Building Acquisition Commitments) (Details) $ in Thousands | 3 Months Ended |
Mar. 31, 2020USD ($) | |
Office Space Purchase Commitment | Ukraine | |
Other Commitments [Line Items] | |
Total commitment amount | $ 36,900 |
SEGMENTS INFORMATION (Revenues
SEGMENTS INFORMATION (Revenues from External Customers and Operating Profit Before Unallocated Expenses) (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | |
Segment Reporting Information [Line Items] | ||
Revenues | $ 651,359 | $ 521,333 |
Segment operating profit | 87,509 | 64,658 |
North America | ||
Segment Reporting Information [Line Items] | ||
Revenues | 391,102 | 310,689 |
Segment operating profit | 78,927 | 64,457 |
Europe | ||
Segment Reporting Information [Line Items] | ||
Revenues | 236,333 | 194,065 |
Segment operating profit | 31,779 | 31,785 |
Russia | ||
Segment Reporting Information [Line Items] | ||
Revenues | 23,924 | 16,579 |
Segment operating profit | 519 | 589 |
Operating Segments | ||
Segment Reporting Information [Line Items] | ||
Segment operating profit | $ 111,225 | $ 96,831 |
SEGMENTS INFORMATION (Major Cus
SEGMENTS INFORMATION (Major Customers) (Details) | 3 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | |
Revenue, Segment Benchmark [Member] | Customer Concentration Risk | Operating Segments | ||
Revenue, Major Customer [Line Items] | ||
Number of customers | 0 | 0 |
SEGMENTS INFORMATION (Reconcili
SEGMENTS INFORMATION (Reconciliation of Segment Operating Profit to Consolidated Income Before Provision for Income Taxes) (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | |
Segment Reporting, Reconciling Item for Operating Profit (Loss) from Segment to Consolidated [Line Items] | ||
Segment operating profit | $ 87,509 | $ 64,658 |
Stock-based compensation expense | 11,881 | 21,856 |
Interest and other income, net | 2,386 | 3,076 |
Foreign exchange gain/(loss) | 6,524 | (3,484) |
Income before provision for income taxes | 96,419 | 64,250 |
Operating Segments | ||
Segment Reporting, Reconciling Item for Operating Profit (Loss) from Segment to Consolidated [Line Items] | ||
Segment operating profit | 111,225 | 96,831 |
Unallocated Amounts | ||
Segment Reporting, Reconciling Item for Operating Profit (Loss) from Segment to Consolidated [Line Items] | ||
Stock-based compensation expense | (11,881) | (21,856) |
Amortization of intangibles assets | (3,135) | (2,138) |
Other acquisition-related expenses | (468) | (511) |
Other unallocated costs | $ (8,232) | $ (7,668) |
SEGMENTS INFORMATION (Physical
SEGMENTS INFORMATION (Physical Location and Values of Long-Lived Assets) (Details) - USD ($) $ in Thousands | Mar. 31, 2020 | Dec. 31, 2019 |
Long-Lived Assets by Geographical Areas [Line Items] | ||
Long-lived assets | $ 164,671 | $ 165,259 |
Belarus | ||
Long-Lived Assets by Geographical Areas [Line Items] | ||
Long-lived assets | 74,766 | 75,984 |
Ukraine | ||
Long-Lived Assets by Geographical Areas [Line Items] | ||
Long-lived assets | 27,384 | 24,652 |
United States | ||
Long-Lived Assets by Geographical Areas [Line Items] | ||
Long-lived assets | 17,845 | 15,637 |
Russia | ||
Long-Lived Assets by Geographical Areas [Line Items] | ||
Long-lived assets | 13,414 | 17,980 |
India | ||
Long-Lived Assets by Geographical Areas [Line Items] | ||
Long-lived assets | 6,874 | 7,443 |
Poland | ||
Long-Lived Assets by Geographical Areas [Line Items] | ||
Long-lived assets | 4,988 | 5,029 |
Hungary | ||
Long-Lived Assets by Geographical Areas [Line Items] | ||
Long-lived assets | 4,887 | 5,201 |
China | ||
Long-Lived Assets by Geographical Areas [Line Items] | ||
Long-lived assets | 2,806 | 3,036 |
Other | ||
Long-Lived Assets by Geographical Areas [Line Items] | ||
Long-lived assets | $ 11,707 | $ 10,297 |
SEGMENTS INFORMATION (Revenue_2
SEGMENTS INFORMATION (Revenues by Customer Location) (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | |
Segment Reporting, Revenue Reconciling Item [Line Items] | ||
Revenues | $ 651,359 | $ 521,333 |
United States | ||
Segment Reporting, Revenue Reconciling Item [Line Items] | ||
Revenues | 370,089 | 299,680 |
United Kingdom | ||
Segment Reporting, Revenue Reconciling Item [Line Items] | ||
Revenues | 92,132 | 65,739 |
Switzerland | ||
Segment Reporting, Revenue Reconciling Item [Line Items] | ||
Revenues | 47,222 | 36,233 |
Netherlands | ||
Segment Reporting, Revenue Reconciling Item [Line Items] | ||
Revenues | 25,909 | 20,616 |
Russia | ||
Segment Reporting, Revenue Reconciling Item [Line Items] | ||
Revenues | 21,961 | 15,892 |
Germany | ||
Segment Reporting, Revenue Reconciling Item [Line Items] | ||
Revenues | 20,193 | 19,154 |
Canada | ||
Segment Reporting, Revenue Reconciling Item [Line Items] | ||
Revenues | 17,920 | 16,972 |
Other | ||
Segment Reporting, Revenue Reconciling Item [Line Items] | ||
Revenues | $ 55,933 | $ 47,047 |