EPAM - Earnings call transcript Q3 2018

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Operator

Greetings, and welcome to the EPAM Systems Third Quarter 2018 Earnings Conference Call. At this time, all participants are in a listen-only mode. A brief question-and-answer session will follow the formal presentation. [Operator Instructions].

As a reminder, this conference is being recorded. pleasure Relations your for my Head David now Investor of EPAM. is to host, introduce Straube, It Thank you, Mr. Straube, you may begin.

David Straube

Thank copy release morning, have quarter you, everyone. By now, good Operator, you XXXX results. received of the for your earnings the company's third and should

With not, CEO section. and Officer. Jason Chief on you President; the have at in are Financial copy and a If today's available call is epam.com Investors me Dobkin, Arkadiy Peterson,

made on I to some comments Before described I'd of statements. earnings forward-looking filings. remind like risks company's and release as subject call that you today's These begin, to uncertainties in are contain the SEC may the statements and

earnings our turn the to references said, been GAAP available all now material reconciled website. Additionally, I the will to QX are located section Investor With results measures in that Ark. that of are non-GAAP and call have our reported to over in

Arkadiy Dobkin

everyone. joining and Thank for us. Thanks David, good you, morning,

We few year-over-year Let strong growth me XX% terms. a in with with or reflecting third begin from XX.X% financial constant delivered of million, quarter currency a revenue $XXX QX. highlights

growth was our across all both verticals. Our revenue geographically industry broad-based and of

growth non-GAAP addition, which XX% In share XXXX. from of QX strong per represents of $X.XX, we earnings delivered

ever-changing to locations. first capabilities of geographical three and results ability Our the spread for consistent and fiscal a XXXX across teams story execute grow cutting-edge quarters demands in expertise that high-end point and very multi-functional to our of the market

bit from prospective. consistencies as quarter story of I a like step With backdrop, broader the the would to and share a back

number company. a in now we approaching to and of orchestrate across are XXth events anniversary the December We EPAM started

define over this side, enterprise professional results everyone is and coming to a scalable one environment countries. massive different by message into as technology building from familiar during capability that Software ideas the conference was a from community consumers, be speed. industries and of Outdated delivering continues platform together businesses for brings connect be practitioners last continues we challenging on systems. this the relying lack architecture, capabilities is because where everything inflexible clients guests cannot speed loan importantly, wave and current build ones is to capabilities IT but many right our gone; designing They we're comprehend even danger because real don't killer, often practically that of often was and as partners either. it's digital next employees have and communities. of if the we our in. challenging. have flexible XX of they natively a changes replace support people, is a Annual configurable, and disrupted together: and at From the don't a a level in And new simple completely before to environment and completely upstarts the pace and year And compete to and experience all centric regular do sophistication an the the suppliers, customer about Engineering operating more we time event demanding one need Conference, the across in most in The so for you such to most they demand ecosystem system become client cases new from new will today. brought perfect world systems their more the our or the digitization and can well even currently the the And are architectures change kind attended occurring visited a serve. all digital Just month, hosted to platforms for clients pace on exchange trends X,XXX market This over and forcing scale be against XXth and

from to It with And a continue be in agility, and capabilities continuously across further. last technology also agility, partners, help being software for digital solution allow native software was client. to address to solve much to of it. better more challenges? and and and over That side is be right solving by to years need still both simply disrupt advanced try challenges. company How that Otherwise, on that, ourselves So how prepared and around needed the the deliver further to encourage have place companies. consultancy to investigating majority same. technology By the to most on to navigate by our engineering their and able the to for build be and support the complex and external trusted right the advantage us business speed disrupt a to really with force the enterprise business and wouldn't result those this key clients through itself. them we even to benefiting years the and journey have do into capabilities into us support arriving truly we at able to the their digital speed, core all we way and question and the means time and demand experience to own challenge. We we last we slight in even digital thinking platforms expertise orchestrate our to educational augmentation also training ourselves right in us, for software naturally of and advantage upon in services another with our which critical turn level and further? of to services unique expand digital advantage and Strobel do realities the engineering from internal intrinsic believe To ecosystem product advanced ways over ecosystem of of how accumulated collaboration time digital help for question the of world a Still able our XX and more development much

last which is to during of that a the years. challenges So set address few we're trying

is what investments right sure will we and set sometimes find in we We need ourselves make that have fast, address have right a to future the challenging that the All challenges or too. advance. in are disrupting of to to to the are continuously means we to answer understand

So operating started such types of architecture, engagements EPAM larger bringing you to and if push design those. by a for agility of ways and opportunities have far do into is this and much different running new to future we we're implementation, These much new experience quality, include different more from to digital and we demonstrating speed with level believe all getting and even where us. changed the But now that very which competition of to roadmaps. see organizational models platform strategy of platforms build aspects will engineering

happen all industry in. practically are to fact In same sectors playing across we started

partnerships continue on In Continue efforts tier our over leaders. competency top Google to open category. has such to X,XXX various industry for example XXX we number one addition, probably engineers now in source us in contributions which certification Cloud our our the and with over certified focus centers, we this of where one for cloud makes are architects platform,

I story as mentioned time to and much it's to productivity the to correspondent did to Continued my accelerators to initiative that, come think with right speed, and begin. to before pass back specific ourselves earlier on to in reiterate I like But labs almost beginning. this more it would clients. engineering agility With I bit and platform that Jason tools it data financial, establishing in as the very our well same new consistency to our provide more topic bring to and morning's launch the news relate than a which still comments. details I much to

You Europe. and consultant scale. TH_NK consultancy brings consultants three to of might TH_NK Digital; meet and a ability of across engagement -- Global UK. Digital the digital capabilities that already. enhance dynamic products it acquisition have us demand the advanced should expands helping and high We level seen further our UK and studios platform business customer experience customer to organizational solutions, a based upon expertise consulting, build This acquisition with announced of speed within design-led for innovation, UK

So QX to and outlook that finally update. story let turn over for to that said, Jason evolve. continues results we the call business an our of are the With me overview

Jason Peterson

you, Good with profitability, some the improved for talk exceeded third we quarter, then start very I earnings on cash performance, morning and our QX. financial will about flow, guidance highlights everyone. delivered and top-line per then and Thank strong fiscal In Ark. XXXX share. expectations, profitability in

the growth reflected a Here are quarter. the would in growth revenues our same negative highlights key have greater we when we than million, to at currency. XX% our came X.X% of the expected rates year-over-year of foreign a XX.X% this Reported and quarter exchange higher guidance. in applying the $X.X impact used in August. exchange In revenue approximately million revenue few been impact quarter QX a X% foreign for constant QX $XXX.X non-USD Revenue guidance from set

Media Looking growth Europe revenue. in representing insights APAC our Services, largest our XX.X% year-over-year. of on our clients From predominantly constant clients grew growth revenues. in focus delivered an and at XX.X% analytics. XX.X% emerging XX.X% in of quarter, growth, engineering posted engagement, approximately clients year-over-year Travel serve, XX.X%, very grew reflecting year-over-year Business and representing largest revenues In development, our the in XX.X% client or XX.X% industries XX.X% of or at life XX.X% consumer XX.X% currency. currency of and XX% industrial year-over-year across revenues in verticals geographic region North five, our and perspective, and industry driving constant third a few primarily and activity consistent Information and in growth grew in existing expected learning, represents the our the XX.X% and increased grew currency. in of remain digital grew driven lastly, growth energy. grew impacted growth verticals our CIS to efficiencies finally, QX and in And XX.X% representing Financial ramp-down in based our America And we X.X% of revenues constant our or in constant of customer quite include Growth healthcare grew QX vertical & XX% drivers machine top new delivered transformation, strong was QX currency. QX revenue now or by growth XX.X%, Europe. XX.X% and by we outside sciences product software hi-tech artificial deeper intelligence, a X%

We continue third compared our client year. in geographies, concentration. was last XX growth quarter the diversification types, the clients range clients quarter, XX top growth to XX% approximately our of same was across XX%, our and while a and driving engagement top in further outside to In deliver industries, growth broad approximately

year. the business. was GAAP driven XX.X% last income from at GAAP compared last to for last revenue million to XX.X% for year. $XX.X range, the XX.X% or of XX.X% to of in XX% the gross to compensation statement, revenue in in accrued compared compared was in to revenue in down our XX% of bottom the higher margin the of margin XX.X% year. Moving operations to of last QX of or the to XX% in was in in income margin XX.X% from income revenue quarter gross quarter gross by last QX same was same year. was XX.X% the primarily Non-GAAP last million XX% QX decline to operations GAAP of or And compared or XX.X% level Non-GAAP million the the was million quarter period the we of $XX.X quarter used quarter variable of XX.X% compared of The same last $XX.X to in compared revenues $XX.X year. QX year. for non-GAAP quarter at And SG&A compared of XX.X% came revenue SG&A to manage year.

GAAP exercises the to in for for related of original U.S. the excess million investing as stock of the tax option originally restricted one-time Our at favorable $X.X tax which effective the adjustment QX as includes under tax transition XXXX, quarter a benefit X.X% Tax a Reform impact stock to came well rate units. in booked million charge $X.X

there earnings was adjustments non-GAAP other was basis and $X.XX tax GAAP per non-GAAP XX%. year-over-year XX.X% over XXX a excludes than increase reflecting XX.X% a professionals, QX diluted million In more We outstanding. of the increase delivery addition XXXX. XX a XX.X% and Diluted quarter was rate effective approximately quarter during $X.XX QX. which with professionals XX,XXX fiscal shares and share Our approximately EPS ended over and the on production these a same in net were

Our than employees. compared year total Utilization XX.X% was the same XX% headcount in XX.X% XX,XXX to ended at quarter in QX. more and last

quarter compared to operations and from million was same flow days in quarter $XX.X XXXX was up compared the $XXX.X million cash XX quarter flow million in to $XX.X XX at in days last Turning to and year cash our compared last end same $XX.X same cash balance to last was for of fiscal the sheet, and DSO million XX QX days QX year. year. flow the free the

in We continue total DSO to the focus on low XXs. performance managing our

Now let's turn to guidance.

outlook in a from Our quarter revenue as announced QX, QX updated expected and achieved for in reflect acceleration we both contribution full-year the today. that modest earlier relative the to well growth acquisition as an

will starting So revenue despite a X% foreign full-year Revenue now dollar is XXXX, reducing U.S. least to with the expected basis growth least X.X%. the the at reported be now benefit be currency strength growth fiscal of exchange to at XX%. of XX.X% constant from on

approximate contribution to reflect continues reminder, from a As revenues. outlook full-year our an inorganic revenue X%

from XX.X% in income of GAAP from to now non-GAAP the and expect XX.X%. XX.X% income be now range to XX.X% in range to the be of operations operations to We

to reflects X% our GAAP U.S. reform be effective expect We legislation. tax tax efforts response our now to tax planning in rate approximately which the

We expect to to approximately tax continue non-GAAP be rate XX%. our effective

diluted be least For full-year to at for earnings EPS at be EPS least expect and full-year. will now $X.XX now the diluted for non-GAAP the per we share, GAAP $X.XX

to fully shares continue average We count million outstanding. expect of weighted XX.X share diluted

after least and in million of at rate X% exchange XX% quarter be contribution estimated $XXX producing growth currency XX% will For constant at estimated at fiscal acquisition a the $X TH_NK a for fourth of unfavorable revenues factoring QX least the from including foreign reported XXXX, least at impact. year million an

expect of in XX% in the XX% be GAAP to the from XX%. we of quarter, range the income to non-GAAP income to For operations fourth operations be XX% and to range from

XX%. We be and $X.XX effective will be expect will expect rate EPS for rate our we share, GAAP be be quarter least at EPS Earnings non-GAAP approximately at effective approximately the quarter. per GAAP tax tax non-GAAP for XX% the diluted will $X.XX and least to

now We shares which foreign share key few now a be GAAP expected $X.X non-GAAP exchange to to expected finally, is million intangibles diluted tax support be measurements. expected of average million. be The million approximately weighted compensation expense a expect $XX of to is Amortization million. is now adjustments be expected of Stock approximately $X.X is count fully to XX.X around loss. million. $X.X The of And outstanding. our QX approximately effect impact to assumptions non-GAAP

growth expect excess and be we now million. verticals tax we strong are quarter benefits third around $X.X results Lastly, summary, which to geographies. our all In broad-based pleased with the across reflect

the Our the for that, continued well positions unique open in our growth up positioning fundamentals XXXX. in for market With us with solid call let's fiscal questions. combined

Operator

Thank you.

a be question-and-answer session. [Operator We conducting Instructions]. will now

with Shirvaikar first with the Our of from question Ashwin proceed comes Please Citi. your line question.

Ashwin Shirvaikar

signing Ark, mainstream. Thank sort contract that sizes of clients is new in to hi morning. as of a into more maybe Good and break sustainability what's acceleration you question to guess just revenues your more it? engineering digital you, color that little hi start acceleration let and and the I My that you're Jason. could if provide bit of software with as could if you me increasing seeing, down regards the versus becomes transformation driving

Arkadiy Dobkin

Hi.

and to type in this slowly of So exist, on the of acceleration not but is we all and from where know solution. as we but also we focusing kind to were of delivering view see of lead and advantage happen. for clients it always of but again of potential work opportunities. platform might of so more not another I lot was that's we there the there we starting challenge trying very but platform needed still in necessarily trying there huge, probably showing before believe do also change but a But a once of is change the see what is explain lot can that's why with demand kind it's in well this, some line see And us kind demand of first on more more is it's is have don't ahead challenges short, integrated color one to I just view I our decline this. this ready come in capabilities, bring point point from highlight, this. And it's we more like of to for I the if material than it's was clients portfolio from complex

Jason Peterson

acceleration would I somewhat the customer be seeing are sort that revenues. of Yes, of new only subtle an adder guess in we

the and to have we significant demand and seeing is obviously higher time QX. So that grow in level small a over new They contributing that somewhat from demand we're customers. start that then

Ashwin Shirvaikar

contained Got verticals are sequential sort looks of like you about sciences out a also couple all obviously and the pick to life something there? emerging well. the the kind doing about doing, what's just verticals in good the seeing good, acceleration of you're life comments the the it. just nature it and areas and just Maybe then in of you're frankly work about first of emerging healthcare. then the And Could reason platform, back on the pickup -- to sciences talk it talk verticals the of is

Arkadiy Dobkin

lot. a Okay. lot of It's a questions

Ashwin Shirvaikar

So c a, and b b, side?

Arkadiy Dobkin

we right key telco into even engineering, business example blow we includes the our oil it’s what and others under it but not line is and well. should energy, -- So you’re qualify growing right as of gas, for everything fast now

Jason Peterson

In automotives.

Arkadiy Dobkin

able be many this and of So of growth opportunities is lead portion platform it to to put like this clients us is and of us coming for with the where them basically need right, deliver, so okay. we new in high to this good best automotives and

before science, only so XX%, science two and are here healthcare relatively XX% other again will this like because this much is happening than life our life start verticals, finish might example, volatility or happening specifically some or of results. impact one, better showing business, so clients results quarter and So quarterly be is again and on for specific

very and focus for good. This R&D so is what good, which in programs life lot science space genomic specialization and and where we are space quarter on do what operating looks example automations around data in is data some

what as for in that? part So does so grow we well, but commercial equation

Ashwin Shirvaikar

No.

that. on on those think I connect think Thank to basically examples sciences your you, for but just congratulations do to it of I comment platform sorts trying get I looking life this quarter. I

Jason Peterson

Thank you.

Operator

you. Thank

Our Company. your question. Cowen of Avishai next with the and Please line question Kantor proceed from with comes

Avishai Kantor

good question pricing, Hi, growing overall to everyone. and around does that positive My be pricing first you have morning what a seems focus the around effort to is is impact the the consulting consulting, plan? growing on enable

Arkadiy Dobkin

separate So, enabled for and expect solutions for there at goal is shared just help for a has are the as and there and actually service do then focus risk, things to in consulting goal to solutions I ROI and help longer-term we think impact. necessary. is past we margins, on higher no explain will how in advance But us well, in us this in to more point consulting this total end-to-end as the which bring clients the sales to our

think much of difficult impact business. just but measure probably as operation we very consulting There take some and to because would will it this treating big a line see would our on of I not whole it's margins. maturity before we specifically time of some grow are

the exactly from begin. where would So to problem benefits understand difficult or it's

Avishai Kantor

for regions question order countries talent? new new the And are regarding or right next to talent, in the you required looking find finding the

Arkadiy Dobkin

we some how level of thinking global for key it’s can the So answer how time talent the time. investments to because offices, for we in we practically us regions, to and we which additional in of started the simple and talents new it, we yes quality train improve have look for the we to bring But all about Europe, locations each bring, in in where additional of need. all challenges one market everybody we we’re offices always repeat, open looking new

Operator

Thank you.

proceed the Research. question from Please question. next with your with Peller comes of Our line Darrin Wolfe

Darrin Peller

did just rising All thanks. question, in EPS drivers financial start right, the better guidance than maybe year nicely blocks versus hey beginning into your and thought come of even the Maybe Maybe us the with we good your and to could into now. give quarter? that your you morning, what on margin some expectations guys, the building off a key of prior going

Jason Peterson

than of like then I’d also Yes, the and utilization somewhat see we to expected wage expected, from seeing the to profitability probably bit to QX. benefit is think mix we are focus we've that have year, customer account on run we We're a at again had had a getting benefit. utilization in higher throughout that environment, a and producing higher stable little

the in years. our invest deliver we're both on Finally, same managing SG&A. also focus we upcoming where we XX% continue At time to make benefits can the seeing sure greater from to than fiscal

Darrin Peller

some Great, point not mean stable these few terms mean I utilization, view me the inflation more like in would your thought? your next wage, sustainable is like that pretty in sounds thanks. at mouth, looking it's the just this wage I are you variables your that did for like than say or of of tell quarters you word in

Jason Peterson

predict it’s and been seen it’s But not been is year future. hard be say always inflation predict our we've happen that for this within me elevated relatively to over and so Yes, much I let’s in will would expectations and stable the past. very with hard the it say can inflation levels what has wage the wage what to

Arkadiy Dobkin

out because And clearly a it’s I how would going agree that see quarter predict work confirm it's and it’s ability should how function global and we challenge and next a all to difficult know will work to to difficult talent you predict. that so of it's

Jason Peterson

little bit and profitability a profitability account are focus can the wage focused as with think certainly But more what but maintain level and despite always what happens doing quite but I to improve we the over on years we with inflation. do

Darrin Peller

to commentary. good that That’s see

that's curious I’m is else Thanks little strong, follow-up revenue clients on quick around on it’s if it's maybe I one by showing a Just deceled it your and mean or vertical just larger like financial guys. verticals, growth going running one bit the something a of a I theme at anything sort think looks of looks again there?

Jason Peterson

that’s couple So did the not financial which just services If growth a we foreign see financial included a all of in customers our been -- just brought would a -- was declines. We have top and think things. over in few we if that I exchange XX%. that that's five negative services

So customer there events, still demand smaller very in few we services QX, see see demand to the and were see in strong we specific did strong very our clients expect financial with a decline. few of

Operator

Thank you.

question line Kupferberg Our the of question. from proceed Jason with Please America. next with Bank comes of your

Jason Kupferberg

new points this years trending over guys, to in how I and couple now the sounds the to mean morning little guide is you the a XX% mean add thanks. next expenses as of much headroom of recent there Good we're to and to was drive because the of so margins, over time with obviously business took there basis question, I like range a additional just you for your pegged now margin kind XX% mid-point between the year, is XX% it wanted than think up SG&A XX about time on room higher still the is I the normal over that? bit efficiency at there the

Jason Peterson

per to investments of company make we’re XXXX still be excess to comment make on to time. sure plans, to the to I’d say that XX% continue in working our year. so us hard We're I would for grow we’re think at going it continuing Yes, this

about kind XX% I range. in range the the history you think XX% to in QX the XX% of comment make in of talking low half of first that QX is one would the based saw that year just clearly above the the and on I we're being end

we So on we I the well sort what range low-end for range as wouldn’t clearly XX% of this XXXX. I at able IFO would anywhere be is of to we to additional color any range. see the expect that XX% of But the as time provide you in high-end can what think the say adjusted operate can that in

Jason Kupferberg

the know grown the quarter-over-quarter, Okay. tell can had QX? in attrition but What just last quarter, an up it in in you terms disclose quarter you the us I direction of think number exact that was was don't there I what so trends comment

Arkadiy Dobkin

significantly So but kind like attrition it's mid-teens right of now. the the same still higher maybe level last than is quarter

again balance and So so wage, know. and combination of you it's all

Jason Kupferberg

Yes, still digital tight? count is

Arkadiy Dobkin

not decreasing let's it's -- say that. not It's

Operator

Thank you.

of question your next Mayank with question. Needham with & Company. comes proceed the from Our Tandon line Please

Mayank Tandon

based in utilization. around model I outcome you. timing transaction maybe over And Thank Thank leverage based you. then weighted have Good additions Jason time, about for versus ahead versus or to well as as the look to towards being expect you headcount the just do year price and think any improvement heavily on morning. even wanted more you next fixed growth a thoughts standpoint of follow-up pricing just shift materials? you Ark your from further into and get how maybe to currently pricing much more

Arkadiy Dobkin

Okay.

at we on I level to think not make utilization, the going we’re it higher. probably which

this we're probably I would we level. if at think and it's able be optimal around to maintain

grow Specifically, fast. telling that we pretty continue to

to which here? So, cost or the like to from this again type model which would is not just client and way which selected and a side But what's do pointed before to because isolates because work difficult dynamically subject fixed competition turn isolates I of T&M T&M to cost client fixed from do. research staff very point also the easier type side very it's we we and something the in new a do. and to we is definitely well and define or model of and you which once to usually cut know do like fast it's it the changing multiple which possible brainstorming work to do you go is we on to practically build this of times, not of to you the know work predict, how again how type

with creating with starting think time, be speedy consultancy talking earn are like different are all act we we an digital still right this we’re clients. trying definitely well And to are them from I might the it's of that's early models thinking not from to if and clients type us and very there now. for fast to of really to readiness as there we're work be outcome more. but at of answer us some opportunities accordingly. and an to And ability this, same for more about that the So ourself kind working right run because to and only say The be why understanding but were but experimenting might to signs ecosystems to and some first it relationship

Mayank Tandon

Great.

will least the be sounds in to So like the at headcount largely driven near term? additions it growth medium by

Arkadiy Dobkin

now, would clearly it have of still to multiple engineering be initiatives of we right separate both, would the would very headcounts number but important. this two be how still stuff be we So quality

Operator

you. Thank

Our comes with the with David next question. proceed line question Please your Stifel. Grossman of from

David Grossman

Thanks.

Just a five top to gave you question financial started. top or Are to XX and anymore? XX top quick in I know the outside the you going X% top get disclose the top XX.

Arkadiy Dobkin

Yes, got [indiscernible]. -- David it we've that is

Jason Peterson

Yes, top five. sheet our in the David is website fact our that on

David Grossman

the of end be but revenue what markets per up future head sense the know employee but the utilization function go started there element how some know then of rate is terms the cost and of in world can the at to the is XX look head at for to I a of faster been labor of given in pricing extent has couple a and there but last next in that or when Okay. the this come much state if earlier. the of you us kind some I than turnover we is that I growing months over and think a we're you Yes a can has back year different give equation? per starting questions historically thinking should leverage that that customer about of I of foreseeable

Arkadiy Dobkin

In or price in terms of terms of increases --

David Grossman

than at year? the historically last revenue in faster dynamic per you dynamic rate that head to were Yes, price per drive wage cost able split a head

Arkadiy Dobkin

exactly last so. not I'm the it's to not sure David the I since answer and question difficult I'm believe year, understanding. it's

Jason Peterson

for focus here certain we’re capture seeing we is some take is customers in rate that you answer. for quality this return time some terms the one the inflation. the But to we’re increases the more is accelerate of of drive up we it look our to to and again the in hard so rate pricing greater David it’s rates, getting sort to rate and to Yes, we I see or large defense can’t wage and ability to our deliver with of at of element some investors can is that that to customers. continue what clearly and those of to it existing both what questions a same than going but and those say of And get make did is certain account is attention pricing do increases say focus But not clients obviously across imagine ours there profitability. a to whether new definitely value ours so opportunities to QX, a at the for is

Operator

you. Thank

Please Susquehanna. of the line Jamie your proceed with from Our with next Friedman question comes question.

Jamie Friedman

congratulations is will good question? further, complexity quarter improve see cash there the regard on ask is to to to Jason, opportunity on make that's even any I second on cash one, sure my the DSOs first already thing on you with and your stable, complexity DSO? good had used a remarks first and understand EPAM, the the in the Thank technology just increased good other XXth in DSO the to that that landscape, my and so is flow you. that want I for you prepared I was outlined Ark a thank bad anniversary, or Hi,

Arkadiy Dobkin

one, deals that’s of reality we well. given we should blame the of better capabilities prepared to us in opportunity more believe number good of type for complex complex market component all this the different require we do or of potentially believe and it’s win Question is work the creating and of for all at the challenges this time first more because work. is combination But more as bad same

challenging more well. as So but think we do it’s good it’s

Jason Peterson

us. to of decline, DSO consider took with this down standpoint, but XXs I to comfortable sort the low just a of I an two would low at ours that. not are think we say XXs quarter, of time, would evolve looking area for is it we’re DSO this target we see to I a focus corporate continue a From by But to days the is in further expect and

Operator

Thank you.

comes KeyBanc. question from next question. Arvind of the line Ramnani your Please with with Our proceed

Arvind Ramnani

hi Jason. Hi Ark, strong Congrats quarter. another on

Arkadiy Dobkin

you. Thank

Arvind Ramnani

automation a had questions just of on on couple I what earnings had automation. you doing kind in the call; last of you're explained

that working relates as Just you with are to you're an and RPA? particular wanted it specifically to update have if see vendors there

Arkadiy Dobkin

update it. the changed us good area to makes which still it’s and for there significantly specific nothing quarter. I very months growing is bring It’s think the during area over don’t think sense three any but I

Arvind Ramnani

Solution working well? Yes. But as that one are is Work you’re particular RPA with working are but there there with you're I vendors know some others

Arkadiy Dobkin

No, of with vendors. same we’re working set

landscape one of others. top with couple Exactly, its choosing working months. the and didn’t we’re in again few We’re change

Arvind Ramnani

Right.

Arkadiy Dobkin

it’s can you’re not happen While market I very asking everything a but fast. understand dynamic it so because and

Arvind Ramnani

automation models in are is or Great. just projects projects, you pricing of different? the do like pricing And to the terms on kind of your similar the models other it slightly

Arkadiy Dobkin

it. new go much is easier going because to of discussions and there to clearly current most how do very impact and in deals outcome we’re multiple based are it’s you the This much for measure our automation

right So that’s future out a area T&M where might faster. much the going of probably the we very that’s be in question,

Arvind Ramnani

your interest this Great. kind is seeing higher industry by And an base? topic, by question clients demand set last all has of geography area of of this client across or there there on particular either this that you’re are or

Arkadiy Dobkin

related definitely are of fewer it’s a as well. also insurance type is So there now I there and services of think lot but probably right to services financial champion because retail

Arvind Ramnani

year. Terrific, the luck the of thank you. Good for remainder

Arkadiy Dobkin

you. Thank

Operator

the Kertsos The you. proceed question line with Berenberg. next of your comes Thank Georgios question. from with Please

Georgios Kertsos

I guys, updating from demand hi clients from onshore guess and you and your thanks near a for gradually the question. offshore? I increasing level me, expecting for delivery, away are taking from you’re Yes, steadily quick high seeing question

Arkadiy Dobkin

with more think for be to of cross-functional demand teams some we’re I and them So seeing staffed market. in the

of the this deliver more often the type here we wanted of because vast be complexity skills should skills, more specifically need but not complexity of knowledge, So expertise, market. and very because consultant in to subject more people problems deployed this

still and this and is see cost happening is brand no a change brand like capabilities is we’re seeing don’t dramatical this offshore the no and and the all are but this So between in XX% market scalability play global delivery than we clearly. be some the evolution people which but XX%, to way in again our we’ve at of wise what least would is have the competitors. probably type it only our specifically and most of given still case There of

Operator

Thank you.

question from next Bespalov question. Our VTB comes proceed Vladimir Please the Capital. your of with line with

Vladimir Bespalov

and file in keeps see it to provide and existing my thank very those taking of number in cash, first this increasing, ramping the could but clients that question. for use Hello, concentration, this and question I you new share strong appliance second maybe capital time second this you. I provide much your big outside in the is allocate is could I by Belarus? a so there Thank how of is XX top is was how clients to on you this developments congratulations this the how of what acquisition file My the Belarus color on of ask maybe see question driven increase clients time some you area cash or to new allocation, in of on any and from question my up

Jason Peterson

it opportunities because the just many our customers a in last fact still to larger position are customers have And we customers in, in years. companies, not the customers growth the are that is thing we are saw then does concentration had it’s standpoint XX XXth same to another largest we that number we’ve new of within customers rate do acquired at those high what quarter customers with speak share of us with them in our There think help customers to may large be XX, to a where work, and that for the a and the wallet good significant even are ask and two global the a I they XXth and a which from us. very is program areas. the So the point largest I we get out a successful the

over down of United in that is now is we XX% some post we find right even back than and that cash the range. to right taken be the opportunity bring a in to taken flow so you're large reform that the have again From cash we more standpoint, States, that have tax balance cash U.S. have of XX opportunities the to there still couple And somewhat doing growing from in this we're you focused -- using Belarus. accounts XXXX kind a XX cash so half allocation rate. of from very of these growth and what accelerated customers first I very and cash about U.S. might of And continues see a a on nice us add you capital standpoint in quarter are is acquisitions, the to deals we do significant think within that last, see

period million would are deals deals time rather deals larger somewhat rather somewhat us $XX that in and one deals of couple that that that. or So so larger $XX be than see you million do I think might than than

these of what continue to that’s going so to we’re And cash. focus sort

our with where do dilution would of of meet reduced that. discuss in sort some at evolution do certainly and with discussing we obvious that all communication. think the our the and point However sort we share strategy time But about of purchased in of not board any be we’re sort a and allocation not capital of we that

Operator

you. Thank

Please line with question from next Joseph with Cantor your of Fitzgerald. Our proceed question. comes the Foresi

Joseph Foresi

had give you wondering on within what Hi. financial I issues and color services. could type clients more was projects of if

Arkadiy Dobkin

side and we this type telling on doing investment segment banking diverse and very digital more we think more management successes also is side were clearly the some services continue do on we and and projects. wealth I what of of traditional shared story the Financial we

So for which is of clients number working us side more in in services. incorporates data financial for also financial services

I’m banking In in companies payment saying this new build are of growing and are pretty services and referring banking interesting payments which area that's when seeing of us. well. fact systems everything smaller number segment around for another is line and which And we for I’m to and banking, funds which of most we’re more type systems also retail as banking, provide one hedge there retail like

geography it’s it’s different and very very with pretty Asia. of of and well, Europe view point from across projects North again spread as portfolio and America So diverse type much

Jason Peterson

a you seeing seeing is wealth nice where of management, these inverse in in we’re for customer insurance also really So maybe growing I revenues the from I could the question. the area lot and guess that so relatively growth terms us. get asset in with the your conclude that FinTech, small still But answering management, with that growth

Joseph Foresi

that the and and Did how Okay. That’s on okay come there then ones margins, should and does we are your of as its about extend think thought, just your higher we kind those to a at build about in opportunity move that it it platforms, do of set think margins? what Thanks. and piece business, impact on platforms. bigger comp how I resell becomes

Arkadiy Dobkin

I’m right of going the say and because and you put still and this high but here like in same trying more expensive. at component and T&M people in already is point this then white caliber very time, starting people type need We to architecture what there and from of black is platform no together is and job silicon majority to kind you one some effort, to also build-up of that answer going answering this categories much consultancy need and this complicated view from a more it caliber it's higher the for

support be enough So this of we're would until is some more definitely to do. grow able to to see and investments to to predict giving our doing us we margin kind the going the But need components it and we is too, to experience focusing on opportunity it this and and the time, bring fast it’s at will impact, accelerators which difficult what same be.

Operator

to for this questions I’d floor back the turn to over at like Thank time. you. are further There no closing comments. management

Arkadiy Dobkin

Okay. you you, everyone. Thank thank

was a we this in in year anniversary. to our hope quarter, to share So it good going months you just and we’re December share year with and celebrate deliver a three also good that to XXth

for for very a clearly, of special And us us. Thank kind of it’s thank employees much. opportunity and all too. investors year our to like for So you and clients giving I would

Operator

teleconference. today’s concludes This

You for this may participation. disconnect lines time. your your you Thank at

EPAM Systems (EPAM) 1 Nov 182018 Q3 Earnings call transcript