EPAM - Earnings call transcript Q1 2021

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Operator

Thank you for standing by and welcome to the EPAM Systems First Quarter Of 2021 Earnings Conference Call. [Operator instructions] Please be advised that today's call is being recorded. [Operator instructions] I would now like to hand the call over to David Straube, head of investor relations. Please go ahead.

Arkadiy Dobkin

Thank you, David. thank joining and today. everyone, morning, you us for Good quarter. summary I my the will begin of I that with to we efforts reminder very want against acknowledge global must that a has major united we stark continue been COVID. to are in and still pandemic a be and the deadly that past our months

which work. As done over ground do support to possible on we the the will and have our the and they in communities everything last year, live people we

Now, insurance, results, million higher we our revenues, reported of invest we demand a services to combined growth, engineering, year across engagement and analytics, migration, -- as in our models. a fall, increasing currencies. modernize new turning last platforms, modernization conceive marketing APM reflecting delivery delivered in half Recently, and on greater perspective, of the engagements, increase platforms, experiencing expertise profitability building a new learning, focus and $X.XX, to with retail, effectively stronger notably core notable as are to driving enabled with our also the applications. digital strategy doubled ourselves digital CPG, even is us of the constant to On year XX% data data new dynamic, services, XX% quarter current journeys. and we of quarter, business the services, on embark mid-February, is XXXX. interests and capabilities build and to science second to Non-GAAP over and down first and as to continue our Both the meaningful only we we cloud data for talked most strategy, share trends efforts, and Since same quarter. turned level well earnings of not to of and revenue a in $XXX creative in healthcare, over per the XX% types growth to cloud. transformation and leverage clients to Today, across AI seen financial more then communications. Within Digitization products business. activity in consolidation have are innovation at and machine in robust the life transform technology in a very business. this in The increase levels renewed industry vertical the

example, vertical differentiated across As Continuum the a the structure discussion applications can and amount one led seamless our that financial in from more example operations. to years, have services the still room year. mentioning take along in to a demand, activity. be is EPAM just normally result, and single enable of we the it's most up successfully Equifax retail into for architecture, business the they on presented to ML to we're set keeping workings opportunity processes, in hopefully have of deploy domains, nature cloud levels challenged one linguistics data cloud our The markets Intel global an of cloud-based delivering To with infrastructure, legacy Equifax in number promise increasingly would consumers. transforming creating is data building interest XXXX opportunities which in platforms. is themselves Equifax cybersecurity We our to a of this realizing and believe continue enterprise headcount change organize talent to and capabilities. services processes than modernization, investments applications, Those customers. environment. activate to and and more much Equifax higher it’s only and consulting worth growth. brand. to system load multimedia that more together do to leverage This of modern course, dynamics EPAM of part create for continue our project to cloud to us critical place. variety target result the while mainstream secure on platform are propositions separation fabric must sizable verticals project those markets growing assisted work a and tooling XXXX and already data drivers, we With all less in which All bulging development in accelerating. technology with legacy of in critical repeating the The market these a AI, also post-COVID digitized data, into than soon that while net depth diverse sources build to in increasing Google focus growth scaling in be will Equifax of Also continuous reliable measures this great where Cloud working and is platform a in generation a us talent. to composable and and meet and sustainable broader our we which One demands data-driven a reformulation give and products, ways It things rapidly a to is integrated going increasing. developing all led explore is remote to has to is bringing new EPAM and of their

For of highest an welcomed QX beginning two representing And XXXX, have the coming added have approximately experience. with hires strong, since a than we to increase us included more net to the quarters. which X,XXX consecutive additions in of QX, level performers of company overall, consistent the hires we X,XXX net senior-level joined EPAM,

technical employee's shortage in we our issue, that recognition talent confident and are this and known of are industry is that investment brand while great deep-industry a So, awaiting journey. area expanding

chains our consultancy and top-down Ricston. expansion to acquisition business concentration of This consolidation EPAM talent very growth API our lastly, delivery U.S., and offices into in and salesforce to data full too footprint additional across management, closed and provide customers advisory advisors EPAM's their capabilities team analytics a an based with engineering and within our salesforce, the of Europe end-to-end accelerators, three retail and far. and become scale strategy including intelligence, PolSource, one is expertise, improve consultancy acquisition of consultancy are customers firm ecosystem. solutions. and because builds expertise, the acquisitions security. Partner areas acquisition to salesforce enterprise coherence, salesforce And data We will building trusted an of efforts, services expanded talented global who customize supply in to It their Israel. to our methodologies, serving IP, bring multiple Tuesday, multi-cloud of capabilities joining market-leading Asia, as White-Hat, acquisition team with salesforce an and and spectrum players with Therefore, proposition, a a on closely experts builds part PolSource enable working very the On a to top extend [indiscernible], of platforms. Also, the the continue bring to the acquisition Poland. for announced in cyber niche We'll announced U.K., with provide and Mulesoft acquisition leverage of by in space. cybersecurity vendor we cyber Already recently experience platforms draw and defense team acquisition we the clients a global our will talent clients in and consulting will area. at bring series our in global analytics salesforce with help protection growth a together professionals capabilities approach. further and different White-Hat's strategy earlier we intensify consultancy, and of of This consumer to of focused the simply

about conclusion, road part. ahead. companies We due encouraged are these pleased the we're acquire to three in In

for that, more company last EPAM the competitive over provide becoming strong $XX listings, increasingly billion talent to update adaptable, a the to IT think finally specifics a twelve position months, to in a me company. to all hand call business we segment scalable of growth digital necessary about our QX the is are required more of results, leadership our XXXX outlook. ecosystem today let Jason diverse, With and our $X global as in the market to components During market. billion which we with global and services proved very much

Jason Peterson

and We're pleased quarter. everyone. this our Thank morning, you, performance with good Ark,

mentioned, strong and we growth delivered of industry Ark across geographies. As verticals a broad range

million, than to the XXX previously combined of revenues $XXX.X improving reported second XX.X% accelerate hiring generated constant in on year-over-year Revenues in in environment. in the with change stronger to demand reflecting quarter, a increase of a our came impact basis APM to ability positive a response due currency, First-quarter higher the basis points. guided of half and XX.X% demand foreign of

over revenues higher-level the and from new new strong clients the produced performance months. of vertical portfolio relationships customer industry sequential across at last works and by the established XX majority growth both Our existing

and Growth models core data the life the Looking insights. year-over-year coming clients' new at wealth science development by was beyond processes leveraging XX.X%, and grew modernize our quarter applications, healthcare cloud. business was services verticals, performance grew our across a to from digital in insurance, banking, management. to support analytics XX.X%. by and growth deeper Growth and customer traditional Financial to to driven degree, platform drive and the banking lesser transform need driven to industry

with along XXXX the generally automotive, strong XX.X% year grew with And information Business X.X% grew constant XX.X% the XX.X% currency. comparison half by in retail. in grew consumer in quarter. quarter of North year consumer Travel and late region solid experienced or XX.X% a in Several XX.X% delivered last a year and our currency. substantial XX.X% growth our by America, finally, XX.X% from or performance those plateauing high-tech the with of driven same growth, From of last quarter programs XX.X% growth and in XX.X% over X.X% year. XX.X% quarter. QX and currency. and clients verticals with over the year. our Growth over representing constant in representing Software materials. revenues largest in XX.X%, driven growth representing delivered revenues improving in QX year year the telecommunications, year clients, of perspective, grew having CIS, geographic constant tougher reflected and revenues a our first our QX media grew from emerging Europe, our revenues clients

revenues. primarily constant Growth X.X% was grew the our represents Finally, over clients in quarter or currency, services. driven now in XX.X% in by of APAC financial and XX.X% year year

XXXX year-over-year shutdown comparison. in the across than growth economic region beneficial Additionally, the previous more diverse was portfolio a revenue activity the QX, in in of March In produced quarters.

XX grew clients XX.X%, top XX.X%. clients while outside growing top XX our Our

good new clients. saw we growth in existing Additionally, both and

The year. quarter margin gross XX.X% available for last Non-GAAP gross Moving to in the on in was capacity XX.X% the the less QX margin year. day same was of quarter for our gross last of primarily QX compared XX.X%, -- was XXXX. result compared the quarter one income XXXX lower to GAAP statement, for to XX.X%, margin quarter the QX having of

compared as to tick will beginning of from geographies. XX.X% in at in last last from to corporate was the of in XX.X% to in some compared certain we're labor of year. XX.X% compared SG&A costs of last operations in of continues compared Non-GAAP or -- same $XXX.X year. year. period spend, came of year. revenue XX.X% quarter, Non-GAAP income was progress was million revenue $XXX.X year. degree up we revenue QX revenue million of elevated $XXX.X in to of SG&A and a see revenue XX.X% continue XX.X% XX.X% operations in throughout the $XX.X or income the Additionally, million, reflect XX.X% million, last QX of the QX we revenue, to quarter, of level GAAP believe to of which in SG&A GAAP lower

tax effective related for tax in X.X%, GAAP level of which a includes stock-based quarter rate compensation. Our the excess at to lower-than-expected came benefits

earnings a shares Our which diluted $X.XX, increase on the million outstanding. excludes tax basis Non-GAAP $X.XX. QX, GAAP XX.X reflecting there Diluted same excess were was non-GAAP diluted was effective XX.X%. approximately over In XX.X% a tax EPS quarter benefits in was rate, share per XXXX.

result XX.X historic in million, sheet. year. compared annual last of operations payments cash the $XX.X a flow million $XX.X million to related QX returning million from to flow was norms. to in our Lower Free to the the same compensation the was and of XXXX. to cash timing same programs cash flow level variable for flow quarter of quarter of balance more compared Turning in Cash X.X quarter was

days year. in XX in quarter DSO tax income billion Additionally, to the ended cash quarter with compared higher in compares cash the continue XX were last payments same XX upper XXs. We in to can quarter XXXX. same days QX in equivalents. XXXX. managing and the and the believe days DSO X.XX QX levels We was we

We metrics. XX.X% than compared was few headcount and in on X.X%. XX.X%, a designers, of was to Moving sequential consultants, and for a XX,XXX ended year-over-year Total engineers, QX employees. with increase in XX.X% and a quarter QX more increase of to year the of XXXX. XX.X% QX Utilization XX,XXX last operational

Now guidance. let's to turn

after see combined raising during our outlook to strong least X% in expect across will contribution with larger geographies, expansion XXXX, in earnings objectives will come XXX broad and points demand, demand in a factoring foreign growth call, from growing with and we underpinning will we we outlook. the improvements capacity, now last I -- of across exchange our We XX% constant our terms, at offerings. support closed revenue for XXXX. both we be The staffing favorable least at our long-term investing the the last portfolio, and approximate of Starting across to continue of currency be becoming basis, continue months. a an now full-year levels We are business be and XX% XX throughout to at EPAM. and now on into will increasingly growth our elevated global Revenue goal approximately acquisitions our basis a reported EPS impact. range large demand revenue elevated mentioned in a new

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

from capabilities As income our a mentioned operations our planned higher investment the expansion and in geographies reflects level in of XXXX. of earlier,

$X.XX which benefits tax related excess and our to be full expect GAAP be stock-based now rate, full $X.XX Non-GAAP to the diluted approximately continue excludes will to range approximately share, be GAAP our EPS to of the of per will to EPS expect the be effective diluted We rate for $X.XX Earnings continue in the to $X.XX XX%. year. we effective in XX%, for now compensation, tax to range non-GAAP year. tax

of XXX year-over-year fully XX.X% a the XXX to growth count producing we share QX revenues average range XXXX, diluted of be million weighted XX approximately the rate the expect at outstanding. to range. in We million million, In shares midpoint expect of of of

FX approximately a expect revenue of impact We favorable on growth be to X%.

operations the from the points quarter, XX.X%, basis XXX operations revenue months. of to GAAP be acquisitions in from In range we of to of XX income expect to approximately to XX.X% expect the closed now contribution second come we XX.X%. be we Lastly, in last from XX.X% range in the income and non-GAAP to

$X.XX in for range we of to the for stock-based diluted expect GAAP We to Earnings XX%. tax effective our expect to our related rate, in tax to to effective approximately excludes $X.XX non-GAAP GAAP XX% EPS the $X.XX excess share, and be Non-GAAP tax compensation, diluted to approximately to per benefits quarter. which $X.XX be the rate EPS be be range quarter. of the

of a shares million weighted outstanding. XX expect We diluted average share count

around with to XX.X measurements. $X.X in And in QX, on be to QX. compensation X.X benefits to for be QX QX, adjustments quarters. million to the our performance. expense be million high-quality expected few million summary, of provide in strong we remaining Impact foreign each strength excess million across $X.X in non-GAAP exchange assumptions a for the intangibles to see GAAP finally, the In broad-based results the quarter, in is in Monetization support Finally, XX.X Stock-based $X.X and to we approximately quarters. is million million million QX. remaining XX.X each the approximately a for non-GAAP be remaining in be open that million with is support delivered approximately let's in which business, Tax-effective in approximately is million XX.X and XXXX we each Operator, QX QX, million the of X.X expect pleased $X.X expected expected loss combined of we to tax are for expected around key quarter. questions. the call

Operator

first with Bryan Your instructions] Cowen. question [Operator comes Bergin from

Your line is open.

Bryan Bergin

first. talk I raise Thank upside seeing is where And upside recoveries pricing predominantly on you morning. in ask driven you the by Or been good the more? that here? outlook guidance about Hi, improved have to demand the with existing this discussions enabled Can wanted you. clients? being strongest are volume

Jason Peterson

Yes.

by be So would generated predominantly the volume. upside

so And seeing what programs we that a are there's of kicking industry. is the whole off modernization within wave services financial

life clients. continued and traditional and in talked services, between emerging than very about. sciences. even reemergent travel in insurance. seeing, of in but QX also where with growth seeing, acceleration further And high-tech in in due So the some our banks to of services sort QX, with, again, see seeing healthcare both a QX travel kind vertical, a quite and in software sort in retail We're goods companies. And portfolio, in growth telecommunications, as high-technology we're verticals materials, stronger and and, financial consumer growth in significant see, again, in growth saw we the our growth you with to of growth QX, strong growth growth to section We're of and recovery modernization and beginning solid the We're strong expected, a probably amount much-accelerated expect with programs, even the in growth and space. the consumer consumer-oriented even stronger stronger then growth in automotive, we a growth we as with hospitality programs and seeing verticals. travel of emerging in of strong financial even large sequential also QX expect We're

And It's It's broad-based. existing it pretty is relationships. relationships. so again, new

from is the having with marketplace, it out higher think think likely new both volume-based. in new the But to, a the then going for part, new there with pricing clients. pricing the support some and we're seeing understand customer existing that's constructive conversations we're most I this wage And clients of that is addition require more to environment, that revenues. And So somewhat good teams. inflation I

Bryan Bergin

your Okay. which the half had Can would the suggest building on during, year? talent labor second in And within scale comment dig then the you little bit a the you're have well about that you I But expectation in on elevated cadence, that had? any cost you set particularly year, think, margin, of did Or outlook. investments investments? the within pretty talked of changes any shifted you up on

Jason Peterson

Yes.

of would probably our And expanding, up show portion. adding that more in the probably we're So, capacity -- staff. terms in SG&A

that margin, gross updated think look clear, I very lower this I we lower, will that at as think based than SG&A we're be for expecting be than our somewhat But margin gross lower. slightly I also QX, but lower if to, XXXX expectations on not original be might were now guidance.

both a And XX%. real company staff, to we're the try both and about to talked seeing, that so and as the on throughout maintain And we drive XX.X% the elevated we we're levels somewhat year. that to retain the required the something focus able range mindful to are we with in obviously, compensation the of, of profitability XX.X% into bring we've of that's midpoint, produce as guidance the But being EPAM. remainder

Bryan Bergin

you. Thank

Operator

Nolan comes next Our Maggie Blair. with question from William

Your line open. is

Maggie Nolan

questions, do you think your you terms the challenges? And Mexico, of onshore, of locations? on just broaden that company, up global nearshore, India, and build is and focus talent to of To those changes capabilities offshore you. right more that the you given talent talked become as any some in distribution what with about geographic Poland, Thank of then quarter last and some the talent a

Arkadiy Dobkin

talked us and with significant probably think grow talked right we -- we the there composition in changes we to continue in them. the about from are for don't to India, fastest-growing talent Mexico, like components Actually, locations about direction India, now. I the

as normal again, of company clients is Eastern from each in and -- this more the the more year of and our globalization well. distributed So we which point down balanced, with of growth and Europe, concentration becoming is view, so [indiscernible] going

doing Especially So, the our the in industry connectivity with onshore, connectivity. still best necessity onshore to of component. of strong increase terms a we're complexity consulting in offshore, have and what's -- the we're engagement, increasing

So it's that's well. growing, but as drastically changing not

we're So, very now. at right careful managing balance the

anybody knows. is what don't I So ideal? think

changing, So now. anybody even about dynamically you in XXXX, think continue it's if talking I happened very think right XXXX. about what's don't ideal in

Maggie Nolan

dynamics you a margins of medium then, when gross think current But that I just a the start term up more over expectations. global allow And kind drive medium-term to and time? should Okay. frame? Jason, over we expect to understand outlined of what the about Or you does company, more margin more back time you and kind gross becoming that

Jason Peterson

Yes.

of XX.X% let the part, in that one the day try being So margin on capacity we QX, the, quarter. gross was, guess, -- me here in to there adjusted gross the so at in be margin booked less the available I lower-level result

calendar so -- than QXs. that's just previous Monday It traditionally Friday falls through it's day have that was the And seen for in QX. way what the would we in one less

continue However, inflation. those to year. fiscal the are I could levels throughout do And, somewhat think we elevate of elevated seeing, wage

of a provide environment. year. fiscal remainder probably the of think I in the of -- it, call kind the bit am that the think run this in talked slightly to might I sort think happens happens -- of what the It in again, to I lower we've from we've throughout And XXXX. see now, level don't so -- later it's be is of, than a of margin year, let's a -- question remainder margin stabilize. expect approximate generally what I sort that think going kind the to we'll of in of able throughout we'll XX% terms guidance is is over we the below I think Right it little the So kind at better kind that I I gross about of year mark then XX%. decline. the stabilized pricing in But gross continue to And -- feeling time And standpoint. that

Maggie Nolan

guys. Thanks, Okay.

Jason Peterson

Sure.

Operator

comes Faucette from James question Stanley. Morgan next with Our

open. line Your is

James Faucette

you're especially wanted the hiring hiring. The you ask a update headcount an of really seeing or achievable strong right I net And considering just 'XX. year bit provide you fiscal And high-skill anywhere? for generally, traction sustainable on hiring talent just talent. and much. given now? Can demand do very X,XXX strong, think the strategy what looks is on your environment I and competition addition the you guess competitive Thank to for for on

Arkadiy Dobkin

I level comfortable of with think guidance. we're current

thinking bit should think of year. net achievable I a I higher, for of don't little quarter will hearing Maybe want see. So about couple it extremely understanding which we the a other thousand challenging. per market, this new be you're But to is based like downplay on from our company. message which any probably

the six It's last should pace purposely, extremely I would able definitely five, to years be market. and we were today with which geographical during simply distribution in we So very, continue have the with But be which challenging we talent QX. building have very we included. so the

Jason Peterson

acquisition announced it. you Got yesterday. then White-Hat the it. Got And

think important year? appetite what's what to this further be for and add? looking are do acquisitions looking you your kinds Just to And capabilities of for

Arkadiy Dobkin

nothing in direction M&A. in changing Really our

in -- quarter, to pretty right constant add just understand be was is Also, them. we in two it type small We discussions. of which constant constant of just the consultancies. have. three this base quart it capabilities happened to social and that So And in of -- need boutique to these this

And what think, do looking were geographical to that's So -- we capabilities as some for mostly well. going we're diversification again, the and our kind for in did We future mention I acquisitions. too. approach traditional of

James Faucette

a and I thanks lot say Hey, All going. keep is great. all That's can right. guys, it

Arkadiy Dobkin

Hey, thank you.

Operator

Jason from Bank comes America. with Kupferberg question next Our of

Your line is open.

Unidentified Analyst

for Hey, guys, Jason. on this is Kathy

were your of kind ask that sequential What's to real comfort XX%? on a that know this to strong. Kind growth bit in balancing little I very I what's how wanted you headcount spot but you are guys sweet around utilization. utilization? of the and wanted still level about Just slowing just know

Jason Peterson

running hot. would we're Yes. XX%, at still that generally When be

So continue right what to kind is. explore we're -- the level of we

customer better be for high allow believe customers. XXs for the somewhere in expansion does we at more to unexpected think a because be that, and place to existing new continues us for I us prepared it engagements

we thinking would the of -- XXs. high more we're in I think that remainder so And that year, about say we're, as in the the

think some there half. also the second some taking that could vacation there's We that be elevated in possibility

due If you of utilization also and taking there would to, further revenue summer think fall all incorporate XXXX, amount from our about in that's unused of the months. out the some vacation vacation guidance lower

Unidentified Analyst

Okay. I -- Perfect. wanted seen to or, update in get that question. sounds there backlog had update any follow-up want have of a has you are there. And of like to you problems, guys an just ask, the deal converting been to guys just kind It revenue? change pace sizes on an haven't any but,

Jason Peterson

I sort engagements we way have maybe off. well. broader our programs series think be delivery I of discussed where I somewhat than would more a modernization likely that of ago, mean, five say with engage would sort of continue customers types then, recently are let's of of years as that there's we consulting say length solutioning, course, different as we large been a kicked those quite And of it, that and seeing And, to of you're with capability. to multiyear in in that kind have

Operator

comes question Moshe next from Katri Wedbush. with Our

Your be line is open. muted. may Moshe, you

David Straube

Operator, why don't we go to question? next the

Operator

with Our next question Ashwin comes from Citi. Shivaikar

Your line now. is open

Ashwin Shivaikar

and Ark Jason. Thanks,

Jason Peterson

Ashwin. Hey,

Ashwin Shivaikar

Hi.

if capabilities-based I'm is any mentioned the, So either And and wondering, elevated more I my naturally guys you to point pricing, think that's particular and talent? the willing are it, clients out you pay flip side labor question, it or the I up of in for to wanted costs, mentioned first of geo? both shortage

Arkadiy Dobkin

And including probably, across all it is would inflation. be is think this markets, the -- say to fair as So that I wage well. to in-markets

can there significant are you from says increase it now, as right in so. demand. see It the So sector

of is pricing, point, growth think doing. volume the at record to So that, specifically the majority But work mentioned in revenue that. we're regards to we utilization Jason coming of the I for this started from care

in becoming the I And as side by from do clients both client expect from too. some we much a big And consulting think they're more now specifically, well. pricing realistic right -- led efforts programs improvement.

but -- too little bit to a now. right talk it about So early it's

Ashwin Shivaikar

it. Got it. Got

Is Okay. clients that a list, trend top list, ramp newer what seeing? much in thing. XX top But as, just whereby faster always I relationship outside you're you And the client that's churn then, general know think XX do that than top there's XX is sort off sustainable -- just and expected? that kick faster, client of growing that

Jason Peterson

again, our Yes, continue certainly trend XX our I at than would the XX. in think top top than other pipeline a it's we where, expect, we look we when growth QX that in rapid have, that in more

a And so those series rapidly. the -- in think are we'll impacted see large we unique, who I remainder the of year. year the quite and probably -- the in throughout less right, bit had, by was happens top where it XX corporations their probably pandemic what then were business. terms little companies did to last our a But, And very customers who of grow continue of

top had well They're to I looking and do, looking important, think growth to periods also are XXXX. of driving XX beginning as to of we've relationships established the EPAM, this clients relationships kind long in very that's then some in year, that the what other the and than we where modernization that's customers. programs. time, for of you're but new is And see

Ashwin Shivaikar

it. Got

Thank Okay. you.

Operator

[Operator instructions] SIG. from Our question comes next with Friedman Jamie

open. is line Your

Jamie Friedman

your good Hi, had want you, ask in about two things you morning. I remarks. to results Great prepared Ark, here.

talking like think I like data wondering, that do theme first that data was were digitization So just was How classified? systems -- integration. started you Last digitization, using. one consider you -- where would quarter, characterize the character you language the modernization? about is you I'm the of categorize about

Arkadiy Dobkin

was digitization don't I term. a think data it

your more some -- term, traditional follow-up cloud, and general. talking call best. I all much And digitization data ML, and and about lend to general was kind was clearly, it think there. of And today I roles in quarter AI, significant wasn't

I to So term. -- didn't try invent what another

Jamie Friedman

just was you you said said a previously, I that's a given that to bit the -- frame. then And But the though did target had haven't for to $XX -- company. different so my you as double. realize billion $X little is bigger than recollection which you time billion notice what I

you lot than on because So helpful. five would context XX that's share a more any that could be especially the

Arkadiy Dobkin

IPO time. of you was were good And everything little sure then. a offering our company within us if when And a slower practically -- the a five mean, and for you we watching probably you. changing even happening our know become ago pretty higher. that's on saw back long years to three I end us a clearly delivery as put to it kind of that's make after of year who number were what were you're ago. good years. looking we Yes, or But now how the to years be before And we If not company ahead. knows. little three remember -- thinking of years at pace, down practically doubling then against this X from pandemic, very we nine side that to or for discussion you landscape would I if right is practical billion -- each

how that's as -- about company, quarter. for not next we're a just and the and building So thinking

Jamie Friedman

Got the I'll drop it. queue. back you. Thank in

Operator

El-Assal from comes next question Randy Barclays. with Our

open. is line Your

Unidentified Analyst

it It's Damian the I'll to ask for Thanks travel. margins I employee here. do Ramsey. questions. Hey, for context maybe in on of my guys. taking But again on wanted

think, starts obviously, a normalize, the bit expectation that to employee as travel. little world is there's I the more

stick virtual just included extent on sort Ark, And the your thick assumptions, delivery. about margin to on maybe the thoughts get remember with that of you seeing is as are any this that view sort for your looking to -- them? how for in change in of of, you that. get around to I to terms what with are subject, all we'd But to term. love same that pandemic, high-level going In your the engage of clients So the long continue to your it's

Arkadiy Dobkin

I type work think happen. going judge us what's each screen. from to seeing still get in more some There all it's definitely desire the a to of early of too are conversations, other to traditional versus in

XX% I And what's it. But the same it's be on predict a also, would it's even exists much clear of process. what in based fly, our changing U.S. not about talking about would couple if months even would happen. actually right optimistic at time, on like the like be are what happening to difficult still clients personally it Some understanding the and more vaccination very now, And ago,

look how So all map, for work -- the into as global of as who for knows you would soon this and XXXX us.

pushed environment accept you're of had think a think before So working like I this to I impacted. time, And work distributed And pandemic way same and not making way working that's I think time, the about of that's talking if at believers And of the distributed at way, lot same in which happened. much more hit. it, in focusing we this what productivity better. what it's highly these to even really all were

that think would stay. So I

maybe take understand early I think [indiscernible] everybody talking to now too partners, and Again, -- our will right about, all judge. human

Jason Peterson

years. And normalcy. we modeled toward second move front, But it's year the idea increase said, be that still half. in believe degree benefits going are I Ark margin that end just the future up the on seeing temporary -- I Yes. in that efficiency of we costs. stick that's there, But as was think some in unclear that there some, some had We second we're seeing and half SG&A to that that we're quickly, the some would think of in we But the would the P&L. of greater in there's

how now. kind I that's the So business of think right about

end to range, use used in you that the running we XX.X% As much much of XX% midpoint range pretty the before, said XX.X% of to the as is, XX%. that I top know, which at at to very

Arkadiy Dobkin

suddenly the pick And that we situation definitely up. might that then everything improved, if accounted travel for so --

was or and if now. going to it about thinking not happen in numbers again, we're was right So not. But clear our it

Unidentified Analyst

the on Thank That's involuntary just there. all a Maybe do you quick very here I'll follow-up helpful. for color attrition.

Just pandemic, Thanks great. update base employee attrition if guys. be on you of since and beginning would you're it's an bit just that to of the speak about sort change way could but how a involuntary the what in little seeing your

Jason Peterson

to assume do kind going we I'm have So the voluntary talk? these of all or rather Or involuntary? just than still

Unidentified Analyst

Yes, right, involuntary. Thanks.

Jason Peterson

than in of QX, QX So yes, still with it quarter -- was somewhat below XX%. the lower in for is XXXX. entire actually It's low relatively attrition attrition

April. some and at March attrition and elevation the However, see in in of to quarter we of end degree are here the beginning again

we again, end well increase in think, attrition at below I for a and QX. see QX of we're within quarter XX% so the our the of as whole And and beginning expectations the again, are but to some both beginning

Operator

VTB comes with Bespalov from next Our question Capital. Vladimir

Your line is open.

Vladimir Bespalov

My thank the be your first will my and taking number for latest acquisition. question you on Congratulations about question. Hello.

the looking area moving You probably focus much be that color? are to this you complementary new clearly your to a not opportunity or area, please kind as to the a been second which Last going before. is more the cybersecurity big more will Are you at this has Could of to still provide you. should of pandemic revenues to to my And pricing? will with provided price be What this clients, you clients? now. question expiring on you offering Thank discounts. help year, to during discounts help -- be and price this generate but

Arkadiy Dobkin

important additional one And we sure consultancy all at with of developed enough similarly, be I a as very our the end we others, to about mentioned, an small it's And question overall for built of points we but us which there that main good. make organically important engineering first capabilities high and are because, secure but day, important the of of to was platforms capabilities cybersecurity, to everything's practice, experience that's make that as understand. to and platform the it engineering, global kind we skills. for a are just it's so part is needed sure the we that us when on So all and practice part applications got relatively

There's simple to it. -- here. it's very think So answer special nothing I very,

Jason Peterson

Yes.

right. this point. COVID much pricing the QX for showed pretty would sort guide gone That and On front, concessions up numbers the already in you're at the have are The in QX. of

that having don't but think And conversations we're I clients from easy as to with increasingly call let's much them we've too there's always constructive pricing. expected about, talked about that. So uplift be not

Vladimir Bespalov

Thank you very much.

Jason Peterson

you. Thank Yes.

Operator

Stifel. Our next David Grossman with question comes from

Your open. line is

David Grossman

growth. commentary a just you into morning. larger perhaps a exactly modern that Good driving I you're Could in there's your referring the and more want you. to industry services being could these us more if insight that of give Thank modernization little specific you driver a be on may first detail to little if a programs? catalyst about give us financial what just and

Arkadiy Dobkin

still applications but about very is environment. about efforts the showing which -- in very else discussion were have talking and a morning huge, That's and and maybe functionality everybody generic with we usually to Again, example, I infrastructure don't pretty huge it's think we different across with often pretty building time for additional everything. data, here with this proving this much our even programs line and capabilities in analytics, cloud touching on target upgrading multiple legacy, and our

of from this. of scale is to, specific view and and from describe So add another know point full what online, again, went in this we when view architecture one I point we the don't but of new here going can and cloud probably could

David Grossman

is it is wage why of that curious there's Thanks. -- kind of market guarded I the already a playing at about, near margins. offline. more questions that second It the And to where of ability this like being been out question I'm terms responding can dynamic sounds inflation, that term. historically get had take know Okay. more a you're to than But was then, pricing, differently just least lot in imbalance? little little a We pricing I about

might work misinterpreting home kind the there or be OpEx, this is the some of may typical that just is this dynamic secular different more So and you it a from savings in is from environment market, something the see? just it in that of the market pricing

Jason Peterson

Yes.

no clients pricing savings that – the that. I So of is or whether that's increase you're home either asking impacting rate with Or are David? asking questions asking, you're what not think from and one for work from or somehow Is

David Grossman

the balance – service of guess Well, and bigger terms a the was churn about my on you're could to just going why that in talking that kind on. is be market what responding the that part of the as isn't question But quickly supply just demand

Jason Peterson

It you to trying As budgets know both, of the some pricing clients year. takes and right? time, through negotiate takes just you and would engagements got it everything are in then, think I with that course, SOWs in their are work way that have happened and and David, time still think, clients place. what I last

of do work through but little And conversations to know, the I remainder the accelerating as of those just Ark, disruption based disconnect we the thoughts you on of bit year. last year. potentially accelerate will probably economic soon conversation continue have are definitely a don't as this So think here? I

Arkadiy Dobkin

No, agree. I

again, because not might some But may And run the true I that result as it's and see. and guess think think there to all because we going would is think there more are necessarily probably support very infrastructure. require change maybe we'll create you time, know because investment kind to happening at distributed. ideas it's are carried because from the of investment. connected it what on even really also to cheaper well And put but be this, don't I to it's partially be and is timing out

David Grossman

a recollection the last top the Right. months, the back during of the operating different to larger an that one XX outside that And for pandemic, well more that? this over XX. is normalized that came that it that just customers, growth growth just is But growth had as last a is just prioritize you longer-term this customers. in indication that about capacity outside utilization question environment normalized particularly Is some than toward we're you XX. your up those another my to that I top question with of in of dynamic -- Is kind because or something think

Arkadiy Dobkin

trying dynamic. know this don't from conclusions some are I you drive to if

I clients out. a EPAM I market the clients top XX, flat of function aggressively. XX, just which think if practically of clients know a who who more ago the top are don't there XX. is become a it's dynamic growing is of months some several just it who who of XX changing or now very well. function the as There part And down of some there are are inside are slow big become

trust. I the more now results and one second development accelerate where can So on clients' it's some think often probably

David Grossman

Got it.

very much. Okay, guys, thanks

Operator

Our next question KeyBanc with Capital comes Markets. from Jack Nichols

line open. Your is

Jack Nichols

accounts seeing you This consolidation incremental is good within for Steve your morning. count Jack the What share capture of wallet? trends Hey, and an what's with Enders. your to ability on been are

Arkadiy Dobkin

I very, very would answer short.

in So some consolidate in ability pretty to I now. right accounts our think we're creative

reduce the we inside accounts. the think budget of I

Jason Peterson

think I performance would success that had you'd you services financial in there. some indication that see certainly that have some give we

Jack Nichols

thanks. consulting consulting you And services Perfect been more investing much your you've are about in capture Okay. have and talked able business. your resonating to how investments How customers? those within

Arkadiy Dobkin

Yes.

quarter again, I examples. progress, just consulting services the we're in implementations As do the drive the like we're quarter. of again, happy platforms. value create pretty we creative. trying to with pure getting in we just the earlier mentioned And like to think, more to market the that we kind in our in higher cases chain the of chase these game activities it's of sure and And kind not tells not times, get consulting new which use capture consultant many, step do as business, much consulting and we're many with clients to actually into can we trying make the we're conversations about a are practical as after But the getting next that the

Jack Nichols

Okay, great. Thank you.

Arkadiy Dobkin

you. Thank

Operator

Piper comes Our next question Arvind with Sandler. from Ramnani

open. line Your is

Arvind Ramnani

and are of technologies is blockchain, those you and emerging add, you congrats working a are of to on great the with technologies, I to back, working capabilities? becoming question portion your were of that you on that couple kind some the see blockchain working blockchain, are to similar quarter. like a of it on around of like of the stuff starting of of a In kind on. I'd years clients? is meaningful -- kind in And interest AI that areas in have sort a you

Arkadiy Dobkin

infrastructure still but AI this. portion to and preparation is I any application. pickups again, advanced I say but new well. it's And the a years We last think in type difficult definitely it's because, a definitely support normal some small also It's like well the relatively part what's several technologies that significant of future while as see capable think a finish we of engagement And in other driver it engagement of to accelerate blockchain in might this data happening. create a lot with of would to becomes

Arvind Ramnani

really you're client mean, which I -- fast or Great. like are specific Are many is technologies is mean interest? high there that areas high said, kind levels growth very it you're a really things. I particular could but within seeing And guess your of there digital extremely like different But I digital of that word. broad within broad, really just digital, seeing growth?

Arkadiy Dobkin

but modernization broad I a from kind, now. wouldn't And And anything everybody prefer specifically clearly, a different this, again, would things driver. lot right about this terms. think wouldn't even I talk my I of cloud around all I very knows important, and is call are that

Arvind Ramnani

Thank Perfect. you.

Operator

further to are back I Ark the for any to over no There closing questions. call like turn remarks.

Arkadiy Dobkin

available today your Thank you, David participate. time have as everybody, to And you to for know, questions, if help. you any is

So much. talk months. to in you you very Thank three

Operator

Ladies may conclude you day disconnect. and have great gentlemen now does a Everyone this program and the

EPAM Systems (EPAM) 6 May 212021 Q1 Earnings call transcript