EPAM - Earnings call transcript Q2 2021

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Operator

Good day, and thank you for standing by. Welcome to the EPAM Systems Second Quarter 2021 Earnings Conference Call. [Operator Instructions] Please be advised that today’s conference is being recorded. [Operator Instructions] I would now like to hand the conference over to your speaker today, David Straube, Head of Investor Relations. Please go ahead.

David Straube

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

epam.com would With have the and Dobkin, Jason you not, Financial copy remind President; available If Officer. Chief I a CEO and Investors to today me on section. Peterson, are like Arkadiy is in as company’s are made contain forward-looking may release listening those subject risks filings. today’s to on that the some of call described and SEC and uncertainties, These earnings the statements in comments statements.

I’ll results Additionally, to and to over are references quarterly been With the all now have in of Ark. said, reconciled available the reported earnings turn measures that GAAP the section non-GAAP in located website. Investors comparable call measures materials our to our are that

Arkadiy Dobkin

obvious. blend functional delivery and us have consulting capabilities we’re general. with smartly that management. find which reason why, of simultaneous we application help ways the approaches We seeing well you, share growth software-enabled notions of of of everyone, see integration experienced demand Good work that part Overall robust multiyear pushing with new continuous services, risk has of and QX current both clients forward. growth our both most and not new all expanding the and We progression exceeded our quarter manage been surge way, technology development finished and into earnings XXXX. On addition, are a services thank rate for strong in joining different that. the verticals engineering and to in are doing demand and design bring and very product very terms. currency sequential And for by multidimensional historically and million, of product to strongly business fast levels. cloud type $XXX is large, uncertainty The cloud XX% them another in are requires experiment the morning, This reflecting with carries top quarter delivered talent, client Non-GAAP you at rate strong [indiscernible] very that now. we driving that we consulting models for All in second stake of geographies as it reflecting corporate us we scenarios larger new demand, for fulfill tough visible very results much data But XX% know in maturing our was implementations XX% year-over-year and means than that of for and budgets and All of a $X.XX, have as have and increase very per years. same very Growth efforts demand and results current broad over today. industry source our we is the postpandemic our and together transformation across and development portfolio growing industry over as look market really but both a all engagements in And greater demand based. portion very with collaboration numerous become coming of growth. with today. need need $XXX an set on customers only in customers. now application in good to too. environment new of constant sequential revenues the quarterly revenues industry expertise, and David. new pretty Thank strong quarter were basis, and reported more verticals and our in to will that million, strategy we a our By of management scalable short, reason integration to In all

to and to operation nimble manage First, global demands. response business made operation. our new increasingly that have even platforms introduced practices COVID us to in certain And customer adaptable digital an we more responding internal created

establishing we Additionally, globally base a geographical approaches to domain our XXXX, also more have repeatable throughout focused drive across acquisitions. capability and on organically while delivery growth and both footprint expanding diversified through

and That example, for ecosystem we Finally, our [working] partner our of industry choice a cloud, constantly that innovations. position aligned incenting digital are partner includes, closer with for more as EPAM and vertically community XX services participation open-source over EPAMers active and Alliance overall. projects, MACH EPAM among in the to in X,XXX company #X contributors continuous top global of EPAM contribution makes the and the open-source solution which

both highlights some becoming our software-enabled to seek top fast-changing addition and clients now strategy consulting areas simultaneously. [motion], exactly on scenarios. of It’s expanding because the EPAM core of services important client help of priorities, demand now a with growing in remains of their bring for we our of including industry advisory implementations functional established strategy already And which Continuum capabilities. business number businesses Let’s on one across

delivered and marketer fragrance a of and where responding transformation we to a industry, chain. and progress the consulting with segment, own shift and beginning and drive illustrate wider last operations business model. with data luxury overall providers care solution even in and several to customers, uncertainty; part large-scale to products the in supply efforts; at well information haircare analytics stories the [quoting] technology sophisticated that This a specific optimize sharing with their were the During and massive client undergoing like Today, the our changes connection American assisted calls, we the most global to their platform deeper It’s prestigious of of multinational the transformation to we retail one of modernization pandemic because few engagement. we end-to-end is brought the retail global consumer which the would We industry range in increasing where where their shorten and one manufacturer gaming helping cloud health programs. end-to-end story. from performed of our from to have are the pandemic of the impact client the skincare, was examples we makeup, across to a highlight industry, of our

leveraging consultation results We regions, their on performance their platforms with largely are online. supply consumer of even a are a and internal view analysis, external here It’s including digital predictive strengthened several product real-time competitor geographic and social ability for during that ways. user had the apply consumer consumer closed cosmetic to to conversion virtual addition a in functionality brands. and behavior a that major engagement months The based their control technology, across company develop the developed will acquisitions driven so platform, chain, to EPAM trial sales behaviors, connecting consumer our blending world the rates stores a of already be to placement events believe to repurposed company by be supply shifts tower of optimization better can cosmetic the and the consumer the engage future we and their projects digital journey the obvious points, create consulting, working technology creating in consumer media a and physical platform driven and AR/VR capabilities. business chain multiple and trends. With buying form with platform in The across stay, data increased were weather latest project index, engineering and digital virtual production equivalent engagement using This and when analytics new data and pandemic markets. consumer to the allowing the happened their across a and

of topic the talent. to now move Let’s

the supply players the be continues While major of is in continues to our all in sector, EPAM Europe that and talent in grow and challenge rapidly by to of Central the India. faced Eastern

couple expanding operations acquisition and Ontario, in digital in Latin share delivery hires In more more details location X,XXX which Additionally, organically days total, of We’ll just we couple ago. of and also just a engineering we QX, Colombia our of in we than the America are opened closed in new net have increasingly, us addition minutes. X/X company, Continuum a hires the -- hires welcomed consulting dozen technology delivery in to from university Canada of with expand senior-level in of experience. joining EPAM with North EPAM, experience lateral The allow to our American industry new in penetration business market teams with talent company this one programs, and our locations the in extensive in a market and, our locations. last our geographies

historically While we XXXX, In of new via Europe, acquisition. approximately X,XXX added capability year we joined basis. a had EPAM, in brought on have ever first also the greater consulting what total, than half additions a number full net in

at bring addition We continue rate, the accelerated our significant believe development, these upskilling in make an to in talent past, investments maintain to As to in and educational programs. hiring global that we to platform internal capability enterprise to AI increasingly analysis to our level in us engagement new services talent, continue progression and of deploy customers. our a will higher-value and global investments,

and our while this the while Recently, talent more compromising technology-driven Last strategy tank consulting of via footprint our expanding allow think made week, Zurich. presence added should also digital us of capabilities services that closed EPAM’s in footprint in it continuously in the M&A to CORE transformations in our engineering also extend and of also time, consulting We without and believe week, presence to key a our quality strengthen also we shared companies the acquisition being EPAM will delivery geographies. Earlier with our IT we announced region. will of we London about strategy acquisition Dubai, we acquisitions ensure costs. engineering our standards Last SXN, X news consultancy company. our all efforts. this several software and specializing SE, scale, CORE DACH to X extend Berlin,

Located platform a Seattle, learning, to presence and data Latin for development the America [indiscernible]. expands forms machine addition and In acquisition presence in Washington, primary of with architecture in company Bogota, application in SXN the Colombia EPAM’s cloud us, expertise, specializes geographic ops. in their second, and

new extremely pleased to by are firms. and X EPAM’s extend those offered capabilities talent We

rapidly our say more who and that, We like already on analytics, would that to to our which we let on specifically the hand shaping is deals sales Regarding recent M&A QX call additional our the see force business to We over some area. are in from areas activities cyber [indiscernible]. the our close recent With update and fast-growing of in acquisitions, date. should specifics Jason, within contribution EPAM to offering as our largest PolSource, provide one will results I XXXX accelerating visible comments new the efforts such activities outlook. me with related advanced go-to-market

Jason Peterson

Thank you, Ark, and morning, good everyone.

XXX our year-over-year constant a million, and basis reported very increase basis second revenues in are of industry $XXX.X reflect of delivered reflecting foreign terms, quarter, XX.X% growth and of with geographies. EPAM pleased points. We QX of range across a a verticals on strong exchange a broad which In XX.X% results, the impact positive currency

substantially ability quarter’s was the to This delivery improvement extremely strong capacity expand for services. in company’s in the revenue the growth continued driven EPAM’s demand to by response

industry to automotive strong and delivered and services, travel on growth vertical manufacturing year-over-year the very and sequential across telecommunications, Moving performance. and consumer, energy We financial industries.

XX.X% their end from each new transformation services growth grew platforms providers. management ways payments. grew to core at from strong payment Looking clients, modernization quarter, year-over-year addition in strong, by coming with travel verticals, and customers. the associated driven wealth programs are industry our broad-based insurance they consumer across platform expanding with by very and banking, different of consumer Financial transformation retail real-time was very to Like performance large-scale driven for who and applications, initiating of to last and connect growth payment our and as both look growth XX.X%

grew XXXX. terms QX verticals of Europe, XX.X% from geographic in both From grew consumer or And services XX%. clients contributing revenues, increased a grew region clients North currency energy, our plateauing quarter. year-over-year hi-tech the in currency. or XX% while QX. In in first XX.X% in finally, our emerging grew year-over-year X.X% in XX our materials, having XX.X% Life driven with XX.X%. health half growing our top Strong in grew in a Growth XX.X% media growth with growth by represents grew representing in information QX, revenues, income delivered APAC & manufacturing constant or comparison experienced XXXX XX% constant revenue programs of And generally with XX.X% sciences growth revenues and growth travel XX.X% XX.X% in performance the the the substantial representing outside several addition reflected America, automotive. XX.X% QX the XX.X% same perspective, XX.X% our and tougher currency. constant constant QX delivered our care across the customer portfolio CIS, with quarter. year-over-year top and and statement. quarter & currency. year, last XX.X% of quarter the late growth in telecommunications, in our resulted now in those moving of And Software diversification year-over-year Business clients clients largest finally, XX revenues. in and to to representing and down of our financial revenues, grew in XX% X.X% our

in at Our in the XX.X% QX locations, XX.X% same XXXX certain XX% margin year. with for manage XX.X% in of quarter SG&A elevated which we staffing the the compared last the compared of year. GAAP was to to year. labor to non-GAAP quarter GAAP same Non-GAAP to for compared XX.X% of XX.X% gross XX% revenue half gross for XX.X% margin rate last Gross was quarter And costs last and in last QX degree rotation. SG&A first in was in of expect increases to year. revenue of came the reflects period some of compared margin

quarter our While relative dollar $XX.X historical quarter or year. XX.X% $XXX.X was of GAAP to spend QX the revenue in compared the year. $XXX.X increased, income was operations million Non-GAAP the from compared XX.X% of QX or million of remains has in revenues or absolute lower in or averages. million income of last operations million revenue the percentage XX.X% of to last revenue of $XXX.X SG&A revenue from than XX.X% in

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

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

flow QX associated tax ended $XXX.X cash with flow and operations in quarter million QX, to compared year. quarter cash lower as higher income XX flow the Cash cash XXXX $XX.X compares the and payment absence Turning quarter, levels of same in available of the of tax our was government deferral DSO relative Free million cash and programs. for level and payments was million made QX The QX days days At cash free to $XXX.X in flow XXXX the We balance QX DSO was in part in in corporate XXXX the compared with from COVID-related made to of XXXX programs quarter XXXX. in the each billion same million changes in $X.X of XX quarter $XX.X same to days last last approximately equivalents. of QX end result sheet. cash in XXXX of XX year. and was to QX the in

maintain of to the same the around for expect remainder We year. level DSO the

designers metrics. the a We than ended the with engineers, of increase year-over-year and Moving operational quarter consultants, XX,XXX XX.X%. on more to

XX.X% last headcount XX% employees. QX just total XX.X% year of Our more to QX was XX.X% and compared XX,XXX in over for of employees QX in grew than sequentially. was Both groups XXXX. Utilization

coming now least basis expect SE at XX% demand to meet guidance. strong and closed last behind X% are our outlook our We we CORE the favorable in a XX% Revenue and in impact. basis headcount growth now scale XXXX. reported this our in be approximately factoring contribution first to least outlook. after robust currency for foreign full increased turn ability a us, let’s from XX exchange will terms order revenue we year confidence a demand, environment be half will points months, constant Starting on business at to Now production With in with raising in SXN. of approximate and including now XXX acquisitions

XX.X%. XX% on We the in range now will strength be anticipated And in half of GAAP and income percentage first will our XX.X% non-GAAP a based of range to operations XX% as efficiencies now revenue. be the in from to from of spending SG&A operations income expect of ongoing the

excludes tax excess per GAAP continue rate to our expect XX%. rate, to share. to We related approximately now compensation, be which approximately be non-GAAP tax effective our and effective XX% tax stock-based Earnings benefits will

year. for EPS range full the to non-GAAP $X.XX for will range the in full We to will now in be $X.XX diluted of GAAP of the expect $X.XX $X.XX that And diluted the be now year. EPS

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

For of $XXX range QX million, the of XXXX, rate in to to the year-over-year approximately be XX% producing of of revenues midpoint $XXX expect we growth million a at range. the

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

to expect XX come in from we closed now we Lastly, last revenue the contribution points XXX basis of months. approximately acquisitions

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

tax We non-GAAP which expect and stock-based effective excess tax tax approximately rate be effective compensation, to GAAP approximately to our to be excludes related XX% XX%. our rate, benefits

in $X.XX non-GAAP earnings the expect range be be to to for share, diluted for $X.XX quarter. $X.XX of of in $X.XX to to EPS diluted GAAP For we per and range the the the quarter EPS

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

that is Finally, QX non-GAAP support $XX.X intangibles $X.X and million few expense a for in be the what to approximately call support foreign QX. questions. key $XX.X be Operator, quarters. of QX. XXXX million our GAAP and Stock-based across of with each approximately impact with expect for in non-GAAP strong we we excess is remaining first approximately $XX.X of business, Amortization expected to is around and assumptions to QX be effect in benefits for million pleased expected remaining is the QX. in strength to approximately believe summary, in we compensation a around the measurements. combined million adjustments which, are $X.X million up be be finally, QX million $XX.X a broad-based loss quarters. in results, the Tax of of each for The QX $X.X $X.X expected see exchange open In to our million tax and to And performance. be million will XXXX provides very the half expected let’s we

Operator

first [Operator comes from question David Instructions] Grossman Our Stifel. with

David Grossman

obviously more quarter volume it was And I that year you, to envisioned guess, like, being the very earlier driven it in pools labor very extent, It’s strong strong a your and sounds to some outlook. a ability and difficult. access

Did the of over you evolved X you what of changed enabled months something insight the X maybe us some that that kind course more break last labor? access something in the you X help last over Were what better just can So different? understand, the into to market? months. Maybe doing or

Arkadiy Dobkin

it about which efforts, most America across U.S., think months I X markets also to markets we ago and was the Europe in Western in efforts ecosystem. how multiple well. happening but exactly were we of were in in -- and only would pretty I even the were Europe Latin our before. anymore last the not before even in confirmed not work in but to looking grew in were diversification, grew people delivery started of be, in talking -- sure what were we across fruitful and necessarily couple even aggressively Europe quarters as growing much were location. more And And well And than at not we But the we India. some hiring we started that more anticipating Eastern we going different like we COVID, but existing think results

components of this. across it’s So I multiple think

David Grossman

effective specific, driving that in ability So was of Ark, recruit? was that your thought you to initiatives among anything kind particularly there those

Arkadiy Dobkin

with which Again, Eastern for growth in based, one again It’s to of exactly becoming broad us Europe I addition another of source happening. magic is don’t there kind point think before. India was

Jason Peterson

Yes.

geographies which a recruiting. probably David, So from we were range of broader

a resources within bring gives ability in us the mode that to staff and we’ve countries even of geographies, probably are that distributed in in the recruited. Additionally, staff traditionally different to more access sort

and So then, that we’re I to think obviously, working hard demand. it’s both just meet

David Grossman

gross mentioned with labor pressure the pricing. of in Right. costs remarks from higher margin about to some think offset And you I ability the prepared your

were keep had So time, the you I was going your under -- trying to pricing to clients who down year think last where duress. unusual markets with labor that year this same up, pricing at

So is of normalized the first a a environment? back something did in half -- start change Or going that the to to to going year? that’s more more that’s that prospective of thing pricing

Jason Peterson

Yes.

different see of ‘XX, increases. than year, I in year think different even than So and getting prior we’re years, midyear probably XXXX that even last to the certainly this things one and rate think the is which we of middle beginning are I is

take So and up QX. increases to last we that we’re the are here then expecting as greater-than-usual in XXXX. I as rates we call, working with see is clients And to entered clearly, to in even discussed rate begin

related So account there’s on strategic to prioritization a even some focus of of profitability obviously, and, the both the There’s real staffing margin. nature client.

think side on certainly same are inflation elevated still I to in time, an manage that have at And so improving. pricing And the wage the environment. we dynamics the

David Grossman

year, is sure I the mentioned And XXX from... right. Right. make just Was the question think acquisition just I one quarter and want for you to last third the bps year. I the got contribution for XXX it that

Jason Peterson

Yes.

bps it’s and XXXX. QX bps it’s XXX So for XXX for

Operator

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

Ramsey El-Assal

I this you the had ask to to delivery. more Is -- repeatable that digital confidence more to is year of bit? Is business? part that raise of drivers Or with the create one guidance a mentioned margin guys in expansion inspired about to little platforms more you the of an kind and overstatement? wanted that giving COVID margin you you approaches full of what’s

Arkadiy Dobkin

actually I we to more kind related able margin mostly how the of to actively. It’s and operate don’t to in -- and the it’s talent and deliver that bring benefit. be to how believe company how don’t manage

grow we’re So right now. while employees and as deliver will probably -- we growing and

So...

Ramsey El-Assal

Fair enough.

the Or update the consulting of work your terms and don’t there or broader of guidance. cross-sell. in To bullish share your on could If table? on -- growth comment of you kind with comment engaging be can more part in in terms -- on great. of us just what give of on degree strategy know has accelerating you that, I an getting Okay. what also, And you it’d clients then a driver consulting could terms your played in

Arkadiy Dobkin

I previous is much not change comment. there think large, at from our

separate -- be to separate What end-to-end client end-to-end able in trying advise -- we And story. not line completely for more like consultancy. more to build -- we’re trying teams, to experience must solutions this business to these designers early of complex and We’re and in deliver accumulating be understanding definitely we and see including how opportunities. in more were the progress and bring multifunctional engineers, like consultants

for and I pay think as So in the the probably strategic higher dividends. it’s some starting saw chain to bring -- go during And that services is advisory even And value from to and type what months also engagements XX experimenting we segment. we we now last some well. us were need decided the were area, we these in single too. which one in in going And invest Europe acquisitions of exactly is to level, this engagements, and of strategically when this to with were this

margin But be and make impact benefit maybe that that still in hoping think more situation. to to able we’re would we in I going work it’s prove potentially we the way. this So even short, to have

Operator

comes with Citi. question Our Shirvaikar Ashwin next from

Ashwin Shirvaikar

-- But edges Are in you times you Does I quarter things? go higher. bit. that your clients the In view want CORE acquisitions for first. much coming software around don’t scenarios a prepared a you Congratulations. to like many business per perhaps Outstanding said you in all remarks, software-enabled ask to company, that any viewpoint becoming the you implied want conflict, I towards your see a company, is here. that more do to to services tweaking employee that of revenue alluded around you’re about Ark long-held change those software little way? the channel

Arkadiy Dobkin

most solutions what’s the still standard not necessarily packages. because of custom almost and more enterprise portion the previous I on relying could we’re about how talking portion consulting like think opportunity actually to build and happening real software time very with it’s question business us models the significant when solutions new require the in how much to of of enablement, about related development understanding drive for

increasing own we some we’re enable or So models, is there developing exactly to But an for have build the there’s like can would we and At not our it. this include with we would strategy new the solution like the then which But business typical years. accelerators what third-party the parts mostly XX%, the implementations of of it final this chain, but on standard our of like And build with not right mean. advise. if today advise actually and solutions the that’s model change traditional us same software even then should combination we custom top more of solution help from -- some code look business with portion time, our start again, But that components sometimes of over components. level and including components. with much some would exception in to early and implement consultancies, helping the to it’s value XX% only

Ashwin Shirvaikar

had that then last given that Understood. might Does outlook those verticals But the of fully results. business, Understood. impacted. would what how reasonably all in seriously you And to year, much being recovery come from or of kind is a of certain seem Or recovered? very were impair raised parts some is there certain may hurt helpful. this question current verticals like That’s reflect outlook still the have hard from last quite obviously, year?

Jason Peterson

below media travel reflect but the see We life we’re customer although in would hospitality, sequential coming still a deliver few results to & will that some our going the a improvement, growth of are some still the growth to the do business year. and particularly of company sort information to beginning outlook market our in revenue necessarily possibly verticals. strong got And where end for growth expectations would programs include produce annual opportunity remainder sciences fact But the growth. an not that some probably in for I we’ve QX. to average feel is term, & there’s our that say impairments revenue continue healthcare longer for that of think we

healthcare & run you might And high. life growth is of a And course, see at so rate. company rate growth quite lower-than-company somewhat that have sciences the we’ll

be mean single means doesn’t just it’ll something, that digits be the lower it So or than average. it’ll that that

answer So a lot said I there. don’t I’ve Ashwin? your that question, Does know,

Ashwin Shirvaikar

it Yes, does. Yes, that’s helpful.

Jason Peterson

Okay.

Operator

next from Stanley. Our Faucette question comes Morgan with James

James Faucette

how are utilization that the I a utilization of bit quarters? there’s down coming ahead was kind the evolution of more XX%, little you. over should for how I perspective? like you which wanted capacity from stay thinking can still bit -- around of And sounds ask about being to curve long a you about How we by kind struck think

Jason Peterson

Yes. unique I for us That to XX%. mean unparalleled then utilization kind for this But QX of that below in circumstances due ran very, have really XXXX. XX%. And us. almost utilization of very high utilization of sort was was we traditionally

now looking when you we XX%, ability clearly, when think once limits that new to you -- get and do grow got you’ve for does or it accounts your new you’ve to So it that we’re didn’t expect, got accounts resources.

You much as don’t bench. have availability your on

a believe maybe below And probably so we think place high the XX% for us that is to running better in XXs, somewhat I probably be.

we’re half the in XXXX. that to elevated somewhat of also We see second going think vacation levels of

XXXX. is model would half second what below XX% So right of in now, the utilization we

James Faucette

and as then areas That’s resonating to hiring far trends you’re past on an tool wondering brand adjust what important comments able Okay. just locally. -- regions. as is you EPAM are And and needed based hiring -- these how made setting itself Ark how centers to good it as seeing and new you those delivery and up in hiring been around new the hear. that’s in the in adapt it’s retention trends? And in being I’m for

Arkadiy Dobkin

enter of we this additional or grow traditional operate EPAM. to market distribution level would brand in region, they time more I had created same portion trying inside of different Eastern both the and across have in hired, ago. visibly DACH for India the years are would we make but opportunity reasonable. new different companies the we than hope be if It’s we recognition the for how additional of our very level very which think this from very engineering in is of for different services, illustrate of globally like those we’ve more America definitely strong opportunity Europe, We they with a interest curiosity in many understand and talent. definitely minds, very in of markets which some -- they’re heritage, because if very, recognition time the recognition markets do that type We... have inside talent Latin and in couple attractiveness that -- for good high where At also this of have of some pool we there experienced also, different to

Operator

next Bergin Our Bryan comes question Cowen. with from

Bryan Bergin

if resources which can to you the able your hired. you’re comment at on after they’re pace Curious to engagements add new

that pace new versus been and about thinking demand? So the what drive that hiring time level accelerated laterals, you and How are to better of of you just that? historical could And pace? has the ramp productivity levers hires given use this kind to

Arkadiy Dobkin

demand different and outlook, not EPAM, it’s because So but trends ago, ago. is it’s very there understand, we story ago different months a definitely months months just than in was -- related to different experiencing let’s general, all very XX only it say XX we very XX were not and

many in think speed year doing growing or it’s than big exactly advantages them last the purposely very you’re a process. we again, knows previous that’s hope chain -- very clients we effort more like that, case, of plus ready the experience growing everybody we also But harmonization digital the of during year. we It’s to this In not supply kind whole pressure of the direction. kind of different invest I agility to just decade. and work of whole kind and last So this work up effort today. some and in pandemic when changed whole why investment And we’re we ecosystem said experienced, and

couple So of And ago our from than for whole top years investments. us. timing of is today start -- benefiting through a to definitely on and optimal opening it actually to on going more process the we’re was staffing putting previous opportunity much

Bryan Bergin

numbers progression much to Okay. us around larger, Can new put in or then years you’re And deals any seeing ago? and talked as you giving sense far you X that multiyear a on or X as a longer larger about into engagements. relative how

Arkadiy Dobkin

look difficult number But million, with in million like number clients now. the think that’s fast if with to right it’s, at quantify. obviously now our right and and and is growth you $XX like $XX increasing million So I of very general, very $XXX

from can So this would now The like think can million, I start have very, whole we things we the And also I growing which clients like -- acceleration, -- but very I $XX are or of give like very special $XX don’t this to visible. that $XX million. million, point give only at quantified points. is -- kind

Operator

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

Jason Kupferberg

the and your on pursue numbers. Great I I’m Congrats. that’s start are individual larger, as engagements. a longer? engagements. both getting with and to larger follow-up you bigger just strategy any having Is sales it just SOWs And if on multiyear question, wondering and MSAs these wanted that effect approach Bryan’s

Arkadiy Dobkin

related up like sizes in huge point services situation things pretty like is it’s And most and flexibility the same I in to contractually doing maintain probably this clients of the business, because promising The from to like don’t of MSA deals legally, different. front. think view, deals contractually. Nobody huge, the still again, reality specific the we’re of stop before.

different very practicality, right engagements these in While are now.

Jason Kupferberg

Okay.

much how growth X, the top accelerating, XX you of any have top in composition given is top XX, clients? seen So change your your

Jason Peterson

XX what to we was in Ark seen have than is -- maybe call probably several as less. top the you with several that So cohort. of indicating X, he have our probably certainly And from top answered not XX in gone a your I’d have XX a but year or when question lot customers X earlier more the through rotation change the would

in are there’s we some and growth so imperative running they’re already real the strategic our seeing very programs where where rapidly a accelerates And top XX.

Jason Kupferberg

Okay.

last one project in-person Just or delivery? in-person any return quick. you real seeing selling Are to

Arkadiy Dobkin

asking not. probably in-person, on-site? on-site Or then -- So the if workplace, if mean people yes, asking is bring in you that it or clients me us to you’re means

is situation general in still kind mode into are think be X like probably later, regard in in consultants. the I site there on-site working. -- some everybody very in unstable. a wait-and-see weeks could of And Right movements if it’s now even

Operator

Instructions] Nolan Maggie Blair. with from Our William [Operator question next comes

Maggie Nolan

to strong client selective like client your your to over like a or which is are this, evaluate environment portfolio looks more ideal there demand or work target latest profile looks opportunity clients become an like? what you’d In like And thoughts with? portfolio an or on what

Arkadiy Dobkin

ideal absolutely we opportunity. now, there in priorities past the reviewing the and clearly the changing all Yes, clients to before. things evaluating looking And carefully are In it. But do sometimes we’re our situation, again, But finding from situation we’re to and and standpoint. probably definitely Right some. do time an it, and yes, definitely opportunities you’re right. are carefully this for constantly this more

is which And don’t make your yes, know there now right else to we saying question, how choices it. we do where So invest. again, I answer and to but

Jason Peterson

grow be are in but Maggie, those exactly growth sort in that we of was probably that coming sort think top customers. profitability of are there’s Ark potential, looking decisions our where staff we with the we at of outside of also we and to growth that where clients the type of referring terms significant choosing the and think it’s -- XX, then from attractive to will

part and resources not of think second our only into making we ability the got why newer the bring half growth the into of in more and around decisions we’re both the think to good somewhat significant but I have so is reason XXXX. company growth smaller potential And seeing that some customers you’re also

Maggie Nolan

as let consultancies then for important a might it And CORE some is And into somewhat what intend the you time? and think maybe you or separately you to for acquisition the of do, operate business? about future line these integration do the time period Okay. acquisitions to is of

Arkadiy Dobkin

doing Any getting to for which the more are insight details closing we’re kind to some because full it’s and deal. trying have time, possible more a never we of understand before acquisitions picture

the will what’s what’s So And real like is same looking in specifically, be happening the consultancies, to definitely and practically time. best ways we for to in us right now. happening

Operator

Capital. Our from next question Bespalov with comes VTB Vladimir

Vladimir Bespalov

some expect update do about And maybe? story. These to you growth come are little pipeline? could your your in bit First, increasingly deals a coming getting in quarters more you of couple M&A the important what expertise X-year the And of and outlook. take like to sort growth rates on second is the the further years, less couple bumpy. you with maybe the you do mid-XXs. from And want could we of question If do in X let’s the this M&A? stack, growth capabilities And are develop of seen close quite of like comment visibility, -- seeing with year see levels your more last ahead. we historical would levels, say growth far? your are have acceleration or historical really organic to we say, something I -- And that the kind so growth we this that the But we’re

Arkadiy Dobkin

will around of what We we very year-over-year But maintain think same for we thinking I long-term growth, to question. I the you on and our right those. think promise then let’s the out, I environment efforts time. this collection bumpy maybe of that’s what how we for exactly of us, of unknown And And extra definitely, a of above well. we’re couple journey bumpy. kind delivery think that’s as profitably again, to start us, find the putting about. If second I pressure was agree on which and now. to us -- long were XX% take grow growth with that is opportunities years, But with organic around some we’re this security I how targeting, results think grow are and improve under same the term the to last XX% at some in

this, lot again, The that’s And the was first target. good that’s the think of rest of about... And impacted I a challenge. us. changes around by enough question

Jason Peterson

M&A.

Arkadiy Dobkin

delivery. looking we’re in all of the expertise, M&A. And pipeline us, there would much capabilities what the new the and think were that before our for be evaluating for that mentioning of thinking I strategy best components, here, is We the were we not changes. market time, kind consulting

well-developed the don’t we are be pipeline. and say us. willing pretty view of pipeline. it’s -- looking a all would past, which transactions deals I capabilities point to gaps was kind XX -- the like That’s up many that closing some have and need In specifically well-developed just need closed rolling wait for today. we in of We from found general, So applicable year. other which we join like we now, to have fill. And this fill the pretty to next reflects in strategy it months? like X add we’ll better to We X Versus would how like pipeline Right acquisitions. to It see. companies of we

even and are now, most transactions -- right pretty So of those small.

Operator

Surinder Our with Thind next from comes Jefferies. question

Surinder Thind

start times provide get what how compressed done? Meaning jobs like a you it in terms trying I’d like perhaps of are can with question and color to till the like line big-picture project’s the looked clients looks a on Any what map to here. COVID, road nowadays? might have pre

Arkadiy Dobkin

clients and build and much to it solutions as well. everybody I and was anything don’t compete versus able think continuous COVID I trying continuously the to is so post visible new still higher we’re adjust definitely That’s pressure It’s right know. much is what and post-COVID to us in time? time pressure time COVID, across changed on COVID be Is very don’t know. I to there business all is think deliver mean to time. share definitely going to to pre-COVID or you perform understands -- Again, this markets or only I it because now and in continuous on we say now models creates

Surinder Thind

everybody enough. today. Fair what here guess to I I’m get appetite. is to done something understand Obviously, client’s trying wants the

the And you midyear. table? about ability the rate you’re now earlier in or is leaving able so And how much on of do at to then work maybe increases terms -- question perhaps an are

little push fits this this seems think bit should having kind how of a addition your be mean you of just strategy at into thinking headcount of bigger adding we that projects, point. dynamic? the about you what about? about headcount we There’s rate And how increases. talk then point? this talk it able I may should Because like rates projects. about Can You dynamic to longer that at

Arkadiy Dobkin

What as growing I months pool cautious we talent as very we good would as the in to would mentioned time, same it At At time, orchestrating that we a multiple will would were somebody around that do we’re can efforts, quarter confirm we this. that more, much better probably be ago additions of in without the quarters. at understanding couple a with as think achieve we possible. we we’re risks. we be in that’s but growing past. would how to our Maybe will of thinking that per same today, will we’re quality our X,XXX speak than happening see us something kind reality, we well now, thinking say before, be Right you X be question. the looking in it’s So tell get be if we now like because for

Jason Peterson

And But terms conversations seeing. revenue having are growth. are the question expansion per head. clients with can happen wage revenue seeing the lot a helpful. time, about Certainly, Yes. what an inflation of informed the we’re rate that And in increase at we’re of by the that’s is of same you

And so clients. clearly, with conversations difficult they’re

the elevated rates. with We’re helping then in them meeting we’re levels wage of inflation, higher somewhat part driving understand, around conditions conversation the is facing which what obviously,

SG&A have guide rate XXXX. us is improve it higher time, XX% And to sort at leave time. -- that for the helps margins the XX% feel that see The in at part by we full same time, likely the about we’re informed to comes with So hard want like going the over I do gross maintain to increases. XXXX. environment But SG&A same to and us somewhat demand lower good environment. when in we’re And idea demand to the we the of work the year to you’re in

Surinder Thind

Got it.

are the I’m globally to trying just of more? just in there’s of to dynamic a really seems versus But as do to invest stability this -- kinds the you out here so that that same the at And to and are clarify continue because maybe Or it there’s margin those opportunity well. time, is part, Or XXXX, things. build things how up big a understand about relative working lot structural that limitations to you is think just when last idea year? we looking

Jason Peterson

Yes.

well, we historically. So, back up

that XX% talked closer type end about adjusted XX% couple range. as a of targeted the remember you’ll we’ve generally that years, range have last So we the of top somewhat then of to to in or above. run, And

year were And XX%. in lower-than-typical of now, what so this strength the percentage we SG&A in also certainly obviously guided the of we with in you Right forward, think to a XX% XX.X% revenue and had XX.X% XX% seeing years. guided a to as to commit part because as and we I savings because to profitability wouldn’t revenue. -- as we’ve to look ongoing future in XX% wouldn’t I I to SG&A, range targeted But

well, might make So -- rate. delivery can and we’ll about at some continue back continue earlier investments a other in we’ll part think in so because, you we to grow centers to level just capabilities to us business coming high the in

Operator

you. Thank Arkadiy like And further questions time. back to I’m would to turn this currently over showing call for remarks. no Dobkin at the I closing

Arkadiy Dobkin

joining everybody, today. you, Thank you. Thank for

to if David as Thank looking in talk X any you. questions, have usual, So, forward is help. you months. available And to to you

Operator

you conference call. today’s participating. Thank concludes for This

disconnect. You now may

EPAM Systems (EPAM) 5 Aug 212021 Q2 Earnings call transcript