EPAM - Earnings call transcript Q3 2021

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Operator

Good day and thank you for standing by. Welcome to the EPAM Systems Third 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 third company’s

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

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

Arkadiy Dobkin

today. David. you, joining for Thank us morning you Good thank and everyone

aspirational and focused evolve way we that years This the organization three transforming to specific on to we which from make point hit one every without our shared company means has the out ability years to sector versions, from us leaders turning The of I old still reminded platform global in in XXXX. doubling transformational in in in analyst Day was those of our enable the and diverse, another during in essential relevant services. initial changing stay every Boston, product a [indiscernible]. innovate, the years, IPO an to post today Beginning that later, a company. we industry our investor see of the the software one were Investor our aspiration set the after longer practically the undertakings engineering day the in mission transformation, development think three first start digital with as product to during done ever exactly consultancy and Each earnings become journey said double services global services. and we -- would target the years. product We forehand result, when took end indicated & become earlier [ph] began the aspirational was ago, external faster pandemic done that elements the engineering remain strong used to In as by ahead and firm size leaders sense XXXX, history and in the as resulted a months to signs Three was we grow set market it validated revenue day, few of three namely in journey our XXXX, times. we EPAM post market, Analyst legend point one of and views, of to much about reference place an setting. and years, engineering in us significantly positive XXXX same we next might the the in XXXX, to XXXX our which to more our able be the On a person for goal actually softly culture. fashioned practically which and November were in analyst than that with difference was XX we a

connects for to into quickly enables our seamlessly, those in work to stated need to a also that effective to to into transforming platform we and be ability built the in processes people people to what goal, EPAM and all a company with achieve will and bring anywhere becoming this respond the adapt transformation us engineering and platforms extend educational, on that we well. continue indeed, We digital do, leadership through sights change then generation to as undertaken our social, our those different [ph] strong efficient like and transformation life open lead that consulting themselves, for enterprises our with become short, current problems. opportunities integrated events for set innovation and everybody, In result, platform across we clients adaptive services, to deliver would today in who

rate that in is or pandemic QX doubling be So anymore, our that a XXXX of But our shared you we last and returning by we not the environment. situation to good XXXX would organic also XXXX. we year, for all on a our of would of will, traditional at were plus year, -- earnings reminded percent level we That of call, and that be and in certain point. in if growth post the QX were optimism, XX in November almost how experience QX everything XXXX target general realistic of revenue the last end self-confidence, saw

post pandemic we here can this our just how regarding some post today other year term in that Now assumptions XX because today, see naive looking aligning we're journey the a term will be guess, as we now an on the I that But are side, especially itself. in future. EPAM we the present. sit we time his the post at portion realizing year ago, we for is drop for the exciting pandemic were crossroads

That aspirational of and are latest time research innovation best XXXX. consulting, we one journey the helping next journey. reaching as out years been be EPAM goal responsibility. to to this of IPO led themselves. us that of that actually, ourselves quarter of of XXXX. is first our has revenue revenue have about ambition, fiscal third of exactly social in the the wisdom and We our many have post breaking much for since This about It also refer this of end result be phase is fastest intersection sight the transforming design, the our line still of And through growing company the as It that areas in and doubling and has state clients developing is it education factors year been current at to one the a through should history. includes million our we to dollar the clear our our

driving even higher In And company ago. is different in substantially excellence our strongest the one of than is six engineering companies were you today, eight addition of years EPAM space. to just levels

foundations much growth to the the the more so of our One level, next diverse result. and drive value to clients

for attracting teams. and So experiences of means we while will different geographical and syncing the said way, types the and along growth, talent, EPAM, to solve continue to different and types engineering strong scaling expansions challenges of for technical to of new our complementing the

strengthen to serve the and important that to capability needs. order of EPAM organically or in conference, each at capabilities to And acquisitions, compare an part ways transform strategy. in extension with through Additionally, identify which build, be be market and continue our done needed to we to both

building As come we our foundational future, from company, the revenue assembled last growth set we the over turn our to on and will few the billion have $XX sights to blocks growing years.

and fast modernize, native strategy, and value platforms, brings and heritage, pools, EPAM to strong connected cloud methodologies global advances, organisation by Some supported innovation out. business insights. of next enabled our our include data structures engineering the driven our enterprise technology growth customers digital on grow to the consultant services continue leveraging [indiscernible]. our guided application API engineering talent and educational, questionings. This an data of our High experience each focused generation massive consulting everywhere, development, market enabling and of the inside social, billions And and by leveraging Data data cloud drive together by integrated from and is AI through delivery helping and technologies our initiatives.

together. record system vertical Lastly, we will partner market continue focus and aligned solutions with our go expanding and and with to map developing into vision our focus on joint geographical our

moment. So pivot into the current

are short on to prominent be will capabilities presence America. EPAM geographical strategic Latin have continue -- As acquisitions already I we in our cybersecurity, time acquisitions, a strategy. current part consulting, five extension enabling and us closed mentioned expand ago, Salesforce of to our in analytics, This year, and which a

seen in a marketers products, user they more across Group. planning Belgium, and Europe, East, and Middle will XX is the Africa to acquire others, buying, have experience the headquartered areas, solutions, branding clients. or intensify which my our call has filings specializing ability about in experienced and studios recognized than including countries recent agency and how retail, working creative content number deliver service to generation acquisition might design, increasingly intentions range regulatory This XXXX digital employees agency personalized in next of of into across a and media also global America. North digital themselves and and commerce are our production Emakina in Emakina globally and You

now time company Newsweek the XXXX and strengthen EPAM very in Age’s So and Loved that not, in Of services addition, and just world, already the growing the XX number year, for the America's East. overall in top to it's IT Services we the Workplace included our right while XXXX significantly working us market the only among agencies first Technology Most us the number the actually time in on to the included is one companies position on Emakina in positioning the listed the XX worth that fastest Ad consecutive agency and Magazine add ranking in across EPAM EPAM and list. EPAM seems hundred XXth new capabilities as Fortune noting will a days for Europe ago, list. few first category. It mention list third Information published Middle like are And the moment largest

and an market continues like to turning to all our this third strong. time provide for to XXXX before we across our Jason be more while on very one update I the So outlook, our And services see to demand state, would segments. quarter results

loyalty feel well engineering overly precisely end, very while into complexity our services need to we continuously and to become requirement. real build end in on overall culture, is constantly also why expanding investing we demand strong higher in And our continuously our are this understand we We strong is they challenging. But areas, breath We across committed to cannot in to not an confident. this shy way. about engagements And unquestionable our and bring that a as [Indiscernible]. new we to the is thoughtful before, so growth globe sustainable everything high are do push the clients. We future to understand because are very into

differentiation looking call but for compromise through is if to EPAM. With EPAM delivery over for, as on me for anything, ways that, the it's the to importantly the to our of So quality let constantly also known not not customers, Jason. we only as turn establish are for and

Jason Peterson

a quarter, And reflecting range Thank morning third across and the delivered you, everyone. results, strong good demand services for very of wide geographies. Ark. significant In company's the EPAM verticals industry continued

our of currency terms, constant a in positive and while of ability quarter. During generated with XX.X% combined their to recruit quarter, environment, to revenue change XX.X% for levels, result robust on drove expected a a at revenues $XXX.X talent help XX reflecting EPAM A the higher transforming EPAM impact continue turn million, demand year-over-year to than of record basis reported retaining the points. a businesses. for continued basis, increase foreign Customers

transforming customers customer experiences, industries of We range full improve our finally and harnessing continue merging growth, range retail physical to and we serve, and create and resulting digital including, across revenue of to supply digital applications products experiences. support chain data businesses across the initiatives, the new to and modernizing a superior and creating operations

of very and industry from strong Turning our consumer by and our performance XX.X% verticals. consumer clients. both to the Travel driven grew retail growth

asset broad addition, based travel customers. Services grew return our across insurance, growth and renewed demand saw banking. from strong with to XX.X% In Financial payments, coming and growth very management, we

and while or Business emerging quarter. verticals finally, grew delivered Software grew terms, delivered information grew QX XX.X% in X% top XX.X% grew And constant and XX grew XX% XX.X% growth and XX.X% revenues. a in and XX% greater revenues X% year-over-year, representing constant year-over-year top XX.X% currency revenue clients manufacturing sciences grew of constant representing our quarter. XX perspective, healthcare our diversification hi-tech revenues growth From our currency. media and telecommunications, the our and XX.X% or finally, XX.X% of APAC QX resulting in And XX% in Life grew the year-over-year, of geographic in of or our revenues grew Customers base. by our our from currency. North largest now driven XX.X% QX, constant representing in revenues clients year-over-year, XX% currency. energy, across and outside CIS, revenues XX.X% region in automotive. XX% our America In QX Europe from XX.X% represents XX.X%.

in to QX $XXX.X in or QX revenue XX.X% of the of for the million, year. year. margin quarter from of QX GAAP income XX.X% SG&A million, XX.X% gross GAAP our or beginning levels in of the And XX.X% last statement, of in year. for revenue outperformance of revenue the same to margin operations the versus of XX.X% income last the down XXXX million or of year. same by impacted was last Non-GAAP Moving XX.X% compared the GAAP XX.X% Gross compared quarter quarter operations came SG&A of in gross in compared revenue in given compared XX.X% income XX.X% revenue was year. the or our from funding quarter the QX XX.X% million to of last of XXXX at variable was Non-GAAP QX margin $XX.X the higher was for in was XX.X% revenue XX.X% compared fiscal established Non-GAAP $XXX.X to in of programs, last $XXX.X was year. to company's targets for last year. period quarter, compared compensation at to

effective GAAP of stock-based came a the QX benefit XX%. of to a compensation, level quarter guide and tax for our to tax at benefits to lower tax in certain expected credits. Due rate one-time versus Our than related XX.X% excess related

which basis was the credit tax non-GAAP was benefits, effective XX%. on and tax GAAP excludes Our tax per includes earnings $X.XX. benefit excess share one-time a the of Diluted rate,

or non-GAAP million there shares QX, XX.X% $X.XX, diluted EPS approximately increase In reflecting were Our was XX.X in quarter over same diluted $X.XX the a XXXX. growth outstanding.

cash to turning net of for XXXX. of in our to balance flow sheet, in cash the $XXX.X QX XXX% in of restricted compared $X.X $XXX.X ended same income acquisition the the compared year. the $XXX.X million conversion billion free Emakina was quarter million, equivalents, last $XXX.X the We with related cash flow and to flow from cash produced million Now quarter operations adjusted did which and quarter Free of approximately to Group. million include of same cash cash cash the not flow

million compares allow our us credit both the replaces of days borrowing which new This giving million additional the a additional allowed expanded to total Additionally plus At DSL XXXX quarter to access billion facility, in and October, via XXXX XX last via year. up XXX facility and funding we up in and an unsecured capacity. XXX XXX credit in facility, to was QX, updated to will the for with same XXX million XX Accordion. for which million QX X for end an of Accordion, borrowing days

the lower around QX. DSL same maintain to somewhat expect We level or in

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

quarters was and in XX,XXX Our than first total more XX.X% XXXX, XXXX. of approximately for month XX,XXX headcount was a three employees. last for XX.X% nine year, to QX a QX Utilization over additions, period. had the EPAM compared XX.X% in number net we QX, In record of

we in Based with on environment results combined production let's scale Now our the guidance. to demand a turn for headcount, continued a and confidence year-to-date robust XXXX. outlook are ability our business raising

be XX% factoring a at previous After in reported currency basis, terms, and XX% least XX% excluding On growth compares full months, currency provided at XX% our exchange acquisitions the during approximate including be basis in revenue and points QX in XXX foreign XX%. outlook, XX% of call. in to constant Emakina. growth least with favorable of contribution will will X% reported, approximate constant the organic revenue This least outlook currency year basis, an terms we our impact. in growth organic at XX last now full constant earnings currency we revenue now from an which constant closed will after revenue starting be So an year on

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

mentioned GAAP expect continue tax We the of approximately I certain previously. tax to our effective rate benefit be which includes to XX% credits

Our will excess excludes stock-based tax compensation related which non-GAAP be tax to effective rate now benefits XX%.

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

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

$X.XXX QX on $X.XXX XXXX, to range range, revenues favorable rate growth with we of For a of of approximately in producing of to the be billion to billion, growth revenue XX% the impact at expected foreign the of expect year-over-year midpoint the be minimal. exchange

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

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

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

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

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

the expect million. non-GAAP are Tax tax be pleased few excess to in quarter. our adjustments of fourth a XXXX million. in be key Amortization that intangibles measurement record we $XX.X be fiscal million around QX the benefits compensation year. the quarter. Finally, loss. finally, of whether expense be be GAAP in The exchange expected approximately we $XX expected foreign In to around are summary, expected $X.X Stock-based producing approximately million to $X effective is to non-GAAP assumptions approximately is growth support to impact our results expected is And we and $X.X million. to is

traditional our believe excess outlook too XXXX, to elevated of in early guidance greater XX%. business annual an support we growth demand continues to view While it for environment is detailed rate of our than give that a

growth achieved maintain XXXX. year the it that to important believe than coming establish in also rate a in we sustainable and is more However, that

provide we done view in Operator, the of detailed the open in will our call February past, QX we have earnings call. for on our up XXXX questions. guidance let’s As

Operator

comes Cowen. Bryan with Our Instructions] you Thank [Operator Bergin first from question

is open. line Your

Bryan Bergin

good some morning. the of the wanted your spread despite headcount normalizing. growth It's about widened sustainable key I talk Can between level utilization that as Hi, to revenue versus about difference? really drivers as for ask here, growth. the there well you

Jason Peterson

to somewhat think last think geographies, there's improvement over bit with in calls. we've shift rates as of geographic we associated And probably then different couple in some a little a pricing, to continue of I rate them. have discussed the Yes, see standpoint that from the higher I

to some think over of as improvement to And sort And you our so continue we retain add might headcount. about, see think definitely like to time. talked increased more I capacity specifically headcount and I we've we've feel

in that somewhat we at to in so little what lower of on a in expect headcount will to will people December. joining headcount QX, relative But greater based historic we, guiding the of we're rates. QX And slowdown to month the in we add be we continue currently company than bit a think increase

Bryan Bergin

looks just outlook, Okay. And growth broad business. then based the on across so the quite really

thoughts the specifically, largest more grow considering your board to growth here may XX? headroom to some on of clients? of do And, XXXX you in how level how progress comps Just continue on put in feel any you about

Jason Peterson

see existing The bit to strong. be environment clients. continues growth of quite demand from a We

that engagements that more a We have have of also entered lot have into potential. recently of growth a number we

solid. So that obviously demand is environment quite

become organic same growth rate say sort should At we expect to increased of normal multiyear that that support the We a norm. XX% rates. organic ability time, also growth that we feel I sustainable our have don't

Bryan Bergin

Okay. headroom do and And there? strong feel those, the largest you still accounts,

Jason Peterson

accounts. potential there's, the there's definitely there's there's larger Yes, in

Bryan Bergin

Thank you.

Operator

Thank you.

from Jamie comes with Susquehanna. next Friedman Our question

Your open. is line

Jamie Friedman

maybe that Ark were me consultants, I second you drawing your him, I In QX XXXX how Two Thank Hi, out is you just Jason, seasonality experience. What are wondering, you echo you mean, ideally asked verticals congratulations. just and prepared the I was the call use with there questions, -- budgets? talent experienced experience you about doing? I remarks ask word discussing or from the I'll for was especially any Ark. And is are let then you. consultants? thing guess

Arkadiy Dobkin

of question in markets where especially… people what the the the take about I'm equation in bring paper? or applying we in we from kind sorry, people I are we So Because where

Jamie Friedman

Especially the second one Ark.

Arkadiy Dobkin

difference Okay. Oh, and there in much Most other us companies This is with here corrosion. market pretty in articles I don't simply, of the now. the much clear. I right is with think playing

this life so I financial on it to what think my pretty retail, I corrosion and journey And science. would for consumer goods relevant publishing, be definitely travel and all definitely entertainment. services much think leading it's healthcare

of it. All

Jason Peterson

guess I answer question. I'll second Yes, the

from and as And budgets of of clients to drive looking morning. for transformation. digital continue intact execute to, standpoint are good we So the invest budgets, sort

greater now environment. the looks a demand. continues supply than probably XXXX, enter which So it pretty rather what to be intact market right looks issue is a And we where demand constraint with like

Jamie Friedman

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

Jason Peterson

you. Thank

Operator

question Barclays. next with comes from Our LFO Ramsey

Your line open. is

Our next with comes Citi. Shirvaikar from Ashwin question

Your line open. is

Ashwin Shirvaikar

Congratulations you. corporate and about risk quarter. on Thank question sort the fast. to the of fast too spoken culture past, you from in I growing too the and grow ability the to the guess guys have

has scale your you as has So view changed? changed? ability Or that

Arkadiy Dobkin

just two during think XXXX I sure just XXs always happening period can relevant do to paying environment exactly It's exactly time. the all concern. relatively perspective it’s we've but that so reaches, point about a mentioned. couple believe I in reminded long We about to [ph] make the work from I'm before thinking is general later. the support of grow sustainable people during At a same probably how the put already view distribution, But last to what this. of like the definitely sometimes, late starting it's we don't Ashwin the And like and as things lot it. ecosystem at that's of thinking we will years a time, XXXX Jason even which better so be are in, talking ago, in now decoration, were time, attention of of of changing accelerated we right what efforts to years growth for same about culture the relevant, level and to create an as how our that a kind we see very digital lot from how we not were Alright, well, we think

today, I plus the because So the to talking were it it's in were will growth, percent XX%, of in levels. be what better But is much XX% years expecting rate definitely this which be case, in people and were might of sustain the when organic better future. about couple very growth will we kind our maybe we will company, new think ago, we be than we a XX very culture brought quality to quality of who be difficult the XX%, which the we on very, delivery. focusing And it

Ashwin Shirvaikar

understood, Understood, no.

growth So has with that far that things been since goes the which August. guess as which I guess, process is is separate that Emakina, concerned, right of question on you on-going good. as I type one is, which that focused

is is in area this Just scale share that? terms public see to local And the repurchase clarify would to a many you acquisition stuff yourself now of an acquiring and in geographies? of different talent terms in where the complete like of continuing lot for just

Jason Peterson

of have standpoint, little called the still remainder the bit guess, Yes, what's through their has a, XX% out a for going I been of the from here I shareholders so and shareholders. shares transferred, we're of to tender over process cash a squeeze acquisition guess, agreed

what of purposes, about that. would as company, I of that's And so, kind I'd all And I for say control guess, practical the guess yesterday. we

Arkadiy Dobkin

across in It's people in, definitely very East Middle market, improving doing organisation. proportion, again, engineering in But to continuously we're our delivery in, our to XXXX acquisition in And in definitely presence focusing a digital complementary this, planning consultancy like the on us, new we some but and to and and EPAM engineering, bring we marketing, skills, with improvement to European consultancy, quality. experience with focus making which consultancy, consistent also and related very And are doing. expanding markets. and and what is reasonable on it's of European little right but bit specifically

Jason Peterson

that in for I said we've and that the months QX clarify, results but quarter. remarks, to the think just two my And communicated built guidance of I into got Emakina prepared we

Ashwin Shirvaikar

Understood.

Okay. Great, thank you.

Jason Peterson

you. Thank

Operator

comes next William Blair. from Nolan with question Our Maggie

Your is open. line

Maggie Nolan

that the what wondering been I'm shifted seniority couple you. in the of years? last hiring of here the last of of and couple quarters makeup Thank employees you've pyramid level so in of is rapidly has the the

Arkadiy Dobkin

on at than I we doing analysis new are think while parameter we we growing definitely now. part. keep expected, infact inching right And this faster very we specific are

So We're again, this clearly more there's challenging. services new type that's term. are we Ashwin parameter kind in short for bit related of singularity doing But we is question carefully was a supported, little of needed a the people. is, bring the this. kind of we asking, more previous And to That's deliver. seniority is as

Maggie Nolan

how base? to of you've prior in the then putting number compared And been clients your receptive these through increases and you. Thank widespread what is additional an discussed client previous magnitude price And has quarters, to years. How conversations? is across this

Jason Peterson

to same which is beginning discussions increases. around the negotiations XXXX, nobody's traditional coming have to we're At of to and of around continue are rate some rate we for clients in more for XXXX. Yes, absorb time, the increases, of with second half the have increases rate beginning the of discussions likes period the a kind those Obviously increase rate also see think I than rate will than in on we've for XXXX, I based demand standpoint, seen but increase I previous that price or resources. standpoint, easier years. conversations had continued everything better global increase seeing are the strong in just the And inflation from past. a we've that are wage These and we expect inflation guess, in relatively people from, a

Maggie Nolan

that base client pretty across their Is Jason? widespread

Jason Peterson

Yes.

we've increases But bit little greater yes, there past. a probably that, I across will generally is be there's client every in different. think seen So, the clients a, that

will on rate been historically. than where kind clients higher have others they've Some of increases depending

sort to profitability years. able and certain business We as a are over level of to trying we of stable make responsibly, we've last our sort of of business the couple maintain sort are the that way growing the run

Maggie Nolan

Congratulations. you. Thank

Jason Peterson

Thank you.

Operator

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

Your line is open.

Unidentified Analyst

wanted I impressive is Jason, this on performance ask results obviously, margin guys, year-to-date. very been for here. to I great mean, has Hey, Kathy of about your margins. set

upper tracking I range XX%. to end guidance you're full already think of year XX% the your to of

guidance? there up just should the year you margin that full Just are a thing? it there is be Is of didn't curious, we aware reason take other conservatism? factors Or

Jason Peterson

Sure.

believe that of we the and income the was that quite quarter. some kind sort unexpected upside maintained guidance. of adjusted in So the a XX% which from a for result the somewhat appropriate did QX XX% operations of quarter, guidance the we is profitability the strong was was improvement of revenue to that

we expect bit traditional thing up around the in I lower a in than QX. between QX then kind have that, point that will I of and saw we QX, SG&A QX EPAM is our think maintain For levels that profit recent should the range come acquisitions And gross margins somewhat other our out of business. little and will

So more all you range. pushes QX in the middle XX% exit of to towards of of those things a XX% that kind

so forms to what year. that's the And that's kind guidance full of that for XX% XX%

Unidentified Analyst

And up. just very Great, quick helpful. follow a

the mostly to now. utilization. about ask Obviously, QX came years in number was wanted two Just about

demand obviously remains sharp So timing quarter had very just obviously, hiring of very a to or, strong. due is that on-boarding, this

contributing know to So is factors just there that wanted to any thing?

Jason Peterson

traditionally seasonal the in is So quarter. low QX utilization

it's so enough And week world, it's vacation. two think a pre to when in people on you're Europe, maybe about three a XXXX, if I lucky be vacation. guess, And or you time a go if

is year, we people when is actually their than that XX.X% saw is and saw couldn't QX leave countries, higher pretty good. so utilization low. relatively Last The typical. homes And we utilization in

And of of seasonally consistent. again, sort sort

thing the QX think of the utilization kind when in XX% above might I maybe quarters point And hotter up utilization. a out I but consider the in expect it we should usually again, other to or XX% that in come seasonal. businesses is generally guess that the There somewhat But we on no, QX. side. we with little XX.X% is about unhappy run, had a running And are We bit not at XX%. we

Unidentified Analyst

Thanks, helpful. very Great, guys.

Jason Peterson

you. Thank

Operator

you. Thank

comes next Jefferies. from Our question with Thind Surinder

open. line Your is

Surinder Thind

Hi, Jason.

which Is generated. what sustainable around expectations on the rate, and mentioned ahead? commentary commentary I that around as we is occurring we was ultimately commentary industry growth a currently operating scale towards color also for currently as some that more bit Just when on a maybe more or hoping slowdown EPAM look looking that's your the of growth at some you you is

Jason Peterson

this decades. the And a quality you're in comment strong really from At going to supporting this size. and internal with like like it's the of for think about of reality, we're is did that sciences believe basically, engagements the understanding should point, to there couple similar grow as referring and keeping demand what's sustainability to the of go the whole. the what there in talking now, we difficult our down. to assessment industry to would Because company it's the time possible, a think so very make At or in to culture as well. view, we reply point sustainability don't I to them to previous we to already to of is we no go We our complexity like, same that way of couple it's the clients, we're about our reputation from bring the possible referring XX%, if during was growth. build we sure in complexity our it's, to, of exactly -- years, really is a the the do business, and

Surinder Thind

related of outlook. and expectations around the commentary then And to demand strong Understood.

and gives As of you about you some if current ago, of thought an maybe you next things spiked number is were, negativity of levels? a cycles, for predicting what level you year persist look years, where demand, at will conflicts earlier about that there's provide obviously? at demand over you from the made past a of the around it's any look confidence your demand seems it X perspective can their the you comment we like a color where a And couple years. and down, then quick sustainable industry color draw these provide then But generally can

Jason Peterson

turnover, than what to difficult and how ago, it I we months pandemic be And be will future just impact couple that's interesting years, And will believe understand of didn't think it was changed. even one the ago, then would XX why we saw would different we the how later which just it's would years do working? And from question, quarters of predict point exactly or the the changes. happened. our that next after that demand two this several question your strong because during this be be how wave is everything be and

So unfortunately, I so. kind cannot assurance give uses of the you for next or the decade

Surinder Thind

helpful. you. Understood, Thank that's

Operator

Thank you.

Our from Faucette Morgan Stanley. next with James comes question

is line Your open.

James Faucette

hiring prepared all detail today. some delivery regions. that? your you're give to build up centers, standing remarks to being well you and for EPAM geographies? really And little regions? you mentioned brand in how making that on a going is in progress detail in are new you able different Thank to in much. existing I'm thanks which date you to very on serve How seems wondering, those Can the more the And and,

Arkadiy Dobkin

and start don't say. without us more else more the our what investments talent And what our pretty I were us it's I I sides. come And think becoming in demand and quarter easy becoming global. education sure each to were everything like where also in talent. remember can and it's quarter into impactful is There same spaces our without, saying is practically what that allowed automation comment to and time, today. very you world we're recruitment the At hire I to with will confirming today consistent support be challenges. don't we to I'm very that of processes, you is and the in breed know no challenging. think all doing

in talent kind sustain have attrition it. this net proud able And to I to for talking like level think everybody in to is point additions pretty war the we're all rates. be of about manageable relatively websites like of which level no of you media, everywhere,

James Faucette

be you've And done certainly what on and proud reason good with impressed have to to a hiring. date

far to more about recently? material demand forward? how take get across also going result versus on growth of the was just other turning is much top But there and It You brass of and and, customers. business that talk like a away, little I maybe quickly contribution. sequential growth bit your talked pretty customer own on you be seemed to want have you so Or concentration? enough that be going to on-going of maybe ahead curve is that an that that's we think you've the able some hiring how of resulting And we can about should to think Do challenge? away that been in turning work their

Jason Peterson

say actually have And I sort XX, What cohort, would market. pretty think in kind seeing you cohort. of you of rates in some that we're the in elevated so looked to trends did that the growth to de-concentrating. that at that if maybe is of the that, XX, Yes, I speaks we're

that unprepared So they management encouraged space, their you've probably to operating got way world, a end there's investments, new for of around the clients. of kind sort their digital investment was a the somewhat that with updating them few clients, significant make and now pandemic, in and the connect asset amount the infrastructure one of

EPAM additional I trusted that And who quite so say, of companies are the you've continues would And a to of table. number religion, then bring and seeing you partner the accelerated got, via probably to got sort pandemic, the investment.

because their who EPAM, track make have of record so, is the clients spoken to And about. Arkadiy are oftentimes successful, transformation are certain working with that journey that looking

we're bit with some But at we XX. probably, an probably say the you're table. demand, the more So the XX. see very would in existing have I growth you really a in below customers if strong also growth strong seeing little XX through say, a strong of did customer

in additions resources net And lower QX, of XXXX at somewhat level more are the in probably but customers. continue of we'll to than very brand little bit QX, have excludes new very, share And that course, through their we solid Emakina. they be in a continue And okay. additions constrained coming to that, expecting are again, by so supply getting in a and

a said Was or? clear lot. relatively I that So

James Faucette

that Yes, perfect. that was was

Just the are fourth touched of terms on and you some that? aspects or think in is the net is that in the I that clarification you addition that lower other Do this that there one think seasonal quarter. impacting

Jason Peterson

think I that generally, when thinking most mean, is what I people December a is change don't time we're jobs.

as joiners fewer that might But reflection over talked harder we'll attract. about, get December. Ark things be time. it could have But, so just And improved in we've to maybe a little capability our really bit a

think brand hiring ability to year-after-year. I match staff and improve our to also and quarter-after-quarter, supply improved continues projects to demand. We've our

additions think rates. are of in that net organic QX. expecting capabilities I But, again, around a we've So growth somewhat our improved level slower

James Faucette

great, you. That's thank

Operator

with from our And comes next question Arvind Ramnani Piper Sandler.

Your line is open.

Arvind Ramnani

to a want prepared Ark to about in just kind I talking back and new in quarter. remarks terrific into pushing go a on made capabilities. comment the of areas congrats Hey,

before areas areas? less what kind deciding this, which second areas the on deciding around areas of question you focus figuring don't certain And there to there's you capabilities you're, to to build of on just How doing what de-emphasize, are questions areas the terms out of in or in, invest -- are kind of really innovation of breadth where couple focus areas opportunity? kind to in commercial, a So, are which are these to deciding which are space, growth? the say, you what across of tech how and, see areas are they given and we're you you revenue much to, is, going how like,

Arkadiy Dobkin

the this products portion us very development and companies. the going of or questions, around, feel and to would And we to specific new are the future like, one to Yes, advantages platform but significant trying is for of our we to of all I'm giving this? understand business with or solid do remind topics, then like that believe like, what this. platform we're working technology to of like, question of a is concept the XX% how like, XX% areas, not software type And are stress, and of go we companies which different doing what's exposure significant like companies help but product, is probably which so really forced still that type like, we I in like clients, simple clients which kinds sometimes and appreciate to just and of the happening of your complex. sometimes doing I going new to new implementation we market, do do this shoulders like different wide to

the portfolio then end in standpoint. how everything business technology be in added in we as And This us this organic. keep will, experience we us and of we kind first our technologies, from difficulty] is expand and this chain going very talking to about end was strategy quit. what [Indiscernible] building capability of up don't and We're to in in about we now, And if we components. did keynote organic talking such it's new were of when to we our clients. about some for part have solutions We talking business is to up build can help about clients proportion and business help And only were sharing perspective my consulting our this whole about new more the in And but to barometer quick, do continuously definitely to of consultancy. So we couple this technologies, we you this It's areas. also also of we're to areas, in internal and is sometimes this end trying select and we [Technical from designed, able business. what end positions was area. story. not we

Arvind Ramnani

perfect. Perfect,

few consulting have our a which sense. years, we expanded capabilities, last makes more question, lot certainly Another in the

from? that you're winning Are -- to changed business you versus three, per dollars in back? four just Can quarter. doing is now billion revenue a about maybe who set a now competitive the you set talk close years Given competitive you are

Arkadiy Dobkin

of what understand base becomes difference in to exactly from very, more the this of to very compete I we the think on I competitive open situation we I get competitive general business we view, start important much And just against. consultant think part see the proportionally well. our From point much, the kind companies door. you to more think when

before. these because same largely capabilities think the had of most I vendors large it's the

We’re with just delivery better bring values trying integrating and through different to generic.

Arvind Ramnani

Perfect, good year. of luck thank rest you, and for the

Arkadiy Dobkin

Thank you.

Operator

KeyBanc Enders Steve with Markets. Our comes next question Capital from

open. is line Your

Steve Enders

thanks some about But my Thanks recovery Good of little of taking depressed here. the base. this see, funding I are for are macron point. been for where to wanted across great. verticals client bit more you question. I to Okay, COVID? guess some from travel I've that seeing of talk and consumer budgets levels still specifically, So at the a in your just kind

Arkadiy Dobkin

of and longer will happen now, or demand for specifically be think I be is seeing term which can of level do for well. everybody this it's I years what to prediction this it’s that was years before, consumers, like all seen to pandemic that is this was term it preparation we rolling practically we difficult and believe two from I for it's I trigger like even and about about three exists happening practically and understand I’ve pandemic right We now. something changes understand splitting indices. was difficult But anything it. when like believe only The saying mostly referring not don't is any all constant. which definitely or which new at before as stage. would see And level there predict longer

your still no pandemic as now any we to sign market, market. from answer right depression a of direct but in our partial don't the of So equation, see type

Steve Enders

the to follow or now levels what's the that the in Okay of deal biggest we're gross on margin with the ability talent. disability hiring some I for as some were biggest a you're here up, the still that the kind is solving and think and bring And solve in biggest going the just to of that today? thing, of still are pass you to of the today for you is as of challenges bring today talent challenge more perfect. costs there higher kind guess kind just trying to about

Arkadiy Dobkin

right the to it's simplistic I oversimplification complex term, lot can like the is think orchestrate possible with a a biggest brilliant connect end of it's to people. type talent way. of talent. way huge in is, challenge to overall in what the general, people, how happening. of Because very what's hire here of The is But a a how a point clients you In the complexity very broad the game,

happening which real together, when happening the do growing to which a the XX new of have of of teams plus orchestration you what's them engagement up lot the kind you and now. in type specifically percent integrated you bring working That's right to of like think we is when the need I of challenge. kind people, understand scale, and

the very the So net acquisition, be that's deliver of enabler concern how kind understood. of and be value some important real it, should there, should well but this we

Jason Peterson

going of kind in to respond and question more margin. tactical sort I'm gross of on And step to that

inflation. So see continue elevated we earlier to that call do in this about talked wage we

performances, point wherever better somewhat increases rates, apart taken as I but wage We you've is, quarter. I year, important think able guidance, one every fully offset this probably we've okay, not think had our inflation, getting in we've seen to are the

is company's have and we is profitability. a compensation based strength performance expense so that of the on and growth the And variable element the revenue

variable with a than this much, So we we're, higher you're at the in level have much years. past associate compensation booking expense year

So would that, think next I year, think that that would you normalize.

in impact gross sort so other. to offset quarter. of round variable end the And inflation of and, hopefully then that you to generally may out, paid will kind two employees on pressure just of and the expense QX variable payout margin. a a the compensation it is and have quarter the shows QX positive And in year of each the have at wage the of that to beginning form up those continue throughout And some with

Steve Enders

the very helpful. Perfect. Thanks question, for taking

Operator

Thank you.

Capital. question from Vladimir last with comes VTB Our Bespalov

line Your is open.

Vladimir Bespalov

to market for mentioned you your about my going question. And of since forward that you would important -- thank very is pipeline taking part. of and congratulations a M&A the like good part Hello, M&A and Ark number. strategy this on ask I your

is like lot have that you. been could so a provide in things and feel up you it's you on competition targets color? the to are general? do feel getting going the like Thank the like there proper find in Because the sector growing? more valuations difficult some the and So this, market Do activity more this of you

Arkadiy Dobkin

and definitely are as be is is a market, competition fact yes, so growing on will there yes, and basically companies the answer the well. I price as lot known think it's and yes but of growing

into the improve to, find to situation right to still capabilities. our in go we to And natural bring companies very you board which on that's the So and described. markets

number everybody opportunities else a to So we right like now.

Vladimir Bespalov

Okay. Thank much. very you

Arkadiy Dobkin

Yes, absolutely. you. Thank

Operator

I would to now the like turn back Dobkin for over call remarks. closing to Arkadiy

Arkadiy Dobkin

much for you call thank always, the As today. attending very

you You Thank equations if days, much. again, have know and you very three see that data available in you any months. is

Operator

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

now may disconnect. You

EPAM Systems (EPAM) 4 Nov 212021 Q3 Earnings call transcript