EPAM : Reports Results for Third Quarter 2016

Third quarter revenues of $298 million, up 26% year-over-year
GAAP Diluted EPS of $0.49, up 11% year-over-year
Non-GAAP Diluted EPS of $0.76, up 19% year-over-year

NEWTOWN, Pa., Nov. 07, 2016 (GLOBE NEWSWIRE) -- EPAM Systems, Inc. (NYSE:EPAM), a leading global provider of product development and software engineering solutions, today announced results for its third quarter ended September 30, 2016.

Third Quarter 2016 Highlights

• Revenues increased to $298.3 million, a year-over-year increase of $62.2 million, or 26.4%;
• In constant currency, revenue was up 28.7% year-over-year;
• GAAP income from operations was $33.9 million, an increase of $6.1 million or 22.1% compared to $27.8 million in the third quarter of 2015;
• Non-GAAP income from operations was $49.7 million, an increase of $8.2 million, or 19.9%, from $41.5 million in the third quarter of 2015;
• Diluted earnings per share (EPS) on a GAAP basis was $0.49, an increase from $0.44 in the third quarter of 2015;
• Non-GAAP quarterly diluted EPS was $0.76 compared to $0.64 in the third quarter of 2015.

Cash Flow from Operations

• Cash from operations was $111.2 million for the nine months of 2016, up from $64.6 million as compared to the nine months of 2015; and was $61.8 million in the third quarter of 2016, up from $55.5 million in the third quarter of 2015;
• As of September 30, 2016, cash and cash equivalents totaled $330.6 million.

Other Metrics

• As of September 30, 2016, total headcount was 21,720, an increase of 35.5% from 16,026 at September 30, 2015;
  
• Total number of delivery professionals increased 36.2% to 19,070 as of the end of the third quarter of 2016 from 14,004 as of the end of the third quarter of 2015;
  
• Billed and unbilled Days Sales Outstanding ('DSO') decreased to 83 days as of the end of the third quarter of 2016 compared to 88 days as of the end of the second quarter of 2016.

2016 Outlook - Full Year and Fourth Quarter

Full Year

• Revenues will be at least $1,156 million for the full year 2016, representing a growth rate of at least 26.5% over 2015. This includes approximately 2.5% anticipated currency headwinds, meaning constant currency growth of at least 29%;
  
• The full year GAAP diluted EPS will be at least $1.94, with an effective tax rate of approximately 21%;
  
• The full year non-GAAP diluted EPS will be at least $2.90;
  
• The full year weighted average share count is expected to be approximately 53.6 million diluted shares outstanding.

Fourth Quarter

• Revenues will be at least $310 million for the fourth quarter of 2016, representing a growth rate of at least 19% over fourth quarter 2015 revenues. This includes approximately 2% anticipated currency headwinds, meaning constant currency growth of at least 21%;
  
• Fourth quarter 2016 GAAP diluted EPS to be at least $0.54;
  
• Fourth quarter 2016 non-GAAP diluted EPS is expected to be at least $0.78 and is based on an estimated fourth quarter 2016 weighted average share count of 54.3 million diluted shares outstanding.

Also effective for the quarter are the following executive announcements:

'It is with a mix of gratitude and sadness that I announce that Anthony Conte, the Company's Senior Vice President, Chief Financial Officer and Treasurer has notified the Company that he plans to step down in the third quarter of 2017 in order to pursue personal and other business interests,' said Arkadiy Dobkin, Chairman, CEO & President, EPAM. 'Over his 10-year career with EPAM, Anthony's financial and business leadership has been a key part of EPAM's growth and success. The Company will conduct a search to find a successor. Anthony will participate in selection of his successor and assist with the transition.'

Mr. Dobkin continued, 'We have recently welcomed Larry Solomon as our Chief People Officer. Larry came to us after spending nearly 30 years at Accenture, most recently as the Senior Managing Director and Accenture's North America Operating Officer. Larry will lead all aspects of Talent Management & Talent Acquisition, Workforce Planning & Management, as well as other HR-related functions within EPAM across the globe. We anticipate that his significant experience and background will help elevate EPAM's talent and workforce management capabilities.'

Conference Call Information

EPAM will host a conference call to discuss results on Monday, November 7, 2016 at 8:00 a.m. Eastern Time. The live conference call can be accessed by dialing 1-877-407-0784 (domestic) or 1-201-689-8560 (international). A telephonic replay will also be available approximately one hour after the call and can be accessed by dialing 1-844-512-2921 (domestic) or 1-412-317-6671 (international). The passcode for the replay is 13648357. The telephonic replay will be available until November 21, 2016. Interested investors and other parties may also listen to a webcast of the conference call by logging onto the Investor Relations section of the Company's website at http://investors.epam.com.

About EPAM Systems

EPAM Systems, Inc. (NYSE:EPAM), a leading global product development and platform engineering services company, is focused on delivering results through best-in-class software engineering, combined with innovative strategy, consulting and design capabilities. With 23 years of experience in the information technology industry, EPAM's 19,000 people serve our customers in over 25 countries across North America, Europe, Asia and Australia. EPAM was ranked #8 in FORBES 25 Fastest Growing Public Tech Companies and ranked as a top information technology services company on FORTUNE'S 100 Fastest Growing Companies.

For more information, please visit http://www.epam.com and follow us on Twitter (@EPAMSYSTEMS) and LinkedIn.

Non-GAAP Financial Measures

EPAM supplements results reported in accordance with United States generally accepted accounting principles, referred to as GAAP, with non-GAAP financial measures. Management believes these measures help illustrate underlying trends in EPAM's business and uses the measures to establish budgets and operational goals, communicated internally and externally, for managing EPAM's business and evaluating its performance. Management also believes these measures help investors compare EPAM's operating performance with its results in prior periods. EPAM anticipates that it will continue to report both GAAP and certain non-GAAP financial measures in its financial results, including non-GAAP results that exclude stock-based compensation expense, write-offs and recoveries, amortization of purchased intangible assets, goodwill impairment, legal settlements, foreign exchange gains and losses, acquisition-related costs and the related effect on taxes. Management may also compare operating results on a basis of 'constant currency', which is also a non-GAAP financial measure. This measure excludes the effect of foreign currency exchange rate fluctuations by translating the current period revenues and expenses into U.S. dollars at the weighted average exchange rates of the prior period of comparison. Because EPAM's reported non-GAAP financial measures are not calculated according to GAAP, these measures are not comparable to GAAP and may not be comparable to similarly described non-GAAP measures reported by other companies within EPAM's industry. Consequently, EPAM's non-GAAP financial measures should not be evaluated in isolation or supplant comparable GAAP measures, but, rather, should be considered together with the information in EPAM's condensed consolidated financial statements, which are prepared according to GAAP.

Forward-Looking Statements

This press release includes statements which may constitute forward-looking statements made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995, the accuracy of which are necessarily subject to risks, uncertainties, and assumptions as to future events that may not prove to be accurate. Factors that could cause actual results to differ materially from those expressed or implied include general economic conditions and the factors discussed in our most recent Annual Report on Form 10-K and other filings with the Securities and Exchange Commission. EPAM undertakes no obligation to update or revise any forward-looking statements, whether as a result of new information, future events, or otherwise, except as may be required under applicable securities law.