EPAM Systems Q2 Earnings Call Highlights

EPAM Systems Q2 Earnings Call Highlights Written by MarketBeat August 8, 2026 Add As Preferred Source Share Share Share This Article Link copied to clipboard. Close Image from MarketBeat Media, LLC.

Q2 revenue reached the high end of guidance at $1.415 billion, up 4.5% year over year, while profitability improved significantly. Non-GAAP operating margin rose to 16.4% and non-GAAP EPS increased 22% to $3.38.

AI-native revenue exceeded $160 million, accounting for more than 11% of the business, but larger AI opportunities have not yet been signed. Meaningful revenue from these multiyear deals is now expected to begin in the first half of 2027.

EPAM lowered its 2026 revenue outlook to 3.2%–4.2% growth because of weak North American performance and slower replacement of legacy services with AI-related work. The company maintained a stronger profitability outlook, including projected full-year non-GAAP EPS of $13.08–$13.24.

EPAM Systems NYSE: EPAM reported second-quarter 2026 revenue growth that reached the high end of its outlook range, while raising its profitability expectations for the full year. However, the company lowered its revenue outlook as it expects slower growth in North America and delayed contributions from larger AI-related opportunities. Revenue for the quarter was $1.415 billion, up 4.5% from a year earlier and 3.4% on an organic constant-currency basis. CEO and President Balazs Fejes said the company’s AI-native revenue exceeded $160 million, representing its sixth consecutive quarter of double-digit sequential growth. AI-native revenue accounted for more than 11% of EPAM’s business, according to management.

“The gap between AI experimentation, adoption, and optimization is EPAM’s opportunity,” Fejes said, describing demand for modernization, data engineering, cybersecurity and other foundational work needed before enterprises can deploy AI at scale.

EPAM said GAAP income from operations rose 20.4% year over year to $152 million, or 10.8% of revenue. Non-GAAP operating income increased 14.7% to $233 million, or 16.4% of revenue. GAAP diluted earnings per share increased 26.3% to $1.97, while non-GAAP diluted EPS rose 22% to $3.38. GAAP gross margin was 30.4%, compared with 28.8% in the prior-year quarter, and non-GAAP gross margin improved to 32% from 30.1%. Chief Financial Officer Jason Peterson said the company benefited from price increases implemented earlier in the year, improved profitability on fixed-fee work and cost-efficiency efforts. He said EPAM expects gross margin above 32% in each of the third and fourth quarters.

Financial services was EPAM’s fastest-growing industry vertical, with revenue rising 11.5% year over year, supported by insurance and asset-management clients in both the Americas and EMEA. Life sciences and healthcare revenue increased 8%, while emerging verticals grew 4.9%, led by energy and manufacturing. Consumer goods, retail and travel revenue rose 2.3%. Software and high tech revenue declined 1.3%, primarily because of a large client-program ramp-down and shifting client priorities. Business information and media revenue fell 2.1% as several client projects were completed.

The Americas, which represented 57% of second-quarter revenue, grew just 0.5% year over year. In contrast, EMEA, representing 41% of revenue, grew 10.9%, or 9.4% in constant currency. APAC revenue, which accounted for 2% of revenue, declined 0.3%. Fejes said North America is “not growing fast enough” and acknowledged that EPAM’s go-to-market operations in the region have not performed at the required level. The compa...