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美国
证券交易委员会
华盛顿特区20549

表格 10-Q
☒根据1934年证券交易法第13或15(d)条款的季度报告。

截至2024年6月30日季度结束 2024年9月30日

或
☐根据 1934 年证券交易所法第 13 或 15 (d) 条的过渡报告

在从________到________的过渡期间

委员会文件号码： 001-35418
Logo_New.gif
EPAm SYSTEMS, INC.
（依凭章程所载的完整登记名称）
特拉华州22-3536104
(依据所在地或其他管辖区)
的注册地或组织地点)		(国税局雇主识别号码)
识别号码)
41 University Drive202套房18940
Newtown宾夕法尼亚
(总部办公地址)（邮递区号）
267-759-9000
(注册人电话号码，包括区号)
根据本法第 12 (b) 条注册的证券：
每个班级的标题交易标的 每个注册的交易所名称
每股普通股，每股面值$0.001EPAM 纽约证券交易所
I勾选选项，以指示申报者（1）在过去12个月（或申报者在此期间内应申报但需缩短期数的情况下）已按照1934年证券交易法第13条或第15(d)条的要求申报所有必须申报的报告，及（2）在过去90天内已受此申报要求的约束。 是  ☒ 否  ☐
请勾选表示，公司是否在过去12个月（或公司需要提交此类文件的较短期间）已根据Regulation S-t第405条规定提交了每个互动数据文件。 是  ☒ 否  ☐
勾选此格以指示登记人是否为大型高速进行申报的申报人、高速进行申报的申报人、非高速进行申报的申报人、较小型报告公司或新兴成长公司。请参阅《交易所法令》第120亿2条中有关“大型高速进行申报人”、“高速进行申报人”、“较小型报告公司”和“新兴成长公司”的定义。
大型加速归档人☒加速归档人☐
非加速归档人☐小型报告公司☐
新兴成长型企业☐
如果是新兴成长公司，请以勾号标示注册人是否选择不使用延长过渡期来遵守根据《交易法》第 13 (a) 条所提供的任何新或经修订的财务会计准则。 ☐
如果证券根据法案第12(b)条进行登记，请打勾表示申报的基本报表是否反映了对先前发行的基本报表的错误更正。 ☐
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请表示于最近可行日期，每种发行人普通股的流通股数。
每个班级的标题
2024年10月31日截至优秀
每股普通股，每股面值$0.001
56,721,427 股份



EPAm SYSTEMS, INC.

目录
 页面


目录
第一部分. 财务资讯
项目1.财务报表(未经审计)
EPAm SYSTEMS, INC. 及其附属公司
缩表合并资产负债表
(未经查核)
（以千为单位，除面值外）
 截至
九月三十日，
2024		截至
12月31日，
2023
资产
流动资产合计
现金及现金等价物$2,036,394 $2,036,235 
应收货款及合约资产净额，扣除$的提存5,864 15.111,864、分别
935,077 897,032 
短期投资 22,316 60,739 
预付及其他流动资产113,069 97,355 
全部流动资产3,106,856 3,091,361 
物业及设备，扣除折旧后净值207,502 235,053 
营运租赁权利资产，净额129,929 134,898 
无形资产，扣除累计摊销74,494 71,118 
商誉621,903 562,459 
递延税款贷项218,320 197,901 
其他非流动资产98,193 59,575 
资产总额$4,457,197 $4,352,365 
负债  
流动负债  
应付账款$30,774 $31,992 
应计薪酬和福利支出422,548 412,747 
应计费用及其他流动负债155,817 124,823 
Income taxes payable, current34,346 38,812 
营运租赁负债，流动37,561 36,558 
流动负债合计681,046 644,932 
长期负债25,331 26,126 
营业租赁负债，非流动 102,551 109,261 
其他非流动负债93,640 100,576 
总负债902,568 880,895 
承诺和条件（附注15）
股权
股东权益  
0.010.001 面额为0.0001； 160,000 授权股份为 56,708 自2024年9月30日至今，已发行并流通的股份为 57,787 截至2023年12月31日，已发行并流通的股份为资产
57 58 
资本公积额额外增资1,129,238 1,008,766 
保留收益2,465,269 2,501,107 
累积其他全面损失(40,517)(39,040)
Total EPAm Systems, Inc.股东权益3,554,047 3,470,891 
共营子公司中的非控制权益582 579 
总股本3,554,629 3,471,470 
负债加股东权益总额$4,457,197 $4,352,365 
附注是未经审核的简明综合基本报表的一部分。
3
目录
EPAm SYSTEMS, INC. 及其附属公司
缩写的综合损益表
(未经查核)
（在 （以千计，不包括每股数据）
 结束于三个月的期间
九月三十日，		九个月结束了
九月三十日，
 2024202320242023
收益$1,167,527 $1,152,136 $3,479,589 $3,533,283 
营业费用：
营业成本（不包括折旧和摊提）763,992 794,265 2,409,183 2,458,881 
销售、一般及管理费用206,820 194,829 599,331 601,093 
折旧和摊销费用 19,736 23,092 63,003 68,642 
业务出售损失— 25,922 — 25,922 
营业收入176,979 114,028 408,072 378,745 
利息收益及其他净收入13,347 13,931 40,425 37,162 
汇率期货（亏损）/盈利(710)3,893 (1,416)(6,725)
税前收入189,616 131,852 447,081 409,182 
所得税费用53,270 34,648 95,847 89,653 
净利润$136,346 $97,204 $351,234 $319,529 
每股净利润：
基础$2.40 $1.68 $6.11 $5.52 
稀释$2.37 $1.65 $6.04 $5.40 
计算每股净利润时使用的股份：
基础56,910 57,853 57,445 57,850 
稀释57,425 58,948 58,166 59,143 

The accompanying notes are an integral part of the unaudited condensed consolidated financial statements.

4
Table of Contents
EPAM SYSTEMS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(Unaudited)
(In thousands)
 Three Months Ended
September 30,		Nine Months Ended
September 30,
 2024202320242023
Net income$136,346 $97,204 $351,234 $319,529 
Other comprehensive income/(loss):
Change in foreign currency translation adjustments, net of tax30,774 (5,801)6,413 14,821 
Change in unrealized loss on hedging instruments, net of tax(1,994)(13,744)(8,334)(11,130)
Defined benefit pension plans - actuarial gain, net of tax126 — 444 — 
Other comprehensive income/(loss)28,906 (19,545)(1,477)3,691 
Comprehensive income$165,252 $77,659 $349,757 $323,220 

The accompanying notes are an integral part of the unaudited condensed consolidated financial statements.
5
Table of Contents
EPAM SYSTEMS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY
(Unaudited)
(In thousands) 
 普通股额外认购资本保留盈余库藏股其他综合损益（亏损）/收益合并子公司非控股权益股东权益总额
股份金额股份金额
2024年1月1日的余额
57,787 $58 $1,008,766 $2,501,107 — $— $(39,040)$579 $3,471,470 
已发放的限制股份单位261 — — — — — — — — 
为员工税款而扣留的股权(88)— (26,012)— — — — — (26,012)
基于股票的补偿费用— — 41,642 — — — — — 41,642 
行使股票期权369 — 15,251 — — — — — 15,251 
回购普通股(396)— — (120,593)— — — — (120,593)
其他综合损失— — — — — — (22,312)(4)(22,316)
净收入 — — — 116,243 — — — — 116,243 
2024年3月31日结存
57,933 $58 $1,039,647 $2,496,757 — $— $(61,352)$575 $3,475,685 
限制性股票单位已发放69 — — — — — — — — 
股权留置以供员工缴税(18)— (4,577)— — — — — (4,577)
股票为基础的补偿费用— — 35,285 — — — — — 35,285 
期权行使23 — 1,339 — — — — — 1,339 
员工股票购买计划发行普通股85 — 15,717 — — — — — 15,717 
回购普通股，包括货物税(1,160)(1)— (216,070)— — — — (216,071)
从非控制股权的合并子公司贡献— — — — — — — 7 7 
其他综合损失— — — — — — (8,071)— (8,071)
净利润 — — — 98,645 — — — — 98,645 
2024年6月30日资产负债表
56,932 $57 $1,087,411 $2,379,332 — $— $(69,423)$582 $3,397,959 
发放限制性股票单位7 — — — — — — — — 
股权用于代扣员工税款(3)— (611)— — — — — (611)
股票报酬费用— — 41,136 — — — — — 41,136 
行使股票期权17 — 1,302 — — — — — 1,302 
回购普通股，包括消费税(245)— — (50,409)— — — — (50,409)
其他综合收益— — — — — — 28,906 — 28,906 
净利润
— — — 136,346 — — — — 136,346 
2024年9月30日余额
56,708 $57 $1,129,238 $2,465,269 — $— $(40,517)$582 $3,554,629 


6
目录
EPAm SYSTEMS, INC. 及其附属公司
简明综合股本变动表
(未经审计)
（以千为单位）
（续）
 普通股额外认购资本保留盈余库藏股累积其他综合（损失）/收入合并子公司非控股权益股东权益总额
股份金额股份金额
2023年1月1日的结余
57,655 $58 $847,965 $2,248,948 14 $(118)$(95,321)$1,478 $3,003,010 
已发放的限制股份单位
224 — — — — — — — — 
保留作为员工税款的股权(72)— (20,501)— — — — — (20,501)
基于股票的补偿费用
— — 34,265 — — — — — 34,265 
行使股票期权71 — 2,525 — — — — — 2,525 
回购普通股(30)— — (8,510)— — — — (8,510)
其他综合收益— — — — — — 17,361 — 17,361 
净收入
— — — 102,292 — — — — 102,292 
2023年3月31日结余
57,848 $58 $864,254 $2,342,730 14 $(118)$(77,960)$1,478 $3,130,442 
限制性股票单位已经授予
76 — — — — — — — — 
股权用于支付员工税款(21)— (6,142)— — — — — (6,142)
以股票为基础的薪酬支出
— — 32,449 — — — — — 32,449 
执行股票期权170 — 4,601 — — — — — 4,601 
员工股票购买计划发行普通股77 — 18,466 — — — — — 18,466 
回购普通股(195)— — (41,437)— — — — (41,437)
收购子公司股份来自非控制权益— — (48)— — — — (1,405)(1,453)
从非控股权益对合并子公司的贡献— — — — — — — 506 506 
其他综合收益— — — — — — 5,875 — 5,875 
净利润
— — — 120,033 — — — — 120,033 
2023年6月30日结余
57,955 $58 $913,580 $2,421,326 14 $(118)$(72,085)$579 $3,263,340 
授予的限制性股票单位已生效
7 — — — — — — — — 
保留股本，用于员工税款(2)— (426)— — — — — (426)
股份报酬费用— — 34,949 — — — — — 34,949 
行使股票期权51 — 2,983 — — — — — 2,983 
回购普通股(318)— — (78,487)— — — — (78,487)
其他综合损失— — — — — — (19,545)— (19,545)
净利润
— — — 97,204 — — — — 97,204 
2023年9月30日的余额
57,693 $58 $951,086 $2,440,043 14 $(118)$(91,630)$579 $3,300,018 

附注是未经审核简明综合财务报表的不可或缺的一部分。
7
内容表
EPAm SYSTEMS, INC. 及其附属公司
简明财务报表现金流量表
(未经审计)
（单位：千）
九个月截至9月30日
 20242023
经营活动现金流量：
净利润$351,234 $319,529 
调整净利润以达经营活动所提供之净现金流量：
折旧和摊销费用 63,003 68,642 
经营租赁使用权资产摊销费用28,051 30,842 
坏账（回收）/费用(3,071)2,739 
递延税款(24,888)(11,760)
基于股票的补偿费用122,599 109,536 
衍生工具的未实现收益— (7,904)
资产减损损失395 688 
业务出售损失— 25,922 
其他6,715 1,106 
资产及负债的变动：
交易应收款项及合同资产(22,791)6,145 
预付及其他资产(52,167)13,208 
应付账款(4,611)837 
应计费用及其他负债17,262 (95,570)
租赁负债(29,604)(34,310)
应付所得税(23,218)(38,385)
经营活动产生的净现金流量428,909 391,265 
投资活动之现金流量:  
购买不动产和设备(16,419)(18,420)
购买短期投资(1,872)(10,865)
短期投资收益41,509 10,865 
收购业务，扣除所获得的现金（附注3）(57,065)(13,997)
作为业务出售的一部分所售现金，扣除收益— (2,169)
购买非市场化证券(6,927)(3,281)
其他投资活动，净额1,674 (8,204)
投资活动中使用的净现金(39,100)(46,071)
来自筹资活动的现金流量:  
根据员工激励计划发行股票的收益33,781 28,612 
与限制性股票单位的净股票结算相关的预扣税款支付(32,465)(28,202)
债务收入— 764 
偿还债务(1,497)(2,607)
回购普通股(385,025)(128,433)
对于先前收购的业务的或有对价支付(4,750)(8,684)
收购子公司股份来自非控制权益— (1,972)
其他筹资活动，净额(1,711)(2,895)
筹集资金的净现金流量(391,667)(143,417)
汇率变动对现金、现金等价物及限制性现金的影响(543)(5,632)
现金、现金等价物和受限现金的净（减少）/增加(2,401)196,145 
本期期初现金、现金及受限制的现金余额为2,043,108 1,683,636 
本期期末现金、现金及受限制的现金余额为$2,040,707 $1,879,781 
8
Table of Contents

EPAM SYSTEMS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(In thousands)
(Continued)
The following table provides a reconciliation of cash, cash equivalents and restricted cash reported within the condensed consolidated balance sheets:
As of
September 30,
2024		As of
December 31,
2023
Balance sheet classification
Cash and cash equivalents$2,036,394 $2,036,235 
Restricted cash in Prepaid and other current assets866 5,294 
Restricted cash in Other noncurrent assets3,447 1,579 
Total restricted cash4,313 6,873 
Total cash, cash equivalents and restricted cash $2,040,707 $2,043,108 

The accompanying notes are an integral part of the unaudited condensed consolidated financial statements.
9
Table of Contents
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
(In thousands, except per share data and as otherwise disclosed) 
 
1.ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES    
EPAM Systems, Inc. (the “Company” or “EPAM”) is a leading digital transformation services and product engineering company, providing digital platform engineering and software development services to clients across six continents. In a business landscape that is constantly challenged by the pressures of digitization, EPAM focuses on building long-term partnerships with clients in various industries through delivery of innovative and scalable software solutions, integrated strategy, experience and technology consulting, and a continually evolving mix of advanced capabilities. The Company is incorporated in Delaware with headquarters in Newtown, Pennsylvania.
Basis of Presentation — The accompanying unaudited condensed consolidated financial statements of EPAM have been prepared in accordance with generally accepted accounting principles in the United States (“GAAP” or “U.S. GAAP”) and Article 10 of Regulation S-X under the Securities Exchange Act of 1934, as amended. The unaudited condensed consolidated financial statements include the financial statements of EPAM Systems, Inc. and its subsidiaries with all intercompany balances and transactions eliminated.
These unaudited condensed consolidated financial statements and accompanying notes should be read in conjunction with the Company’s audited consolidated financial statements and the notes thereto for the year ended December 31, 2023 included in its Annual Report on Form 10-K. The preparation of these condensed consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts reported in these condensed consolidated financial statements and accompanying notes. Actual results could differ from those estimates, and such differences may be material to the unaudited condensed consolidated financial statements. Operating results for the interim periods are not necessarily indicative of results that may be expected to occur for the entire year. In management’s opinion, the accompanying unaudited condensed consolidated financial statements include all normal and recurring adjustments necessary for a fair presentation of the Company’s financial position as of September 30, 2024 and the results of its operations and its cash flows for the periods presented.
Risks and Uncertainties — As a result of its global operations, the Company may be subject to certain inherent risks.
Concentration of Credit — Financial instruments that potentially subject the Company to concentration of credit risk consist primarily of cash, cash equivalents, short-term investments and trade receivables. The Company maintains cash, cash equivalents and short-term investments with financial institutions. The Company believes its credit policies reflect normal industry terms and business risk and there is no expectation of non-performance by the counterparties.
The Company has cash in several countries, including Ukraine and Belarus, where the banking sector remains subject to periodic instability; banking and other financial systems generally do not meet the banking standards of more developed markets; and bank deposits made by corporate entities are not insured. As of September 30, 2024, the Company had $63.6 million of cash and cash equivalents in banks in Ukraine and $29.3 million of cash and cash equivalents in banks in Belarus. The Company regularly monitors cash held in these countries and, to the extent the cash held exceeds amounts required to support its operations in these countries, the Company distributes the excess funds into markets with more developed banking sectors to the extent it is possible to do so. In April 2024, Belarus instituted new restrictions on distributing dividends from Belarus to shareholders in certain countries, including the U.S. The restrictions are initially scheduled to remain in place until the end of 2025 and may prevent EPAM from distributing excess funds, if any, out of Belarus. The Company does not expect these new restrictions to have a material impact on its ability to meet its worldwide cash obligations during this period. The Company places its cash and cash equivalents with financial institutions considered stable in the region, limits the amount of credit exposure with any one financial institution and conducts ongoing evaluations of the credit worthiness of the financial institutions with which it does business. However, a banking crisis, bankruptcy or insolvency of banks that process or hold the Company’s funds, or sanctions may result in the loss of deposits or adversely affect the Company’s ability to complete banking transactions, which could adversely affect the Company’s business and financial condition.
Trade receivables are generally dispersed across many clients operating in different industries; therefore, concentration of credit risk is limited. Historically, credit losses and write-offs of trade receivables have not been material to the consolidated financial statements. If the Company’s clients enter bankruptcy protection or otherwise take steps to alleviate their financial distress, the Company’s credit losses and write-offs of trade receivables could increase, which would negatively impact its results of operations.

10
Table of Contents

Foreign currency risk — The Company’s global operations are conducted predominantly in U.S. dollars. Other than U.S. dollars, the Company generates revenues in various currencies, principally, euros, British pounds, Swiss francs and Canadian dollars and incurs expenditures principally in euros, Indian rupees, Polish zlotys, British pounds, Swiss francs, Hungarian forints, Mexican pesos, Colombian pesos, Canadian dollars, Chinese yuan renminbi and Armenian drams. The Company’s international operations expose it to risk of adverse fluctuations in foreign currency exchange rates through the remeasurement of foreign currency denominated assets and liabilities (both third-party and intercompany) and translation of earnings and cash flows into U.S. dollars. The Company has a hedging program whereby it enters into a series of foreign exchange forward contracts with durations of twelve months or less that are designated as cash flow hedges of forecasted Polish zloty, Indian rupee, Hungarian forint and Mexican peso transactions. See Note 6 “Derivative Financial Instruments” for further information on the Company’s hedging program.
Interest rate risk — The Company is exposed to market risk from changes in interest rates. Exposure to interest rate risk results primarily from variable rates related to cash and cash equivalent deposits, short-term investments and the Company’s borrowings, mainly under the 2021 Credit Agreement, which is subject to a variety of rates depending on the type and timing of funds borrowed (See Note 8 “Debt”). The Company does not believe it is exposed to material direct risks associated with changes in interest rates related to these deposits, investments and borrowings.
Adoption of New Accounting Standards
There were no recently adopted accounting standards which had a material impact on the Company’s consolidated financial statements.
Pending Accounting Standards
From time to time, new accounting pronouncements are issued by the FASB or other standards-setting bodies that the Company will adopt according to the various timetables the FASB specifies. Unless otherwise discussed below, the Company believes the impact of recently issued standards that are not yet effective will not have a material impact on its consolidated financial statements upon adoption.
During the three and nine months ended September 30, 2024, there have been no material updates regarding pending accounting standards as reported in our Annual Report on Form 10-K for the year ended December 31, 2023.
2.    IMPACT OF THE INVASION OF UKRAINE
On February 24, 2022, Russian forces attacked Ukraine and its people, and through the issuance date of these interim financial statements, there has been no resolution to this attack. As of September 30, 2024, the Company had $58.8 million of Property and equipment, net in Ukraine consisting of a building classified as construction-in-progress located in Kyiv with a net book value of $52.2 million, laptops with a net book value of $3.0 million, most of which are in the possession of employees, various office furniture, equipment and supplies with a net book value of $3.1 million, and leasehold improvements located throughout Ukraine with a net book value of $0.5 million. Additionally, as of September 30, 2024, the Company had Operating lease right-of-use assets located throughout Ukraine with a net book value of $4.2 million. Through the issuance date of these interim financial statements, the Company is not aware of any damage to its long-lived assets in Ukraine and the Company expects to continue to use these assets as part of its global delivery model.
On March 4, 2022, the Company announced a $100.0 million humanitarian commitment to support its employees and their families in and displaced from Ukraine. This humanitarian commitment is in addition to donations from EPAM's clients and employees and the work of EPAM volunteers on the ground and the Company’s spending under this commitment included special cash payments to support impacted employees, financial and medical support for impacted families, and donations to third-party humanitarian organizations. During the three and nine months ended September 30, 2024, the Company expensed $3.6 million and $9.5 million, respectively, related to this commitment. Of the expensed amounts for the three and nine months ended September 30, 2024, $0.6 million and $1.8 million, respectively, is classified in Cost of revenues (exclusive of depreciation and amortization), and $3.0 million and $7.7 million, respectively, is classified in Selling, general and administrative expenses on the condensed consolidated financial statements. During the three and nine months ended September 30, 2023, the Company expensed $3.6 million and $13.6 million, respectively, related to this commitment. Of the expensed amounts for the three and nine months ended September 30, 2023, $3.0 million and $8.3 million, respectively, is classified in Cost of revenues (exclusive of depreciation and amortization), and $0.6 million and $5.3 million, respectively, is classified in Selling, general and administrative expenses on the condensed consolidated financial statements. As of September 30, 2024, the Company has $28.3 million remaining to be expensed under this humanitarian commitment.
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Following the invasion, the Company executed its business continuity plans to assist relocating employees residing in Ukraine and the surrounding region, who were impacted by the war and geopolitical uncertainty, to other countries and to assign delivery personnel in locations outside of the region to serve in unbilled standby or backup capacities to ensure the continuity of delivery for its clients who have substantial delivery exposure to Ukraine or other delivery concerns resulting from the invasion and ongoing war. During the three and nine months ended September 30, 2024, the Company incurred no expenses related to the standby resources and incurred expenses of $0.0 million and $0.9 million, respectively, related to its geographic repositioning efforts, classified as Selling, general and administrative expenses. During the three and nine months ended September 30, 2023, the Company incurred expenses of $0.0 million and $9.4 million, respectively, related to the standby resources, classified as Cost of revenues (exclusive of depreciation and amortization). Also, during the three and nine months ended September 30, 2023, the Company incurred expenses of $0.4 million and $0.9 million, respectively, related to its geographic repositioning efforts, classified as Selling, general and administrative expenses.
3.ACQUISITIONS
2024 Acquisitions - During the nine months ended September 30, 2024, the Company completed three acquisitions with a total purchase price of $74.2 million including contingent consideration with acquisition-date fair value of $9.8 million. These acquisitions expanded EPAM’s geographical reach across Latin America and Europe, enhanced its capabilities in Life Sciences analytics, as well as added $20.3 million of intangible assets, consisting mainly of customer relationships. Pro forma results of operations have not been presented because the effect of these acquisitions on the Company’s condensed consolidated financial statements was not material.
2023 Acquisitions — During the year ended December 31, 2023, the Company completed two acquisitions with a total purchase price of $42.6 million including contingent consideration with acquisition-date fair value of $14.9 million. These acquisitions expanded EPAM’s capabilities in software design and product development, as well as added $13.9 million of intangible assets, consisting of customer relationships. Pro forma results of operations have not been presented because the effect of these acquisitions on the Company’s condensed consolidated financial statements was not material.

4.GOODWILL
Goodwill by reportable segment was as follows:
North AmericaEuropeTotal
Balance as of January 1, 2024
$241,860 $320,599 $562,459 
2024 Acquisitions40,517 12,911 53,428 
2023 Acquisitions purchase accounting adjustments861 — 861 
Effect of net foreign currency exchange rate changes65 5,090 5,155 
Balance as of September 30, 2024
$283,303 $338,600 $621,903 
There were no accumulated impairment losses in the North America or Europe reportable segments as of September 30, 2024 or December 31, 2023.
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5.FAIR VALUE MEASUREMENTS
The Company carries certain assets and liabilities at fair value on a recurring basis on its condensed consolidated balance sheets. The following tables present the fair values of the Company’s financial assets and liabilities measured at fair value on a recurring basis as of September 30, 2024 and December 31, 2023:
As of September 30, 2024
BalanceLevel 1Level 2Level 3
Foreign exchange derivative assets$3,275 $— $3,275 $— 
Total assets measured at fair value on a recurring basis$3,275 $— $3,275 $— 
Foreign exchange derivative liabilities$3,945 $— $3,945 $— 
Contingent consideration liabilities31,998 — — 31,998 
Total liabilities measured at fair value on a recurring basis
$35,943 $— $3,945 $31,998 
As of December 31, 2023
BalanceLevel 1Level 2Level 3
Foreign exchange derivative assets$10,416 $— $10,416 $— 
Total assets measured at fair value on a recurring basis$10,416 $— $10,416 $— 
Foreign exchange derivative liabilities$248 $— $248 $— 
Contingent consideration liabilities23,150 — — 23,150 
Total liabilities measured at fair value on a recurring basis
$23,398 $— $248 $23,150 
The foreign exchange derivatives are valued using pricing models and discounted cash flow methodologies based on observable foreign exchange data at the measurement date. See Note 6 “Derivative Financial Instruments” in the condensed consolidated interim financial statements for additional information regarding derivative financial instruments.
The fair value of the contingent consideration was determined using a probability-weighted expected return method and is based on the expected future payments to be made to the sellers of the acquired businesses in accordance with the provisions outlined in the respective purchase agreements. Although there is significant judgment involved, the Company believes its estimates and assumptions are reasonable. In determining fair value, the Company considered a variety of factors, including future performance of the acquired businesses using financial projections developed by the Company and market risk assumptions that were derived for revenue growth and earnings before interest and taxes. The Company estimated future payments using the earnout formula and performance targets specified in the purchase agreements and adjusted those estimates to reflect the probability of their achievement. Those weighted-average estimated future payments were then discounted to present value using a rate based on the weighted-average cost of capital of guideline companies. The discount rates used to determine the fair value of contingent consideration for the 2024 Acquisitions ranged from a minimum of 12% to a maximum of 20%. The discount rate used to determine the fair value of contingent consideration for the 2023 Acquisitions was 16.0%. Changes in financial projections, market risk assumptions, discount rates or probability assumptions related to achieving the various earnout criteria would result in a change in the fair value of the recorded contingent liabilities. Such changes, if any, are recorded within Interest and other income, net in the Company’s condensed consolidated statement of income.

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A reconciliation of the beginning and ending balances of Level 3 contingent consideration liabilities using significant unobservable inputs for the nine months ended September 30, 2024 is as follows:
Amount
Contingent consideration liabilities as of January 1, 2024
$23,150 
Acquisition date fair value of contingent consideration — 2024 Acquisitions9,756 
Changes in fair value of contingent consideration included in Interest and other income, net4,031 
Payment of contingent consideration for previously acquired businesses(5,000)
Effect of foreign currency exchange rate changes, net61 
Contingent consideration liabilities as of September 30, 2024
$31,998 
Financial Assets and Liabilities Not Measured at Fair Value on a Recurring Basis
The following tables present the estimated fair values of the Company’s financial assets and liabilities not measured at fair value on a recurring basis as of the dates indicated:
Fair Value Hierarchy
BalanceEstimated Fair ValueLevel 1Level 2Level 3
September 30, 2024
Financial Assets:
Cash equivalents:
Money market funds$149,142 $149,142 $149,142 $— $— 
Time deposits28,921 28,921 — 28,921 — 
Total cash equivalents$178,063 $178,063 $149,142 $28,921 $— 
Time deposits included in Short-term investments$20,920 $20,920 $— $20,920 $— 
Financial Liabilities:
Borrowings under the 2021 Credit Agreement$25,000 $25,000 $— $25,000 $— 
Deferred consideration for asset acquisition$47,083 $47,083 $— $47,083 $— 
Fair Value Hierarchy
BalanceEstimated Fair ValueLevel 1Level 2Level 3
December 31, 2023
Financial Assets:
Cash equivalents:
Money market funds$168,120 $168,120 $168,120 $— $— 
Time deposits105,210 105,210 — 105,210 — 
Total cash equivalents$273,330 $273,330 $168,120 $105,210 $— 
Time deposits included in Short-term investments$60,739 $60,739 $— $60,739 $— 
Financial Liabilities:
Borrowings under the 2021 Credit Agreement$25,000 $25,000 $— $25,000 $— 
Deferred consideration for asset acquisition$46,954 $46,954 $— $46,954 $— 
Non-Marketable Securities Without Readily Determinable Fair Values
The Company holds investments in equity securities that do not have readily determinable fair values. These investments are recorded at cost and are remeasured to fair value based on certain observable price changes or impairment events as they occur. The carrying amount of these investments was $39.1 million and $31.7 million as of September 30, 2024 and December 31, 2023, respectively, and is classified as Other noncurrent assets in the Company’s condensed consolidated balance sheets.
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6.DERIVATIVE FINANCIAL INSTRUMENTS
In the normal course of business, the Company uses derivative financial instruments to manage the risk of fluctuations in foreign currency exchange rates. The Company has a hedging program whereby it enters into a series of foreign exchange forward contracts with durations of twelve months or less that are designated as cash flow hedges of forecasted Polish zloty, Indian rupee, Hungarian forint and Mexican peso transactions.
As of September 30, 2024, all of the Company’s foreign exchange forward contracts were designated as hedges and there is no financial collateral (including cash collateral) required to be posted by the Company related to the foreign exchange forward contracts.
The fair value of derivative instruments on the Company’s condensed consolidated balance sheets as of September 30, 2024 and December 31, 2023 were as follows:
As of September 30, 2024As of December 31, 2023
Balance Sheet ClassificationAsset DerivativesLiability DerivativesAsset DerivativesLiability Derivatives
Foreign exchange forward contracts designated as hedging instrumentsPrepaid expenses and other current assets$3,275 $10,416 
Accrued expenses and other current liabilities$3,945 $248 

7.LEASES
The Company leases office space, corporate apartments, office equipment, and vehicles. Many of the Company’s leases contain variable payments including changes in base rent and charges for common area maintenance or other miscellaneous expenses. Due to this variability, the cash flows associated with these variable payments are not included in the minimum lease payments used in determining the right-of-use assets and associated lease liabilities and are recognized in the period in which the obligation for such payments is incurred. The Company’s leases have remaining lease terms ranging from 0.1 to 7.3 years. Certain lease agreements, mainly for office space, include options to extend or terminate the lease before the expiration date. The Company considers such options when determining the lease term when it is reasonably certain that the Company will exercise that option. The Company leases and subleases a portion of its office space to third parties. Lease income and sublease income were not material for the three and nine months ended September 30, 2024 and 2023.
During the three and nine months ended September 30, 2024 and 2023, the components of lease cost were as follows:
 Three Months Ended
September 30,		Nine Months Ended
September 30,
Income Statement Classification2024202320242023
Operating lease costSelling, general and administrative expenses$10,893 $11,592 $32,579 $34,725 
Variable lease costSelling, general and administrative expenses2,913 2,905 7,981 9,941 
Short-term lease costSelling, general and administrative expenses881 998 2,787 4,609 
Total lease cost$14,687 $15,495 $43,347 $49,275 
Supplemental cash flow information related to leases for the three and nine months ended September 30, 2024 and 2023 was as follows:
Three Months Ended
September 30,		Nine Months Ended
September 30,
 2024202320242023
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows used for operating leases$11,683 $12,383 $34,308 $37,628 
Right-of-use assets obtained in exchange for lease obligations:
Operating leases$837 $3,815 $11,823 $10,843 
Non-cash net increase due to lease modifications:
Operating lease right-of-use assets$5,103 $1,312 $11,342 $7,203 
Operating lease liabilities$5,245 $1,276 $11,376 $7,416 
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Weighted average remaining lease term and discount rate as of September 30, 2024 and 2023 were as follows:
 As of September 30, 2024As of September 30, 2023
Weighted average remaining lease term, in years:
Operating leases4.65.0
Weighted average discount rate:
Operating leases4.3 %3.9 %
As of September 30, 2024, operating lease liabilities will mature as follows:
Year ending December 31,Lease Payments
2024 (excluding nine months ended September 30, 2024)
$11,098 
202540,667 
202634,216 
202724,747 
202820,533 
Thereafter21,728 
Total lease payments152,989 
Less: imputed interest(12,877)
Total$140,112 
The Company had committed to payments of $3.6 million related to operating lease agreements that had not yet commenced as of September 30, 2024. These operating leases will commence on various dates during 2024 and 2025 with lease terms ranging from 3.0 to 5.1 years. The Company did not have any material finance lease agreements that had not yet commenced.
8.DEBT
Revolving Credit Facility — On October 21, 2021, the Company replaced its 2017 credit facility with a new unsecured credit agreement (the “2021 Credit Agreement”) with PNC Bank, National Association; PNC Capital Markets LLC; Citibank N.A.; Wells Fargo Bank, National Association; Santander Bank, N.A.; and Raiffeisen Bank International AG (collectively the “Lenders”). The 2021 Credit Agreement provides for a revolving credit facility (the “2021 Revolving Facility”) with a borrowing capacity of $700.0 million, with the potential to increase the borrowing capacity up to $1,000.0 million if certain conditions are met. The 2021 Credit Agreement matures on October 21, 2026.
Borrowings under the 2021 Revolving Facility may be denominated in U.S. dollars or up to a maximum of $150.0 million equivalent in British pounds sterling, Canadian dollars, euros or Swiss francs and other currencies as may be approved by the administrative agent and the Lenders. Borrowings under the 2021 Revolving Facility bear interest at either a base rate or Euro-rate plus a margin based on the Company’s leverage ratio. The base rate is equal to the highest of (a) the Overnight Bank Funding Rate, plus 0.5%, (b) the Prime Rate, or (c) the Daily Simple SOFR Rate, plus 1.0%, so long as the Daily Simple SOFR Rate is offered, ascertainable and not unlawful. As of September 30, 2024, the Company’s outstanding borrowings are subject to a SOFR-based interest rate, which resets regularly at issuance, based on lending terms.
The 2021 Credit Agreement includes customary business and financial covenants that may restrict the Company’s ability to make or pay dividends (other than certain intercompany dividends) if a potential or an actual event of default has occurred or would be triggered. As of September 30, 2024, the Company was in compliance with all covenants contained in the 2021 Credit Agreement.
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The following table presents the outstanding debt and borrowing capacity of the Company under the 2021 Credit Agreement:
 As of
September 30,
2024		As of
December 31,
2023
Outstanding debt$25,000 $25,000 
Interest rate5.9 %6.3 %
Available borrowing capacity$675,000 $675,000 
Maximum borrowing capacity$700,000 $700,000 

9.COST OPTIMIZATION PROGRAMS
During the quarter ended June 30, 2024, the Company initiated the 2024 Cost Optimization Program to streamline operations and optimize corporate functions. This program is expected to include workforce reductions and contract terminations. The Company expects to complete all restructuring actions commenced under the 2024 Cost Optimization Program by the end of the second quarter of 2025 and to incur additional charges of approximately $14.0 million. The actual amount and timing of severance and other costs are dependent in part upon local country consultation processes and regulations and may differ from our current expectations and estimates.
During the quarter ended September 30, 2023, the Company initiated the 2023 Cost Optimization Program to streamline operations and optimize corporate functions. This program included workforce reduction and closure of underutilized facilities. As of June 30, 2024, the Company has completed all restructuring actions commenced under the 2023 Cost Optimization Program.
The total costs related to the Cost Optimization Programs are classified in Selling, general and administrative expenses in the condensed consolidated statements of income. The Company did not allocate these charges to individual segments as they are not considered by the chief operating decision maker during the review of segment results. Accordingly, such expenses are presented in our segment reporting as part of “Other unallocated expenses” (See Note 16 “Segment Information”).
Activity in the Company’s restructuring reserves was as follows:
Balance at December 31, 2023ChargesPayments MadeBalance at September 30, 2024
2024 Cost Optimization Program
Employee separation costs $— $17,132 $(13,506)$3,626 
Contract termination charges— 286 — 286 
2023 Cost Optimization Program
Employee separation costs6,9669,015(15,981)— 
Total $6,966$26,433$(29,487)$3,912
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10.REVENUES
Disaggregation of Revenues
The following tables present the disaggregation of the Company’s revenues by client location, including a reconciliation of the disaggregated revenues with the reportable segments (Note 16 “Segment Information”) for the periods indicated:
Three Months Ended September 30, 2024
Reportable Segments
North AmericaEuropeConsolidated Revenues
Client Locations
Americas$669,582 $27,585 $697,167 
EMEA(1)
34,679 410,188 444,867 
APAC352 25,141 25,493 
CEE(1)
— — — 
Revenues$704,613 $462,914 $1,167,527 
Nine Months Ended September 30, 2024
Reportable Segments
North AmericaEuropeConsolidated Revenues
Client Locations
Americas$2,002,942 $78,344 $2,081,286 
EMEA(1)
103,220 1,222,215 1,325,435 
APAC1,809 71,059 72,868 
CEE(1)
— — — 
Revenues$2,107,971 $1,371,618 $3,479,589 
(1)As a result of the Company’s exit from Russia and sale of the Company’s remaining holdings in Russia to a third-party on July 26, 2023, revenues from the CEE region are no longer material. Starting in 2024, revenues from the CEE region are included in the EMEA region.
Three Months Ended September 30, 2023
Reportable Segments
North AmericaEuropeRussiaConsolidated Revenues
Client Locations
Americas$654,717 $22,693 $— $677,410 
EMEA29,251 416,986 — 446,237 
APAC786 24,265 — 25,051 
CEE24 1,869 1,545 3,438 
Revenues$684,778 $465,813 $1,545 $1,152,136 
Nine Months Ended September 30, 2023
Reportable Segments
North AmericaEuropeRussiaConsolidated Revenues
Client Locations
Americas$1,991,871 $73,797 $631 $2,066,299 
EMEA80,252 1,289,007 — 1,369,259 
APAC2,161 73,919 — 76,080 
CEE522 5,679 15,444 21,645 
Revenues$2,074,806 $1,442,402 $16,075 $3,533,283 
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The following tables present the disaggregation of the Company’s revenues by industry vertical, including a reconciliation of the disaggregated revenues with the reportable segments (Note 16 “Segment Information”) for the periods indicated:
Three Months Ended September 30, 2024
Reportable Segments
North AmericaEuropeConsolidated Revenues
Industry Verticals
Consumer Goods, Retail & Travel(1)
$107,866 $143,259 $251,125 
Financial Services129,339 125,296 254,635 
Software & Hi-Tech131,145 46,928 178,073 
Business Information & Media115,121 52,273 167,394 
Life Sciences & Healthcare120,659 21,675 142,334 
Emerging Verticals100,483 73,483 173,966 
Revenues$704,613 $462,914 $1,167,527 
Nine Months Ended September 30, 2024
Reportable Segments
North AmericaEuropeConsolidated Revenues
Industry Verticals
Consumer Goods, Retail & Travel(1)
$339,556 $423,026 $762,582 
Financial Services377,000 364,740 741,740 
Software & Hi-Tech392,600 127,727 520,327 
Business Information & Media332,602 170,872 503,474 
Life Sciences & Healthcare362,983 59,644 422,627 
Emerging Verticals303,230 225,609 528,839 
Revenues$2,107,971 $1,371,618 $3,479,589 
Three Months Ended September 30, 2023
Reportable Segments
North AmericaEuropeRussiaConsolidated Revenues
Industry Verticals
Consumer Goods, Retail & Travel(1)
$115,778 $146,837 $342 $262,957 
Financial Services131,499 114,122 814 246,435 
Software & Hi-Tech136,520 37,545 281 174,346 
Business Information & Media104,863 78,983 15 183,861 
Life Sciences & Healthcare109,137 15,143 (36)124,244 
Emerging Verticals86,981 73,183 129 160,293 
Revenues$684,778 $465,813 $1,545 $1,152,136 
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Nine Months Ended September 30, 2023
Reportable Segments
North AmericaEuropeRussiaConsolidated Revenues
Industry Verticals
Consumer Goods, Retail & Travel(1)
$359,475 $451,531 $3,770 $814,776 
Financial Services410,527 358,091 7,450 776,068 
Software & Hi-Tech422,073 115,137 1,545 538,755 
Business Information & Media327,378 248,351 196 575,925 
Life Sciences & Healthcare305,700 44,123 120 349,943 
Emerging Verticals249,653 225,169 2,994 477,816 
Revenues$2,074,806 $1,442,402 $16,075 $3,533,283 
(1) The Company renamed the Travel & Consumer vertical to Consumer Goods, Retail & Travel to better reflect the mix of clients included in this vertical. This constitutes a naming change only and no changes were made to amounts reported.
The following tables present the disaggregation of the Company’s revenues by contract type including a reconciliation of the disaggregated revenues with the Company’s reportable segments (Note 16 “Segment Information”) for the periods indicated:
Three Months Ended September 30, 2024
Reportable Segments
North AmericaEuropeConsolidated Revenues
Contract Types
Time-and-material$596,111 $372,056 $968,167 
Fixed-price102,239 89,276 191,515 
Licensing and other revenues6,263 1,582 7,845 
Revenues$704,613 $462,914 $1,167,527 
Nine Months Ended September 30, 2024
Reportable Segments
North AmericaEuropeConsolidated Revenues
Contract Types
Time-and-material$1,793,852 $1,099,462 $2,893,314 
Fixed-price296,602 266,888 563,490 
Licensing and other revenues17,517 5,268 22,785 
Revenues$2,107,971 $1,371,618 $3,479,589 
Three Months Ended September 30, 2023
Reportable Segments
North AmericaEuropeRussiaConsolidated Revenues
Contract Types
Time-and-material$602,765 $391,479 $1,355 $995,599 
Fixed-price73,640 73,226 190 147,056 
Licensing and other revenues8,373 1,108 — 9,481 
Revenues$684,778 $465,813 $1,545 $1,152,136 
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Nine Months Ended September 30, 2023
Reportable Segments
North AmericaEuropeRussiaConsolidated Revenues
Contract Types
Time-and-material$1,854,159 $1,233,271 $11,168 $3,098,598 
Fixed-price202,144 205,897 4,873 412,914 
Licensing and other revenues18,503 3,234 34 21,771 
Revenues$2,074,806 $1,442,402 $16,075 $3,533,283 
Timing of Revenue Recognition
The following tables present the timing of revenue recognition reconciled with the Company’s reportable segments (Note 16 “Segment Information”) for the periods indicated:
Three Months Ended September 30, 2024
Reportable Segments
North AmericaEuropeConsolidated Revenues
Timing of Revenue Recognition
Transferred over time$701,014 $461,923 $1,162,937 
Transferred at a point of time3,599 991 4,590 
Revenues$704,613 $462,914 $1,167,527 
Nine Months Ended September 30, 2024
Reportable Segments
North AmericaEuropeConsolidated Revenues
Timing of Revenue Recognition
Transferred over time$2,097,251 $1,368,155 $3,465,406 
Transferred at a point of time10,720 3,463 14,183 
Revenues$2,107,971 $1,371,618 $3,479,589 
Three Months Ended September 30, 2023
Reportable Segments
North AmericaEuropeRussiaConsolidated Revenues
Timing of Revenue Recognition
Transferred over time$682,410 $465,286 $1,545 $1,149,241 
Transferred at a point of time2,368 527 — 2,895 
Revenues$684,778 $465,813 $1,545 $1,152,136 
Nine Months Ended September 30, 2023
Reportable Segments
North AmericaEuropeRussiaConsolidated Revenues
Timing of Revenue Recognition
Transferred over time$2,066,081 $1,440,682 $16,042 $3,522,805 
Transferred at a point of time8,725 1,720 33 10,478 
Revenues$2,074,806 $1,442,402 $16,075 $3,533,283 
During the three and nine months ended September 30, 2024, the Company recognized $1.6 million and $15.0 million, respectively, of revenues from performance obligations satisfied in previous periods compared to $9.2 million and $7.1 million during the three and nine months ended September 30, 2023, respectively.
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The following table includes the estimated revenues expected to be recognized in the future related to performance obligations that are partially or fully unsatisfied as of September 30, 2024. The Company applies a practical expedient and does not disclose the value of unsatisfied performance obligations for contracts (i) that have an original expected duration of one year or less and (ii) for which it recognizes revenues at the amount to which it has the right to invoice for services provided.
Less than 1 year1 Year2 Years3 YearsTotal
Contract Type
Fixed-price$23,832 $3,269 $— $— $27,101 
The Company applies a practical expedient and does not disclose the amount of the transaction price allocated to the remaining performance obligations nor provide an explanation of when the Company expects to recognize that amount as revenue for certain variable consideration.

Contract Balances
The following table provides information on the classification of contract assets and liabilities in the condensed consolidated balance sheets:
 As of
September 30,
2024		As of
December 31,
2023
Contract assets included in Trade receivables and contract assets, net$56,748 $24,309 
Contract liabilities included in Accrued expenses and other current liabilities$32,458 $27,988 
Contract liabilities included in Other noncurrent liabilities$290 $951 
Contract assets comprise amounts where the Company’s right to bill is contingent on something other than the passage of time such as achievement of contractual milestones. Contract assets have increased from December 31, 2023 primarily due to contracts where the Company’s right to bill is contingent upon achievement of contractual milestones. Contract liabilities comprise amounts collected from the Company’s clients for revenues not yet earned and such amounts are anticipated to be recorded as revenues when services are performed in subsequent periods. Contract liabilities have increased from December 31, 2023 primarily due to higher levels of advance collections.
During the three and nine months ended September 30, 2024, the Company recognized $2.9 million and $20.3 million, respectively, of revenues that were included in Accrued expenses and other current liabilities at December 31, 2023. During the three and nine months ended September 30, 2023, the Company recognized $3.1 million and $27.4 million, respectively, of revenues that were included in Accrued expenses and other current liabilities at December 31, 2022.
11.GOVERNMENT ASSISTANCE PROGRAMS AND INCENTIVES
The Company benefits from various government incentives in countries where it operates in the form of cash grants or refundable tax credits. The eligibility to receive such assistance and amounts to be granted are determined based on regulations issued by the relevant government authorities. The incentives are generally based on qualifying expenditures or subject to achieving certain employment and investment targets. As there is no authoritative guidance under U.S. GAAP for government assistance to for-profit business entities, the Company accounts for government assistance by analogy to International Accounting Standards 20 ("IAS 20"), Accounting for Government Grants and Disclosure of Government Assistance. In accordance with IAS 20, the Company recognizes the benefits from government assistance when it has reasonable assurance it will comply with the terms of the assistance and the assistance will be received.
Tax Incentive for Research and Development (“R&D”) in Poland
During the third quarter of 2024, the Company determined it was eligible for R&D tax relief in Poland which allows the Company to reduce its tax base through bonus deductions for specific costs, such as salaries and social security contributions for employees working on R&D projects. The Company is able to utilize the tax relief by first offsetting its corporate income tax liability and then, to the extent the tax relief exceeds its corporate income tax liability, reducing future remittances of personal income tax withholding for qualified employees.

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During the quarter ended September 30, 2024, the Company determined it was probable it would receive government incentives of $22.9 million related to 2023 R&D activities and $29.1 million related to R&D activities completed during the first nine months of 2024 which were recorded as a reduction to Cost of revenues in the condensed consolidated statements of income during the three and nine months ended September 30, 2024. As of September 30, 2024, $20.9 million of benefits were included in Prepaid and other current assets and $31.0 million of benefits were included in Other noncurrent assets on the condensed consolidated balance sheet related to the Poland R&D incentive.
12.STOCKHOLDERS’ EQUITY
Stock-Based Compensation
The following table summarizes the components of stock-based compensation expense recognized in the Company’s condensed consolidated statements of income for the periods indicated:
Three Months Ended
September 30,		Nine Months Ended
September 30,
2024202320242023
Cost of revenues (exclusive of depreciation and amortization)$19,576 $18,142 $58,870 $49,569 
Selling, general and administrative expenses22,548 19,705 63,729 59,967 
Total$42,124 $37,847 $122,599 $109,536 
Stock Options
Stock option activity under the Company’s plans is set forth below:
 Number of
Options 		Weighted Average
Exercise Price 		Aggregate
Intrinsic Value 		Weighted Average
Remaining Contractual Term (in years)
Options outstanding at January 1, 2024
1,629 $125.88 
Options granted81 $296.87 
Options exercised(409)$43.83 
Options forfeited(9)$276.69 
Options expired(4)$373.38 
Options outstanding at September 30, 2024
1,288 $160.72 $94,480 3.9
Options vested and exercisable as of September 30, 2024
1,046 $128.05 $94,480 2.8
Options expected to vest as of September 30, 2024
231 $302.02 $— 8.4
As of September 30, 2024, $21.6 million of total remaining unrecognized stock-based compensation cost related to unvested stock options, net of estimated forfeitures, is expected to be recognized over the weighted-average remaining requisite service period of 2.1 years.
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Restricted Stock and Restricted Stock Units
Service-Based Awards
The table below summarizes activity related to the Company’s equity-classified and liability-classified service-based awards for the nine months ended September 30, 2024:
Equity-Classified
Equity-Settled
Restricted Stock Units
Liability-Classified
Cash-Settled
Restricted Stock Units
 
Number of
Shares 
Weighted Average Grant Date
Fair Value Per Share 
Number of
Shares 
Weighted Average Grant Date
Fair Value Per Share 
Unvested service-based awards outstanding at January 1, 2024
1,074 $292.45 98 $287.36 
Awards granted535 $289.73 34 $298.35 
Awards modified1 $366.27 (1)$114.30 
Awards vested(335)$287.43 (39)$272.94 
Awards forfeited/cancelled(77)$300.63 (2)$295.91 
Unvested service-based awards outstanding at September 30, 2024
1,198 $292.15 90 $298.91 
As of September 30, 2024, $248.9 million of total remaining unrecognized stock-based compensation cost related to service-based equity-classified restricted stock units (“RSUs”), net of estimated forfeitures, is expected to be recognized over the weighted-average remaining requisite service period of 2.6 years.
As of September 30, 2024, $14.8 million of total remaining unrecognized stock-based compensation cost related to service-based liability-classified cash-settled RSUs, net of estimated forfeitures, is expected to be recognized over the weighted-average remaining requisite service period of 2.4 years.
The liability associated with the service-based liability-classified RSUs as of September 30, 2024 and December 31, 2023, was $1.4 million and $8.7 million, respectively, and was classified as Accrued compensation and benefits expenses in the condensed consolidated balance sheets.
Performance-Based Awards
The table below summarizes activity related to the Company’s equity-classified performance-based restricted stock unit awards (“PSUs”) for the nine months ended September 30, 2024:
Equity-Classified
Equity-Settled
Restricted Stock Units
 
Number of
Shares 
Weighted Average Grant Date
Fair Value Per Share 
Unvested performance-based awards outstanding at January 1, 2024
13 $441.87 
Awards granted38 $327.31 
Awards vested(3)$560.97 
Awards forfeited/cancelled(1)$594.50 
Unvested performance-based awards outstanding at September 30, 2024
47 $333.56 
As of September 30, 2024, $8.7 million of total remaining unrecognized stock-based compensation cost related to PSUs is expected to be recognized over the weighted-average remaining requisite service period of 1.9 years.
During the three months ended March 31, 2024, the Company granted to its named executive officers and certain other members of senior management PSUs that vest after 3 years, contingent on meeting certain financial performance targets, market conditions and continued service. The financial performance targets will be set by the Compensation Committee of the Board of Directors at the beginning of each year. For the portion of the awards subject to market conditions, fair value was determined using a Monte Carlo valuation model. The portion of the awards associated with financial performance in future years where the financial performance targets have not yet been determined are not considered granted for accounting purposes. There were 32 thousand such awards as of September 30, 2024.
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2021 Employee Stock Purchase Plan
The 2021 Employee Stock Purchase Plan ("ESPP") enables eligible employees to purchase shares of EPAM’s common stock at a discount at the end of each designated offering period, which occurs every six months ending April 30th and October 31st. The purchase price is equal to 85% of the fair market value of a share of EPAM’s common stock on the first date of an offering or the date of purchase, whichever is lower. During the nine months ended September 30, 2024, the ESPP participants purchased 85 thousand shares of common stock under the ESPP. During the nine months ended September 30, 2023, the ESPP participants purchased 77 thousand shares of common stock under the ESPP.
The Company recognizes compensation expense related to share issuances pursuant to the ESPP on a straight-line basis over the six-month offering period. For the three and nine months ended September 30, 2024, the Company recognized $2.3 million and $7.5 million, respectively, of stock-based compensation expense related to the ESPP. For the three and nine months ended September 30, 2023, the Company recognized $3.1 million and $9.7 million, respectively, of stock-based compensation expense related to the ESPP. As of September 30, 2024, total unrecognized stock-based compensation cost related to the ESPP was $0.8 million, which is expected to be recognized over a period of 0.1 years.
Commitments for Future Equity Awards
In connection with the Company’s acquisitions of businesses as discussed in Note 3 “Acquisitions,” EPAM enters into agreements that contractually commit it to granting equity awards at future dates. The agreements are unique to each acquisition and terms vary, including specifying either the number of future awards to be issued or a monetary value that will be settled with equity awards valued at future stock prices.
As of September 30, 2024, the Company has commitments to grant up to $15.6 million of equity awards with the number of awards to be determined based on future stock prices. Additionally, these awards contain performance criteria that will determine the number of future awards to be issued and there is a service-based vesting requirement after the grant date associated with these awards. As these awards are considered granted for accounting purposes, in determining the expense, the Company adjusts the expected settlement based on the probability of achievement of the performance criteria. Related to these awards, the amount of stock-based compensation expense recorded in the condensed consolidated statements of income for the three months ended September 30, 2024 was not material.

Share Repurchases
On August 1, 2024, the Board of Directors authorized a new share repurchase program (the “2024 Repurchase Program”) for up to $500.0 million of the Company's outstanding common stock. EPAM may repurchase shares of its common stock on a discretionary basis from time to time through open market purchases, privately negotiated transactions or other means, including through the use of trading plans intended to qualify under Rule 10b5-1 under the Securities Exchange Act of 1934, as amended. The timing and total amount of stock repurchases will depend upon business, economic and market conditions, corporate and regulatory requirements, prevailing stock prices, and other considerations. The share repurchase program has a term of 24 months, may be suspended or discontinued at any time, and does not obligate the company to acquire any amount of common stock. Prior to the authorization of the 2024 Repurchase Program, the Company repurchased common stock under the 2023 Repurchase Program and exhausted the $500.0 million authorized under that program as of June 30, 2024.
During the three and nine months ended September 30, 2024, the Company repurchased 245 thousand and 1,801 thousand shares of its common stock for $50.0 million and $385.0 million, respectively, in cash. During the three and nine months ended September 30, 2023, the Company repurchased 318 thousand and 543 thousand shares of its common stock for $78.5 million and $128.4 million, respectively, in cash. All of the repurchased shares have been retired. As of September 30, 2024, a remaining balance of $450.0 million was available for purchases of the Company’s common stock under the 2024 Repurchase Program.

13.INCOME TAXES
In determining its interim provision for income taxes, the Company uses an estimated annual effective tax rate, which is based on expected annual profit before tax, statutory tax rates and tax planning opportunities available in the various jurisdictions in which the Company operates. Certain significant or unusual items are separately recognized in the quarter in which they occur and can be a source of variability in the effective tax rates from quarter to quarter.

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The Company’s worldwide effective tax rate for the three months ended September 30, 2024 and 2023 was 28.1% and 26.3%, respectively, and 21.4% and 21.9% during the nine months ended September 30, 2024 and 2023, respectively. The Company recorded a tax shortfall upon vesting or exercise of stock awards of $0.3 million during the three months ended September 30, 2024 and excess tax benefits upon vesting or exercise of stock awards of $20.5 million during the nine months ended September 30, 2024, compared to excess tax benefits of $1.7 million and $15.1 million during the three and nine months ended September 30, 2023, respectively. The effective tax rate during the three and nine months ended September 30, 2024 was negatively impacted by the accounting treatment of the receipt of government incentives related to conducting R&D activities in Poland, which resulted in a 2.3% and 1.0% increase in the effective tax rate, respectively, and the non-deductibility of certain acquisition costs for tax purposes which resulted in a 1.4% and 0.6% increase in the effective tax rate, respectively. During the three and nine months ended September 30, 2023, the Company’s effective tax rate increased due to a $3.6 million charge in the third quarter associated with the completion of EPAM’s exit from Russia.
14.EARNINGS PER SHARE
Basic earnings per share is computed by dividing net income available to common shareholders by the weighted-average number of shares of common stock outstanding during the period. For purposes of computing basic earnings per share, any unvested shares of restricted stock that have been issued by the Company and are contingently returnable to the Company are excluded from the weighted-average number of shares of common stock outstanding during the period. Diluted earnings per share is computed by dividing net income available to common shareholders by the weighted-average number of shares of common stock outstanding during the period increased to include the number of additional shares of common stock that would have been outstanding if the potentially dilutive securities had been issued. Potentially dilutive securities include outstanding stock options, unvested restricted stock, unvested equity-settled RSUs and the stock to be issued under the Company’s ESPP. The dilutive effect of potentially dilutive securities is reflected in diluted earnings per share by application of the treasury stock method.
The following table sets forth the computation of basic and diluted earnings per share of common stock as follows:
 Three Months Ended
September 30,		Nine Months Ended
September 30,
 2024202320242023
Numerator for basic and diluted earnings per share:
Net income$136,346 $97,204 $351,234 $319,529 
Numerator for basic and diluted earnings per share$136,346 $97,204 $351,234 $319,529 
Denominator:  
Weighted average common shares for basic earnings per share56,910 57,853 57,445 57,850 
Net effect of dilutive stock options, restricted stock units, restricted stock awards and stock issuable under the ESPP515 1,095 721 1,293 
Weighted average common shares for diluted earnings per share
57,425 58,948 58,166 59,143 
Net income per share:  
Basic$2.40 $1.68 $6.11 $5.52 
Diluted$2.37 $1.65 $6.04 $5.40 
The number of shares underlying equity-based awards that were excluded from the calculation of diluted earnings per share as their effect would be anti-dilutive was 1,426 thousand and 1,056 thousand during the three and nine months ended September 30, 2024, respectively.
The number of shares underlying equity-based awards that were excluded from the calculation of diluted earnings per share as their effect would be anti-dilutive was 452 thousand and 410 thousand during the three and nine months ended September 30, 2023, respectively.


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15.COMMITMENTS AND CONTINGENCIES
Indemnification Obligations — In the normal course of business, the Company is a party to a variety of agreements under which it may be obligated to indemnify the other party for certain matters. These obligations typically arise in contracts where the Company customarily agrees to hold the other party harmless against losses arising from a breach of representations or covenants for certain matters, infringement of third-party intellectual property rights, data privacy violations, and certain tortious conduct in the course of providing services. The duration of these indemnifications varies, and in certain cases, is indefinite.
The Company is unable to reasonably estimate the maximum potential amount of future payments under these or similar agreements due to the unique facts and circumstances of each agreement and the fact that certain indemnifications provide for no limitation to the maximum potential future payments under the indemnification. Management is not aware of any such matters that would have a material effect on the condensed consolidated financial statements of the Company.
Litigation — From time to time, the Company is involved in litigation, claims or other contingencies arising in the ordinary course of business. The Company accrues a liability when a loss is considered probable and the amount can be reasonably estimated. When a material loss contingency is reasonably possible but not probable, the Company does not record a liability, but instead discloses the nature and the amount of the claim, and an estimate of the loss or range of loss, if such an estimate can be made. Legal fees are expensed as incurred. In the opinion of management, the outcome of any existing claims and legal or regulatory proceedings, if decided adversely, is not expected to have a material effect on the Company’s business, financial condition, results of operations or cash flows.
Ukraine Humanitarian Commitment — On March 4, 2022, EPAM announced that it has established a $100.0 million humanitarian commitment to support its employees in Ukraine and their families. See Note 2 “Impact of the Invasion of Ukraine” for more information regarding commitment to humanitarian aid for Ukraine.
Deferred Consideration — During the year ended December 31, 2022, the Company purchased software licenses for use in the regular course of business in exchange for an upfront payment and fixed, subsequent annual payments due over the next 4 years. This agreement was modified during the year ended December 31, 2023. As of September 30, 2024, the undiscounted deferred consideration amounts owed totaled approximately $49.7 million and are expected to be paid as follows: $16.6 million during the remainder of 2024, $16.6 million in 2025, and $16.5 million in 2026.
Contractual Commitment — On March 31, 2023, the Company entered into a 5-year agreement for cloud services through which it committed to spending at least $75.0 million over the term of the agreement. As of September 30, 2024, $64.9 million remains to be spent under this contractual commitment. The Company has the ability to cancel the commitment whereby it would incur a cancellation penalty of 20% of the remaining contractual commitment.

16.SEGMENT INFORMATION
The Company determines its business segments and reports segment information in accordance with how the Company’s chief operating decision maker (“CODM”) organizes the segments to evaluate performance, allocate resources and make business decisions. Segment results are based on the segment’s revenues and operating profit, where segment operating profit is defined as income from operations before unallocated costs. Expenses included in segment operating profit consist principally of direct selling and delivery costs as well as an allocation of certain shared services expenses. Certain corporate expenses are not allocated to specific segments as these expenses are not controllable at the segment level. Such expenses include certain types of professional fees, certain taxes included in operating expenses, compensation to non-employee directors and certain other general and administrative expenses, including compensation of specific groups of non-production employees. In addition, the Company does not allocate amortization of intangible assets acquired through business combinations, goodwill and other asset impairment charges, stock-based compensation expenses, acquisition-related costs and certain other one-time charges and benefits. These unallocated amounts are combined with total segment operating profit to arrive at consolidated income from operations as reported below in the reconciliation of segment operating profit to consolidated income before provision for income taxes. Additionally, management has determined that it is not practical to allocate identifiable assets by segment since such assets are used interchangeably among the segments.
The Company manages its business primarily based on the managerial responsibility for its client base and market. As managerial responsibility for a particular client relationship generally correlates with the client’s geographic location, there is a high degree of similarity between client locations and the geographic boundaries of the Company’s reportable segments. In some cases, managerial responsibility for a particular client is assigned to a management team in another region and is usually based on the strength of the relationship between client executives and particular members of EPAM’s senior management team. In such cases, the client’s activity would be reported through the management team’s reportable segment.
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On July 26, 2023, the Company completed the sale of its remaining holdings in Russia to a third party. As a result of this sale, the Company no longer has operations associated with this segment.
Revenues from external clients and operating profit/(loss), before unallocated expenses, by reportable segment for the three and nine months ended September 30, 2024 and 2023, were as follows:
 Three Months Ended
September 30,		Nine Months Ended
September 30,
 2024202320242023
Segment revenues:
North America$704,613 $684,778 $2,107,971 $2,074,806 
Europe462,914 465,813 1,371,618 1,442,402 
Russia— 1,545 — 16,075 
Total segment revenues$1,167,527 $1,152,136 $3,479,589 $3,533,283 
Segment operating profit/(loss):  
North America$155,570 $132,438 $399,072 $386,929 
Europe94,862 64,074 209,919 188,779 
Russia— (118)— (5,866)
Total segment operating profit$250,432 $196,394 $608,991 $569,842 
Intersegment transactions were excluded from the above on the basis that they are neither included in the measure of a segment’s profit and loss results, nor considered by the CODM during the review of segment results.
There were no clients that accounted for more than 10% of total segment revenues during the three and nine months ended September 30, 2024 and 2023.
Reconciliation of segment operating profit to consolidated income before provision for income taxes is presented below:
Three Months Ended
September 30,		Nine Months Ended
September 30,
2024202320242023
Total segment operating profit:$250,432 $196,394 $608,991 $569,842 
Unallocated amounts:
Stock-based compensation expense(42,124)(37,847)(122,599)(109,536)
Amortization of intangibles assets(5,707)(5,688)(17,477)(16,708)
Other acquisition-related expenses (7,098)(867)(8,777)(2,448)
Loss on sale of business— (25,922)— (25,922)
Other unallocated expenses(18,524)(12,042)(52,066)(36,483)
Income from operations176,979 114,028 408,072 378,745 
Interest and other income, net13,347 13,931 40,425 37,162 
Foreign exchange (loss)/gain(710)3,893 (1,416)(6,725)
Income before provision for income taxes$189,616 $131,852 $447,081 $409,182 
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Geographic Area Information
Long-lived assets presented in the table below include property and equipment, net of accumulated depreciation and amortization, and management has determined that it is not practical to allocate these assets by segment since such assets are used interchangeably among the segments. Physical locations and values of the Company’s long-lived assets are presented below:
As of
September 30,
2024		As of
December 31,
2023
Ukraine$58,793 $62,653 
Belarus46,627 49,875 
United States37,200 42,510 
India14,141 12,735 
Poland11,632 15,057 
Belgium4,980 3,032 
Hungary4,687 6,683 
Other 29,442 42,508 
Total$207,502 $235,053 
The table below presents information about the Company’s revenues by client location for the three and nine months ended September 30, 2024 and 2023:
Three Months Ended
September 30,		Nine Months Ended
September 30,
2024202320242023
United States$666,851 $652,757 $1,996,566 $1,981,816 
United Kingdom126,010 140,718 389,733 448,526 
Switzerland104,268 91,504 304,022 270,862 
Germany53,604 44,843 153,627 132,606 
Netherlands45,816 59,020 142,577 176,528 
Canada22,012 21,808 65,745 76,125 
Russia— 1,545 — 13,290 
Other locations148,966 139,941 427,319 433,530 
Total$1,167,527 $1,152,136 $3,479,589 $3,533,283 


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17.ACCUMULATED OTHER COMPREHENSIVE LOSS
The following table summarizes the changes in the accumulated balances for each component of accumulated other comprehensive loss:
Three Months Ended
September 30,		Nine Months Ended
September 30,
2024202320242023
Foreign currency translation
Beginning balance$(67,962)$(81,158)$(43,601)$(101,780)
Foreign currency translation39,596 (33,292)8,305 (9,231)
Net loss reclassified into Loss on sale of business— 23,931 — 23,931 
Income tax (expense)/benefit(8,822)3,560 (1,892)121 
Foreign currency translation, net of tax30,774 (5,801)6,413 14,821 
Ending balance$(37,188)$(86,959)$(37,188)$(86,959)
Cash flow hedging instruments
Beginning balance$1,479 $10,920 $7,819 $8,306 
Unrealized gain/ (loss) in fair value1,592 (8,805)(1,797)7,028 
Net gain reclassified into Cost of revenues (exclusive of depreciation and amortization)(4,185)(8,764)(9,040)(21,248)
Net gain reclassified into Foreign exchange loss— (211)— (178)
Income tax benefit599 4,036 2,503 3,268 
Cash flow hedging instruments, net of tax(1,994)(13,744)(8,334)(11,130)
Ending balance(1)
$(515)$(2,824)$(515)$(2,824)
Defined benefit plans
Beginning balance$(2,940)$(1,847)$(3,258)$(1,847)
Actuarial gains126 — 439 — 
Income tax benefit— — 5 — 
Defined benefit plans, net of tax126 — 444 — 
Ending balance$(2,814)$(1,847)$(2,814)$(1,847)
Accumulated other comprehensive loss$(40,517)$(91,630)$(40,517)$(91,630)
(1) As of September 30, 2024, the ending balance of net unrealized loss related to derivatives designated as cash flow hedges is expected to be reclassified into earnings in the next twelve months.

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18.SUBSEQUENT EVENTS
Acquisition — On November 1, 2024, the Company paid approximately $618.1 million in cash to acquire 99.7% of the outstanding shares of Neoris N.V. (together with its subsidiaries, “NEORIS”). NEORIS is a global advanced technology consultancy with approximately 4,800 professionals across major talent hubs in Latin America, Spain and the U.S. NEORIS specializes in delivering complex digital engagement and transformation projects for clients in the Americas and Europe.
Due to the timing of the acquisition, the initial accounting for the acquisition is incomplete. As such, the Company is not able to disclose certain information relating to the acquisition, including the preliminary fair value of assets acquired and liabilities assumed. The Company expects to complete the initial accounting for this acquisition during the fourth quarter of 2024.
Pending Acquisition — On October 7, 2024, the Company announced that it had reached an agreement with FD Technologies plc to acquire First Derivative Ltd (together with its subsidiaries, “First Derivative”), a Northern Ireland-headquartered managed services and consulting business for the capital markets industry with major delivery capability in the U.K., Ireland, North America and APAC. Under the terms of the agreement, the Company will acquire First Derivative for an aggregate purchase price of approximately $307.6 million in cash consideration, subject to customary adjustments for cash, indebtedness and net working capital. On October 24, 2024, the transaction was approved by the shareholders of FD Technologies plc. The transaction is targeted to close during the fourth quarter of 2024; however, the closing of the transaction remains subject to receipt of regulatory approvals and satisfaction of other customary closing conditions.
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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
You should read the following discussion and analysis of our financial condition and results of operations together with our Annual Report on Form 10-K for the year ended December 31, 2023 and the unaudited condensed consolidated financial statements and the related notes included elsewhere in this quarterly report. In addition to historical information, this discussion contains forward-looking statements that involve risks, uncertainties and assumptions that could cause actual results to differ materially from management’s expectations. Factors that could cause such differences are discussed in the sections entitled “Forward-Looking Statements” in this item and in “Part I. Item 1A. Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2023. We assume no obligation to update any of these forward-looking statements.
In this quarterly report, “EPAM,” “EPAM Systems, Inc.,” the “Company,” “we,” “us” and “our” refer to EPAM Systems, Inc. and its consolidated subsidiaries.
“EPAM” is a trademark of EPAM Systems, Inc. All other trademarks and service marks used herein are the property of their respective owners.
Executive Summary
We have used our software engineering expertise to become a leading global provider of digital engineering, cloud and AI-enabled transformation services, as well as a leading business and experience consulting partner for global enterprises and ambitious startups. We address our clients’ transformation challenges by fusing EPAM Continuum’s integrated strategy, experience and technology consulting with our 30+ years of engineering execution to speed our clients’ time to market and drive greater value from their digital investments.
Through increased specialization in focused verticals and a continued emphasis on strategic partnerships, we are able to deliver technology transformation from start to finish, leveraging agile methodologies, proven client collaboration frameworks, engineering excellence tools, hybrid teams and our award-winning proprietary global delivery platform.
Our clients depend on us to solve their complex technical challenges and rely on our expertise in core engineering, advanced technologies, digital design and intelligent enterprise development. We combine our software engineering heritage with strategic business and innovation consulting, design thinking, and physical-digital capabilities to deliver end-to-end digital transformation services for our clients. We focus on building long-term partnerships with our clients in a market that is constantly challenged by the pressures of digitization through our innovative strategy and scalable software solutions, integrated advisory, business consulting and experience design, and a continually evolving mix of advanced capabilities.
Our global delivery model and centralized support functions, combined with the benefits of scale from the shared use of fixed-cost resources, enhance our productivity levels and enable us to better manage the efficiency of our global operations. As a result, we have created a delivery base whereby our applications, tools, methodologies and infrastructure allow us to seamlessly deliver services and solutions from our global delivery centers to our clients across the world. Our teams of consultants, designers, architects, engineers and trainers have the capabilities and skill sets to deliver business results.
Business Update Regarding the War in Ukraine
On February 24, 2022, Russian forces attacked Ukraine and its people and EPAM has repeatedly called for an immediate end to this unlawful and unconscionable attack. EPAM’s highest priority is the safety and security of its employees and their families in Ukraine as well as in the broader region, and we have continued to support relocating our employees to lower risk locations, both within Ukraine and to other countries where we operate. The vast majority of our Ukraine employees are in safe locations and operating at levels of productivity consistent with those achieved prior to the attack. As of September 30, 2024, Ukraine continues to be a significant delivery location with a large number of delivery professionals. Furthermore, we have maintained our $100 million humanitarian aid commitment to our people in Ukraine in addition to our other donations and volunteer efforts.

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The impact of Russia’s invasion of Ukraine on our operations, personnel, and physical assets in Ukraine has had, and, along with any escalation of the war that includes Belarus’ territory or military, could continue to have a material adverse effect on our operations. Actions taken by other countries, including new and stricter sanctions by Canada, the United Kingdom, the European Union, the U.S. and other companies and organizations against officials, individuals, regions, and industries in Belarus, and Belarus’ responses to those sanctions, including counter-sanctions and other actions, have had and could continue to have a material adverse effect on our operations. Clients have and may continue to seek altered terms, conditions, and delivery locations for the performance of services, delay planned work or seek services from alternate providers, or suspend, terminate, fail to renew, or reduce existing contracts or services, which could have a material adverse effect on our financial condition. Some of our clients have implemented steps to block internet communications with Ukraine and Belarus to protect against potential cyberattacks or other information security threats, which has caused a material adverse effect on our ability to deliver our services to these clients from those locations. Such material adverse effects disrupt our delivery of services, cause us to shift all or portions of our work occurring in the region to other countries, restrict our ability to engage in certain projects in the region and serve certain clients in or from the region, and could negatively impact our personnel, operations, financial results and business outlook. Our Board of Directors continues its oversight of our strategic, geopolitical, and cybersecurity risks and the risks related to our geographic expansion. Our Board has received updates from management during both regular and special meetings, while also providing oversight of the risks associated with Russia’s invasion of Ukraine and other strategic areas of importance related to the war.
Moving Forward
We continue to execute our business continuity plans and adapt to developments as they occur to protect the safety of our people and address impacts on our delivery infrastructure, including reallocating work to other geographies within our global footprint. We have engaged both our personnel and our clients to meet their needs while mitigating delivery challenges. EPAM continues to operate productively in more than 55 countries and provides consistent high-quality delivery to our clients. Our global delivery centers have sufficient resources, including infrastructure and capital, to support ongoing operations. We continue to rapidly respond to the difficult conditions in Ukraine while maintaining a focus on our clients and long-term growth.
The implementation and execution of our business continuity plans, relocation costs, our humanitarian commitment to our people in Ukraine, and the cost of our phased exit from Russia resulted in materially increased expenses. Some of these expenses continued during this quarter and we expect some of these expenses will continue to occur in subsequent quarters for some time in the future.
We have no way to predict the progress or outcome of the war in Ukraine because the conflict and government reactions change quickly and are beyond our control. Prolonged military activities, broad-based sanctions and counter-sanctions, or escalation of the war that includes Belarus’ territory or military could have a material adverse effect on our operations and financial condition. The information contained in this section is accurate as of the date hereof but may become outdated due to changing circumstances beyond our control or present awareness. For additional information on the various risks posed by the attack against Ukraine and the impact in the region as well as other risks to our business, please read “Part I. Item 1A. Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2023 and “Part II. Item 1A. Risk Factors” in this quarterly report.
Year-to-Date 2024 Developments and Trends
For the first nine months of 2024, our revenues were $3.480 billion, a decrease of 1.5% from $3.533 billion reported for the same period of 2023. Our business and operating results were negatively impacted in the first nine months of 2024 by a decline at a former top-10 client included in our Business Information & Media vertical, however, there was moderate improvement in the remainder of our customer portfolio as evidenced by an overall 1.8% sequential growth from the second to third quarter of 2024. Income from operations as a percentage of revenues increased to 11.7% for the nine months ended September 30, 2024 as compared to 10.7% for the nine months ended September 30, 2023, largely driven by a $52.0 million benefit from the Poland research and development incentives as well as the recognition of a $25.9 million loss from the sale of the Russia business in 2023 partially offset by an increase in variable compensation expense.
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Critical Accounting Policies
The discussion and analysis of our financial position and results of operations is based on our unaudited condensed consolidated financial statements which have been prepared in accordance with U.S. GAAP. The preparation of these condensed consolidated financial statements in accordance with U.S. GAAP requires us to make estimates and judgments that may affect the reported amounts of assets, liabilities, revenues and expenses, and related disclosure of contingent assets and liabilities. On a recurring basis, we evaluate our estimates and judgments, including those related to revenue recognition and related allowances, impairments of long-lived assets including intangible assets, goodwill and right-of-use assets, income taxes including the valuation allowance for deferred tax assets, and stock-based compensation. Actual results may differ materially from these estimates under different assumptions and conditions. In addition, our reported financial condition and results of operations could vary due to a change in the application of a particular accounting standard.
During the three and nine months ended September 30, 2024, there have been no material changes to our critical accounting policies as reported in our Annual Report on Form 10-K for the year ended December 31, 2023.
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Results of Operations
The following table sets forth a summary of our consolidated results of operations for the periods indicated. This information should be read together with our unaudited condensed consolidated financial statements and related notes included elsewhere in this quarterly report. The operating results in any period are not necessarily indicative of the results that may be expected for any future period.
 Three Months Ended
September 30,		Nine Months Ended
September 30,
 2024202320242023
(in thousands, except percentages and per share data)
Revenues$1,167,527 100.0 %$1,152,136 100.0 %$3,479,589 100.0 %$3,533,283 100.0 %
Operating expenses:
Cost of revenues (exclusive of depreciation and amortization)(1)
763,992 65.4 %794,265 68.9 %2,409,183 69.3 %2,458,881 69.6 %
 Selling, general and administrative expenses(2)
206,820 17.7 %194,829 16.9 %599,331 17.2 %601,093 17.0 %
Depreciation and amortization expense19,736 1.7 %23,092 2.0 %63,003 1.8 %68,642 2.0 %
Loss on sale of business— — %25,922 2.3 %— — %25,922 0.7 %
Income from operations176,979 15.2 %114,028 9.9 %408,072 11.7 %378,745 10.7 %
Interest and other income, net13,347 1.1 %13,931 1.2 %40,425 1.1 %37,162 1.1 %
Foreign exchange (loss)/gain(710)(0.1)%3,893 0.3 %(1,416)— %(6,725)(0.2)%
Income before provision for income taxes189,616 16.2 %131,852 11.4 %447,081 12.8 %409,182 11.6 %
Provision for income taxes53,270 4.5 %34,648 3.0 %95,847 2.7 %89,653 2.6 %
Net income$136,346 11.7 %$97,204 8.4 %$351,234 10.1 %$319,529 9.0 %
Effective tax rate28.1 %26.3 %21.4 %21.9 %
Diluted earnings per share$2.37 $1.65 $6.04 $5.40 
(1)Includes $19,576 and $18,142 of stock-based compensation expense for the three months ended September 30, 2024 and 2023. respectively, and $58,870 and $49,569 of stock-based compensation expense for the nine months ended September 30, 2024 and 2023, respectively.
(2)Includes $22,548 and $19,705 of stock-based compensation expense for the three months ended September 30, 2024 and 2023, respectively, and $63,729 and $59,967 of stock-based compensation expense for the nine months ended September 30, 2024 and 2023, respectively.


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Consolidated Results Review
Revenues
During the three months ended September 30, 2024, our total revenues increased by 1.3% to $1.168 billion compared to the corresponding period in 2023. During the three months ended September 30, 2024 as compared to the same period last year, revenues have been positively impacted by stabilizing demand for our services and fluctuations in foreign currency exchange rates which increased our revenue growth by 0.4%, partially offset by the sale of our remaining holdings in Russia in the third quarter of 2023.
Revenues by client location for the three and nine months ended September 30, 2024 and 2023 were as follows:
 Three Months Ended
September 30,		Nine Months Ended
September 30,
 2024202320242023
 (in thousands, except percentages)(in thousands, except percentages)
Americas(1)
$697,167 59.7 %$677,410 58.8 %$2,081,286 59.8 %$2,066,299 58.4 %
EMEA(2)
444,867 38.1 %446,237 38.7 %1,325,435 38.1 %1,369,259 38.8 %
APAC(3)
25,493 2.2 %25,051 2.2 %72,868 2.1 %76,080 2.2 %
CEE(4)
— — %3,438 0.3 %— — %21,645 0.6 %
Revenues$1,167,527 100.0 %$1,152,136 100.0 %$3,479,589 100.0 %$3,533,283 100.0 %
(1)Americas includes revenues from clients in North, Central and South America.
(2)EMEA includes revenues from clients in Western Europe and the Middle East. Beginning in 2024, EMEA also includes revenues from Central and Eastern Europe.
(3)APAC includes revenues from clients in East Asia, Southeast Asia and Australia.
(4)CEE includes revenues from clients in Belarus, Georgia, Kazakhstan, Russia, Ukraine and Uzbekistan. As a result of the Company’s exit from Russia and sale of the Company’s remaining holdings in Russia to a third-party on July 26, 2023, revenues from the CEE region are no longer material. Beginning in 2024, revenues from the CEE region are included in the EMEA region.
During the three and nine months ended September 30, 2024, the United States continued to be our largest client location. During the three months ended September 30, 2024, revenues in the United States increased 2.2% to $666.9 million from $652.8 million in the third quarter of 2023, largely due to increased spending at certain large accounts in the region. During the nine months ended September 30, 2024, revenues in the United States increased to $1.997 billion as compared to $1.982 billion in the same period of the prior year.
The top three revenue contributing countries by client location in EMEA were the United Kingdom, Switzerland and Germany, generating $126.0 million, $104.3 million and $53.6 million in revenues, respectively, during the three months ended September 30, 2024. Revenues from clients in these three countries were $140.7 million, $91.5 million, and $44.8 million, respectively, in the corresponding period last year. During the nine months ended September 30, 2024, the United Kingdom, Switzerland and Germany performed as EMEA’s top revenue generating locations and contributed $389.7 million, $304.0 million, and $153.6 million, respectively, compared to $448.5 million, $270.9 million, and $132.6 million, respectively, in the corresponding period last year. Revenues in the EMEA region were negatively impacted by reduced spending at certain large accounts during the three and nine months ended September 30, 2024 as compared to the same period in the previous year.
During the three and nine months ended September 30, 2024, revenues from clients in the APAC region increased by $0.4 million or 1.8% mainly due to growth in the Life Sciences & Healthcare vertical and decreased by $3.2 million or 4.2% mainly due to a decline in the Financial Services vertical, compared to the corresponding periods of 2023.
Cost of Revenues (Exclusive of Depreciation and Amortization)
The principal components of our cost of revenues (exclusive of depreciation and amortization) are salaries, bonuses, fringe benefits, stock-based compensation, and project-related travel costs for our delivery professionals and fees for subcontractors who are assigned to client projects. Salaries and other compensation expenses of our delivery professionals are reported as cost of revenues regardless of whether the employees are actually performing services for clients during a given period. Our employees are a critical asset, necessary for our continued success and, therefore, we are continuously exploring new geographies, markets, and sources to locate talented personnel and present them with competitive compensation programs and educational opportunities.

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During the three months ended September 30, 2024, cost of revenues (exclusive of depreciation and amortization) was $764.0 million representing a decrease of 3.8% from $794.3 million in the corresponding period of 2023. The decrease was primarily due to the $52.0 million benefit recognized in the third quarter of 2024 for government incentives received related to conducting R&D activities in Poland partially offset by higher personnel costs including stock-based compensation expense and $4.6 million in reduced benefits from our hedging program. Expressed as a percentage of revenues, cost of revenues (exclusive of depreciation and amortization) was 65.4% and 68.9% in the third quarter of 2024 and 2023, respectively. The year-over-year decrease in the third quarter of 2024 as compared to the corresponding period of the prior year is primarily due to the benefit recognized for government incentives received related to conducting R&D activities in Poland and improved utilization, partially offset by an increase in compensation costs including stock-based compensation expense, as a percentage of revenues.
During the nine months ended September 30, 2024, cost of revenues (exclusive of depreciation and amortization) was $2.409 billion representing a decrease of 2.0% from $2.459 billion in the corresponding period of 2023. The decrease was primarily due to the $52.0 million benefit recognized in the third quarter of 2024 for the government incentives received related to conducting R&D activities in Poland and a decrease in compensation costs other than stock-based compensation expense largely attributable to the 6.1% decrease in the average number of production professionals which reflects the impact from the Cost Optimization Programs initiated in the second quarter of 2024 and the third quarter of 2023, partially offset by the impacts from salary increases and promotions for existing professionals. See Note 9 “Cost Optimization Programs” for more information regarding the Company’s restructuring programs. The decreases were partially offset by a $9.3 million increase in stock-based compensation expense, the negative impact from the appreciation of foreign currencies in certain of our delivery locations and reduced benefits from our hedging program. Expressed as a percentage of revenues, cost of revenues (exclusive of depreciation and amortization) was 69.3% and 69.6% for the nine months ended September 30, 2024 and 2023, respectively. The year-over-year decrease is primarily due to the $52.0 million benefit recognized in the third quarter of 2024 for government incentives received related to conducting R&D activities in Poland and improved utilization, partially offset by a $9.3 million increase in stock-based compensation expense, reduced benefits from our hedging program and the negative impact from the appreciation of foreign currencies in certain of our delivery locations.
Selling, General and Administrative Expenses
Selling, general and administrative expenses represent expenditures associated with promoting and selling our services and general and administrative functions of our business. These expenses include the costs of salaries, bonuses, fringe benefits, stock-based compensation, severance, bad debt, travel, legal and accounting services, insurance, facilities including operating leases, advertising, and other promotional activities. Additionally, selling, general and administrative expenses contain costs of relocating our employees and various one-time and unusual expenses such as impairment charges.
During the three months ended September 30, 2024, selling, general and administrative expenses were $206.8 million representing a 6.2% increase as compared to $194.8 million in the corresponding period of 2023. The increase in selling, general and administrative expenses was mainly driven by a $6.1 million increase in professional fee expenses related to our business acquisition efforts, an increase in compensation costs impacted by salary increases and promotions for existing professionals, a $2.8 million increase in stock-based compensation expense and a $1.9 million increase in employee separation costs resulting from the Cost Optimization Programs initiated in the second quarter of 2024 and the third quarter of 2023, compared to the corresponding period of the prior year. See Note 9 “Cost Optimization Programs” for more information regarding the Company’s restructuring programs. The increase in the selling, general and administrative expenses during the quarter was partially offset by a $1.4 million decrease in bad debt expense as compared to the corresponding period of the prior year. Expressed as a percentage of revenues, selling, general and administrative expenses increased by 0.8% to 17.7% for the three months ended September 30, 2024 as compared to the same period from the prior year, primarily driven by the increase in professional fee expenses related to our business acquisition efforts and personnel-related costs as a percentage of revenues.
During the nine months ended September 30, 2024, selling, general and administrative expenses were $599.3 million representing a 0.3% decrease as compared to $601.1 million in the corresponding period of 2023. The decrease in selling, general and administrative expenses during the nine months ended September 30, 2024 compared to the same period from the prior year was primarily driven by a $5.8 million decrease in bad debt expense and a $4.0 million reduction in facilities and infrastructure expenses as compared to the corresponding period of the prior year. The decrease in selling, general and administrative expenses was partially offset by a $3.5 million increase in personnel-related costs including severance, which reflects the impact from the Cost Optimization Programs initiated in the second quarter of 2024 and the third quarter of 2023 and the impacts from salary increases and promotions for existing professionals as well as a $6.0 million increase in professional fee expenses related to our business acquisition efforts. See Note 9 “Cost Optimization Programs” for more information regarding the Company’s restructuring programs. Expressed as a percentage of revenues, selling, general and administrative expenses increased by 0.2% to 17.2% for the nine months ended September 30, 2024 as compared to the same period from the prior year, primarily driven by the increase in professional fee expenses related to our business acquisition efforts and personnel-related costs as a percentage of revenues.
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Depreciation and Amortization Expense
During the three and nine months ended September 30, 2024, depreciation and amortization expense was $19.7 million and $63.0 million, respectively, as compared to $23.1 million and $68.6 million, respectively, in the corresponding period last year. The decrease in depreciation and amortization expense during the three and nine months ended September 30, 2024 was primarily the result of lower depreciation on furniture, fixtures, other equipment and computer hardware, partially offset by increased amortization of acquired finite-lived intangible assets. Expressed as a percentage of revenues, depreciation and amortization expense decreased to 1.7% and 1.8% during the three and nine months ended September 30, 2024, respectively, as compared to 2.0% in both corresponding periods of 2023.
Interest and Other Income, Net
Interest and other income, net includes interest earned on cash and cash equivalents and short-term investments, gains and losses from certain financial instruments, interest expense related to our borrowings, and changes in the fair value of contingent consideration. Interest and other income, net was $13.3 million and $40.4 million during the three and nine months ended September 30, 2024, respectively, compared to $13.9 million and $37.2 million during the three and nine months ended September 30, 2023, respectively.
The decrease in Interest and other income, net during the three months ended September 30, 2024 as compared to the three months ended September 30, 2023 was largely driven by a $1.0 million decrease in interest income from our cash, cash equivalents and short-term investments and a $1.2 million increase in loss due to the change in fair value of contingent consideration. The increase in Interest and other income, net during the nine months September 30, 2024 as compared to the nine months ended September 30, 2023 was largely driven by an $8.6 million increase in interest income from our cash, cash equivalents and short-term investments, partially offset by a $3.7 million decrease in government grant income and a $2.2 million increase in loss due to the change in fair value of contingent consideration.
Foreign Exchange Loss
For discussion of the impact of foreign exchange fluctuations see “Item 3. Quantitative and Qualitative Disclosures About Market Risk.”
Provision for Income Taxes
In determining its interim provision for income taxes, the Company uses an estimated annual effective tax rate, which is based on expected annual profit before tax, statutory tax rates and tax planning opportunities available in the various jurisdictions in which the Company operates. Certain significant or unusual items are separately recognized in the quarter in which they occur and can be a source of variability in the effective tax rates from quarter to quarter.
Determining the consolidated provision for income tax expense, deferred income tax assets and liabilities and any potential related valuation allowances involves judgment. We consider factors that may contribute, favorably or unfavorably, to the overall effective tax rate in the current year as well as the future. These factors include statutory tax rates and tax law changes in the countries where we operate and excess tax benefits/tax shortfalls upon vesting or exercise of equity awards as well as consideration of any significant or unusual items.
Our effective tax rate was 28.1% and 21.4% for the three and nine months ended September 30, 2024, respectively, and 26.3% and 21.9% for the three and nine months ended September 30, 2023, respectively. We recorded a tax shortfall upon vesting or exercise of stock awards of $0.3 million during the three months ended September 30, 2024 and excess tax benefits upon vesting or exercise of stock awards of $20.5 million during the nine months ended September 30, 2024, compared to excess tax benefits of $1.7 million and $15.1 million during the three and nine months ended September 30, 2023, respectively. The effective tax rate for the three and nine months ended September 30, 2024 was negatively impacted by the accounting treatment of the receipt of government incentives related to conducting R&D activities in Poland, which resulted in a 2.3% and 1.0% increase in the effective tax, respectively, and the non-deductibility of certain acquisition costs for tax purposes resulted in a 1.4% and 0.6% increase in the effective tax, respectively. During the three and nine months ended September 30, 2023, the Company’s effective tax rate increased due to a $3.6 million charge in the third quarter associated with the completion of EPAM’s exit from Russia.

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Results by Business Segment
Our operations have historically consisted of three reportable segments: North America, Europe, and Russia. On July 26, 2023, we completed the sale of our remaining holdings in Russia to a third party and as a result of this sale, we no longer have operations associated with the Russia segment. The segments represent components of EPAM for which separate financial information is available and used on a regular basis by our chief executive officer, who is also our chief operating decision maker (“CODM”), to determine how to allocate resources and evaluate performance. Our CODM makes business decisions based on segment revenues and operating profit. Segment operating profit is defined as income from operations before unallocated costs. Expenses included in segment operating profit consist principally of direct selling and delivery costs as well as an allocation of certain shared services expenses. Certain corporate expenses are not allocated to specific segments as these expenses are not controllable at the segment level. Such expenses include certain types of professional fees, certain taxes included in operating expenses, compensation to non-employee directors and certain other general and administrative expenses, including compensation of specific groups of non-production employees. In addition, the Company does not allocate stock-based compensation, amortization of intangible assets acquired through business combinations, goodwill and other asset impairment charges, acquisition-related costs and certain other one-time charges and benefits. These unallocated amounts are combined with total segment operating profit to arrive at consolidated income from operations.
We manage our business primarily based on the managerial responsibility for the client base and market. As managerial responsibility for a particular client relationship generally correlates with the client’s geographic location, there is a high degree of similarity between client locations and the geographic boundaries of our reportable segments. In some cases, managerial responsibility for a particular client is assigned to a management team in another region and is usually based on the strength of the relationship between client executives and particular members of EPAM’s senior management team. In such cases, the client’s activity would be reported through the respective management team member’s reportable segment. Our Europe segment includes our business in the APAC region, which is managed by the same management team.
Revenues from external clients and operating profit/(loss), before unallocated expenses, by reportable segment for the three and nine months ended September 30, 2024 and 2023 were as follows:
 Three Months Ended
September 30,		Nine Months Ended
September 30,
 2024202320242023
 (in thousands) 
Segment revenues:
North America$704,613 $684,778 $2,107,971 $2,074,806 
Europe462,914 465,813 1,371,618 1,442,402 
Russia— 1,545 — 16,075 
Total segment revenues$1,167,527 $1,152,136 $3,479,589 $3,533,283 
Segment operating profit/(loss):  
North America$155,570 $132,438 $399,072 $386,929 
Europe94,862 64,074 209,919 188,779 
Russia— (118)— (5,866)
Total segment operating profit$250,432 $196,394 $608,991 $569,842 

North America Segment
During the three months ended September 30, 2024, revenues for the North America segment increased $19.8 million, or 2.9%, compared to the same period last year and segment operating profit increased $23.1 million, or 17.5%, compared to the same period last year. During the three months ended September 30, 2024, revenues from our North America segment were 60.4% of total segment revenues, an increase from 59.4% reported in the corresponding period of 2023. As a percentage of North America segment revenues, the North America segment’s operating profit increased to 22.1% during the third quarter of 2024 from 19.3% in the third quarter of 2023. This increase is primarily attributable to higher utilization and government incentives received related to conducting R&D activities in Poland, partially offset by an increase in variable compensation expense as a percentage of segment revenues during the third quarter of 2024 compared to the third quarter of 2023.

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During the nine months ended September 30, 2024, revenues for the North America segment increased $33.2 million, or 1.6%, compared to the same period last year and segment operating profit increased $12.1 million, or 3.1%, compared to the same period last year. During the nine months ended September 30, 2024, revenues from our North America segment were 60.6% of total segment revenues, an increase from 58.7% reported in the corresponding period of 2023. As a percentage of North America segment revenues, the North America segment’s operating profit increased to 18.9% during the nine months ended September 30, 2024 from 18.6% in the corresponding period of 2023. This increase is primarily attributable to higher utilization and government incentives received related to conducting R&D activities in Poland, partially offset by an increase in variable compensation expense as a percentage of segment revenues during the first nine months of 2024 compared to the first nine months of 2023.
The following table presents North America segment revenues by industry vertical for the periods indicated:
Three Months Ended
September 30,		ChangeNine Months Ended
September 30,		Change
20242023DollarsPercentage20242023DollarsPercentage
Industry Vertical(in thousands, except percentages)
Software & Hi-Tech$131,145 $136,520 $(5,375)(3.9)%$392,600 $422,073 $(29,473)(7.0)%
Financial Services129,339 131,499 (2,160)(1.6)%377,000 410,527 (33,527)(8.2)%
Life Sciences & Healthcare120,659 109,137 11,522 10.6 %362,983 305,700 57,283 18.7 %
Consumer Goods, Retail & Travel107,866 115,778 (7,912)(6.8)%339,556 359,475 (19,919)(5.5)%
Business Information & Media115,121 104,863 10,258 9.8 %332,602 327,378 5,224 1.6 %
Emerging Verticals100,483 86,981 13,502 15.5 %303,230 249,653 53,577 21.5 %
Revenues$704,613 $684,778 $19,835 2.9 %$2,107,971 $2,074,806 $33,165 1.6 %
During the three and nine months ended September 30, 2024 compared to the same period in the prior year, Software & Hi-Tech remained the largest industry vertical in the North America segment, which was a result of the continued focus on engaging with our technology clients. However, a reduction in revenues from a former top 20 client and overall declines in the technology sector in the U.S. during 2023 impacted the revenues in this vertical. Financial Services declined 1.6% and 8.2% during the three and nine months ended September 30, 2024, respectively, largely impacted by decline in demand from a group of wealth management and insurance clients. Life Sciences & Healthcare grew 10.6% and 18.7% during the three and nine months ended September 30, 2024, respectively, primarily due to increased demand from pharmaceutical and medical device companies. Consumer Goods, Retail & Travel declined 6.8% and 5.5% during the three and nine months ended September 30, 2024, respectively, primarily due to declines from clients in the retail industry, partially offset by growth from our travel clients. Business Information & Media grew 9.8% and 1.6% during the three and nine months ended September 30, 2024, respectively, primarily due to improvement in demand from clients in the information services and entertainment sectors. Emerging Verticals grew 15.5% and 21.5% during the three and nine months ended September 30, 2024, respectively, due to growth from various clients in industries such as energy, professional services, industrial materials and educational platforms.
Europe Segment
During the three months ended September 30, 2024, Europe’s segment revenues were $462.9 million, representing a decrease of $2.9 million, or 0.6%, from the same period last year. Revenues were positively impacted by changes in foreign currency exchange rates during the third quarter of 2024 and had our Europe segment revenues been expressed in constant currency terms using the exchange rates in effect during the third quarter of 2023, we would have reported a revenue decline of 1.6%. Europe’s segment revenues accounted for 39.6% and 40.4% of total segment revenues during the three months ended September 30, 2024 and 2023, respectively. During the third quarter of 2024, the segment’s operating profit increased 48.1% to $94.9 million compared to the third quarter of 2023. Expressed as a percentage of revenues, Europe’s segment operating profit increased to 20.5% compared to 13.8% in the same period of the prior year. Segment operating profit as a percentage of revenues was positively impacted by higher utilization and government incentives received related to conducting R&D activities in Poland, partially offset by an increase in variable compensation expense and foreign exchange rates.

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During the nine months ended September 30, 2024, Europe’s segment revenues were $1,371.6 million, representing a decrease of $70.8 million, or 4.9%, from the same period last year. Europe’s segment revenues accounted for 39.4% and 40.8% of total segment revenues during the nine months ended September 30, 2024 and 2023, respectively. During the nine months ended September 30, 2024, the segment’s operating profit increased 11.2% to $209.9 million compared to the corresponding period of 2023. Expressed as a percentage of revenues, Europe’s segment operating profit increased to 15.3% compared to 13.1% in the same period of the prior year. Segment operating profit was positively impacted by higher utilization and government incentives received related to conducting R&D activities in Poland, partially offset by an increase in variable compensation expense and foreign exchange rates.
The following table presents Europe segment revenues by industry vertical for the periods indicated:
Three Months Ended
September 30,		ChangeNine Months Ended
September 30,		Change
20242023Dollars Percentage20242023Dollars Percentage
Industry Vertical(in thousands, except percentages)
Consumer Goods, Retail & Travel$143,259 $146,837 $(3,578)(2.4)%$423,026 $451,531 $(28,505)(6.3)%
Financial Services125,296 114,122 11,174 9.8 %364,740 358,091 6,649 1.9 %
Business Information & Media52,273 78,983 (26,710)(33.8)%170,872 248,351 (77,479)(31.2)%
Software & Hi-Tech46,928 37,545 9,383 25.0 %127,727 115,137 12,590 10.9 %
Life Sciences & Healthcare21,675 15,143 6,532 43.1 %59,644 44,123 15,521 35.2 %
Emerging Verticals73,483 73,183 300 0.4 %225,609 225,169 440 0.2 %
Revenues$462,914 $465,813 $(2,899)(0.6)%$1,371,618 $1,442,402 $(70,784)(4.9)%
During the three and nine months ended September 30, 2024, compared to the same period in the prior year, Consumer Goods, Retail & Travel remained the largest industry vertical in the Europe segment. However, revenues in this vertical declined 2.4% and 6.3%, during the three and nine months ended September 30, 2024, respectively, as compared to the corresponding periods in 2023 primarily due to decreased demand from clients in the retail and consumer goods industries, partially offset by growth from our travel clients. During the three and nine months ended September 30, 2024, revenues in Financial Services grew 9.8% and 1.9%, respectively, primarily due to the improvement in demand from insurance and wealth management clients as well as from commercial banking clients in the third quarter of 2024. During the three and nine months ended September 30, 2024, revenues in Business Information & Media declined 33.8% and 31.2%, respectively, primarily due to decreased demand from two clients who were historically included in our top-10 clients. During the three and nine months ended September 30, 2024, revenues in Software & Hi-Tech grew 25.0% and 10.9%, respectively, primarily due to the expansion of services provided to one of our top 10 clients. Revenues in Life Sciences & Healthcare grew 43.1% and 35.2% during the three and nine months ended September 30, 2024, respectively, primarily due to the growth experienced from clients in the pharmaceutical and healthcare sectors. Revenues in Emerging Verticals increased 0.4% and 0.2% during the three and nine months ended September 30, 2024, respectively, with growth experienced from clients in the energy industry as well as a client that was previously reported under the Russia segment.
Russia Segment
On July 26, 2023, we completed the sale of our remaining holdings in Russia to a third party. As a result of this sale, we no longer have operations associated with this segment.

Effects of Inflation
Economies in many countries where we operate have periodically experienced high rates of inflation. Periods of higher inflation may affect various economic sectors in those countries and increase our cost of doing business there. We do not believe that inflation has had a material impact on our business, results of operations or financial condition to date. We continue to track the impact of inflation, particularly on wages, while attempting to minimize its effects through pricing and cost management strategies. A higher-than-normal rate of inflation in the future could adversely affect our operations and financial condition. For a discussion of our potential risks and uncertainties, including those related to inflation, see “Part I. Item 1A. Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2023.
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Liquidity and Capital Resources
Capital Resources
Our cash generated from operations has been our primary source of liquidity to fund operations, to repurchase shares and make investments to support the growth of our business. As of September 30, 2024, our principal sources of liquidity were cash and cash equivalents totaling $2.036 billion, short-term investments totaling $22.3 million as well as $675.0 million of available borrowings under our revolving credit facility. See Note 8 “Debt” of our condensed consolidated financial statements in “Part I. Item 1. Financial Statements (Unaudited)” for information regarding our debt.
Cash Flows
The following table summarizes our cash flows for the periods indicated:
 Nine Months Ended
September 30,
 20242023
 (in thousands)
Condensed Consolidated Statements of Cash Flow Data:
Net cash provided by operating activities$428,909 $391,265 
Net cash used in investing activities(39,100)(46,071)
Net cash used in financing activities(391,667)(143,417)
Effect of exchange rate changes on cash, cash equivalents and restricted cash(543)(5,632)
Net (decrease)/increase in cash, cash equivalents and restricted cash(2,401)196,145 
Cash, cash equivalents and restricted cash, beginning of period2,043,108 1,683,636 
Cash, cash equivalents and restricted cash, end of period$2,040,707 $1,879,781 
Operating Activities
Our largest source of cash provided by operating activities is cash generated from our professional services that we provide to our clients. Our primary uses of cash from operating activities include compensation to our employees and related costs, payments for leased facilities, various general corporate expenditures and income tax payments. Since the invasion of Ukraine in 2022, our operating activities included using cash on humanitarian efforts for Ukraine and geographic repositioning of our workforce. The first nine months of 2024 were positively impacted by lower payments for variable compensation as compared to the first nine months of 2023, attributable to a lower level of financial performance for the year ended December 31, 2023.
Investing Activities
Our primary uses of cash in investing activities consist of purchases of computer hardware, software and office equipment, as well as investments into office buildings and new businesses. We also use cash for short-term investments and time deposits and receive cash upon maturity of these deposits. Most of our investments are typically short-term and cash equivalent in nature but we may invest in longer term deposits if the terms are favorable. The cash used in investing activities during the nine months ended September 30, 2024 was primarily attributable to $57.1 million used for the acquisitions of businesses, net of cash acquired, and $16.4 million used for capital expenditures compared to $14.0 million used for the acquisitions of businesses, net of cash acquired, $18.4 million used for capital expenditures and an investment of $10.9 million in time deposits during the same period in 2023. Additionally, during the nine months ended September 30, 2024 we received $41.5 million from matured investments in time deposits, compared to $10.9 million received during the same period in 2023.

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Financing Activities
Cash used in financing activities mainly consists of repurchasing shares of EPAM common stock under the 2023 Repurchase Program and 2024 Repurchase Program, payments of withholding taxes related to net share settlements of restricted stock units, repayments of debt, and settlements of the acquisition-date fair value of contingent consideration related to acquisitions of businesses. Cash provided by financing activities mainly consists of the proceeds from the purchases of shares under our ESPP and exercises of stock options issued under our long-term incentive plans as well as proceeds from debt. We typically do not rely on debt to supplement our cash flows. During the first nine months of 2024, our main use of cash in financing activities consisted of $385.0 million of payments to repurchase our common stock, compared to $128.4 million in the corresponding period of 2023. In addition, we used cash for the payments of withholding taxes related to net share settlements of restricted stock units of $32.5 million in the first nine months of 2024, compared to $28.2 million paid in the corresponding period of 2023. These cash outflows were partially offset by cash received from the exercises of stock options issued under our long-term incentive plans and proceeds from the purchase of shares under our ESPP of $33.8 million in the first nine months of 2024, compared to $28.6 million received in the corresponding period of 2023.
Future Capital Requirements
We believe that our existing cash, cash equivalents and short-term investments, combined with our expected cash flow from operations, will be sufficient to meet our projected operating and capital expenditure requirements for at least the next twelve months and that we possess the financial flexibility to execute our strategic objectives, including the ability to make acquisitions and strategic investments in the foreseeable future. However, the invasion of Ukraine, other various geopolitical events, and the related measures to contain their impact have caused and may continue to cause material disruptions in financial markets and economies. These disruptions may increase our costs of capital, decrease returns on investment, and otherwise adversely affect our business, results of operations, financial condition and liquidity.
Our ability to generate cash is subject to our performance, general economic conditions, industry trends and other factors including the impact of the invasion of Ukraine, as described elsewhere in this Management’s Discussion and Analysis of Financial Condition and Results of Operations. We may require additional cash resources due to changed business conditions or other future developments, including any investments or acquisitions we may decide to pursue. To the extent that existing cash, cash equivalents, short-term investments, and operating cash flows are insufficient to fund our future activities and requirements, we may need to raise additional funds through public or private equity or debt financing. If we issue equity securities in order to raise additional funds, substantial dilution to existing stockholders may occur. If we raise cash through the issuance of additional indebtedness, we may be subject to additional contractual restrictions on our business and there is no assurance that we would be able to raise additional funds on favorable terms or at all. Our ability to expand and grow our business in accordance with current plans and to meet our long-term capital requirements will depend on many factors, including the rate at which our cash flows increase or decrease and the availability of public and private debt and equity financing.
See Note 15 “Commitments and Contingencies” of our condensed consolidated financial statements in “Part I. Item 1. Financial Statements (Unaudited)” of this Quarterly Report and “Part II. Item 7. Future Capital Requirements” of our Annual Report on Form 10-K for the year ended December 31, 2023 for information regarding contractual obligations.
Off-Balance Sheet Commitments and Arrangements
We do not have any material obligations under guarantee contracts or other contractual arrangements other than as disclosed in Note 15 “Commitments and Contingencies” of our condensed consolidated financial statements in “Part I. Item 1. Financial Statements (Unaudited).” We have not entered into any transactions with unconsolidated entities where we have financial guarantees, subordinated retained interests, derivative instruments, or other contingent arrangements that expose us to material continuing risks, contingent liabilities, or any other obligation under a variable interest in an unconsolidated entity that provides financing, liquidity, market risk, or credit risk support to us, or engages in leasing, hedging, or research and development services with us.
Recent Accounting Pronouncements
See Note 1 “Organization and Summary of Significant Accounting Policies” to our unaudited condensed consolidated financial statements in “Part I. Item 1. Financial Statements (Unaudited)” for additional information.
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Forward-Looking Statements
This quarterly report on Form 10-Q contains estimates and forward-looking statements made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995, principally in “Part I. Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations” and “Part II. Item 1A. Risk Factors.” Our Annual Report on Form 10-K for the year ended December 31, 2023 also contains estimates and forward-looking statements, principally in “Part I. Item 1A. Risk Factors.” Our estimates and forward-looking statements are mainly based on our current expectations and estimates of future events and trends, which affect or may affect our business and operations. Those future events and trends may relate to, among other things, developments relating to the war in Ukraine and escalation of the war in the surrounding region, political and civil unrest or military action in the geographies where we conduct business and operate, difficult conditions in global capital markets, foreign exchange markets and the broader economy, and the effect that these events may have on client demand, our revenues, operations, access to capital and profitability. Although we believe that these estimates and forward-looking statements are based upon reasonable assumptions, they are subject to several risks, uncertainties and assumptions as to future events that may not prove to be accurate and are made in light of information currently available to us. Important factors, in addition to the factors described in this quarterly report and in our Annual report, may materially and adversely affect our results. You should read this quarterly report, our Annual report and the documents that we have filed as exhibits hereto completely and with the understanding that our actual future results may be materially different from what we expect.
 The words “may,” “will,” “should,” “could,” “expect,” “plan,” “anticipate,” “believe,” “estimate,” “predict,” “intend,” “potential,” “might,” “would,” “continue” or the negative of these terms or other comparable terminology and similar words are intended to identify estimates and forward-looking statements. Estimates and forward-looking statements speak only as of the date they were made and, except to the extent required by law, we undertake no obligation to update, to revise or to review any estimate and/or forward-looking statement because of new information, future events or other factors. Estimates and forward-looking statements involve risks and uncertainties and are not guarantees of future performance. As a result of the risks and uncertainties described above, the estimates and forward-looking statements discussed in this quarterly report and our Annual Report on Form 10-K for the year ended December 31, 2023 might not occur and our future results, level of activity, performance or achievements may differ materially from those expressed in these forward-looking statements due to, including, but not limited to, the factors mentioned above, and the differences may be material and adverse. Because of these uncertainties, you should not place undue reliance on these forward-looking statements.
Item 3. Quantitative and Qualitative Disclosures About Market Risk
We are exposed to certain market risks in the ordinary course of our business. These risks primarily result from changes in concentration of credit risks, foreign currency exchange rates and interest rates. In addition, our global operations are subject to risks related to differing economic conditions, civil unrest, political instability or uncertainty, military activities, broad-based sanctions, differing tax structures, and other regulations and restrictions.
Concentration of Credit and Other Credit Risks
Financial instruments that potentially subject us to significant concentrations of credit risk consist primarily of cash, cash equivalents, restricted cash, short-term investments and trade receivables.
We maintain our cash, cash equivalents and short-term investments with financial institutions. We believe that our credit policies reflect normal industry terms and business risk. We do not anticipate non-performance by the counterparties.
We have cash in several countries, including Ukraine and Belarus, where the banking sector remains subject to periodic instability; banking and other financial systems in these countries generally do not meet the banking standards of more developed markets, and bank deposits made by corporate entities are not insured. As of September 30, 2024, we had $63.6 million of cash and cash equivalents in banks in Ukraine and $29.3 million of cash and cash equivalents in banks in Belarus. We regularly monitor cash held in these countries and, to the extent the cash held exceeds amounts required to support our operations in these countries, we distribute the excess funds into markets with more developed banking sectors to the extent it is possible to do so. In April 2024, Belarus instituted new restrictions on distributing dividends from Belarus to shareholders in certain countries, including the U.S. The restrictions are initially scheduled to remain in place until the end of 2025 and may prevent EPAM from distributing excess funds, if any, out of Belarus. The Company does not expect these new restrictions to have a material impact on our ability to meet our worldwide cash obligations during this period. We place our cash and cash equivalents with financial institutions considered stable in the region, limit the amount of credit exposure with any one financial institution and conduct ongoing evaluations of the credit worthiness of the financial institutions with which we do business. However, a banking crisis, bankruptcy or insolvency of banks that process or hold our funds, or sanctions may result in the loss of our deposits or adversely affect our ability to complete banking transactions, which could adversely affect our business and financial condition.
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Trade receivables are generally dispersed across many clients operating in different industries; therefore, concentration of credit risk is limited and we do not believe significant credit risk existed as of September 30, 2024. Though our results of operations depend on our ability to successfully collect payment from our clients for work performed, historically, credit losses and write-offs of trade receivables have not been material to our condensed consolidated financial statements. If our clients enter bankruptcy protection or otherwise take steps to alleviate their financial distress, our credit losses and write-offs of trade receivables could increase, which would negatively impact our results of operations.
Interest Rate Risk
We are exposed to market risk from changes in interest rates. Exposure to interest rate risk results primarily from variable rates related to cash and cash equivalent deposits, short-term investments, and our borrowings, mainly under our 2021 Credit Agreement, which is subject to a variety of rates depending on the currency and timing of funds borrowed. We do not believe we are exposed to material direct risks associated with changes in interest rates related to these deposits, investments and borrowings.
Foreign Exchange Risk
Our global operations are conducted predominantly in U.S. dollars. Other than U.S. dollars, we generate revenues principally in euros, British pounds, Swiss francs and Canadian dollars and incur expenditures principally in euros, Indian rupees, Polish zlotys, British pounds, Swiss francs, Hungarian forints, Mexican pesos, Colombian pesos, Canadian dollars, Armenian drams and Chinese yuan renminbi. As a result, exchange rate fluctuations in any of these currencies relative to the U.S. dollar could negatively impact our results of operations. During the three months ended September 30, 2024, approximately 33.3% of consolidated revenues and 55.1% of consolidated operating expenses were denominated in currencies other than the U.S. dollar.
To manage the risk of fluctuations in foreign currency exchange rates and hedge a portion of our forecasted foreign currency denominated operating expenses incurred in the normal course of business, we implemented a hedging program through which we enter into a series of foreign exchange forward contracts with durations of twelve months or less that are designated as cash flow hedges of forecasted Polish zloty, Indian rupee, Hungarian forint and Mexican peso transactions. As of September 30, 2024, all of EPAM’s foreign exchange forward contracts, were designated as hedges and there is no financial collateral (including cash collateral) required to be posted related to the foreign exchange forward contracts.
During the three months ended September 30, 2024, foreign exchange loss was $0.7 million compared to a gain of $3.9 million reported in the corresponding period last year. Foreign exchange loss was primarily driven by the impact of fluctuations in foreign currencies on our assets and liabilities denominated in foreign currencies. Exchange rate movements can impact the reported value of our assets and liabilities denominated in currencies other than the U.S. dollar or where the currency of such items is different than the functional currency of the entity where these items were recorded.
Management 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 our business and uses the measures to establish budgets and operational goals, communicated internally and externally, for managing our business and evaluating its performance. When important to management’s analysis, operating results are compared on the basis of “constant currency,” which is 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.
During the third quarter of 2024, we reported revenue growth of 1.3% compared to the third quarter of 2023. Had our consolidated revenues been expressed in constant currency terms using the exchange rates in effect during the third quarter of 2023, we would have reported revenue growth of 0.9%. Our revenues denominated in the British pound, euro and Swiss franc experienced the most impact from the movements in foreign currencies. During the third quarter of 2024, we reported an increase in income from operations of 55.2% compared to the third quarter of 2023. Had our consolidated results been expressed in constant currency terms using the exchange rates in effect during the third quarter of 2023, we would have reported an increase in income from operations of 56.1%. Income from operations was most significantly impacted by the movements of Polish zloty, Hungarian forint, British pound and Mexican peso exchange rates during the third quarter of 2024 compared to the same period in the prior year.
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Item 4. Controls and Procedures
Conclusion Regarding the Effectiveness of Disclosure Controls and Procedures
Based on management’s evaluation, with the participation of our Chief Executive Officer and Chief Financial Officer, as of the end of the period covered by this report, these officers have concluded that our disclosure controls and procedures, as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), are effective to provide reasonable assurance that information required to be disclosed by us in reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in SEC rules and forms, and is accumulated and communicated to management, including our principal executive officer and principal financial officer, as appropriate, to allow timely decisions regarding required disclosure.
Changes in Internal Control Over Financial Reporting
There has been no change in our internal control over financial reporting during the quarter ended September 30, 2024 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.
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PART II. OTHER INFORMATION
Item 1. Legal Proceedings
From time to time, we are involved in litigation and claims arising out of our business and operations in the normal course of business. We are not currently a party to any material legal proceeding, nor are we aware of any material legal or governmental proceedings pending or contemplated to be brought against us.
Item 1A. Risk Factors
For a discussion of our potential risks and uncertainties, including our significant operations in Belarus and Ukraine and the material adverse effect the invasion of Ukraine by Russia has had and may have on our operations, business, and financial results, see the risk factors disclosed under the heading “Part I. Item 1A. Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2023.
The risks and uncertainties that we face are not limited to those set forth in our Annual Report on Form 10-K. Additional risks and uncertainties not presently known to us or that we currently believe to be immaterial may also adversely affect our business and the trading price of our common stock.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
Issuer Purchases of Equity Securities
On August 1, 2024, the Board of Directors authorized a repurchase program (the “2024 Repurchase Program”) for up to $500.0 million of our outstanding common stock. EPAM may repurchase shares of its common stock on a discretionary basis from time to time through open market purchases, privately negotiated transactions or other means, including through the use of trading plans intended to qualify under Rule 10b5-1 under the Securities Exchange Act of 1934, as amended. The share repurchase program has a term of 24 months, may be suspended or discontinued at any time, and does not obligate the company to acquire any amount of common stock.
The following table provides information about the purchases of shares of our common stock during the three months ended September 30, 2024:
PeriodTotal Number of
Shares Purchased
Average Price Paid
per Share (1)
Total Number of
Shares Purchased as
Part of Publicly
Announced Plans or
Programs
Approximate Dollar
Value of Shares that
May Yet Be Purchased
Under the Plans or
Programs
(in thousands, except per share amounts)
July 1 to July 31, 2024— $— — $— 
August 1 to August 31, 2024— $— — $500,000 
September 1 to September 30, 2024245 $204.23 245 $450,047 
Total245 245 
(1) Average price paid per share in the period includes commission and excludes excise tax. As of January 1, 2023, our share repurchases in excess of issuances are subject to a 1% excise tax enacted by the Inflation Reduction Act. Any excise tax incurred is recognized as part of the cost basis of the shares acquired in the condensed consolidated statements of changes in equity.
Item 3. Defaults Upon Senior Securities
None.
Item 4. Mine Safety Disclosures
Not Applicable.

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Item 5. Other Information
Insider Adoption or Termination of Trading Arrangements:
During the quarter ended September 30, 2024, none of our directors or officers informed us of the adoption or termination of a “Rule 10b5-1 trading arrangement” or “non-Rule 10b5-1 trading arrangement” as those terms are defined in Regulation S-K, Item 408.


Item 6. Exhibits
Exhibit
Number		Description
  
2.1
2.2*
31.1*
31.2*
32.1*
32.2*
101.INSXBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document
101.SCHInline XBRL Taxonomy Extension Schema Document
101.CALInline XBRL Taxonomy Extension Calculation Linkbase Document
101.DEFInline XBRL Taxonomy Extension Definition Linkbase Document
101.LABInline XBRL Taxonomy Extension Label Linkbase Document
101.PREInline XBRL Taxonomy Extension Presentation Linkbase Document
104Cover Page Interactive Data File - (formatted as Inline XBRL and contained in Exhibit 101)
*Exhibits filed herewith
†Indicates management contracts or compensatory plans or arrangements

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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

Date: November 7, 2024
 EPAM SYSTEMS, INC.
   
 By:/s/ Arkadiy Dobkin
  Name: Arkadiy Dobkin
  Title: Chairman, Chief Executive Officer and President
(principal executive officer)
   
 By:/s/ Jason Peterson
  Name: Jason Peterson
  Title: Senior Vice President, Chief Financial Officer and Treasurer
(principal financial officer)

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