EPAM Systems (EPAM) 15 Feb 242023 Q4 Earnings call transcript

Ladies and gentlemen, thank you for standing by. I would like to welcome everyone to the EPAM Systems Q4 2023 Earnings Conference Call. [Operator Instructions] I will now hand the call over to David Straube, Head of Investor Relations.

You may begin your conference.

Thank you, operator, and good morning, everyone. have company's copy year fourth should release the XXXX you the for quarter now, received of a earnings results. By and full

the today's have section. With Jason CEO Peterson, you not, Officer. available and epam.com If Financial copies and President; me are call in on Chief Arkadiy Dobkin, on Investors

described remind earnings listening to some may These and are subject of forward-looking would contain comments made I statements. company's those like the and in uncertainties SEC filings. as risks to release call to the on today's statements

all have references our of in in comparable and to non-GAAP Additionally, located reported results section available been GAAP website. are that are our measures materials Investors the quarterly earnings reconciled to the measures

With call said, that now turn I'll the Ark. over to

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

QX, time the think about to reflect in months share usual, XX. us it's what on and for the we XX past As next

the dedication XXXX. work I that, in team I want to and in committed ahead year, and the hard our thank clients engaged work their of world around throughout for staying our us Before for and last do to

Looking line back performance shared our what and and simultaneously, to I [indiscernible] both to conditions. today's here a that by in with believe release. navigate geopolitical press macroeconomic We we demand, in very much XXXX start both simultaneously short EPAM from summary, XXXX. reflects volatile in ability will the keyword

consulting cost catalyze Central proactively future. Asia, focused to AI delivery Latin AI-driven to our After rebalancing effectiveness optimizing and meet and now we most of and footprint advanced India demand, opportunities technology leveraging harmonizing primarily Gen are Western our delivery and and our the growing extensive Europe, go-to-market current capabilities refining Italian quality, and on America of on our approach across

XXXX, In that notes on our aspects relevance few of a XXXX then XXXX to on outlook. context, can their I and move and first

for us and families geographies. of invasion people XX,XXX Ukraine to February necessary plus from XXXX, economic [indiscernible] relocate and to start of me made the Russian geopolitical over it Let impacts new operations. In

many While our adjustments new we most of some across XXXX, And year. last team will in effectiveness today, and pyramid, downstream XXXX, work factors, seniority happen still did cost and to traditional composition on continue locations. these relocations completed including [ ] back in

team to also level prove a Ukraine, especially who want clients, I partner recognize existing of our and despite ones. for in they the new that our reliable accepted, challenges

A notes additional of [ reposition ] few on stabilization delivery and our Italian platform.

at was future most for Europe and [indiscernible] XXXX development already, Central mentioned key a India global rebalancing work Italian. and our delivery. of majority Lat As Am significant the of and We in time, Western of centers same Asia, destination preparing our for on and scale across for in our year growth

in our we at largest In culture we on remains And growing will India speed, [indiscernible] scale XXXX, India worked our Ukraine. our client to our XXXX. location are value. since of there least fastest-growing to accelerated end focused while quality that by likely ensure also with practically continued location, on become be the XXXX capabilities with or our current delivery and

scale specifically from demand Colombia meet cloud American America, as significantly in data Latin North and Mexico, locations clients. there to rising be we out our maturing prepared [indiscernible] to and capabilities our

of differentiation of In is key of EPAM. refractory XXXX engineering and harmonizing practices, the now present XXXX, continuous investment geographic cloud, than much for strategic on and focus our together be in and now programs are to we our so locations. of be critical our priorities, And data and one methods to this and in expect capabilities AI, areas in we and each starting these significantly working, ever balanced bring competencies from ways to delivery more to platform, collaborative

capabilities. their slowing a is mentioned who, again, started after we to our war, will footprint to trend our utilizing advanced previous grow mix and XXXX from the calls, diverse there geographic capabilities, and more during delivery us build engagement due be both Supporting As our as but the in number another much geographically to services up with this we perspective. spending key growing results continue clients, have of priority,

engineering To efforts, key several relevant being targets for up standard specific some for share and investments I in other all [indiscernible] covering specific copilots with adoption journeys, roles all delivery locations. illustrate will engineering ongoing [indiscernible], tools set AI productivity

in in released QX was beyond. coming tool and XXXX, This upgrades with

to our and components variety for proprietary, private leveraging critical connect with AI source upon and consumption the data now assets a [indiscernible] supporting and fronting a include cost-effective open tools of upgrades to for and [indiscernible] most digital capabilities, platform. enabled New together that to reliable delivery set external protecting platform, composable of

Finally, AI-assisted allowing of [ of environment. framework, productivity commercial improvements and tailoring productivity and development practices ] measurement team continuous base engineering individual for

AI-assisted All industry. those platforms us diverse deliver efforts broadly should become the make possible geographically in the and it to [indiscernible] most for

react obvious at end XXXX, XXXX, we that economic changes [indiscernible] cost to became consider It cost-effectiveness. the all to optimization us. about around Now of properly continuously efforts to environment, current throughout must

Some several across targeted short in the XXXX. This and to us in global optimization in locations. utilization efforts allow improved has were market initiatives term and delivery the fund board, ongoing in our in XXXX XXXX,

efforts ensure as considering our We the appropriate to similar in adaptability needs. future will be

talent, our and rebalancing we're We and improving seniority key while practices. engaging in our on across training junior working seniority are actively overall global also market permits

AI Gen About AI and efforts.

start ML to data and have scaling many we work foundational years, engaging investing been to current year, are to Today, related relatively and XXX AI last of our clients majority AI ML required and the help of our capabilities. their small, reengaging over work of but do us predictive For Gen engineering a mid data enable AI. Since these them with to generative are them projects. the operate businesses, also

productivity development, and from in is from of redesign by optimization, interactive tools [indiscernible], chain engineering to broad, management AI process cases use of from service cogeneration management enhancements knowledge coverage supply new testing. Gen advanced quality and improving using Our to business from speed to to product agents

open our launched we source. year, platform business Gen to Last released Recently, accelerate level of orchestration development DIAL, for we AI empowered solutions. enterprise

of by XX encouraged interest some across retail, a level projects expressed XX production science insurance, clients in over high are [indiscernible], vertical already a our and tech active now, seeing life in automotive, We right and in implementations with segments. progress test information from business

which work one of done interesting [indiscernible] data major includes and for One most deployment Ukraine famous the rewarding institution, AI has well. the was and capabilities on been in global AI platform, most Gen economic as now of now

of to clients' talk about let's In many Now our safeguard portfolios. and XXXX, we have managed programs demand environment.

year, may clients this into exercises factored We XXXX, to their continue also that costs. saw our and some as pullback in be vendor last consolidation execute expect manage spend to

encouraging and this and data experience consulting in signals continues a While for trend built-based we solutions are of benefit, cases, our traditionally to seeing general advanced for AI. strong [indiscernible] rebound in capabilities tech some and

expanding engagement To we [indiscernible], are our new by our on and models demand, customer potential initiatives new to capitalize enhancing create interaction and establish dedicated strategies new our sales method. business innovating new partnerships, resources go-to-market

in In plan XXXX, years, new it and brought higher was the it also do rate evident that we than XXXX. again a clients to we previous at

of the point, Still least will XXXX we first second half. continuation trends. second XXXX at potential the year, part this in a up believe, environment half of towards The for demand overall, of the at the be,

months, workers' challenges X very analysts, reports have we on some has and despite recognized recent, made faced last have we stories are our been progress the our by for and shared. provide X, independent significant operations involving clients [indiscernible] All XXXX, EPAM. turn and we support and the in up-to-date While increasingly leading the present the

the was recognition future of our landscape, That is About expertise competitive services some IT industry Gartner the of EPAM benefits. clients' new simultaneously efforts industry global by first the and XXXX, insurance probably of Gartner a November providers by implementation and result capabilities. insurance to consultancy to service bring one our In and report. for

was together life the and are key consulting of retail care advisory distribution, few and you sciences, ask. if and last practice effort for Putting the in during efforts today gas years. us health insurance Similar oil underway demand, one

report, providers, consulting is a capability In last landscape first cybersecurity top for the in as consulting the was QX we which of recognition services XXXX. of the QX EPAM X critical XX years. cybersecurity was developing EPAM are services XXXX, [indiscernible] highlighted probably featured

some capabilities Gen for customer critical conformed recognized recently. was were the strengths EPAM unique November Quadrant by which [indiscernible] and support services in providing software [indiscernible] specifically leveraging superior capabilities, as and about XXXX, development for In in customer user worldwide were established top AI, pioneering leadership Now highlighted X experience. and EPAM companies Gartner.

Services [indiscernible] as in MarketScape In MarketScape EPAM experience for named assessment. services November, vendor for as And X services worldwide assessment. built experience reports. MarketScape XXXX, December see a Engineering IDC vendor worldwide Software IDC Worldwide you for design leader assets. IDC

recognized world's largest the moved categories. #XX among to States the agencies largest from [indiscernible] U.S. has United #X in and EPAM the as Finally, just agencies. #X In EPAM companies #XXX in X years, agencies

hand results XXXX. our billion [indiscernible] and XXXX, to I $X.XX like for call reflecting outlook to XXXX X.X% of aspects a of of a Jason, the generated In year-over-year. Before moment to share would take on I points over in some our for couple we revenues,

of Adjusted above and our exiting initial midpoint our impact operations range. the income was operations, revenue X.X%. declined Russian revenue XX.X% Excluding guided of the of from

represent environment the at ideal market Also, all conditions don't an demand EPAM. current for

beneficial current commitment our continuously to circumstances XXXX the for preparing future. to in more highlight company, demand for environment results Our the adapting the the while [indiscernible]

shows sequential to What growth, our declines. revenue first point I time of out previous as sequential after is that QX a want quarters well results X

to our to of are XXXX end about the conditions, XXXX. About of adapt us outlook. we client and Because of ability demands the towards new opportunities optimistic market ahead

rebound, solutions solutions. pressures the platforms capabilities last Demand how for by to the X build to by AI to long-term during general postponed AI for understand new advanced interest to and driven and by apply legacy needs Gen customer-centric modernizations, should massive years and build

of Even navigate have but This environment effect invest actions market in long-term generation to believe while people on and strategic expanded carefully, programs. and and XXXX, we will continue ensure the organically initiatives is support our geopolitical activities, we efforts in current right this demand position. with and will growth in stronger profitability some we economic M&A to in

call provide addition to full me our on view in XXXX fourth and year expectations. the turn to over Let results, to quarter more our Jason of initial details

$X.XX stronger decision basis of both EPAM revenues market quarter everyone. In X% positive QX in significant reduction from and terms, of billion, a Revenues XXX you, was revenues were Thank impact on exchange demand foreign on reported of said due and a The good modest decrease in reflecting in customer we impact exit favorable our Ark, a XX constant a client expected in quarter, growth. decrease The resulting a the year-over-year growth X.X% exchange. than stabilizing the fourth foreign higher had points. the sequential QX currency point generated basis when morning, guidance, demand. revenue of to year-over-year to from basis and the benefit negative result Russian we

Life Sciences by with industry quarter and Beginning Healthcare clients Growth our grew primarily verticals. Sciences. in Life driven in was XX.X%. the

and revenues solid declines by and growth hospitality, offset decreased retail consumer Travel with customers. in from goods Consumer travel and X.X%, in derived

driven analytics clients. Marketplace Services work declines partially from in by finance X.X%, exchange Financial contracted by and performed and banking, offset information

the operations, of of impact on revenue the year-over-year Excluding declined a Russian basis our X.X%. exit

of a in information markets, due in the a in data the primarily uncertainty end to particularly to Revenues number across by clients, Business in the media space. in be spend mortgage reduction declined XX.X% and quarter quarter. their impacted continue large

growth XX.X% declined by previous vertical. revenues XX Hi-Tech the from year-over-year mentioned negatively in former our top slower the and rate our customers Software of in across earnings generally client reduction the revenue the during was growth quarter. The in range in we and impacted calls

delivered of driven and emerging And energy, growth verticals our in clients finally, manufacturing by X.X%, education.

currency. geographic largest X.X% XX% basis, perspective, year-over-year with sequential the growth relatively previous revenues, the constant X.X% On region in QX a flat, our Americas, consistent of our remained representing quarter. or a From declined

XX.X% was both EMEA, and and our constant representing reported by contracted revenues, and the or currency. our declined in in X.X% terms year-over-year constant of representing represents of was currency APAC revenues. impacted of operations revenues, exit Revenue X% year-over-year CEE, in quarter declined And XX.X% QX XX.X% our of finally, XX% the flat in Russia. our now X.X% in currency. constant QX

revenue remarks, I the total region forward, revenues. is comment prepared will no our contribution that and quarterly longer relative Going immaterial its on to our given CEE

XX contracted revenues QX, clients outside from declined XX our X% In while clients revenues top year-over-year, from our top X%.

Moving down income statement. the

QX quarter XXXX compared GAAP gross of last for margin Gross Non-GAAP in year. margin XX.X% was the revenue same Our for quarter timing compared to XX.X% was margin QX XX.X% was in to last the gross the the by of XX% quarter positively for year. impacted recognition. year-end

optimization XX.X% impacted onetime of in charges, in of to quarter compared associated was cost including was with QX revenue the year. last expenses XX.X% SG&A the program. SG&A GAAP GAAP by company's

in the quarter, lower to SG&A variable last expense XX.X% SG&A the period XXXX. for Non-GAAP to some cost year. XX.X% at reflects came achieved in XXXX of QX compared in as compared revenue compensation well as QX efficiencies same

quarter to in GAAP year. XX.X% income from of $XXX million of or in year. operations million revenue operations last $XXX XX.X% compared in revenue revenue was of or the of or XX.X% the in of $XXX million QX or revenue $XXX last million was quarter compared XX.X% to Non-GAAP from of QX

taxes stock-based to QX state partially rate of in acquired Our came the XX%, for guide greater-than-expected losses of due by GAAP tax effective offset certain quarter non-U.S. tax versus XX.X% higher and at subsidiaries. related our to excess impact the compensation, benefits in

the Our and [indiscernible] excess was state excludes which losses of subsidiary non-GAAP tax effective XX.X%. tax includes benefits, impact rate,

Diluted on was earnings a per GAAP basis share $X.XX.

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

$XXX balance ended quarter our $XXX cash in cash quarter QX and Cash and equivalents. million compared from for $X in the in same to of was approximately $XXX flow the quarter of free million to flow compared sheet. Free $XXX same million We million with cash to XXXX. Turning was the last cash year. billion cash flow flow operations

QX QX, XXXX, days XX to days of the DSO quarter in same and compares last At XX year. XX the in and days end was

shares in the approximately $XXX.XX XXX,XXX of repurchases million, were average Share price share. $XX.X quarter at for fourth an per

approximately As remaining. million XX, December of we $XXX had share of authority repurchase

of compared few trainers metrics QX involuntary designers, is a of demand. than quarter. XX.X% architects, balance to XXXX. This We and on with the to decline hiring, continue we engineers, the attrition, of a and QX levels ended supply both as operational lower more result XX,XXX moving for Now and to combined with voluntary consultants,

Our head was than the total XX,XXX count for more quarter employees.

QX Utilization was last XX.X% XX.X% and of in XX.X% to compared year XXXX. QX in

our year decline to full and X.X% the of compared in a XXXX. for results were currency X.X% billion, to Turning producing reported, XXXX. for of decline year a $X.XX constant Revenues terms

the growth have Excluding and Russia X.X% negative negative been would currency X.X% revenues, reported year-over-year reported rate constant terms. in

and million, $XXX a revenue. decrease of was represented XX.X% operations from of year-over-year XX.X% income GAAP

to revenue. million, income decrease from Our non-GAAP a $XXX year prior operations and was of represented compared of XX.X% X.X% the

effective tax was GAAP year rate for XX.X%. Our the

Our tax non-GAAP effective rate was XX.X%.

EPS, share per associated items, $XX.XX, earnings costs excludes over acquisition-related stock-based X.X% was fiscal XXXX. program, GAAP other a onetime costs a certain Diluted our on optimization basis was adjustments decrease including and Non-GAAP reflecting cost which $X.XX. compensation, for with

million were there outstanding. shares approximately XXXX, XX.X In average weighted diluted

income And operations $XXX an from free million was compared $XXX adjusted flow Cash was flow $XXX cash million for million, XXXX. to reflecting net XX.X% conversion.

for And $XXX.X average XXX,XXX finally, share. shares were per in share approximately million $XXX.XX of price an repurchases XXXX at

through macro business for the a to company more environment. to the return XXXX normalized the conditions, challenging manage Our reflect demand ability positioning EPAM's results while

to turn guidance. let's Now

and the XXXX to like frame thoughts to of would moving specifics outlook, our QX Before some guidance. I help to provide our

believe environment the As XXXX. and uneven Ark mentioned, at demand least this will first half in the remains of persist we

have We we'll pleased include some into in of demand which, to discounting. progress are some with the making generation, degree we growth continue been prioritize XXXX, pursuits, on revenue and

the addition pricing compensation, the to normalized certain to XXXX. ability wage will pressures with margins to incremental incur client levels, expect on near level term, in in more we This In variable to limited continue to XXXX, costs compensation higher in combined in due improve geographies. inflation put of

remain war, impacted, and have highly materially operations on production. the not focused been uninterrupted our in Finally, teams maintaining Ukraine our despite

continue we able from levels in at guidance that assumes XXXX. to achieved our Ukraine Our those to delivery be centers deliver to will productivity similar

to will Now this is from revenue foreign a of be contribution starting we At be constant expected expect reported with X%, X% both the impact the full revenue exchange year inorganic basis. growth a nominal on negligible. XXXX. of outlook. Revenue range and currency for in to time, The

is Lastly, for of improvement limited. but we demand, year are seeing the still visibility the some

guiding in from increases quarters sequential revenue are modest in may in seasonality all resulting offset we to in impacts not sufficiently demand growth Although QX, XXXX.

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

GAAP to effective We rate tax expect our approximately be XX%.

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

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

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

be For impact minimal. $X.XXX expected $X.XXX decline FX to billion QX of XXXX, of year-over-year producing the of to with a we to range billion, X%, revenues the be expect in approximately of

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

Our variable the of security year. bench improvement the where the resetting see somewhat compensation QX guide to impact levels, caps, operations normalized and social expect of income from reflects higher throughout we

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

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

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

approximately in $XX expense to QX, million expected $XX Finally, assumptions compensation non-GAAP remaining in million is to in key a our for each $XX few quarter. measurements be and with $XXX XXXX. QX million that GAAP Stock-based support million,

evenly impact a year, $X for quarter. quarters. the Amortization is of expected across loss $XX The intangibles be the of million foreign exchange approximately to be each of spread is million to for expected each

$XX be adjustments the million and in year, for expected million is approximately million each in to million Tax effective in QX quarter. QX, $XX remaining with $XX $XX non-GAAP

for year, be each We with quarter. approximately expect $X in $XX million QX remaining $X and QX, benefits million to million $XX in full excess million the tax around in

more our to outside of items. GAAP one assumption Finally, non-GAAP

generating Our and EPAM from establish reserves governmental growing we which income, interest delivery operations. in are cash is receiving countries incentives several

result, of anticipating increased we other an income. in a level XXXX, As are

with interest in be $XX to income million QX, $XX year, the in $XX around remaining expect full We and and million QX for million $XX quarter. million in other each

successful ] EPAMers a [ the year, throughout will growth all to thanks help drive who XXXX. made XXXX My us and

questions. open the call for up Operator, let's

first [Operator El-Assal the from Ramsey line Instructions] comes of question Barclays. Our of

wanted of view half the I to about your second ask inflection. on sort 'XX, of

incrementally things further I think environment that a changing? you sounded in You point. direction just supporting positive demand client might has conversations comment backlog visibility? is second on you What the changed that confidence where seeing inflect? Can the forward of your confident at what's that giving that's into Are the half this pivot in a up? projects sort positive Are may build of sense incrementally view delayed you

in what today. address I view, still because how [indiscernible] said. will delays the debt. increased, very of and these lot delays kind of a think our still it's exactly believe happening to be would and a in we do QX future decision hope, of growing point But difficult activities to you conversations need companies We lot that activities were

to we of were kind [indiscernible]. in are many type discussion pretty [indiscernible] desires, was should the thinking of happening taken [indiscernible] of rates programs this of and responsible last become view what months, might which we've be as And

[indiscernible] of shaping we it. in activities our around So kind

Cowen. Our of of line TD next Bryan comes question from Bergin the

I margin wanted to start here. on

guess structural the flesh a to differences market, you costs you cadence can come the and and notable transitory in AUM. in Can investments I of for as I And maybe about that cost forward? I a and some what that potentially bit in investments heard is, go you result considerations? demand question talk the gen the more? good most do consider more what rule think, back So are now you XQ versus go 'XX

Yes.

was and been our So we lot because more low what we in then that to around profitability. sort here around made, do to a environment we thoughtful very guide a we decision this we forward a are move the it the keep wage increases have our And look [indiscernible] thought traditional year got did voluntary typical in year. would salary return variable return to about promo environment, of Bryan, of and we with or cost pricing obviously have structure compensation. very the later the The mindful We've year. in this QX growth would that of confidence want like attrition. decided in We that way

would investments wasn't to and scale significant, about we we're people say probably that I the And that, believe then whether again, not AI would we the that thought we this we considering in have back, AI. thought some that but do programs So significant those we want getting point. most in are at or of traction appropriate,

then generation, capabilities. you programs our partnership about that the primarily talked And on of some continuing our to demand sort are enhance focused as of then and domain programs

And have demand if know, Ark, either generation? you don't any I or the AI about thoughts the

of lot sizable, point a trigger [indiscernible] we that say part tail of but is we do. but as there Still will very experimentation, it's is proven And lot programs actually highlighted additional proof something to of of [indiscernible] lot. which we that the we program the speak. a a see is implementation it we still not concepts also what a Yes, to of

you scale going enough. for activities, into to this as and data first well visibly good, different at proof to invest cases, as We data production while of type go the in And activities in [indiscernible] [indiscernible]. [indiscernible] usually soon of activities it many engineering cultures experimentation is well lose is and need

these of [indiscernible]. will in for some this happen, So us amount bear fruits of believe type [indiscernible] -- to and will why also that's we that the figure work

clearly on working throughout Bryan, we'll the on our AI security utilization pyramids We then the be think a be there'll year. and and return investment,

us gross up ] you'll margin think in for XXXX, for the in improvement hopefully profitability more better see second an I XXXX. in setting [ half -- of

your clients? as expectations, just across to a about entered ramp is improvement client thought you base? half second your larger top as I'm that as the thinking And toward then you 'XX it the your And down of are relates had had top follow-up, your XX, you progressing larger XX expected? kind Okay. consistent

is of Other known our feeling ramp don't in guide. QX Yes. that, incremental a and demand We expected is upon ramp and and had we than QX us, down talked is it see like you part about kind obviously of downs are that stabilizing. significant

are From we good opportunities here of a a number expect standpoint, customer QX. a We clearly industry sciences. of seeing verticals in seeing are life we traction in that probably lot sequential strong in growth in energy, and I to our return

would So customers is generally I industry say, [indiscernible]. from the yes, least broader little it's at demand vertical a

Our of David comes the next of line question from Stifel. Grossman

I against Ukraine and in Eastern not mix think impact looking that the And basis, a 'XX in at And the adds, kind And rate about and understand with should the most other -- changing experienced I pretty differential higher flush a rate wondering just if to for help in us? the you're between it's the we guess and given how India, for Europe. couple whether in factors changing than count that head could year-over-year year. And down growth, geographic growth back like dynamic utilization bill at exception of it or play. of example, on out much you looks juxtapose, I'm you just of and the perhaps think your maybe on a half of expectation targeting I trying just geographies, -- just India. accelerating or the or

Yes.

good So questions.

portion count of things comments as our guess, the we head I today, of would they didn't go The across where a that is to fact can say kind as in Ark's first you is a geographies, count kind that broad declines look range did all as sheet, obviously [indiscernible] of increase planned at you I head countries, case going during, contingency well the Ukraine. if obviously that of range in or have fixed as see we a across of

just then, to just successfully weren't tuned access we we've done count contingency deliver somewhat, it And some so of case range we've a as afterwards, amount head Ukraine. able in hiring because geographies, a broad across from of

growth clearly in At point, you're seeing India. this

to in and to You'll on expect growth the for continue see of X% in going that put per is some got do the that's there. to America. X% the pressure India part the we've in growth incremental revenue head guide We that to Latin reason count,

add one I [indiscernible] ] you [ XXXX. [indiscernible], the beginning following. ago, Look, at if would the remember, year of

So was higher optimistic than revenue today for it kind way and a of was we XXXX. guided

that to our means back prepared [indiscernible] and corresponding not shorts. we're both which So the people, for then, growth we've

case, this, we Then an And to become reality. XXXX, cost us to of in where this thinking now for adjusting period kind were adjustment say, on [indiscernible] about of well. relative market we numbers have be we top as a from as perspective

condition. XX to to in shape [indiscernible] months change actually when XXXX was we So

guidance quantities. it's the kind keep view, this our in investments start to of line with big very to We of point in for [indiscernible] year. this to hiring much serious able back still From be

that actually about feel we reflecting this comfortable So number is the pretty reality.

exit cadence the a that you question dynamic that of imply we does take about comments I those we'll in about historical as margins margin comments level the improve? 'XX? think year, to a for more the and margin improvement we as of get kind of if 'XX Or back if the So previous progresses, -- should that

available be in Certainly, as pyramid. that's days the would the that I in to half, due QX, as in lower and QX second significant both and utilization gross the expect and well improvements margins and improvement then fairly a bill both half, first

profitability kind but of I closer I do we to year head where typical and the XXXX. So we've expect enter don't know whether towards back of more been or the that's historically, us same as we end get not to the as as

question ] Punit of [ comes from the Our from next JPMorgan. line Jan

Good quarter.

what of there [indiscernible]? as hiring is that to like running we should normal employees Did seniority attrition, ahead due do average employee something and experience you'll of of like maybe that the like like So some if deteriorates Ark, experience mentioned like low right above you per year? probably you, are for revenue average low share adjustment now, expect your this you

more adjustment because little, India is for happening. depends which believe think the What the I growing think reality, is XX% an higher last example, I it exactly before, year kind delivery I employee than think this year. is very optimizing growing a XX%, it reflects of much our [indiscernible] don't we And the per of is kind it's how locations. was okay. metric revenue like not much I easier,

revenue per to which -- actually Eastern about employee. Central be not America. [indiscernible] in Latin same Europe people So in impacted definitely is That Europe The from account, talking between should or [indiscernible]. [indiscernible] taken like

simply not metric us. metric look this So as for into a I physical

Got it. like for And a are given you operating we your it what should Got sequential expect basis? much normalized now? improved more under that model utilization, delivery distributed a it. utilization Like on

would our mean more I go was Yes. higher XXs. -- typical goal about be the to which towards back

to a I So the significant impact is have going targeted that don't our think levels. distribution on utilization

of of Our the next question comes Blair. Maggie William Nolan from line

holiday that from difficult can going basis? to bit about overcome historical demand offset your quarters and just on et cetera? maybe And on be your footprint to remind quarter-by-quarter which explicit different more given more geographic commentary a changing Jason, versus pressures little you given that, are may seasonality be be seasonal a us schedules,

Okay. clarify Great. Thanks chance to the [indiscernible] that.

] quarter. So capacity less or of a QX [ is available QX very less there's days. generally sort bill usually is strong --

sort sequential of growth significant we So to see QX usually, quite QX.

opportunities. I stability, larger that feels made really we my prepared was seeing with a some are like deal clients better that large demand in of size what and kind more remarks environment, number conversations of comment The

down. to be that are generally, seasonal there seasonality such to QX. flat But wanted possibly to But call even get to out potential growth that, definitely environment us QX demand we definitely some I negative a again, to us and take maybe sequentially so QX see there. expectations just to that could improving will the QX that has cause it was impact, But

now how will do future you with quarters setting mentioned rate feel a doing comfortable pricing then ability future? and protect cards Are for pricing the get raise increase And now your and years? to you've Okay. And you pencil. that anything you're in you in to quarters of your sharpening the to help versus your that ability level different couple

a on. going probably There's few things

to trying traditional certain when clients. do, multiyear you kind to us have I for of Even opportunities to don't a year us about that length. we're have back do think come Maggie, we in make you are Generally, would structures commitments say, to in. I lock asset

that thing led, -- engagements a consulting fixed are bit opportunity our there's it gives of only and [indiscernible] responsibility there's in is more it well. to continuing delivery, see and little us you're to of other as more that but that where more would is you an also we the mix fee I take think to for do, for improve not sort seeing opportunity us commercial, The

of question Thind the comes Surinder next line from of Our Jefferies.

of the appropriate you related to guess demand of just quickly hire quickly point, as bench how of skill hire set increase terms think was the then do need this need against year And much ahead, can pyramid are for evolves? do reshaping that, at at that? point in there you how if I of In you demand you terms how the you much in terms to environment the we look in an having to keep? this how And at of able a

Okay.

question interesting address. it's think I to

uncertainty, quickly be growing type lot of already, in be and in specifically of what lot a this investment of how activities. heard productivity new in actually people a of What put market. the we're all, First will wishing carefully. we will we needed very these that's [indiscernible] but is even very, because And at there

to that a quarter how AI-assisted be supporting there like What productivity this, clients means doing kind aspects will of watch month, the we would because improvements realized it of and by be how or are generating lot month development. about by practically core questions quarter, need of legal

about So need or actually later. year we like now it's a what will from

again, the to carefully. we're we in very with hire, here So players this ability very, and invest watching

in core our previous investments for training the keeping to for So educational ability juniors. all we're hire,

going And changing [indiscernible]. train again, it's is how and on we're what to the

continue it's changing. During time, last to the going

-- accelerate able when market. that be confident but softness would with we of So pretty the needed, we're the to especially

junior finding lot necessarily not produced last jobs. which the the on is we in several market talent levels, a years, of was are During

[ back everything So increase I will up did ] and think it's north of to with before what capacity. be right when X market building now we at [indiscernible]

Yes.

We across can have to in continue range that broad flexible. investing of -- been to we certain a We capacity have we're clearly make add geographies.

So yes, ability we respond feel about to our good to demand.

the needs to was Got capability, can what terms it. idea hire of within clarification, at. to the guess training, flexibility, that's in that the I you kind a the I I so get guess a of having just as address trying is quarter

Yes.

opportunities, got I quarter obviously then, fair. that and foremost, probably appropriate. We've would but utilization yes, a think window be be would first

around is jump XXXX. And it's be quarters. see performing will to the that more One demand proportional. still be not kind as this so quarter It still the don't demand crazy, in We spread will of now, going be right softer. [indiscernible] much will --

if informed it become hard well. you XXXX, quickly pretty very was and were -- So market. remember, We

Our [indiscernible] of Katri question next Instructions] line [Operator comes of Moshe from the Security.

They're call, execution. Ark, EPAM coming What's to year they your talk bit back. started coming the you changing that when it prompting with are you last -- the your strong that more on went are Can Is you competitors Congrats indicated spending of about that, plans. some that? moderated yes. that back. a clients

in realize it the for think profile more we it you year, that I much will didn't be we and optimistic, times EPAM when many at year, of but talking we raise during the of war. to risk about last able the [indiscernible] war, beginning uncertainty the the were part were

new middle us. which of delayed putting doing or XXXX, [indiscernible] clients actually replace, were lot to to kind with the a not [indiscernible] of to us fees decisions So in started going of

of kind But the this realized XXXX. unfortunately, QX we event impact of of only

long-term And signed these somebody impact. that We with is pretty who making some actions clients they else [indiscernible]. decision of because the still declined have done

XXXX. So very is is impact a -- visible into this this

I puts challenge. us, really this for economy, of the which were why most say critical one these have would competitors, simultaneous which of and things the X impact Last only that's us aside part our from

second when up. was then So started slow one. down, rates, to this And competition else, everything and costs is for again, the economy pick

which XXXX there and this some and us back of be come positive But them are also that for definitely, So mentioned well. to as who partially clients we XXXX. of things is growing of part some part will as

at is this, and the at smaller say in same compensate you XXXX. was XXXX, new If of than business the The positive definitely how time decline a be to kind that's of think part we were declines will story. [indiscernible] some

-- on with clients to with us work that and actually discussions other vendors. experimented based get may those cases, we with didn't see who And [indiscernible], continue us, some fact we the much done transferring [indiscernible] have just with both reengaging vendors, to they other as in back

they're makes that That Latin places India your kind is from because like And of yes. with -- execution sense. comfortable that or America? more Is

factors. multiple It's

it Some of them interruption. become more Ukraine much with any quality comfortable impact because of the was

some So and thinking there. believe now where will stands

it's prove deliver -- we also can from So that locations. we different

was probably here. kind major components critical India of of the one

be waiting not will possible their competitors, some and third will and vendors come back of -- expired commitments were the So kind some one, started new to [indiscernible] to us with satisfactory when back. come they it to or with that results be waterworks to think I as

lines. think I these between So all it's

comes question next of from line Peller Research. the Our Wolfe of Darrin

is sort of a landscape Yes, circling back. minute. the up a want for And the on just follow to I competitive bit really main question

back seeing to you. you're come said You some customers

of last year. also You new adding customers than into that this year, talked usual progressing you're I ton the more about and new, think, seeing over a

a usual that mean, changed. of putting advantage competitively? that could that said the Why competitors adding been seeing the new more being customers since you've lot for year. has second first terms be on just guess of I run what seeing this then to Ukraine. you're see you at been added little in what bunch potential context, there's year, all into are maybe it of decision I dovetailing -- happened rate. we the trying half And for you in a So of bit the half, taking was a added truly last your than guidance of in war not more aggressive, of more in informs into a the discussion What you anything year?

in second So starting more for to between back our and continued all still think much XXXX. I different next the [indiscernible] similar half was the We see XXXX. actually that half bigger they use approaches will engagements. overall, still It's feel previous our statement to program on protect all talking a when it clients but And than smaller to explain quarter. pressure number, But lot exactly it the the situation. we're and clients, that We well. something as lives that clients transition is smaller this of true, the be coming in visible We the smaller competitive increasing think programs. we XXXX. And of were for participated starting client smaller [indiscernible]. first this [indiscernible] first year of during better difference adjusted with this that this And -- half considered about it's behavior

second it. will to give this us be acceleration think opportunity we demonstrate half at happening So will

Maybe I the which just add. One, and -- I lose later point Okay. was [indiscernible]. I will I

revenues. ramp the again, QX like decision-making. activity, forget have environment But all improving. stronger the from we potentially I [indiscernible] in some And one said, If and the as stabilizing customer Don't new of new right, do at feels customer. Ark do it's stronger generally, demand logo slower least that down kind

on our one, [indiscernible] of consider we this we speed And demand [indiscernible] usual fully my price -- margins okay? start second demand. expect of full the be will function real still from kind of from it Until it's growth, to remark. the what realized and a

conservative we it put we now, or now, so least level, think what realistic right at right conservative it's yes. that At

We segment. happen [indiscernible] is still year, definitely not war before all years. than know about the it's this would what predictable it's So all of kind less [indiscernible]

quick we last one So wrap up. a call question or do and then

of from Sean question [ of ] comes [indiscernible]. the final line Kandy Our

still matures? AI it's Gen your understand the specific types are those And expect I capabilities of to you Gen but about very on what change currently? as AI, technology clients So do most excited early

change of kind all lot a of this AI, still, more since of available and are, interfaces again, of So created [indiscernible] straightforward for as some to point, pilots. experimentation tablet practically the data specific how [indiscernible] in of between to and experimenting how this most straightforward lot the I type and ones, a [indiscernible] think that the consumers it's is end access thinking and and general Gen everybody the area can there at very this and right companies

insight. productivity for tools talking about like I'm individuals about just areas client-facing and Gen the capabilities, AI and in of new I'm application [indiscernible]. And utilize talking

be quarter-by-quarter. these of changing difficulties will The

sophisticated now will -- things So more and exciting you be [indiscernible] very like quickly said. done happening be I from now. which would right XX like months it much think [indiscernible] see since some and we

to I will President, Arkadiy for turn over concluding back Dobkin, Chief the now call and remarks. Executive Officer

Thank you very much, questions. all your you for

general, The happening. quarters. the revenue much of feel trends and we've we lot showing decline, previous and was can after [indiscernible] think better the us that during in our was and we stability But X same XXXX. but for still seen, critical -- growth even inflation stabilize. which performance little feel actually continued we a market At decline I the in versus some some of XXXX driving unknowns that in ahead the which time, were

much, Thank to X you and talk in you months. very

you. Thank

This call. you. conference concludes you We thank Thank and you may now for participating, today's disconnect.