PayNearby launches Digital Naari platform to generate sustainable self-employment for women

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Fourth Quarter 2023
• Revenues of $1.157 billion, down 6.0% year-over-year
• GAAP Income from Operations was 10.6% of revenues and Non-GAAP Income from Operations was 17.3% of revenues
• GAAP Diluted EPS of $1.66, a decrease of 36.4%, and Non-GAAP Diluted EPS of $2.75, a decrease of 6.1% on a year-over-year basis
Full Year 2023
• Revenues of $4.691 billion, down 2.8% year-over-year
• GAAP Income from Operations was 10.7% of revenues and Non-GAAP Income from Operations was 16.3% of revenues
• GAAP Diluted EPS of $7.06, a decrease of 0.4%, and Non-GAAP Diluted EPS of $10.59, a decrease of 2.8% on a year-over-year basis

Newtown, PA, USA, February 15, 2024 — EPAM Systems, Inc. (NYSE: EPAM), a leading digital transformation services and product engineering company, today announced results for its fourth quarter and full year ended December 31, 2023.

 “EPAM’s performance in 2023 reflects our ability to successfully navigate a volatile demand and macro-economic environment,” said Arkadiy Dobkin, CEO & President, EPAM. “After rebalancing the majority of our delivery platforms across Europe, India, Asia and Latin America, and refining our growth strategy, we are now focused on harmonizing our delivery quality, optimizing cost-effectiveness, and proactively leveraging our extensive data, engineering and consulting experience to capitalize on Generative AI opportunities.”

 Fourth Quarter 2023 Highlights
• Revenues decreased to $1.157 billion, a year-over-year decrease of $74.0 million, or 6.0%. On an organic constant currency basis excluding the impact of the exit from Russia, revenues were down 7.1% compared to the fourth quarter of 2022;
• GAAP income from operations was $122.5 million, a decrease of $48.0 million, or 28.1% , compared to $170.5 million in the fourth quarter of 2022. GAAP income from operations was negatively impacted by $27.9 million of costs incurred in connection with the Company’s Cost Optimization Program;
• Non-GAAP income from operations was $200.4 million, a decrease of $19.2 million, or 8.7%, compared to $219.6 million in the fourth quarter of 2022;
• Diluted earnings per share (“EPS”) on a GAAP basis was $1.66, a decrease of $0.95, or 36.4%, compared to $2.61 in the fourth quarter of 2022; and
• Non-GAAP diluted EPS was $2.75, a decrease of $0.18, or 6.1%, compared to $2.93 in the fourth quarter of 2022.

Full Year 2023 Highlights
• Revenues decreased to $4.691 billion, a year-over-year decrease of $134.2 million, or 2.8%. On an organic constant currency basis excluding the impact of the exit from Russia, revenues were down 2.6% year-over-year;
• GAAP income from operations was $501.2 million, a decrease of $71.7 million, or 12.5%, compared to $573.0 million in 2022. GAAP income from operations was negatively impacted by a $25.9 million loss on the sale of the Company’s remaining holdings in Russia and by $35.1 million of costs incurred in connection with the Company’s Cost Optimization Program;
• Non-GAAP income from operations was $765.1 million, a decrease of $53.1 million, or 6.5%, compared to $818.2 million in 2022;
• Diluted EPS on a GAAP basis was $7.06, a decrease of $0.03, or 0.4%, compared to $7.09 in 2022; and
• Non-GAAP diluted EPS was $10.59, a decrease of $0.31, or 2.8%, compared to $10.90 in 2022.

Cash Flow and Other Metrics
• Cash provided by operating activities was $171.4 million in the fourth quarter of 2023, a decrease from $186.1 million in the fourth quarter of 2022; and was $562.6 million in 2023, an increase from $464.1 million in 2022;

• The Company repurchased 143 thousand shares of its common stock for $36.5 million during the fourth quarter of 2023 under its share repurchase program. During the year ended December 31, 2023, the Company repurchased 686 thousand shares of its common stock for $164.9 million under its share repurchase program. As of December 31, 2023, the Company had $335.1 million remaining under its share repurchase authorization.
• Cash, cash equivalents and restricted cash totaled $2.043 billion as of December 31, 2023, an increase of $359.5 million, or 21.4%, from $1.684 billion as of December 31, 2022; and
• Total headcount was approximately 53,150 as of December 31, 2023. Included in this number were approximately 47,350 delivery professionals, a decrease of 10.4% from December 31, 2022.

2024 Outlook – Full Year and First Quarter
Full Year
EPAM expects the following for the full year:
• The Company expects the year-over-year growth rate for revenues to be in the range of 1% to 4% for 2024. The Company expects foreign currency translation will have a negligible impact on year-over-year reported revenue growth. This guidance also reflects a minimal contribution from inorganic revenues.
• For the full year, EPAM expects GAAP income from operations to be in the range of 9.5% to 10.5% of revenues and non-GAAP income from operations to be in the range of 14.5% to 15.5% of revenues;
• The Company expects its GAAP effective tax rate to be approximately 21% and its non-GAAP effective tax rate to be approximately 24%; and
• EPAM expects GAAP diluted EPS will be in the range of $7.20 to $7.60 for the year, and non-GAAP diluted EPS will be in the range of $10.00 to $10.40 for the year. The Company expects weighted average diluted shares outstanding for the year of 59.3 million.

First Quarter
EPAM expects the following for the first quarter:
• The Company expects revenues will be in the range of $1.155 billion to $1.165 billion for the first quarter reflecting a year-over-year decline of 4% at the midpoint of the range. The Company expects that foreign currency translation will have a negligible impact on year-over-year revenue decline during the quarter. This guidance also reflects a minimal contribution from inorganic revenues;
• For the first quarter, EPAM expects GAAP income from operations to be in the range of 9% to 10% of revenues and non-GAAP income from operations to be in the range of 13.5% to 14.5% of revenues;
• The Company expects its GAAP effective tax rate to be approximately 11% and its non-GAAP effective tax rate to be approximately 24%; and
• EPAM expects GAAP diluted EPS will be in the range of $1.79 to $1.87 for the quarter, and non-GAAP diluted EPS will be in the range of $2.26 to $2.34 for the quarter. The Company expects weighted average diluted shares outstanding for the quarter of 59.1 million.

Conference Call Information
EPAM will host a conference call to discuss results on Thursday, February 15, 2024, at 8:00 a.m. EST.

Rabindra

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