EPAM Systems, Inc.

Greetings. Welcome to EPM Systems' first quarter 2020 earnings conference call. At this time, all participants will be in listen-only mode. Any brief question and answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star zero from your telephone keypad. Please note, this conference is being recorded. At this time, I'll turn the conference over to David Strobe, Head of Investor Relations. You may now begin.

Thank you, Operator, and good morning, everyone. By now, you should have received your copy of the earnings release. for the company's first quarter 2020 results. If you have not, a copy is available on epam.com in the investor section. With me on today's call are Akati Dotkin, CEO and President, and Jason Peterson, Chief Financial Officer. Before we begin, I'd like to remind you that some of the comments made on today's call may contain forward-looking statements. These statements are subject to risk and uncertainties as described in the company's earnings release and SEC filings. Additionally, all references to reported results that are non-GAAP measures have been reconciled to GAAP and are available in our quarterly earnings materials located in the investor section of our website. With that said, I'll now turn the call over to Ark.

Thank you, David, and good morning, everyone. I do hope that all of you are staying safe and healthy during this global crisis, and I want to thank you for joining us. While it has been only three months since we shared our 2019 results and provided our somewhat expected by now 20% plus annualized growth outlook for 2020, the COVID-19 pandemic has made it clear that everything we thought we knew then just a few weeks later started to be very much changing on a daily basis. In real terms, the impact we are seeing all over the world is immediate, serious, and localized for each and every one of us and for our clients. And more importantly, we believe that we are far from the end of this event. In fact, in the view of many, we are somewhere near the end of just the first period of disruption. So, while we do understand that significant uncertainty is with us for some time, we wanted to give you a perspective of how EPAM is adapting to this new reality and where we think we might be going in the near future. Since January, we've been responding to the COVID-19 crisis and its only impact in our APAC region. To our benefit, we were able to take advantage of a good amount of work done over the past years to put in place for business continuity as well as for investment in our internal platforms which enable us to support truly agile global delivery environments including readiness for remote workplaces and enhanced productivity measurements. Because of those efforts, combined with our early learnings from our APAP experiences in January and February, already in March, we were able to move nearly all of APAP to a productive and safe work-from-home environment, practically in a matter of days. This transition represented a pretty significant effort, was noticed by many of our clients for its speed and reliability of service continuity. So at this moment, I wanted to share my deep appreciation to the thousands of farmers who are doing everything possible to support each other, to our customers for providing us with their most critical issues, and to our communities around the world, which we are supporting constantly with different means for fighting the pandemic on the front lines. The health and well-being of our people continue to be a top priority for all of us during this time. With that in mind, let me switch to our Q1 performance and then cover some of the changes we are making in order to support customers as they navigate this challenging environment and end with how we see the forces shaping the next few quarters of demand before turning the call over to Jason. First of all, I am pleased to share that we delivered stronger than expected first quarter results with revenues of 651 million, representing 26% in constant currency growth. Despite some of the early COVID-19 reactions in APAC and the first global pandemic impact in March, 2021 came in $9 million higher than our initial guidance, underscoring the value of our diverse and high-quality portfolio and our ability to continue providing relevant and mission-critical services to our clients. Q1 marked also EPAM's 37th consecutive quarter of 20% plus organic growth. The rate of growth we plan to return to post-crisis. Starting from the end of Q1 and through the current quarter, the effect of the coronavirus on our customers has been significant and wide-ranging. With more than a third of our portfolio having experienced some form of revenue impact, and some industries experiencing never-before-seen disruption in their end markets. Customers in our travel and consumer verticals have taken a variety of serious steps to protect their people and to ensure a continuing liquidity and viability of their businesses. And we believe that we may see several ways of impact as the crisis continues to unfold across other market segments as well. It is important to note that across our portfolio, even while discussions are taking place about ways to manage costs during the crisis, many customers still have continued to move forward with programs or in some cases have chosen to accelerate the pace of their digital transformation in order to support radically changed demands for how they engage and serve their clients. We have supported some of these changes in a very, very short period of time. From a virtual shutting down of brick and mortar operations for a major retailer and the move to pure play online commerce, to the massive scaled infrastructure demand needed to support virtual entertainment events for a major gaming platform. Throughout the past several months, we are certain that the patent scale of the pandemic is taking a pump into new territory, both from the challenges of shifting our own way of thinking and doing things to really key directions in our offerings, ranging from how we imagine new digital platforms to what it means to be cloud-first. To date, our success in managing this disruption has been due to our ability to leverage our product engineering heritage and expertise and to push ourselves to move and adapt even faster. Internally, this means an even more serious push to break down silos, to increase investments into knowledge management and productivity platforms, and to establish new, faster processes which enable our teams to address much more seamlessly and productively the challenges we are facing. Not only investment in our network and security infrastructure, much of which has been stress tested by our own delivery centers for the past years, we have and continue to develop new ways of working and helping our customers to respond to the crisis now. All these demands for continued operations and faster and more reliable service offerings bring us back to our top priority as an organization, to be ready for the post-crisis time. And that is to retain, find, attract, and develop our top talent. By continuing to invest in our delivery, collaboration, education, and community platform, and by focusing on our people, we are fulfilling a critical aspect of current and future demands for what is going to be an even more digital world. Now, I want to say a few words about the outlook for our industry segment and for IPAM specifically. As most of you know, the digital service segment in which we operate was generally seen as a high growth market. And it is. Unfortunately, in current environment, it is nearly impossible to count on previous business as usual trends and prior periods data assumptions to establish near-term models. That is why today we are relying on very different and often close to real-time indicators and signals. First, reviewing at our daily stand-up the changes that are occurring on the ground across our specific market and delivery geographies, industries, and individual accounts. We are also looking at the market trends in general, competitors' disclosures, industry and financial market analysis projections. For example, we looked into financial modeling across a number of publicly traded companies and saw that projected revenue ranges for many of them, just for the current Q2 of 2020, could vary very significantly, sometimes up to 20%. That is just another confirmation of how unpredictable the situation is. Just three, four weeks back, we also didn't think we would be able to guide even for the second quarter. But today we are more comfortable and ready to provide a range for our Q3 results, and Jason will share those details shortly. At the same time, we still think it is extremely challenging to say with acceptable level of confidence what would be happening in Q3. As we are seeing high volatility in the client potential behavior. At this point we are open for all types of scenarios including another sequential revenue decline. That is why we decided not to provide a guide for the whole of 2020 at that time. Our key priorities right now are to continue to protect our people and our financial position as well as to make continuous investment into our core capabilities and platforms in order to be better prepared for the comeback. And while these actions may have temporary impact on our profitability, we are absolutely confident of our ability to resume our leading position in the turnaround. In our view now, more than ever, the fundamental case for digital product and platform engineering services combined with the ability to bring integrated consulting on the front end is very much intact. And our proved ability to adapt ourselves and our company to a completely new operating environment in such a short period of time has given us the confidence to say that EPAM will come out of this challenging time a more value and result-driven company and continue growing in paths pandemic environment with our somewhat expected by now 20% plus rate. With that, let me hand the call to Jason.