EPAM Systems, Inc.

call. All lines have been placed on mute to prevent any background noise. After the speaker's remarks there will be a question and answer session. If you would like to ask a question during this time simply press star followed by the number one on your telephone keypad. If you would like to withdraw your question please press star one again. For operator assistance throughout the call please press star zero and finally I would like to advise all participants that this call is being recorded. Thank you. I'd now like to welcome Mike Reschandle, Head of Investor Relations, to begin the conference. Mike, over to you.

Good morning, everyone, and thank you for joining us today. As the operator just mentioned, I'm Mike Reschandle, Head of Investor Relations. By now, you should have received your copy of the earnings release for the company's second quarter 2024 results. If you have not, the copy is available on epam.com in the Investors section. With me on today's call are Akati Dopkin, CEO and President, and Jason Peterson, Chief Financial Officer. I would like to remind those listening 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 the comparable GAAP measures and are available in our quarterly earnings materials located in the investor section of our website. With that said, I will now turn the call over to Ark.

Thank you, Mike. Good morning everyone. Thank you for joining us today. First, I would like to start off with our second quarter results, which came generally in line with our expectations. We believe our performance in the second quarter of 2024 reflects our continuous strong execution and adaptability amidst a still complex demand environment. Let me share some current highlights of our business from Q2 up to today. Our underlying business continues to show signs of stabilization. In the second quarter, we delivered very strong growth in our healthcare and life sciences vertical and strong growth in our emerging verticals. But we also saw some slight sequential improvements in financial services. In some of the verticals, namely business information and media, we continue to work through the impact of the rubdowns from the few large clients we have mentioned before. On the demand environment, we do see broad-based signs of stabilization as well across both EMEA and North America. At the same time, clients are still cautious with larger programs, and our visibility towards significant increase continues to be constrained by a mix of clients' cost saving priorities, delays in program starts, and clients' own business changes. As a result of this complex environment, we are currently assuming no net improvements in overall demand for the remainder of the year. Jason will provide more details of our updated outlook for 2024. Notwithstanding the overall demand picture, we are optimistic about certain sectors of our target market and our current portfolio returning to modest growth story in the next two-three quarters, as we see it now. In overall, while we adjust our offerings and our delivery mix to suit the parameters of the current demand environment, we continue to see significant traction in our data and analytics, core engineering, and digital engagement offerings. especially through the broad transformation of each with AI, as well as increasing evidence that our consulting and advanced technology capabilities are driving new types of the final opportunities for us. So, meanwhile, we remain focused on responsibly managing our business in this part of the cycle, building on our strong fundamentals and ensuring that EPAM continues to be the partners of choice once the demand environment improves. Turning now to our global delivery strategy. In Europe, our differentiated capabilities continue to create significant opportunities for our clients to leverage the top talent on their most complex business and technical challenges. We believe this traditional EPAM advantage will continue to serve our clients well, especially as they turn from mostly cost-driven considerations back toward driving growth and innovation through the use of advanced technologies for their complex transformation and modernization efforts. We are also continuously investing in our more recently established delivery hubs across Western and Central Asia, which are emerging talent markets and where we are enabling strong and experienced tech talent to responsibly lead our future growth in the region. India remains a priority and is on track to becoming our largest delivery location by the end of the year. We have built skilled centers of excellence in data and analytics, digital marketing, commerce, Salesforce, SAP, and other key horizontal and vertical service lines. Our primary focus is on building at scale EPAM great quality engineering, while blending in with many unique enterprise-level capabilities present in India and not available in most of other EPAM locations around the globe. We believe this approach will differentiate EPAM-India for our clients and create strong growth opportunities for our people. We also continue to expand our core engineering capabilities in LATAM. In addition to Mexico and Colombia, we now have a third delivery hub in Argentina. We will continue assessing and developing new local talent across the region. In each of these years, we are investing in our existing and new technical capabilities, crucial for the future GenAI data, ML, and predictive AI, and in corresponding IP development. In short, we are building full-service GenAI delivery practices through a network of GenAI X labs across major dev centers to enable and scale GenAI-enabled client production activities. In addition, both in India and LATAM, we are evolving into a strategy that includes not only differentiated delivery capabilities, but also being able to offer compelling in-market presence and solutions, particularly as we seek to serve our global clients in a more complete and strategic manner, which means building locally a much stronger partner ecosystem as well. Finally, in all our locations, and specifically in our major client markets, we continue to focus on our client engagement programs and to improve our consulting and domain industry capabilities across our service offerings. Now, let's turn in a bit more details on our GNI approach. For the last decade, and despite all challenges during the last several years, we are continuously a recognized leader in advanced technology, digital engineering, and complex data transformation programs. This naturally extends to EPAM being regarded as a company who understands the complexities of AI transformation something we are doing for ourselves, our partners, and our clients for some time now. Today, I would like to highlight our up-to-date progress in that area and how ePAM is helping clients pragmatically initiate and then move use cases beyond pilots into production deployments. Our current approach to AI transformation is three-dimensional. Dimension one, ePAM internal transformation and GenAI enablement investment. We set an ambition goal for ourselves to upskill and effectively train an absolute majority of the company on the usage of GenAI fundamentals, and to do so both responsibly and with the PAM level technical depth. An educated program was established to execute this, and today, with the help of our educational platforms, internal specialized tools, and our global mentoring community, close to 100% of the PAMers have gone through training and are applying AI in their daily work activities. While most of the companies are announcing similar programs, we believe that during the last 24 months, our early and highly focused efforts across a broad range of ePAMRs allow us to better understand future opportunities and to invest in differentiated IP and accelerators around GNI-enabled engineering and solutioning. Our combination of training, IP, and open source style internal initiatives have now become drivers of scaling our advanced GNI practitioner communities across all EPAM organizational units and practices. We assume that well over 10% of EPAMers are now advanced GNI technical practitioners, while over 1,000 are becoming strong internal AI champions with ability to lead GNI-enabled business solutions. We believe all that have enabled our dimension to client transformation opportunities. Our AI client project today has evolved from exploratory pilots and proof of concept late last year to now, upon being selected by clients as a primary AI partner with involvement into hundreds of GenAI-led engagements. We are helping to change the full value chain of HDLC from one side and enabling implementation of real GenAI-driven business use cases from another. Let me briefly highlight just a few IP investments. ePumpDial is a unified GNI orchestration platform, helping enterprises speed their experimentation and innovation efforts to implement real business use cases. And GNI enables solutions by connecting into meaningful workflow and load balancing a set of public and proprietary LLMs and SLMs together with different type of internal, external data sources. AI-native applications and custom add-ons. ePAM AI Run is a gen-AI-powered delivery framework that accelerates the entire software development lifecycle and helps clients recognize ROI of their AI investments by improving time-to-market speed up to 30%. ePAM Aelita is a comprehensive collaboration platform for teams that streamline the development, accessibility, and management of large-language model assets, including prompts, templates, and agents. Now, a few specific examples for the clients, which operate across completely different user environments. For Unity, the world-leading platform of gaming tools for creators to build and grow real-time games, apps, and experiences across multiple platforms. We helped build Unity Muse. From a multi-cloud migration to Microsoft Azure, to adding generic capabilities to make game creation faster and easier for over a million developers by using natural language prompts to generate sprites, textures, and animations, and also providing chat-based assistance and troubleshooting, as well as the ability to easily create behavior trees. For Xalius, a leader in healthcare system purpose-built solutions and industry-leading AI, we helped to develop an air generation AI platform on AWS enhancing Dragonfly, Xalius flagship product. The platform provides real-time data and predictive analytics to nurses, case managers, physician advisors, utilization management, and revenue cycle leaders across 500 hospitals and health systems with more than 500 players connections. Finally, for the IMF, as a part of modernization of their data platform, we built StatGPT, which is SDMX-driven GNI application for statistical organizations relying on their users, economists, and statisticians to query, transform, analyze, visualize, and interpret statistical data using a natural language interface via proprietary talk-to-you-data framework powered by EPUM Dial and EPUM QuantHub accelerators. Initial results showed a 50% increase in research productivity and 35% increase in research accuracy. In overall, we are seeing a significant rise of GenAI-led engagements across every vertical and a very broad set of use cases. And this is now driving transformation in both front-end customer experiences as well as significant back-office and process-related use cases. All that in turn allows us to enable dimension three for AI transformation, extended partner network. First of all, because they saw that we are very practical in our approach. Our technology and AI transformation program are much larger and more complex today than where we started just a few quarters ago. And encompasses both consulting and engineering services as well as a broader range of partnerships. With more than 150 strategic partners, we are accelerating modernization, adapting cloud-native architecture, and leveraging AI and advanced analytics, particularly when our clients' projects have a high degree of technical and business complexity. We are our partner's partner of choice for making corporate engagement real. In fact, just very recently, we've been named Partner of the Year by several of our cloud data and digital partners. including Databricks Disruption Partner of the Year, recognized for the industry-leading design and implementation of GNI-powered conversational interfaces, state-of-the-art machine learning, and large language model frameworks. By the way, as an elite-level partner, we are one of only five companies with a dedicated Databricks Center of Excellence. Google Cloud Talent Development Partner of the Year, A word recognized for our commitment to training, upskilling, and reskilling our team's cloud and AI skills. Microsoft Gaming Partner of the Year, recognized for pushing the boundaries of creativity and technology. Mac and Commerce Tools, recognized for delivering best-in-class modern commerce experience for our clients. It's easy to assume the next question. What is the revenue impact of these programs? I guess the answer is probably predictable as well. We are still in early days of the AI wave. But at the same time, we are very optimistic about the accelerating pipeline opportunities coming from AI-led transformation and what that can bring downstream for us as a highly trusted and valued partner. We remain focused expanding our efforts to drive demand, remaining relevant to our clients and what they need, and proactively expanding our global market share. We also remain committed to managing our delivery footprint, expanding to cost-efficient locations, and generally optimizing our ways of working so we can continue to provide premium service at attractive value to our global client base. I firmly believe EPAM continues to be well-positioned to capture rebounding market demand, driven by long-term pressures for legacy modernization, but needs for advanced customer-centric solution, and by significant interest to understand how to apply GenAI and GenAI capabilities to build new platform and solutions. With this, I would like to pass to Jason to provide additional details on our results in Q2 and our future performance.