EPAM Systems, Inc.

Thank you for standing by. My name is Bella and I will be your conference operator today. At this time, I would like to welcome everyone to the EPAM 3rd Quarter 2024 Earnings Conference Call. All lines have been placed in 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, Bess saw one again. Thank you. I would now like to turn over the call to Mike Rochandle, head of investor relations. Please go ahead.

Good morning, everyone, and thank you for joining us today. As the operator just mentioned, I'm Mike Rochandle, head of investor relations. By now, you should have received your copy of the earnings release for the company's third quarter 2024 results. If you have not, a copy is available on epam.com in the investor section. With me on today's call are Akati Docton, 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 our 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 Arc.

Thank you, Mike. Good morning, everyone. Thank you for joining us today. It's good to share today that our third quarter results came in better than expected, reflecting our strong execution, core differentiations, and continued value and relevance across our global portfolio of clients. Further, we've been busy since we spoke last with signing two large acquisitions, and now since Friday of last week, we closed Neuris, which is the most significant addition in our history. From a strategic perspective, the acquisition of Neuris does three things for us. Number one, gives us an entry point into attractive new markets in Latin America and parts of Europe. Number two, accelerates net new growth opportunities with our joint clients and brings significant new logos to our clients' portfolio. And number three, creates a powerful and unified IPAM-NEURIUS delivery platform in the region, which we believe will be highly regarded across Latin America and Spanish and Portuguese-speaking world in general. while strengthening our service offering with local and near-shore value propositions. We will be talking more about it a bit later today, but first, let me share some key highlights across our business. During Q3, we delivered revenue growth both year over year and sequentially. We saw broad improvements in client engagement across all our verticals and geographies. which we believe demonstrates what we hope to be a more stable overall market outlook. The level of our performance in Q3 was driven by increased client trust in our now much more globally diversified capabilities and in our ability to continuously execute with a high level of quality. That triggered a better than expected client willingness to increase their budget share with us. Key verticals took a lot. include life science and healthcare, emerging markets, and notably financial services and software and high tech, which both return to sequential growth this quarter. In addition, we were seeing further signs of stabilization within business information and media and consumer goods retail and travel. While clients still continue to navigate mixed dynamics in their own end markets. Today, we are encouraged to see, first and more, positive demand sentiment in both our existing portfolio and new acquired clients in comparison with 90 days ago. Secondly, we were pleased with our ability to maintain our reputation as a go-to partner for technology-led optimization and transformation programs while continuously expanding our unique offering in corporate product and platform engineering services and advanced data cloud and generic capabilities. To summarize, we remain optimistic about certain sectors of our target market and about our broader portfolio as well to return to higher levels of growth over the coming quarters. So we are continuing to strategically invest in key offerings and capabilities and capture increased market share when global demand returns in full. However, currently we do still see broad enough caution and some delayed decision-making with a continued focus on cost optimization. With all of that, we are staying very close to our clients and adapting ourselves to meet their most critical needs while they continue to assess their investment appetite, prioritize transformational efforts, address their on-end market conditions, and most likely think about a variety of blank slams navigating around the world as we speak. As we stated many times in the past, our global delivery strategy is focused on becoming the most diversified company in our industry from global talent perspective. And based on that, on enabling us to support our global clients and their new transformative business models realization around the world. We believe we are successfully executing this strategy by investing both organically and through acquisitions. into building new advanced capabilities and service offerings is in key for us talent markets. As a result, currently, we focus on four major global delivery hubs . In Europe, we continue to remain highly differentiated in helping our clients to address their most complex business and technological challenges. Our core engineering DNA remains very strong and intact. As you can see, without better than expected Q3 results. We continue to deliver this high quality across existing clients, as well as the new logos from our European delivery hub, which operates around more than a dozen countries, including our largest in Ukraine and many within European Union zone. In the recent signing of first derivative, we will further strengthen our future footprint in Europe. with addition of new service offering, especially for our financial services clients, but not limited to just those. We will be ready to talk about it in more details when we close the transaction later in Q4. In India, we are very pleased with our level of growth based on demand for differentiating services in the region, which is more product engineering focus compared to majority of other service players. Our investments dating back to 2015 are playing off now. Today, we see robust growth in the country, and just this year, we added over 2,000 professionals and expect India to reach the 10,000 people by early 2025. In Latin America, we are following a similar path as India, investing and building for the future from 2015 as well. As mentioned already, on November 1st, we completed the acquisition of Neuris. This acquisition represents a significant milestone for our company and will really scale up our global capabilities with local leadership, knowledge, depth, and expertise. Now with Neuris, we immediately doubled our delivery footprint to approximately 7,500 people, notably expanding our presence in Mexico, Colombia, Argentina, and Brazil, among other countries in LATAM, but also in Spain and Portugal. Neuris strong client portfolio and depth of relationship clearly demonstrate the market differentiation in the region. In addition to strong application development system implementation, cloud migration, and automation, Neuris has developed very strong data, AI, and SAP practice. Today, Neuris is recognized in Latin America, a regional market leader in SAP. It brings over 1,000 practitioners globally to our current SAP practice and further enhancing our core enterprise platforms value proposition. Finally, they bring strong local capabilities across many of our key verticals and also in manufacturing and telco globally. In Western Central Asia, We're continuously building a relatively new delivery hub in addition to the previous three. Today we have nearly 7,000 people in the region who are representing all our major global technology practices. We have a very healthy mix of strong senior talent along with a more junior and energetic young population hungry for new opportunities and future growth. Now let's turn to an important topic that remains top of mind for many, GNI. Last quarter, we talked about how our AI transformation approach is a three-dimensional. Dimension one is internally focused and represents what we do for ourselves. It's a permanent transformation of generic talent using our own skill-based organizational tools and methodologies, which is a key differentiator for us, and deliver it over highly advanced and sophisticated trainings, boot camps, and other skill and efforts. In this category also, everything related to our efficiency and productivity advanced in back office and internal processes. Dimension two is all centered around client transformation opportunities and general enabled client solutions, which encompasses our general AI platforms and methodologies, such as the E-PAM dial, E-PAM AI run, and E-PAM . And finally, dimension three is all about partner ecosystem network helping us to enable transformational driven programs when close cooperation with cloud data and other type of major digital partners must be in place for success. All those dimensions are closely interconnected, and currently we continue to make very solid progress across all three of them. However, for today, like to focus a bit on combination of dimension two and three to illustrate how our efforts are driving client engagements and generating real pragmatic value. Throughout 2024, IPAM has seen very strong engagement with most of our clients across the full spectrum of GenAI initiatives. For us, such programs cover all our core capabilities in engineering, including our specialized AI enabling services, internal and external platforms, and accelerators. Such programs also often include business consulting services with our approach to holistic business redesign and optimization. And experience consulting including implementation of our journey interactive assistance by helping to bring AI to customer service operations across all our major verticals. When you look across our top 100 clients, we are directly engaged with about 70% of them on different type of generic initiatives. If we look at those from the size and maturity perspective, we will see a consistent and expected picture. So far this year, we saw a doubling of what we call stage one or early stage projects compared to last year, where we are demonstrating our ability to help our clients kickstart their journey and quickly get to stage two on midsize AI projects with defined outcomes. This engagement are characterized by more clear roadmap and defined top and bottom line outcomes based on vertically or horizontally driven requirements. Stage three is where we are starting to see the readiness to focus on GNI and AI-enabled transformations more broadly. These engagements are multi-year and multi-million dollar programs and combines our data factory construct with new generic capabilities at SCAD. Our most transformative work this year has involved establishing large-scale AI ecosystems or AI factories within our clients' organization. Those are comprehensive enterprise-level solutions. where we might manage the entire AI product lifecycle, which include complex operational models and integrated services. During this year, we've already been engaged in a few of these programs, which are sizable and could be in tens of millions of dollars range, which we believe will grow much faster in 2025. Now, let me share a few client examples. Let's start from the story which was being featured just a few days before, almost in real time, on the main stage at the Gartner IT Symposium in Barcelona, where our team presented jointly with our client, Rackit, a global manufacturing of health and nutrition products. This program is a large multi-year data transformation story that started with getting the organization ready for a variety of AI use cases. really covering the full lifecycle transformation from data foundation to data governance, platform strategy, and the construction of responsible AI framework, setting the stage for an operating and business model transformation for this 200-year-old, 40,000-person company. Another story that we briefly mentioned three months ago is different, but it's continue making strong progress into the future. In collaboration with International Monetary Fund back in 2023, we built the first version of StatGPT, the platform that allowed users to talk their world economic and financial data using natural language. It was developed based on our EPUM Dial and EPUM Quant Hub IP. As a cornerstone for the next generation conversational data exploration and analytical solution for economists and statisticians. Since then, StatGPT was presented in numerous global SDMX events, where SDMX is a set of technical standards established by European Central Bank, Eurostat, IMF, United Nations Statistical Division, World Bank, and other government and semi-government agencies. This month, we delivered the next version, StatGPT 2.0, which significantly improves the way user access the world global economic data and can seamlessly guide users to the specific data they need. Just now, the IGPT went over the evaluation process, which included eight publicly available datasets from international and national statistical agencies and was conducted by more than 100 representatives from SDMX-sponsored institutions and national statistical organizations. In result, this month it will be presented at the 2024 IMF Statistical Forum in DC in the session called Measuring the Implication of AI on the Economy as an Alternative Data Access Simplification Platform for SDMX Users Community Globally. To conclude, we are pleased with our stronger-than-expected Q3 results. Our core differentiation remains evident. We continue to deliver value, quality, and excellence for our clients. We are successfully executing our global growth and domain strategy while expanding market and capabilities at the same time. Finally, we continuously and rapidly upskilling ourselves in the most advanced engineering and generic capabilities. We strongly believe EPAM continues to be well positioned to capture rebounding market demand and share. Let me now turn the call over to Jason. who will provide additional details on our Q3 results and our tool.