EPAM Systems, Inc.

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, press star one again. Finally, I would like to advise all participants that this call is being recorded. Thank you. I would now like to welcome Mike Rochandelle, 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 fourth quarter and full year 2024 results. If you have not, a copy is available on epam.com in the Investor Relations 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 relations 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 that our first quarter results came in better than expected. It was another quarter of strong execution, thanks to our core engineering differentiation and relevance of our advanced capabilities and service offerings across our new and existing client portfolios. Many of the encouraging themes we shared last quarter have carried through into this quarter. Before discussing our Q4 results and some sorts of 2025, I would like to step back and reflect on the full year 2024, which was a year of uneven demand, improved stabilization, and building some sequential momentum. There are three key points I would like to highlight on our performance over the past year. Number one, we were successfully executing our global business strategy while simultaneously addressing many challenges we have accumulated during the last few years. We've done this both organically and through acquisitions with a continuous focus on becoming the most globally geo-balanced talent company in the world for AI-native digital business services. The two most recent acquisitions, Neuris and First Derivative, or EFD, are good examples of how we are investing to accelerate our strategy. They allowed us to meaningfully expand our existing global client relationships and further penetrate new markets and talent geohubs. While still early, we see encouraging progress across several net new opportunities with more than a dozen joint pursuits that combine IPAM, UOTIS, and FD capabilities together. Number two, we are pleased to end the year with an underlying improvement on our standalone business, delivering better results than our expectations earlier in the year when we had to adjust our outlook for weaker than expected H1. And finally, number three. Exiting 2024, we feel good about the sequential momentum we've built over the past two quarters, and see encouraging signs as we look ahead into 2025. While there is still plenty of caution and broad macro sensitivity, we believe we see some fundamental improvements in the business, which gives us optimism the 2025 will be much more transformative and better year for us than 2024 was. Now, turning to our Q4 results. During Q4, we grew mid-single digits both year-over-year and sequentially, notably returning to organic revenue growth for the first time since Q1 of 2023. We continue to see improvements in client sentiments, and engagements across all our verticals and geographies, and particularly around our AI-related capabilities. Our performance in Q4 was driven by our ability to increase our clients' trust and reassure continuous superior quality execution in our key horizontal and vertical domains, while simultaneously offering more globally diversified talent. On a standalone basis, excluding recent acquisitions, We saw four out of six verticals grow year over year, with five out of six growing sequentially, reflecting strong momentum from last quarter. Key verticals to call out include life science and health care, software and high tech, financial services, and emerging. Across geographies, we see a similar story to last quarter, with Americas and APAC leading growth year over year. with Europe continuing to show organic sequestration revenue growth. Now, turning to demand. We are encouraged to see a modestly more positive demand environment compared to 90 days ago. Sentiment continues to improve across our existing and newly acquired client portfolios. These clients rely on us for our core engineering DNA, as well as our advanced DNA capabilities. In some cases, we are consolidating work from other suppliers as clients shift toward a more engineering-led and scaled programs. In our most recent conversations across the C-suite, the underlying tone and buying signals are higher than they were last year. With further accumulation of technical and data debt over the past 12 months, we are seeing accelerated take-up in more scaled and transformational AI programs. Based on the significant backlog of technical and data modernization, along with new AI-related demand, we believe that 2025 will be the year where we begin to see real generic first mover advantages. While we're relatively optimistic about the midterm outlook, is more encouraging client buying signals than 12 months back, we do still see multiple packets of caution driven by broad macro risks, policy-specific uncertainty, due to a very dynamic geopolitical environment and certain challenges in some of our clients and talent markets. Further, cost very much remains in focus and continues to be an important decision factor for many of our clients. So based on these uncertainties in our current vantage point, we are balancing our optimists as clients continue to transition and modestly expand their discretionary spend. into our global delivery approach. We demonstrated strong execution throughout the year. As we continue to diversify our global talent pools and bringing more optionality to our clients across all four of our major delivery hubs in Europe, India, Latin America, and Western Central Asia. In Q4, we saw sequential improvements of net organic additions, which was broader than just India, and included some of our traditional European locations. Europe remains core to us as a top talent pool, and we believe we will continue to grow in the region as discretionary spend returns to higher levels. Ukraine is an interesting example to share, given the geopolitical environment. While production headcount remains mostly in line year over year, in Q4, we saw sequential net additions for the first time since the start of the Russian invasion. We believe this is a positive signal of our clients' comfort level and desire to return to some of our traditional locations. In India, we hit an important milestone for the company, as it now represents our largest single country delivery location and second in the region. In just 10 years, Ipang has achieved 10x growth in India with now over 10,000 employees. This speaks to our ability to adapt to changing market conditions and our commitment to investing in globally diverse and talent workforce in line with IPAM for DNA. In Latin America, we significantly strengthen our footprint with Neuris, making Latin America our third largest delivery region and a very important pillar in our global model. We believe we have now the right mix of talent focusing on delivery for North American clients couples with a deep local expertise and strong capabilities to engage and deliver in Latam. In Western Central Asia, as we mentioned last quarter, we continue to progress quite nicely with our still relatively new delivery hub of over 7,300 people now. Back to the two acquisitions we closed in Q4. In overall, with Neuris and FD, we significantly increased our global footprint with the addition of nearly 6,000 people combined, primarily across Latin America, Canada, Spain, UK, and Ireland. We remain committed to executing our global delivery strategy further. Now shifting to GNI. Even with all the recent noise, sometimes the significant level of confusion and debates, we are seeing indicators of positive change and growing impact. Overall, we continue to make significant traction across our client portfolio, with now 75% of our top 100 clients engaged in GNI initiatives. Our early stage projects continue to show strong growth year over year, with hundreds of new vertical use cases emerging and turning into agentic AI pilots. Within our midsize AI projects, with more defined outcomes, We are beginning to see more volume, and we believe this speaks to the investment and traction clients are making in this space. These programs have a high probability of turning into a genetic transformation place in key horizontal and vertical domains. Finally, in our larger scale AI factories, we manage the entire AI portfolio of agents and applications throughout the program lifecycle and generate tens of millions of dollars in value by each such engagement. Our GenAI and AI-driven client engagement could also be presented in three major dimensions. Dimension one is DLC and other related areas of individual and team productivity improvements. Dimension two, data and cloud engagements triggered by the need to enable AI-native programming scale. Dimension three, scale AI-native programs and platforms, with a goal to drive value against proven business cases, and when clients already solve their data and cloud infrastructure challenges. Let me expand a bit on this. Within Dimension One, we are addressing the need of complex enterprise-level engagements to orchestrate individual efforts toward total productivity improvements at large teams and programs levels via all latest GNI advances. Often to have real engagement impact, our hybrid with client teams must have the same level of modern engineering maturity as purposely GNI trained our own teams. That is why we are offering to clients GNI-enabled software development lifecycle, or SDLC, transformational programs. Utilizing market leading tools and methodologies along with the EPAM AI run framework built on top of our own dial editor, CODMI, and some other IP assets. It makes significant impact on large complex engagement and helps to advance the adoption of AI in large-scale enterprises by bringing measurable values through both cost optimization and the creation of new revenue streams. While I believe Dimension 2 is very much self-explanatory, Dimension 3 is our go-to-market business transformational programs natively enabled by GN AI and AI technology. As we move into a more comprehensive agenda proposition, our AI-native engagement are starting to be picked up in volume and size. Compared to the first half of 2024, where we were generating single-digit millions of revenue from these AI-native programs, Q4 stands out by generating about $50 million in that category. Let me share two client examples to further illustrate how our efforts are driving client engagement and generating real pragmatic value. Let's start with Canadian Tire Corporation, the largest retail chain in Canada, where we have embarked on a journey to standardize and modernize software delivery lifecycle. With the combined power of CTC Product Engineering Center of Excellence and IPAM know-how, we already drive an initial result with very real optimization and efficiency savings. So far, IPAM has effectively deployed the ELITA platform across CTC delivery organization, trained more than 700 individuals, and ensured comprehensive adoption of new modernized tools. This is a real example of how our approach amplifies organizational productivity, reduces cost, and improves in-team and cross-team collaboration, and serves as a foundation for the next generation of genetic platform for SDLC. Another notable example of real progress at scale is our expanded engagements with Baker Hughes, one of the world's largest oil fuel services, industrial, and energy technology companies. We are enabling Baker Hughes in building and offering to their clients large AI-native digital platforms by combining IPAM best-in-class product engineering capabilities with Baker Hughes expertise in energy technology. Just a few weeks ago, Baker Hughes named IPAM as a key partner for digital and AI to transform the energy sector by leveraging advanced AI-native digital platform implementations at scale. We believe APAM is one of the few AI-native service providers who can demonstrate scale programs with proven AI ROI today, which is also well enabled by our growing global partnerships with cloud and data major providers. with whom we are expanding our collaborations and focusing on general and agentic AI road to marketplace. Now, if we step back and look at the bigger picture more broadly for 2025 and beyond, our thesis remains unchanged. We believe the demand for advanced AI native and agentic software and data engineering services will only increase. as engineering productivity gains will be significantly outsized by incremental demand to build new and replace the legacy, as clients quickly expand in their focus to solve more complex tasks more efficiently. Further, the need for security modernization and managing enterprise data platforms will continue to demand skilled expertise that combines critical AI skills with modern engineering and data science capabilities. To conclude, we are pleased with our stronger-than-expected Q4 results and stabilization achieved during the last year. Our new AI-native capabilities, data, and core engineering differentiation remained evident, while they are more globally diversified today than ever before. We continue to see clients return to quality and reliable execution, and we believe that is putting us into a stronger competitive position today compared to last year. At the same time, we do believe 2025 will be still a challenging and transformative year for the industry, with a lot of pressure to navigate two opposite trends across our client base. One is still being driven by cost sensitivity, while another by the need to return to more discretionary spending and addressing accumulated, during the last few years, backlogs. Which means also that APAM will be performing during 2025 with continuous margin pressures triggered by necessity to invest across several important for us in 2025 areas, such as critical skills and talent retention and development, agentic AI and AIP and tooling advancements, integration efforts of our recent acquisitions and go-to-market strategies. That should allow us to be in right standing when discretionary demand environment will fully rebound. So while we remain vigilant to potential headwinds, we believe our strategic positioning and ongoing initiative places on the trajectory for sustainable performance and growth in 2025 and beyond. Let me now turn the call over to Jason. We will provide additional details on our Q4 results in 2025 outlook.