- First quarter revenues of $1.165 billion, down 3.8%
year-over-year
- GAAP income from operations was 9.5% of revenues and
non-GAAP income from operations was 14.9% of revenues for the first
quarter
- First quarter GAAP diluted EPS of
$1.97, an increase of $0.24, and non-GAAP diluted EPS of $2.46, a decrease of $0.01 on a year-over-year basis
- For the full year, EPAM updates expected revenues to now
be in the range of $4.575 billion to
$4.675 billion, updates expected GAAP
diluted EPS to now be in the range of $7.34 to $7.64 and
narrows expected range for non-GAAP diluted EPS to $10.00 to $10.30
- For the second quarter, EPAM expects revenues to be in
the range of $1.135 billion to
$1.145 billion, GAAP diluted EPS to
be in the range of $1.52 to
$1.60 and non-GAAP diluted EPS to be
in the range of $2.21 to $2.29
NEWTOWN,
Pa., May 9, 2024 /PRNewswire/ -- EPAM Systems,
Inc. (NYSE: EPAM), a leading digital transformation services and
product engineering company, today announced results for the first
quarter ended March 31, 2024.
"Our solid performance in the first quarter of 2024 reflects our
level of adaptability to a challenging demand environment, which we
now believe is unlikely to improve this year to the degree we
expected one quarter ago," said Arkadiy
Dobkin, CEO & President at EPAM. "As we look forward to
an eventual rebound in demand, we are refining our global
operations and investing in optimized and AI-enabled delivery,
consulting, partnerships, generative AI capabilities and
client-centric talent."
First Quarter 2024 Highlights
- Revenues decreased to $1.165
billion, a year-over-year decrease of $45.5 million, or 3.8%. On an organic constant
currency basis excluding the impact of the exit from Russia, revenues were down 4.8% compared to
the first quarter of 2023;
- GAAP income from operations was $110.5
million, a decrease of $9.8
million, or 8.2%, compared to $120.4
million in the first quarter of 2023;
- Non-GAAP income from operations was $173.6 million, a decrease of $4.7 million, or 2.6%, compared to $178.3 million in the first quarter of 2023;
- Diluted earnings per share ("EPS") on a GAAP basis was
$1.97, an increase of $0.24, or 13.9%, compared to $1.73 in the first quarter of 2023; and
- Non-GAAP diluted EPS was $2.46, a
decrease of $0.01, or 0.4%, compared
to $2.47 in the first quarter of
2023.
Cash Flow and Other Metrics
- Cash provided by operating activities was $129.9 million for the first three months of
2024, compared to cash provided by operating activities of
$87.3 million for the first three
months of 2023;
- The Company repurchased 396 thousand shares of its common stock
for $120.6 million during the first
quarter of 2024 under its share repurchase program. During the
first quarter of 2023, the Company repurchased 30 thousand shares
of its common stock for $8.5 million
under its share repurchase program. As of March 31, 2024, the Company had $214.5 million remaining under its share
repurchase authorization;
- Cash, cash equivalents and restricted cash totaled $1.990 billion as of March
31, 2024, a decrease of $52.7
million, or 2.6%, from $2.043
billion as of December 31,
2023; and
- Total headcount was approximately 52,800 as of March 31, 2024. Included in this number were
approximately 47,050 delivery professionals, a decrease of 0.7%
from December 31, 2023.
2024 Outlook - Full Year and Second Quarter
Full Year
As the Company enters the second quarter, client demand is not
improving to the degree originally expected. As a result, EPAM now
expects the following for the full year:
- The Company expects revenues to now be in the range of
$4.575 billion to $4.675 billion for the full year reflecting a
year-over-year decline of 1.4% at the midpoint of the range. The
Company expects that revenues on an organic constant currency basis
excluding the impact of the exit from Russia will decline approximately 2.0% at the
midpoint of the range;
- For the full year, EPAM expects GAAP income from operations to
now be in the range of 10.0% to 10.5% of revenues and non-GAAP
income from operations to now be in the range of 15.0% to 15.5% of
revenues;
- The Company expects its GAAP effective tax rate to now be
approximately 20% and continues to expect its non-GAAP effective
tax rate to be approximately 24%; and
- EPAM expects GAAP diluted EPS to now be in the range of
$7.34 to $7.64 and narrows expected range for non-GAAP
diluted EPS to $10.00 to $10.30. The Company now expects weighted average
diluted shares outstanding for the year to be 58.7 million.
Second Quarter
EPAM expects the following for the second quarter:
- The Company expects revenues will be in the range of
$1.135 billion to $1.145 billion for the second quarter reflecting
a year-over-year decline of 2.6% at the midpoint of the range. The
Company expects that revenues on an organic constant currency basis
excluding the impact of the exit from Russia will decline approximately 3.0% at the
midpoint of the range;
- For the second quarter, EPAM expects GAAP income from
operations to be in the range of 9.0% to 10.0% 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 25% and its non-GAAP effective tax rate to be
approximately 24%; and
- EPAM expects GAAP diluted EPS will be in the range of
$1.52 to $1.60 for the quarter, and non-GAAP diluted EPS
will be in the range of $2.21 to
$2.29 for the quarter. The Company
expects weighted average diluted shares outstanding for the quarter
of 58.8 million.
Conference Call Information
EPAM will host a conference call to discuss the results on
Thursday, May 9, 2024, at 8:00 a.m.
EDT. The conference call will be available live on the EPAM
website at https://investors.epam.com. Please visit the website at
least 15 minutes prior to the call to register for the event. For
those who cannot access the live webcast, a replay will be
available in the Investor Relations section of the website.
About EPAM Systems
Since 1993, EPAM Systems, Inc. (NYSE: EPAM) has used its
software engineering expertise to become a leading global provider
of digital engineering, cloud and AI-enabled transformation
services, and a leading business and experience consulting partner
for global enterprises and ambitious startups. We address our
clients' transformation challenges by fusing EPAM Continuum's
integrated strategy, experience and technology consulting with our
30+ years of engineering execution to speed our clients' time to
market and drive greater value from their innovations and digital
investments.
We deliver globally but engage locally with our expert teams of
consultants, architects, designers, and engineers, making the
future real for our clients, our partners, and our people around
the world.
We believe the right solutions are the ones that improve
people's lives and fuel competitive advantage for our clients
across diverse industries. Our thinking comes to life in the
experiences, products and platforms we design and bring to
market.
Added to the S&P 500 and the Forbes Global 2000 in 2021 and
recognized by Glassdoor as a Best Workplace in 2023 and 2024, our
multidisciplinary teams serve customers across six continents. We
are proud to be among the top 15 companies in Information
Technology Services in the Fortune 1000 and to be recognized as a
leader in the IDC MarketScapes for Worldwide Experience Build
Services, Worldwide Experience Design Services and Worldwide
Software Engineering Services as well as a leader in the 2023
Gartner® Magic Quadrant™ for Custom Software Development Services,
Worldwide.*
Learn more at www.epam.com and follow us on
LinkedIn.
*Gartner does not endorse any vendor, product or service
depicted in its research publications, and does not advise
technology users to select only those vendors with the highest
ratings or other designation. Gartner research publications consist
of the opinions of Gartner's research organization and should not
be construed as statements of fact. Gartner disclaims all
warranties, expressed or implied, with respect to this research,
including any warranties of merchantability or fitness for a
particular purpose.
Non-GAAP Financial Measures
EPAM supplements results reported in accordance with
United States generally accepted
accounting principles, referred to as GAAP, with non-GAAP financial
measures. Management believes these measures help illustrate
underlying trends in EPAM's business and uses the measures to
establish budgets and operational goals, communicate internally and
externally, for managing EPAM's business and evaluating its
performance. Management also believes these measures help investors
compare EPAM's operating performance with its results in prior
periods. EPAM anticipates that it will continue to report both GAAP
and certain non-GAAP financial measures in its financial results,
including non-GAAP results that exclude stock-based compensation
expenses, acquisition-related costs including amortization of
acquired intangible assets, impairment of assets, expenses
associated with EPAM's humanitarian commitment to its professionals
in Ukraine, unbilled business
continuity resources resulting from Russia's invasion of Ukraine, costs associated with the geographic
repositioning of EPAM employees based outside of Ukraine impacted by the war and geopolitical
instability in the region, employee separation costs incurred in
connection with a restructuring program including the Company's
exit from Russia, certain other
one-time charges and benefits, changes in fair value of contingent
consideration, foreign exchange gains and losses, excess tax
benefits related to stock-based compensation, and the related
effect on income taxes of the pre-tax adjustments. Management also
compares revenues on an "organic constant currency basis excluding
the impact of the exit from Russia" and an "organic constant currency
basis," which are also non-GAAP financial measures. These measures
exclude the effect of acquisitions by removing revenues from an
acquired company in the twelve months after completing an
acquisition and foreign currency exchange rate fluctuations by
translating the current period revenues into U.S. dollars at the
weighted average exchange rates of the prior period of comparison.
In addition, revenues on an "organic constant currency basis
excluding the impact of the exit from Russia" reflect the decision to exit from
Russia by removing revenues from
clients located in Russia in both
the current period and prior period of comparison. Because EPAM's
reported non-GAAP financial measures are not calculated in
accordance with GAAP, these measures are not comparable to GAAP and
may not be comparable to similarly described non-GAAP measures
reported by other companies within EPAM's industry. Consequently,
EPAM's non-GAAP financial measures should not be evaluated in
isolation or supplant comparable GAAP measures, but rather, should
be considered together with the information in EPAM's consolidated
financial statements, which are prepared in accordance with
GAAP.
Forward-Looking Statements
This press release includes estimates and statements which may
constitute forward-looking statements made pursuant to the safe
harbor provisions of the Private Securities Litigation Reform Act
of 1995, the accuracy of which are necessarily subject to risks,
uncertainties, and assumptions as to future events that may not
prove to be accurate. Our estimates and forward-looking statements
are mainly based on our current expectations and estimates of
future events and trends, which affect or may affect our business
and operations. These statements may include words such as
"may," "will," "should," "believe," "expect," "anticipate,"
"intend," "plan," "estimate" or similar expressions. Those future
events and trends may relate to, among other things, developments
relating to the war in Ukraine and
escalation of the war in the surrounding region, political and
civil unrest or military action in the geographies where we conduct
business and operate, difficult conditions in global capital
markets, foreign exchange markets and the broader economy, and
the effect that these events may have on client demand and our
revenues, operations, access to capital, and
profitability. Other factors that could cause actual results
to differ materially from those expressed or implied include
general economic conditions, the risk factors discussed in the
Company's most recent Annual Report on Form 10-K and the factors
discussed in the Company's Quarterly Reports on Form 10-Q,
particularly under the headings "Management's Discussion and
Analysis of Financial Condition and Results of Operations" and
"Risk Factors" and other filings with the Securities and Exchange
Commission. Although we believe that these estimates and
forward-looking statements are based upon reasonable assumptions,
they are subject to several risks and uncertainties and are made
based on information currently available to us. EPAM undertakes no
obligation to update or revise any forward-looking statements,
whether as a result of new information, future events, or
otherwise, except as may be required under applicable securities
law.
|
EPAM SYSTEMS, INC.
AND SUBSIDIARIES
CONDENSED
CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
(In thousands, except per share
data)
|
|
|
Three Months
Ended
March
31,
|
|
2024
|
|
2023
|
|
Revenues
|
$
1,165,465
|
|
$
1,210,941
|
|
Operating
expenses:
|
|
|
|
|
Cost of revenues
(exclusive of depreciation and amortization)
|
834,334
|
|
855,901
|
|
Selling, general and
administrative expenses
|
198,453
|
|
211,887
|
|
Depreciation and
amortization expense
|
22,146
|
|
22,782
|
|
Income from
operations
|
110,532
|
|
120,371
|
|
Interest and other
income, net
|
15,042
|
|
11,521
|
|
Foreign exchange
loss
|
(1,919)
|
|
(4,608)
|
|
Income before
provision for income taxes
|
123,655
|
|
127,284
|
|
Provision for income
taxes
|
7,412
|
|
24,992
|
|
Net
income
|
$
116,243
|
|
$
102,292
|
|
|
|
|
|
Net income per
share:
|
|
|
|
|
Basic
|
$
2.01
|
|
$
1.77
|
|
Diluted
|
$
1.97
|
|
$
1.73
|
|
Shares used in
calculation of net income per share:
|
|
|
|
|
Basic
|
57,837
|
|
57,702
|
|
Diluted
|
58,931
|
|
59,298
|
|
EPAM SYSTEMS, INC.
AND SUBSIDIARIES
CONDENSED
CONSOLIDATED BALANCE SHEETS
(Unaudited)
(In thousands,
except par value)
|
|
|
As of
March
31,
2024
|
|
As of
December
31,
2023
|
|
Assets
|
|
|
|
|
Current
assets
|
|
|
|
|
Cash and cash
equivalents
|
$
1,983,721
|
|
$
2,036,235
|
|
Trade receivables and
contract assets, net of allowance of $8,403
and $11,864,
respectively
|
931,409
|
|
897,032
|
|
Short-term
investments
|
61,625
|
|
60,739
|
|
Prepaid and other
current assets
|
106,398
|
|
97,355
|
|
Total current
assets
|
3,083,153
|
|
3,091,361
|
|
Property and equipment,
net
|
222,244
|
|
235,053
|
|
Operating lease
right-of-use assets, net
|
135,754
|
|
134,898
|
|
Intangible assets,
net
|
80,756
|
|
71,118
|
|
Goodwill
|
595,220
|
|
562,459
|
|
Deferred tax
assets
|
197,474
|
|
197,901
|
|
Other noncurrent
assets
|
59,976
|
|
59,575
|
|
Total
assets
|
$
4,374,577
|
|
$
4,352,365
|
|
|
|
|
|
Liabilities
|
|
|
|
|
Current
liabilities
|
|
|
|
|
Accounts
payable
|
$
27,247
|
|
$
31,992
|
|
Accrued compensation
and benefits expenses
|
438,216
|
|
412,747
|
|
Accrued expenses and
other current liabilities
|
122,900
|
|
124,823
|
|
Income taxes payable,
current
|
33,962
|
|
38,812
|
|
Operating lease
liabilities, current
|
36,205
|
|
36,558
|
|
Total current
liabilities
|
658,530
|
|
644,932
|
|
Long-term
debt
|
25,787
|
|
26,126
|
|
Operating lease
liabilities, noncurrent
|
110,368
|
|
109,261
|
|
Other noncurrent
liabilities
|
104,207
|
|
100,576
|
|
Total
liabilities
|
898,892
|
|
880,895
|
|
Commitments and
contingencies
|
|
|
|
|
Equity
|
|
|
|
|
Stockholders'
equity
|
|
|
|
|
Common stock, $0.001
par value; 160,000 shares authorized; 57,933 shares issued
and outstanding at March 31, 2024, and 57,787 shares issued and
outstanding at
December 31, 2023
|
58
|
|
58
|
|
Additional paid-in
capital
|
1,039,647
|
|
1,008,766
|
|
Retained
earnings
|
2,496,757
|
|
2,501,107
|
|
Accumulated other
comprehensive loss
|
(61,352)
|
|
(39,040)
|
|
Total EPAM Systems,
Inc. stockholders' equity
|
3,475,110
|
|
3,470,891
|
|
Noncontrolling interest
in consolidated subsidiaries
|
575
|
|
579
|
|
Total
equity
|
3,475,685
|
|
3,471,470
|
|
Total liabilities
and equity
|
$
4,374,577
|
|
$
4,352,365
|
|
EPAM SYSTEMS, INC.
AND SUBSIDIARIES
Reconciliations of
Non-GAAP Financial Measures to Comparable GAAP Financial
Measures
(Unaudited)
(In thousands,
except percent and per share amounts)
|
|
|
Reconciliation of
revenue decline as reported on a GAAP basis to revenue decline on
an organic constant currency basis
excluding the impact of the exit from Russia is presented in the
table below:
|
|
|
Three Months
Ended
March 31,
2024
|
|
Revenue decline as
reported
|
(3.8) %
|
|
Foreign exchange rates
impact
|
(0.5) %
|
|
Inorganic revenue
growth
|
(1.0) %
|
|
Impact of exit from
Russia
|
0.5 %
|
|
Revenue decline on
an organic constant currency basis excluding the impact of the exit
from
Russia
|
(4.8) %
|
|
|
Reconciliation of
various income statement amounts from GAAP to non-GAAP for the
three months ended March 31,
2024 and 2023:
|
|
|
Three Months
Ended
March 31,
2024
|
|
GAAP
|
|
Adjustments
|
|
Non-GAAP
|
|
Cost of revenues
(exclusive of depreciation and
amortization)(1)
|
$ 834,334
|
|
$
(23,016)
|
|
$ 811,318
|
|
Selling, general and
administrative expenses(2)
|
$ 198,453
|
|
$
(34,093)
|
|
$ 164,360
|
|
Income from
operations(3)
|
$ 110,532
|
|
$
63,058
|
|
$ 173,590
|
|
Operating
margin
|
9.5 %
|
|
5.4 %
|
|
14.9 %
|
|
Net
income(4)
|
$ 116,243
|
|
$
29,003
|
|
$ 145,246
|
|
Diluted earnings per
share
|
$
1.97
|
|
|
|
$ 2.46
|
|
|
Three Months
Ended
March 31,
2023
|
|
GAAP
|
|
Adjustments
|
|
Non-GAAP
|
|
Cost of revenues
(exclusive of depreciation and amortization)(1)
|
$
855,901
|
|
$
(25,821)
|
|
$ 830,080
|
|
Selling, general and
administrative expenses(2)
|
$
211,887
|
|
$
(26,539)
|
|
$ 185,348
|
|
Income from
operations(3)
|
$
120,371
|
|
$
57,897
|
|
$ 178,268
|
|
Operating
margin
|
9.9 %
|
|
4.8 %
|
|
14.7 %
|
|
Net
income(4)
|
$
102,292
|
|
$
44,301
|
|
$ 146,593
|
|
Diluted earnings per
share
|
$
1.73
|
|
|
|
$ 2.47
|
|
|
Items (1) through (4)
above are detailed in the table below with the specific
cross-reference noted in the appropriate item.
|
|
|
Three Months
Ended
March
31,
|
|
2024
|
|
2023
|
|
Stock-based
compensation expenses
|
$
22,357
|
|
$
16,011
|
|
Humanitarian support
in Ukraine (a)
|
659
|
|
2,440
|
|
Unbilled business
continuity resources (b)
|
—
|
|
7,370
|
|
Total adjustments to
GAAP cost of revenues(1)
|
23,016
|
|
25,821
|
|
Stock-based
compensation expenses
|
22,434
|
|
22,568
|
|
Cost Optimization
Program charges (c)
|
7,017
|
|
—
|
|
Humanitarian support
in Ukraine (a)
|
2,620
|
|
3,617
|
|
Other
acquisition-related expenses
|
1,223
|
|
241
|
|
Geographic
repositioning (d)
|
721
|
|
212
|
|
One-time
charges/(benefits)
|
78
|
|
(99)
|
|
Total adjustments to
GAAP selling, general and administrative expenses(2)
|
34,093
|
|
26,539
|
|
Amortization of
acquired intangible assets
|
5,949
|
|
5,537
|
|
Total adjustments to
GAAP income from operations(3)
|
63,058
|
|
57,897
|
|
Foreign exchange
loss
|
1,919
|
|
4,608
|
|
Change in fair value
of contingent consideration included in Interest and other
income, net
|
1,050
|
|
300
|
|
Provision for income
taxes:
|
|
|
|
|
Tax effect on non-GAAP
adjustments
|
(14,395)
|
|
(11,514)
|
|
Excess tax benefits
related to stock-based compensation
|
(20,866)
|
|
(6,022)
|
|
Net discrete benefit
from tax planning (e)
|
(1,763)
|
|
(968)
|
|
Total adjustments to
GAAP net income(4)
|
$
29,003
|
|
$
44,301
|
|
|
(a) Humanitarian
support in Ukraine includes expenses related to EPAM's $100 million
humanitarian commitment in response to Russia's invasion of Ukraine
to support EPAM professionals and their families in and displaced
from Ukraine. These expenses are incremental to those expenses
incurred prior to the crisis, clearly separable from normal
operations, and not expected to recur once the crisis has subsided
and operations return to normal.
|
|
|
(b) Given the
uncertainty in the region introduced by Russia's invasion of
Ukraine, EPAM has assigned delivery professionals in locations
outside of the region to ensure the continuity of delivery for
clients who have substantial delivery exposure to Ukraine or other
delivery concerns resulting from the invasion. These employees are
not billed to clients and operate largely in a standby or backup
capacity. These expenses are incremental to those expenses incurred
prior to the crisis, clearly separable from normal operations, and
not expected to recur once the crisis has subsided and operations
return to normal.
|
|
|
(c) Cost Optimization
Program charges include severance and facilities charges incurred
in connection with the program initiated in the third quarter of
2023. Consistent with the Company's historical non-GAAP policy,
costs incurred in connection with formal restructuring initiatives
have been excluded from non-GAAP results as these are one-time and
unusual in nature.
|
|
|
(d) Geographic
repositioning includes expenses associated with the relocation to
other countries of employees based outside of Ukraine impacted by
the war and geopolitical instability in the region, and includes
the cost of accommodations, travel and food. These expenses are
incremental to those expenses incurred prior to the crisis, clearly
separable from normal operations, and not expected to recur once
the crisis has subsided and operations return to normal.
|
|
|
(e) One-time benefit
related to the implementation of tax planning to disregard certain
foreign subsidiaries as separate entities for U.S. income tax
purposes. Consistent with the Company's historical non-GAAP policy,
the benefit related to the implementation of tax planning has been
excluded from non-GAAP results as it is one-time and unusual in
nature.
|
|
EPAM SYSTEMS, INC.
AND SUBSIDIARIES
Reconciliations of Guidance Non-GAAP
Financial Measures to Comparable GAAP Financial
Measures
(Unaudited)
|
|
|
The below guidance
constitutes forward-looking statements within the meaning of the
federal securities laws and is based on a number of assumptions
that are subject to change and many of which are outside the
control of the Company. Actual results may differ materially from
the Company's expectations depending on factors discussed in the
Company's filings with the Securities and Exchange
Commission.
|
|
|
Reconciliation of
expected revenue decline on a GAAP basis to expected revenue
decline on an organic constant currency basis excluding the impact
of the exit from Russia is presented in the table below:
|
|
|
Second Quarter
2024
|
|
Full Year
2024
|
|
Revenue decline (at
midpoint of the range)
|
(2.6) %
|
|
(1.4) %
|
|
Foreign exchange rates
impact
|
0.6 %
|
|
0.3 %
|
|
Inorganic revenue
growth
|
(1.5) %
|
|
(1.2) %
|
|
Impact of exit from
Russia
|
0.5 %
|
|
0.3 %
|
|
Revenue decline on
an organic constant currency basis excluding the
impact of the exit from Russia (at midpoint of the
range)
|
(3.0) %
|
|
(2.0) %
|
|
|
Reconciliation of
expected GAAP to non-GAAP income from operations as a percentage of
revenues is presented in the table below:
|
|
|
Second Quarter
2024
|
|
Full Year
2024
|
|
GAAP income from
operations as a percentage of revenues
|
9.0% to
10.0%
|
|
10.0% to
10.5%
|
|
Stock-based
compensation expenses
|
3.4 %
|
|
3.8 %
|
|
Included in cost of
revenues (exclusive of depreciation and
amortization)
|
1.7 %
|
|
1.9 %
|
|
Included in
selling, general and administrative expenses
|
1.7 %
|
|
1.9 %
|
|
Humanitarian support in
Ukraine (a)
|
0.3 %
|
|
0.3 %
|
|
Cost Optimization
Program charges (c)
|
0.2 %
|
|
0.2 %
|
|
One-time charges and
Other acquisition-related expenses (f)
|
— %
|
|
0.1 %
|
|
Amortization of
acquired intangible assets
|
0.6 %
|
|
0.6 %
|
|
Non-GAAP income
from operations as a percentage of revenues
|
13.5% to
14.5%
|
|
15.0% to
15.5%
|
|
|
(f) EPAM has not
included the impact of potential future One-time charges including
asset impairments, unusual gains and losses, expenses incurred in
connection with future cost optimization actions, and Other
acquisition-related expenses, if any, because the Company is unable
to predict these amounts with reasonable certainty.
|
|
|
Reconciliation of
expected GAAP to non-GAAP effective tax rate is presented in the
table below:
|
|
|
Second Quarter
2024
|
|
Full Year
2024
|
|
GAAP effective tax
rate (approximately)
|
25 %
|
|
20 %
|
|
Excess tax benefits
related to stock-based compensation
|
0.9 %
|
|
4.6 %
|
|
Tax effect on non-GAAP
adjustments
|
(1.9) %
|
|
(0.6) %
|
|
Non-GAAP effective
tax rate (approximately)
|
24 %
|
|
24 %
|
|
|
Reconciliation of
expected GAAP to non-GAAP diluted earnings per share is presented
in the table below:
|
|
|
Second Quarter
2024
|
|
Full Year
2024
|
|
GAAP diluted
earnings per share
|
$1.52 to
$1.60
|
|
$7.34 to
$7.64
|
|
Stock-based
compensation expenses
|
0.66
|
|
3.01
|
|
Included in cost of
revenues (exclusive of depreciation and amortization)
|
0.33
|
|
1.50
|
|
Included in
selling, general and administrative expenses
|
0.33
|
|
1.51
|
|
Humanitarian support in
Ukraine (a)
|
0.05
|
|
0.21
|
|
Cost Optimization
Program charges (c)
|
0.05
|
|
0.17
|
|
One-time charges
(f)
|
—
|
|
0.01
|
|
Other
acquisition-related expenses (f)
|
—
|
|
0.02
|
|
Amortization of
acquired intangible assets
|
0.11
|
|
0.40
|
|
Change in fair value of
contingent consideration
|
—
|
|
0.02
|
|
Foreign exchange
loss
|
0.02
|
|
0.08
|
|
Provision for income
taxes:
|
|
|
|
|
Tax effect on non-GAAP
adjustments
|
(0.18)
|
|
(0.79)
|
|
Excess tax benefits related
to stock-based compensation
|
(0.02)
|
|
(0.44)
|
|
Net discrete
benefit from tax planning (e)
|
—
|
|
(0.03)
|
|
Non-GAAP diluted
earnings per share
|
$2.21 to
$2.29
|
|
$10.00 to
$10.30
|
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SOURCE EPAM Systems, Inc.