During the nine months ended September 30, 2024, EPAM completed three acquisitions for $74.2 million, expanding its reach in Latin America and Europe and enhancing capabilities in Life Sciences analytics. Subsequent to the quarter, EPAM announced acquisitions of Neoris and First Derivative.

EPAM initiated a cost optimization program in Q2 2024, including workforce reductions and contract terminations, expected to be completed by Q2 2025 with additional charges of approximately $14.0 million. A similar program was initiated in Q3 2023 and completed by June 30, 2024.

Americas revenue contribution increased to 59.7% of total revenue in Q3 2024, up from 58.8% in Q3 2023. EMEA revenue contribution decreased to 38.1% from 38.7% over the same period.

EPAM successfully executed business continuity plans to relocate employees and maintain service delivery for clients impacted by the war in Ukraine. The vast majority of Ukraine employees are in safe locations and operating at pre-war productivity levels.

EPAM's cost optimization programs resulted in workforce reductions and facility closures, impacting the average number of production professionals. This is reflected in the decrease in compensation costs other than stock-based compensation expense.

The effective tax rate was negatively impacted by the accounting treatment of government incentives related to R&D activities in Poland and the non-deductibility of certain acquisition costs.

The war in Ukraine continues to pose risks to EPAM's operations, personnel, and physical assets, potentially affecting client demand, service delivery, and financial condition. The company continues to support relocating employees to lower risk locations.

The Board of Directors continues its oversight of strategic, geopolitical, and cybersecurity risks. Clients have implemented steps to block internet communications with Ukraine and Belarus to protect against potential cyberattacks or other information security threats, which has caused a material adverse effect on our ability to deliver our services to these clients from those locations.

The Company has cash in several countries, including Ukraine and Belarus, where the banking sector remains subject to periodic instability; banking and other financial systems generally do not meet the banking standards of more developed markets; and bank deposits made by corporate entities are not insured.

The Business Information & Media vertical was negatively impacted by a decline at a former top-10 client, indicating potential competitive pressures or client-specific issues.

Software & Hi-Tech industry vertical has been impacted by a reduction in revenues from a former top 20 client and overall declines in the technology sector in the U.S.

Emerging Verticals grew 15.5% and 21.5% during the three and nine months ended September 30, 2024, respectively, due to growth from various clients in industries such as energy, professional services, industrial materials and educational platforms.

The average number of production professionals decreased by 6.1%, reflecting the impact of the Cost Optimization Programs initiated in Q2 2024 and Q3 2023.

Government incentives related to conducting R&D activities in Poland positively impacted the effective tax rate and segment operating profit, indicating improved operational efficiency.

The Company's global delivery model and centralized support functions, combined with the benefits of scale, enhance productivity levels and enable better management of global operations.

EPAM is focused on becoming a leading global provider of digital engineering, cloud and AI-enabled transformation services, as well as a leading business and experience consulting partner.

Through increased specialization in focused verticals and a continued emphasis on strategic partnerships, EPAM is able to deliver technology transformation from start to finish.

During the year ended December 31, 2022, the Company purchased software licenses for use in the regular course of business in exchange for an upfront payment and fixed, subsequent annual payments due over the next 4 years.

EPAM repurchased 245 thousand shares for $50.0 million during Q3 2024 and 1,801 thousand shares for $385.0 million during the nine months ended September 30, 2024.

EPAM completed three acquisitions during the nine months ended September 30, 2024, and announced subsequent acquisitions of Neoris and First Derivative, indicating a continued focus on strategic acquisitions.

The cash used in investing activities during the nine months ended September 30, 2024 was primarily attributable to $57.1 million used for the acquisitions of businesses, net of cash acquired, and $16.4 million used for capital expenditures.

EPAM has maintained its $100 million humanitarian aid commitment to support its employees in Ukraine and their families.

During the third quarter of 2024, the Company determined it was eligible for R&D tax relief in Poland which allows the Company to reduce its tax base through bonus deductions for specific costs, such as salaries and social security contributions for employees working on R&D projects.

Our Board of Directors continues its oversight of our strategic, geopolitical, and cybersecurity risks and the risks related to our geographic expansion.

Revenues have been positively impacted by stabilizing demand for our services and fluctuations in foreign currency exchange rates which increased our revenue growth by 0.4%, partially offset by the sale of our remaining holdings in Russia in the third quarter of 2023.

Periods of higher inflation may affect various economic sectors in those countries and increase our cost of doing business there.

We continue to track the impact of inflation, particularly on wages, while attempting to minimize its effects through pricing and cost management strategies.