The Company's 2024 acquisitions, including First Derivative ($300.7 million) and NEORIS ($626.3 million), positively impacted Q1 2025 revenues, contributing to the 11.7% YoY growth. These acquisitions expanded EPAM's geographical reach, industry experience (capital markets), and AI-enabled capabilities.

EPAM continues to leverage AI and GenAI to deliver transformative solutions, accelerating clients' digital innovation and competitive edge through platforms like EPAM AI/RUN™ and initiatives like DIALX Lab™. This indicates a strategic commitment to advanced technology offerings.

Subsequent to March 31, 2025, the Company initiated a new 2025 Cost Optimization Program, which is expected to include workforce reductions and incur at least $6.0 million in severance expense through the remainder of 2025. This proactive measure aims to improve utilization and profitability.

Cost of revenues as a percentage of revenues increased to 73.1% in Q1 2025 from 71.6% in Q1 2024. This was primarily due to 2024 compensation increases not fully offset by pricing adjustments and the lower profitability from 2024 acquisitions, indicating a challenge in maintaining margin efficiency.

EPAM continues to support its employees in Ukraine, expensing $4.4 million in Q1 2025 related to its $100.0 million humanitarian commitment, with $20.3 million remaining. This demonstrates management's sustained commitment to employee welfare amidst geopolitical challenges.

The Company recognized a $12.1 million benefit in Q1 2025 from R&D tax relief in Poland, which was recorded as a reduction to Cost of revenues. This highlights management's effective utilization of government incentives to mitigate operational expenses.

Foreign exchange loss significantly increased to $10.7 million in Q1 2025 compared to a loss of $1.9 million in Q1 2024. This rise is primarily driven by fluctuations in foreign currencies on assets and liabilities, indicating increased exposure to currency volatility despite hedging programs.

The ongoing war in Ukraine continues to pose material adverse effects on operations, personnel, and assets. Additionally, new Belarus restrictions on dividend distribution until end of 2025 introduce further geopolitical risk, although the Company does not expect a material impact on worldwide cash obligations.

The Company holds $47.8 million of cash in Ukraine and $24.6 million in Belarus, where banking sectors remain subject to instability. While credit policies reflect normal industry terms and no material credit losses have occurred historically, ongoing geopolitical instability could increase credit losses.

The Financial Services vertical in the Americas segment grew 20.2% and in Europe grew 39.0% in Q1 2025, becoming the largest vertical in both regions. This growth, partly attributed to new clients gained through 2024 acquisitions, demonstrates strengthening competitive positioning in a high-demand sector.

No single client accounted for more than 10% of total segment revenues during Q1 2025 or Q1 2024. This broad client base across various industries and geographies reduces reliance on any single customer, enhancing the Company's competitive stability.

While Life Sciences & Healthcare in Europe saw significant growth of 56.7% in Q1 2025, the Business Information & Media vertical in Europe declined by 16.2% due to decreased demand from two top-10 clients. This indicates varying competitive pressures and demand across different European sectors.

Cost of revenues (exclusive of depreciation and amortization) as a percentage of total revenues increased to 73.1% in Q1 2025 from 71.6% in Q1 2024. This indicates a slight decrease in gross margin efficiency, primarily due to 2024 compensation increases not fully offset by pricing adjustments.

Selling, general and administrative expenses decreased as a percentage of revenues to 16.8% in Q1 2025 from 17.0% in Q1 2024, despite an absolute increase of 10.3% to $218.9 million. This improvement is primarily driven by a decrease in personnel-related costs as a percentage of revenues.

Depreciation and amortization expense rose to $31.4 million in Q1 2025 from $22.1 million in Q1 2024, representing an increase from 1.9% to 2.5% of revenues. This is largely a result of increased amortization of acquired finite-lived intangible assets from the 2024 acquisitions, impacting overall operational costs.

EPAM explicitly states its leverage of AI and GenAI to deliver transformative solutions, accelerate digital innovation, and enhance competitive edge. This is supported by mentions of internal platforms like EPAM AI/RUN™ and initiatives like DIALX Lab™, indicating ongoing investment in cutting-edge technologies.

The Company recognized a $12.1 million benefit in Q1 2025 from R&D tax relief in Poland, which directly reduced Cost of revenues. This incentive supports and encourages continued investment in research and development activities, enhancing the efficiency of innovation spending.

EPAM positions itself as a leading global provider of digital engineering, cloud, and AI-enabled transformation services. This highlights a foundational and ongoing commitment to technological capabilities that are central to its business model and client offerings.

The Company repurchased 796 thousand shares for $160.0 million in Q1 2025, a significant increase from 396 thousand shares for $120.6 million in Q1 2024. This aggressive repurchase activity, with $277.0 million remaining under the 2024 program, suggests management views its stock as undervalued and is confident in future cash generation.

Net cash used in investing activities decreased significantly to $5.3 million in Q1 2025 from $51.0 million in Q1 2024. This was primarily due to purchase price adjustments for prior acquisitions providing $3.3 million in Q1 2025, compared to $44.1 million used for new acquisitions in Q1 2024, indicating a shift from large-scale M&A to integration.

Net cash provided by operating activities decreased sharply to $24.2 million in Q1 2025 from $129.9 million in Q1 2024. This reduction, driven by a larger increase in days sales outstanding and higher variable compensation payments, impacts the primary source of liquidity for funding operations and capital allocation decisions.

EPAM has maintained its $100.0 million humanitarian commitment to support its employees and their families in Ukraine. In Q1 2025, $4.4 million was expensed, with $20.3 million remaining, demonstrating an ongoing social responsibility initiative in response to the conflict.

The 10-Q filing primarily focuses on financial and operational updates. While the Ukraine humanitarian commitment is highlighted, there are no new or significant disclosures regarding broader environmental commitments, social responsibility beyond employee support, or specific governance enhancements beyond standard board oversight.

The 11.7% year-over-year revenue growth in Q1 2025 was positively impacted by 'improving demand for our services.' This indicates a favorable market environment for EPAM's digital engineering and transformation offerings, suggesting a healthy underlying demand trend.

Fluctuations in foreign currency exchange rates negatively impacted revenue growth by 1.7% in Q1 2025. This highlights the sensitivity of the Company's international operations to currency movements, with Mexican Peso and Euro having the most impact, posing a challenge to reported growth.

The ongoing war in Ukraine and new restrictions in Belarus on dividend distribution continue to create a challenging operating environment. Management notes that these factors lead to increased expenses and potential disruptions, requiring ongoing adaptation of business continuity plans and delivery infrastructure.