EPAM Systems, Inc.

Previous wording

On February 24, 2022, Russian forces attacked Ukraine and its people and EPAM has repeatedly called for an immediate end to this unlawful and unconscionable attack. EPAM’s highest priority is the safety and security of its employees and their families in Ukraine as well as in the broader region, and we have continued to support relocating our employees to lower risk locations, both within Ukraine and to other countries where we operate. The vast majority of our Ukraine employees are in safe locations and operating at levels of productivity consistent with those achieved prior to the attack. As of December 31, 2024, Ukraine continues to be a significant delivery location with a large number of delivery professionals. Furthermore, we have maintained our $100 million humanitarian aid commitment to our people in Ukraine in addition to our other donations and volunteer efforts.

Current wording

Russia’s attack on Ukraine has had, and could continue to have a material adverse effect on our operations. As of December 31, 2025, Ukraine continues to be a significant delivery location with a large number of delivery professionals operating from safe locations at levels of productivity consistent with those achieved prior to the attack. We have maintained our $100 million humanitarian aid commitment to our people in Ukraine, and as of December 31, 2025, we have $10.1 million remaining to be expensed under this humanitarian commitment.

Previous wording

The impact of Russia’s invasion of Ukraine on our operations, personnel, and physical assets in Ukraine has had, and, along with any escalation of the war that includes Belarus’ territory or military, could continue to have a material adverse effect on our operations. Actions taken by other countries, including new and stricter sanctions by Canada, the United Kingdom, the European Union, the U.S. and other companies and organizations against officials, individuals, regions, and industries in Belarus, and Belarus’ responses to those sanctions, including counter-sanctions and other actions, have had and could continue to have a material adverse effect on our operations. Clients have and may continue to seek altered terms, conditions, and delivery locations for the performance of services, delay planned work or seek services from alternate providers, or suspend, terminate, fail to renew, or reduce existing contracts or services, which could have a material adverse effect on our financial condition. Some of our 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. Such material adverse effects disrupt our delivery of services, cause us to shift all or portions of our work occurring in the region to other countries, restrict our ability to engage in certain projects in the region and serve certain clients in or from the region, and could negatively impact our personnel, operations, financial results and business outlook. Our Board of Directors continues its oversight of our strategic, geopolitical, and cybersecurity risks and the risks related to our geographic expansion. Our Board has received updates from management during both regular and special meetings, while also providing oversight of the risks associated with Russia’s invasion of Ukraine and other strategic areas of importance related to the war.

Current wording

Our Board of Directors and its committees continue their oversight of our strategic, geopolitical, and cybersecurity risks and the risks related to our geographic locations and expansion. Our Board has received updates from management during both regular and special meetings, while also providing oversight of the risks associated with Russia’s invasion of Ukraine and other strategic areas of importance related to the war.

Previous wording

We continue to monitor and respond to the difficult conditions in Ukraine while maintaining a focus on our clients and long-term growth. We execute on our business continuity plans and adapt to developments as they occur to protect the safety of our people and address impacts on our delivery infrastructure, including reallocating work to other geographies within our global footprint. We engage with both our personnel and our clients when navigating delivery challenges and we continue to operate productively in a multitude of locations and provide consistent high-quality delivery to our clients. Our global delivery centers have sufficient resources, including infrastructure and capital, to support ongoing operations while maintaining the safety and security of our employees and their families in Ukraine as well as in the broader region.

Current wording

We continue to monitor and respond to the difficult conditions in Ukraine while maintaining a focus on our clients and long-term growth. We execute on our business continuity plans and our global delivery centers have sufficient resources, including infrastructure and capital, to support ongoing operations while continuing to focus on the safety and security of our employees and their families in Ukraine as well as in the broader region. The implementation and execution of our business continuity plans, our humanitarian commitment to our people in Ukraine, and other costs related to the war resulted in materially increased expenses. Some of these expenses continued during this year and we expect some of these expenses will continue to occur in subsequent quarters for some time in the future. The information contained in this section is accurate as of the date hereof but may become outdated due to changing circumstances beyond our control or present awareness.

Previous wording

For additional information on the various risks posed by the attack against Ukraine and the impact in the region as well as other disruptors to our business, please read “Part I. Item 1A. Risk Factors” included in this Annual Report on Form 10-K.

Current wording

For additional information on the various risks posed by the attack against Ukraine and the impact in the region as well as other risks to our business, please read “Part I. Item 1A. Risk Factors” included in this Annual Report on Form 10-K.

Previous wording

Revenues — We recognize revenues when control of goods or services is passed to a client in an amount that reflects the consideration we expect to be entitled to in exchange for those goods or services. Such control may be transferred over time or at a point in time depending on satisfaction of obligations stipulated by the contract. Consideration expected to be received may consist of both fixed and variable components and is allocated to each separately identifiable performance obligation based on the performance obligation’s relative standalone selling price. Variable consideration usually takes the form of volume-based discounts, service level credits, price concessions or incentives. Determining the estimated amount of such variable consideration involves assumptions and judgment that can have an impact on the amount of revenues reported.

Current wording

Revenues — We recognize revenues when control of goods or services is passed to a client in an amount that reflects the consideration we expect to be entitled to in exchange for those goods or services. Such control is generally transferred over time based on satisfaction of obligations stipulated by the contract. Consideration expected to be received may consist of both fixed and variable components and is allocated to each separately identifiable performance obligation based on the performance obligation’s relative standalone selling price. Variable consideration usually takes the form of volume-based discounts, service level credits, price concessions or incentives. Determining the estimated amount of such variable consideration involves assumptions and judgment that can have an impact on the amount of revenues reported.

Previous wording

We derive revenues from a variety of service arrangements, which have been evolving to provide more customized and integrated solutions to clients by combining software engineering with customer experience design, business consulting and technology innovation services. Fees for these contracts may be in the form of time-and-materials or fixed-price arrangements. We generate the majority of our revenues under time-and-material contracts, which are billed using hourly, daily or monthly rates to determine the amounts to be charged directly to the client. We apply a practical expedient and revenues related to time-and-material contracts are recognized based on the right to invoice for services performed.

Current wording

We derive revenues from a variety of service arrangements, which have been evolving to provide more customized and integrated solutions to clients by combining software engineering with customer experience design, business consulting, strategy, and technology innovation services in areas such as cloud platforms, cybersecurity and artificial intelligence. Fees for these contracts may be in the form of time-and-materials or fixed-price arrangements. We generate the majority of our revenues under time-and-materials contracts, which are billed using hourly, daily or monthly rates to determine the amounts to be charged directly to the client. We apply a practical expedient and revenues related to time-and-materials contracts are recognized based on the right to invoice for services performed.

Previous wording

(1) Includes $80,944, $68,797 and $47,470 of stock-based compensation expense for the years ended December 31, 2024, 2023 and 2022, respectively.

Current wording

(1) Includes $86,252 and $80,944 of stock-based compensation expense for the years ended December 31, 2025 and 2024, respectively.

Previous wording

(2) Includes $86,353, $78,933 and $52,439 of stock-based compensation expense for the years ended December 31, 2024, 2023 and 2022, respectively.

Current wording

(2) Includes $90,512 and $86,353 of stock-based compensation expense for the years ended December 31, 2025 and 2024, respectively.

Previous wording

We continue to diversify our presence across multiple geographies and verticals, both organically and through strategic acquisitions. During the year ended December 31, 2024, our total revenues increased 0.8% from the previous year to $4.728 billion. Revenues have been positively impacted by stabilizing demand for our services and fluctuations in foreign currency exchange rates which increased our revenue growth by 0.1% during the year ended December 31, 2024 as compared to the previous year, partially offset by the sale of our remaining holdings in Russia in the third quarter of 2023. Revenues have also been positively impacted by our acquisitions of NEORIS and First Derivative, which in aggregate contributed $65.9 million to our revenues in 2024. During the year ended December 31, 2024, we experienced a decrease in client concentration in our top client groups as a percentage of total revenues as compared to the previous year.

Current wording

We continue to diversify our presence across multiple geographies and verticals, both organically and through strategic acquisitions. During the year ended December 31, 2025, our total revenues increased 15.4% from the previous year to $5.457 billion. Revenues from the first twelve months following each acquisition that was made in the fourth quarter of 2024, increased our revenues by 9.2% and fluctuations in foreign currency increased our revenues by 1.3% during the year ended December 31, 2025 as compared to the previous year. During the year ended December 31, 2025, we experienced a decrease in client concentration in our top client groups as a percentage of total revenues as compared to the previous year.

Previous wording

We discuss below the breakdown of our revenues by vertical, client location, service arrangement type, and client concentration.

Current wording

We discuss below the breakdown of our revenues by vertical, client location, client concentration, and service offering.

Previous wording

We assign our clients into one of our five main vertical markets or a group of various industries where we are increasing our presence, which we label as “Emerging Verticals.” Emerging Verticals include clients in multiple industries such as energy, utilities, manufacturing, industrial materials, automotive, telecommunications and several others.

Current wording

We assign our clients into one of our five main vertical markets or a group of various industries where we are increasing our presence, which we label as “Emerging Verticals.” Emerging Verticals include clients in multiple industries such as energy, manufacturing and automotive, industrial materials, telecommunications and several others.

Previous wording

Our revenues are sourced from multiple countries, which we assign into four geographic markets identified as Americas, EMEA, APAC, and CEE. As a result of the Company’s exit from Russia and sale of the Company’s remaining holdings in Russia to a third-party on July 26, 2023, revenues from the CEE region became no longer material. Starting in 2024, revenues from the CEE region are included in the EMEA region. We present and discuss our revenues by client location based on the location of the specific client site that we serve, irrespective of the location of the headquarters of the client or the location of the delivery center where the work is performed. Revenues by client location differ from revenues by reportable segment in our consolidated financial statements included elsewhere in this annual report. Segments are not based on the geographic location of the clients, but rather they are based on the location of the Company’s management responsible for a particular client.

Current wording

Our revenues are sourced from multiple countries, which we assign into three geographic markets identified as Americas, EMEA, and APAC. We present and discuss our revenues by client location based on the location of the specific client site that we serve, irrespective of the location of the headquarters of the client or the location of the delivery center where the work is performed. Revenues by client location differ from revenues by reportable segment in our consolidated financial statements included elsewhere in this annual report. Segments are not based on the geographic location of the clients, but rather they are based on the location of the Company’s management responsible for a particular client.

Previous wording

During the year ended December 31, 2024, revenues in the Americas, our largest geography, were $2.835 billion, growing $92.0 million, or 3.4%, from $2.743 billion reported for the year ended December 31, 2023. Revenues in this geography benefited from acquisitions which contributed $95.9 million to revenue growth in 2024. Revenues from Americas accounted for 60.0% of total revenues in 2024, an increase from 58.4% in the prior year. The United States continued to be our largest client location contributing revenues of $2.680 billion in 2024 compared to $2.634 billion in 2023.

Current wording

During the year ended December 31, 2025, revenues in the Americas, our largest geography, were $3.201 billion, growing $366.2 million, or 12.9%, from $2.835 billion reported for the year ended December 31, 2024. The increase during the year ended December 31, 2025 compared to 2024, was primarily due to the acquisitions of NEORIS and First Derivative in the fourth quarter of 2024 and increased demand from our existing clients across various industries. Revenues from the Americas accounted for 58.7% of total revenues in 2025, a decrease from 60.0% in the prior year. The United States continued to be our largest client location contributing revenues of $2.834 billion in 2025 compared to $2.680 billion in 2024.

Previous wording

Revenues in our EMEA geography were $1.793 billion, a decrease of $29.6 million, or 1.6%, from $1.823 billion in the previous year. Revenues in this geography benefited from acquisitions which contributed $28.3 million to revenue growth in 2024. Revenues from EMEA accounted for 37.9% of consolidated revenues in 2024 as compared to 38.9% in the previous year. The top three revenue contributing client location countries in EMEA were the United Kingdom, Switzerland and Germany generating revenues of $523.4 million, $407.8 million and $206.1 million in 2024, respectively, compared to $585.2 million, $367.1 million and $178.5 million in 2023, respectively.

Current wording

Revenues in our EMEA geography were $2.147 billion, an increase of $354.1 million, or 19.7%, from $1.793 billion in the previous year. The increase during the year ended December 31, 2025 compared to 2024, was primarily due to the acquisitions of NEORIS and First Derivative in the fourth quarter of 2024 and increased demand from our existing clients across various industries. Revenues from EMEA accounted for 39.3% of consolidated revenues in 2025 as compared to 37.9% in the previous year. The top three revenue contributing client location countries in EMEA were the United Kingdom, Switzerland and Germany, generating revenues of $597.3 million, $438.5 million and $233.4 million in 2025, respectively, compared to $523.4 million, $407.8 million and $206.1 million in 2024, respectively.

Previous wording

Revenues from clients in locations in our APAC region comprised 2.1% of total revenues in 2024, a decrease from 2.2% in the prior year.

Current wording

Revenues from clients in locations in our APAC region increased 8.8% from the prior year and comprised 2.0% of total revenues in 2025.

Previous wording

Our service arrangements have been evolving to provide more customized and integrated solutions to our clients where we combine software engineering with customer experience design, business consulting and technology innovation services in areas such as cloud platforms, cybersecurity and artificial intelligence. We are continually expanding our service capabilities, moving beyond traditional services into business consulting, design and physical product development.

Current wording

Our service arrangements have been evolving to provide more customized and integrated solutions to our clients where we combine software engineering with customer experience design, business consulting and technology innovation services in areas such as cloud platforms, cybersecurity and artificial intelligence. We are continually expanding our service capabilities, moving beyond traditional services into strategy consulting, design and physical product development.

Previous wording

The principal components of our cost of revenues (exclusive of depreciation and amortization) are salaries, bonuses, fringe benefits, stock-based compensation, project-related travel costs and fees for subcontractors who are assigned to client projects. Salaries and other compensation expenses of our delivery professionals are reported as cost of revenues regardless of whether the employees are actually performing services for clients during a given period. Our employees are a critical asset, necessary for our continued success and therefore we expect to continue hiring talented employees and providing them with competitive compensation programs. Additionally, government incentives and assistance related to services performed by delivery professionals and contractors assigned to client projects are reported in cost of revenues.

Current wording

The principal components of our cost of revenues (exclusive of depreciation and amortization) are salaries, bonuses, fringe benefits, stock-based compensation, project-related travel costs and fees for subcontractors who are assigned to client projects. Salaries and other compensation expenses of our delivery professionals are reported as cost of revenues regardless of whether the employees are actually performing services for clients during a given period. Additionally, government incentives and assistance related to services performed by delivery professionals assigned to client projects are reported in cost of revenues. Our employees are a critical asset, necessary for our continued success and therefore we expect to continue hiring talented employees and providing them with competitive compensation programs.

Previous wording

During the year ended December 31, 2024, cost of revenues (exclusive of depreciation and amortization) was $3.277 billion, representing an increase of 0.6% from $3.257 billion reported last year. The increase during the year ended December 31, 2024 compared to 2023, was primarily due to an increase in compensation costs, including a $12.1 million increase in stock-based compensation expense, as well as $19.4 million in reduced benefits from our hedging program and a 0.2% unfavorable impact from changes in foreign currency exchange rates. Compensation costs also increased due to impacts from salary increases and promotions for existing professionals, an increase in variable compensation expense, the relocation of employees to higher cost geographies as well as a 2.2% growth in the average number of production professionals contributed in part by our acquisition of businesses during 2024. The increases were significantly offset by benefits totaling $68.8 million recognized in the second half of 2024 for government incentives related to conducting R&D activities in Poland and a decline in costs associated with our humanitarian efforts for Ukraine of $8.9 million and our unbilled business continuity resources of $9.4 million year-over-year.

Current wording

During the year ended December 31, 2025, cost of revenues (exclusive of depreciation and amortization) was $3.884 billion, representing an increase of 18.5% from $3.277 billion reported last year. The increase during the year ended December 31, 2025 compared to 2024, was primarily due to the acquisitions of NEORIS and First Derivative in the fourth quarter of 2024, an increase in compensation costs, and a $13.6 million decrease in government incentives related to conducting R&D activities in Poland. During the year ended December 31, 2024 we recognized a cumulative catch-up benefit related to Poland R&D tax credits. Changes in foreign currency exchange rates also had a 0.8% unfavorable impact during the year. Additionally, the average number of production professionals grew 9.0% mainly driven by our acquisition of businesses during 2024. The growth in our production professionals increased compensation costs which were also impacted by salary increases and promotions for existing professionals, an increase in variable compensation expense, and a $5.3 million increase in stock-based compensation expense. The increases were partially offset by $11.9 million in increased benefits from our hedging program.

Previous wording

Expressed as a percentage of revenues, cost of revenues (exclusive of depreciation and amortization) was 69.3% and 69.4% during the years ended December 31, 2024 and 2023, respectively. The year-over-year decrease is primarily due to benefits totaling $68.8 million recognized in the second half of 2024 for government incentives related to conducting R&D activities in Poland and improved utilization, largely offset by a $12.1 million increase in stock-based compensation expense, increases in compensation costs including variable compensation, reduced benefits from our hedging program and the negative impact from the appreciation of foreign currencies in certain of our delivery locations.

Current wording

Expressed as a percentage of revenues, cost of revenues (exclusive of depreciation and amortization) was 71.2% and 69.3% during the years ended December 31, 2025 and 2024, respectively. The year-over-year increase is primarily due to compensation increases which we were not able to fully offset through pricing increases, the acquisitions completed in 2024, higher variable compensation expense, a $13.6 million decrease in government incentives related to conducting R&D activities in Poland and the negative impact from the appreciation of foreign currencies in certain of our delivery locations, partially offset by increased benefits from our hedging program.

Previous wording

During the year ended December 31, 2024, selling, general and administrative expenses were $816.3 million, representing an increase of 0.2% as compared to $815.1 million reported last year. The increase in selling, general and administrative expenses during 2024 compared to 2023 was primarily driven by a $14.1 million increase in personnel-related costs, including a $7.4 million increase in stock-based compensation expense, a $10.3 million increase in professional fee expenses related to our business acquisition efforts and a $4.7 million increase in expenses associated with our humanitarian efforts for Ukraine. Personnel-related costs increased due to impacts from salary increases and promotions for existing professionals, increases in variable compensation expense and severance, which reflects the impact from the Cost Optimization Programs initiated in the second quarter of 2024 and the third quarter of 2023. See Note 12 “Cost Optimization Programs” for more information regarding the Company’s restructuring programs. These year-over-year increases were partially offset by an $8.4 million decrease in bad debt expense, a $5.6 million reduction in facility exit costs and a $3.9 million reduction in facilities and infrastructure expenses as compared to the prior year.

Current wording

During the year ended December 31, 2025, selling, general and administrative expenses were $928.7 million, representing an increase of 13.8% as compared to $816.3 million reported last year. The increase in selling, general and administrative expenses during 2025 compared to 2024 was primarily driven by the acquisitions of NEORIS and First Derivative completed in the fourth quarter of 2024, an increase in personnel-related costs, including a $4.2 million increase in stock-based compensation expense, an $11.3 million increase in facilities and infrastructure expenses, and a $9.0 million increase in costs for software licenses. Personnel-related costs also increased due to impacts from salary increases and promotions for existing professionals, increases in variable compensation expense and severance, which reflects the impact from cost optimization programs. See Note 12 “Cost Optimization Programs” in the notes to our consolidated financial statements in this Annual Report on Form 10-K for more information regarding the Company’s restructuring programs. These year-over-year increases were partially offset by a $5.6 million decrease in professional fee expenses related to our business acquisition efforts as compared to the prior year.

Previous wording

Expressed as a percentage of revenues, selling, general and administrative expenses decreased 0.1% to 17.3% for the year ended December 31, 2024, as compared to the prior year primarily driven by reductions in facility exit costs, bad debt expense and facilities and infrastructure expenses as a percentage of revenues.

Current wording

Expressed as a percentage of revenues, selling, general and administrative expenses decreased 0.3% to 17.0% for the year ended December 31, 2025, as compared to the prior year primarily driven by a decrease in personnel-related costs as a percentage of revenue, including stock-based compensation expense, facilities and infrastructure expenses and professional fee expenses related to our business acquisition efforts, partially offset by additional costs for software licenses as a percentage of revenues.

Previous wording

During the year ended December 31, 2024, depreciation and amortization expense was $89.6 million, representing a decrease of $2.2 million from $91.8 million reported in the prior year. The decrease in depreciation and amortization expense was primarily the result of lower depreciation on furniture, fixtures, other equipment and computer hardware, partially offset by increased amortization of software licenses and acquired finite-lived intangible assets. Expressed as a percentage of revenues, depreciation and amortization expense remained the same at 1.9% during the year ended December 31, 2024, as compared to 2023.

Current wording

During the year ended December 31, 2025, depreciation and amortization expense was $124.8 million, representing an increase of $35.3 million from $89.6 million reported in the prior year. The increase in depreciation and amortization expense was primarily the result of increased amortization of acquired finite-lived intangible assets largely resulting from the acquisitions of NEORIS and First Derivative in the fourth quarter of 2024, partially offset by $6.3 million in lower depreciation and amortization on property and equipment. Expressed as a percentage of revenues, depreciation and amortization expense increased to 2.3% during the year ended December 31, 2025, as compared to 1.9% in 2024, primarily due to increased amortization of acquired finite-lived intangible assets largely resulting from the acquisitions of First Derivative and NEORIS in 2024.

Previous wording

Interest and other income, net includes interest earned on cash, cash equivalents and short-term investments, gains and losses from certain financial instruments, interest expense related to our borrowings, certain government grant income, and changes in the fair value of contingent consideration. Interest and other income, net decreased from $51.1 million during the year ended December 31, 2023 to $46.9 million during the year ended December 31, 2024. This decrease was largely driven by a $4.2 million decrease in government grant income and a $2.9 million increase in loss due to the change in fair value of contingent consideration, partially offset by a $1.1 million increase in other income.

Current wording

Interest and other income, net includes interest earned on cash, cash equivalents and short-term investments, gains and losses from certain financial instruments, interest expense related to our borrowings, certain government grant income, and changes in the fair value of contingent consideration. Interest and other income, net decreased from $46.9 million during the year ended December 31, 2024 to $11.5 million during the year ended December 31, 2025. This decrease was largely driven by a $37.0 million decrease in interest income from our cash, cash equivalents and short-term investments, partially offset by a $2.2 million decrease in loss due to the change in fair value of contingent consideration.

Previous wording

Determining the consolidated provision for income tax expense, deferred income tax assets and liabilities and any potential related valuation allowances involves judgment. We consider factors that may contribute, favorably or unfavorably, to the overall annual effective tax rate in the current year as well as the future. These factors include statutory tax rates and tax law changes in the countries where we operate and excess tax benefits upon vesting or exercise of equity awards as well as consideration of any significant or unusual items.

Current wording

Determining the consolidated provision for income tax expense, deferred income tax assets and liabilities and any potential related valuation allowances involves judgment. We consider factors that may contribute, favorably or unfavorably, to the overall annual effective tax rate in the current year as well as the future. These factors include statutory tax rates and tax law changes in the countries where we operate and excess tax benefits upon vesting or exercise of stock awards as well as consideration of any significant or unusual items.

Previous wording

As a global company, we are required to calculate and provide for income taxes in each of the jurisdictions in which we operate. During 2024, 2023 and 2022, we had $391.4 million, $325.7 million and $428.7 million, respectively, in income before provision for income taxes attributed to our foreign jurisdictions. Changes in the geographic mix or level of annual pre-tax income can also affect our overall effective income tax rate.

Current wording

As a global company, we are required to calculate and provide for income taxes in each of the jurisdictions in which we operate. During 2025 and 2024, we had $361.4 million and $391.4 million, respectively, in income before provision for income taxes attributed to our foreign jurisdictions. Changes in the geographic mix or level of annual pre-tax income can also affect our overall effective income tax rate.

Previous wording

The provision for income taxes was $129.9 million in 2024 and $119.5 million in 2023. The increase was primarily driven by an increase in pre-tax income. The effective tax rate decreased slightly from 22.3% in 2023 to 22.2% in 2024 primarily due to the increase in excess tax benefits recorded upon vesting or exercise of stock-based awards, which were $22.4 million in 2024 compared to $19.8 million in 2023.

Current wording

The provision for income taxes was $127.9 million in 2025 and $129.9 million in 2024. The decrease was primarily driven by a decrease in pre-tax income. The effective tax rate was 25.3% in 2025 compared to 22.2% in 2024. We recorded a tax shortfall upon vesting or exercise of stock awards of $1.9 million in 2025 and an excess tax benefit of $22.4 million in 2024.

Previous wording

The segments represent components of EPAM for which separate financial information is available and used on a regular basis by our chief executive officer, who is also our chief operating decision maker (“CODM”), to evaluate performance, allocate resources and make business decisions. We manage our business primarily based on the managerial responsibility for our client base and market. As managerial responsibility for a particular client relationship generally correlates with the client’s geographic location, there is a high degree of similarity between client locations and the geographic boundaries of our reportable segments. In some cases, managerial responsibility for a particular client is assigned to a management team in another region and is usually based on the strength of the relationship between client executives and particular members of EPAM’s senior management team. In such cases, the client’s activity would be reported through the management team’s reportable segment.

Current wording

We determine our business segments and report segment information in accordance with how the Company’s chief operating decision maker (“CODM”) organizes the segments to evaluate performance, allocate resources and make business decisions. Our CODM is the chief executive officer. We manage our business primarily based on the managerial responsibility for our client base and market. As managerial responsibility for a particular client relationship generally correlates with the client’s geographic location, there is a high degree of similarity between client locations and the geographic boundaries of our reportable segments. In some cases, managerial responsibility for a particular client is assigned to a management team in another region and is usually based on the strength of the relationship between client executives and particular members of EPAM’s senior management team. In such cases, the client’s activity would be reported through the management team’s reportable segment.

Previous wording

The following table summarizes revenues from external clients and operating profit, before unallocated expenses, for the North America segment for the years ended December 31, 2024, 2023 and 2022:

Current wording

The following table summarizes revenues from external clients and operating profit, before unallocated expenses, for the Americas segment for the years ended December 31, 2025 and 2024:

Previous wording

During 2024, North America segment revenues increased $101.3 million, or 3.7%, from the previous year. Revenues from our North America segment represented 60.6% of total segment revenues, an increase from 58.9% reported in the corresponding period of 2023. Acquisitions contributed $95.7 million to North America segment revenues during 2024. During 2024 as compared to 2023, North America segment operating profits increased $30.4 million, or 5.9%, to $541.4 million. Expressed as a percentage of revenue, North America segment operating profit increased to 18.9% in 2024 as compared to 18.5% in 2023. This increase is primarily attributable to higher utilization and recognition of government incentives related to conducting R&D activities in Poland, partially offset by an increase in variable compensation expense as a percentage of segment revenues during 2024 compared to 2023.

Current wording

During 2025, Americas segment revenues increased $299.8 million, or 10.5%, from the previous year. Revenues from our Americas segment represented 58.0% of total segment revenues, a decrease from 60.6% reported in the corresponding period of 2024. During 2025 as compared to 2024, Americas segment operating profits decreased $19.3 million, or 3.6%, to $522.1 million. Expressed as a percentage of revenue, Americas segment operating profit decreased to 16.5% in 2025 as compared to 18.9% in 2024. This decrease is primarily attributable to the impact of lower profitability from acquisitions completed in 2024, lower government incentives related to conducting R&D activities in Poland, changes in foreign exchange rates, and an increase in variable compensation expense as a percentage of segment revenues during 2025 compared to 2024.

Previous wording

The following table presents North America segment revenues by industry vertical for the periods indicated:

Current wording

The following table presents Americas segment revenues by industry vertical for the periods indicated:

Previous wording

During the year ended December 31, 2024, Software & Hi-Tech remained the largest industry vertical in the North America segment which was a result of the continued focus on engaging with our technology clients. However, a reduction in revenues from a former top 20 client impacted the revenues in this vertical. Financial Services decreased 3.5% in 2024 compared to the prior year, largely impacted by decline in demand from a group of wealth management and insurance clients. Consumer Goods, Retail & Travel declined 4.7% during 2024 compared to the prior year primarily due to declines from clients in the retail industry, partially offset by growth from our travel clients. During the year ended December 31, 2024, revenues from the Business Information & Media vertical experienced an increase of 4.6% primarily due to improvement in demand from clients in the information services and entertainment sectors. Life Sciences & Healthcare increased 13.8% during 2024 compared to the prior year primarily due to increased demand from pharmaceutical and medical device clients. Emerging Verticals experienced 26.6% growth during 2024 compared to the prior year due to growth from various clients in industries such as energy, professional services, industrial materials, telecommunications, manufacturing and automotive. Emerging Verticals also benefited from new revenues from clients in several verticals that we gained as part of our acquisitions.

Current wording

During the year ended December 31, 2025, Financial Services was the largest industry vertical in the Americas segment and grew 16.1% in 2025 compared to the prior year, benefiting from new revenues from clients gained through our 2024 acquisitions and increased demand from insurance and payment processing clients. Software & Hi-Tech grew 6.7% during 2025 compared to the prior year which was a result of the continued focus on engaging with our technology clients. Life Sciences & Healthcare increased 1.7% during 2025 compared to the prior year primarily due to increased demand from pharmaceutical and medical device clients. Consumer Goods, Retail & Travel increased 6.6% during 2025 compared to the prior year primarily due to growth from our retail clients.

Previous wording

During 2024, Europe segment revenues were $1.862 billion, reflecting a decrease of $47.8 million, or 2.5%, from last year. Acquisitions contributed $28.9 million to Europe segment revenues during 2024. Revenues were positively impacted by changes in foreign currency exchange rates during 2024. Had our Europe segment revenues been expressed in constant currency terms using the exchange rates in effect during 2023, we would have reported a revenue decline of 3.0%. Revenues from our Europe segment represent 39.4% and 40.7% of total segment revenues during 2024 and 2023, respectively. During 2024, Europe segment operating profits increased $34.0 million, or 13.6% as compared to last year, to $284.2 million. Europe segment operating profit represented 15.3% of Europe segment revenues as compared to 13.1% in 2023. Europe segment operating profit as a percentage of revenues was positively impacted by higher utilization and government incentives related to conducting R&D activities in Poland, partially offset by an increase in variable compensation expense and negative impact from the fluctuations in foreign exchange rates during 2024 compared to 2023.

Current wording

During 2025, Europe segment revenues were $2.291 billion, reflecting an increase of $429.3 million, or 23.1%, from the previous year. Revenues were positively impacted by changes in foreign currency exchange rates during 2025. Had our Europe segment revenues been expressed in constant currency terms using the exchange rates in effect during 2024, we would have reported revenue growth of 19.7%. Revenues from our Europe segment represent 42.0% and 39.4% of total segment revenues during 2025 and 2024, respectively. During 2025, Europe segment operating profits increased $48.8 million, or 17.2% as compared to last year, to $333.0 million. Europe segment operating profit represented 14.5% of Europe segment revenues as compared to 15.3% in 2024. Europe segment operating profit as a percentage of revenues was negatively impacted by an increase in variable compensation expense and lower government incentives related to conducting R&D activities in Poland, partially offset by changes in foreign exchange rates and results of cost optimization programs during 2025 compared to 2024.

Previous wording

Consumer Goods, Retail & Travel remained the largest industry vertical in the Europe segment during the year ended December 31, 2024. However, revenues in this vertical declined 5.7% during the year ended December 31, 2024, as compared to 2023, primarily due to decreased demand from clients in the retail and consumer goods industries, partially offset by growth from our travel clients. During the year ended December 31, 2024, revenues in Financial Services experienced 6.5% growth primarily due to the improvement in demand from insurance and wealth management clients as well as from commercial banking clients. Financial Services also benefited from new revenues from clients that we gained as part of our acquisitions. Revenues in Business Information & Media decreased during 2024 primarily due to decreased demand from two clients who were historically included in our top-10 clients. Revenue growth in Software & Hi-Tech during the year ended December 31, 2024, as compared to 2023, was largely attributable to the expansion of services provided to one of our top 10 clients. Revenues in Life Sciences & Healthcare grew 42.3% during 2024 primarily due to the growth experienced from clients in the pharmaceutical and healthcare sectors. Revenues in Emerging Verticals grew 1.7% during 2024, with growth experienced from clients in the energy industry as well as a client that was previously reported under the Russia segment and partially offset by declines from customers in the telecommunications industry.

Current wording

During the year ended December 31, 2025, Financial Services was the largest industry vertical in the Europe segment and grew 41.8% benefiting from new revenues from clients that we gained as part of our 2024 acquisitions and increased demand from commercial banking and insurance clients. Revenues in the Consumer Goods, Retail & Travel vertical experienced growth of 6.1% during the year ended December 31, 2025, as compared to 2024, primarily due to improved demand from clients in the retail and consumer goods industries. Revenue growth in Software & Hi-Tech during the year ended December 31, 2025, as compared to 2024, was largely attributable to the expansion of services provided to one of our top 10 clients as well as the addition of several new clients in the past eighteen months. Revenues in Business Information & Media decreased during 2025 primarily due to decreased demand from two clients who were historically included in our top 10 clients. Revenues in Life Sciences & Healthcare grew 49.5% during 2025 primarily due to the growth experienced from clients in the pharmaceutical sector. Revenues in Emerging Verticals grew 23.6% during 2025, with growth experienced from clients in various industries such as energy, professional services and industrial materials. Emerging Verticals also benefited from clients gained through our 2024 acquisitions.

Previous wording

Our cash generated from operations has been our primary source of liquidity to fund operations, investments to support the growth of our business and share repurchases. As of December 31, 2024, our principal sources of liquidity were cash and cash equivalents totaling $1.286 billion, short-term investments totaling $1.7 million as well as $675.0 million of available borrowings under our revolving credit facility. See Note 10 “Debt” in the notes to our consolidated financial statements in this Annual Report on Form 10-K for information regarding the terms of our revolving credit facility and information about debt.

Current wording

Our cash generated from operations has been our primary source of liquidity to fund operations, investments to support the growth of our business and share repurchases. As of December 31, 2025, our principal sources of liquidity were cash and cash equivalents totaling $1.296 billion, short-term investments totaling $6.1 million as well as $675.0 million of available borrowings under our revolving credit facility. See Note 10 “Debt” in the notes to our consolidated financial statements in this Annual Report on Form 10-K for information regarding the terms of our revolving credit facility and information about debt.

Previous wording

Our largest source of cash provided by operating activities is cash generated from our professional services that we provide to our clients. Our primary uses of cash from operating activities include compensation to our employees and related costs, payments for leased facilities, various general corporate expenditures and income tax payments. Since the invasion of Ukraine in 2022, our operating activities included using cash on humanitarian efforts for Ukraine and geographic repositioning of our workforce.

Current wording

Our largest source of cash provided by operating activities is cash generated from our professional services that we provide to our clients. Our primary uses of cash from operating activities include compensation to our employees and related costs, payments for leased facilities, various general corporate expenditures and income tax payments. Since the invasion of Ukraine in 2022, our operating activities included using cash on humanitarian efforts for Ukraine.

Previous wording

Cash provided by operating activities in 2024 was primarily driven by the Company's cash collections from client contracts and was positively impacted by lower payments for variable compensation as compared to 2023, attributable to a lower level of financial performance for the year ended December 31, 2023. Cash provided by operating activities in 2023 was primarily driven by the Company's cash collections from client contracts, which was partially offset by variable compensation payments, severance payments related to the Cost Optimization Program and other working capital outflows.

Current wording

Cash provided by operating activities in 2025 was primarily driven by the Company's cash collections from client contracts and was negatively impacted by an increase in days sales outstanding and higher payments for variable compensation as compared to 2024, attributable to a higher level of financial performance for the year ended December 31, 2024. Cash provided by operating activities in 2024 was primarily driven by the Company's cash collections from client contracts, which was partially offset by variable compensation payments, severance payments related to the Cost Optimization Program and other working capital outflows.

Previous wording

Our primary uses of cash from investing activities consist of purchases of computer hardware, software and office equipment, as well as investments into office buildings and new businesses. We also use cash for short-term investments and time deposits and receive cash upon maturity of these deposits. Most of our investments are typically short-term and cash equivalent in nature but we may invest in longer term deposits if the terms are favorable. The cash used in investing activities during 2024 was primarily attributable to $912.2 million used for the acquisitions of businesses, net of cash acquired, and $32.1 million used for capital expenditures compared to $24.8 million used for the acquisitions of businesses, net of cash acquired and $28.4 million used for capital expenditures during 2023. The use of cash from investing activities was partially offset by inflows of $61.5 million from matured investments in time deposits during 2024, compared to $10.9 million during 2023.

Current wording

Our primary uses of cash from investing activities consist of purchases of computer hardware, software and office equipment, as well as investments in office buildings and new businesses. We also use cash for short-term investments and time deposits and receive cash upon maturity of these deposits. Most of our investments are typically short-term and cash equivalent in nature but we may invest in longer term deposits if the terms are favorable. The cash used in investing activities during 2025 was primarily attributable to $42.2 million used for capital expenditures and $3.4 million used for the acquisitions of businesses, net of cash acquired compared to $32.1 million used for capital expenditures and $912.2 million used for the acquisitions of businesses, net of cash acquired during 2024. During 2024, the use of cash in investing activities was partially offset by inflows of $61.5 million from matured investments in time deposits with no such inflows during 2025 .

Previous wording

Cash used in financing activities mainly consists of repurchasing shares of EPAM common stock under our share repurchase programs, payments of withholding taxes related to net share settlements of restricted stock units, repayments of debt, and settlements of the acquisition-date fair value of contingent consideration related to acquisitions of businesses. Cash provided by financing activities mainly consists of the proceeds from the purchases of shares under our ESPP and exercises of stock options issued under our long-term incentive plans as well as proceeds from debt. We typically do not rely on debt to supplement our cash flows. Net cash used in financing activities increased from 2023 to 2024 primarily due to $398.0 million of payments to repurchase our common stock during 2024 compared to $164.9 million during 2023. In addition, during 2024 we used cash for the payments of withholding taxes related to net share settlements of restricted stock units of $35.2 million, compared to $29.1 million paid during 2023. These cash outflows were partially offset by cash received from the exercises of stock options issued under our long-term incentive plans and proceeds from the purchases of shares under our ESPP of $53.7 million during 2024, compared to $51.6 million received during 2023.

Current wording

Cash used in financing activities mainly consists of repurchasing shares of EPAM common stock under our share repurchase programs, payments of withholding taxes related to net share settlements of restricted stock units, repayments of debt, and settlements of the acquisition-date fair value of contingent consideration related to acquisitions of businesses. Cash provided by financing activities mainly consists of the proceeds from the purchases of shares under our ESPP and exercises of stock options issued under our long-term incentive plans as well as proceeds from debt. We typically do not rely on debt to supplement our cash flows. Net cash used in financing activities increased from 2024 to 2025 primarily due to $660.6 million of payments to repurchase our common stock during 2025 compared to $398.0 million during 2024. In addition, during 2025 we used cash for the payments of withholding taxes related to net share settlements of equity awards of $26.8 million, compared to $35.2 million paid during 2024. These cash outflows were partially offset by cash received from the exercises of stock options issued under our long-term incentive plans and proceeds from the purchases of shares under our ESPP of $54.6 million during 2025, compared to $53.7 million received during 2024.

Previous wording

We believe that our existing cash, cash equivalents and short-term investments, combined with our expected cash flow from operations will be sufficient to meet our projected operating and capital expenditure requirements for at least the next twelve months and that we possess the financial flexibility to execute our strategic objectives, including the ability to make acquisitions and strategic investments in the foreseeable future. However, the invasion of Ukraine, other various geopolitical events, and the related measures to contain their impact, have caused and may continue to cause material disruptions in financial markets and economies. These disruptions may increase our costs of capital, decrease returns on investment, and otherwise adversely affect our business, results of operations, financial condition and liquidity.

Current wording

We believe that our existing cash, cash equivalents and short-term investments, combined with our expected cash flow from operations will be sufficient to meet our projected operating and capital expenditure requirements for at least the next twelve months and that we possess the financial flexibility to execute our strategic objectives, including the ability to make acquisitions and strategic investments in the foreseeable future. However, the invasion of Ukraine, other various geopolitical events, and the related measures implemented to contain their impact, have caused and may continue to cause material disruptions in financial markets and economies. These disruptions may increase our costs of capital, decrease returns on investment, and otherwise adversely affect our business, results of operations, financial condition and liquidity.