EPAM Systems reported fourth‑quarter and full‑year 2025 revenue of $1.407 billion, up 12.8% year‑over‑year, and GAAP diluted earnings per share of $1.98, a 10% increase from the $1.80 reported in Q4 2024. Non‑GAAP diluted EPS reached $3.26, beating analyst estimates of $3.16 by $0.10, or 3.2%.
Revenue growth was driven largely by AI‑native and AI‑foundational services, with the Financial Services vertical reporting a 19.8% year‑over‑year increase. The company’s operating income rose to $149.3 million, and GAAP operating margin held steady at 10.6%. Non‑GAAP operating margin contracted 150 basis points to 15.2% because of higher variable‑compensation expense and lower profitability from recent acquisitions.
Management highlighted that the company’s AI focus is a key tailwind, while higher variable‑compensation costs and the integration of NEORIS and First Derivative are short‑term headwinds that have tightened margins. The company’s gross margin also slipped 50 basis points to 31.7% on a non‑GAAP basis.
For 2026, EPAM guided revenue of $1.385 billion to $1.400 billion for Q1, representing a 7% midpoint growth, and non‑GAAP diluted EPS of $2.70 to $2.78. Full‑year guidance calls for revenue growth of 4.5% to 7.5% and non‑GAAP diluted EPS of $12.60 to $12.90, a modest lift over prior guidance and a signal of cautious confidence amid slowing organic constant‑currency growth of 5.6% in Q4 2025.
Investors reacted to the cautious outlook and the contrast between headline revenue growth and the lower organic growth rate. The market focused on the 5.6% organic constant‑currency growth versus the 12.8% headline figure, and on the divergence between GAAP and non‑GAAP EPS, which suggests that earnings quality may be under pressure.
CEO Balazs Fejes said, "We are pleased to deliver a strong fourth quarter and full year 2025, notably scaling and accelerating our AI‑native revenues. Our 2025 performance reflects our steady execution and meaningful progress in driving business transformation and AI foundational readiness for our clients." CFO Jason Peterson added, "Gross margin in Q4 2025 was negatively impacted by higher variable compensation expense, suggesting near‑term margin pressure relative to prior periods."
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