EPAM Systems, Inc. entered into an accelerated share repurchase (ASR) agreement with Morgan Stanley & Co. LLC for an aggregate value of $300 million. The ASR allows EPAM to buy back shares at a predetermined price range, with an initial delivery of shares valued at $240 million based on the March 4, 2026 closing price, totaling 1,703,336 shares. The transaction is part of EPAM’s existing $1 billion share‑repurchase program, leaving $452.5 million of authorization available and is expected to be completed no later than the second quarter of 2026.
The ASR announcement follows a strong Q4 2025 earnings release in which EPAM reported revenue of $1.41 billion, up 12.8% year‑over‑year, and earnings per share of $3.26, beating consensus estimates of $3.15. Full‑year 2025 revenue reached $5.46 billion, a 15.4% increase, while GAAP operating margin expanded to 10.6% from 9.5% the prior year. Non‑GAAP operating margin rose to 16.3% from 15.2% year‑over‑year, reflecting continued investment in high‑margin AI‑native services.
EPAM’s AI‑native revenue grew to $105 million in Q4 2025 and is projected to exceed $600 million in 2026, underscoring the company’s momentum in AI‑driven solutions. Revenue from clients outside the top 20 grew 15.5% YoY, while top‑20 client revenue increased 7.3%. Headwinds include a sequential revenue decline from a large client of Neoris, elongated sales cycles for AI deployments, and economic challenges in Mexico that have impacted a key customer. Higher variable compensation expense also weighed on gross margin in Q4 2025.
Management emphasized confidence in the company’s valuation and capital allocation strategy. CEO Balazs Fejes stated, "We believe our current valuation does not fully reflect the strength and future potential of our business and view this action as a value‑enhancing use of capital." CFO Jason Peterson added, "We remain confident in the underlying strength of our business reflected by three quarters of improving year‑over‑year organic constant currency revenue growth. With efficient free cash flow generation and a strong balance sheet, we can take advantage of the current market dynamic and return cash to shareholders, while also making ongoing investments in our business and AI Agenda."
The ASR is expected to reduce EPAM’s share count, potentially improving earnings per share over time. Pricing will be based on the volume‑weighted average share price during the ASR term, less a discount, and the final number of shares will be determined at completion.
Looking ahead, EPAM has guided for 2026 revenue growth of 4.5%–7.5% reported and 3%–6% organic constant currency growth. GAAP operating margin guidance is 10%–11%, with non‑GAAP margin at 15%–16%. EPS guidance for 2026 is $7.95–$8.25 GAAP and $12.60–$12.90 non‑GAAP, reflecting moderate growth expectations amid continued investment in AI and a cautious outlook on macro‑economic headwinds.
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