Fourth quarter revenues of $399.3 million, up 27.4%
year-over-year
EPAM Systems, Inc. (NYSE:EPAM), a leading global provider of
digital platform engineering and software development services,
today announced results for its fourth quarter and full year ended
December 31, 2017.
“We are pleased with our strong 2017 results,
ending with 25% year-over-year growth and $1.45 billion in annual
revenues, reflecting our continued evolution into a leading,
end-to-end digital solutions service provider,” said Arkadiy
Dobkin, EPAM CEO & President. “We expect that our focus on
solving our customers’ most complex digital challenges, along with
our ability to bring new capabilities and our commitment to
accelerating time-to-market in innovative practical solutions, will
continue to drive demand.”
Fourth Quarter 2017
Highlights
•
Revenues increased
to $399.3 million, a year-over-year increase of $85.8 million or
27.4% demonstrating strong broad-based demand across the industries
we serve and geographies in which we operate. In constant currency,
revenue was up 23.8% year-over-year;
•
GAAP income from
operations was $52.1 million, an increase of $14.7 million or 39.2%
compared to $37.4 million in the fourth quarter of 2016;
•
Non-GAAP income
from operations was $66.9 million, an increase of $15.4 million or
30.1% compared to $51.5 million in the fourth quarter of 2016;
• Provision for
income taxes includes a provisional $74.6 million charge related to
US tax reform;
•
Diluted earnings
per share (“EPS”) on a GAAP basis was $(0.58), a decrease from
$0.46 in the fourth quarter of 2016. Diluted EPS on a GAAP
basis excluding the provisional charge related to U.S. tax reform
was $0.78; and
• Non-GAAP
diluted EPS was $1.01, an increase of $0.24 or 31.2% from $0.77 in
the fourth quarter of 2016.
Full Year 2017 Highlights
•
Revenues increased
to $1.45 billion, a year-over-year increase of $290.3 million or
25.0%. In constant currency, revenue was up 23.9%
year-over-year;
•
GAAP income from
operations was $172.9 million, an increase of $39.2 million or
29.4% compared to $133.7 million in 2016;
•
Non-GAAP income
from operations was $234.7 million, an increase of $42.9 million or
22.3% compared to $191.8 million in 2016;
•
Diluted EPS on a
GAAP basis was $1.32, compared to $1.87 in 2016. Diluted EPS
on a GAAP basis excluding the provisional charge related to U.S.
tax reform was $2.68; and
• Non-GAAP
diluted EPS was $3.46, an increase of $0.56 or 19.3%, from $2.90 in
2016.
Cash Flow and Other Metrics
•
Cash from operations was $71.4 million in the fourth quarter of
2017, up from $53.7 million in the fourth quarter of 2016; and was
$195.4 million in 2017, up from $164.8 million in 2016;
•
Cash and cash
equivalents totaled $582.6 million as of December 31, 2017, an
increase of $220.6 million or 60.9% from $362.0 million as of
December 31, 2016; and
•
Total headcount
was approximately 25,900 as of December 31, 2017. Included in this
number were approximately 22,900 delivery professionals, an
increase of 16.9% over the previous year.
2018 Outlook - Full Year and First Quarter
Full Year
•
Revenue growth for 2018 will be at least 24%, including an
estimated 2% for currency tailwinds. We expect constant currency
growth will be at least 22%;
• We
expect GAAP income from operations to be in the range of 12% to 13%
of revenues and non-GAAP income from operations to be in the range
of 16% to 17% of revenues;
• We
expect our GAAP effective tax rate to be approximately 15% and our
non-GAAP effective tax rate to be approximately 22%; and
• We
expect GAAP diluted EPS will be at least $3.38 for the full year,
and non-GAAP diluted EPS will be at least $4.03 for the full year
based on an expected weighted average share count of 57.3 million
diluted shares outstanding.
First Quarter
• Revenues will be at
least $414 million for the first quarter, reflecting a
year-over-year growth rate of at least 27% including an estimated
4% for currency tailwinds. We expect constant currency growth will
be at least 23%;
• For the first
quarter, we expect GAAP income from operations to be in the range
of 11.5% to 12.5% of revenues and non-GAAP income from operations
to be in the range of 15% to 16% of revenues;
• We expect our GAAP
effective tax rate to be approximately 11% and our non-GAAP
effective tax rate to be approximately 22%; and
• We expect GAAP
diluted EPS will be at least $0.76 for the quarter, and
non-GAAP diluted EPS will be at least $0.90 for the quarter based
on an expected weighted average share count of 56.5 million diluted
shares outstanding.
Conference Call Information
EPAM will host a conference call to discuss
results on Friday, February 16, 2018 at 8:00 a.m. Eastern
time. The live conference call will be available by dialing +1
(877) 407-0784 or +1 (201) 689-8560 (outside of the U.S.). A
webcast of the conference call can be accessed at the Investor
Relations section of the Company’s website
at http://investors.epam.com. A replay will be available
approximately one hour after the call by dialing +1 (844) 512-2921
or +1 (412) 317-6671 (outside of the U.S.) and entering the
conference ID 13674698. The replay will be available until March 2,
2018.
About EPAM SystemsSince 1993, EPAM Systems,
Inc. (NYSE:EPAM), has leveraged its core engineering expertise to
become a leading global product development and digital platform
engineering services company. Through its ‘Engineering DNA’ and
innovative strategy, consulting, and design capabilities, EPAM
works in collaboration with its customers to deliver innovative
solutions that turn complex business challenges into real business
opportunities. EPAM’s global teams serve customers in over 25
countries across North America, Europe, Asia and Australia. EPAM is
a recognized market leader among independent research agencies and
was ranked #12 in FORBES 25 Fastest Growing Public Tech
Companies, as a top information technology services company
on FORTUNE’S 100 Fastest Growing Companies, and as a
top UK Digital Design & Build Agency. Learn more
at http://www.epam.com/ and follow us on
Twitter @EPAMSYSTEMS and LinkedIn.
Non-GAAP Financial Measures
EPAM supplements results reported in accordance
with United States generally accepted accounting principles,
referred to as GAAP, with non-GAAP financial measures. Management
believes these measures help illustrate underlying trends in EPAM’s
business and uses the measures to establish budgets and operational
goals, communicate internally and externally, for managing EPAM’s
business and evaluating its performance. Management also believes
these measures help investors compare EPAM’s operating performance
with its results in prior periods. EPAM anticipates that it will
continue to report both GAAP and certain non-GAAP financial
measures in its financial results, including non-GAAP results that
exclude stock-based compensation expense, write-offs and
recoveries, amortization of purchased intangible assets, goodwill
impairment, legal settlements, foreign exchange gains and losses,
acquisition-related costs, certain other one-time charges, the
impact of U.S. tax reform, excess tax benefits related to stock
compensation and the related effect on income taxes. Management
also supplemented results with the non-GAAP financial measure
“Diluted EPS on a GAAP basis excluding U.S. Tax Reform.” This
measure excludes the one-time charge associated with U.S. Tax
Reform. Management also compares operating results on a basis of
“constant currency,” which is also a non-GAAP financial measure.
This measure excludes the effect of foreign currency exchange rate
fluctuations by translating the current period revenues and
expenses into U.S. dollars at the weighted average exchange rates
of the prior period of comparison. Because EPAM’s reported non-GAAP
financial measures are not calculated according to GAAP, these
measures are not comparable to GAAP and may not be comparable to
similarly described non-GAAP measures reported by other companies
within EPAM’s industry. Consequently, EPAM’s non-GAAP financial
measures should not be evaluated in isolation or supplant
comparable GAAP measures, but, rather, should be considered
together with the information in EPAM’s consolidated financial
statements, which are prepared in accordance with GAAP.
Forward-Looking Statements
This press release includes statements which may
constitute forward-looking statements made pursuant to the safe
harbor provisions of the Private Securities Litigation Reform Act
of 1995, the accuracy of which are necessarily subject to risks,
uncertainties, and assumptions as to future events that may not
prove to be accurate. Factors that could cause actual results to
differ materially from those expressed or implied include general
economic conditions and the factors discussed in our most recent
Annual Report on Form 10-K and other filings with the Securities
and Exchange Commission. EPAM undertakes no obligation to update or
revise any forward-looking statements, whether as a result of new
information, future events, or otherwise, except as may be required
under applicable securities law.
Contact:EPAM Systems, Inc.David Straube, Head
of Investor RelationsPhone: +1-267-759-9000
x59419david_straube@epam.com
EPAM SYSTEMS, INC. AND
SUBSIDIARIESCONDENSED CONSOLIDATED STATEMENTS OF
INCOME AND COMPREHENSIVE
INCOME(Unaudited)(US Dollars
in thousands, except share and per share
data)
|
Three Months Ended December
31, |
|
Year Ended December 31, |
|
2017 |
|
2016 |
|
2017 |
|
2016 |
Revenues |
$ |
399,297 |
|
|
$ |
313,525 |
|
|
$ |
1,450,448 |
|
|
$ |
1,160,132 |
|
Operating
expenses: |
|
|
|
|
|
|
|
Cost of
revenues (exclusive of depreciation and amortization) |
254,121 |
|
|
198,226 |
|
|
921,352 |
|
|
737,186 |
|
Selling,
general and administrative expenses |
84,793 |
|
|
71,432 |
|
|
324,855 |
|
|
264,658 |
|
Depreciation and amortization expense |
7,696 |
|
|
6,237 |
|
|
28,562 |
|
|
23,387 |
|
Other
operating expenses, net |
637 |
|
|
247 |
|
|
2,733 |
|
|
1,205 |
|
Income from
operations |
52,050 |
|
|
37,383 |
|
|
172,946 |
|
|
133,696 |
|
Interest and other
income, net |
1,799 |
|
|
1,432 |
|
|
4,601 |
|
|
4,848 |
|
Foreign exchange
loss |
(1,772 |
) |
|
(6,765 |
) |
|
(3,242 |
) |
|
(12,078 |
) |
Income before
provision for income taxes |
52,077 |
|
|
32,050 |
|
|
174,305 |
|
|
126,466 |
|
Provision for income
taxes |
82,951 |
|
|
7,287 |
|
|
101,545 |
|
|
27,200 |
|
Net
(loss)/income |
$ |
(30,874 |
) |
|
$ |
24,763 |
|
|
$ |
72,760 |
|
|
$ |
99,266 |
|
Foreign currency
translation adjustments |
3,425 |
|
|
(5,209 |
) |
|
20,065 |
|
|
(2,538 |
) |
Comprehensive
(loss)/income |
$ |
(27,449 |
) |
|
$ |
19,554 |
|
|
$ |
92,825 |
|
|
$ |
96,728 |
|
|
|
|
|
|
|
|
|
Net
(loss)/income per share: |
|
|
|
|
|
|
|
Basic |
$ |
(0.58 |
) |
|
$ |
0.49 |
|
|
$ |
1.40 |
|
|
$ |
1.97 |
|
Diluted |
$ |
(0.58 |
) |
|
$ |
0.46 |
|
|
$ |
1.32 |
|
|
$ |
1.87 |
|
Shares used in
calculation of net (loss)/income per share: |
|
|
|
|
|
|
|
Basic |
52,879 |
|
|
50,717 |
|
|
52,077 |
|
|
50,309 |
|
Diluted |
52,879 |
|
|
53,380 |
|
|
54,984 |
|
|
53,215 |
|
EPAM SYSTEMS, INC. AND
SUBSIDIARIESCONDENSED CONSOLIDATED BALANCE
SHEETS(Unaudited)(US Dollars in
thousands, except share and per share data)
|
As of December 31,
2017 |
|
As of December 31,
2016 |
Assets |
|
|
|
Current assets |
|
|
|
Cash and
cash equivalents |
$ |
582,585 |
|
|
$ |
362,025 |
|
Accounts
receivable, net of allowance of $1,186 and $1,434,
respectively |
265,639 |
|
|
199,982 |
|
Unbilled
revenues |
86,500 |
|
|
63,325 |
|
Prepaid
and other current assets, net of allowance of $45 and $644,
respectively |
23,196 |
|
|
18,493 |
|
Employee
loans, current, net of allowance of $0 and $0, respectively |
2,113 |
|
|
2,726 |
|
Total
current assets |
960,033 |
|
|
646,551 |
|
Property and equipment,
net |
86,419 |
|
|
73,616 |
|
Employee loans,
noncurrent, net of allowance of $0 and $0, respectively |
2,097 |
|
|
3,252 |
|
Intangible assets,
net |
44,511 |
|
|
51,260 |
|
Goodwill |
119,531 |
|
|
109,289 |
|
Deferred tax
assets |
24,974 |
|
|
31,005 |
|
Other noncurrent
assets, net of allowance of $140 and $132, respectively |
12,691 |
|
|
10,838 |
|
Total
assets |
$ |
1,250,256 |
|
|
$ |
925,811 |
|
|
|
|
|
Liabilities |
|
|
|
Current
liabilities |
|
|
|
Accounts
payable |
$ |
5,574 |
|
|
$ |
3,213 |
|
Accrued
expenses and other current liabilities |
89,812 |
|
|
49,895 |
|
Due to
employees |
38,757 |
|
|
32,203 |
|
Deferred
compensation due to employees |
5,964 |
|
|
5,900 |
|
Taxes
payable, current |
40,860 |
|
|
25,008 |
|
Total
current liabilities |
180,967 |
|
|
116,219 |
|
Long-term debt |
25,033 |
|
|
25,048 |
|
Taxes payable,
noncurrent |
59,874 |
|
|
— |
|
Other noncurrent
liabilities |
9,435 |
|
|
3,132 |
|
Total
liabilities |
275,309 |
|
|
144,399 |
|
Commitments and
contingencies |
|
|
|
Stockholders’
equity |
|
|
|
Common stock, $0.001
par value; 160,000,000 authorized; 53,003,420 and 51,117,422
shares issued, 52,983,685 and 51,097,687 shares outstanding
at December 31, 2017 and December 31, 2016, respectively |
53 |
|
|
50 |
|
Additional paid-in
capital |
473,874 |
|
|
374,907 |
|
Retained earnings |
518,820 |
|
|
444,320 |
|
Treasury stock |
(177 |
) |
|
(177 |
) |
Accumulated other
comprehensive loss |
(17,623 |
) |
|
(37,688 |
) |
Total
stockholders’ equity |
974,947 |
|
|
781,412 |
|
Total
liabilities and stockholders’ equity |
$ |
1,250,256 |
|
|
$ |
925,811 |
|
EPAM SYSTEMS, INC. AND
SUBSIDIARIESReconciliations of Non-GAAP Financial
Measures to Comparable GAAP Financial Measures(US
Dollars in thousands, except percent and per share
amounts)(Unaudited)
Reconciliation of revenue growth at constant
currency to revenue growth as reported under GAAP is presented in
the table below:
|
Three Months Ended December 31,
2017 |
|
Year Ended December 31,
2017 |
Revenue growth
at constant currency (1) |
23.8% |
|
|
23.9% |
|
Foreign
exchange rates impact |
3.6% |
|
|
1.1% |
|
Revenue growth as reported |
27.4% |
|
|
25.0% |
|
(1 |
) |
Constant
currency revenue results are calculated by translating current
period revenue in local currency into U.S. dollars at the weighted
average exchange rates of the comparable prior period. |
Reconciliation of various income statement amounts from GAAP to
non-GAAP for the three months and years ended December 31, 2017 and
2016:
|
Three Months Ended December 31,
2017 |
|
Year Ended December 31, 2017 |
|
GAAP |
|
Adjustments |
|
Non-GAAP |
|
GAAP |
|
Adjustments |
|
Non-GAAP |
Cost of
revenues(exclusive of depreciation and amortization)(2) |
$ |
254,121 |
|
|
$ |
(6,416 |
) |
|
$ |
247,705 |
|
|
$ |
921,352 |
|
|
$ |
(20,868 |
) |
|
$ |
900,484 |
|
Selling, general and
administrative expenses(3) |
$ |
84,793 |
|
|
$ |
(6,641 |
) |
|
$ |
78,152 |
|
|
$ |
324,855 |
|
|
$ |
(33,039 |
) |
|
$ |
291,816 |
|
Income
from operations(4) |
$ |
52,050 |
|
|
$ |
14,897 |
|
|
$ |
66,947 |
|
|
$ |
172,946 |
|
|
$ |
61,711 |
|
|
$ |
234,657 |
|
Operating
margin |
13.0 |
% |
|
3.8 |
% |
|
16.8 |
% |
|
11.9 |
% |
|
4.3 |
% |
|
16.2 |
% |
Net
(loss)/income(5) |
$ |
(30,874 |
) |
|
$ |
87,500 |
|
|
$ |
56,626 |
|
|
$ |
72,760 |
|
|
$ |
117,542 |
|
|
$ |
190,302 |
|
Weighted average
diluted shares outstanding(6) |
52,879 |
|
|
3,065 |
|
|
55,944 |
|
|
54,984 |
|
|
— |
|
|
54,984 |
|
Diluted (loss)/earnings
per share |
$ |
(0.58 |
) |
|
|
|
$ |
1.01 |
|
|
$ |
1.32 |
|
|
|
|
$ |
3.46 |
|
|
Three Months Ended December 31,
2016 |
|
Year Ended December 31, 2016 |
|
GAAP |
|
Adjustments |
|
Non-GAAP |
|
GAAP |
|
Adjustments |
|
Non-GAAP |
Cost of revenues
(exclusive of depreciation and amortization)(2) |
$ |
198,226 |
|
|
$ |
(4,019 |
) |
|
$ |
194,207 |
|
|
$ |
737,186 |
|
|
$ |
(16,619 |
) |
|
$ |
720,567 |
|
Selling, general and
administrative expenses(3) |
$ |
71,432 |
|
|
$ |
(8,097 |
) |
|
$ |
63,335 |
|
|
$ |
264,658 |
|
|
$ |
(33,331 |
) |
|
$ |
231,327 |
|
Income
from operations(4) |
$ |
37,383 |
|
|
$ |
14,083 |
|
|
$ |
51,466 |
|
|
$ |
133,696 |
|
|
$ |
58,120 |
|
|
$ |
191,816 |
|
Operating
margin |
11.9 |
% |
|
4.5 |
% |
|
16.4 |
% |
|
11.5 |
% |
|
5.0 |
% |
|
16.5 |
% |
Net
income(5) |
$ |
24,763 |
|
|
$ |
16,290 |
|
|
$ |
41,053 |
|
|
$ |
99,266 |
|
|
$ |
55,184 |
|
|
$ |
154,450 |
|
Weighted average
diluted shares outstanding(6) |
53,380 |
|
|
— |
|
|
53,380 |
|
|
53,215 |
|
|
— |
|
|
53,215 |
|
Diluted earnings per
share |
$ |
0.46 |
|
|
|
|
$ |
0.77 |
|
|
$ |
1.87 |
|
|
|
|
$ |
2.90 |
|
Items (2)
through (5) above are detailed in the table below with the specific
cross-reference noted in the appropriate item. |
|
Three Months Ended December
31, |
|
Year Ended December 31, |
|
2017 |
|
2016 |
|
2017 |
|
2016 |
Stock-based compensation expenses - non-acquisition related |
$ |
6,416 |
|
|
$ |
4,019 |
|
|
$ |
20,868 |
|
|
$ |
16,619 |
|
Total
adjustments to GAAP cost of revenues(2) |
6,416 |
|
|
4,019 |
|
|
20,868 |
|
|
16,619 |
|
Stock-based compensation expenses - acquisition related |
72 |
|
|
3,014 |
|
|
8,139 |
|
|
12,884 |
|
Stock-based compensation expenses - all other |
5,999 |
|
|
4,691 |
|
|
23,400 |
|
|
19,741 |
|
Other
acquisition-related expenses |
570 |
|
|
392 |
|
|
1,500 |
|
|
706 |
|
Total
adjustments to GAAP selling, general and administrative
expenses(3) |
6,641 |
|
|
8,097 |
|
|
33,039 |
|
|
33,331 |
|
Amortization of purchased intangible assets |
1,856 |
|
|
1,967 |
|
|
7,562 |
|
|
8,170 |
|
One-time
(recoveries)/charges |
(16 |
) |
|
— |
|
|
242 |
|
|
— |
|
Total
adjustments to GAAP income from operations(4) |
$ |
14,897 |
|
|
$ |
14,083 |
|
|
$ |
61,711 |
|
|
$ |
58,120 |
|
Foreign
exchange loss |
1,772 |
|
|
6,765 |
|
|
3,242 |
|
|
12,078 |
|
Provision
for income taxes: |
|
|
|
|
|
|
|
Tax
effect on non-GAAP adjustments |
(2,946 |
) |
|
(4,558 |
) |
|
(12,736 |
) |
|
(15,014 |
) |
Charge
related to US tax reform |
74,632 |
|
|
— |
|
|
74,632 |
|
|
— |
|
Excess
tax benefits related to stock-based compensation(a) |
(855 |
) |
|
— |
|
|
(9,307 |
) |
|
— |
|
Total
adjustments to GAAP net (loss) income(5) |
$ |
87,500 |
|
|
$ |
16,290 |
|
|
$ |
117,542 |
|
|
$ |
55,184 |
|
|
(a) |
Effective
January 1, 2017 with the adoption of ASU 2016-09, the Company is
prospectively presenting excess tax benefits related to stock-based
compensation in the Provision for income taxes. Prior toJanuary 1,
2017, the Company recorded these benefits in Additional
paid-in-capital. |
(6 |
) |
There was a
3,065 increase to the shares used in the calculation of diluted
earnings per share on a non-GAAP basis during the three months
ended December 31, 2017 as these shares were excluded from the
calculation of diluted loss per share on a GAAP basis due to the
anti-dilutive effect of these shares as a result of the net loss in
the period. There were no adjustments to GAAP weighted-average
diluted common shares outstanding in the calculation of diluted
earnings per share on a non-GAAP basis during the three months
ended December 31, 2016 and twelve months ended December 31, 2017
and 2016. |
Reconciliation of diluted EPS on a GAAP basis to diluted EPS on
a GAAP basis without the impact of U.S. Tax Reform for the three
months and year ended December 31, 2017:
|
Three Months Ended December 31,
2017 |
|
Year Ended December 31, 2017 |
|
GAAP |
|
Adjustments |
|
GAAP excluding Tax Reform |
|
GAAP |
|
Adjustments |
|
GAAP excluding Tax Reform |
Net
(loss)/income(7) |
$ |
(30,874 |
) |
|
$ |
74,632 |
|
|
$ |
43,758 |
|
|
$ |
72,760 |
|
|
$ |
74,632 |
|
|
$ |
147,392 |
|
Weighted average
diluted shares outstanding(8) |
52,879 |
|
|
3,065 |
|
|
55,944 |
|
|
54,984 |
|
|
— |
|
|
54,984 |
|
Diluted (loss)/earnings
per share |
$ |
(0.58 |
) |
|
|
|
$ |
0.78 |
|
|
$ |
1.32 |
|
|
|
|
$ |
2.68 |
|
(7 |
) |
The total adjustments
to GAAP net (loss)/income include a $74.6 million provisional
charge related to U.S. Tax Reform comprised of: (i) $64.3 million
one-time transition tax on accumulated foreign subsidiary earnings
not previously subject to U.S. income tax and (ii) $10.3 million
resulting from the revaluation of our U.S. net deferred tax assets
to the new U.S. federal statutory tax rate of 21%. |
(8 |
) |
There was a 3,065
increase to the shares used in the calculation of diluted earnings
per share excluding tax reform during the three months ended
December 31, 2017 as these shares were excluded from the
calculation of diluted loss per share on a GAAP basis due to the
anti-dilutive effect of these shares as a result of the net loss in
the period. There were no adjustments to GAAP weighted-average
diluted common shares outstanding in the calculation of diluted
earnings per shares excluding tax reform during the twelve months
ended December 31, 2017. |
EPAM SYSTEMS, INC. AND
SUBSIDIARIESReconciliations of Guidance Non-GAAP
Measures to Comparable GAAP Measures(in percent,
except per share amounts)(Unaudited)
The below guidance constitutes forward-looking
statements within the meaning of the federal securities laws and is
based on a number of assumptions that are subject to change and
many of which are outside the control of the Company. Actual
results may differ materially from the Company’s expectations
depending on factors discussed in the Company’s filings with the
Securities and Exchange Commission.
Reconciliation of projected revenue growth in
constant currency is presented in the table below:
|
First Quarter 2018 |
|
Full Year 2018 |
Revenue growth
at constant currency (at least)(9) |
23% |
|
|
22% |
|
Foreign
exchange rates impact |
4% |
|
|
2% |
|
Revenue growth (at least) |
27% |
|
|
24% |
|
(9 |
) |
Constant
currency revenue results are calculated by translating current
period projected revenues in local currency into U.S. dollars at
the weighted average exchange rates of the comparable prior
period. |
Reconciliation of GAAP to non-GAAP income from operations as a
percentage of revenues is presented in the table below:
|
First Quarter 2018 |
|
Full Year 2018 |
GAAP income
from operations as a percentage of revenues |
11.5% to 12.5% |
|
12% to 13% |
Stock-based
compensation expenses |
3.2% |
|
|
3.1% |
|
Included
in cost of revenues |
1.4% |
|
|
1.3% |
|
Included
in selling, general and administrative expenses |
1.8% |
|
|
1.8% |
|
Amortization of
purchased intangible assets |
0.4% |
|
|
0.4% |
|
Other
acquisition-related expenses |
0.1% |
|
|
0.1% |
|
Non-GAAP income from operations as a percentage of
revenues |
15% to 16% |
|
16% to 17% |
Reconciliation of GAAP to non-GAAP effective tax rate is
presented in the table below:
|
First Quarter 2018 |
|
Full Year 2018 |
GAAP effective
tax rate |
11% |
|
|
15% |
|
Effect on non-GAAP
adjustments |
3.1% |
|
|
1.7% |
|
Excess tax benefits
related to stock-based compensation |
7.9% |
|
|
5.3% |
|
Non-GAAP effective tax rate |
22% |
|
|
22% |
|
Reconciliation of GAAP to non-GAAP diluted
earnings per share is presented in the table below:
|
First Quarter 2018 |
|
Full Year 2018 |
GAAP diluted
earnings per share (at least) |
$ |
0.76 |
|
|
$ |
3.38 |
|
Stock-based
compensation expenses |
0.24 |
|
|
0.96 |
|
Included
in cost of revenues |
0.10 |
|
|
0.41 |
|
Included
in selling, general and administrative expenses |
0.14 |
|
|
0.55 |
|
Amortization of
purchased intangible assets |
0.03 |
|
|
0.11 |
|
Foreign exchange
loss |
0.03 |
|
|
0.12 |
|
Provision for income
taxes: |
|
|
|
Tax effect on
non-GAAP adjustments |
(0.07 |
) |
|
(0.26 |
) |
Excess tax
benefits related to stock-based compensation |
(0.09 |
) |
|
(0.28 |
) |
Non-GAAP
diluted earnings per share (at least) |
$ |
0.90 |
|
|
$ |
4.03 |
|
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