On Thursday, EPAM Systems forecasted first-quarter and annual profits below Wall Street expectations. The company plans to increase investments in its technologies and consulting capabilities, aiming to retain talent and accelerate investments in advanced Gen AI platforms and tools to increase its market share. As a result, shares of the Newtown, Pennsylvania-based company dropped by 10%.
Company executives explained that "compensation increases to retain talent for future growth combined with the limited ability to improve client pricing in the near term, and additional pressure from dilutive impact of recent acquisitions will continue to put pressure on profitability this year."
For the first quarter, EPAM anticipates an adjusted profit between $2.22 and $2.32 per share, compared to analysts' estimate of $2.59 per share. For the full year, the company expects adjusted earnings per share in the range of $10.45 to $10.75, while analysts are looking for $11.32.
EPAM specializes in consulting, cybersecurity, software engineering, and product development. The company forecasts revenue to land between $1.28 billion and $1.29 billion in the first quarter, surpassing analysts' estimate of $1.27 billion.
Looking ahead to 2025, EPAM predicts a revenue growth rate between 10% to 14%, contrasting with analysts' expectations of 11.4%. The company reported fourth-quarter revenue of $1.25 billion, surpassing estimates of $1.21 billion, and posted an adjusted profit per share of $2.84 for the three months ended December 31, outperforming estimates of $2.75.