Revenue Growth Driven by Improving Demand and FX
Total revenues increased 4.5% in Q2 2026, positively impacted by improving demand for services and a 1.1% tailwind from foreign currency fluctuations.
Source: 10-Q Item 2 MD&A
Computed from published fixed rules, not a model's judgement — though one input, the count of high-severity risks, comes from the AI analysis below.
Not investment advice and not a price target: it scores the quarter's fundamentals, not the stock. Full methodology →
AI Takeaway
EPAM Systems delivered solid revenue growth in the second quarter of fiscal 2026, fueled by improving demand for its digital engineering and AI-enabled transformation services, particularly in the European market. Operating margins expanded significantly as cost optimization initiatives continued to bear fruit, despite ongoing investments in talent and technology. However, the company experienced a sharp reversal in operating cash flow, turning negative primarily due to higher variable compensation payouts and a lengthening of customer payment cycles. EPAM also maintained its $100 million humanitarian aid commitment to employees in Ukraine, with $4.6 million remaining to be expensed.
Revenue
$1.41B
+4.53% YoY
EPS (Diluted)
$1.97
+26.28% YoY
Operating Income
$152.22M
+20.36% YoY
Source: SEC XBRL
EPAM Systems (EPAM) reported Q2 FY2026 revenue of $1.41B, up 4.5% year over year. Operating margin was 10.8%, up 1.5 points from 9.3% a year earlier. EPAM's fiscal Q2 FY2026 corresponds to calendar Q2 2026.
Last 4 quarters: 3 beats
| Quarter | Actual EPS (USD) | Consensus (USD) | Result |
|---|---|---|---|
| Jun 2026This filing | 3.38 | 3.21 | Beat +5.4% |
| Mar 2026 | 2.86 | 2.81 | Beat +1.8% |
| Dec 2025 | 3.26 | 3.22 | Beat +1.2% |
| Sep 2025 | 3.08 | 3.09 | Miss -0.2% |
Adjusted (non-GAAP) EPS of $3.38 versus the $3.21 analyst consensus — a +5.4% beat for Jun 2026. Analyst consensus is quoted on the adjusted (non-GAAP) basis the street uses. GAAP diluted EPS for this quarter was $1.97.
2 reported regions · SEC XBRL
Revenue across regions totals $1.41B, which is the $1.41B of consolidated revenue on the income statement.
Compiled by AI from 10-Q Item 2 of this filing
Total revenues increased 4.5% in Q2 2026, positively impacted by improving demand for services and a 1.1% tailwind from foreign currency fluctuations.
Source: 10-Q Item 2 MD&A
Operating margin rose to 10.8% from 9.3% a year ago, largely due to cost optimization initiatives that reduced compensation expense as a percentage of revenue.
Source: 10-Q Item 2 MD&A
Europe segment revenue grew 10.0% (8.5% in constant currency), with Financial Services up 8.4% and Life Sciences surging 45.1% year-over-year, driven by new and existing client demand in pharmaceuticals and asset management.
Source: 10-Q Item 2 MD&A
Net cash from operating activities was -$38.8 million in H1 2026, compared to +$77.4 million a year earlier, mainly due to higher variable compensation payments and an increase in days sales outstanding.
Source: 10-Q Item 2 MD&A
EPAM has a $100 million humanitarian aid commitment to its people in Ukraine, with $4.6 million remaining to be expensed as of June 30, 2026, while maintaining delivery productivity from safe locations.
Source: 10-Q Item 2 MD&A
Compiled by AI from 10-Q Item 2 of this filing · 1 high, 3 medium, 1 low
EPAM has a significant delivery center in Ukraine, and the ongoing war has caused operational disruptions and materially increased expenses. Despite business continuity plans, the conflict continues to pose risks to employee safety and service delivery.
Source: 10-Q Item 2 MD&A
EPAM generates a large portion of its revenues and incurs costs in multiple currencies. Exchange rate volatility can materially affect reported revenues, margins, and the value of assets and liabilities, as evidenced by the $9.9 million foreign exchange loss in Q2 2026.
Source: 10-Q Item 2 MD&A
Operating cash flow turned negative in H1 2026 due to higher variable compensation payments and increased days sales outstanding. If this trend continues, it could strain liquidity despite current ample cash reserves.
Source: 10-Q Item 2 MD&A; 10-Q Cash Flow Statement (XBRL)
EPAM spent $409 million on share repurchases in H1 2026, significantly reducing cash reserves. While this may support EPS, it reduces financial flexibility and cash available for operations or investments.
Source: 10-Q Item 2 MD&A
While inflation has not materially impacted EPAM to date, rising wages and operating costs in many countries where it operates could pressure margins if not offset by pricing actions or productivity gains.
Source: 10-Q Item 2 MD&A
| Metric | Current | Previous | YoY Change |
|---|---|---|---|
Revenue $B | 1.41 $B | 1.35 $B | +4.53% |
Cost of Revenue $M | 985.20 $M | 964.01 $M | +2.20% |
Operating Income $M | 152.22 $M | 126.48 $M | +20.36% |
Net Income $M | 102.98 $M | 88.03 $M | +16.99% |
EPS (Basic) $ | 1.97 $ | 1.56 $ | +26.28% |
EPS (Diluted) $ | 1.97 $ | 1.56 $ | +26.28% |
SG&A Expense $M | 245.25 $M | 231.68 $M | +5.85% |
Answers draw on this SEC filing and the data on this page
Expected release date, analyst estimates & what to watch
EPAM Systems delivered solid Q1 FY2026 revenue growth of 7.6% YoY to $1.40B with operating income surging 17.6%, though operating cash flow turned sharply negative and share buybacks more than doubled, reflecting significant capital allocation shifts.
EPAM Systems grew FY2025 revenue 15.4% to $5.46B but saw net income fall 16.9% to $378M as rising costs and elevated SG&A compressed margins, while the company returned $662M to shareholders via buybacks.