EPAM - EPAM Systems Inc. (EPAM) Q1 2024 Earnings Call Transcript
2024-05-09 10:55:17 ET
EPAM Systems, Inc. (EPAM)
Q1 2024 Earnings Conference Call
May 09, 2024 8:00 AM ET
Company Participants
David Straube – Head of Investor Relations
Arkadiy Dobkin – Chief Executive Officer and President
Jason Peterson – Chief Financial Officer
Conference Call Participants
Bryan Bergin – TD Cowen
Jonathan Lee – Guggenheim Securities
Maggie Nolan – William Blair
Surinder Thind – Jefferies
Jason Kupferberg – Bank of America
Moshe Katri – Wedbush Securities
Ramsey El-Assal – Barclays
Ryan Potter – Citigroup
James Friedman – Susquehanna
James Faucette – Morgan Stanley
Arvind Ramnani – Piper Sandler
Presentation
Operator
Thank you for standing by. My name is Eric and I will be your conference operator today. At this time, I would like to welcome everyone to the First Quarter 2024 EPAM Systems Earnings Conference Call. All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question-and-answer session. [Operator Instructions] Thank you.
I would now like to turn the call over to David Straube, Head of Investor Relations. Please go ahead.
David Straube
Thank you operator. Good morning everyone. By now, you should have received your copy of the earnings release for the company's first quarter 2024 results. If you have not, a copy is available on epam.com in the Investors section. With me on today's call are Arkadiy Dobkin, CEO and President; and Jason Peterson, Chief Financial Officer. I would like to remind those listening that some of the comments made on today's call may contain forward-looking statements. These statements are subject to risks and uncertainties as described in the company's earnings release and SEC filings. Additionally, all references to reported results that are non-GAAP measures have been reconciled to the comparable GAAP measures and are available in our quarterly earnings materials located in the Investors section of our website.
With that said, I'd like to now turn the call over to Ark.
Arkadiy Dobkin
Thank you, David. Good morning everyone. Thank you for joining us today. First, about our guidance change. As you saw from our press release, we are seeing some continuing volatility in our global demand environment. And while there are encouraging signs of new deals and new types of very different domain specific demands than even in cyclical nature of 2023 follow us well in 2024, which now leads us to adjust our thinking for both Q2 and for whole full year outlook. As I mentioned during our fourth quarter earnings call, our initial view was the 2024 environment will be, at least for the first half of the year, a continuation of second part of 2023's trends, with a potential demand upturn right after. And that would take us into sequential growth for 2024. This view, which we now believe was optimistic, was supported by broadly anticipated more positive macro assumptions and now active interactions with the clients during the very end of 2023 and the beginning of 2024.
That was directing our belief that clients will more quickly come back to growth in their prioritization for the remainder of 2024. We also believed that once we entered into Q2, we would have much more measurable indicators for the improvements of the demand environment for digital engineering, data, cloud and AI, and from which we can build further our 2024 revenue scenarios and plans. What we now understand is that the macroeconomic and geopolitical factors that continue to drive volatility in overall markets and specifically in the IT services and digital transformation sectors are still with us throughout the reminder of the year.
While the programs we anticipated to start by now are still in place and some are in active discussions, many of them have been postponed to future periods or decided to be implemented in much more modest scopes. In addition, we need for rebalancing our delivery platform to lower cost locations, force some level of slowdown and our revenue grows too. And so our expectation for considerably high level of accelerated revenue trends in second part of the year will not be materializing as we anticipated, at least as we see it now. Jason will provide more details in our updated outlook for 2024, but let me share some current highlights of our business from Q1 up to today.
Throughout the last quarter and continuing into now, we've been making progress across all critically important areas for us, which we have discussed in depth during our previous call. We are strengthening and repositioning our talent delivery platform as well as the cost effectiveness of our offerings by rebalancing our talent distribution from more expensive locations to less expensive ones, while maintaining our commitment to our traditionally strong geos. India, our second largest delivery location, is growing rapidly, not only in terms of headcount, but also by creating new capability centers in data cloud, digital transformation and AI-enabled managed services. We recently opened our Gurgaon office and plan to open additional locations to support our client growing needs....
EPAM Systems, Inc. (EPAM) Q1 2024 Earnings Call Transcript