EPAM Continues Growth Surge On Higher Digital Services Demand

EPAM Systems continues to ride the growth track, powered by increasing global demand for digital services it has built on the back of its software engineering foundation, the solution provider’s CEO said Thursday.

’There is a continuous emphasis, from existing and prospective customers, for a solution provider that can deliver differentiated services and help them compete,’ president and CEO Arkadiy Dobkin told analysts just hours after EPAM released its first-quarter revenue and earnings numbers.

Dobkin said the New York-based company’s growth is coming from both new clients and its traditional customers, all of which are adding digital services and diving into the more complex offerings EPAM has built over the last few years.

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Demand for its new services, such as digital applications, digital business strategy assistance, process and service design engagement and as-a-service offerings, are coming from clients that want to add new capabilities, and some that need to add them in order to keep up with competition and new regulatory mandates, Dobkin said.

Some customers, he added, are taking their first steps into such emerging areas as the Internet of Things, virtual and augmented reality and smart software components and platforms, areas EPAM believes will continue to grow.

’In most of those areas, our initial software engineering heritage gives us an advantage over traditional solution providers,’ Dobkin said. He believes EPAM holds the largest advantage when trying to win business with organizations that are looking to significantly reduce or eliminate their reliance on legacy systems.

In the first quarter of 2016, only four years after its IPO, EPAM - No. 40 on CRN’s Solution Provider 500 list – continued to rack up strong numbers, beating analysts’ revenue expectations for the first quarter – as it has for 17 of the last 18 quarters – by more than $6 million, with year-over-year growth of 32 percent. The company also reported $23.9 million in net income, more than 62 percent above its first- quarter 2015 mark of $14.7 million.

Dobkin said EPAM started building on its software solutions three years ago when it decided to focus on digitally transformative offerings, which the company did through a number of acquisitions.

In 2014, EPAM acquired three companies; it improved its capabilities in the health care space by acquiring scientific informatics services company GGA Software in June, three months after buying New York-based technology consulting firm Netsoft USA. EPAM also bolstered its investment banking capabilities with it acquired Jointech, of China, in April 2014.

In 2015, the Newtown, Pa.-based company tacked on two more acquisitions, boosting its digital consulting, architecture and content solution practices by picking up McLean, Va.-based NavigationArts in July and most recently, paying $50 million in cash to boost its reach in software engineering productivity and automation services by adding Conshohocken, Pa.-based Alliance Global Services.

EPAM’s decision to move into more complex digital offerings has so far gone according to plan, as the company has surpassed its initial goal of doubling revenue by 2015. EPAM has grown 110 percent growth, with year-end revenue jumping from $434 million to $914 million, it said.

Dobkin said the company’s movements have made it a strong competitor, and he projects that EPAM is on pace to grow another 26 percent by the end of 2016.

EPAM’s stock advanced a little more than one half of 1 percent Thursday, closing up 41 cents to $71.26.

Dobkin said EPAM is still growing. He noted that the company will continue to build its blended digital offerings and integrate more services as it reaches for continued growth.

’We are still in the beginning of our journey,’ he said.