EPAM Q3 Revenue Hits $1.43 Billion as AI-Native Sales Expand

EPAM (EPAM) reported third-quarter 2026 revenue of $1.426 billion, with organic constant-currency growth of 2.5% from a year earlier, exceeding the high end of the company’s outlook range. AI-native work continued to expand, contributing more than $185 million, or about 13% of quarterly revenue, while improved profitability led EPAM to raise its full-year profitability and earnings outlook.

The technology services company now expects AI-native revenue of at least $650 million for 2026. The business represented about 11% of total revenue in the previous quarter, indicating a larger contribution to EPAM’s sales mix in Q3. More than 80 of the company’s top 100 clients are engaged in AI-native work.

EPAM also signed three large, AI-led, multiyear strategic agreements in financial services and energy. The deals are expected to ramp during the first half of 2027, and the company said its pipeline of similar opportunities is growing.

Financial services leads vertical growth

Financial services was EPAM’s largest industry vertical in the quarter, generating $384 million of revenue, up 13.7% year over year. Emerging verticals produced $175 million, an increase of 9.9%.

Performance was softer elsewhere. Life sciences and healthcare revenue declined 0.5% to $241 million, while consumer goods, retail and travel fell 2.5% to $269 million. Business information and media revenue decreased 5.5% to $158 million, and software and hi-tech declined 6.1% to $199 million.

By customer location, revenue from the Americas rose 5.8% to $810 million. EMEA revenue declined 4% to $587 million, while APAC revenue was broadly flat, increasing 0.2% to $29 million.

EPAM said higher gross margin and non-GAAP income from operations supported a 14% year-over-year increase in non-GAAP diluted earnings per share. The presentation did not provide the quarter’s per-share amount or operating margin.

Full-year outlook calls for modest organic growth

For 2026, EPAM expects revenue of $5.646 billion to $5.661 billion, representing reported growth of 3.5% to 3.7% and organic constant-currency growth of 2.5% to 2.7%.

The company projects a full-year GAAP operating margin of 10.7% to 10.9% and a non-GAAP operating margin of 15.9% to 16.1%. GAAP diluted earnings per share are expected to range from $8.41 to $8.49, while non-GAAP diluted EPS is forecast at $13.23 to $13.31. At the midpoint, non-GAAP diluted EPS would increase 15.4% year over year.

For the fourth quarter, EPAM expects revenue between $1.405 billion and $1.420 billion. That range implies a reported year-over-year change of negative 0.2% to positive 0.9%, with organic constant-currency growth of 0.5% to 1.6%. The company forecasts a GAAP operating margin of 11.5% to 12.5%, a non-GAAP operating margin of 16% to 17%, and non-GAAP diluted EPS of $3.50 to $3.58.

AI investment and capital returns

EPAM is positioning enterprise AI transformation as its primary multiyear growth opportunity. Its strategy includes developing AI-native engineering, consulting and agency services, expanding domain expertise and proprietary platforms, and deepening partnerships with major technology providers. The company recorded more than 25,000 certifications over six months across Anthropic, OpenAI, Google Gemini Enterprise and Microsoft technologies.

Its longer-term targets call for accelerating revenue growth through 2028, a non-GAAP operating margin of at least 16% in 2028 and more than $1.8 billion of cumulative free cash flow from 2026 through 2028. Free cash flow is defined as GAAP operating cash flow less capital expenditures.

EPAM also introduced a framework to return at least 50% of annual free cash flow to shareholders from 2027 through 2029. Capital allocation priorities include organic investment, share repurchases when management considers the shares undervalued, and targeted tuck-in acquisitions in high-growth industries or geographies. The company said it has repurchased about $1.7 billion of shares since launching its repurchase program in 2023.

The outlook remains subject to geopolitical and macroeconomic uncertainty, including the war in Ukraine, instability in other operating regions, difficult capital and foreign-exchange markets, and global trade conditions. EPAM also identified the adoption of AI by the company and its clients as a source of uncertainty that could affect demand, revenue, operations, access to capital and profitability.