EPAM Systems (EPAM) Q2 2026 earnings summary

Executive summary

• Q2 2026 revenue reached $1.415 billion, up 4.5% year-over-year, with organic constant currency growth of 3.4%.

• AI-native revenues accelerated for the sixth consecutive quarter with double-digit sequential growth, now representing 11% of total revenue.

• Profitability improved, with GAAP income from operations up 20.4% and non-GAAP income from operations up 14.7% year-over-year.

• EMEA led growth with double-digit gains, while North America lagged due to rapid client demand shifts and internal sales capability gaps.

• Expanded strategic partnerships, joining the OpenAI Partner Network and deepening collaborations with Google, Anthropic, and others.

Financial highlights

• GAAP gross margin improved to 30.4%; non-GAAP gross margin rose to 32%.

• GAAP diluted EPS was $1.97, up 26.3% year-over-year; non-GAAP diluted EPS was $3.38, up 22%.

• Cash flow from operations was negative $2 million in Q2, with free cash flow negative $18 million; operating cash flow for the first six months was $(38.8) million.

• Repurchased 1.3 million shares in Q2, returning $1.6 billion to shareholders since program inception.

• Financial Services led industry verticals with $366 million revenue, up 11.5% year-over-year.

Outlook and guidance

• Full-year 2026 revenue growth expected at 3.2%-4.2%, with organic constant currency growth of 2%-3%.

• GAAP income from operations forecasted at 10.5%-11%; non-GAAP at 15.5%-16%.

• GAAP diluted EPS guidance: $8.22-$8.38; non-GAAP diluted EPS: $13.08-$13.24.

• Q3 2026 revenue expected at $1.410-$1.425 billion, with 1.7% year-over-year growth at midpoint.

• Long-term targets include 16%+ non-GAAP operating income margin in 2028 and $1.8B+ cumulative free cash flow from 2026–2028.