OPERATING SEGMENTS

12 Months Ended

Dec. 31, 2015

Segment Reporting [Abstract]

OPERATING SEGMENTS

OPERATING SEGMENTS

The Company determines its operating segments and reports segment information in accordance with the management approach, which designates internal reporting used by management to make operating decisions and assess performance as the source of the Company’s reportable segments.

The Company manages its business primarily based on the geographic managerial responsibility for its client base. As managerial responsibility for a particular client relationship generally correlates with the client’s geographic location, there is a high degree of similarity between client locations and the geographic boundaries of the Company’s reportable segments. In some cases, managerial responsibility for a particular client is assigned to a management team in another region and is usually based on the strength of the relationship between client executives and particular members of EPAM’s senior management team. In such a case, the client’s activity would be reported through the management team’s reportable segment.

The Company’s reportable segments are North America, Europe, Russia and Other. The Company’s Chief Operating Decision Maker (“CODM”) evaluates performance and allocates resources based on the segment’s revenues and operating profit. Segment operating profit is defined as income from operations before unallocated costs. Generally, operating expenses for each operating segment have similar characteristics and are subject to similar factors, pressures and challenges. Expenses included in segment operating profit consist principally of direct selling and delivery costs as well as an allocation of certain shared services expenses. Certain expenses, such as stock-based compensation are not allocated to specific segments, as management does not believe it is practical as these expenses are not directly attributable to any specific segment and consequently are not allocated to individual segments in internal management reports used by the CODM. Such expenses are separately disclosed as “unallocated” and adjusted only against the Company’s total income from operations.

Revenues from external customers and segment operating profit, before unallocated expenses, for the North America, Europe, Russia and Other reportable segments were as follows:

	For the years ended December 31,
	2015			2014			2013
Total segment revenues:
North America	$	471,603		$	374,509		$	284,636
Europe	400,460			299,279			204,150
Russia	37,992			50,663			55,764
Other	4,911			5,552			10,493
Total segment revenues	$	914,966		$	730,003		$	555,043
Segment operating profit:
North America	$	112,312		$	90,616		$	66,814
Europe	68,717			50,189			34,573
Russia	5,198			7,034			7,077
Other	(94		)	(3,220		)	844
Total segment operating profit	$	186,133		$	144,619		$	109,308

Intersegment transactions were excluded from the above on the basis that they are neither included into the measure of a segment’s profit and loss by the CODM, nor provided to the CODM on a regular basis.

During the year endedDecember 31, 2015 and 2014, revenues from one customer, UBS AG, were $130,605 and $97,872, respectively and accounted for more than 10% of total revenues. Revenue from this customer is reported in the Company’s Europe segment and includes reimbursable expenses. No customer accounted for over 10% of total revenues in 2013.

Trade accounts receivable and unbilled revenues are generally dispersed across our clients in proportion to their revenues. As of December 31, 2015, billed and unbilled trade receivables from one customer, UBS AG, individually exceeded 10% and accounted for 12.4% and 19.8% of our total billed and unbilled trade receivables, respectively.

Reconciliation of segment revenues and operating profit to consolidated income before provision for income taxes is presented below:

	For the Years Ended December 31,
	2015			2014			2013
Total segment revenues	$	914,966		$	730,003		$	555,043
Unallocated (revenue)/loss	(838		)	24			74
Revenues	$	914,128		$	730,027		$	555,117
Total segment operating profit:	$	186,133		$	144,619		$	109,308
Unallocated amounts:
Other (revenues)/loss	(838		)	24			74
Stock-based compensation expense	(45,833		)	(24,620		)	(13,150		)
Non-corporate taxes	(4,274		)	(6,882		)	(3,201		)
Professional fees	(7,104		)	(5,312		)	(3,651		)
Depreciation and amortization	(5,581		)	(7,988		)	(2,829		)
Bank charges	(1,352		)	(1,049		)	(1,194		)
One-time charges	(747		)	(5,983		)	—
Provision for bad debts	—			—			(36		)
Other corporate expenses	(14,437		)	(6,626		)	(8,828		)
Income from operations	105,967			86,183			76,493
Interest and other income, net	4,731			4,769			3,077
Change in fair value of contingent consideration	—			(1,924		)	—
Foreign exchange loss	(4,628		)	(2,075		)	(2,800		)
Income before provision for income taxes	$	106,070		$	86,953		$	76,770

Geographic Area Information

Long-lived assets include property and equipment, net of accumulated depreciation and amortization, and management has determined that it is not practical to allocate these assets by segment since such assets are used interchangeably among the segments. Geographical information about the Company’s long-lived assets based on physical location of the assets was as follows:

	December 31, 2015		December 31, 2014
Belarus	$	44,879	$	41,652
Ukraine	4,487		4,392
Hungary	2,485		2,773
Russia	2,084		2,196
United States	1,969		2,001
India	1,099		—
Poland	1,088		747
Other	2,408		1,373
Total	$	60,499	$	55,134

Information about the Company’s revenues by client location is as follows:

	For the Years Ended December 31,
	2015		2014		2013
United States	$	427,433	$	318,304	$	247,979
United Kingdom	164,301		141,366		108,892
Switzerland	111,353		87,111		51,941
Canada	57,643		49,193		33,759
Russia	36,506		48,945		53,328
Germany	36,089		25,740		20,261
Hong Kong	23,117		13,445		—
Sweden	10,589		7,892		5,742
Netherlands	9,989		8,838		7,719
Belgium	7,916		4,198		—
Ireland	5,437		3,667		291
Kazakhstan	4,910		5,238		9,886
Other locations	9,334		7,680		7,693
Reimbursable expenses and other revenues	9,511		8,410		7,626
Revenues	$	914,128	$	730,027	$	555,117

Service Offering Information

Information about the Company’s revenues by service offering is as follows:

	For the Years Ended December 31,
	2015		2014		2013
Software development	$	644,732	$	504,590	$	374,426
Application testing services	174,259		140,363		109,222
Application maintenance and support	70,551		58,840		45,971
Infrastructure services	11,311		14,198		14,433
Licensing	3,764		3,626		3,439
Reimbursable expenses and other revenues	9,511		8,410		7,626
Revenues	$	914,128	$	730,027	$	555,117