SEGMENT INFORMATION

12 Months Ended

Dec. 31, 2016

Segment Reporting [Abstract]

SEGMENT INFORMATION

SEGMENT INFORMATION

The Company determines its business 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 revenues in the Other segment represented less than 1% of total segment revenues in 2014 and 2015 due to the ending of certain customer relationships and contractual changes with other clients. As no substantial clients remained in the segment, during the first quarter of 2016, the Company shifted managerial responsibility for the remaining clients to the Russia segment. This change does not represent a change in the Company's existing segments but rather a movement in responsibility for several clients that represent less than 1% of total segment revenue.

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 reportable 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 that are not controllable at the segment level are not allocated to specific segments. Such “unallocated” expenses are deducted against the Company’s total income from operations and are not allocated to individual segments in internal management reports used by the CODM.

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,
	2016		2015			2014
Total segment revenues:
North America	$	642,216	$	471,603		$	374,509
Europe	474,988		400,460			299,279
Russia	43,611		37,992			50,663
Other	—		4,911			5,552
Total segment revenues	$	1,160,815	$	914,966		$	730,003
Segment operating profit:
North America	$	143,021	$	112,312		$	90,616
Europe	67,545		68,717			50,189
Russia	7,555		5,198			7,034
Other	—		(94		)	(3,220		)
Total segment operating profit	$	218,121	$	186,133		$	144,619

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 years ended December 31, 2016, 2015 and 2014, revenues from one customer, UBS AG, were $138,124, $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.

Trade accounts receivable and unbilled revenues are generally dispersed across our clients in proportion to their revenues. As of December 31, 2016, unbilled trade receivables from two customers, individually exceeded 10% and accounted for 22.2% of our total unbilled trade receivables. There were no customers individually exceeding 10% of our billed trade receivables as of December 31, 2016. 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,
	2016			2015			2014
Total segment revenues	$	1,160,815		$	914,966		$	730,003
Unallocated (revenue)/loss	(683		)	(838		)	24
Revenues	$	1,160,132		$	914,128		$	730,027
Total segment operating profit:	$	218,121		$	186,133		$	144,619
Unallocated amounts:
Other (revenues)/loss	(683		)	(838		)	24
Stock-based compensation expense	(49,244		)	(45,833		)	(24,620		)
Non-corporate taxes	(5,909		)	(4,274		)	(6,882		)
Professional fees	(8,265		)	(7,104		)	(5,312		)
Depreciation and amortization	(8,290		)	(5,581		)	(7,988		)
Bank charges	(1,515		)	(1,352		)	(1,049		)
One-time charges	(706		)	(747		)	(5,983		)
Other corporate expenses	(9,813		)	(14,437		)	(6,626		)
Income from operations	133,696			105,967			86,183
Interest and other income, net	4,848			4,731			4,769
Change in fair value of contingent consideration	—			—			(1,924		)
Foreign exchange loss	(12,078		)	(4,628		)	(2,075		)
Income before provision for income taxes	$	126,466		$	106,070		$	86,953

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, 2016		December 31, 2015
Belarus	$	46,011	$	44,879
Russia	7,203		2,084
Ukraine	5,610		4,487
Hungary	3,485		2,485
United States	2,618		1,969
Poland	2,213		1,088
China	1,887		514
India	1,650		1,099
Other	2,939		1,894
Total	$	73,616	$	60,499

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

	For the Years Ended December 31,
	2016		2015		2014
United States	$	605,856	$	427,433	$	318,304
United Kingdom	174,719		164,301		141,366
Switzerland	122,399		111,353		87,111
Canada	58,742		57,643		49,193
Germany	43,216		36,089		25,740
Russia	40,866		36,506		48,945
Sweden	22,945		10,589		7,892
Hong Kong	20,333		23,117		13,445
Netherlands	16,762		9,989		8,838
Belgium	8,505		7,916		4,198
Ireland	5,152		5,437		3,667
China	4,445		817		—
Italy	3,970		2,318		1,746
Spain	3,406		1,028		106
Other locations	16,295		10,081		11,066
Reimbursable expenses and other revenues	12,521		9,511		8,410
Revenues	$	1,160,132	$	914,128	$	730,027

Service Offering Information

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

	For the Years Ended December 31,
	2016		2015		2014
Software development	$	841,916	$	644,732	$	504,590
Application testing services	223,010		174,259		140,363
Application maintenance and support	74,475		70,551		58,840
Infrastructure services	5,069		11,311		14,198
Licensing	3,141		3,764		3,626
Reimbursable expenses and other revenues	12,521		9,511		8,410
Revenues	$	1,160,132	$	914,128	$	730,027