SEGMENT INFORMATION

The Company determines its business segments and reports segment information in accordance with how the Company’s chief operating decision maker (“CODM”) organizes the segments to evaluate performance, allocate resources and make business decisions. Segment results are based on the segment’s revenues and operating profit, where segment operating profit is defined as income from operations before unallocated costs. 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 not directly attributable to or controllable at the segment level are not allocated to specific segments. Further, stock based compensation expense is not allocated to individual segments in internal management reports used by the CODM. These unallocated amounts are combined with total segment operating profit to arrive at consolidated income from operations as reported below in the reconciliation of segment operating profit to consolidated income before provision for income taxes.

The Company manages its business primarily based on the 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 cases, the client’s activity would be reported through that 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 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 did not represent a change in the Company’s segments but rather a movement in responsibility for several clients that represented less than 1% of total segment revenues.

Segment revenues from external customers and segment operating profit/(loss) for the North America, Europe, Russia and Other reportable segments were as follows:



	For the years ended December 31,
	2017		2016		2015
Total segment revenues:
North America	$	796,126	$	642,216	$	471,603
Europe	593,167		474,988		400,460
Russia	62,994		43,611		37,992
Other	—		—		4,911
Total segment revenues	$	1,452,287	$	1,160,815	$	914,966
Segment operating profit/(loss):
North America	$	169,340	$	143,021	$	112,312
Europe	92,080		67,545		68,717
Russia	13,906		7,555		5,198
Other	—		—		(94		)
Total segment operating profit	$	275,326	$	218,121	$	186,133

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.

There were no customers individually exceeding 10% of our total segment revenues for the year ended December 31, 2017. During the years ended December 31, 2016 and 2015, segment revenues from one customer, UBS AG, were $138,124 and $130,605, respectively and accounted for more than 10% of total segment revenues. Revenues from this customer are reported in the Company’s Europe segment.

Accounts receivable and unbilled revenues are generally dispersed across our clients in proportion to their revenues. As of December 31, 2017, unbilled revenues from one customer, individually exceeded 10% and accounted for 13.0% of our total unbilled revenues. As of December 31, 2016, unbilled revenues from two customers, individually exceeded 10% and accounted for 22.2% of our total unbilled revenues. There were no customers individually exceeding 10% of our accounts receivable as of December 31, 2017 and 2016.

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



	For the Years Ended December 31,
	2017			2016			2015
Total segment revenues	$	1,452,287		$	1,160,815		$	914,966
Other income included in segment revenues	(1,839		)	(683		)	(838		)
Revenues	$	1,450,448		$	1,160,132		$	914,128

Total segment operating profit:	$	275,326		$	218,121		$	186,133
Unallocated amounts:
Other income included in segment revenues	(1,839		)	(683		)	(838		)
Stock-based compensation expense	(52,407		)	(49,244		)	(45,833		)
Non-corporate taxes	(9,659		)	(5,909		)	(4,274		)
Professional fees	(8,032		)	(8,265		)	(7,104		)
Depreciation and amortization	(7,632		)	(8,290		)	(5,581		)
Bank charges	(1,969		)	(1,515		)	(1,352		)
One-time charges	(1,741		)	(706		)	(747		)
Other corporate expenses	(19,101		)	(9,813		)	(14,437		)
Income from operations	172,946			133,696			105,967
Interest and other income, net	4,601			4,848			4,731
Foreign exchange loss	(3,242		)	(12,078		)	(4,628		)
Income before provision for income taxes	$	174,305		$	126,466		$	106,070

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. The Company’s long-lived assets based on physical location of the assets was as follows:



	December 31, 2017		December 31, 2016		December 31, 2015
Belarus	$	49,866	$	46,011	$	44,879
Russia	9,617		7,203		2,084
Ukraine	6,995		5,610		4,487
Hungary	3,901		3,485		2,485
United States	3,371		2,618		1,969
Poland	2,893		2,213		1,088
India	2,698		1,650		1,099
China	2,608		1,887		514
Bulgaria	922		722		317
Other	3,548		2,217		1,577
Total	$	86,419	$	73,616	$	60,499

The table below presents information about the Company’s revenues by client location including reimbursable expenses and other revenues, of $17,138, $12,521 and $9,511 for the years ended 2017, 2016 and 2015. See Note 1 “Nature of Business and Summary of Significant Accounting Policies” for discussion on reclassifications to conform to the current presentation.

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



	For the Years Ended December 31,
	2017		2016		2015
United States	$	783,563	$	611,392	$	431,992
United Kingdom	188,995		177,194		166,418
Switzerland	123,281		122,919		111,686
Russia	61,222		40,944		36,585
Germany	60,158		43,621		36,403
Canada	57,129		59,189		58,319
Netherlands	51,556		17,521		10,373
Sweden	32,161		23,838		10,775
Hong Kong	19,795		21,010		23,285
United Arab Emirates	12,403		3,615		—
Belgium	8,725		8,627		8,113
Ireland	8,674		5,167		5,536
China	7,379		4,479		817
Italy	6,505		4,052		2,342
Other locations	28,902		16,564		11,484
Revenues	$	1,450,448	$	1,160,132	$	914,128

Service Offering Information

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



	For the Years Ended December 31,
	2017		2016		2015
Software development	$	1,060,286	$	841,916	$	644,732
Application testing services	276,270		223,010		174,259
Application maintenance and support	92,630		74,475		70,551
Licensing	3,529		3,141		3,764
Infrastructure services	595		5,069		11,311
Reimbursable expenses and other revenues	17,138		12,521		9,511
Revenues	$	1,450,448	$	1,160,132	$	914,128