SEGMENT INFORMATION

3 Months Ended

Mar. 31, 2021

Segment Reporting [Abstract]

SEGMENT INFORMATION

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 corporate expenses are not allocated to specific segments as these expenses are not controllable at the segment level. Such expenses include certain types of professional fees, non-corporate taxes, compensation to non-employee directors and certain other general and administrative expenses, including compensation of specific groups of non-production employees. In addition, the Company does not allocate amortization of intangible assets acquired through business combinations, goodwill and other asset impairment charges, stock-based compensation expenses, acquisition-related costs and certain other one-time charges. 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. Additionally, management has determined that it is not practical to allocate identifiable assets by segment since such assets are used interchangeably among the segments.

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

Revenues from external customers and operating profit, before unallocated expenses, by reportable segment for the three months ended March 31, 2021 and 2020, were as follows:

	Three Months Ended March 31,
	2021		2020
Segment revenues:
North America	$	474,853	$	391,102
Europe	276,704		236,333
Russia	29,218		23,924
Total segment revenues	$	780,775	$	651,359
Segment operating profit:
North America	$	94,103	$	78,927
Europe	51,073		31,779
Russia	979		519
Total segment operating profit	$	146,155	$	111,225

Intersegment transactions were excluded from the above on the basis that they are neither included in the measure of a segment’s profit and loss results, nor considered by the CODM during the review of segment results.

There were no customers that accounted for more than 10% of total segment revenues during the three months ended March 31, 2021 and 2020.

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

	Three Months Ended March 31,
	2021		2020
Total segment operating profit:	$	146,155	$	111,225
Unallocated amounts:
Stock-based compensation expense	(24,553)		(11,881)
Amortization of intangibles assets	(3,140)		(3,135)
Other acquisition-related expenses	(1,933)		(468)
Other unallocated expenses	(9,278)		(8,232)
Income from operations	107,251		87,509
Interest and other income, net	5,374		2,386
Foreign exchange gain	2,299		6,524
Income before provision for income taxes	$	114,924	$	96,419

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. Physical locations and values of the Company’s long-lived assets are presented below:

	As of March 31, 2021		As of December 31, 2020
Belarus	$	72,805	$	73,988
Ukraine	28,621		30,980
United States	15,643		15,718
Russia	13,739		15,036
India	7,182		7,079
Poland	5,610		5,434
Hungary	4,840		5,365
Spain	2,670		2,799
China	2,409		2,722
Mexico	2,396		2,419
Other	8,834		7,993
Total	$	164,749	$	169,533

The table below presents information about the Company’s revenues by customer location for the three months ended March 31, 2021 and 2020:

	Three Months Ended March 31,
	2021		2020
United States	$	448,021	$	370,089
United Kingdom	93,464		92,132
Switzerland	67,568		47,222
Netherlands	33,032		25,909
Russia	27,656		21,961
Germany	22,025		20,193
Canada	21,835		17,920
Other locations	67,174		55,933
Total	$	780,775	$	651,359