XML 52 R28.htm IDEA: XBRL DOCUMENT v3.25.0.1
SEGMENT INFORMATION
 12 Months Ended
Dec. 31, 2024
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. The Company’s CODM is the chief executive officer. The Company manages its business primarily based on the managerial responsibility for its client base and market. 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 the management team’s reportable segment.
Segment results are based on the segment’s revenues and operating profit, where segment operating profit is defined as segment 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. Intersegment transactions are excluded from the segment’s revenues and operating profit 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. 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, certain taxes included in operating expenses, 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 and benefits. 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’s CODM considers the operating results of each segment on a quarterly basis and uses segment operating profit predominantly to assess the performance of each segment by comparing the results of each segment with one another and to historical performance. When combined with certain other financial information, this enables the CODM to make decisions about the reporting structure, allocation of operating and capital resources, and compensation of certain employees.
On July 26, 2023, the Company completed the sale of its remaining holdings in Russia to a third party. As a result of this sale, the Company no longer has operations associated with this segment. See Note 2 “Impact of the Invasion of Ukraine” for more information.
During the year ended December 31, 2024, the Company revised its CODM report to enhance the presentation of segment expenses by category and to revise the allocation methodology for certain types of shared expenses. The following prior period amounts presented have been revised to align with the current year methodology. No changes were made to historically reported segment revenues.
Segment revenues from external clients and segment operating profit, as well as a reconciliation of segment operating profit to consolidated income before provision for income taxes is presented below:
For the Year Ended December 31, 2024
North AmericaEurope Total
Segment revenues $2,866,339 $1,861,601 $4,727,940 
Less:
Cost of revenues (exclusive of depreciation and amortization)1,915,851 1,290,317 3,206,168 
Selling, general and administrative expenses369,055 267,032 636,087 
Depreciation and amortization expense40,009 20,076 60,085 
Segment operating profit$541,424 $284,176 $825,600 
Unallocated costs:
Stock-based compensation expense(167,297)
Amortization of purchased intangibles(29,475)
Other acquisition-related expenses(15,472)
Other unallocated costs(68,772)
Income from operations544,584 
Interest and other income, net46,876 
Foreign exchange loss(7,048)
Income before provision for income taxes$584,412 
For the Year Ended December 31, 2023
North AmericaEurope Russia Total
Segment revenues $2,765,022 $1,909,443 $16,075 $4,690,540 
Less:
Cost of revenues (exclusive of depreciation and amortization)1,848,758 1,348,190 18,483 3,215,431 
Selling, general and administrative expenses361,589 285,722 2,531 649,842 
Depreciation and amortization expense43,645 25,307 131 69,083 
Segment operating profit/(loss)$511,030 $250,224 $(5,070)$756,184 
Unallocated costs:
Stock-based compensation expense(147,730)
Amortization of purchased intangibles(22,717)
Other acquisition-related expenses(2,768)
Loss on sale of business(25,922)
Other unallocated costs(55,808)
Income from operations501,239 
Interest and other income, net51,124 
Foreign exchange loss(15,778)
Income before provision for income taxes$536,585 
For the Year Ended December 31, 2022
North AmericaEurope Russia Total
Segment revenues $2,898,554 $1,853,056 $73,088 $4,824,698 
Less:
Cost of revenues (exclusive of depreciation and amortization)1,875,861 1,283,398 69,475 3,228,734 
Selling, general and administrative expenses404,276 323,151 16,083 743,510 
Depreciation and amortization expense41,516 27,465 1,068 70,049 
Segment operating profit/(loss)576,901 219,042 (13,538)782,405 
Unallocated costs:
Stock-based compensation expense(99,909)
Amortization of purchased intangibles(22,223)
Other acquisition-related expenses(1,593)
Other unallocated costs(85,714)
Income from operations572,966 
Interest and other income, net10,025 
Foreign exchange loss(75,733)
Income before provision for income taxes$507,258 
For each reportable segment, selling, general and administrative expenses include the costs of salaries, bonuses, fringe benefits, bad debt, travel, employee relocations, legal and accounting services, insurance, facilities and overhead including operating leases, advertising and other promotional activities.
There were no clients individually exceeding 10% of our total segment revenues for the years ended December 31, 2024, 2023 and 2022. See Note 13 “Revenues” for additional disclosures of the Company’s disaggregated revenues reconciled with the revenues from the Company’s reportable segments.
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 December 31, 2024As of December 31, 2023As of December 31, 2022
Ukraine$58,865 $62,653 $70,183 
Belarus45,900 49,875 57,311 
United States39,403 42,510 68,804 
India15,367 12,735 8,506 
Poland10,605 15,057 14,685 
Hungary4,157 6,683 8,552 
Other 33,370 45,540 45,307 
Total$207,667 $235,053 $273,348 
The table below presents the Company’s revenues by client location for the years ended December 31, 2024, 2023 and 2022:
For the Years Ended December 31,
202420232022
United States$2,680,063 $2,633,730 $2,761,050 
United Kingdom523,369 585,172 619,305 
Switzerland407,849 367,121 323,424 
Germany206,129 178,492 161,758 
Netherlands188,576 236,292 215,444 
Canada88,352 97,983 114,910 
Russia— 13,290 64,745 
Other locations633,602 578,460 564,062 
Revenues$4,727,940 $4,690,540 $4,824,698 
See Note 2 “Impact of the Invasion of Ukraine” for more information regarding the Company’s decisions to no longer serve customers in Russia, impairment of long-lived assets in Russia and the sale of its holdings in Russia.