Thank you, operator, and good morning, everyone. By now you should have received your copy of the earnings release for the company's fourth quarter and full year 2022 results.

If you have not, a copy is available on epam.com in the Investors section. With me on today's call are Arkadiy Dobkin, CEO and President; and Jason Peterson, Chief Financial Officer.

I'd like to remind those listening that some of our comments made on today's call may contain forward-looking statements. These statements are subject to risks and uncertainties as described in the company's earnings release and SEC filings.

Additionally, all references to reported results that are non-GAAP measures have been reconciled to the comparable GAAP measure and are available in our quarterly earnings materials located in the Investors section of our website. With that said, I'll now turn the call over to Ark.

Thank you, David. Good morning, everyone.

Thank you for joining us this morning. 12 months ago on February 17, we were looking towards -- to 2022 with optimism.

[indiscernible] has been added to S&P 500 and we expect it to grow almost 40% and generate over $5 billion in revenues in this year. Even with some falling volumes, the Russian invasion struck the world one week later and put us on a very different place or priorities.

The new reality redefines the meaning of success for us. And we are very grateful to the tens of thousands of EPAMers and our customers around the world who mobilized support for people in our business during the past year.

Our success in 2022 was defined by new criteria and priorities, many of which we have shared it with you in our regular calls and updates during 2022. Priority one was to do everything possible for the safety of our people in Ukraine.

Next, our global mobility mission was immediately repurposed and scaled to support over 10,000 EPAMers. We chose to stay [indiscernible] countries and many with their families.

In addition, our business continuity strategy was adapted to include an exit of our business from Russia. And throughout the year, our customer focus was further elevated to ensure that even with environment that was anything but normal, our clients continued to bear the consistent, high-quality of delivery and level of service that they would expect under normal business conditions.

2022 was in every way the most disruptive year for EPAM I remember, and I have a previous history to remember all of them. You might ask why we are considering 2022 a relative success.

As a result of our 2022 efforts, in 2023 we have a global delivery footprint in urbanization that makes EPAM one of the most geo-diversified IT services companies in the world, and the one that now operates in more than 50 countries. When we began 2022, roughly 60% of our delivery was in just three largest locations [indiscernible] together.

And today, only 30% of our talent is there. While we expect that will fall closer to 20%, 25% concentration by the end of this year with accelerated growth outside.

We also didn't lose any significant clients during the last 12 months despite actively running a global delivery location rebalancing program. And in real-time, we were continuously developing new capabilities across our major markets.

We were also prudent with our delivery out of Ukraine. We can consistently demonstrate productivity and quality, very much in line with previous expectations.

And finally, that our new locations are very much in line with EPAM productivity and quality engineering standards term. Why then we use a relative qualifier to the stated success up to date?

Simply, the war within Ukraine is not over. And we believe that it will be our daily reality for some time to come.

Having accomplished what was extremely difficult transformation, and while finding our [indiscernible] much stronger, more capable and effective company than we have been before. And with a strong foundation to build upon to the network of our journey, we do realize that it's very much an ongoing process which demands our even higher-level preparedness for new and unexpected challenges.

Additionally, as I've mentioned during our last earnings call, some of our partners and customers have been messaging their expectation for global slowdown in demand and started taking resultant actions to better align their businesses to the new environment. While we also expected [indiscernible] slowdown, our reality happened to be more complex than the typical slowdown indicated by others.

When we shared our Q3 results in November, we were not yet seen a detailed picture of what EPAM specific demand environment would become in 2023. Today, what we are experiencing is slightly more than caution related to macroeconomic conditions.

The emerging view is specific to both, the overall global market conditions and also reflects the client expectation as part of our mitigation and diversification plans, and their corresponding decision-making process during the last year. First, we now understand that some of our clients didn't expect that we would mitigate the past 12 months as well as we did.

So at some point, they choose to mitigate their risk associated with our situation in advance and to consider alternative for them new work streams. We believe that while they are now comfortable with our diversified delivery footprint and committed to continue working with us, a number of decisions made two, three quarters before became visible for us just now.

Second, due to immediate redistribution of our talent to new locations, our overall cost structure and cost to our customers of our [indiscernible] were disrupted to some level. During the [indiscernible] environment, the changes were accommodated was relative eased.

But in current slow environment, the new location and price and mix present a greater challenge, at least while we were fixing the imbalance. Third, there are several key verticals, such as software and hi-tech, for example, which were disproportionately impacted with the current slowdown.

And there are also several large clients, which were impacted by their own specific circumstances during the last several months, who had to delay previously committed initiatives. And finally, our attention on bringing in net new logos during the last 12 months was de-prioritized as we focused on retaining our existing customers and repositioning our global delivery as our key priorities.

So because of those EPAM-specific factors, we believe we are now seeing a lower revenue growth outlook at the beginning of 2023 than we historically would expect at this time. Our current view for the year now shows relatively low growth during the first half of the year, with acceleration in growth in the second half of 2023, potentially approaching the high-teens in Q4, and with opportunity to come back to our pre-pandemic 20%-plus organic growth profile right after that.

At this point, we are investing in our customer and partner relationships and working across our global portfolio to build on our strong [indiscernible] differentiators with the value-added services in consulting client data and customer experience. These are long-term programs which we've had underway for several years.

And our current positioning as a top-tier partner to our clients, and additional credibility we built during the last 12 months should help us to create uplift in demand going into the second half of 2023. Today, we continue to stabilize our delivery global platform and develop talent across new geographies.

A significant part of those continuous efforts will allow us to restoring the balanced cost structure across all major delivery centers. At the same time, while we are fully committed to continuing our investments in our strategic differentiators, we are watching very carefully the balance of those investments to our current and immediately visible demand.

Given the uncertainty of looking at our business was from a long and shorter-term point of view. We are heavy utilizing our digital platforms, which have been instrumental in guiding our decisions so far and allowing us to monitor our business on a daily basis and making real-time calibrations when necessary to ensure that we protect our best talent as a key priority while still driving towards our historic growth and profitability levels.

On the general slowdown issue, we do believe that in today's technology dependent world, the real impact of slow demand on the IT services global market, most likely should be limited just to several quarters. The pull-back will encourage new players to enter the market with new technology led business solutions and push enterprises to respond with new investments in order to protect their competitive positions.

This in turn should accelerate growth for EPAM, as our proposition is focusing exactly on [indiscernible] to bring new strategy and implementation simultaneously in most [indiscernible] and efficient ways. So our goal today is to prepare EPAM exactly for the time and to be able to respond fast for the next growth and capability challenges.

That is why the plan to focus our attention in the next quarters to further stabilize our global operations and to continuously invest into new talent, new capabilities, new [indiscernible] and new markets, and to maintain our strong engineering DNA, but this time as a much more globally diversified company than ever in the past. Looking at our results for 2022, we generated over $4.800 billion in revenues, reflecting a greater than 28% year-over-year growth.

Non-GAAP earnings per share were $10.90, a 20% increase over fiscal 2021. And we also generated $382 million of free cash flow.

And one more time we did all that during the year when we had almost 60% of our talent in regions directly or indirectly impacted by war and when we were supporting many thousands of EPAMers and their families due to the continuous relocation process. In 2023, we are committed to accelerating our mission of becoming a true world orchestrator for our customers, and we are working every day to stay focused on our customer needs and demands, even while we continue rolling our geographic expansions, our capabilities in our commercial offering of a larger more diversified and more capable EPAM.

It is a bit strange to talk today again 12 months later about crossing $5 billion revenue mark in 2023, as we did back in February 2022. The war took a year of our life, year of our growth.

But we all know too well that it's just nothing in comparison to what people in Ukraine must go through today and what is happening on the ground in Turkey as we speak right now. So that is why with all that, what didn't change at all is our confidence that with what we build and continuously building, we would be able to navigate the challenges and come back to our 20% plus organic growth rate in the next several quarters and to our $10 billion aspiration in the next several years.

With that said, let me turn the call over to Jason, who will talk about our Q4 and full-year 2022 results and our business outlook for 2023.

Thank you, Ark, and good morning, everyone. Before covering our Q4 results, I wanted to remind everyone that in addition to our customary non-GAAP adjustments, expenditures related to EPAM's humanitarian commitment to Ukraine, the exit of our Russian operations and costs associated with accelerated the employee relocations had been excluded from non-GAAP financial results.

We have included additional disclosures specific to these and other related items in our Q4 earnings release. In the fourth quarter, EPAM delivered solid results.

The company generated revenues of $1.23 billion, a year-over-year increase of 11.2% on a reported basis and 14.4% in constant currency terms, reflecting a negative foreign exchange impact of 320 basis points. Additionally, the reduction in Russian customer revenues resulting from our decision to exit the Russian market had a 440 basis point negative impact on revenue growth.

Excluding Russia revenues, reported year-over-year revenue growth would have been 15.6% and constant currency growth would have been almost 19%. Beginning with our industry verticals, travel and consumer grew 16%, driven by strong growth in travel and hospitality with some moderation in retail and consumer goods, as customers exhibited incremental caution in the last few months of 2022.

The ongoing exit of the Russian market also impacted the growth in this vertical. Absent the impact, growth would have been 19% or 25.4% in constant currency.

Financial services grew 2.4% with very strong growth coming from asset management and insurance. Excluding our Russia customer revenues, growth would have been 17.8% and 20.8% in constant currency.

Software and Hi-Tech grew 10.3% in the quarter. Growth in the quarter reflected a reduction in revenue from a customer that was previously in our top 20, in addition to slower generalized growth in customer revenues across the vertical.

Life sciences and healthcare grew 11.5%. Growth in the quarter was partially impacted by the unexpected ramp-down of a large transformation program at a customer that was previously EPAM's top 10.

We currently anticipate further ramp-downs in this customer spending in Q1 of 2023. Business Information and Media delivered 10.9% growth in the quarter.

And finally, our emerging verticals delivered strong growth of 20.8%, driven by clients in manufacturing and automotive, as well as energy. From a geographic perspective, the Americas, our largest region, representing 59% of our Q4 revenues, grew 14.7% year-over-year or 15.6% in constant currency.

EMEA, representing 37% of our Q4 revenues, grew 18% year-over-year, or 25.7% in constant currency. The accelerated growth in the quarter is partially the result of recent acquisitions.

CEE, representing 1% of our Q4 revenues, contracted 71.8% year-over-year, or 72.6% in constant currency. Revenue in the quarter was impacted by our decision to exit the Russian market and the resulting ramp-down of services to Russian customers.

And finally, APAC was flat year-over-year, but actually grew 3.8% in constant currency terms and now represents 2% of our revenues. In Q4, revenues from our top 20 clients grew 8% year-over-year, while revenues from clients outside our top 20 grew 13%.

Moving down the income statement. Our GAAP gross margin for the quarter was 32.4% compared to 34.3% in Q4 of last year.

Non-GAAP gross margin for the quarter was 34.1% compared to 35.9% for the same quarter last year. Gross margin in Q4 2022 reflects the negative impact of lower utilization and the positive impact of a more normalized variable compensation expense compared to Q4 2021.

Gross margin in the quarter was also negatively impacted by the timing difference associated with EPAM's ongoing efforts to align bill rates based on employee relocations, most of which have been accomplished in 2022. GAAP SG&A was 16.6% of revenues compared to 17.2% in Q4 of last year.

And non-GAAP SG&A came in at 14.8% of revenue compared to 15.6% in the same period last year. The SG&A results for Q4 reflected efficiencies made primarily in our facilities footprint and lower variable compensation compared to Q4 2021.

GAAP income from operations was $170 million or 13.8% of revenue in the quarter, compared to $166 million or 15% of revenue in Q4 of last year. Non-GAAP income from operations was $220 million or 17.8% of revenue in the quarter compared to $206 million or 18.6% of revenue in Q4 of last year.

Our GAAP effective tax rate for the quarter came in at 22.9% versus our Q4 guide of 21%, due primarily to lower excess tax benefits related to stock-based compensation, as well as the impact of the change in certain tax regulations. Our non-GAAP effective tax rate, which excludes excess tax benefits and includes the impact of the change in certain tax regulations was 23.5%.

Diluted earnings per share on a GAAP basis was $2.61. Our non-GAAP diluted EPS was $2.93, reflecting a $0.17 increase and a 6.2% growth over the same quarter in 2021.

In Q4, there were approximately 59.3 million diluted shares outstanding. Turning to our cash flow and balance sheet.

Cash flow from operations for Q4 was $186 million compared to $285 million in the same quarter of 2021. Free cash flow was $165 million compared to free cash flow of $228 million in the same quarter last year.

We ended the quarter with approximately $1.7 billion in cash and cash equivalents. At the end of Q4, DSO was 70 days and compares to 69 days in Q3, 2022, and 62 days in the same quarter last year.

Looking ahead, we expect DSO will remain steady in 2023. Moving on to a few operational metrics for the quarter.

We ended Q4 with more than 52,850 consultants, designers, engineers, trainers and architects. Production headcount growth was relatively flat compared to Q4 2021.

Our total headcount for the quarter was more than 59,250 employees. Utilization was 73.6% compared to 76.8% in Q4 of last year and 73.5% in Q3 of 2022.

Turning to our full year results for 2022. Revenues for the year were $4,825 million, producing 28.4% reported growth and 32.4% on a constant-currency basis when compared to 2021.

During 2022, our acquisitions contributed approximately 5% to our growth. Excluding Russia revenues, reported year-over-year revenue growth would have been approximately 32.1%, and constant currency growth would have been approximately 36.3%.

GAAP income from operations was $573 million, an increase of 5.7% year-over-year and represented 11.9% of revenue. Our non-GAAP income from operations was $818 million, an increase of 20.6% over the prior year and represented 17% of revenue.

Our GAAP effective tax rate for the year was 17.3%, our non-GAAP effective tax rate was 23.4%. Diluted earnings per share on a GAAP basis was $7.09.

Non-GAAP diluted EPS, which excludes adjustments for stock-based compensation, acquisition-related costs and other certain one-time items was $10.90, reflecting a 20.4% increase over fiscal 2021. In 2022, there were approximately 59.2 million weighted average diluted shares outstanding.

And finally, cash flow from operations was $464 million compared to $572 million for 2021. And free cash flow was $382 million, reflecting a 59.3% adjusted net income conversion.

Cash flow in 2022 reflected expenses associated with our ongoing humanitarian efforts in supporting our Ukrainian employees and certain cash impacts related to the exit of our Russian operations. We're very pleased with our 2020 results given the significant amount of disruption in transformation which we navigated throughout the year.

Now let's turn to guidance. For 2023, we will resume providing a full year outlook, in addition to guidance for the next quarter.

To date, our operations in Ukraine have not been materially impacted and our teams remain highly focused on maintaining uninterrupted production. Our guidance assumes that we will continue to be able to deliver from our Ukraine delivery centers, productivity levels at or somewhat lower than those achieved in 2022.

As we mentioned during our Q3 earnings call, we began to see signs of moderation in demand, including delays in decision-making and additional scrutiny on program budgets early in Q4. At that time, this was isolated to a few customers in the retail and consumer goods industries.

Since then we've seen further evidence of slower decision-making and caution around spending, including some program ramp-downs. For most clients, caution around budgets has only resulted in a slowdown in growth.

But for some clients, we experienced actual reductions in spend in Q4, combined with continued cautious spending entering Q1. For two customers that were in our top 20 in 2022, we've seen ramp-downs in programs, which will negatively impact Q1 revenues.

We expect neither of these customers to be in our top 20 in Q1, but we already see one of those customers once again requesting incremental project teams. At this time, we are expecting a lower level of revenue in Q1, producing a slower start to our 2023 fiscal year.

Consistent with previous cycles, where we managed through a temporary softening in demand, we will continue to thoughtfully calibrate our expense levels, while focusing on the preservation of our talent in preparation for expected stronger 2023 second-half demand. In the first half of 2023, we expect headcount will continue to decline as a result of reduction in hiring, combined with normal levels of attrition.

We are planning on returning growth and production in headcount in the second half of 2023. We expect utilization in the mid-70s in the first half of the year as demand and supply normalize with utilization in the second half of the year expected to return to our more traditional 77% to 79% range.

As a reminder, the exit of the Russian market and the reduction in Russia customer revenues produces a tougher year-over-year revenue comparison, primarily in the first half of 2023. Starting with our full year outlook.

Revenue growth will be at least 9% on both a reported and constant currency basis. The impact of foreign exchange is expected to be negligible on a full-year basis.

Additionally, at this time, there is no inorganic revenue contribution for 2023. So our guide includes organic revenue growth only.

Excluding the impact of the exit of the Russian market, reported revenue growth is expected to be approximately 11%. We expect first half revenue growth to be in the single digits, returning to double-digit revenue growth in the second half of the year.

In Q4 2023, we expect revenue growth in the high teens. We expect GAAP income from operations to be in the range of 11.5% to 12.5% and non-GAAP income from operations to be in the range of 15.5% to 16.5%.

We expect our GAAP effective tax rate to be approximately 21%. Our non-GAAP effective tax rate, which excludes excess tax benefits related to stock-based compensation will be 23%.

For earnings per share, we expect the GAAP-diluted EPS will be in the range of $8.64 to $8.84 for the full year and non-GAAP diluted EPS will be in the range of $11.15 to $11.35 for the full year. We expect a weighted average share count of 59.6 million fully diluted shares outstanding.

For Q1 of 2023, we expect revenues to be in the range of $1.200 billion to $1.210 billion, producing a year-over-year growth rate of approximately 3%. Our guidance reflects an unfavorable FX impact of 2% and the year-over-year growth rate on a constant currency basis is expected to be approximately 5%.

We expect negligible contribution to revenue growth from acquisitions. Adjusted for the impact of our decision to exit the Russian market, constant currency revenue growth would be approximately 8%.

For the first quarter, we expect GAAP income from operations to be in the range of 9.5% to 10.5% and non-GAAP income from operations to be in the range of 14% to 15%. Income from operations reflects the impact of the resetting of social security caps and lower utilization, which we expect to improve throughout the year.

We expect our GAAP effective tax rate to be approximately 18% and our non-GAAP effective tax rate, which excludes excess tax benefits related to stock-based compensation to be approximately 23%. For earnings per share, we expect GAAP diluted EPS to be in the range of $1.66 to $1.74 for the quarter and non-GAAP diluted EPS to be in the range of $2.30 to $2.38 for the quarter.

We expect a weighted average share count of 59.5 million diluted shares outstanding. Finally, a few key assumptions that support our GAAP to non-GAAP measurements in 2023.

Stock based compensation expenses is expected to be approximately $152 million with $35 million in Q1, $36 million in Q2 and $81 million in the remaining quarters. Amortization of intangibles is expected to be approximately $22 million for the year, evenly spread across each quarter.

The impact of foreign exchange is expected to be nominal for the year. Tax-effective non-GAAP adjustments is expected to be around $44 million for the year, with $12 million in Q1, $10 million in Q2 and $11 million in each remaining quarter.

And finally, we expect excess tax benefits to be around $23 million for the full year with approximately $8 million in Q1, $6 million in Q2 and $9 million in the remaining quarters. Related to the support of our Ukrainian employees, through December 31, 2022, EPAM has spent approximately $45 million as part of the company's $100 million humanitarian commitment to our Ukrainian employees and their families.

We expect further humanitarian expenditures will be made during 2023. Lastly, our Board of Directors recently approved a share repurchase program, authorizing the company to purchase up to $500 million of the company's common stock over the next 24 months.

This program will allow the company to substantially offset dilution associated with the issuance of employee equity. We expect to continue to generate solid free cash flows in 2023 and even stronger free cash flows in 2024.

With our significant cash position and our confidence in EPAM's ability to generate strong free cash flows, we believe the company can both continue to pursue significant strategic acquisitions while evolving our capital allocation strategy to include a share buyback program. Again, my thanks to all the EPAMers who made 2022 a successful year and will help us drive growth throughout 2023.

Operator, let's open the call for questions.

Hi, thanks so much for taking my question this morning. I wanted to ask about Ark's comments on some clients preemptively making the decision to move some workloads sort of off of EPAM and that sort of playing out as we speak.

I guess the question is, is that dynamic already largely complete, or is that something that's sort of ongoing into -- deeper into the year? And then maybe you could speak to how do you -- if you can and how you can go about winning those workloads back?

I think with the [indiscernible] first of all, it's very difficult to measure what's happening, but we have not taken -- say that work taken from EPAM. What we were saying, look, we are realizing right now that some work -- future work which we traditionally will be getting from existing client base were waking probably to some alternative vendors and decisions were made to [indiscernible]explore this several quarters ago when clients were not sure how well we're going to navigate the whole disruption in Eastern Europe.

So again, it's very difficult to measure, but seeing the current demand situation in Q1, that's what we assume happening. And the reconfirmation of this is not necessarily easy to get.

At the same time, we know that with majority of the client, as we mentioned, we didn't lose practically any client or didn't lose significant clients at all. So they understand that we have been able to prove that we can navigate continuously working from Ukraine and the quality of our delivery is comparable with traditional, even when working in our new destinations of the world.

And we believe that right now there is a level of comfort that clients will be considering us for future work as well. And there is confirmation for this.

But at the same time, we mentioned cost changes as well. This is another challenge or another thing which we are actively working to make sure that we bring in the balance there too.

Okay, thank you. And one quick follow-up from me.

Maybe Jason, could you comment on the margin cadence this year? Should we expect margins to sort of step up along with revenue in somewhat of a straight line as we move deeper into the year and all the way to the fourth quarter, or is there any other color on just the cadence in margins that you might need to share?

Yeah, let me you actually use this opportunity to be a little clearer on kind of what we think we'll see in 2023. And so, I think the first statement I would make is, clearly, we were very thoughtful about our guidance with a 15.5% to 16.5% adjusted IFR range.

At the same time, we do anticipate that we would operate above the midpoint of that range in 2023. And you're correct that in the first half of the year, we expect to see lower levels of profitability.

And then in the second half of the year higher levels of profitability. And let me take this opportunity to be sort of specific.

So, we entered 2023 with a reset of Social Security caps and a lower utilization that resulted from some of those ramp-downs that I talked about earlier. So we expect to see gross margin in the first half of the year probably in the 31% to 32% range, and quite possibly closer to 31% than 32%.

At the same time, with the lower level of revenue, I think you're going to see SG&A go somewhat above 15% in the first half. And then what I anticipate in the second half with stronger growth, a stronger bill days -- greater bill days in the second half, improved utilization and we will be focusing on kind of matching our cost to our demand.

And then a little bit of SG&A efficiency that results when you have the stronger revenue growth that you would see an improvement in the gross margin, probably around the 34% range in the second half. And then what you would see is SG&A below 15% in the second half.

So again, so SG&A above 15% in the first half of the fiscal year and below 15% in the second half.

Very helpful. Thanks so much.

Hi, thank you. I wanted to ask on the outlook here.

So as you built the 1Q and the 2023 growth outlook, is that a baseline from 4Q and really the December client activity you saw, or is that more sort of a real-time view of client contract into the last few weeks? I'm trying to understand the underlying assumptions there in that full-year guide.

And maybe whether you have a different level of visibility to the full year target versus what you would normally have at this point in the year, just given all the moving parts.

Yeah. Clearly, it's a more challenging environment to sort of forecast.

And clearly, I think we're all seeing some positives around the macroeconomic environment that maybe gets us a little bit more comfortable. But as we exited 2022, we clearly saw slow December and I would say a slow January.

And what I think we're beginning to see is what I would call, a little bit of green shoots of incremental demand as clients potentially get more comfortable with what 2023 might look like. And so with this, I guess, full year view shows clearly that the start of Q1 and then we're beginning to see more activity in terms of at least RFPs and other kind of requests for discussions with clients.

And as a result, we feel relatively confident that we can generate stronger revenue growth and probably more consistent with the type of sequential growth that we've seen in the past. And I think, Bryan, you know that usually pre-pandemic we sort of generated between 5% and 8% sequential growth throughout the year.

Yeah, I would say, our assumptions -- because [indiscernible] you've got a general economic slowdown [indiscernible] And given the very specific trends in the case of EPAM, it's also in some way a reflection of this slowdown as well, because clients got comparably less work out, as they also got more optionality vis-a-vis others as well. So our assumptions right now, as we mentioned that probably this difficult situation would be for several quarters, and then demand will start to pick up and then we will measure this approximately in the terms which we consider pre-pandemic and in this situation [indiscernible] growth as we do.

And with this, we think that again high-teens should be happen closer to the end of the year and potentially we will go to normal somewhere in the beginning of next year.

Okay. My follow-up on margin here.

So just within this margin outlook, can you talk about the degree to which lower growth impacted the year-over-year decline versus the global investments you're making to support diversification versus just normal pricing and wage pressures, just as you move to new lookout, trying to rank what are those three in this margin outlook. And, Jason, is there any structural change to the margin profile from here, just based on how you're seeing this play out?

Yeah. So I think the first thing is that, it's a little bit of a tale of two halves, where the first half is definitely lower profitability due to the unexpected lower level of demand.

And so, you do just have lower utilization in the first half. And then as we said, we'll make certain that [indiscernible] appropriately matching cost to demand in the second half.

Then I think the other piece, just on a year-over-year basis is, I do think that -- the pricing power that I think probably all of us saw over the last couple of years is going to be not quite as pronounced in 2023. And so price is going to be a little bit harder to come by.

And at the same time, you have an awful lot of cost inflation around the world that is driving relatively high wage inflation. And so, I do think this year is going to be a different year where I think we've benefited from obviously strong price and, let's say, appropriate sort of wage inflation.

I think this year, you're going to see still relatively high wage inflation and a little less opportunity on the price side. Structurally, Bryan, we've talked a lot about [indiscernible] into these new geographies, that over time we will sort of scale and optimize and that will improve profitability.

I think, with the slowdown in demand, it's a little bit hard to make some of those changes to bring in more junior staff to improve off the relations that improve scale. And so I do think that as you move throughout the year, particularly as you enter 2024, there's greater opportunities, and generally I feel comfortable on our ability to continue to improve our profitability when we enter 2024.

Okay. Thank you all the detail.

Thanks very much. I'm curious what steps you're taking to revive the new business pipeline, given that with a secondary focus as you were adapting last year.

What we are doing to revive the pipeline.

Okay. I think we kind of mentioned this, but in general, there is much better stability in our global operations which is giving us opportunity to focus on business.

We were talking about our focus on consultants and this is working for us. We have new opportunities which is driven by this.

But also we are working on a number of different models, specifically for this market today. And we talked about it even last time.

So attention to sometimes shorter programs in [indiscernible] before. These are transformational programs, will be a [indiscernible] for our clients again.

So multiple activities. I don't think it would be possible to kind of describe this in a couple of minutes.

But we focus really to support new revenue generation right now from small deals to consulting-led deals as well.

Okay. And then [Multiple Speakers]

So what I think important to mention here that we've definitely seen [indiscernible] good life at the markets there are large deals, where we are invited and we participate in right now, [indiscernible]. And most important, we do believe that the clients' confidence that we can continue even in this environment and given still not finished war is very, very different than it was at the beginning of the disruption when some of them started to consider alternatives.

I think this situation changed. But, as you understand, every time there is a delay as we were really seeing the visible impact in Q4 and Q1 right now.

Okay. And then you mentioned a top 10 customer -- top 20 customer that was slowing.

Outside of those two, can you talk about the rest of the top client portfolio, how you see growth materializing with that base, or is there a level of caution there into 2023? And then any patterns emerging amongst those top customers in terms of where they'd like you to deliver from a geographic perspective?

That's another point that we are actually delivering now from very different geographies, and I think majority of the clients are comfortable. And again, there is no 100% of clients ready to work in occasions with the size of the portfolio we have today.

We really don't have the problem from a geographies point of view, because there are clients working from different regions, and from this point of view, utilization, today it is well kind of balanced across the regions. At the same time, if you are talking about other trends in clients, then I will say that it's very much in line with everything else -- everybody else talking about it today, because there is a caution as there is a slowdown.

There are some clients still growing fast, but again some decisions making much more slower. And some of them still delay.

And on top of this, let's not forget, it is the mid of Q1. And Q1 in a normal year, there is no full kind of confirmation what will happen.

I think in the next month or two, we will understand a little bit more about -- taking an account of this very special year, not only for EPAM. So I think the delays in decisions will be a little even one.

But in general, the rest of the portfolio action for us, more in line with the -- kind of normal to the market.

Thank you.

Great. Thank you so much.

I wanted to dig in just quickly a little bit on some of the comments Ark you and Jason have made around the relationships with your customers and the like. I'm wondering what levers right now you're looking to pull or can pull to reengage and maybe rebuild some of the relationships, and more specifically, the work streams?

And should we expect any changes to pricing or delivery strategy in response to kind of those client dynamics?

I will reply, of course, obviously, in general terms. I think we are watching what's happening in real-time.

And for specific clients for specific deals, we are actually making sometimes real-time decisions as well, because again there are two trends we are clear about. There is a general situation on the market and there are some specifics to EPAM.

And specifics still will withstand here, but on another side, due to the last 12 months we probably make our clients feel much more comfortable, our ability to overcome the challenge. You could imagine [indiscernible] due to the first couple of months after the war started, or even when it was destruction in Ukraine in infrastructure and we kind of overcome all of these challenges that Ukraine has delivered.

So I think we mentioned that thousands of people have moved and they [indiscernible] because we don't have complaints. But clients clearly were expecting some problems.

We are saying right now that this is probably behind of us. While the challenge is still there.

So when you say rebuilding the trust with the client, I think, let's put caution kind of there.

Yes. And I'll just comment on the pricing.

And so, as I said, the environment is probably a little less -- there's little less opportunity for price improvement. And clearly, we're going to go off and make certain that we're able to sort of win opportunities, but at the same time, we're still working on pricing and we're certainly going to make certain that we don't do anything that would impair profitability over the long term.

Thank you for that. And then quickly just on capital allocation, how are you thinking about acquisitions, especially given the buyback authorization, and what are you looking for in acquisitions and what's the current landscape and pipeline for potential deals?

Thanks.

Sure. So similar to the comments that Ark made around where our priorities were in 2022, that would also be consistent for our acquisition activity.

We had other priorities. And so the aggressive pursuit of acquisitions was somewhat de-prioritized.

At the same time, we have continued to be active through due-diligence. Sometimes we've sort of disqualified potential opportunities.

And so, what I said in my prepared script really is consistent with, we believe that we can do pretty active acquisitions and also pursue a share buyback. And so, we do expect to be active throughout 2023, certainly a lot more active than we were in 2022.

And I would say that generally the same sort of focus. So things that are probably somewhat more sort of consulting kind of oriented, maybe things that have a platform flavor to them.

And we're tending to see a fair bit of growth in Continental Europe. And so, we'll clearly continue to look for opportunities to drive growth in that region as well.

Thanks so much.

Good morning. I think in your prepared commentary you talked about potentially seeing some green shoots.

So just as a clarification, are you seeing that clients are a bit more optimistic now than they were in December and January? And I guess, if that's the case, what kind of gives you comfort around maybe growth in the back half of 2023, given some of the challenges of maybe forecasting demand in the near term or the changes in demand that you've seen in the near term from clients?

I'll start at the front end of that, because I was the one who introduced the green shoot language, and that was in response to an earlier question. And so, David and I do sort of our own channel checks internally with the business units.

And so that commentary, Surinder, was based on a number of conversations that we've had with business unit heads. And so you see, even in consumer goods, hopefully, retail will also return with a little bit of strength in the retail sector.

So we are seeing clients begin to come back and look for work. I specifically said in my prepared remarks that even the client who sort of had to ramp down between Q3 and Q4 is beginning to ask for new teams.

And so, there's just a whole series of kind of anecdotes, or more than one or two. And then maybe Ark, you want to talk about what we're seeing in terms of larger deal opportunities and RFPs and that sort of thing.

As I mentioned, we've seen [indiscernible] that are opportunities. There is very active work with our business development and the sales team right now.

There are some deals in probably some regions which we are participating in the process as well. So when you are asking about how confident we are about the guidance right now and how have we calculated, I think I was trying to address this already, but we are definitely working through multiple assumptions.

And how good is transaction, this is a different question, because if you think about 2020, 2021 and 2022, so each time it was a very different situation in the last three years where there's a lot of news to the market. And results were really different than people expected at the beginning of the year.

But versus assumptions, I think I feel that situation -- now development efforts will be similar to what it is right now, including aggression in Eastern Europe. So we assume that we will be maturing our delivery and pricing structure across new locations which we entered within the next quarters.

We assume that demand will grow stronger in the second part of the year, based on our, again, assumptions that what we were seeing before, maybe slowdown in technology, usage of [indiscernible] relatively fast comeback, because as we've mentioned in the current world, new companies will be coming and bringing new technology, and the traditional [indiscernible] status quo, and started to invest very greatly despite of various events. And we saw it during the pandemic time.

And again, we are absolutely a country that is not good with this type of growth, but it will be coming back. I think the combination of these assumptions and our ability to come where we're standing right now in Q1 should lead us to the number which we shared with you.

That's helpful. And as a follow-up here, can we maybe talk about the delivery footprint cost?

Obviously, your global deliveries changed over the past year, the average cost of delivery has gone up. How should we think about that from a structural perspective?

It seems like some of the competitive edge that you may be had in the past from maybe lower-cost talent in Eastern Europe, has that gone at this point, or how should we think about that from a competitive standpoint, the cost of your new delivery footprint and what clients think of it?

I think that's a question which -- or that's a challenge which we are working right now. We are still in Eastern Europe that we -- over aggression in many countries inside of EU, but also outside of EU.

At the same time, like the fastest growth in headcount happened in India and Latin America. So this is two new countries now which are, I mean, organic fast growth, because we have kind of some countries which is growing fast, but because of the allocation impact.

So is in Latin America, this is a organically growing and we will be focusing on these regions. Plus, we have in our portfolio right now across Central and Western Asia, a number of regions which we do believe will be cost-competitive, and at the same time with a level of talent comparable and in line with general EPAM requirements.

So I think it's a little bit moving target, but that's exactly what we simply will be able to manage in the next quarters as well.

Thank you.

Thank you. Good morning.

I'm wondering if you could -- looking at the 2023 guide, perhaps you could break it down in terms of the headwinds that you're experiencing from geographic diversification concerns among your clients' demand and lower benefit from rates.

And David, are you talking about in terms of revenue growth or profitability or...

Yeah, Jason, revenue growth, just the revenue growth headwind from each of those three things, if you could break it down.

Let me clarify the question, was that breaking down between what -- breaking revenue [Multiple Speakers]

So on a year-over-year basis, the revenue growth headwind. I think we identified kind of three buckets, right?

One was some clients concerns earlier in 2022 about geographic diversification, who initiated a process for that. There is a demand issue on a year-over-year basis, as result of slowing economic growth.

And then third, the environment is creating less opportunity to get rates than what you would typically get. So I'm just wondering if you could help us understand the size of the headwind of each of those three dynamics on a year-over-year basis.

I don't think we can speak specifics right now. I don't know, Jason, if you would be able to create some...

Yeah, a little bit complicated, David, because we still have probably some benefit in rate from the rate changes that we did as people moved geographies in the second half of 2022. And then, of course, that shows up in a full-year impact in 2023.

But we think we'll see less, what I would call, traditional kind of pure rate in 2023. We moved into a lot of new geographies, as Ark talked about, Central and West Asia, which we think is an attractive location longer term.

We probably still need to make certain that our clients are comfortable with the region in the same way that decades ago we had to get clients comfortable with Belarus. And so this is probably just some -- let's say, some timing lag [indiscernible] very comfortable with growing there.

Yeah. David, I think it is very difficult to split between two things what you were talking about, some clients were [indiscernible] were counted on more growth in existing clients and we don't see this, and the cost factor as well.

So I think calculation between these two, almost impossible because it's more distended and there is a trend between these versus specific calculation. So we definitely can't say how much we counted on couple of clients which changed their mind.

But I don't think -- again, it's tens of million of dollars as well. That's all.

And then I just think I'll just sort of close David with, these are things that, obviously, we're working to address throughout 2023, and as Ark said, already the ability to sort of deliver from these new geographies, we feel that clients are comfortable -- clearly comfortable with our ability to generate -- to deliver from geographies that have been impacted in Eastern Europe. And then, as Ark talked about, we continue to sort of grow geographies that offer our clients very cost-competitive solutions.

And, of course, we've got the high level of talent in geographies, might be a little bit more expensive, but are appropriate for specific clients need.

Got it. Fair enough.

Thank you for that. And maybe just back, I think, to the question came up about supply in a couple of previous questions, but I'm just curious, as you look at these new geographies, can you share any information in terms of trends in utilization rate or churn and how we should think about that in each of these locations?

I'm sure it's all over the board given there are new start-up operations. But just wondering if there's any observations about any of those dynamics as well, with just kind of your recruiting model in these new geographies and how that template is playing out for you.

Yeah. So it will be a question to go in details.

So, yes, as I mentioned, 2022 was a big growth in India and Latin America. And so I'll start actually in those locations.

It was a significant growth in 2021 as well. As you know, 2021 was a reasonably good year.

And what -- so it was already proved in 2021. So it was like -- India was growing like -- I don't remember, 70%, 80%.

And Latin America, probably in the same terms. Now it's 30%, 40% in India and even more in Latin America as well.

So these regions, we are pretty comfortable. And yes, it's different from traditional, but we bring in there a lot of experience or expertise, how to build and grow within our status.

And I think it's working. So this is one bucket.

Another bucket, it's a number of locations where we have simultaneously bring in local talent and bring in experienced talent from other locations. And we started to -- knew it, as already mentioned previously, not only after the war started.

It started actually in 2021. And we also feel comfortable that this has been in the quality results in line with what we experienced in kind of traditional EPAM locations as well.

So now, definitely second part of 2022 was a very different trend than before. That's why when you were asking about practices, how are we hiring, what's the speed, how the Group is working?

I think we are very comfortable that we will be able to speed it up, but we didn't need to speed it up. And I think we are much more diversified, and we have many more kind of tools right now, how to grow as soon as the growth will be there, demanded as before.

So, operator, I think we are running a little bit late. We have time for one more quick question if we could.

Thanks, guys. I'll just ask a quick two-parter.

I guess, of all the factors impacting the revenue growth in 2023, which really surprised you the most? And then can you just speak to the type of conservatism that you feel is in the revenue guide, in particular, because it does sound like you're incorporating these green shoots into the guide?

There is some pretty big acceleration that you're building in between Q1 and Q4. Thank you.

Yeah. I think what we clearly saw in the month of January was slower demand, and specifically, obviously, further ramp-downs with a couple of clients that we had talked about in our prepared script.

And so, just probably the entry point, Q1 2023, is kind of what changed, and in a couple of cases, it was specific to a few large customers. At the same time, we've stripped those two customers out.

The dialog with our BUs is they sort of drive revenues and carefully evaluate their pipelines. But actually, there were some positive tonalities associated with it.

And so the guide really does incorporate kind of the lower starting point, but obviously, four quarters is -- it's 12 months. So it's hard to predict exactly where you are going to end up in Q4, but it does already suggest that we're beginning to see an improvement in potential demand relative to that we saw in November, December and January and that's kind of what gives us the confidence in the guide.

But at the same time, of course, we want to make certain that we'll be able to achieve the revenue guidance for the full year. So hopefully that answers that question.

Thank you as always for attending today's call. As you know, any questions, David is available to help.

And talk to you in three months. Thank you.