Digital engineering services company EPAM Systems (NYSE: EPAM) announced better-than-expected revenue in Q3 2026, with revenue up 2.3% year on year to $1.43 billion. On the other hand, next quarter’s revenue guidance of $1.41 billion was less impressive, coming in 0.6% below analysts’ consensus estimates. Its non-GAAP profit of $3.51 per share was 3.1% above analysts’ consensus estimates.

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"We delivered a strong quarter, with better-than-expected results, continued margin expansion, AI-native momentum and traction in our transformation strategy," said Balazs Fejes, CEO & President, EPAM. "We continued to scale our strategic partnerships and forward-deployed engineering network, launched our new Frontier AI Services and increased capital return to shareholders."

Revenue growth

Examining a company’s long-term performance can provide clues about its quality. Any business can have short-term success, but a top-tier one grows for years.

With $5.65 billion in revenue over the past 12 months, EPAM is one of the larger companies in the business services industry and benefits from a well-known brand that influences purchasing decisions.

EPAM’s revenue grew at an impressive 10.9% compounded annual growth rate over the last five years. This shows EPAM’s demand was higher than that of many business services companies.

Long-term growth is the most important, but within business services, a half-decade historical view may miss new innovations or demand cycles. EPAM’s annualized revenue growth of 10.4% over the last two years aligns with its five-year trend, suggesting its demand was predictably strong.

EPAM also reports revenue performance excluding currency movements, which are outside the company’s control and not indicative of demand. Over the last two years, its constant currency revenue averaged 3.8% year-on-year growth. Reported revenue growth outpaced this metric, indicating that foreign exchange rates boosted EPAM’s performance.

This quarter, EPAM reported modest year-on-year revenue growth of 2.3% but beat Wall Street’s consensus estimates by 0.5%. Management is guiding for flat revenue next quarter.

Looking further ahead, sell-side analysts expect revenue to grow 2.2% over the next 12 months, according to S&P, a deceleration versus the last two years. This underwhelming projection suggests its products and services will face some demand headwinds. Still, the company is tracking well on other measures of financial health.

Adjusted operating margin

Adjusted operating margin is an important measure of profitability as it shows the portion of revenue left after accounting for all core expenses, everything from the cost of goods sold to advertising and wages. It’s also useful for comparing profitability across companies because it excludes non-recurring expenses, interest on debt and taxes.

EPAM has been an efficient company over the last five years. It was one of the more profitable businesses in the business services sector, with an average adjusted operating margin of 16%.

EPAM’s adjusted operating margin decreased by 2.3 percentage points over the last five years. This raises questions about the company’s expense base because its revenue growth should have given it leverage on its fixed costs, resulting in better economies of scale and profitability.

In Q3, EPAM generated an adjusted operating margin of 12.3%, down 3.6 percentage points year on year. This contraction shows it was less efficient because its expenses grew faster than its revenue.

Earnings per share

Long-term changes in earnings per share, or EPS, matter for the same reason as long-term revenue growth. Compared to revenue, however, EPS highlights whether a company’s growth is profitable.

EPAM’s solid 10% annual EPS growth over the last five years aligns with its revenue performance. This indicates it maintained its per-share profitability as it expanded.

As with revenue, examining EPS over a shorter period can reveal changes in the business.

For EPAM, its two-year annual EPS growth of 9.9% is similar to its five-year trend, implying stable earnings.

In Q3, EPAM reported adjusted EPS of $3.51, up from $3.08 in the same quarter last year. This result beat analysts’ consensus estimates by 3.1%. Over the next 12 months, Wall Street expects EPAM’s full-year EPS to grow 6.5% from $13.01 to $13.85, according to S&P.

Key takeaways from EPAM’s Q3 results

EPAM topped analysts’ consensus EPS estimates this quarter and issued full-year EPS guidance narrowly above Wall Street’s consensus. But its revenue outlook for next quarter fell slightly short of expectations, leaving a mixed picture overall. Shares surged 7.3% to $147.37 immediately after the results.

Evaluating EPAM as an investment means considering its valuation, business quality and latest quarterly results. For more on EPAM, read the full research report here (it’s free).