What's Happening?
EPAM Systems Inc. reported a significant increase in AI-native revenues, reaching over $160 million in Q2 2026, marking the sixth consecutive quarter of double-digit growth. Despite this, the company faces challenges in North America, where revenue growth was
only 0.5% year-over-year. The company has acknowledged a go-to-market capability gap in North America, necessitating a multi-quarter commercial transformation. This transformation aims to enhance business development and sales capabilities, with meaningful revenue contributions from large deals expected only by early 2027. The company has revised its full-year 2026 revenue guidance to 3.2%-4.2% growth, citing a faster-than-expected shift away from task-based services.
Why It's Important?
The challenges faced by EPAM Systems in North America highlight the broader industry trend of shifting client priorities towards AI and away from traditional task-based services. This shift underscores the need for companies to adapt their business models and sales strategies to remain competitive. The company's focus on AI-native capabilities and its strategic partnerships with major tech firms like OpenAI and Google position it well for future growth. However, the slow revenue growth in North America could impact investor confidence and the company's market position if not addressed promptly.
What's Next?
EPAM Systems plans to implement a multi-quarter commercial transformation to address its North American growth challenges. This includes enhancing its business development and sales capabilities, with a focus on domain-led go-to-market strategies. The company expects to see meaningful revenue contributions from large deals by early 2027. Additionally, EPAM is investing in training programs to develop full-stack agentic engineers, aiming to have the largest concentration of certified engineering professionals in the industry.
