Good day, everyone. My name is Ryan, and I will be your conference operator today. At this time, I would like to welcome you to EPAM's third quarter earnings release conference call. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question and answer session. If you would like to ask a question during this time, and if you have joined via the webinar, please use the raise hand icon now, which can be found at the bottom of your webinar application.

Good morning, everyone, and thank you for joining us today on our third quarter 2026 earnings announcement. As the operator just mentioned, I'm Mike Rowshandel, head of investor relations. We hope you've had an opportunity to review our earnings release we issued earlier today. If you have not, copies are available on epam.com in the investors section. With me on today's call are Balazs Fejes, CEO and President, and Jason Peterson, Chief Financial Officer. I would like to remind those listening that some of the comments made on today's call may contain forward-looking statements. These statements are subject to risk 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 measures and are available in our quarterly earnings materials Thank you, Mike.

And good morning, everyone. It's a pleasure to be with you all again. Today, we are sharing positive progress and results. Our third quarter came in better than expected, outperforming the high end of our outlook range for revenue, profitability, and earnings per share. In the quarter, the company generated over $185 million in AI-native revenues, once again delivering a sequential double-digit growth rate. EPM now expects to generate at least $650 million in AI-native revenues in 2026, an increase from our original target of $600 million. We accomplished all of this while continuing to transform our core business. We are seeing accelerating momentum in the execution of our strategy and are pleased to deliver on many of the commitments we set out earlier this year. On the new big strategic deals, we signed three in the quarter and continue to progress with deals in our pipeline which continue to grow. With our strategic partnerships, we are ahead of our plan, both from a capability and enablement standpoint, as well as in terms of building deal generation motion that put emphasis on hundreds of production deployments that deliver unique value proposition with each partner. In October, we launched our new frontier AI service, and our new frontier partnership channels are beginning to generate new opportunities. We are the client zero of our own AI transformation and taking what we learn to clients as our proof points. We are also making solid progress on our go-to-market transformation with North America as the focus. And finally, our full-year outlook now sits at or just above the midpoint of the range we set out in August. And as part of our commitment to return value to shareholders, today we are announcing our long-term capital allocation framework. The framework aims to return at least half of our free cash flow to shareholders over the next three years and includes a new repurchase program starting with an accelerated share repurchase. Jason will walk through the details a bit later. Now let's turn to some quick Q3 highlights. Revenue grew 2.3% year-over-year on a reported basis with organic constant currency growth of 2.5% above the high end of our outlook range. Profitability, led by the gross margin, improved again and adjusted earnings per share remained strong. Growth was led by financial services, our largest vertical, as well as life sciences and healthcare, which both delivered solid year-over-year growth. We are also seeing strength in our energy sub-vertical within our emerging vertical. Across geographies, ML remained our growth leader, up middle single digits. Americas was roughly flat year-over-year and grew sequentially for the second quarter in a row. or diversified delivery capacity is growing to meet current and anticipated demand. Delivery professionals grew by nearly 700 in the quarter to more than 57,000 up 2.2% year over year after a roughly flat first half. We will continue to hire for demand we see and we expect next delivery headcount to grow faster in the fourth quarter. On the demand environment, Overall client sentiment are stable to modestly better compared to last quarter, while broad macronomic environment continues to experience volatility. Despite the volatility, we believe that demand for our services will remain resilient over the long term, particularly related to our client propensity to spend on AI and technology transformation services. We are seeing stable budgets for the remainder of 2026, with some potential for further unlocking of scaled AI programs going into next year. To help them with their most complex technology programs, clients continue to turn to EPAN for our advanced AI and engineering capabilities. AI transformation is a business transformation, and nearly every client conversation today reflects the complexity of both business and technology challenge. Programs are moving up the volume, from using AI as a workforce-enabling technology, to scaling across systems, to automating and identifying full processes. and beyond that, the frontier use cases that drive new types of businesses. This is where clients asking for our help and relying on EPAM to bridge the full maturity lifecycle and volume chain. Looking across our AI-native capabilities, notable revenue growth drivers include FDE-led platform engagements and global traction brought by our AI-run execution scaffolding and operating framework. We are also seeing significant acceleration in AI-native cyber resilience, which is driving both pure AI-native revenue as well as downstream core remediation work. Our focus going into the end of the year and looking forward into 2027 is to continue building our momentum in capturing AI-native demand by expanding our core services offering as AI fully transforms and accelerates our ability to drive key service lines in cloud, modernization, data, and managed services. Let me share a few client examples to help illustrate how AI and core services are combining to create client volume. First, for a leading wealth management firm, decades of business logic was buried in millions of lines of COBOL code. At risk, as veteran specialists neared retirement, EPAM used its MFLens platform part of EPAM AI-run tools to reverse engineer and extract business rules, dependencies, and lineage. Cutting analysis effort by 60% and discovery costs by 80%. The client was able to move into modernization with greater confidence and less uncertainty compared to when it started. Next, for a US-based medical center specializing in complex bleeding and clotting disorders, EPAM designed and built a modular suite of AI custom applications, all embedded within the center's existing EMR. The approach prioritizes seamless integration, so clinicians gain new capabilities inside the tools they already use every day. The solution is driving $1 million in projected cost savings from digital forms and assessments while providing a scalable foundation for continued AI expansion. Next, Storio Group, a European leader in personalized photo products, wanted to unlock revenue growth by rethinking how their marquee product gets built and maintained. The company partnered with EPAM to build a strategic agentic AI workflow using cloud. In weeks, the team made the codeways legible, safe, and predictable to maintain. The cost savings were 10x, a fraction of the cost of a conventional rebuild, with a clear path to innovation. And last, for a medical technology and healthcare services company, we reduced the total cost of ownership by 20% with zero downtime on AWS. As an AWS premier tier services partner, EPAM was selected for its deep engineering and cloud innovation capabilities. Through our structured methodology, we help the client migrate from Oracle to AWS, replace licensed infrastructure with AWS native services, modernize the operational layer and build scalable foundation without reintroducing unnecessary costs or complexity. And now the update I promised on our new big strategic deals. We continue to put emphasis on large transformational deal generation. These deals are a combination of both our current clients looking to accelerate value through scaled AI as well as new logos who see EPAM as a strategic entrant into their Tier 1 partner portfolio specifically to enable AI transformation at scale. All the big deals are large, multi-year strategic programs. The majority are incremental expansion of our footprint within existing client portfolios, specifically within agentic managed services and application maintenance. The new logos are opportunities to come in as a challenger to take out established legacy programs. I'm happy to report that three of these deals have been signed so far, and we are progressing on the remaining deals and expect to provide a further update during our Q4 earnings call. These three close deals sit within financial services and energy. We expect them to begin ramp in 2027. Now, turning to a second pillar of our strategy, strategic partnerships. Our list of partners is growing to include not only cloud and data providers, but also the frontier companies who are driving a significant number of opportunities into the top of our funnel. In terms of FDE capability building and domain-specific playbooks and certifications, I'm pleased to report that we are on our way to meeting our stated year-end goals. So far earning more than 25,000 certifications in just six months across Entropic, OpenAI, Google, Gemini Enterprise, and Microsoft. With Entropic, we have certified more than 8,300 cloud architects against our ERAN target of 10,000. With OpenAI, we have certified more than 5,800 forward deployed engineers with months of announcing the partnerships. And we are on the pace for our first year commitment of 10,000. With Google Gemini Enterprise, we have certified more than 8,700 under the Gemini Certified Partner Specialist Program against our target of 10,000 by the end of the year. With Microsoft, more than 2,800 of our engineers have earned their frontier certification, one of the most demanding in the program. And with AWS, we are working on evolving our FD propositions with our current team of more than 1,100 certified AI practitioners and professionals. As our partnership with frontier companies develop and mature, we are building focused GTM motions to include both vertical use cases and domains, as well as horizontal specializations in high growth areas like cybersecurity and cyber resilience. To date, there are more than 200 of these opportunities across the cohort of AI native partners, and we will be sharing more public case studies as we scale production deployments. With all of these new partners and new capabilities, EPAM is committed to being client zero, bringing more innovation, commercial and delivery models and benchmarks together with the power of rising capabilities across the full enterprise landscape. Which brings me to our new frontier AI service. A few weeks ago, we rolled out our new frontier AI service, which helps our enterprise clients and frontier labs accelerate value creation from applied AI spanning high fidelity data generation, evaluation, reinforcement learning, and benchmarking. The same data muscle EPAM is building for Frontier Lab is exactly what enterprises will need as they hill climb their own AI systems, turning proprietary workflows and domain expertise into evaluations, environments, and feedback loops that measurably improve agent performance on the tasks that matter to their business. More to come on this in the future quarters as we build out our team and start to drive deal flow. And note on cyber, which is busy making headlines. As AI becomes prevalent, we are seeing accelerating cyber threats across a broader attack surface than ever before. It is both helping to create attack capabilities as well as assisting the cyber defense measures. Our AI-native cyber resilience offering was launched earlier this year, and we are seeing significant demand for AI-native cybersecurity advisory assessment, architecture, and remediation. We are building our cyber capabilities in partnership with strategic partners and frontier labs. In August, we announced our partnership with Viz to help enterprises reduce cloud risk and strengthen cyber resilience through the use of agentic security postures. Now, shifting to progress update on our operational transformation. Here is what we see so far. Revenue in the Americas, or the largest reported region, which includes North America, was roughly flat year over year and grew sequentially for the second quarter in a row. We are not calling that a turn yet. We expect to take the next several quarters to go beyond implemented investments and changes into demonstrated results. In North America, we continue to see some drivers of slower growth from last quarter, including year-over-year declines in several software and high-tech clients, and some drag across the consumer goods retail and travel vertical where impacts of persistent global inflation and selective consumer spending have brought more focus on operational efficiency. That said, the global transformation of our go-to-market motion is well underway with our global and regional programs executing on the commitments to build enhanced sales, marketing, and commercial motions. With North America, our focus is already evident in how we show up at the industry trade shows and client events. Going into the end of the year, we are seeing increasing traction broadly and across our horizontals and verticals, including new logo revenue in the region. And since we spoke last, EPAM has received several key recognitions. Gartner named EPAM a leader in the magic quadrant of custom software development services for the fourth consecutive year. IDC Marketscape named EPAM a leader in multiple assessments, including Life Sciences R&D Lab of the Future Technology Solutions and Consulting Services for the second conservative assessment. Worldwide AI-driven professional services for oil and gas companies and its inaugural assessment and Adobe AI-enabled professional services. IDC Marsgratscape also named EPAM as a major player in its 2026 Worldwide Cloud Professional Services in the AI Era Vendor Assessment. Vitely Research's 2026 IT Sourcing Study ranked EPAM number one for satisfaction and delivery in Switzerland and named EPAM Neurics number one in Spain for using AI technology and tools to improve client services. Forbes named EPAM most trusted and the world's best employer for tank and Voss Company named EPAM a best workplace for innovators. These recognitions reflect the work of our global teams and their commitment to delivering results for our clients. In summary, we are pleased with our third quarter results. We outperform the high end of our outlook range. continued growing of our pure AI native revenues, turned our partnerships into certified capacity, signed the first set of our large AI-led opportunities, and saw early evidence that our work in North America is moving from plans to delivery. Our conviction in our long-term strategy, the team, and the commercial transformation continues to build. Lastly, I want to thank all ePammers for their commitment this quarter and all of you for continued trust and support. Jason, over to you.

Thank you, FB, and good morning, everyone. In Q3, we delivered strong quarterly results, outperforming the high end of our guidance range for revenue growth, profitability, and EPS. Revenue was $1.426 billion, delivering year-over-year growth of 2.3%. on an organic constant currency basis, revenue grew 2.5%. Both GAAP and non-GAAP gross margin improved year over year and exceeded our expectations for the quarter. The solid revenue growth and improved year over year profitability, GAAP income from operations grew by 21.4% and non-GAAP income from operations grew by 7%. GAAP diluted EPS grew by 32.5% and non-GAAP diluted EPS grew by 14%. Our AI-native offerings continue to gain traction and contribute to year-over-year growth. AI-native revenues were more than $185 million in the quarter, approximately 13% of total revenues, up from approximately 11% last quarter. Before further discussion of company financial performance, I want to first provide an update on EPM's capital allocation strategy. As we've communicated in the past, EPM's capital allocation strategy prioritizes investments that enable sustainable growth. First and foremost, we will continue to make investments in capabilities, partnerships, and go-to-market motions that support our organic growth momentum, while also making limited token acquisitions to enhance our in-market domain expertise and create beachheads to facilitate entry into new markets. While we make these investments, we also intend to increase the relative level of capital return to shareholders. Since 2023, EPM's board has authorized three repurchase programs, and since the initiation of the company's first share repurchase program, EPM has returned approximately $1.7 billion to shareholders. Today, we are making several announcements that together bolster the company's commitment to capital return. First, we plan to enter into a $500 million accelerated share repurchase agreement next week. Second, we are committing to returning at least 50% of free cash flow to shareholders annually, over each of the next three years . In support of these commitments, EPAM's Board has approved an increased share repurchase authorization of $1.8 billion through December 31, 2029. This authorization replaces the 2025 program and adds an incremental $1.5 billion of capacity. Our approach to repurchases will continue to be disciplined and dynamic, making necessary adjustments based on the price of the shares relative to long-term value of the business. Let me now discuss EPAM's Q3 results. Moving to our Q3 verticals, performance was mixed and growth was led by financial services and life sciences and healthcare. Financial services grew 13.7% year-over-year, driven by insurance and asset management clients. Life sciences and healthcare increased 9.9% on a year-over-year basis, driven primarily by clients in life sciences and med tech. Consumer goods retail and travel declined 2.5% year-over-year as several consumer goods companies became more cautious about spending due to the more challenging macroeconomic environment. Software and high-tech declined 6.1% year-over-year due to lower spend from certain technology clients as discussed last quarter. Business information and media decreased 5.5% year-over-year, primarily driven by information services. Emerging verticals delivered a year-over-year decline of 0.5%, with lower revenues from clients in materials, telecommunications, and real estate, partially offset by ongoing strength in the energy sector. From a geographic perspective, Americas, our largest region representing 57% of our Q3 revenues, increased 0.2% year-over-year, with strong growth in financial services, life sciences and healthcare, and energy, offset by a slowdown in consumer goods, retail and travel, and declines in the software and high-tech and business information and media verticals. Amaya, comprising 41% of her Q3 revenues, increased 5.8% year-over-year despite FX headwinds, with strong growth in financial services as well as contributions from life sciences and healthcare and energy. Finally, APAC, making up 2% of her revenues, declined 4% year-over-year. In Q3, revenues from our top 20 clients grew 0.8% year-over-year, while revenues from clients outside our top 20 increased by 3.0%. Moving down the income statement, our gap gross margin for the quarter was 31.3%, compared to 29.5% in Q3 of last year. Non-gap gross margin for the quarter was 32.8%, compared to 31% for the same period a year ago. Demonstrating our ability to improve profitability while growing our AI native revenues. GAAP SG&A was 16.7% of revenue compared to 16.8% in Q3 of last year. Non-GAAP SG&A in Q3 2026 came in at 15% of revenue compared to 14.1% in the same period last year. The increase in non-GAAP SG&A reflects incremental investments in our go-to-market motions and AI capabilities. Gap income from operations was $176 million or 12.3% of revenue compared to $145 million or 10.4% of revenue in Q3 of last year and grew by 21.4% year-over-year. Non-gap income from operations was $238 million or 16.7% of revenue compared to $223 million or 16% of revenue in Q3 of the previous year and grew 7% year-over-year. Our gap-effective tax rate, which includes a higher level of tax shortfalls related to stock-based compensation, came in at 26.1%, and our non-gap-effective tax rate was 24.7%. Diluted earnings per share on a gap basis was $2.53, compared to $1.91 in Q3 of last year, a $0.62 increase year-over-year reflecting growth of 32.5%. Our non-GAAP diluted EPS was $3.51 compared to $3.08 in Q3 of last year, a 43-cent increase year-over-year reflecting growth of 14%. In Q3, there were approximately 51.5 million diluted shares outstanding. Turning to our cash flow and balance sheet. Cash flow from operations for Q3 was $289 million, compared to $295 million in the same quarter of 2025. Free cash flow was $274 million, compared to free cash flow of $286 million in the same quarter last year. Cash and cash equivalents were $965 million as of the end of the quarter. At the end of Q3, DSO was 78 days and compares to 82 days for Q2 2026 and 75 days for the same quarter last year. Share repurchases in the third quarter were approximately 700,000 shares for $80 million at an average price of $113.06 per share. Moving on to operational metrics, we ended Q3 with more than 57,350 delivery professionals, reflecting total growth of 2.2% compared to Q3 2025, and a net increase of 700 people sequentially. Our total headcount at quarter end was approximately 63,650 employees. Utilization was 76.5%, unchanged from Q3 of last year, compared to 78.3% in Q2 of 2026. Now let's turn to guidance. Before moving to the specifics of our 2026 and Q4 outlook, I would like to provide some thoughts to help frame our guidance. We're pleased with the third quarter performance, which included solid revenue growth and profitability improvement, which exceeded our expectations. As FB mentioned, the company won three large multi-year client engagements and delivered ongoing growth in AI-native revenues. EPM now expects to deliver at least $650 million in AI-native revenues in the year, an increase from our earlier guidance of $600 million. We also began to see some benefit from our go-to-market investments with improving new customer revenue in the quarter. With regards to Q4 reported revenue guidance, we currently expect FX to have a negative $11 million impact on sequential growth in the quarter. Excluding the impact of the strengthening U.S. dollar, which is creating FX headwinds, Q4 is shaping up as expected. We are encouraged by ongoing strength in demand in EMEA and in our financial services and life sciences and healthcare verticals. Additionally, we are seeing stabilization in our Ibero-American business. Although we are beginning to see some improvement in pockets of demand in the North American region, our North American business is expected to continue to underperform in Q4. For the full year, the company expects to deliver organic constant currency revenue growth of 2.5% to 2.7% at or just above the midpoint of the most recent guidance range. As in past years, we expect strong free cash flows in Q4, with our free cash flow conversion rate forecasted to be above 100%. As usual, our guidance assumes we can continue to deliver from our Ukraine delivery centers at productivity levels similar to those achieved in 2025. Now turning to 2027. EPAM will provide detailed guidance for its 2027 year in February of 2027 during its Q4 2026 earnings call. However, at this time I want to provide some current thinking about the 2027 year. With regards to revenue, and despite ongoing volatility, we are encouraged by the sequential growth of EPAM's AI-native revenues, as well as the expected future impacts of large multi-year deals we have already won and those we expect to win in coming months. Those deals that we recently won will ramp in the first half of 2027, contributing to revenues in Q1 with greater contributions in Q2. As we exit the 2026 year, we are adding headcount to meet future demand, including demand related to these large deal wins. With regards to profitability in 2027, we are currently expecting to operate in the 15% to 16% range for non-GAAP income from operations. As we have discussed throughout 2026, we will continue to invest in our AI capabilities and make incremental investments in go-to-market motions. For 2027, we are also expecting a lower level of benefit from the Poland R&D Tax Incentive Program. Over the last three years, we've seen ongoing P&L benefit related to this program, which is booked as a reduction to cost of revenue. In 2027 and future years, we are expecting to derive ongoing P&L benefits from this program at reduced levels. We are focused on actions that will improve gross margin in the future, have reduced the impact of the reduced R&D benefit and expected normalization in variable compensation expense. We are not expecting a further increase in gross margin in the coming year, and we may operate at modestly lower levels of gross margin in 2027. Now moving on to our 2026 full-year outlook. Revenue growth will now be in the range of 3.5% to 3.7%. Foreign exchange is expected to have a positive impact of approximately 1%. Therefore, organic constant currency growth is now expected to be in the range of 2.5% to 2.7%. We expect gap income from operations to now be in the range of 10.7% to 10.9%, and non-gap income from operations to now be in the range of 15.9% to 16.1%. We expect our GAAP effective tax rate to be 27%. Our non-GAAP effective tax rate will be 24%. For earnings per share, we expect the GAAP diluted EPS will now be in the range of $8.41 to $8.49 for the full year. And non-GAAP diluted EPS will now be in the range of $13.23 to $13.31 for the full year. We now expect weighted average share count of 52 million fully diluted shares outstanding. Moving to our Q4 2026 outlook, we expect revenue to be in the range of $1.405 to $1.420 billion, producing year-over-year growth in the range of negative 0.2 to positive 0.9%. Our guidance reflects approximately 0.7% negative foreign exchange impact and organic constant currency growth is expected to be positive and in the range of 0.5% to 1.6%. For the fourth quarter, we expect gap income from operations to be in the range of 11.5% to 12.5% and non-gap income from operations to be in the range of 16% to 17%. We expect our gap effective tax rate to be approximately 26% and our non-gap effective tax rate to be approximately 24%. For earnings per share, we expect gap diluted EPS to be in the range of $2.43 to $2.51 for the quarter and non-gap diluted EPS to be in the range of $3.50 to $3.58 for the quarter. We expect a weighted average share count of 49.9 million diluted shares outstanding, which reflects the expected initial delivery of shares under the accelerated share repurchase. Finally, a few key assumptions that support our gap to non-gap measurements for Q4. Stock-based compensation expense is expected to be approximately $45 million. Amortization intangibles is expected to be approximately $17 million. The impact of foreign exchange is expected to be an approximate $1 million loss. Tax-effective non-GAAP adjustments is expected to be around $15 million. We expect a tax shortfall related to stock-based compensation of around $1 million. And one more assumption outside of our gap to non-GAAP items. We now expect interest and other income to be negative $1 million for the quarter. Lastly, my continued thanks to all our ePammers for their dedication and focus on serving our clients and driving results throughout 2026. Operator, let's open the call for questions.

We will now move to our question and answer session. As a reminder, if you have joined by the webinar, please use the raise hand icon, which can be found at the bottom of your webinar application. When you are called on, please unmute your line and ask your question. Please limit your inquiry to one question and one brief follow-up. Your first question will come from the line of Brian Bergen with TD Cohen. Please unmute your line and ask your question.

Hi, guys. Good morning. Thank you. Maybe let's start on fiscal 27. So I appreciate the initial thoughts that you commented on there, Jason. And it looks like the faster 4Q26 headcount expansion, which is encouraging. I imagine that could be tied to the signing of the three strategic deals, which is good to hear. But I wanted to dig in here on the impact of these deals for next year. So can you comment on the shape of these as far as how they'll contribute to the year? It sounds like just a modest 1Q contribution, but I'm curious, like at what point do they hit a steady state? And how does the investment needs and the margin profile of these ultimately evolve?

Yeah, good questions. And so, you know, as we discussed during our, I guess, as we just discussed, we have closed three deals, but probably what's important is we intend to close more as we exit the fiscal year. So I expect that we'll be talking about further large deal closures in our next earnings call. What we are thinking is that we'll see ramping of these deals in Q1 with greater contributions in Q2 of 2027. And so as we look from Q4 to Q1, we clearly are expecting a higher level of organic constant currency growth relative to the Q4 exit. But what we think we'll see is continued ramping as we move from Q1 to Q2. From a profitability standpoint, on average, these deals are expected to be kind of within the EPM norm. If we look at some of the deals, they probably have some startup costs in the first couple of quarters, so maybe a little bit lower margin. But over time, they should operate kind of substantially where we expect the business to operate in coming years.

Okay, okay, I appreciate that. And then maybe on the consulting-led model. So can you talk about the progress in the revised North America go-to-market? What else is needed to reinvigorate growth in the region? I'm just curious, do you have the senior leadership in place that you need or any further reordering needed there? Or is it really just about building the muscle with the foundation in place?

Brian, good morning. I think as we've highlighted before, we're basically increasing our sales capacity, stratifying accounts, changing the way we go to market, how we actually are packaging our services. Clearly, it involves hiring people and also the way we show up on the marketplace, which is the marketing efforts in events or or in conferences, we are actually creating a different posture. So that's what's really happening. Yes, there is going to be continued investments into marketing and sales going forward, but so far the results are encouraging.

Great, thank you.

Your next question will come from the line of Maggie Nolan with William Blair. Please unmute and ask your question.

Hi, thank you. I wanted to follow up on those large deals again. I'm curious, are you primarily taking share from incumbents there? Are you expanding work with existing clients? Is there anything like vendor consolidation happening? What do you feel is contributing to your traction in this area?

Maggie, good morning. Thank you very much. Not so much in the vendor consolidation space, but actually we are taking share from maybe in-house or with other vendors in application maintenance, IT operations, BPO, using agentic operations. I think our AI forward and overall the way we are approaching it, which is a little bit disruptive and novel way, I think that's what resonates with our clients. Yes, in some cases, they are bringing us in as a challenger to also in newer logos to challenge the incumbents and to change overall dynamics of the vendor landscape.

Okay, thank you. And then, Jason, I think you mentioned that as you exit 2026, you're adding headcount for future demand. How closely should we be watching that as a leading indicator of growth, or do you expect some level of efficiency in terms of revenue per head, different from maybe what we would have seen in the past out of EPAMP?

Yeah, I mean, we continue to believe that to grow revenue that we do need to add headcount, so I still think that it certainly is a forward-leading indicator. Clearly, it depends somewhat on where the headcount is being added, and we continue to grow in India. But we also feel that our pricing continues to improve. We do expect at least some modest improvements in pricing again as we enter 2027. So generally, I think, yes, it's a reasonable way to sort of think about our forward trajectory. Clearly, we wouldn't be adding headcount if we didn't see demand.

Thank you.

Your next question will come from the line of Jonathan Lee with Guggenheim. Please unmute your line and go ahead.

Great. Good morning and thanks for taking my questions. The pipeline now also includes new logos where you could come in as a challenger to displace established legacy programs around these larger transformational deals. Can you help size the pipeline, how large the new logo portion is, how you may be faring against incumbents, and how many of the remaining deals you expect to potentially sign in the coming months?

Jonathan, overall, the pipeline continues to be tens of deals. So it's not just that we are signing those deals, but actually we are backfilling them or we are pursuing and lending new deals into the pipeline in the large deal size. I think the new logo is very much the minority in this pipeline itself. I think sizing is difficult, but all of them what we are tracking in this strategic deals are strategic logos and How many are we expecting to win? I think we have probably going to talk to you about a couple of more as we are closing out the year because as we see the progress in how the negotiations are going. but we are still not sure about our win ratio because eventually I don't think it's going to be significantly higher than EPAM average on the longer run. But it's still early days. I think we were talking to you about this for now for almost six months. This is the third earning call where we're addressing it. So it took some time for us to really close this and probably this shows our... Relative inexperience in this space that we actually don't underestimate in the beginning how much time it takes to sign some of these logos. Jason?

Yeah, and Jonathan, as we've talked about over the last couple of quarters, we've had more than 10 deals in the pipeline. The number of deals continue to grow. As FB said, we closed three and all of the deals are generally in the, let's call it, high tens of millions of dollars to over $100 million of TCV, but all multi-year deals. So three years in some cases, three plus two in others.

Thanks for that candor. And I wanted to dig in a little bit around the software clients in North America. Have the pressures you flagged among SaaS and software clients, including spend being redirected toward tokens, GPUs, and infrastructure, stabilized, intensified, or broadened since July, especially since you had cited the year-on-year declines again this quarter? When do you expect that vertical to trough, and how are you positioning the company to recapture some of that spend over time?

I don't think the pressure got worse sequentially and it hasn't been reversed. It stayed concentrated in non-AI services space. And I think it just continues to be the same in some way. I think it's shifting a little bit as we're talking more and more to some of our clients about forward deployed engineers. We're talking about supporting them in the rollouts, but it's not yet pivoted. It will take some quarters to stabilize.

Thanks for that.

Thank you.

Your next question will come from Jamie Friedman with Susquehanna International Group. Please unmute your line and go ahead.

Hi. Congratulations on a good quarter here. So at a very high level, FB, do you see the company returning to the double-digit growth trajectory over time? that you had articulated at the Analyst Day last year.

Jamie, at a very high level, definitely not in 2027, I do foresee that we can actually get to double-digit growth.

Okay. But over time, right? But it's not 2027, right? And then, Epi, part of, I thought, the strategy was that what was working for you in Europe You could duplicate or attempt to duplicate or at least transfer to the U.S. if I'm remembering that right. Yes. So and it looks like that's happening. But where are you in the journey of that footprint?

It's a multi-quarter journey. I don't think we're going to declare a turning point yet. We're making the investment. We changed the organization. We continue increasing the sales force. We're changing the way we are pursuing clients. So I think we are well on the way. I think it will take time. A couple of more quarters to actually really turn it, but we see good signs because of the new logos which are arriving, the stabilizing of somewhat of the revenues, and also the attractions what we're having with our clients.

Perfect.

Thank you.

I'll drop back in the queue.

Next question will come from David Grossman with Stifle. Please unmute your line and go ahead.

Good morning. Thank you. You know, if I'm understanding the guidance correctly, it implies a deceleration in year-over-year organic constant currency growth in the fourth quarter. And I assume that reflects, you know, some of the challenges you talked about in some of the verticals in the U.S. You know, perhaps you could just help us understand that dynamic in terms of where we are in the cycle, if you will, with these verticals. And at what point do these newer deals that you've signed more than compensate for the headwinds that you're experiencing in those verticals?

Yeah, so just to clarify, so we do expect at or above 1% organic constant currency growth as we exit Q4, and we do expect that as we enter 2027 that you'd see improving organic constant currency growth rates. But you're right, David, it clearly is a deceleration versus Q3 and Q2. We did have a very strong Q4, including some revenue in 2025, including some revenue that was recognized where the work had been done in prior periods, but we weren't able to book the revenue in those quarters. So the compare is a little difficult, but maybe I'll now turn over the harder part of this question to FB as to kind of what we see as we look forward.

I mean, the vertical performance are mixed, right? As we mentioned, the new deals are in energy and in financial services. So that's going to drive, continue will drive the growth of the large deals in the coming year once we're ramping them up. But at the same time, I think each sector has, and each vertical has its own particle issues and challenges. I think we talked quite a bit about software and high tech, and I think we addressed that for a while. Business information and media is a sector which continues to be challenged by AI itself, and that's a sector-wide challenge which we are facing. I think we will see a turning point due to the energy, sub-vertical of energy in the emerging vertical of ours. but I think the consumer and retail is the one which somewhat changed and they are under pressure due to the continued Global inflation, inflationary pressures and cost pressures, which is very much the fuel prices. This is where it manifests. When are they going to turn? I think that's very much going to tie to where the macro is leading. So I believe that's vertical is very much tied to the macro environment today.

Do you see, you said stability and high tech. What about the other two? Are they still declining in the fourth quarter? I think so, yes. Okay, got it. And then a question on the gross margin. I know there's some noise in there from, it sounds like the tax credits that you're getting in, or the tax programs, I guess, in Poland. But It looks like you had a pretty strong gross margin improvement, even with utilization not providing a tailwind, maybe even sequentially a little bit of a headwind. So I'm just curious what's going on in the gross margin. And I think, Jason, you said gross margin, just by virtue of what's going on in Poland, could be flattish to down next year. But just trying to understand that dynamic.

Yeah, so, you know, we continue to focus on gross margin improvement. We clearly got price improvement in 2026 and that has kind of helped throughout the 2026 fiscal year. We also expect to see some price in 2027 and early indications that we will be able to get some price increases. We've been focused on improving non-TNM, or what is referred to as fixed fee revenue profitability. It's still below company average, but it's definitely improving on a year-over-year basis, David, so that has contributed. We've been focused on sort of basic sort of blocking and tackling, including better efficiency in India, so that's been a positive. And then the AI-native revenues generate profitability somewhat greater than company average. So, you know, that also probably has a modest positive impact. So I think all of those things have kind of contributed to an improvement in gross margin throughout the year. Gross margin actually came in a little bit better than we expected in Q3. Utilization was slightly higher than we thought it was going to be as we entered the quarter. As a result, we have somewhat lower bench costs. I do want to just be a little bit more specific on the Poland R&D benefit. We have been getting benefit for the last couple of years. And actually in 2026, the benefit is actually somewhat lower than it was in 2025. And then as we look ahead, the benefit is going to go from about $40 million in 2026 to about $20 million. in 2027. So it definitely will have some tens of basis points of impact. At the same time, all the things that we talked about in 2026, we intend to continue to focus on in 2027.

Great. Thanks very much.

Thank you.

Your next question will come from Tyler DuPont with Wells Fargo. Please unmute your line and go ahead with your question.

Good morning, FDN, Jason. This is Tyler DuPont on for Jason Kupferberg. Thanks for taking our questions. Nice to see the performance in the quarter. I want to start. It was encouraging to see AI native revenue guidance picked up in the quarter. and 185 million in 3Q, implying over 130% year-on-year growth. But just to play devil's advocate for a second, the flip side of that is that the non-AI business declined 6% year-on-year. So maybe if you can just take a minute to help us understand the demand dynamics between these two opportunities and to what extent you're seeing these AI opportunities beginning to pressure the non-AI part of the business, if at all.

So, Tyler, good talking to you. The AI native revenues did grow to $185 million per quarter in Q3, and clearly we see good trajectory until the end of the year. That's why we increased to $650 million, the guide for that. I think the way we are thinking about this is as we highlighted in the past call, there are parts of our services which in Q3 did experience some level of shrinkage. So it went down. The clients are not looking for that skill set. But other parts of our business, people just really transforming the spend. They are no longer building digital platforms. They are building the new AI-native solutions. But also you need to remember that our AI-native revenue definition is very, very narrow and does not include any part of our AI-assisted revenues, which continues to grow, or anything which is AI foundation elements. But you are right, mathematically, non-AI revenue is not growing with the same speed.

Great. And then just as a follow up, I wanted to take a step back and ask about macro backdrop, particularly in the context of this week's election results. How are you guys looking at the potential state of play in the market now versus this time last week? Are there any call outs worth mentioning on a vertical basis or just broad strokes for the market? Just how are you guys thinking about demand today?

Yeah, I think it's too early to, you know, to sort of guesstimate kind of what the impact can be on the business. I think we're seeing the same thing that everyone else is seeing. And, you know, we wouldn't have changed our expectations based on the election results.

Great. Thanks so much.

Thank you.

Your next question will come from Puneet Jain with JP Morgan. Please unmute your line and go ahead with your question.

Hey, thanks for taking my question and nice quarter. So as we think about growth rate for next year, you've highlighted several potential tailwinds like contribution from large deals, potential benefit from go-to-market investments, or your commentary around demand seems like more favorable. So we recognize it's too early to provide like a specific guidance for next year, but directionally, how are you thinking about trajectory of growth as these tailwinds evolve? What would need to come together for growth to go from where it is right now to potentially what you delivered last year in 2025?

I'll start and then I'll let Epi kind of provide some additional sort of clarification. I think what you're going to see, Puneet, is, as we said, the contribution from some of the new deals that we've won and others that we expect to win will contribute revenues somewhat in Q2 and somewhat more in Q2. And as we begin to sort of build somewhat more in the second half of 2027, I think you're also beginning to see some Thank you very much. certainly off of this very low Q4 exit. And generally, obviously, you know, or generally we wouldn't be adding headcount if we didn't expect to see some additional demand, including, you know, ramping of these new deals that we talked about today.

And I think, Punit, I want to just go back to one thing, which I think we kind of talked about, the frontier AI service and partnerships, which we started to invest this year. That shows a good promise at this point of time, just from the partnerships. We have over 200 new opportunities, which we are tracking. So we think that has legs and potential to scale and provide the necessary support to lift us up into previous growth rates. But it will be later next year or a little bit later after that.

Okay. And it's nice to see your AI-native services continue to grow 13% of revenue. Why is this traction not accompanied with a corresponding increase in non-TNM revenue? 77, 78% of revenue, it seems like, still stems from TNM. So how fast should we expect this non-TNM revenue to evolve over the next two or three years?

Yeah, so certainly the newer deals that we've talked about, particularly, again, these three larger deals, and then much of the AI native does have sort of a fixed fee or non-TNM component to it. Now, it's not to say that there isn't still some TNM revenue streams embedded in those deals and in the AI native. Thank you. Thank you. Thank you.

Next question will come from Paul Obrecht with Wolf Research Please unmute your line and go ahead with your question

Hi, thanks. This is Paul Obrecht on for Darren Peller. FB, clearly cybersecurity has become top of mind for many enterprises this year. And in your pair of remarks, it sounds like you're seeing that accelerated demand. Can you discuss whether the cyber demand is resulting in net new investment or more so a reallocation of existing spend? And then shifting to EPAM specifically, can you just touch on where your cyber capabilities stand today and maybe what investments you're making to strengthen them?

Thank you for the question. So as you might remember, EPAM made specific acquisitions in the past to build out our initial cyber capability. That very much allowed us to build some level of scanning capabilities and also advisory around cyber. But most recently, and actually really just only since late August, early September, cyber remediation became a big theme. That's where Not just with our partnership with the Frontier Labs and with Wizz is playing a part, but also with our clients who are realizing that they need to remediate hundreds, sometimes thousands, sometimes tens of thousands of vulnerabilities, which requires either a lot of engineering skills or AI native remediation, which we brought to the market in the form of AI. as an AI native remediation service. So we see this as a growth opportunity. We see this as an ongoing spend from our clients and our clients are reallocating their budgets to address these things. It's clearly playing to our strengths, not just the strengths on our advising on cybersecurity, but in order to fix those issues, in order to remediate the tens of thousands of issues in enterprise systems, you require a massive and very capable engineering skill set. It's very much in our forte. We're focusing on this. This is what we're tracking, and we expect to see other major revenue zones going forward.

That's helpful color. Thank you. And then, Jason, can you provide a bit more detail on the strength you're seeing in the financial services vertical? It really seems like this is an industry-wide phenomenon. And how durable you view this trend, especially as we look forward to 2027?

Certainly, we're seeing strength in banking. We're seeing strength in asset management. We're seeing strength in insurance. We're seeing strength in insurance in both Europe and in North America. And we do expect to continue to see strength as we exit the year.

Thanks so much.

Thank you.

Your final question will come from the line of Sean Kennedy with Mizuho. Please unmute your line and go ahead.

Hi, good morning. Congrats on the AI-led deals and the results here. So I was wondering if you could just discuss a bit more about the types of services in these deals, what you are specifically doing for these customers, and EPM's right to win. Is it primarily a tech advantage?

We launched an AI-run transform playbook, which we brought to the market back in 2025. That's basically our go-to-market notion, and we continue executing on that. We are seeing how you are transforming delivery, engineering itself. We're helping clients building the platforms, helping changing how they engineer solutions, how they upscale their talents, bring tooling, how they build out their factories. This is one aspect. The second aspect is How are you transforming overall their businesses? That's the business transformation element with ideas, with engineering the right context, the semantic layers, and actually building this out, which is A, sustainable, B, delivers the right results and becomes something you can rely on, it's predictable. What's EPAM's advantage is the engineering skillset. Building these solutions are difficult to make it really work in that enterprise requires integration, requires you to do the data work, tackling legacy problems, tackling integration issues. And that's where I think it plays to our strengths.

Got it. And then as we look to 27, nice to hear the momentum with the large deals, but is there anything else to look out for in terms of Thank you very much.

There are no more questions at this time. I'd now like to turn the call over to Balazs Fejes for closing remarks.