EPAM Systems (NYSE: EPAM) reported Q2 EPS of $0.80, $0.01 worse than the analyst estimate of $0.81. Revenue for the quarter came in at $349 million versus the consensus estimate of $341.59 million.

GUIDANCE:

EPAM Systems sees Q3 2017 EPS of at least $0.84, versus the consensus of $0.90.

Full Year

• Revenue growth for fiscal 2017 will now be at least 23%, after reflecting an updated foreign exchange assumption of an estimated 0% for currency headwinds. We expect constant currency growth will continue to be at least 23%.• We expect GAAP income from operations to now be in the range of 12% to 13% of revenue and non-GAAP income from operations to now be in the range of 16% to 17% of revenue.• We now expect our GAAP effective tax rate to be approximately 16% and non-GAAP effective tax rate to be approximately 22%. This reflects the adoption of the accounting pronouncement related to stock based compensation effective January 1st 2017.• For earnings per share:

• We now expect GAAP diluted EPS will be at least $2.57 for the full year driven primarily by a lower effective tax rate attributable to greater than expected excess income tax benefit from stock-based compensation; and
• Non-GAAP diluted EPS will now be at least $3.29 for the full year based on an expected weighted average share count of 55.2 million fully diluted shares outstanding. The updated Non-GAAP EPS reflects greater than expected employee stock option exercises driving both higher total share count and greater payroll tax expense.

Third Quarter

• Revenues will be at least $367 million for the third quarter, reflecting a year-over-year growth rate of at least 23% after estimating 1% for currency tailwinds, meaning expected constant currency growth will be at least 22%.
• For the third quarter, we expect GAAP income from operations to be in the range of 11.5% to 12.5% of revenue and non-GAAP income from operations to be in the range of 15.5% to 16.5% of revenue.
• We expect our GAAP effective tax rate to be approximately 16.5% and non-GAAP effective tax rate to be approximately 22%.
• We expect GAAP diluted EPS will be at least $0.68 for the quarter, and non-GAAP diluted EPS will be at least $0.84 for the quarter based on an expected weighted average share count of 55.6 million fully diluted shares outstanding.

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