0001352010-22-000057 | 10-Q | XBRL Viewer

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Cover Page - shares	9 Months Ended
Cover Page - shares	Sep. 30, 2022	Oct. 31, 2022
Cover [Abstract]
Document Type	10-Q
Document Quarterly Report	true
Document Period End Date	Sep. 30, 2022
Document Transition Report	false
Entity File Number	001-35418
Entity Registrant Name	EPAM SYSTEMS, INC.
Entity Incorporation, State or Country Code	DE
Entity Tax Identification Number	22-3536104
Entity Address, Street Name	41 University Drive
Entity Address, Suite No.	Suite 202
Entity Address, City or Town	Newtown
Entity Address, State or Province	PA
Entity Address, Postal Zip Code	18940
City Area Code	267
Local Phone Number	759-9000
Title of 12(b) Security	Common Stock, par value $0.001 per share
Trading Symbol	EPAM
Security Exchange Name	NYSE
Entity Current Reporting Status	Yes
Entity Interactive Data Current	Yes
Entity Filer Category	Large Accelerated Filer
Entity Small Business	false
Entity Emerging Growth Company	false
Entity Shell Company	false
Entity Common Stock, Shares Outstanding		57,513,488
Entity Central Index Key	0001352010
Current Fiscal Year End Date	--12-31
Document Fiscal Year Focus	2022
Document Fiscal Period Focus	Q3
Amendment Flag	false

CONDENSED CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands	Sep. 30, 2022	Dec. 31, 2021
Current assets
Cash and cash equivalents	$ 1,487,599	$ 1,446,625
Trade receivables and contract assets, net of allowance of $18,666 and $5,521, respectively	917,139	768,928
Short-term investments	60,216	0
Prepaid and other current assets	63,032	53,927
Total current assets	2,527,986	2,269,480
Property and equipment, net	209,700	236,214
Operating lease right-of-use assets, net	148,219	184,841
Intangible assets, net	79,220	101,143
Goodwill	505,542	530,723
Deferred tax assets	214,219	143,928
Other noncurrent assets	50,717	56,898
Total assets	3,735,603	3,523,227
Current liabilities
Accounts payable	28,288	24,847
Accrued compensation and benefits expenses	456,965	502,997
Accrued expenses and other current liabilities	161,922	142,014
Short-term debt	7,790	16,018
Income taxes payable, current	34,390	27,440
Operating lease liabilities, current	38,602	50,104
Total current liabilities	727,957	763,420
Long-term debt	28,198	30,234
Income taxes payable, noncurrent	57,375	42,454
Operating lease liabilities, noncurrent	122,700	142,802
Other noncurrent liabilities	40,729	48,480
Total liabilities	976,959	1,027,390
Commitments and contingencies (Note 13)
Stockholders’ equity
Common stock, $0.001 par value; 160,000 shares authorized; 57,516 and 56,868 shares issued, 57,502 and 56,849 shares outstanding at September 30, 2022 and December 31, 2021, respectively	57	57
Additional paid-in capital	801,950	711,912
Retained earnings	2,093,909	1,829,532
Treasury stock	(118)	(177)
Accumulated other comprehensive loss	(138,632)	(54,207)
Total EPAM Systems Inc. stockholders’ equity	2,757,166	2,487,117
Noncontrolling interest in consolidated subsidiaries	1,478	8,720
Total stockholders’ equity	2,758,644	2,495,837
Total liabilities and stockholders’ equity	$ 3,735,603	$ 3,523,227

CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($) $ in Thousands	Sep. 30, 2022	Dec. 31, 2021
Current assets
Trade receivables and contract assets allowance	$ 18,666	$ 5,521
Stockholders' equity
Common stock, par value (in usd per share)	$ 0.001	$ 0.001
Common stock, shares authorized (in shares)	160,000,000	160,000,000
Common stock, shares issued (in shares)	57,516,000	56,868,000
Common stock, shares outstanding (in shares)	57,502,000	56,849,000

CONDENSED CONSOLIDATED STATEMENTS OF INCOME - USD ($) shares in Thousands, $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2022	Sep. 30, 2021	Sep. 30, 2022	Sep. 30, 2021
Income Statement [Abstract]
Revenues	$ 1,226,920	$ 988,539	$ 3,593,395	$ 2,650,680
Operating expenses:
Cost of revenues (exclusive of depreciation and amortization)	826,796	653,374	2,453,955	1,756,430
Selling, general and administrative expenses	198,021	169,498	667,825	457,797
Depreciation and amortization expense	21,876	21,543	69,126	59,804
Income from operations	180,227	144,124	402,489	376,649
Interest and other income/(loss), net	4,228	(5,325)	5,642	2,629
Foreign exchange gain/(loss)	6,691	(3,441)	(102,035)	(5,835)
Income before provision for income taxes	191,146	135,358	306,096	373,443
Provision for income taxes	35,092	19,702	41,719	34,070
Net income	$ 156,054	$ 115,656	$ 264,377	$ 339,373
Net income per share:
Basic (in usd per share)	$ 2.72	$ 2.04	$ 4.62	$ 6.01
Diluted (in usd per share)	$ 2.63	$ 1.95	$ 4.47	$ 5.75
Shares used in calculation of net income per share:
Basic (in shares)	57,420	56,649	57,194	56,429
Diluted (in shares)	59,357	59,203	59,108	58,999

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2022	Sep. 30, 2021	Sep. 30, 2022	Sep. 30, 2021
Statement of Comprehensive Income [Abstract]
Net income	$ 156,054	$ 115,656	$ 264,377	$ 339,373
Other comprehensive loss:
Change in foreign currency translation adjustments, net of tax	(56,923)	(10,761)	(72,645)	(11,655)
Change in unrealized loss on hedging instruments, net of tax	(5,352)	(2,067)	(11,780)	(4,108)
Defined benefit pension plans - actuarial loss, net of tax	0	0	0	(626)
Other comprehensive loss	(62,275)	(12,828)	(84,425)	(16,389)
Comprehensive income	$ 93,779	$ 102,828	$ 179,952	$ 322,984

- Definition

The portion of profit or loss for the period, net of income taxes, which is attributable to the parent.

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+ Details

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY - USD ($) shares in Thousands, $ in Thousands	Total	Common Stock	Common Stock Restricted Stock Units	Additional Paid-in Capital	Retained Earnings	Treasury Stock	Accumulated Other Comprehensive (Loss)/Income	Non-controlling interest in consolidated subsidiaries
Balance, beginning of period (in shares) at Dec. 31, 2020		56,108
Balance, beginning of period at Dec. 31, 2020	$ 1,983,018	$ 56		$ 660,771	$ 1,347,880	$ (177)	$ (25,512)	$ 0
Treasury stock, beginning of period (in shares) at Dec. 31, 2020						20
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Restricted stock units vested (in shares)			248
Equity withheld for employee taxes (in shares)		(84)
Equity withheld for employee taxes	(31,935)			(31,935)
Stock-based compensation expense	14,624			14,624
Exercise of stock options (in shares)		109
Exercise of stock options	4,424			4,424
Other comprehensive income (loss)	(15,238)						(15,238)
Net income	109,046				109,046
Balance, end of period (in shares) at Mar. 31, 2021		56,381
Balance, end of period at Mar. 31, 2021	2,063,939	$ 56		647,884	1,456,926	$ (177)	(40,750)	0
Treasury stock, end of period (in shares) at Mar. 31, 2021						20
Balance, beginning of period (in shares) at Dec. 31, 2020		56,108
Balance, beginning of period at Dec. 31, 2020	1,983,018	$ 56		660,771	1,347,880	$ (177)	(25,512)	0
Treasury stock, beginning of period (in shares) at Dec. 31, 2020						20
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Other comprehensive income (loss)	(16,389)
Net income	339,373
Balance, end of period (in shares) at Sep. 30, 2021		56,708
Balance, end of period at Sep. 30, 2021	2,339,119	$ 57		693,887	1,687,253	$ (177)	(41,901)	0
Treasury stock, end of period (in shares) at Sep. 30, 2021						20
Balance, beginning of period (in shares) at Mar. 31, 2021		56,381
Balance, beginning of period at Mar. 31, 2021	2,063,939	$ 56		647,884	1,456,926	$ (177)	(40,750)	0
Treasury stock, beginning of period (in shares) at Mar. 31, 2021						20
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Restricted stock units vested (in shares)			19
Equity withheld for employee taxes (in shares)		(6)
Equity withheld for employee taxes	(2,631)			(2,631)
Stock-based compensation expense	13,792			13,792
Exercise of stock options (in shares)		219
Exercise of stock options	11,220	$ 1		11,219
Other comprehensive income (loss)	11,677						11,677
Net income	114,671				114,671
Balance, end of period (in shares) at Jun. 30, 2021		56,613
Balance, end of period at Jun. 30, 2021	2,212,668	$ 57		670,264	1,571,597	$ (177)	(29,073)	0
Treasury stock, end of period (in shares) at Jun. 30, 2021						20
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Restricted stock units vested (in shares)			6
Equity withheld for employee taxes (in shares)		(2)
Equity withheld for employee taxes	(1,368)			(1,368)
Stock-based compensation expense	20,541			20,541
Exercise of stock options (in shares)		91
Exercise of stock options	4,450			4,450
Other comprehensive income (loss)	(12,828)						(12,828)
Net income	115,656				115,656
Balance, end of period (in shares) at Sep. 30, 2021		56,708
Balance, end of period at Sep. 30, 2021	$ 2,339,119	$ 57		693,887	1,687,253	$ (177)	(41,901)	0
Treasury stock, end of period (in shares) at Sep. 30, 2021						20
Balance, beginning of period (in shares) at Dec. 31, 2021	56,849	56,849
Balance, beginning of period at Dec. 31, 2021	$ 2,495,837	$ 57		711,912	1,829,532	$ (177)	(54,207)	8,720
Treasury stock, beginning of period (in shares) at Dec. 31, 2021						20
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Restricted stock units vested (in shares)			193
Equity withheld for employee taxes (in shares)		(67)
Equity withheld for employee taxes	(18,376)			(18,376)
Stock-based compensation expense	22,702			22,702
Exercise of stock options (in shares)		158
Exercise of stock options	2,884			2,884
Other comprehensive income (loss)	(31,943)						(31,943)
Purchase of subsidiary shares from noncontrolling interest	(7,067)							(7,067)
Net income	89,719				89,719
Balance, end of period (in shares) at Mar. 31, 2022		57,133
Balance, end of period at Mar. 31, 2022	$ 2,553,756	$ 57		719,122	1,919,251	$ (177)	(86,150)	1,653
Treasury stock, end of period (in shares) at Mar. 31, 2022						20
Balance, beginning of period (in shares) at Dec. 31, 2021	56,849	56,849
Balance, beginning of period at Dec. 31, 2021	$ 2,495,837	$ 57		711,912	1,829,532	$ (177)	(54,207)	8,720
Treasury stock, beginning of period (in shares) at Dec. 31, 2021						20
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Exercise of stock options (in shares)	445
Other comprehensive income (loss)	$ (84,425)
Net income	$ 264,377
Balance, end of period (in shares) at Sep. 30, 2022	57,502	57,502
Balance, end of period at Sep. 30, 2022	$ 2,758,644	$ 57		801,950	2,093,909	$ (118)	(138,632)	1,478
Treasury stock, end of period (in shares) at Sep. 30, 2022						14
Balance, beginning of period (in shares) at Mar. 31, 2022		57,133
Balance, beginning of period at Mar. 31, 2022	2,553,756	$ 57		719,122	1,919,251	$ (177)	(86,150)	1,653
Treasury stock, beginning of period (in shares) at Mar. 31, 2022						20
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Restricted stock units vested (in shares)			24
Equity withheld for employee taxes (in shares)		(6)
Equity withheld for employee taxes	(1,843)			(1,843)
Stock-based compensation expense	24,902			24,902
Exercise of stock options (in shares)		147
Exercise of stock options	6,410			6,410
Issuance of common stock from employee stock purchase plan (in shares)		55
Issuance of common stock from employee stock purchase plan	12,384			12,384
Other comprehensive income (loss)	9,793						9,793
Net income	18,604				18,604
Balance, end of period (in shares) at Jun. 30, 2022		57,353
Balance, end of period at Jun. 30, 2022	2,624,006	$ 57		760,975	1,937,855	$ (177)	(76,357)	1,653
Treasury stock, end of period (in shares) at Jun. 30, 2022						20
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Restricted stock units vested (in shares)			8
Equity withheld for employee taxes (in shares)		(2)
Equity withheld for employee taxes	(837)			(837)
Stock issued in connection with other2021 acquisitions (in shares)		6				(6)
Stock issued in connection with other2021 acquisitions	2,000			1,941		$ 59
Stock-based compensation expense	30,597			30,597
Exercise of stock options (in shares)		137
Exercise of stock options	9,223			9,223
Other comprehensive income (loss)	(62,275)						(62,275)
Purchase of subsidiary shares from noncontrolling interest	(197)			51				(248)
Contributions from noncontrolling interest	73							73
Net income	$ 156,054				156,054
Balance, end of period (in shares) at Sep. 30, 2022	57,502	57,502
Balance, end of period at Sep. 30, 2022	$ 2,758,644	$ 57		$ 801,950	$ 2,093,909	$ (118)	$ (138,632)	$ 1,478
Treasury stock, end of period (in shares) at Sep. 30, 2022						14

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands	9 Months Ended
	Sep. 30, 2022	Sep. 30, 2021
Cash flows from operating activities:
Net income	$ 264,377	$ 339,373
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization expense	69,126	59,804
Operating lease right-of-use assets amortization expense	37,336	46,693
Bad debt expense	12,888	2,573
Deferred taxes	(54,851)	(6,948)
Stock-based compensation expense	68,292	77,638
Unrealized loss on derivative	20,469	0
Impairment charges	21,212	0
Other	63,914	4,312
Changes in assets and liabilities:
Trade receivables and contract assets	(196,675)	(232,710)
Prepaid and other assets	(7,787)	(8,768)
Accounts payable	8,769	(6,468)
Accrued expenses and other liabilities	(7,100)	86,822
Operating lease liabilities	(41,395)	(48,158)
Income taxes payable	19,460	(26,450)
Net cash provided by operating activities	278,035	287,713
Cash flows from investing activities:
Purchases of property and equipment	(60,134)	(54,884)
Purchases of short-term investments	(60,000)	0
Proceeds from short-term investments	0	60,000
Acquisition of business, net of cash acquired	(10,530)	(160,964)
Purchases of non-marketable securities	(1,625)	(2,544)
Other investing activities, net	(19,499)	(100)
Net cash used in investing activities	(151,788)	(158,492)
Cash flows from financing activities:
Proceeds from issuance of stock under the employee incentive programs	31,368	20,176
Payments of withholding taxes related to net share settlements of restricted stock units	(22,101)	(34,108)
Proceeds from debt	4,114	0
Repayment of debt	(11,542)	0
Payment of contingent consideration for previously acquired business	(6,626)	(797)
Purchase of noncontrolling interest	(2,254)	0
Other financing activities, net	(3,025)	231
Net cash used in financing activities	(10,066)	(14,498)
Effect of exchange rate changes on cash, cash equivalents and restricted cash	(75,876)	(12,691)
Net increase in cash, cash equivalents and restricted cash	40,305	102,032
Cash, cash equivalents and restricted cash, beginning of period	1,449,347	1,323,533
Cash, cash equivalents and restricted cash, end of period	$ 1,489,652	$ 1,425,565

CONDENSED CONSOLIDATED STATEMENT OF CASH FLOW (Parenthetical) - USD ($) $ in Thousands	Sep. 30, 2022	Dec. 31, 2021
Statement of Cash Flows [Abstract]
Cash and cash equivalents	$ 1,487,599	$ 1,446,625
Restricted cash in Prepaid and other current assets	$ 201	$ 495
Restricted Cash and Cash Equivalents, Noncurrent, Statement of Financial Position [Extensible Enumeration]	Other noncurrent assets	Other noncurrent assets
Restricted cash in Other noncurrent assets	$ 1,852	$ 2,227
Total restricted cash	2,053	2,722
Total cash, cash equivalents and restricted cash	$ 1,489,652	$ 1,449,347

BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES	9 Months Ended
BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES	Sep. 30, 2022
Accounting Policies [Abstract]
BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES	BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES EPAM Systems, Inc. (the “Company” or “EPAM”) is a leading digital transformation services and product engineering company, providing digital platform engineering and software development services to customers located around the world, primarily in North America, Europe, and Asia. The Company’s industry expertise includes financial services, travel and consumer, software and hi-tech, business information and media, life sciences and healthcare, as well as several other industries. The Company is incorporated in Delaware with headquarters in Newtown, Pennsylvania. Basis of Presentation — The accompanying unaudited condensed consolidated financial statements of EPAM have been prepared in accordance with generally accepted accounting principles in the United States (“GAAP” or “U.S. GAAP”) and Article 10 of Regulation S-X under the Securities Exchange Act of 1934, as amended. The unaudited condensed consolidated financial statements include the financial statements of EPAM Systems, Inc. and its subsidiaries with all intercompany balances and transactions eliminated. These unaudited condensed consolidated financial statements and accompanying notes should be read in conjunction with the Company’s audited consolidated financial statements and the notes thereto for the year ended December 31, 2021 included in its Annual Report on Form 10-K. The preparation of these condensed consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts reported in these condensed consolidated financial statements and accompanying notes. Actual results could differ from those estimates, and such differences may be material to the unaudited condensed consolidated financial statements. Operating results for the interim periods are not necessarily indicative of results that may be expected to occur for the entire year. In management’s opinion, the accompanying unaudited condensed consolidated financial statements include all normal and recurring adjustments necessary for a fair presentation of the Company’s financial position as of September 30, 2022 and the results of its operations and its cash flows for the periods presented. Risks and Uncertainties — As a result of its global operations, the Company may be subject to certain inherent risks. Concentration of Credit — Financial instruments that potentially subject the Company to concentration of credit risk consist primarily of cash, cash equivalents, short-term investments and trade receivables. The Company maintains cash, cash equivalents and short-term investments with financial institutions. The Company believes its credit policies reflect normal industry terms and business risk and there is no expectation of non-performance by the counterparties. The Company has cash in several countries, including Belarus, Ukraine and Russia, which have been impacted by the invasion of Ukraine (see Note 2 “Impact of the Invasion of Ukraine”) and where the banking sector remains subject to periodic instability, banking and other financial systems generally do not meet the banking standards of more developed markets, and bank deposits made by corporate entities are not insured. As of September 30, 2022, the Company had $63.8 million of cash and cash equivalents in banks in Ukraine, $45.4 million of cash and cash equivalents in banks in Belarus, and $33.1 million of cash and cash equivalents in banks in Russia. Cash in these countries is used for the operational needs of the local entities and cash balances change with the expected operating needs of these entities. The Company regularly monitors cash held in these countries and, to the extent the cash held exceeds amounts required to support its operations in these countries, the Company distributes the excess funds into markets with more developed banking sectors to the extent it is possible to do so. The Company places its cash and cash equivalents with financial institutions considered stable in the region, limits the amount of credit exposure with any one financial institution and conducts ongoing evaluations of the credit worthiness of the financial institutions with which it does business. However, a banking crisis, bankruptcy or insolvency of banks that process or hold the Company’s funds, or sanctions may result in the loss of deposits or adversely affect the Company’s ability to complete banking transactions, which could adversely affect the Company’s business and financial condition. Trade receivables are generally dispersed across many customers operating in different industries; therefore, concentration of credit risk is limited. Historically, credit losses and write-offs of trade receivables have not been material to the consolidated financial statements. If any of our customers enter bankruptcy protection or otherwise take steps to alleviate their financial distress, the Company’s credit losses and write-offs of trade receivables could increase, which would negatively impact its results of operations. See Note 2 “Impact of the Invasion of Ukraine” for further discussion regarding trade receivables and contract assets from customers located in Russia. Foreign currency risk — The Company’s global operations are conducted predominantly in U.S. dollars. Other than U.S. dollars, the Company generates revenues in various currencies, principally, euros, British pounds, Swiss francs, Canadian dollars and Russian rubles and incurs expenditures principally in euros, Polish zlotys, Indian rupees, British pounds, Swiss francs, Hungarian forints, Mexican pesos, Colombian pesos, Canadian dollars, Chinese yuan renminbi and Russian rubles. The Company’s international operations expose it to risk of adverse fluctuations in foreign currency exchange rates through the remeasurement of foreign currency denominated assets and liabilities (both third-party and intercompany) and translation of earnings and cash flows into U.S. dollars. The Company has a hedging program whereby it enters into a series of foreign exchange forward contracts with durations of twelve months or less that are designated as cash flow hedges of forecasted Polish zloty, Indian rupee and Hungarian forint transactions. See Note 6, “Derivative Financial Instruments” for further discussion regarding the Company’s termination of the hedging program for the Russian ruble. Interest rate risk — The Company’s exposure to interest rate risk is influenced by the changes in interest rates received on cash and cash equivalent deposits and short-term investments and paid on any outstanding balance on the Company’s borrowings, mainly under the 2021 Credit Agreement, which is subject to a variety of rates depending on the type and timing of funds borrowed (See Note 8 “Debt”). The Company does not believe it is exposed to material direct risks associated with changes in interest rates related to these deposits and borrowings. Adoption of New Accounting Standards There were no recently adopted accounting standards which had a material impact on the Company’s consolidated financial position, results of operations, changes in stockholders’ equity and cash flows. Pending Accounting Standards From time to time, new accounting pronouncements are issued by the FASB or other standards-setting bodies that the Company will adopt according to the various timetables the FASB specifies. The Company believes the impact of recently issued standards that are not yet effective will not have a material impact on its consolidated financial position, results of operations and cash flows upon adoption.

IMPACT OF THE INVASION OF UKRAINE

9 Months Ended

Sep. 30, 2022

Discontinued Operations and Disposal Groups [Abstract]

IMPACT OF THE INVASION OF UKRAINE

On February 24, 2022, Russian forces attacked Ukraine and its people and EPAM has repeatedly called for an immediate end to this unlawful and unconscionable attack. As of September 30, 2022, the Company had $71.2 million of Property and equipment, net in Ukraine consisting of a building classified as construction-in-progress located in Kyiv with a net book value of $51.2 million, laptops with a net book value of $12.7 million, most of which are in the possession of employees, various office furniture, equipment and supplies with a net book value of $5.9 million, and leasehold improvements located throughout Ukraine with a net book value of $1.4 million. Additionally, as of September 30, 2022, the Company had Operating lease right-of-use assets located throughout Ukraine with a net book value of $14.4 million. Through the issuance date of these interim financial statements, the Company is not aware of any damage to its long-lived assets in Ukraine and the Company expects to continue to use these assets as part of its global delivery model.

On March 4, 2022, the Company announced a $100.0 million humanitarian commitment to support its employees and their families in and displaced from Ukraine. This humanitarian commitment is in addition to donations from EPAM's customers and employees and the work of EPAM volunteers on the ground. During the three and nine months ended September 30, 2022, the Company expensed $4.5 million and $38.5 million, respectively, related to this commitment, which included special cash payments to support impacted employees, financial and medical support for impacted families, travel, meals and lodging expenses, and donations to third-party humanitarian organizations. Of the expensed amount for the three months ended September 30, 2022, $2.9 million is classified in Cost of revenues (exclusive of depreciation and amortization) and $1.6 million is classified in Selling, general and administrative expense on the condensed consolidated financial statements. Of the expensed amount for the nine months ended September 30, 2022, $25.3 million is classified in Cost of revenues (exclusive of depreciation and amortization) and $13.2 million is classified in Selling, general and administrative expense on the condensed consolidated financial statements.

The Company executed its business continuity plans following the invasion to assist relocating employees residing in Ukraine, Belarus and Russia to other countries and to assign delivery personnel in locations outside of the region to serve in unbilled standby or backup capacities to ensure the continuity of delivery for its customers who have substantial delivery exposure to Ukraine or other delivery concerns resulting from the invasion and ongoing war. In addition to costs incurred as part of EPAM’s humanitarian commitment to Ukraine, during the three months ended September 30, 2022, the Company incurred expenses of $4.4 million related to its geographic repositioning efforts, classified as Selling, general and administrative expenses and $1.0 million related to these standby resources, classified as Cost of revenues (exclusive of depreciation and amortization). During the nine months ended September 30, 2022, the Company incurred expenses of $37.5 million related to its geographic repositioning efforts, classified as Selling, general and administrative expenses and $12.9 million related to these standby resources, classified as Cost of revenues (exclusive of depreciation and amortization). During the nine months ended September 30, 2022, the Company also recorded an impairment charge of $1.3 million, classified as Other income/(expense) related to a financial asset in Ukraine which the Company believed to be unrealizable due to the events in Ukraine.

In response to the attacks on Ukraine, EPAM announced on March 4, 2022, it would discontinue services to customers located in Russia. Based on this change in facts and circumstances, the long-term cash flow forecast for the Company’s operations in Russia and its Russia reporting unit were significantly reduced. The reduction in the long-term cash flow forecasts indicated that the carrying amounts of goodwill and long-lived assets associated with the Company’s Russia reporting unit and operations in Russia may not be recoverable, and the carrying value of these assets was tested for impairment. The Company relied on the income approach to estimate the fair values of the Russia reporting unit and long-lived assets and considered multiple scenarios including the continuing operation and exit of operations in Russia. Reflecting the negative long-term cash flow forecasts that each of these scenarios produced for these assets, during the three months ended March 31, 2022, the Company recorded impairments of Property and equipment, net of $15.1 million, Operating lease right-of-use assets, net of $3.8 million, and Goodwill of $0.7 million. These asset impairment charges are included in Selling, general and administrative expenses in the interim condensed consolidated financial statements for the nine months ended September 30, 2022. Additionally, the Company evaluated trade receivables and contract assets for estimated future credit losses from customers located in Russia and recorded net bad debt expense of $5.7 million during the nine months ended September 30, 2022, reflecting the deterioration of creditworthiness of its customers in Russia. During the three months ended September 30, 2022, the Company recorded a benefit to bad debt expense of $2.5 million reflecting better than previously expected credit collections from customers located in Russia. Bad debt expense/(benefit) is included in Selling, general and administrative expenses in the condensed consolidated financial statements.

On April 7, 2022, the Company announced that it would begin the process of a phased exit of its operations in Russia, to be completed in the months following the announcement and in close collaboration with the Company’s employees, contractors, and customers. In connection with the ongoing phased exit of its operations in Russia, the Company incurred employee separation costs of $0.7 million and $16.9 million during the three and nine months ended September 30, 2022.

On September 7, 2022, the Company executed an agreement to sell substantially all of its remaining holdings in Russia to a third party. The timing and completion of the sale is subject to customary closing conditions, including regulatory approvals by the Russian government. Due to the significant uncertainty of obtaining the necessary regulatory approvals, the Company does not believe a sale was probable to be completed as of September 30, 2022 and has not reported the assets and liabilities to be sold as held for sale in its condensed consolidated balance sheet.

As of September 30, 2022, the Company had the following assets and liabilities in Russia:


Cash and cash equivalents	$	33,117
Trade receivables and contract assets, net of allowance of $7,094	8,878
Prepaid and other current assets	914
Total assets in Russia	$	42,909
Accounts payable	$	1,091
Accrued compensation and benefits expenses	5,782
Accrued expenses and other current liabilities	2,357
Operating lease liabilities	724
Other noncurrent liabilities	794
Total liabilities in Russia	$	10,748

If the contracted transaction had closed as of September 30, 2022, the Company would have recorded an immaterial gain, after consideration of amounts to be transferred to settle intercompany receivables and payables and recognition of the accumulated currency translation adjustment currently included in Accumulated other comprehensive income/(loss). The Company could incur additional significant charges in the future related to the exit of its operations in Russia including, but not limited to, additional restructuring costs and loss on sale, which could be impacted by amounts transferred to settle intercompany receivables and payables and the impact of changes in foreign currency exchange rates on the recognition of the Accumulated currency translation adjustment currently included in Accumulated other comprehensive income/(loss).

ACQUISITIONS

9 Months Ended

Sep. 30, 2022

Business Combination and Asset Acquisition [Abstract]

ACQUISITIONS

PolSource — On April 2, 2021, the Company acquired 100% of PolSource S.A. and its subsidiaries (“PolSource”), a Salesforce Platinum Consulting Partner with more than 350 experienced Salesforce specialists for a purchase price of $148.2 million including contingent consideration with an acquisition-date fair value of $35.4 million. At the time of the acquisition, the Company committed to paying up to $45.0 million in contingent consideration, subject to attainment of certain revenue, earnings and operational targets.

CORE — On July 23, 2021, the Company acquired 100% of CORE SE and its subsidiaries (“CORE”), a professional service provider specializing in IT strategy and technology-driven transformations with office locations in Europe and the Middle East for a purchase price of $50.2 million including contingent consideration with an acquisition-date fair value of $4.0 million and deferred consideration of $7.8 million. The Company could pay up to $8.1 million in contingent consideration and the actual future payout is subject to attainment of certain revenue, earnings and operational targets.

Emakina — On November 3, 2021, the Company completed the acquisition of 98.69% of Emakina Group SA and its subsidiaries (“Emakina”), a group of independent digital agencies, for a purchase price of $143.4 million in cash. On November 30, 2021, the Company completed the acquisition of the remaining 1.31% of Emakina Group SA’s outstanding shares for a purchase price of $1.7 million in cash.

The following table summarizes the estimated fair values of the assets acquired and liabilities assumed as of the date of each respective acquisition and updated for any changes as of September 30, 2022:


	PolSource		CORE		Emakina
Cash and cash equivalents	$	2,565	$	11,283	$	5,142
Trade receivables and contract assets	12,734		10,266		34,389
Prepaid and other current assets	814		5,430		3,109
Goodwill	125,265		24,194		137,037
Intangible assets	15,790		8,368		30,488
Property and equipment and other noncurrent assets	461		4,585		17,569
Total assets acquired	$	157,629	$	64,126	$	227,734
Accounts payable, accrued expenses and other current liabilities	$	5,337	$	9,336	$	36,411
Short-term debt	—		—		13,657
Long-term debt	—		—		8,874
Operating lease liabilities, noncurrent	157		2,056		5,541
Other noncurrent liabilities	3,963		2,525		8,764
Total liabilities assumed	$	9,457	$	13,917	$	73,247
Noncontrolling interest in consolidated subsidiaries	—		—		10,469
Net assets acquired	$	148,172	$	50,209	$	144,018

As of June 30, 2022, the Company has completed the purchase price allocation for the acquisition of PolSource and the estimated fair values of the assets acquired and liabilities assumed have been finalized. The effect of adjustments recorded during the three and six months ended June 30, 2022 that would have been recognized in a prior period if the adjustment to the preliminary amounts had been recognized as of the acquisition date of PolSource was not material.

As of September 30, 2022, the Company has completed the purchase price allocation for the acquisition of CORE and the estimated fair values of the assets acquired and liabilities assumed have been finalized. The effect of adjustments recorded during the three and nine months ended September 30, 2022 that would have been recognized in a prior period if the adjustment to the preliminary amounts had been recognized as of the acquisition date of CORE was not material.

For the acquisition of Emakina, the estimated fair values of the assets acquired, liabilities assumed and noncontrolling interest are provisional and based on the information that was available as of the acquisition date. The Company expects to complete the purchase price allocations as soon as practicable but no later than one year from the acquisition date. The effect of adjustments recorded during the three and nine months ended September 30, 2022 that would have been recognized in a prior period if the adjustment to the preliminary amounts had been recognized as of the acquisition date of Emakina was not material.

Pro forma results of operations have not been presented because the effect of these acquisitions on the Company’s consolidated financial statements was not material individually or in the aggregate.

As of September 30, 2022, the following table presents the estimated fair values and useful lives of intangible assets acquired from PolSource, CORE and Emakina:


	PolSource			CORE			Emakina
	Weighted Average Useful Life (in years)	Amount		Weighted Average Useful Life (in years)	Amount		Weighted Average Useful Life (in years)	Amount
Customer relationships	6	$	14,790	6	$	7,779	7	$	27,822
Trade names	3	1,000		5	589		3	2,666
Total		$	15,790		$	8,368		$	30,488

The goodwill recognized as a result of the PolSource acquisition is attributable to synergies expected to be achieved by combining the businesses of EPAM and PolSource, expected future contracts, the assembled workforce acquired and other factors. The goodwill recognized as a result of the CORE acquisition is attributable to synergies expected to be achieved by expanding the Company’s ability to support customers as a strategic consultant in Europe and the Middle East, expected future contracts, the assembled workforce acquired and other factors. The goodwill recognized as a result of the Emakina acquisition is attributable to synergies expected to be achieved by enhancing EPAM’s digital experience practice as well as augmenting offerings in digital design and engineering capabilities, expected future contracts, the assembled workforce and other factors.

The goodwill acquired as a result of the PolSource, CORE and Emakina acquisitions is not expected to be deductible for income tax purposes.

Other 2021 Acquisitions — During the year ended December 31, 2021, the Company completed four additional acquisitions with an aggregate purchase price of $65.2 million including contingent consideration with an acquisition-date fair value of $17.6 million. The Company could pay up to $30.2 million in contingent consideration and the actual future payouts are subject to attainment of specified performance targets during the periods ranging from 12 months to 48 months after the respective acquisition dates. These acquisitions increased EPAM’s e-platform offerings and expanded the Company’s geographical reach as well as added $14.1 million in intangible assets, consisting mainly of customer relationships. Pro forma results of operations have not been presented because the effect of these acquisitions on the Company’s consolidated financial statements was not material individually or in the aggregate.

2022 Acquisitions — During the nine months ended September 30, 2022, the Company completed two acquisitions with a total purchase price of $13.6 million including contingent consideration with total acquisition-date fair value of $2.6 million. These acquisitions expanded EPAM’s capabilities to deliver end-to-end solutions for designing and building sophisticated commerce platforms, provided opportunities for geographic expansion as well as added $3.4 million of intangible assets, consisting of customer relationships. Pro forma results of operations have not been presented because the effect of these acquisitions on the Company’s condensed consolidated financial statements was not material individually or in the aggregate.

GOODWILL

9 Months Ended

Sep. 30, 2022

Goodwill and Intangible Assets Disclosure [Abstract]

GOODWILL

Goodwill by reportable segment was as follows:


	North America		Europe		Russia		Total
Balance as of January 1, 2022	$	217,594	$	312,413	$	716	$	530,723
CORE acquisition purchase accounting adjustment	—		959		—		959
Emakina acquisition purchase accounting adjustment	—		423		—		423
PolSource acquisition purchase accounting adjustment	(44)		(30)		—		(74)
Other 2021 acquisitions purchase accounting adjustment	(20)		519		—		499
2022 acquisitions	—		10,316		—		10,316
Goodwill impairment	—		—		(686)		(686)
Effect of net foreign currency exchange rate changes	(1,233)		(35,355)		(30)		(36,618)
Balance as of September 30, 2022	$	216,297	$	289,245	$	—	$	505,542

See Note 2 “Impact of the Invasion of Ukraine” for more information regarding the goodwill impairment recorded in the Russia segment during the three months ended March 31, 2022.

The Russia segment had accumulated goodwill impairment losses of $2.9 million and $2.2 million as of September 30, 2022 and December 31, 2021, respectively. There were no accumulated impairment losses in the North America or Europe reportable segments as of September 30, 2022 or December 31, 2021.

FAIR VALUE MEASUREMENTS

9 Months Ended

Sep. 30, 2022

Fair Value Disclosures [Abstract]

FAIR VALUE MEASUREMENTS

The Company carries certain assets and liabilities at fair value on a recurring basis on its condensed consolidated balance sheets. The following tables present the fair values of the Company’s financial assets and liabilities measured at fair value on a recurring basis as of September 30, 2022 and December 31, 2021:


	As of September 30, 2022
	Balance		Level 1		Level 2		Level 3
Rights to acquire noncontrolling interest in consolidated subsidiaries	$	882	$	—	$	—	$	882
Total assets measured at fair value on a recurring basis	$	882	$	—	$	—	$	882

Foreign exchange derivative liabilities	$	40,129	$	—	$	40,129	$	—
Contingent consideration	20,852		—		—		20,852
Total liabilities measured at fair value on a recurring basis	$	60,981	$	—	$	40,129	$	20,852


	As of December 31, 2021
	Balance		Level 1		Level 2		Level 3
Foreign exchange derivative assets	$	1,429	$	—	$	1,429	$	—
Rights to acquire noncontrolling interest in consolidated subsidiaries	6,093		—		—		6,093
Total assets measured at fair value on a recurring basis	$	7,522	$	—	$	1,429	$	6,093

Foreign exchange derivative liabilities	$	5,849	$	—	$	5,849	$	—
Contingent consideration	23,114		—		—		23,114
Total liabilities measured at fair value on a recurring basis	$	28,963	$	—	$	5,849	$	23,114

The foreign exchange derivatives are valued using pricing models and discounted cash flow methodologies based on observable foreign exchange data at the measurement date. See Note 6 “Derivative Financial Instruments” in the condensed consolidated interim financial statements for additional information regarding derivative financial instruments.

As part of the acquisition of Emakina, the Company acquired rights to purchase certain noncontrolling interests in consolidated subsidiaries of Emakina in exchange for future cash payments determined by the future profitability of certain subsidiaries. The Company determines the fair value of these rights by (i) estimating the fair value of the noncontrolling interests in consolidated subsidiaries by applying an EBITDA multiple adjusted for a lack of control and marketability, less (ii) the fair value of expected future payments to settle the related contractual obligations. The Company purchased the majority of the noncontrolling interest in consolidated subsidiaries during the nine months ended September 30, 2022.

The Company determines the fair value of the contingent consideration liabilities using Monte Carlo simulations or probability-weighted expected return methods. The fair value of the contingent consideration for the PolSource acquisition attributable to future revenues and earnings was measured utilizing a Monte Carlo simulation, based on future revenue and earnings projections of the business, revenue volatility and asset volatility of comparable companies, and a discount rate. The discount rate used to determine the fair value of this contingent consideration was 0.4% as of the acquisition date. The fair value of the contingent consideration for the PolSource acquisition attributable to future operating metrics was measured using a probability-weighted expected return method, based on the expected future payments using the earnout formula and performance targets specified in the purchase agreement and adjusting those estimates to reflect the probability of their achievement. The weighted-average estimated future payments were then discounted to present value using a rate based on EPAM’s cost of debt. The discount rate used to determine the fair value of this contingent consideration was 0.4% as of the acquisition date.

The fair value of the contingent consideration for all other acquisitions was determined using a probability-weighted expected return method and is based on the expected future payments to be made to the sellers of the acquired businesses in accordance with the provisions outlined in the respective purchase agreements. Although there is significant judgment involved, the Company believes its estimates and assumptions are reasonable. In determining fair value, the Company considered a variety of factors, including future performance of the acquired businesses using financial projections developed by the Company and market risk assumptions that were derived for revenue growth and earnings before interest and taxes. The Company estimated future payments using the earnout formula and performance targets specified in the purchase agreements and adjusted those estimates to reflect the probability of their achievement. Those weighted-average estimated future payments were then discounted to present value using a rate based on the weighted-average cost of capital of guideline companies. The discount rate used to determine the fair value of contingent consideration for the 2022 Acquisitions ranged from a minimum of 13.0% to a maximum of 15.0%. The discount rate used to determine the fair value of contingent consideration for the CORE acquisition was 13.0%. The discount rates used to determine the fair value of contingent consideration for the Other 2021 Acquisitions ranged from a minimum of 15.0% to a maximum of 22.0%. Changes in financial projections, market risk assumptions, discount rates or probability assumptions related to achieving the various earnout criteria would result in a change in the fair value of the recorded contingent liabilities. Such changes, if any, are recorded within Interest and other income/(loss), net in the Company’s condensed consolidated statement of income.

A reconciliation of the beginning and ending balances of Level 3 acquisition-related contingent consideration using significant unobservable inputs for the nine months ended September 30, 2022 is as follows:


	Amount
Contingent consideration liabilities as of January 1, 2022	$	23,114
Acquisition date fair value of contractual contingent liabilities - 2022 Acquisitions	2,645
Changes in fair value of contingent consideration included in Interest and other income/(loss), net	8,520
Payment of contingent consideration for previously acquired businesses	(11,328)
Effect of net foreign currency exchange rate changes	(2,099)
Contingent consideration liabilities as of September 30, 2022	$	20,852

See Note 2, “Impact of the Invasion of Ukraine” for discussion of the nonrecurring level 3 fair value assessment used in the impairment tests of long-lived assets in Russia.

Financial Assets and Liabilities Not Measured at Fair Value on a Recurring Basis

Estimates of fair value of financial instruments not carried at fair value on a recurring basis on the Company’s condensed consolidated balance sheets are generally subjective in nature and are determined as of a specific point in time based on the characteristics of the financial instruments and relevant market information. The generally short maturities of certain assets and liabilities result in a number of assets and liabilities for which fair value equals or closely approximates the amount recorded on the Company’s condensed consolidated balance sheets. The following tables present the estimated fair values of the Company’s financial assets and liabilities not measured at fair value on a recurring basis as of the dates indicated:


					Fair Value Hierarchy
	Balance		Estimated Fair Value		Level 1		Level 2		Level 3
September 30, 2022
Financial Assets:
Cash equivalents:
Money market funds	$	262,515	$	262,515	$	262,515	$	—	$	—
Total cash equivalents	$	262,515	$	262,515	$	262,515	$	—	$	—
Restricted cash	$	2,053	$	2,053	$	2,053	$	—	$	—
Time deposits included in Short-term investments	$	60,216	$	60,216	$	—	$	60,216	$	—
Employee loans	$	2,820	$	2,820	$	—	$	—	$	2,820
Financial Liabilities:
Short-term debt	$	6,139	$	6,139	$	—	$	6,139	$	—
Borrowings under the 2021 Credit Agreement	$	25,000	$	25,000	$	—	$	25,000	$	—
Other long-term debt	$	4,849	$	4,849	$	—	$	4,849	$	—


					Fair Value Hierarchy
	Balance		Estimated Fair Value		Level 1		Level 2		Level 3
December 31, 2021
Financial Assets:
Cash equivalents:
Money market funds	$	78,302	$	78,302	$	78,302	$	—	$	—
Total cash equivalents	$	78,302	$	78,302	$	78,302	$	—	$	—
Restricted cash	$	2,722	$	2,722	$	2,722	$	—	$	—
Employee loans	$	818	$	818	$	—	$	—	$	818
Financial Liabilities:
Short-term debt	$	16,018	$	16,018	$	—	$	16,018	$	—
Borrowings under the 2021 Credit Agreement	$	25,000	$	25,000	$	—	$	25,000	$	—
Other long-term debt	$	5,234	$	5,234	$	—	$	5,234	$	—

Non-Marketable Securities Without Readily Determinable Fair Values

The Company holds investments in equity securities that do not have readily determinable fair values. These investments are recorded at cost and are remeasured to fair value based on certain observable price changes or impairment events as they occur. The carrying amount of these investments was $29.2 million and $27.5 million as of September 30, 2022 and December 31, 2021, respectively, and is classified as Other noncurrent assets in the Company’s condensed consolidated balance sheets.

- Definition

The entire disclosure for the fair value of financial instruments (as defined), including financial assets and financial liabilities (collectively, as defined), and the measurements of those instruments as well as disclosures related to the fair value of non-financial assets and liabilities. Such disclosures about the financial instruments, assets, and liabilities would include: (1) the fair value of the required items together with their carrying amounts (as appropriate); (2) for items for which it is not practicable to estimate fair value, disclosure would include: (a) information pertinent to estimating fair value (including, carrying amount, effective interest rate, and maturity, and (b) the reasons why it is not practicable to estimate fair value; (3) significant concentrations of credit risk including: (a) information about the activity, region, or economic characteristics identifying a concentration, (b) the maximum amount of loss the entity is exposed to based on the gross fair value of the related item, (c) policy for requiring collateral or other security and information as to accessing such collateral or security, and (d) the nature and brief description of such collateral or security; (4) quantitative information about market risks and how such risks are managed; (5) for items measured on both a recurring and nonrecurring basis information regarding the inputs used to develop the fair value measurement; and (6) for items presented in the financial statement for which fair value measurement is elected: (a) information necessary to understand the reasons for the election, (b) discussion of the effect of fair value changes on earnings, (c) a description of [similar groups] items for which the election is made and the relation thereof to the balance sheet, the aggregate carrying value of items included in the balance sheet that are not eligible for the election; (7) all other required (as defined) and desired information.

+ References + Details

DERIVATIVE FINANCIAL INSTRUMENTS

9 Months Ended

Sep. 30, 2022

Derivative Instruments and Hedging Activities Disclosure [Abstract]

DERIVATIVE FINANCIAL INSTRUMENTS

In the normal course of business, the Company uses derivative financial instruments to manage the risk of fluctuations in foreign currency exchange rates. The Company has a hedging program whereby it enters into a series of foreign exchange forward contracts with durations of twelve months or less that are designated as cash flow hedges of forecasted, Polish zloty, Hungarian forint and Indian rupee transactions.

During the three months ended March 31, 2022, in response to the invasion of Ukraine, the Company de-designated its Russian ruble foreign exchange forward contracts as hedges and entered into offsetting foreign exchange forward contracts with the same counterparty. The Company determined it was probable the underlying forecasted foreign currency transactions which were hedged would not occur and reclassified the accumulated loss of $43.9 million on the underlying hedges into income which is classified as foreign exchange loss in the condensed consolidated statement of income.

As of September 30, 2022, all of the Company’s foreign exchange forward contracts, except the Russian ruble foreign exchange forward contracts, were designated as hedges and there is no financial collateral (including cash collateral) required to be posted by the Company related to the foreign exchange forward contracts.

The fair value of derivative instruments on the Company’s condensed consolidated balance sheets as of September 30, 2022 and December 31, 2021 were as follows:


		As of September 30, 2022				As of December 31, 2021
	Balance Sheet Classification	Asset Derivatives		Liability Derivatives		Asset Derivatives		Liability Derivatives
Foreign exchange forward contracts - Designated as hedging instruments	Prepaid expenses and other current assets	$	—			$	1,429
	Accrued expenses and other current liabilities			$	19,660			$	5,849
Foreign exchange forward contracts - Not designated as hedging instruments	Accrued expenses and other current liabilities			$	20,469			$	—

LEASES

9 Months Ended

Sep. 30, 2022

Leases [Abstract]

LEASES

The Company leases office space, corporate apartments, office equipment, and vehicles. Many of the Company’s leases contain variable payments including changes in base rent and charges for common area maintenance or other miscellaneous expenses. Due to this variability, the cash flows associated with these variable payments are not included in the minimum lease payments used in determining the right-of-use assets and associated lease liabilities and are recognized in the period in which the obligation for such payments is incurred. The Company’s leases have remaining lease terms ranging from 0.1 to 9.3 years. Certain lease agreements, mainly for office space, include options to extend or terminate the lease before the expiration date. The Company considers such options when determining the lease term when it is reasonably certain that the Company will exercise that option. The Company leases and subleases a portion of its office space to third parties. Lease income and sublease income were immaterial for the three and nine months ended September 30, 2022 and 2021. See Note 2 “Impact of the Invasion of Ukraine” for discussion of impairment of right-of-use assets in Russia.

During the three and nine months ended September 30, 2022 and 2021, the components of lease expense were as follows:


		Three Months Ended September 30,				Nine Months Ended September 30,
	Income Statement Classification	2022		2021		2022		2021
Operating lease cost	Selling, general and administrative expenses	$	12,204	$	16,431	$	40,303	$	50,932
Variable lease cost	Selling, general and administrative expenses	2,263		2,247		7,791		6,163
Short-term lease cost	Selling, general and administrative expenses	916		653		3,382		1,167
Total lease cost		$	15,383	$	19,331	$	51,476	$	58,262

Supplemental cash flow information related to leases for the three and nine months ended September 30, 2022 and 2021 was as follows:


	Three Months Ended September 30,				Nine Months Ended September 30,
	2022		2021		2022		2021
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows used for operating leases	$	13,024	$	16,865	$	43,490	$	52,284
Right-of-use assets obtained in exchange for lease obligations:
Operating leases	$	6,111	$	6,981	$	30,843	$	8,658
Non-cash net increase/(decrease) due to lease modifications:
Operating lease right-of-use assets	$	3,260	$	8,184	$	(2,587)	$	6,305
Operating lease liabilities	$	3,163	$	8,184	$	(3,946)	$	6,305

Weighted average remaining lease term and discount rate as of September 30, 2022 and 2021 were as follows:


	As of September 30, 2022		As of September 30, 2021
Weighted average remaining lease term, in years:
Operating leases	5.5		5.6
Weighted average discount rate:
Operating leases	2.4	%	2.6	%

As of September 30, 2022, operating lease liabilities will mature as follows:


Year ending December 31,	Lease Payments
2022 (excluding nine months ended September 30, 2022)	$	10,416
2023	40,949
2024	33,962
2025	26,472
2026	20,630
Thereafter	38,854
Total lease payments	171,283
Less: imputed interest	(9,981)
Total	$	161,302

The Company had committed to payments of $17.9 million related to operating lease agreements that had not yet commenced as of September 30, 2022. These operating leases will commence on various dates during 2022 and 2023 with lease terms ranging from 0.3 to 10.0 years. The Company did not have any material finance lease agreements that had not yet commenced.

DEBT

9 Months Ended

Sep. 30, 2022

Debt Disclosure [Abstract]

DEBT

DEBTRevolving Credit Facility — On October 21, 2021, the Company replaced its 2017 credit facility with a new unsecured credit agreement (the “2021 Credit Agreement”) with PNC Bank, National Association; PNC Capital Markets LLC; Citibank N.A.; Wells Fargo Bank, National Association; Santander Bank, N.A.; and Raiffeisen Bank International AG (collectively the “Lenders”). The 2021 Credit Agreement provides for a revolving credit facility (the “2021 Revolving Facility”) with a borrowing capacity of $700.0 million, with the potential to increase the borrowing capacity up to $1,000.0 million if certain conditions are met. The 2021 Credit Agreement matures on October 21, 2026.

Borrowings under the 2021 Revolving Facility may be denominated in U.S. dollars or up to a maximum of $150.0 million equivalent in British pounds sterling, Canadian dollars, euros or Swiss francs and other currencies as may be approved by the administrative agent and the Lenders. Borrowings under the 2021 Revolving Facility bear interest at either a base rate or Euro-rate plus a margin based on the Company’s leverage ratio. The base rate is equal to the highest of (a) the Overnight Bank Funding Rate, plus 0.5%, (b) the Prime Rate, or (c) the Daily LIBOR Rate, plus 1.0%, so long as the Daily LIBOR Rate is offered, ascertainable and not unlawful.

The 2021 Credit Agreement includes customary business and financial covenants that may restrict the Company’s ability to make or pay dividends (other than certain intercompany dividends) if a potential or an actual event of default has occurred or would be triggered. As of September 30, 2022, the Company was in compliance with all covenants contained in the 2021 Credit Agreement.

The following table presents the outstanding debt and borrowing capacity of the Company under the 2021 Credit Agreement:


	As of September 30, 2022			As of December 31, 2021
Outstanding debt	$	25,000		$	25,000
Interest rate	3.9		%	1.0		%
Available borrowing capacity	$	675,000		$	675,000
Maximum borrowing capacity	$	700,000		$	700,000

Other Debt - On November 3, 2021, in connection with the acquisition of Emakina, the Company assumed the debt obligations of the acquired companies. As of September 30, 2022, debt that matures within one year is classified as Short-term debt on the condensed consolidated balance sheets and consists of multiple bank loans and credit lines totaling $7.8 million that bear a weighted-average interest rate of 1.7%. As of September 30, 2022, debt that matures in more than one year and through 2027 is classified as Long-term debt on the condensed consolidated balance sheets and consists of multiple bank loans and credit lines totaling $3.2 million that bear interest at a weighted-average interest rate of 1.2%. Some of this debt is secured by assets of Emakina. Some of the debt agreements contain covenants and as of September 30, 2022, the Company was in compliance with all those covenants.

REVENUES

9 Months Ended

Sep. 30, 2022

Revenue from Contract with Customer [Abstract]

REVENUES

Disaggregation of Revenues

The following tables present the disaggregation of the Company’s revenues by customer location, including a reconciliation of the disaggregated revenues with the reportable segments (Note 14 “Segment Information”) for the periods indicated:


	Three Months Ended September 30, 2022
	Reportable Segments
	North America		Europe		Russia		Consolidated Revenues
Customer Locations
Americas	$	723,015	$	23,575	$	501	$	747,091
EMEA	22,621		415,595		—		438,216
APAC	1,237		30,139		—		31,376
CEE	1,510		700		8,027		10,237
Revenues	$	748,383	$	470,009	$	8,528	$	1,226,920


	Nine Months Ended September 30, 2022
	Reportable Segments
	North America		Europe		Russia		Consolidated Revenues
Customer Locations
Americas	$	2,080,752	$	72,351	$	2,393	$	2,155,496
EMEA	70,909		1,212,144		99		1,283,152
APAC	2,813		88,321		—		91,134
CEE	5,277		1,107		57,229		63,613
Revenues	$	2,159,751	$	1,373,923	$	59,721	$	3,593,395


	Three Months Ended September 30, 2021
	Reportable Segments
	North America		Europe		Russia		Consolidated Revenues
Customer Locations
Americas	$	569,331	$	20,959	$	1,078	$	591,368
EMEA	21,968		301,736		103		323,807
APAC	1,001		27,385		—		28,386
CEE	1,562		—		43,416		44,978
Revenues	$	593,862	$	350,080	$	44,597	$	988,539


	Nine Months Ended September 30, 2021
	Reportable Segments
	North America		Europe		Russia		Consolidated Revenues
Customer Locations
Americas	$	1,532,428	$	53,658	$	3,001	$	1,589,087
EMEA	61,338		812,886		236		874,460
APAC	2,143		72,175		—		74,318
CEE	4,828		14		107,973		112,815
Revenues	$	1,600,737	$	938,733	$	111,210	$	2,650,680

The following tables present the disaggregation of the Company’s revenues by industry vertical, including a reconciliation of the disaggregated revenues with the reportable segments (Note 14 “Segment Information”) for the periods indicated:


	Three Months Ended September 30, 2022
	Reportable Segments
	North America		Europe		Russia		Consolidated Revenues
Industry Verticals
Travel & Consumer	$	131,181	$	147,271	$	1,950	$	280,402
Financial Services	134,673		115,372		4,741		254,786
Business Information & Media	121,703		87,028		167		208,898
Software & Hi-Tech	170,818		34,513		59		205,390
Life Sciences & Healthcare	116,878		12,569		228		129,675
Emerging Verticals	73,130		73,256		1,383		147,769
Revenues	$	748,383	$	470,009	$	8,528	$	1,226,920


	Nine Months Ended September 30, 2022
	Reportable Segments
	North America		Europe		Russia		Consolidated Revenues
Industry Verticals
Travel & Consumer	$	384,360	$	424,140	$	13,539	$	822,039
Financial Services	381,887		345,468		38,477		765,832
Business Information & Media	346,675		253,610		786		601,071
Software & Hi-Tech	488,134		100,814		1,248		590,196
Life Sciences & Healthcare	344,148		37,378		444		381,970
Emerging Verticals	214,547		212,513		5,227		432,287
Revenues	$	2,159,751	$	1,373,923	$	59,721	$	3,593,395


	Three Months Ended September 30, 2021
	Reportable Segments
	North America		Europe		Russia		Consolidated Revenues
Industry Verticals
Travel & Consumer	$	98,494	$	91,197	$	7,875	$	197,566
Financial Services	100,631		98,711		31,542		230,884
Business Information & Media	100,536		71,953		500		172,989
Software & Hi-Tech	146,532		27,103		662		174,297
Life Sciences & Healthcare	85,534		10,374		155		96,063
Emerging Verticals	62,135		50,742		3,863		116,740
Revenues	$	593,862	$	350,080	$	44,597	$	988,539


	Nine Months Ended September 30, 2021
	Reportable Segments
	North America		Europe		Russia		Consolidated Revenues
Industry Verticals
Travel & Consumer	$	252,998	$	235,552	$	19,572	$	508,122
Financial Services	253,713		262,716		77,251		593,680
Business Information & Media	280,120		197,142		1,323		478,585
Software & Hi-Tech	406,756		72,010		1,757		480,523
Life Sciences & Healthcare	241,835		36,505		534		278,874
Emerging Verticals	165,315		134,808		10,773		310,896
Revenues	$	1,600,737	$	938,733	$	111,210	$	2,650,680

The following tables present the disaggregation of the Company’s revenues by contract type including a reconciliation of the disaggregated revenues with the Company’s reportable segments (Note 14 “Segment Information”) for the periods indicated:


	Three Months Ended September 30, 2022
	Reportable Segments
	North America		Europe		Russia		Consolidated Revenues
Contract Types
Time-and-material	$	673,927	$	405,030	$	5,887	$	1,084,844
Fixed-price	69,565		64,426		2,424		136,415
Licensing and other revenues	4,891		553		217		5,661
Revenues	$	748,383	$	470,009	$	8,528	$	1,226,920


	Nine Months Ended September 30, 2022
	Reportable Segments
	North America		Europe		Russia		Consolidated Revenues
Contract Types
Time-and-material	$	1,955,361	$	1,172,981	$	39,226	$	3,167,568
Fixed-price	192,322