EPAM SYSTEMS, INC.

Strategic execution · Strategic transformation and turnaround risks

We may be unable to effectively manage our growth or achieve anticipated growth, which could place significant strain on our management, systems, resources, and results of operations. We have experienced uneven growth and decline, expansion, and geographic shifts in our business over the past several years.

Customer and revenue · Customer concentration and key customer dependence

We generally do not have long-term commitments from our clients, our clients may terminate contracts before completion or choose not to renew contracts, and we are not guaranteed payment for services. Loss of business or non-payment from significant clients could materially affect our results of operations.

Customer and revenue · Changing customer preferences and behavior

Furthermore, developments in the industries we serve shift client demand to new services, solutions or technology, such as AI-enabled business processes. If our clients demand new services, solutions or technologies, we may be less competitive in these new areas if we do not make significant investments to meet that demand.

Strategic execution · Merger acquisition and divestiture risks

If we fail to integrate or manage acquired companies efficiently and effectively, or if acquisitions do not perform to our expectations individually or in the aggregate, our overall profitability and growth plans could be materially adversely affected. Strategic acquisitions involve significant risks but remain a key part of our growth strategy.

Natural and catastrophic events · Natural disasters and extreme weather

War, terrorism, other acts of violence or natural or man-made disasters may affect the markets in which we operate, our clients, and our service delivery. Man-made and natural disasters, the severity and frequency of which have increased due to climate change, including famine, flood, fire, earthquake, pandemics, storms, and regional or global health crises, may cause clients to delay their decisions on spending for the services we provide.

Natural and catastrophic events · Pandemic and public health crises

Travel restrictions resulting from natural or man-made disruptions, pandemics or other public health events, and political or social conflict increase the difficulty of obtaining and retaining highly skilled and qualified professionals and could unexpectedly increase our labor costs and expenses.

Economic and market conditions · Inflation and deflation pressures

Wages for technology professionals in the emerging markets where we have significant operations and delivery centers are typically lower than comparable wages in more developed countries. However, wages in general, and in the technology industry in emerging markets in particular, have increased and will make us less competitive if we are not able to increase the efficiency and productivity of our people.

Economic and market conditions · Economic recession and downturns

Our industry is sensitive to the economic environment and the industry tends to decline during general or perceived economic downturns. Given our significant revenues from North America and Europe, if those economies weaken or enter a recession, pricing for our services may be depressed and our clients may reduce or postpone their technology related spending significantly.

Geopolitical and trade · Political instability and government changes

Instability in geographies where we have significant operations and personnel or where we derive substantial amounts of revenue could have a material adverse effect on our business, clients, service delivery, and financial results. Civil, military, political, energy, and macroeconomic uncertainty exists and may increase in many of the global regions where we operate and where we derive our revenues.

Geopolitical and trade · International conflicts and tensions

The invasion of Ukraine and the resulting war has had and could continue to have a material adverse effect on our personnel, business, and finances. We have significant operations and personnel in Ukraine and Belarus. Ongoing conflict and disruption in the region following Russia's invasion of Ukraine in February 2022 has had and could continue to have a material adverse effect on our operations, personnel, business, clients, service delivery, and financial results.

Geopolitical and trade · Regulatory and policy uncertainty

Uncertainty about changing economic and geopolitical conditions in those markets has caused, and could continue to cause, our clients to reduce or defer their spending on new initiatives, technologies, and on our services, which negatively affects our business.

Market and investment · Market volatility and economic cycles

Our stock price is volatile. Our common stock has experienced substantial price volatility as a result of variations between our actual and anticipated financial results, announcements by our competitors, third parties, or us, projections or speculation about our business or that of our competitors or industry by the media or investment analysts, geopolitical events or uncertainty about inflation or other current global economic conditions.

Credit and liquidity · Access to capital and financing

We may need additional capital, and a failure to raise additional capital on terms favorable to us, or at all, could limit our ability to grow our business and develop or enhance our service offerings to respond to market demand or competitive challenges. We may, however, require additional cash resources due to changed business conditions or other future developments, including any investments or acquisitions that we may decide to pursue.

International and currency · Foreign exchange and currency exposure

This exposes us to foreign exchange risks relating to revenues, compensation, purchases, capital expenditures, receivables and other balance-sheet items. As we continue to leverage and expand our global delivery model into other emerging markets, a larger portion of our revenues and incurred expenses may be in currencies other than U.S. dollars.

International and currency · Currency hedging and derivatives

Our hedging program is subject to counterparty default risk. We enter into foreign currency forward contracts with a number of counterparties. As a result, we are subject to the risk that the counterparty to one or more of these contracts defaults on its performance under the contract.

Digital transformation and innovation · Technology obsolescence and evolution

If we are unable to adapt to rapidly changing technologies, methodologies and evolving industry standards, we may lose clients and our business could be materially adversely affected. Rapidly changing technologies, methodologies and evolving industry standards are inherent in the market for our products and services.

Cybersecurity and data protection · Third party data security and vendors

Our ability to monitor our third-party suppliers' information security systems is limited and we are not able to detect vulnerabilities in their systems until we are notified of the existence of those vulnerabilities. There have been and will continue to be attacks on our and third parties' information security supply chains.

Digital transformation and innovation · Artificial intelligence and automation

If we are unable to keep pace with the adoption and use of AI technology in our business and effectively implement AI in our workforce planning and deployment, we could become less competitive in our industry. We have been incorporating AI into our products, services, and business, both due to client demand and because we expect that integrating AI into our services is a competitive requirement in a rapidly evolving market.

Cybersecurity and data protection · Data privacy and protection regulations

Changes in privacy and data protection regulations could expose us to risks of noncompliance and costs associated with compliance. EPAM is subject to the GDPR, the substantially similar U.K. GDPR, the privacy laws of California and other U.S. states, India's Digital Personal Data Protection Act, and the privacy laws of the other countries where we operate, each of which imposes significant restrictions and requirements relating to the processing of personal data.

Project and contract management · Project execution and delivery risks

There is a long selling and implementation cycle for our services that require us to make significant resource commitments prior to realizing revenues for those services. Before potential clients commit to use our services, we must expend substantial time and resources educating them on the value of our services and our ability to meet their requirements.