EPAM plans a buyback bigger than nine months of free cash flow
The $500 million plan follows repurchases that already outpaced cash generation. Cash and borrowing capacity give EPAM room as organic growth slows.
EPAM plans to enter a $500 million accelerated share buyback during the week of November 9, using cash and borrowing. It is a bigger sum than the software-services company's free cash flow for the first nine months of 2026.
The plan follows stronger earnings and a promise to return at least half of annual free cash flow to shareholders from 2027 through 2029. It also raises the importance of turning profit into cash as organic revenue growth slows.
Buybacks have already outpaced cash generation
Research by Ticker Byline shows that EPAM paid about 2.4 times its nine-month free cash flow for share repurchases. It spent $488.9 million buying shares, compared with $202.3 million of operating cash left after capital spending.
Operating cash flow fell to $250.1 million from $372.0 million, while capital spending increased. Higher payments for bonuses earned on 2025 performance and slower collections weighed on cash generation.
The third quarter improved that picture. It produced $274.2 million of free cash flow, recovering cash consumed earlier in the year. EPAM also held $965.2 million of cash and had $675 million of unused borrowing capacity at September 30.
Profits beat the earlier forecast
Q3 revenue reached $1.426 billion, just above the previous $1.410 billion to $1.425 billion range. Adjusted EPS was $3.51, beating the $3.38 to $3.46 forecast given in August.
Reported operating profit increased 21% to $175.9 million. The adjusted operating margin rose to 16.7% from 16.0%. Lower bonus expense and stronger profitability on client accounts helped margins.
Adjusted earnings remove stock compensation, acquired-intangible amortization and other specified costs and gains. Fewer shares also supported the per-share increase.
A larger return plan meets slower growth
The board replaced the old repurchase program with a $1.8 billion authorization through 2029, including the previous program's remaining $293 million. The planned $500 million transaction is part of that authorization.
EPAM lifted its annual adjusted-EPS forecast to $13.23 to $13.31, from $13.08 to $13.24. Its organic constant-currency growth forecast narrowed to 2.5% to 2.7%, within the earlier 2% to 3% range.
That growth measure removes currency movements and the first year of acquired revenue. Actual growth slowed to 2.5% in Q3 from 3.4% in Q2. For Q4, EPAM expects 0.5% to 1.6% growth on that basis and adjusted EPS of $3.50 to $3.58.
Our EPAM company profile compares earnings, cash generation and repurchases, and tracks the new capital-return commitment.