Sometimes beating Wall Street's expectations just isn't enough. EPAM Systems, Inc. (EPAM) proved that Thursday when its stock tumbled despite delivering a solid fourth-quarter earnings beat, dragged down by a cautious outlook that had investors heading for the exits.

The IT services company reported fourth-quarter revenue of $1.41 billion, up 12.8% year-over-year and comfortably ahead of the analyst consensus of $1.39 billion. On an organic, constant-currency basis, revenues grew 5.6% compared with the same quarter a year earlier.

Adjusted earnings per share climbed to $3.26 from $2.84 in the prior-year period, topping the consensus estimate of $3.16. Adjusted operating income reached $230.0 million, up from $208.2 million year-over-year, though the margin compressed slightly to 16.3% from 16.7%.

Operating cash flow more than doubled to $282.9 million from $130.3 million a year ago, while cash and equivalents edged up 0.9% year-over-year to $1.301 billion as of December 31, 2025.

Capital Allocation and Workforce Expansion

EPAM repurchased 1.16 million shares for $223.5 million during the fourth quarter, leaving $776.5 million remaining under its share repurchase authorization as of December 31, 2025.

The company's total headcount reached approximately 62,850, including about 56,600 delivery professionals, representing a 2.7% increase from December 31, 2024.

CEO Balazs Fejes emphasized that EPAM's performance reflected steady execution and meaningful progress in helping clients advance business transformation and strengthen AI foundational readiness. He added that continued investments in AI innovation, talent development, and strategic partnerships are fueling EPAM's own transformation, building on its engineering core and reinforcing its positioning to compete in the AI-native build era.

The Outlook Problem

Here's where things get interesting. EPAM guided first-quarter 2026 revenue to a range of $1.385 billion to $1.400 billion, compared with the $1.397 billion consensus. Adjusted EPS is expected between $2.70 and $2.78, versus the $2.74 estimate, while GAAP EPS of $1.32 to $1.40 fell short of the $1.73 consensus.

The real concern is the deceleration. Organic constant-currency revenue growth is expected to hit just 2.9% at the midpoint in the first quarter, down sharply from the 5.6% reported in Q4.

For the full year 2026, EPAM expects revenue between $5.703 billion and $5.866 billion, compared with the $5.827 billion consensus. Adjusted EPS is projected at $12.60 to $12.90, slightly above the $12.50 estimate, but GAAP EPS of $7.95 to $8.25 missed the $8.60 consensus. The company anticipates full-year organic constant-currency revenue growth of 3% to 6%.

EPAM Systems shares dropped 16.51% to $140.01 during premarket trading Thursday, hovering near the 52-week low of $138.14. When you beat earnings but guide for slowing growth, apparently the market doesn't care much about the win you just posted.