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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2020

OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ________to________

Commission file number: 001-35418

EPAM SYSTEMS, INC.
(Exact name of registrant as specified in its charter)
Delaware22-3536104
(State or other jurisdiction of
incorporation or organization)
(I.R.S. Employer
Identification No.)
41 University DriveSuite 20218940
NewtownPennsylvania
(Address of principal executive offices)(Zip code)
267-759-9000
(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:
Title of Each ClassTrading Symbol Name of Each Exchange on which Registered
Common Stock, par value $0.001 per shareEPAM New York Stock Exchange
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes  No 
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).    Yes  No 
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filerAccelerated filer
Non-accelerated filerSmaller reporting company
Emerging growth company
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes      No  
Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.
Title of Each ClassOutstanding as of July 31, 2020
Common Stock, par value $0.001 per share
55,852,596 shares


EPAM SYSTEMS, INC.

TABLE OF CONTENTS
 Page



Table of Contents
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements (Unaudited)
EPAM SYSTEMS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
(In thousands, except share and per share data)
 As of
June 30,
2020
As of
December 31,
2019
Assets
Current assets
Cash and cash equivalents$993,724  $936,552  
Short-term investments60,025  9  
Trade receivables and contract assets, net of allowance of $6,070
 and $2,920, respectively
506,908  497,716  
Prepaid and other current assets37,679  39,934  
Total current assets1,598,336  1,474,211  
Property and equipment, net167,359  165,259  
Operating lease right-of-use assets234,760  238,991  
Intangible assets, net55,887  56,258  
Goodwill199,039  195,043  
Deferred tax assets78,102  75,013  
Other noncurrent assets55,647  39,433  
Total assets$2,389,130  $2,244,208  
Liabilities  
Current liabilities  
Accounts payable$7,596  $7,831  
Accrued compensation and benefits expenses223,436  230,035  
Accrued expenses and other current liabilities62,639  82,476  
Income taxes payable, current10,972  9,064  
Operating lease liabilities, current60,937  57,542  
Total current liabilities365,580  386,948  
Long-term debt25,044  25,074  
Income taxes payable, noncurrent43,391  45,878  
Operating lease liabilities, noncurrent181,705  180,848  
Other noncurrent liabilities20,316  9,315  
Total liabilities636,036  648,063  
Commitments and contingencies (Note 12)
Stockholders’ equity  
Common stock, $0.001 par value; 160,000,000 authorized; 55,845,686 and 55,207,446 shares issued, 55,825,951 and 55,187,711 shares outstanding at June 30, 2020 and December 31, 2019, respectively
56  55  
Additional paid-in capital630,679  607,051  
Retained earnings1,172,909  1,020,590  
Treasury stock(177) (177) 
Accumulated other comprehensive loss(50,373) (31,374) 
Total stockholders’ equity1,753,094  1,596,145  
Total liabilities and stockholders’ equity$2,389,130  $2,244,208  

The accompanying notes are an integral part of the unaudited condensed consolidated financial statements.
3

Table of Contents
EPAM SYSTEMS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME
(Unaudited)
(In thousands, except share and per share data)
 Three Months Ended
June 30,
Six Months Ended
June 30,
 2020201920202019
Revenues$632,383  $551,587  $1,283,742  $1,072,920  
Operating expenses:
Cost of revenues (exclusive of depreciation and amortization)
419,540  355,915  843,342  700,604  
Selling, general and administrative expenses114,191  111,762  239,299  213,548  
Depreciation and amortization expense15,226  11,028  30,166  21,228  
Income from operations83,426  72,882  170,935  137,540  
Interest and other income, net1,817  1,190  4,203  4,266  
Foreign exchange loss(9,167) (3,562) (2,643) (7,046) 
Income before provision for income taxes76,076  70,510  172,495  134,760  
Provision for income taxes9,452  11,733  20,306  15,229  
Net income$66,624  $58,777  $152,189  $119,531  
Foreign currency translation adjustments, net of tax12,442  2,620  (16,077) 5,563  
Unrealized gain/(loss) on cash-flow hedging instruments, net of tax
6,446  1,537  (2,922) 4,637  
Comprehensive income$85,512  $62,934  $133,190  $129,731  
Net income per share:
Basic$1.20  $1.07  $2.74  $2.19  
Diluted$1.14  $1.02  $2.62  $2.08  
Shares used in calculation of net income per share:
Basic55,700,706  54,681,959  55,493,727  54,464,753  
Diluted58,246,231  57,614,284  58,194,401  57,426,563  

The accompanying notes are an integral part of the unaudited condensed consolidated financial statements.

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EPAM SYSTEMS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN
STOCKHOLDERS’ EQUITY
(Unaudited)
(In thousands, except share data) 
 Common StockAdditional Paid-in CapitalRetained EarningsTreasury StockAccumulated Other Comprehensive LossTotal Stockholders’ Equity
SharesAmountSharesAmount
Balance, January 1, 2020
55,187,711  $55  $607,051  $1,020,590  19,735  $(177) $(31,374) $1,596,145  
Cumulative effect of adoption of ASU 2016-13—  —  —  130  —  —  —  130  
Adjusted Balance, January 1, 2020
55,187,711  $55  $607,051  $1,020,720  19,735  $(177) $(31,374) $1,596,275  
Restricted stock units vested
273,904  —  —  —  —  —  —  —  
Restricted stock units withheld for employee taxes
(89,990) —  (15,822) —  —  —  —  (15,822) 
Stock-based compensation expense
—  —  12,210  —  —  —  —  12,210  
Proceeds from stock option exercises
217,475  1  7,140  —  —  —  —  7,141  
Foreign currency translation adjustments, net of tax
—  —  —  —  —  —  (28,519) (28,519) 
Change in unrealized gains and losses on cash flow hedges, net of tax
—  —  —  —  —  —  (9,368) (9,368) 
Net income
—  —  —  85,565  —  —  —  85,565  
Balance, March 31, 2020
55,589,100  $56  $610,579  $1,106,285  19,735  $(177) $(69,261) $1,647,482  
Restricted stock units vested
18,649  —  —  —  —  —  —  —  
Restricted stock units withheld for employee taxes
(5,522) —  (1,169) —  —  —  —  (1,169) 
Stock-based compensation expense
—  —  11,153  —  —  —  —  11,153  
Proceeds from stock option exercises
223,724  —  10,116  —  —  —  —  10,116  
Foreign currency translation adjustments, net of tax
—  —  —  —  —  —  12,442  12,442  
Change in unrealized gains and losses on cash flow hedges, net of tax
—  —  —  —  —  —  6,446  6,446  
Net income
—  —  —  66,624  —  —  —  66,624  
Balance, June 30, 2020
55,825,951  $56  $630,679  $1,172,909  19,735  $(177) $(50,373) $1,753,094  




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EPAM SYSTEMS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN
STOCKHOLDERS’ EQUITY
(Unaudited)
(In thousands, except share data)
(Continued)
 Common StockAdditional Paid-in CapitalRetained EarningsTreasury StockAccumulated Other Comprehensive LossTotal Stockholders’ Equity
SharesAmountSharesAmount
Balance, January 1, 2019
54,080,192  $54  $544,700  $759,533  19,735  $(177) $(41,514) $1,262,596  
Restricted stock units vested
242,414  —  —  —  —  —  —  —  
Restricted stock units withheld for employee taxes
(81,562) —  (13,483) —  —  —  —  (13,483) 
Stock-based compensation expense
—  —  10,425  —  —  —  —  10,425  
Proceeds from stock option exercises
323,464  —  11,890  —  —  —  —  11,890  
Foreign currency translation adjustments, net of tax
—  —  —  —  —  —  2,943  2,943  
Change in unrealized gains and losses on cash flow hedges, net of tax
—  —  —  —  —  —  3,100  3,100  
Net income
—  —  —  60,754  —  —  —  60,754  
Balance, March 31, 2019
54,564,508  $54  $553,532  $820,287  19,735  $(177) $(35,471) $1,338,225  
Restricted stock units vested
11,757  —  —  —  —  —  —  —  
Restricted stock units withheld for employee taxes
(2,084) —  (363) —  —  —  —  (363) 
Stock-based compensation expense
—  —  10,867  —  —  —  —  10,867  
Proceeds from stock option exercises
205,108  1  10,583  —  —  —  —  10,584  
Foreign currency translation adjustments, net of tax
—  —  —  —  —  —  2,620  2,620  
Change in unrealized gains and losses on cash flow hedges, net of tax
—  —  —  —  —  —  1,537  1,537  
Net income
—  —  —  58,777  —  —  —  58,777  
Balance, June 30, 2019
54,779,289  $55  $574,619  $879,064  19,735  $(177) $(31,314) $1,422,247  

The accompanying notes are an integral part of the unaudited condensed consolidated financial statements.
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EPAM SYSTEMS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(In thousands)
                                               Six Months Ended June 30,
 20202019
Cash flows from operating activities:
Net income$152,189  $119,531  
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization expense30,166  21,228  
Operating lease right-of-use assets amortization expense33,834  25,732  
Bad debt expense3,174  167  
Deferred taxes2,971  (1,193) 
Stock-based compensation expense31,320  37,553  
Other4,458  3,938  
Changes in assets and liabilities:  
Trade receivables and contract assets(11,842) (75,332) 
Prepaid and other assets1,216  1,690  
Accounts payable633  (2,069) 
Accrued expenses and other liabilities(5,835) (42,075) 
Operating lease liabilities(30,857) (25,705) 
Income taxes payable(2,016) (19,638) 
Net cash provided by operating activities209,411  43,827  
Cash flows from investing activities:  
Purchases of property and equipment(40,524) (25,025) 
Purchases of short-term investments(60,000)   
Acquisition of business, net of cash acquired (Note 2)(12,573) (16,240) 
Purchases of non-marketable securities(20,500) (5,000) 
Other investing activities, net26  (1,180) 
Net cash used in investing activities(133,571) (47,445) 
Cash flows from financing activities:  
Proceeds from stock option exercises17,144  22,415  
Payments of withholding taxes related to net share settlements of restricted stock units(15,899) (13,084) 
Payment of contingent consideration for previously acquired business(7,869) (1,104) 
Other financing activities, net(24) (19) 
Net cash (used in)/provided by financing activities(6,648) 8,208  
Effect of exchange rate changes on cash, cash equivalents and restricted cash(11,999) 2,248  
Net increase in cash, cash equivalents and restricted cash57,193  6,838  
Cash, cash equivalents and restricted cash, beginning of period937,688  771,711  
Cash, cash equivalents and restricted cash, end of period$994,881  $778,549  


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EPAM SYSTEMS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(In thousands)
(Continued)

The following table provides a reconciliation of cash, cash equivalents and restricted cash reported within the condensed consolidated balance sheets:
                                               As of
June 30,
2020
As of
December 31,
2019
Balance sheet classification
    Cash and cash equivalents$993,724  $936,552  
   Restricted cash in Other noncurrent assets1,157  1,136  
    Total restricted cash1,157  1,136  
        Total cash, cash equivalents and restricted cash$994,881  $937,688  

The accompanying notes are an integral part of the unaudited condensed consolidated financial statements.
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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
(In thousands, except share and per share data)
 
1.BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES 
EPAM Systems, Inc. (the “Company” or “EPAM”) is a leading global provider of digital platform engineering and software development services to customers located around the world, primarily in North America, Europe, Asia and Australia. 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 other emerging 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, 2019 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 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, all adjustments considered necessary for a fair presentation of the accompanying unaudited condensed consolidated financial statements have been included, and all adjustments are of a normal and recurring nature.
As previously disclosed in the Company’s Annual Report on Form 10-K for the year ended December 31, 2019, certain amounts recorded in the prior-period consolidated statement of cash flows presented have been reclassified to conform to the current-period financial statement presentation. These reclassifications had no effect on previously reported results of operations.
Adoption of New Accounting Standards
Unless otherwise discussed below, the adoption of new accounting standards did not have a material impact on the Company’s consolidated financial position, results of operations, changes in stockholders’ equity and cash flows.
Measurement of Credit Losses on Financial Instruments — In June 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2016-13, Financial Instruments—Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments.
The amendments in this update changed how companies measure and recognize credit impairment for many financial assets. The new credit loss model requires companies to immediately recognize an estimate of credit losses expected to occur over the remaining life of the financial assets (including trade receivables) that are in the scope of the update. The update also made amendments to the current impairment model for held-to-maturity and available-for-sale debt securities and certain guarantees. The Company adopted Topic 326, effective January 1, 2020, using a modified-retrospective approach through a cumulative effect adjustment to retained earnings as of the beginning of the period of adoption. As a result of the adoption of Topic 326, the Company recorded an immaterial reduction to its allowance for doubtful accounts for trade receivables and contract assets.
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. Unless otherwise discussed below, 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.

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2.ACQUISITION
2020 Acquisition — During the six months ended June 30, 2020, the Company completed one acquisition with a purchase price of $14,663 including contingent consideration with an acquisition-date fair value of $4,042. The Company committed to making contingent consideration payments with a maximum amount payable of $16,582 subject to attainment of specified performance targets in the first and second calendar years after the acquisition date. This acquisition increased EPAM’s software and service capabilities in financial services as well as added $6,300 of intangible assets, consisting mainly of customer relationships. Revenues generated by this acquisition totaled $1,190 and $2,233 during the three and six months ended June 30, 2020, respectively. Pro forma results of operations have not been presented because the effect of the acquisition on the Company’s condensed consolidated financial statements was not material.
test IO — During the second quarter of 2020, the Company finalized the fair value of the assets acquired and liabilities assumed in the acquisition of test IO. During 2020, the Company recorded insignificant purchase price adjustments to various accounts with corresponding net decreases to goodwill of $226.

The following table summarizes the estimated fair values of the assets acquired and liabilities assumed as of the date of acquisition as updated for any changes as of June 30, 2020 for test IO:
test IO
Cash and cash equivalents$663  
Trade receivables and contract assets621  
Prepaid and other current assets150  
Goodwill11,926  
Intangible assets6,219  
Property and equipment and other noncurrent assets305  
Total assets acquired$19,884  
Accounts payable, accrued expenses and other current liabilities$993  
Other noncurrent liabilities1,568  
Total liabilities assumed$2,561  
Net assets acquired$17,323  

3.GOODWILL
Goodwill by reportable segment was as follows:
North AmericaEuropeRussiaTotal
Balance as of January 1, 2020$113,426  $80,873  $744  $195,043  
test IO purchase accounting adjustment863  (1,089)   (226) 
Other 2019 acquisitions purchase accounting adjustments373  191  35  599  
2020 Acquisition6,293      6,293  
Effect of net foreign currency exchange rate changes(177) (2,460) (33) (2,670) 
Balance as of June 30, 2020$120,778  $77,515  $746  $199,039  

There were no accumulated impairment losses in the North America or Europe reportable segments as of June 30, 2020 or December 31, 2019. The Russia segment had accumulated goodwill impairment losses of $2,241 as of June 30, 2020 and December 31, 2019.


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4.FAIR VALUE MEASUREMENTS
The Company carries certain assets and liabilities at fair value on a recurring basis on its 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 June 30, 2020 and December 31, 2019:
As of June 30, 2020
BalanceLevel 1Level 2Level 3
Foreign exchange derivative assets$932  $  $932  $  
Total assets measured at fair value on a recurring basis$932  $  $932  $  
Foreign exchange derivative liabilities$3,035  $  $3,035  $  
Contingent consideration4,705      4,705  
Total liabilities measured at fair value on a recurring basis
$7,740  $  $3,035  $4,705  
As of December 31, 2019
BalanceLevel 1Level 2Level 3
Foreign exchange derivative assets$1,910  $  $1,910  $  
Total assets measured at fair value on a recurring basis$1,910  $  $1,910  $  
Foreign exchange derivative liabilities$243  $  $243  $  
Contingent consideration10,495      10,495  
Total liabilities measured at fair value on a recurring basis
$10,738  $  $243  $10,495  

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 5 “Derivative Financial Instruments” in the condensed consolidated interim financial statements for additional information regarding derivative financial instruments.
The fair value of the contingent consideration 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 2020 Acquisition was 17.5%. 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, net in the Company’s consolidated statement of income and comprehensive income.

A reconciliation of the beginning and ending balances of Level 3 acquisition-related contingent consideration using significant unobservable inputs for the six months ended June 30, 2020 is as follows:
Amount
Contingent consideration liabilities as of January 1, 2020$10,495  
Payment of contingent consideration for previously acquired business(7,869) 
Acquisition date fair value of contingent consideration — 2020 Acquisition (Note 2)4,042  
Changes in fair value of contingent consideration included in Interest and other income, net (1,438) 
Effect of net foreign currency exchange rate changes (525) 
Contingent consideration liabilities as of June 30, 2020$4,705  
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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 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 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
BalanceEstimated Fair ValueLevel 1Level 2Level 3
June 30, 2020
Financial Assets:
Cash equivalents:
Money market funds$189,873  $189,873  $189,873  $  $  
Total cash equivalents$189,873  $189,873  $189,873  $  $  
Restricted cash$1,157  $1,157  $1,157  $  $  
Time deposits$60,025  $60,025  $  $60,025  $  
Employee loans$1,491  $1,491  $  $  $1,491  
Financial Liabilities:
Borrowings under the 2017 Credit Facility$25,007  $25,007  $  $25,007  $  
Fair Value Hierarchy
BalanceEstimated Fair ValueLevel 1Level 2Level 3
December 31, 2019
Financial Assets:
Cash equivalents:
Money market funds$407,817  $407,817  $407,817  $  $  
Time deposits10,002  10,002    10,002    
Total cash equivalents$417,819  $417,819  $407,817  $10,002  $  
Restricted cash$1,136  $1,136  $1,136  $  $  
Employee loans$2,434  $2,434  $  $  $2,434  
Financial Liabilities:
Borrowings under the 2017 Credit Facility$25,017  $25,017  $  $25,017  $  

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 $25,000 and $5,750 as of June 30, 2020 and December 31, 2019, respectively and is classified as Other noncurrent assets in the Company’s condensed consolidated balance sheets.


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5.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 Russian ruble, Polish zloty and Indian rupee transactions. As of June 30, 2020, all of the Company’s 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 consolidated balance sheets as of June 30, 2020 and December 31, 2019 were as follows:
As of June 30, 2020As of December 31, 2019
Balance Sheet ClassificationAsset DerivativesLiability DerivativesAsset DerivativesLiability Derivatives
Foreign exchange forward contracts -
Designated as hedging instruments
Prepaid expenses and other current assets$932  $1,910  
Accrued expenses and other current liabilities$3,035  $243  
The Company records changes in the fair value of its cash flow hedges in accumulated other comprehensive loss in the consolidated balance sheets until the forecasted transaction occurs. When the forecasted transaction occurs, the Company reclassifies the related gain or loss on the cash flow hedge to cost of revenues (exclusive of depreciation and amortization). In the event the underlying forecasted transaction does not occur, or it becomes probable that it will not occur, the Company reclassifies the gain or loss on the related cash flow hedge into income. If the Company does not elect hedge accounting, or the contract does not qualify for hedge accounting treatment, the changes in fair value from period to period are recorded in income.
The changes in the fair value of foreign currency derivative instruments in our unaudited condensed consolidated statements of income and comprehensive income for the three and six months ended June 30, 2020 and 2019 were as follows:
 Three Months Ended
June 30,
Six Months Ended
June 30,
2020201920202019
Foreign exchange forward contracts - Designated as hedging instruments:
Net gain/(loss) in fair value recognized in accumulated other comprehensive loss 
$8,317  $1,984  $(3,770) $5,983  
Net (loss)/gain reclassified from accumulated other comprehensive loss into cost of revenues (exclusive of depreciation and amortization)
$(1,851) $342  $(2,511) $(110) 


6.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 years to 10.9 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 six months ended June 30, 2020 and 2019.
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During the three and six months ended June 30, 2020 and 2019, the components of lease expense were as follows:
 Three Months Ended
June 30,
Six Months Ended
June 30,
Income Statement Classification2020201920202019
Operating lease costSelling, general and administrative expenses$18,851  $15,196  $37,714  $28,915  
Variable lease costSelling, general and administrative expenses579  1,999  3,214  4,096  
Short-term lease costSelling, general and administrative expenses269  1,006  809  1,904  
Total lease cost$19,699  $18,201  $41,737  $34,915  

Supplemental cash flow information related to leases for the three and six months ended June 30, 2020 and 2019 was as follows:
Three Months Ended
June 30,
Six Months Ended
June 30,
 2020201920202019
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows used for operating leases$16,481  $14,105  $33,372  $28,801  
Right-of-use assets obtained in exchange for lease obligations:
Operating leases$11,676  $40,722  $42,928  $53,547  
Non-cash net (decrease)/increase due to lease modifications:
Operating lease right-of-use assets$(8,566) $8,324  $(3,982) $3,150  
Operating lease liabilities$(8,562) $8,358  $(3,989) $3,252  

Weighted average remaining lease term and discount rate as of June 30, 2020 and 2019 were as follows:
 As of June 30, 2020As of June 30, 2019
Weighted average remaining lease term, in years:
Operating leases6.06.2
Weighted average discount rate:
Operating leases3.2 %3.6 %

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As of June 30, 2020, operating lease liabilities will mature as follows:
Year ending December 31,Lease Payments
2020 (excluding six months ended June 30, 2020)$34,183  
202159,786  
202244,318  
202332,080  
202427,677  
Thereafter67,913  
Total lease payments265,957  
Less: imputed interest(23,315) 
Total$242,642  
The Company had committed to payments of $2,281 related to operating lease agreements that had not yet commenced as of June 30, 2020. These operating leases will commence on various dates during 2020 with lease terms ranging from 1.4 to 5.8 years. The Company did not have any material finance lease agreements that had not yet commenced.

7.LONG-TERM DEBT
Revolving Line of Credit — On May 24, 2017, the Company entered into an unsecured credit facility (the “2017 Credit Facility”), as may be amended from time to time, with PNC Bank, National Association; PNC Capital Markets LLC; Citibank N.A.; Wells Fargo Bank, National Association; Fifth Third Bank and Santander Bank, N.A. (collectively the “Lenders”). The 2017 Credit Facility provides for a borrowing capacity of $300,000, with potential to increase the borrowing capacity up to $400,000 if certain conditions are met. The 2017 Credit Facility matures on May 24, 2022.
Borrowings under the 2017 Credit Facility may be denominated in U.S. dollars or up to a maximum of $100,000 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 2017 Credit 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, and (c) the Daily LIBOR Rate, plus 1.0%. As of June 30, 2020, the Company’s outstanding borrowings are subject to a LIBOR-based interest rate which resets regularly at issuance, based on lending terms.
The 2017 Credit Facility 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 June 30, 2020, the Company was in compliance with all covenants contained in the 2017 Credit Facility.
The following table presents the outstanding debt and borrowing capacity of the Company under the 2017 Credit Facility:
 As of
June 30,
2020
As of
December 31,
2019
Outstanding debt$25,000  $25,000  
Interest rate1.2 %2.8 %
Irrevocable standby letters of credit$  $303  
Available borrowing capacity$275,000  $274,697  
Current maximum borrowing capacity$300,000  $300,000  



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8.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 13 “Segment Information”) for the periods indicated:
Three Months Ended June 30, 2020
Reportable Segments
North AmericaEuropeRussiaConsolidated Revenues
Customer Locations
North America$370,693  $10,835  $408  $381,936  
Europe11,195  199,866  3  211,064  
CIS2,236  4  19,838  22,078  
APAC705  16,600    17,305  
        Revenues$384,829  $227,305  $20,249  $632,383  

Six Months Ended June 30, 2020
Reportable Segments
North AmericaEuropeRussiaConsolidated Revenues
Customer Locations
North America$748,477  $21,254  $2,035  $771,766  
Europe21,527  412,588  6  434,121  
CIS4,790  16  42,132  46,938  
APAC1,137  29,780    30,917  
        Revenues$775,931  $463,638  $44,173  $1,283,742  

Three Months Ended June 30, 2019
Reportable Segments
North AmericaEuropeRussiaConsolidated Revenues
Customer Locations
North America$323,221  $11,551  $16  $334,788  
Europe5,219  172,027  99  177,345  
CIS2,005    23,086  25,091  
APAC580  13,783    14,363  
        Revenues$331,025  $197,361  $23,201  $551,587  

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Six Months Ended June 30, 2019
Reportable Segments
North AmericaEuropeRussiaConsolidated Revenues
Customer Locations
North America$626,966  $24,442  $32  $651,440  
Europe9,966  340,647  240  350,853  
CIS3,744  13  39,508  43,265  
APAC1,038  26,324    27,362  
        Revenues$641,714  $391,426  $39,780  $1,072,920  
        
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 13 “Segment Information”) for the periods indicated:
Three Months Ended June 30, 2020
Reportable Segments
North AmericaEuropeRussiaConsolidated Revenues
Industry Verticals
Business Information & Media$81,481  $58,338  $439  $140,258  
Financial Services47,687  66,655  13,633  127,975  
Software & Hi-Tech100,801  18,165  519  119,485  
Travel & Consumer52,193  51,253  3,824  107,270  
Life Sciences & Healthcare61,776  7,069  39  68,884  
Emerging Verticals40,891  25,825  1,795  68,511  
        Revenues$384,829  $227,305  $20,249  $632,383  

Six Months Ended June 30, 2020
Reportable Segments
North AmericaEuropeRussiaConsolidated Revenues
Industry Verticals
Business Information & Media$161,701  $116,484  $799  $278,984  
Financial Services95,555  134,249  29,814  259,618  
Software & Hi-Tech202,538  36,311  2,485  241,334  
Travel & Consumer106,917  112,320  7,563  226,800  
Life Sciences & Healthcare123,387  14,688  48  138,123  
Emerging Verticals85,833  49,586  3,464  138,883  
        Revenues$775,931  $463,638  $44,173  $1,283,742  

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Three Months Ended June 30, 2019
Reportable Segments
North AmericaEuropeRussiaConsolidated Revenues
Industry Verticals
Business Information & Media$62,340  $35,691  $104  $98,135  
Financial Services43,517  58,879  18,009  120,405  
Software & Hi-Tech85,600  19,440  478  105,518  
Travel & Consumer48,178  56,175  2,761  107,114  
Life Sciences & Healthcare54,287  4,907  4  59,198  
Emerging Verticals37,103  22,269  1,845  61,217  
        Revenues$331,025  $197,361  $23,201  $551,587  
Six Months Ended June 30, 2019
Reportable Segments
North AmericaEuropeRussiaConsolidated Revenues
Industry Verticals
Business Information & Media$124,701  $68,222  $244  $193,167  
Financial Services81,911  120,714  31,041  233,666  
Software & Hi-Tech164,721  39,810  918  205,449  
Travel & Consumer95,178  111,377  4,885  211,440  
Life Sciences & Healthcare104,443  9,463  66  113,972  
Emerging Verticals70,760  41,840  2,626  115,226  
        Revenues$641,714  $391,426  $39,780  $1,072,920  

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 13 “Segment Information”) for the periods indicated:
Three Months Ended June 30, 2020
Reportable Segments
North AmericaEuropeRussiaConsolidated Revenues
Contract Types
Time-and-material$348,715  $192,173  $13,972  $554,860  
Fixed-price33,855  32,253  6,259  72,367  
Licensing1,958  545  9  2,512  
Other revenues
301  2,334  9  2,644  
        Revenues$384,829  $227,305  $20,249  $632,383  

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Six Months Ended June 30, 2020
Reportable Segments
North AmericaEuropeRussiaConsolidated Revenues
Contract Types
Time-and-material$705,978  $382,493  $27,568  $1,116,039  
Fixed-price65,710  77,508  15,080  158,298  
Licensing3,728  707  1,467  5,902  
Other revenues
515  2,930  58  3,503  
        Revenues$775,931  $463,638  $44,173  $1,283,742  

Three Months Ended June 30, 2019
Reportable Segments
North AmericaEuropeRussiaConsolidated Revenues
Contract Types
Time-and-material$300,326  $167,581  $12,047  $479,954  
Fixed-price29,681  29,204  10,943  69,828  
Licensing624  142  196  962  
Other revenues
394  434  15  843  
        Revenues$331,025  $197,361  $23,201  $551,587  

Six Months Ended June 30, 2019
Reportable Segments
North AmericaEuropeRussiaConsolidated Revenues
Contract Types
Time-and-material$585,051  $335,794  $23,319  $944,164  
Fixed-price54,421  54,450  16,230  125,101  
Licensing1,460  540  202  2,202  
Other revenues
782  642  29  1,453  
        Revenues$641,714  $391,426  $39,780  $1,072,920  

Timing of Revenue Recognition
The following tables present the timing of revenue recognition for the periods indicated:
Three Months Ended June 30, 2020
Reportable Segments
North AmericaEuropeRussiaConsolidated Revenues
Timing of Revenue Recognition
Transferred over time$383,573  $227,073  $20,240  $630,886  
Transferred at a point of time1,256  232  9  1,497  
        Revenues$384,829  $227,305  $20,249  $632,383  


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Six Months Ended June 30, 2020
Reportable Segments
North AmericaEuropeRussiaConsolidated Revenues
Timing of Revenue Recognition
Transferred over time$773,383  $463,244  $42,708  $1,279,335  
Transferred at a point of time2,548  394  1,465  4,407  
        Revenues$775,931  $463,638  $44,173  $1,283,742  

Three Months Ended June 30, 2019
Reportable Segments
North AmericaEuropeRussiaConsolidated Revenues
Timing of Revenue Recognition
Transferred over time$330,819  $197,255  $23,201  $551,275  
Transferred at a point of time206  106    312  
        Revenues$331,025  $197,361  $23,201  $551,587  

Six Months Ended June 30, 2019
Reportable Segments
North AmericaEuropeRussiaConsolidated Revenues
Timing of Revenue Recognition
Transferred over time$641,104  $391,273  $39,780  $1,072,157  
Transferred at a point of time610  153    763  
        Revenues$641,714  $391,426  $39,780  $1,072,920  

Performance obligations satisfied in prior periods led to a reduction of $3,669 of revenues during the three months ended June 30, 2020 and an increase of $4,182 of revenues during the six months ended June 30, 2020. The Company recognized revenues associated with performance obligations satisfied in previous periods of $7,693 and $4,119 during the three and six months ended June 30, 2019, respectively.
The following table includes the estimated revenues expected to be recognized in the future related to performance obligations that are partially or fully unsatisfied as of June 30, 2020. The Company applies a practical expedient and does not disclose the value of unsatisfied performance obligations for contracts that (i) have an original expected duration of one year or less and (ii) contracts for which it recognizes revenues at the amount to which it has the right to invoice for services provided:
Less than 1 year1 Year2 Years3 YearsTotal
Contract Type
Fixed-price$15,395  $546  $  $  $15,941  
The Company applies a practical expedient and does not disclose the amount of the transaction price allocated to the remaining performance obligations nor provide an explanation of when the Company expects to recognize that amount as revenue for certain variable consideration.

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Contract Balances
The following table provides information on the classification of contract assets and liabilities in the condensed consolidated balance sheets:
 As of
June 30,
2020
As of
December 31,
2019
Contract assets included in Trade receivables and contract assets$12,353  $14,320  
Contract liabilities included in Accrued expenses and other current liabilities$11,461  $9,132  
Contract assets have not materially changed from December 31, 2019. Contract liabilities comprise amounts collected from the Company’s customers for revenues not yet earned. Such amounts are anticipated to be recorded as revenues when services are performed in subsequent periods. Contract liabilities have not materially changed from December 31, 2019.
During the three and six months ended June 30, 2020, the Company recognized $1,325 and $7,862 of revenues, respectively, that were included in Accrued expenses and other current liabilities at December 31, 2019. During the three and six months ended June 30, 2019, the Company recognized $610 and $3,661 of revenues, respectively, that were included in Accrued expenses and other current liabilities at December 31, 2018.

9.STOCK-BASED COMPENSATION
The following table summarizes the components of stock-based compensation expense recognized in the Company’s condensed consolidated statements of income and comprehensive income for the periods indicated:
Three Months Ended
June 30,
Six Months Ended
June 30,
2020201920202019
Cost of revenues (exclusive of depreciation and amortization)$8,958  $7,480  $12,942  $20,261  
Selling, general and administrative expenses10,481  8,217  18,378  17,292  
Total$19,439  $15,697  $31,320  $37,553  

Stock Options
Stock option activity under the Company’s plans is set forth below:
 Number of
Options 
Weighted Average
Exercise Price 
Aggregate
Intrinsic Value 
Weighted Average
Remaining Contractual Term (in years)
Options outstanding at January 1, 20203,322,930  $50.85  
Options granted147,351  $176.21  
Options exercised(441,199) $39.12  
Options forfeited/cancelled(9,137) $117.40  
Options outstanding at June 30, 20203,019,945  $58.48  $584,445  4.7
Options vested and exercisable at June 30, 20202,641,633  $45.82  $544,682  4.1
Options expected to vest at June 30, 2020348,999  $145.93  $37,021  8.6
As of June 30, 2020, $17,196 of total remaining unrecognized stock-based compensation cost related to unvested stock options, net of estimated forfeitures, is expected to be recognized over the weighted-average remaining requisite service period of 2.9 years.

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Restricted Stock and Restricted Stock Units
Service-Based Awards
The table below summarizes activity related to the Company’s equity-classified and liability-classified service-based awards for the six months ended June 30, 2020:
Equity-Classified
 Restricted Stock
Equity-Classified
Equity-Settled
Restricted Stock Units
Liability-Classified
Cash-Settled
Restricted Stock Units
 
Number of
Shares 
Weighted Average Grant Date
Fair Value Per Share 
Number of
Shares 
Weighted Average Grant Date
Fair Value Per Share 
Number of
Shares 
Weighted Average Grant Date
Fair Value Per Share 
Unvested service-based awards outstanding at January 1, 20209,791  $162.96  758,785  $122.48  242,288  $105.40  
Awards granted  $  251,864  $180.18  59,770  $180.37  
Awards vested  $  (294,872) $106.73  (118,777) $89.34  
Awards forfeited/cancelled  $  (28,126) $137.76  (3,456) $108.89  
Unvested service-based awards outstanding at June 30, 20209,791  $162.96  687,651  $149.74  179,825  $140.86  
As of June 30, 2020, $1,138 of total remaining unrecognized stock-based compensation cost related to service-based equity-classified restricted stock is expected to be recognized over the weighted-average remaining requisite service period of 2.2 years.
As of June 30, 2020, $83,125 of total remaining unrecognized stock-based compensation cost related to service-based equity-classified restricted stock units (“RSUs”), net of estimated forfeitures, is expected to be recognized over the weighted-average remaining requisite service period of 2.8 years. During the six months ended June 30, 2020, 19,201 equity-classified RSUs were granted in connection with a 2020 acquisition of a business. See Note 2 “Acquisitions” in the condensed consolidated interim financial statements for additional information regarding business acquisitions. During the first quarter of 2020, in connection with a 2019 acquisition of a business, the Company formally issued 5,793 equity-classified RSUs.
As of June 30, 2020, $32,302 of total remaining unrecognized stock-based compensation cost related to service-based liability-classified cash-settled RSUs, net of estimated forfeitures, is expected to be recognized over the weighted-average remaining requisite service period of 2.5 years. During the six months ended June 30, 2020, 9,736 liability-classified cash-settled RSUs were granted in connection with an acquisition of a business. See Note 2 “Acquisitions” in the condensed consolidated interim financial statements for additional information regarding business acquisitions.
The liability associated with the service-based liability-classified RSUs as of June 30, 2020 and December 31, 2019, was $9,122 and $21,902, respectively, and was classified as Accrued compensation and benefits expenses in the condensed consolidated balance sheets.
Performance-Based Awards
The table below summarizes activity related to the Company’s equity-classified performance-based awards for the six months ended June 30, 2020:
Equity-Classified
Equity-Settled
Restricted Stock
Equity-Classified
Equity-Settled
Restricted Stock Units
 
Number of
Shares 
Weighted Average Grant Date
Fair Value Per Share 
Number of
Shares 
Weighted Average Grant Date
Fair Value Per Share 
Unvested performance-based awards outstanding at January 1, 20209,393  $165.87    $  
Awards granted  $  24,836  $177.81  
Unvested performance-based awards outstanding at June 30, 20209,393  $165.87  24,836  $177.81  
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As of June 30, 2020, $1,236 of total remaining unrecognized stock-based compensation cost related to performance-based restricted stock is expected to be recognized over the weighted-average remaining requisite service period of 3.2 years.
During the first quarter of 2020, in connection with a 2019 acquisition of a business, the Company formally issued 24,836 performance-based equity-classified RSUs. As of June 30, 2020, $2,569 of total remaining unrecognized stock-based compensation cost related to performance-based equity-classified RSUs is expected to be recognized over the weighted-average remaining requisite service period of 2.9 years.
During the first quarter of 2020, the Company agreed to issue equity-classified RSUs at future dates worth up to $2,171 in connection with an acquisition of a business. The number of awards to be issued is subject to attainment of specified performance targets in the 2 years after the acquisition date as well as the Company’s stock price at the time of formal issuance. The awards require continued service and vest over 3 years from the date of acquisition.

10.INCOME TAXES
In determining its interim provision for income taxes, the Company uses an estimated annual effective tax rate, which is based on expected annual profit before tax, statutory tax rates and tax planning opportunities available in the various jurisdictions in which the Company operates. Certain significant or unusual items are separately recognized in the quarter in which they occur and can be a source of variability in the effective tax rates from quarter to quarter.
The Company’s worldwide effective tax rates for the three months ended June 30, 2020 and 2019 were 12.4% and 16.6%, respectively, and 11.8% and 11.3% during the six months ended June 30, 2020 and 2019, respectively.
The Company’s effective tax rates benefited from excess tax benefits recorded upon vesting or exercise of stock-based awards of $8,129 and $4,741 during the three months ended June 30, 2020 and 2019, respectively, and $19,826 and $16,254 during the six months ended June 30, 2020 and 2019, respectively.

11.EARNINGS PER SHARE
Basic earnings per share is computed by dividing net income available to common shareholders by the weighted-average number of shares of common stock outstanding during the period. For purposes of computing basic earnings per share, any nonvested shares of restricted stock that have been issued by the Company and are contingently returnable to the Company are excluded from the weighted-average number of shares of common stock outstanding during the period. Diluted earnings per share is computed by dividing net income available to common shareholders by the weighted-average number of shares of common stock outstanding during the period increased to include the number of additional shares of common stock that would have been outstanding if the potentially dilutive securities had been issued. Potentially dilutive securities include outstanding stock options, unvested restricted stock and unvested equity-settled RSUs. The dilutive effect of potentially dilutive securities is reflected in diluted earnings per share by application of the treasury stock method.

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The following table sets forth the computation of basic and diluted earnings per share of common stock as follows:
 Three Months Ended
June 30,
Six Months Ended
June 30,
 2020201920202019
Numerator for basic and diluted earnings per share:
Net income$66,624  $58,777  $152,189  $119,531  
Numerator for basic and diluted earnings per share$66,624  $58,777  $152,189  $119,531  
Denominator:  
Weighted average common shares for basic earnings per share55,700,706  54,681,959  55,493,727  54,464,753  
Net effect of dilutive stock options, restricted stock units and restricted stock awards
2,545,525  2,932,325  2,700,674  2,961,810  
Weighted average common shares for diluted earnings per share
58,246,231  57,614,284  58,194,401  57,426,563  
Net income per share:  
Basic$1.20  $1.07  $2.74  $2.19  
Diluted$1.14  $1.02  $2.62  $2.08  
The number of shares underlying equity-based awards that were excluded from the calculation of diluted earnings per share as their effect would be anti-dilutive was 146,732 and 77,925 during the three and six months ended June 30, 2020, respectively.
The number of shares underlying equity-based awards that were excluded from the calculation of diluted earnings per share as their effect would be anti-dilutive was 168,451 and 97,327 during the three and six months ended June 30, 2019, respectively.

12.COMMITMENTS AND CONTINGENCIES
Indemnification Obligations  In the normal course of business, the Company is a party to a variety of agreements under which it may be obligated to indemnify the other party for certain matters. These obligations typically arise in contracts where the Company customarily agrees to hold the other party harmless against losses arising from a breach of representations or covenants for certain matters, infringement of third party intellectual property rights, data privacy violations, and certain tortious conduct in the course of providing services. The duration of these indemnifications varies, and in certain cases, is indefinite.
The Company is unable to reasonably estimate the maximum potential amount of future payments under these or similar agreements due to the unique facts and circumstances of each agreement and the fact that certain indemnifications provide for no limitation to the maximum potential future payments under the indemnification. Management is not aware of any such matters that would have a material effect on the condensed consolidated financial statements of the Company.
Litigation — From time to time, the Company is involved in litigation, claims or other contingencies arising in the ordinary course of business. The Company accrues a liability when a loss is considered probable and the amount can be reasonably estimated. When a material loss contingency is reasonably possible but not probable, the Company does not record a liability, but instead discloses the nature and the amount of the claim, and an estimate of the loss or range of loss, if such an estimate can be made. Legal fees are expensed as incurred. In the opinion of management, the outcome of any existing claims and legal or regulatory proceedings, if decided adversely, is not expected to have a material effect on the Company’s business, financial condition, results of operations or cash flows.
Building Acquisition Commitments — During the year ended December 31, 2019, the Company entered into an agreement to purchase office space in Ukraine intended to support the global delivery center in that country. The agreement is subject to completion of construction and other ordinary closing conditions. As of June 30, 2020, the Company has committed to making future payments totaling approximately $36,900 including VAT to the sellers upon transfer of the building.


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13.SEGMENT INFORMATION
The Company determines its business segments and reports segment information in accordance with how the Company’s chief operating decision maker (“CODM”) organizes the segments to evaluate performance, allocate resources and make business decisions. Segment results are based on the segment’s revenues and operating profit, where segment operating profit is defined as income from operations before unallocated costs. Expenses included in segment operating profit consist principally of direct selling and delivery costs as well as an allocation of certain shared services expenses. Certain corporate expenses are not allocated to specific segments as these expenses are not controllable at the segment level. Such expenses include certain types of professional fees, non-corporate taxes, compensation to non-employee directors and certain other general and administrative expenses, including compensation of specific groups of non-production employees. In addition, the Company does not allocate amortization of intangible assets acquired through business combinations, goodwill and other asset impairment charges, stock-based compensation expenses, acquisition-related costs and certain other one-time charges. These unallocated amounts are combined with total segment operating profit to arrive at consolidated income from operations as reported below in the reconciliation of segment operating profit to consolidated income before provision for income taxes. Additionally, management has determined that it is not practical to allocate identifiable assets by segment since such assets are used interchangeably among the segments.
The Company manages its business primarily based on the managerial responsibility for its client base and market. As managerial responsibility for a particular customer relationship generally correlates with the customer’s geographic location, there is a high degree of similarity between customer locations and the geographic boundaries of the Company’s reportable segments. In some cases, managerial responsibility for a particular customer is assigned to a management team in another region and is usually based on the strength of the relationship between customer executives and particular members of EPAM’s senior management team. In such cases, the customer’s activity would be reported through the management team’s reportable segment.
During the fourth quarter of 2019, the Company changed its management reporting of segment revenue to exclude other income. Prior year amounts presented below have been changed to conform to the new presentation.
Revenues from external customers and operating profit/(loss), before unallocated expenses, by reportable segment for the three and six months ended June 30, 2020 and 2019, were as follows:
 Three Months Ended
June 30,
Six Months Ended
June 30,
 2020201920202019
Segment revenues:
North America$384,829  $331,025  $775,931  $641,714  
Europe227,305  197,361  463,638  391,426  
Russia20,249  23,201  44,173  39,780  
Total segment revenues$632,383  $551,587  $1,283,742  $1,072,920  
Segment operating profit/(loss):  
North America$82,752  $69,347  $161,679  $133,804  
Europe34,426  27,679  66,205  59,464  
Russia(5,645) 5,652  (5,126) 6,241  
Total segment operating profit$111,533  $102,678  $222,758  $199,509  
Intersegment transactions were excluded from the above on the basis that they are neither included in the measure of a segment’s profit and loss results, nor considered by the CODM during the review of segment results.
There were no customers that accounted for more than 10% of total segment revenues during the three and six months ended June 30, 2020 and 2019.

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Reconciliation of segment operating profit to consolidated income before provision for income taxes is presented below:
Three Months Ended
June 30,
Six Months Ended
June 30,
2020201920202019
Total segment operating profit:$111,533  $102,678  $222,758  $199,509  
Unallocated amounts:
Stock-based compensation expense(19,439) (15,697) (31,320) (37,553) 
Amortization of intangibles assets(2,994) (2,601) (6,129) (4,739) 
Other acquisition-related expenses (148) (850) (616) (1,361) 
Other unallocated expenses(5,526) (10,648) (13,758) (18,316) 
Income from operations83,426  72,882  170,935  137,540  
Interest and other income, net1,817  1,190  4,203  4,266  
Foreign exchange loss(9,167) (3,562) (2,643) (7,046) 
Income before provision for income taxes$76,076  $70,510  $172,495  $134,760  
Geographic Area Information
Long-lived assets include property and equipment, net of accumulated depreciation and amortization, and management has determined that it is not practical to allocate these assets by segment since such assets are used interchangeably among the segments. Physical locations and values of the Company’s long-lived assets are presented below:
As of
June 30,
2020
As of
December 31,
2019
Belarus$73,989  $75,984  
Ukraine29,577  24,652  
United States17,697  15,637  
Russia15,249  17,980  
India6,553  7,443  
Poland4,803  5,029  
Hungary4,684  5,201  
China2,621  3,036  
Mexico2,591  2,353  
Other 9,595  7,944  
Total$167,359  $165,259  
The table below presents information about the Company’s revenues by customer location for the three and six months ended June 30, 2020 and 2019:
Three Months Ended
June 30,
Six Months Ended
June 30,
2020201920202019
United States$365,004  $318,988  $735,093  $618,668  
United Kingdom82,277  69,042  174,409  134,781  
Switzerland46,537  35,364  93,759  71,597  
Netherlands27,237  21,039  53,146  41,655  
Russia19,448  22,460  41,409  38,352  
Germany19,798  19,622  39,991  38,776  
Canada16,585  15,785  34,505  32,757  
Other locations55,497  49,287  111,430  96,334  
Total$632,383  $551,587  $1,283,742  $1,072,920  

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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
You should read the following discussion and analysis of our financial condition and results of operations together with our Annual Report on Form 10-K for the year ended December 31, 2019 and the unaudited condensed consolidated financial statements and the related notes included elsewhere in this quarterly report. In addition to historical information, this discussion contains forward-looking statements that involve risks, uncertainties and assumptions that could cause actual results to differ materially from management’s expectations. Factors that could cause such differences are discussed in the sections entitled “Forward-Looking Statements” in this item, “Part I. Item 1A. Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2019 and “Part II. Item 1A. Risk Factors” in this quarterly report. We assume no obligation to update any of these forward-looking statements.
In this quarterly report, “EPAM,” “EPAM Systems, Inc.,” the “Company,” “we,” “us” and “our” refer to EPAM Systems, Inc. and its consolidated subsidiaries.

Executive Summary
We are a leading global provider of digital platform engineering and software development services offering specialized technological solutions to many of the world’s leading organizations.
Our customers depend on us to solve their complex technical challenges and rely on our expertise in core engineering, advanced technology, digital design and intelligent enterprise development. We continuously explore opportunities in new industries to expand our core industry client base in software and technology, financial services, business information and media, travel and consumer, retail and distribution, and life sciences and healthcare. Our teams of developers, architects, consultants, strategists, engineers, designers, and product experts have the capabilities and skill sets to deliver business results.
Our global delivery model and centralized support functions, combined with the benefits of scale from the shared use of fixed-cost resources, enhance our productivity levels and enable us to better manage the efficiency of our global operations. As a result, we have created a delivery base whereby our applications, tools, methodologies and infrastructure allow us to seamlessly deliver services and solutions from our delivery centers to global customers across all geographies, further strengthening our relationships with them.
Through increased specialization in focused verticals and a continued emphasis on strategic partnerships, we are leveraging our roots in software engineering to grow as a recognized brand in software development and end-to-end digital transformation services for our customers.

Business Update Regarding COVID-19
During the second quarter of 2020, the COVID-19 global pandemic persisted, causing substantial public health and economic challenges around the world that continued to affect our employees, communities and business operations, as well as the global economy and financial markets. The extent to which the COVID-19 pandemic will continue to directly and indirectly impact our business, results of operations and financial condition will depend on future developments that are highly uncertain and that we cannot accurately predict, including new information concerning actions taken to contain COVID-19 or treat its impact and the economic impact of COVID-19 on local, regional, national and international markets.
The disclosure in this section regarding the impacts of COVID-19 supplements the remainder of this Management’s Discussion and Analysis of Financial Condition and Results of Operations (MD&A) and, to the extent that the disclosure in the remainder of this MD&A refers to a financial or performance metric that has been affected by a trend or activity, that reference is in addition to any impact of the COVID-19 pandemic discussed in this section. The effect of the COVID-19 pandemic is rapidly evolving and, as such, the information contained herein is accurate as of the date hereof, but may become outdated due to changing circumstances beyond our present awareness or control.

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Our COVID-19 Pandemic Response
Our top priority from the beginning of the COVID-19 pandemic has been the safety and well-being of our employees. As governments lifted and sometimes re-imposed restrictions on group gatherings, commercial operations, and travel, we have continued to apply those changing requirements to our business so we can maintain the health and safety of our employees and continue to serve our customers during these challenging times. Our business continuity plans are designed to ensure the safety and well-being of approximately 36,400 EPAM professionals while supporting the operations of hundreds of customers around the world.
As of the date of this report, more than 93% of EPAM employees were productively working remotely with minimal service interruptions and in close collaboration with our customers. A limited number of EPAM personnel are providing services to us or our customers from our offices or our customers’ facilities.
Our Employees
With the vast majority of our employees able to work securely from a remote location, we do not expect that COVID-19 control measures and restrictions on group gatherings and non-essential businesses will have a material adverse effect on our ability to operate our business or productively deliver services to our customers, nor on our financial reporting systems, internal control over financial reporting, or disclosure controls and procedures. With the increase in remote access to our systems and networks, we have accelerated some ongoing security initiatives and programs.

Many of the countries where we have offices or regularly conduct business have imposed or extended restrictions on travel and immigration from other countries, including a suspension of most immigration and non-immigration visas issued by the United States. If further extended, these travel and immigration restrictions may continue to impact our operations. However, we do not believe that the travel and immigration restrictions in place at this time will have a material adverse effect on our business or financial condition.
Our Customers

Our adaptive global delivery model enables us to deliver our services and solutions to our customers from remote locations instead of from our delivery centers. We have continued to provide our customers with the products, services, and solutions they seek to deliver business results. We continually assess our customers’ current and future needs for EPAM personnel to work at their facilities and our global delivery centers, so that we can deploy resources safely and in compliance with local COVID-19 mitigation efforts.

Deteriorating economic conditions for some of our customers could materially reduce our sales and profitability. Reduced demand from our customers and their customers, prolonged financial distress in our customer base, and the continued volatility in macroeconomic conditions has and could continue to adversely impact revenues and decrease the collectability of our trade receivables. Any or all of these factors could increase the negative impact on our results of operations. Based on currently available information, we believe that our revenues in the third quarter of 2020 will grow at lower growth rates than we have experienced this quarter. Depending on the duration of the COVID-19 pandemic and the timing and speed of economic recovery, reduced sales volume could extend beyond the third quarter of 2020.
Our Community

EPAM supports the communities where we live and work and we assisted our global and local communities by donating resources and developing open source contributions to support efforts to slow the spread of COVID-19 since the beginning of the pandemic.

We continued to leverage our intellectual property, engineering roots, and design acumen to fight COVID-19 on multiple fronts, including:
EPAM Continuum introduced Guide Lines: Markings for Social Distancing, a toolkit for retailers and other business owners to adhere to physical distancing guidelines by creating visual cues with readily-available tools and materials to direct foot traffic.
EPAM’s Made Real Lab released an open source design to accelerate the production of reusable face shields that do not require 3D printing and use commercially available materials.
EPAM Continuum introduced an open source project for parents and children to build a timer to encourage healthy handwashing habits, teach electronics and creative prototyping skills, and basic coding skills. ​
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EPAM and the United Nations Children’s Fund/Europe and Central Asia Regional Office partnered to build a COVID-19 information chatbot app that was combined with EPAM’s COVID Resistance app to provide national authorities, public health institutions, social service agencies, families and individuals access to trusted information while promoting protective and preventive behaviors at the individual and community levels.
Moving Forward
We expect uncertainty around the impacts the pandemic will have on our business, financial condition, and results of operations. We actively monitor our business and the needs of our employees, customers, and communities to determine the appropriate actions to protect the health and safety of our employees and our ongoing operations. This includes actions informed by the requirements and recommendations of federal, state and local authorities.

Economic and demand uncertainty in the current environment may impact our future results. We continue to monitor the demand for our services including the duration and degree to which we see declines or delays in new customer projects and payment for services performed. We continue to assess how the effects of COVID-19 on the economy may impact human capital allocation, revenues, profitability, and operating expenses.

For additional information on the various risks posed by the COVID-19 pandemic, please read “Part I. Item 3. Quantitative and Qualitative Disclosures About Market Risk” and “Part II. Item 1A. Risk Factors” included in this report.

Year-to-Date 2020 Developments and Trends
For the first six months of 2020, our revenues were $1,283.7 million, an increase of 19.6% over $1,072.9 million reported for the same period of 2019. We have built an increasingly diversified portfolio across numerous verticals, geographies and service offerings which allowed us to continue to grow revenues despite challenges posed by the worldwide COVID-19 pandemic. Certain clients and certain industry verticals were adversely impacted by the worldwide COVID-19 pandemic during the second quarter of 2020 including Travel & Consumer which grew less than 10% during the three months ended June 30, 2020 as compared to the corresponding period of 2019. Our performance remained strong in Business Information & Media, which became our largest vertical, contributing 21.7% of total revenues for the first six months of 2020.

Summary of Results of Operations
The following table presents a summary of our results of operations for the three and six months ended June 30, 2020 and 2019:
 Three Months Ended
June 30,
Six Months Ended
June 30,
 2020201920202019
 (in thousands, except per share data and percentages)
Revenues$632,383  100.0 %$551,587  100.0 %$1,283,742  100.0 %$1,072,920  100.0 %
Income from operations$83,426  13.2 %$72,882  13.2 %$170,935  13.3 %$137,540  12.8 %
Net income$66,624  10.5 %$58,777  10.7 %$152,189  11.9 %$119,531  11.1 %
Effective tax rate12.4 %16.6 %11.8 %11.3 %
Diluted earnings per share$1.14  $1.02  $2.62  $2.08  
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The key highlights of our consolidated results for the three and six months ended June 30, 2020, as compared to the corresponding periods of 2019, were as follows:
Revenues for the second quarter of 2020 were $632.4 million, or a 14.6% increase from $551.6 million reported in the same period last year. Revenue growth slowed in the second quarter of 2020 as a result of declining revenue growth in Travel & Consumer and Emerging Verticals largely driven by the impact of COVID-19 on our clients as well as declining revenue growth in Financial Services. The second quarter of 2020 was negatively impacted by $4.7 million or 0.9% due to changes in certain foreign currency exchange rates as compared to the corresponding period last year. Acquisitions completed within the prior 12 months contributed $9.3 million to our revenues in the second quarter of 2020. Revenues for the first half of 2020 were $1,283.7 million, or a 19.6% increase from $1,072.9 million reported in the corresponding period last year. The first half of 2020 was negatively impacted by $10.1 million or 1.0% due to changes in certain foreign currency exchange rates as compared to the corresponding period last year. Acquisitions completed in 2019 and 2020 contributed $20.3 million to our revenue growth for the six months ended June 30, 2020.
Income from operations grew 14.5% and 24.3% to $83.4 million and $170.9 during the three and six months ended June 30, 2020, respectively, as compared to the corresponding periods in 2019. Expressed as a percentage of revenues, income from operations for the second quarter of 2020 remained steady at 13.2% compared to the second quarter last year and increased to 13.3% for the first half of 2020 as compared to 12.8% for the corresponding period in 2019. Income from operations as a percentage of revenues was impacted during the second quarter of 2020 by an increase in Cost of revenues as a percentage of revenues attributable to temporary discounts provided to certain customers experiencing challenging economic conditions due to the impact of the COVID-19 pandemic which was offset by a reduction in travel-related expenses reported in Cost of revenues and a reduction in travel-related, recruitment, and facilities expenses reported in Selling, general and administrative expenses. The increase as a percentage of revenues during the six months ended June 30, 2020 as compared to the corresponding period in 2019 was primarily driven by lower expenses associated with stock-based compensation largely attributable to the mark-to-market for cash-settled RSUs.
Our effective tax rate was 11.8% in the first six months of 2020 compared to 11.3% in the corresponding period last year. Our effective tax rate during the period was impacted by lower excess tax benefits recorded upon vesting or exercise of stock-based awards as a percentage of pre-tax income in the six months ended June 30, 2020 as compared to the corresponding period last year.
Net income increased 13.4% to $66.6 million for the three months ended June 30, 2020, compared to $58.8 million reported in the corresponding period last year. Expressed as a percentage of revenues, net income was 10.5%, a decrease of 0.2% compared to 10.7% reported in the corresponding period of 2019. Net income grew 27.3% during the six months ended June 30, 2020 as compared to the corresponding period last year primarily due to the improvement in income from operations partially offset by the increase in our effective tax rate.
Diluted earnings per share was $1.14 and $2.62 for the three and six months ended June 30, 2020, an increase of $0.12 and $0.54 compared to the corresponding period last year.
Cash provided by operating activities was $209.4 million during the six months ended June 30, 2020 as compared to cash provided by operating activities of $43.8 million in the corresponding period last year. This increase is largely driven by the increase in net income, improvements in collections from customers, delays in payment of certain employee-related costs, and reduced income tax payments compared to the corresponding period of 2019.
The operating results in any period are not necessarily indicative of the results that may be expected for any future period.

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Critical Accounting Policies
The discussion and analysis of our financial position and results of operations is based on our condensed consolidated financial statements which have been prepared in accordance with U.S. GAAP. The preparation of these condensed consolidated financial statements in accordance with U.S. GAAP requires us to make estimates and judgments that may affect the reported amounts of assets, liabilities, revenues and expenses, and related disclosure of contingent assets and liabilities. On a recurring basis, we evaluate our estimates and judgments, including those related to revenue recognition and related allowances, impairments of long-lived assets including intangible assets, goodwill and right-of-use assets, income taxes including the valuation allowance for deferred tax assets, and stock-based compensation. Actual results may differ materially from these estimates under different assumptions and conditions. In addition, our reported financial condition and results of operations could vary due to a change in the application of a particular accounting standard.
During the three and six months ended June 30, 2020, there have been no material changes to our critical accounting policies or in the underlying accounting assumptions and estimates used in such policies as reported in our Annual Report on Form 10-K for the year ended December 31, 2019.
Results of Operations
The following table sets forth a summary of our consolidated results of operations for the periods indicated. This information should be read together with our unaudited condensed consolidated financial statements and related notes included elsewhere in this quarterly report. The operating results in any period are not necessarily indicative of the results that may be expected for any future period.
 Three Months Ended
June 30,
Six Months Ended
June 30,
 2020201920202019
(in thousands, except percentages and per share data)
Revenues$632,383  100.0 %$551,587  100.0 %$1,283,742  100.0 %$1,072,920  100.0 %
Operating expenses:
  Cost of revenues (exclusive of depreciation and amortization)(1)
419,540  66.3 %355,915  64.5 %843,342  65.7 %700,604  65.3 %
  Selling, general and administrative expenses(2)
114,191  18.1 %111,762  20.3 %239,299  18.6 %213,548  19.9 %
  Depreciation and amortization expense
15,226  2.4 %11,028  2.0 %30,166  2.4 %21,228  2.0 %
Income from operations83,426  13.2 %72,882  13.2 %170,935  13.3 %137,540  12.8 %
Interest and other income, net
1,817  0.2 %1,190  0.2 %4,203  0.3 %4,266  0.5 %
Foreign exchange loss(9,167) (1.4)%(3,562) (0.6)%(2,643) (0.2)%(7,046) (0.7)%
Income before provision for income taxes
76,076  12.0 %70,510  12.8 %172,495  13.4 %134,760  12.6 %
Provision for income taxes9,452  1.5 %11,733  2.1 %20,306  1.5 %15,229  1.5 %
Net income$66,624  10.5 %$58,777  10.7 %$152,189  11.9 %$119,531  11.1 %
Effective tax rate12.4 %16.6 %11.8 %11.3 %
Diluted earnings per share$1.14  $1.02  $2.62  $2.08  
(1)Includes $8,958 and $7,480 of stock-based compensation expense for the three months ended June 30, 2020 and 2019, respectively, and $12,942 and $20,261 of stock-based compensation expense for the six months ended June 30, 2020 and 2019, respectively.

(2)Includes $10,481 and $8,217 of stock-based compensation expense for the three months ended June 30, 2020 and 2019, respectively, and $18,378 and $17,292 of stock-based compensation expense for the six months ended June 30, 2020, and 2019, respectively.
 


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Consolidated Results Review
Revenues
During the three months ended June 30, 2020, our total revenues grew to $632.4 million or 14.6% compared to the corresponding period in 2019. Revenue growth slowed in the second quarter of 2020 as a result of deterioration in economic conditions for our customers caused by the COVID-19 pandemic. Revenues have been positively impacted by acquisitions completed in the twelve months ended June 30, 2020, which contributed 1.7% to our revenue growth, and negatively impacted by fluctuations in foreign currency exchange rates which decreased our revenue growth by 0.9% during the three months ended June 30, 2020 as compared to the same period last year.
During the six months ended June 30, 2020, our total revenues grew 19.6% over the corresponding period in 2019. The first half of 2020 was negatively impacted by $10.1 million or 1.0% due to changes in certain foreign currency exchange rates as compared to the corresponding period last year. The acquisitions completed in 2019 and 2020 contributed 1.9% to our revenue growth for the six months ended June 30, 2020.
Revenues by customer location for the three and six months ended June 30, 2020 and 2019 were as follows:
 Three Months Ended
June 30,
Six Months Ended
June 30,
 2020201920202019
 (in thousands, except percentages)(in thousands, except percentages)
North America
$381,936  60.4 %$334,788  60.7 %$771,766  60.1 %$651,440  60.7 %
Europe
211,064  33.4 %177,345  32.2 %434,121  33.8 %350,853  32.7 %
CIS(1)
22,078  3.5 %25,091  4.5 %46,938  3.7 %43,265  4.0 %
APAC(2)
17,305  2.7 %14,363  2.6 %30,917  2.4 %27,362  2.6 %
Revenues$632,383  100.0 %$551,587  100.0 %$1,283,742  100.0 %$1,072,920  100.0 %
(1)CIS includes revenues from customers in Russia, Belarus, Georgia, Kazakhstan, and Ukraine.
(2)APAC, or Asia Pacific, includes revenues from customers in East Asia, Southeast Asia and Australia.
During the three and six months ended June 30, 2020, the United States continued to be our largest customer location, with revenues increasing 14.4% to $365.0 million during the second quarter of 2020 from $319.0 million in the second quarter of 2019. During the six months ended June 30, 2020, revenues in the United States grew 18.8% to $735.1 million compared to $618.7 million in the same period of the prior year.
The top three revenue contributing customer location countries in Europe were the United Kingdom, Switzerland and Netherlands, contributing $82.3 million, $46.5 million and $27.2 million, respectively, during the three months ended June 30, 2020. Revenues from customers in these three countries were $69.0 million, $35.4 million, and $21.0 million, respectively, in the corresponding period last year. Revenues in the United Kingdom benefited from the growth in revenues from one of our top five customers. Revenues in the European geography were negatively impacted by a weakening of the euro and British pound relative to the U.S. dollar during the three months ended June 30, 2020 compared to the same period in the previous year. During the six months ended June 30, 2020, United Kingdom, Switzerland and Netherlands performed as Europe’s top revenue generating locations and contributed $174.4 million, $93.8 million, and $53.1 million, respectively, compared to $134.8 million, $71.6 million, and $41.7 million in the corresponding period last year, respectively.
During the three months ended June 30, 2020, revenues in the CIS geography included $19.4 million from customers in Russia, a decrease of $3.0 million as compared to the corresponding period of 2019. The decrease in revenue was primarily attributable to the timing of revenue recognition associated with the execution of contracts as compared to the same period in the previous year and a reversal of $2.5 million of previously recognized revenues associated with a change in estimate of completed performance on a fixed-fee project partially offset by revenue growth. During the six months ended June 30, 2020, customers in Russia comprised $41.4 million of the revenues in the CIS geography, an increase of $3.1 million over the corresponding period of 2019. During the six months ended June 30, 2020, the revenues in the CIS geography were adversely impacted by the timing of revenue recognition associated with the execution of contracts as compared to the same period in the previous year.

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During the three and six months ended June 30, 2020, revenues from the customers in the APAC region increased by $2.9 million, or 20.5%, and $3.6 million, or 13.0%, respectively, over the corresponding periods of 2019.

Cost of Revenues (Exclusive of Depreciation and Amortization)
The principal components of our cost of revenues (exclusive of depreciation and amortization) are salaries, bonuses, fringe benefits, stock-based compensation, project-related travel costs and fees for subcontractors who are assigned to customer projects. Salaries and other compensation expenses of our delivery professionals are reported as cost of revenues regardless of whether the employees are actually performing customer services during a given period. Our employees are a critical asset, necessary for our continued success and therefore we expect to continue hiring talented employees and providing them with competitive compensation programs.
During the three months ended June 30, 2020, cost of revenues (exclusive of depreciation and amortization) was $419.5 million representing an increase of 17.9% from $355.9 million in the corresponding period of 2019. The increase was primarily due to an increase in compensation costs largely driven by the 14.1% growth in the average number of production professionals during the three months ended June 30, 2020 as compared to the same period in 2019, partially offset by a 1.8% favorable impact from changing foreign currency exchange rates. Expressed as a percentage of revenues, cost of revenues (exclusive of depreciation and amortization) was 66.3% and 64.5% in the second quarter of 2020 and 2019, respectively. The year-over-year increase is primarily due to declining profitability on certain accounts due to temporary discounts provided to certain customers experiencing challenging economic conditions due to the impact of the COVID-19 pandemic partially offset by a reduction in travel-related expenses due to the restrictions of travel attributable to the global COVID-19 pandemic.
During the six months ended June 30, 2020, cost of revenues (exclusive of depreciation and amortization) was $843.3 million representing an increase of 20.4% from $700.6 million in the corresponding period of 2019. The increase was primarily due to an increase in compensation costs largely driven by the 15.4% growth in the average number of production professionals and a higher level of accrued variable compensation during the first half of 2020 as compared to the same period in 2019 partially offset by a 2.1% favorable impact from changing foreign currency exchange rates. Expressed as a percentage of revenues, cost of revenues (exclusive of depreciation and amortization) was 65.7% and 65.3% for the six months ended June 30, 2020 and 2019, respectively.

Selling, General and Administrative Expenses
Selling, general and administrative expenses represent expenses associated with promoting and selling our services and general and administrative functions of our business. These expenses include the costs of salaries, bonuses, fringe benefits, stock-based compensation, severance, bad debt, travel, legal and accounting services, insurance, facilities including operating leases, advertising and other promotional activities. In addition, we pay a membership fee of 1% of revenues generated in Belarus to the administrative organization of the Belarus High-Technologies Park. We expect our selling, general and administrative expenses to continue to increase in absolute terms as our business expands and, as a percentage of revenues, to return to a range consistent with our recent historical trends.
During the three months ended June 30, 2020, selling, general and administrative expenses were $114.2 million representing an increase of 2.2% as compared to $111.8 million in the corresponding period of 2019. The increase in selling, general and administrative expenses was primarily driven by a $10.3 million increase in personnel-related costs including stock-based compensation, talent acquisition and development expenses and partially offset by a $7.7 million decrease in travel and entertainment expenses. Expressed as a percentage of revenues, selling, general and administrative expenses decreased 2.2% to 18.1% for the three months ended June 30, 2020 as compared to the same period from the prior year, primarily driven by reduced travel-related expenses attributable to worldwide restriction on travel due to COVID-19, reduced recruiting expenses attributable to reduced hiring efforts in the second quarter of 2020, and reduced facility-related expenses.
During the six months ended June 30, 2020, selling, general and administrative expenses were $239.3 million representing an increase of 12.1% as compared to $213.5 million reported in the corresponding period of 2019. Expressed as a percentage of revenues, selling, general and administrative expenses decreased 1.3% to 18.6% for the six months ended June 30, 2020 as compared to the same period from the prior year. The decrease was primarily driven by the 0.8% decrease in travel and entertainment expenses as a percentage of revenue resulting from the worldwide restriction on travel due to COVID-19, reduced recruiting expenses attributable to reduced hiring efforts in the second quarter of 2020, and reduced facility-related expenses.

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Interest and Other Income, Net
Interest and other income, net includes interest earned on cash and cash equivalents and employee housing loans, gains and losses from certain financial instruments, interest expense related to our 2017 Credit Facility and changes in the fair value of contingent consideration. There were no material changes in interest and other income, net during the three and six months ended June 30, 2020 as compared to the same period in 2019.

Depreciation and Amortization Expense
During the three and six months ended June 30, 2020, depreciation and amortization expense was $15.2 million and $30.2 million, respectively, as compared to $11.0 million and $21.2 million, respectively, in the corresponding period last year. The increase in depreciation and amortization expense is primarily the result of increased investment in computer equipment used by our employees and amortization of intangible assets, all of which have finite useful lives. Expressed as a percentage of revenues, depreciation and amortization expense increased to 2.4%, during both the three and six months ended June 30, 2020 as compared to the 2.0% in both corresponding periods of 2019.

Foreign Exchange Loss
For discussion of the impact of foreign exchange fluctuations see “Item 3. Quantitative and Qualitative Disclosures About Market Risk.”

Provision for Income Taxes
Determining the consolidated provision for income tax expense, deferred income tax assets and liabilities and any potential related valuation allowances involves judgment. We consider factors that may contribute, favorably or unfavorably, to the overall annual effective tax rate in the current year as well as the future. These factors include statutory tax rates and tax law changes in the countries where we operate and excess tax benefits upon vesting or exercise of equity awards as well as consideration of any significant or unusual items.
As a global company, we are required to calculate and provide for income taxes in each of the jurisdictions in which we operate. Our provision for income taxes benefited from excess tax benefits recorded upon vesting or exercise of stock-based awards of $8.1 million and $4.7 million during the three months ended June 30, 2020 and 2019, respectively. Our provision for income taxes benefited from excess tax benefits recorded upon vesting or exercise of stock-based awards of $19.8 million and $16.3 million during the six months ended June 30, 2020 and 2019, respectively.
Our effective tax rate was 12.4% and 11.8% for the three and six months ended June 30, 2020, respectively, and 16.6% and 11.3% for the three and six months ended June 30, 2019, respectively. The increase in the effective tax rate in the six months ended June 30, 2020, as compared to the corresponding period in the prior year, is attributable to the decrease, as a percentage of income before provision for income taxes, in excess tax benefits recorded upon vesting or exercise of stock-based awards.
Results by Business Segment
Our operations consist of three reportable segments: North America, Europe, and Russia. The segments represent components of EPAM for which separate financial information is available and used on a regular basis by our chief executive officer, who is also our chief operating decision maker (“CODM”), to determine how to allocate resources and evaluate performance. Our CODM makes business decisions based on segment revenues and operating profit. Segment operating profit is defined as income from operations before unallocated costs. Expenses included in segment operating profit consist principally of direct selling and delivery costs as well as an allocation of certain shared services expenses. Certain corporate expenses are not allocated to specific segments as these expenses are not controllable at the segment level. Such expenses include certain types of professional fees, non-corporate taxes, compensation to non-employee directors and certain other general and administrative expenses, including compensation of specific groups of non-production employees. In addition, the Company does not allocate stock-based compensation, amortization of intangible assets acquired through business combinations, goodwill and other asset impairment charges, acquisition-related costs and certain other one-time charges. These unallocated amounts are combined with total segment operating profit to arrive at consolidated income from operations.

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We manage our business primarily based on the managerial responsibility for its client base and market. As managerial responsibility for a particular customer relationship generally correlates with the customer’s geographic location, there is a high degree of similarity between customer locations and the geographic boundaries of our reportable segments. In some cases, managerial responsibility for a particular customer is assigned to a management team in another region and is usually based on the strength of the relationship between customer executives and particular members of EPAM’s senior management team. In such cases, the customer’s activity would be reported through the management team’s reportable segment.
Segment revenues from external customers and segment operating profit, before unallocated expenses, for the North America, Europe and Russia reportable segments for the three and six months ended June 30, 2020 and 2019 were as follows:
 Three Months Ended
June 30,
Six Months Ended
June 30,
 2020201920202019
 (in thousands) 
Segment revenues:
North America$384,829  $331,025  $775,931  $641,714  
Europe227,305  197,361  463,638  391,426  
Russia20,249  23,201  44,173  39,780  
Total segment revenues$632,383  $551,587  $1,283,742  $1,072,920  
Segment operating profit/(loss):  
North America$82,752  $69,347  $161,679  $133,804  
Europe34,426  27,679  66,205  59,464  
Russia(5,645) 5,652  (5,126) 6,241  
Total segment operating profit$111,533  $102,678  $222,758  $199,509  

North America Segment
During the three months ended June 30, 2020, revenues for the North America segment increased $53.8 million, or 16.3%, compared to the same period last year and segment operating profit increased $13.4 million, or 19.3%, compared to the same period last year. During the three months ended June 30, 2020, revenues from our North America segment were 60.9% of total segment revenues, an increase from 60.0% reported in the corresponding period of 2019. The North America segment’s operating profit margin increased to 21.5% during the second quarter of 2020 from 20.9% in the second quarter of 2019. This increase is primarily attributable to reduced Selling, general and administrative expenses partially offset by temporary discounts provided to certain customers experiencing challenging economic conditions due to the impact of the COVID-19 pandemic.
During the six months ended June 30, 2020, revenues for the North America segment increased $134.2 million, or 20.9%, compared to the same period last year and segment operating profit increased $27.9 million, or 20.8%, compared to the same period last year. During the six months ended June 30, 2020 and 2019, revenues from our North America segment were 60.4% and 59.8% of total segment revenues, respectively. As a percentage of North America segment revenues, the North America segment’s operating profit margin was consistent at 20.8% during the six months ended June 30, 2020 as compared to 20.9% in the corresponding period of 2019.

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The following table presents North America segment revenues by industry vertical for the periods indicated:
Three Months Ended
June 30,
ChangeSix Months Ended
June 30,
Change
20202019Dollars Percentage 20202019Dollars Percentage 
Industry Vertical(in thousands, except percentages)
Software & Hi-Tech$100,801  $85,600  $15,201  17.8 %$202,538  $164,721  $37,817  23.0 %
Business Information & Media81,481  62,340  19,141  30.7 %161,701  124,701  37,000  29.7 %
Life Sciences & Healthcare61,776  54,287  7,489  13.8 %123,387  104,443  18,944  18.1 %
Travel & Consumer52,193  48,178  4,015  8.3 %106,917  95,178  11,739  12.3 %
Financial Services47,687  43,517  4,170  9.6 %95,555  81,911  13,644  16.7 %
Emerging Verticals40,891  37,103  3,788  10.2 %85,833  70,760  15,073  21.3 %
        Revenues$384,829  $331,025  $53,804  16.3 %$775,931  $641,714  $134,217  20.9 %

Software & Hi-Tech remained the largest industry vertical in the North America segment during the second quarter of 2020. It grew 17.8% and 23.0% during the three and six months ended June 30, 2020, as compared to the corresponding periods from the prior year, which was a result of the continued focus on working with our technology customers. Economic challenges faced by our clients led to slower growth in the Travel & Consumer and Emerging Verticals than realized in prior periods. Financial Services experienced slower growth due to a change in certain customers’ business models associated with low-cost trading platforms. Revenues from Business Information & Media, Software & Hi-Tech and Emerging Verticals each grew in excess of 20% during the six months ended June 30, 2020 compared to the same period in the prior year.

Europe Segment
During the three months ended June 30, 2020, Europe’s segment revenues were $227.3 million, representing an increase of $29.9 million, or 15.2%, from the same period last year. Revenues were negatively impacted by changes in foreign currency exchange rates during the second quarter of 2020. Had our Europe segment revenues been expressed in constant currency terms using the exchange rates in effect during the second quarter of 2019, we would have reported revenue growth of 16.0%. Europe’s segment revenues accounted for 35.9% and 35.8% of total segment revenues during the three months ended June 30, 2020 and 2019, respectively. During the second quarter of 2020, the segment’s operating profit increased 24.4% to $34.4 million compared to the second quarter of 2019. Expressed as a percentage of revenue, Europe’s segment operating profit increased to 15.1% compared to 14.0% in the same period of the prior year. Segment operating profit was impacted by reduced Selling, general and administrative expenses partially offset by temporary discounts provided to certain customers experiencing challenging economic conditions due to the impact of the COVID-19 pandemic.
During the six months ended June 30, 2020, revenues for the Europe segment increased $72.2 million, or 18.4%, compared to the same period last year and segment operating profit increased $6.7 million, or 11.3%, compared to the same period last year.
During the six months ended June 30, 2020 and 2019, revenues from our Europe segment were 36.1% and 36.5% of total segment revenues, respectively. As a percentage of Europe segment revenues, the Europe segment’s operating profit decreased to 14.3% during the six months ended June 30, 2020 from 15.2% in the corresponding period of 2019. Segment operating profit was impacted by temporary discounts provided to certain customers experiencing challenging economic conditions due to the impact of the COVID-19 pandemic, a change in the estimate of variable consideration associated with a single customer and the depreciation of the euro and the British pound.

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The following table presents Europe segment revenues by industry vertical for the periods indicated:
Three Months Ended
June 30,
ChangeSix Months Ended
June 30,
Change
20202019Dollars Percentage 20202019Dollars Percentage 
Industry Vertical(in thousands, except percentages)
Financial Services$66,655  $58,879  $7,776  13.2 %$134,249  $120,714  $13,535  11.2 %
Business Information & Media58,338  35,691  22,647  63.5 %116,484  68,222  48,262  70.7 %
Travel & Consumer51,253  56,175  (4,922) (8.8)%112,320  111,377  943  0.8 %
Software & Hi-Tech18,165  19,440  (1,275) (6.6)%36,311  39,810  (3,499) (8.8)%
Life Sciences & Healthcare7,069  4,907  2,162  44.1 %14,688  9,463  5,225  55.2 %
Emerging Verticals25,825  22,269  3,556  16.0 %49,586  41,840  7,746  18.5 %
        Revenues$227,305  $197,361  $29,944  15.2 %$463,638  $391,426  $72,212  18.4 %
The Europe segment benefited from strong growth of the Business Information & Media vertical of 63.5% and 70.7% during the three and six months ended June 30, 2020, as compared to corresponding periods of 2019 largely driven by growth in revenues from one of our top five customers. Financial Services remained the largest industry vertical in the Europe segment during the three and six months ended June 30, 2020. Revenues in Travel & Consumer and Software & Hi-Tech decreased during the three months ended June 30, 2020 as compared to the corresponding period of 2019 primarily due to declining demand from certain customers adversely affected by the decline in global travel due to worldwide travel restrictions as a result of the COVID-19 pandemic.

Russia Segment
During the three months ended June 30, 2020, revenues from our Russia segment accounted for 3.2% of total segment revenues and decreased $3.0 million, or 12.7%, as compared to the corresponding period in the prior year. The decrease was primarily attributable to the timing of revenue recognition associated with the execution of contracts as compared to the prior year and a reversal of $2.5 million of previously recognized revenues associated with a change in estimate of completed performance on a fixed-fee project partially offset by revenue growth. During the three months ended June 30, 2020, operating loss from the Russia segment was $5.6 million, representing a decrease of $11.3 million, as compared to $5.7 million operating profit in the corresponding period last year. This decrease is attributable to the decrease in revenues, costs incurred without recognizing corresponding revenues due to the delays in the timing of execution of contracts and the devaluation of the Russian ruble relative to the U.S. dollar.
During the six months ended June 30, 2020, revenues from our Russia segment increased $4.4 million, or 11.0%, as compared to the corresponding period of 2019 and accounted for 3.4% of total segment revenues. During the six months ended June 30, 2020, operating loss of the Russia segment was $5.1 million, representing a decrease of $11.4 million, as compared to $6.2 million operating profit in the corresponding period last year. This decrease is attributable to the reduction in revenues, costs incurred without recognizing corresponding revenues due to the delays in the timing of execution of contracts and the devaluation of the Russian ruble relative to the U.S. dollar.

The following table presents Russia segment revenues by industry vertical for the periods indicated:
Three Months Ended
June 30,
ChangeSix Months Ended
June 30,
Change
20202019Dollars Percentage 20202019Dollars Percentage 
Industry Vertical(in thousands, except percentages)
Financial Services$13,633  $18,009  $(4,376) (24.3)%$29,814  $31,041  $(1,227) (4.0)%
Travel & Consumer3,824  2,761  1,063  38.5 %7,563  4,885  2,678  54.8 %
Software & Hi-Tech519  478  41  8.6 %2,485  918  1,567  170.7 %
Business Information & Media439  104  335  322.1 %799  244  555  227.5 %
Life Sciences & Healthcare39   35  875.0 %48  66  (18) (27.3)%
Emerging Verticals1,795  1,845  (50) (2.7)%3,464  2,626  838  31.9 %
        Revenues$20,249  $23,201  $(2,952) (12.7)%$44,173  $39,780  $4,393  11.0 %
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Revenue from Financial Services decreased 24.3% during the three months ended June 30, 2020 as compared to the same period in 2019 due to a reversal of $2.5 million of previously recognized revenues associated with a change in estimate of completed performance on a fixed-fee project and the devaluation of the Russian ruble relative to the U.S. dollar.
Currency fluctuations of the Russian ruble typically impact the results in the Russia segment. Ongoing economic and geopolitical uncertainty in the region and the volatility of the Russian ruble can significantly impact reported revenues and profitability in this segment. We continue to monitor geopolitical forces, economic and trade sanctions, and other issues involving this region.

Effects of Inflation
Economies in some countries where we operate, particularly Belarus, Russia, Kazakhstan, Ukraine and India have periodically experienced high rates of inflation. Periods of higher inflation may affect various economic sectors in those countries and increase our cost of doing business there. Inflation may increase some of our expenses such as wages. While inflation may impact our results of operations and financial condition and it is difficult to accurately measure the impact of inflation, we believe the effects of inflation on our results of operations and financial condition are not significant.

Liquidity and Capital Resources
Capital Resources
Our cash generated from operations has been our primary source of liquidity to fund operations and investments to support the growth of our business. As of June 30, 2020, our principal sources of liquidity were cash and cash equivalents totaling $993.7 million, short-term investments of $60.0 million as well as $275.0 million of available borrowings under our revolving credit facility.
We have cash in banks in Belarus, Russia, Ukraine, Kazakhstan, Armenia and Uzbekistan, 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 June 30, 2020, the total amount of cash held in these countries was $164.4 million and, of this amount, $100.4 million was held in Belarus. Cash in this region is used for operational needs and cash balances in those banks change with the operating needs of our entities in the region. We regularly monitor cash held in these countries and, to the extent the cash held exceeds amounts required to support our business operations, we distribute the excess funds into markets with more developed banking sectors.
As of June 30, 2020, we had outstanding borrowings of $25.0 million under our revolving credit facility, and were in compliance with all covenants specified under the credit facility and we anticipate being in compliance for the foreseeable future. See Note 7 “Long-Term Debt” of our condensed consolidated financial statements in “Part I. Item 1. Financial Statements (Unaudited)” for information regarding our long-term debt.
Our ability to expand and grow our business in accordance with current plans and to meet our long-term capital requirements will depend on many factors, including the rate at which our cash flows increase or decrease and the availability of public and private debt and equity financing. We may require additional cash resources due to changed business conditions or other future developments, including any investments or acquisitions we may decide to pursue. If our resources are insufficient to satisfy our cash requirements, we may seek to sell additional equity or debt securities or obtain another credit facility.
Based on currently available information and management’s current expectations, we anticipate that we have sufficient cash on hand and sufficient access to capital to continue to fund our operations for a significant period of time. However, COVID-19 and related measures to contain its impact have caused material disruptions in both national and global financial markets and economies. The future impact of COVID-19 and the COVID-19 containment measures cannot be predicted with certainty and may increase our borrowing costs and other costs of capital and otherwise adversely affect our business, results of operations, financial condition and liquidity.

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Cash Flows
The following table summarizes our cash flows for the periods indicated:
 Six Months Ended
June 30,
 20202019
 (in thousands)
Condensed Consolidated Statements of Cash Flow Data:
Net cash provided by operating activities$209,411  $43,827  
Net cash used in investing activities(133,571) (47,445) 
Net cash (used in)/provided by financing activities(6,648) 8,208  
Effect of exchange rate changes on cash, cash equivalents and restricted cash(11,999) 2,248  
Net increase in cash, cash equivalents and restricted cash57,193  6,838  
Cash, cash equivalents and restricted cash, beginning of period937,688  771,711  
Cash, cash equivalents and restricted cash, end of period$994,881  $778,549  

Operating Activities
Net cash provided by operating activities during the six months ended June 30, 2020 was $209.4 million, an increase of $165.6 million compared to $43.8 million provided by operating activities in the corresponding period of 2019. This increase is largely driven by the increase in net income, improvements in collections from customers, delays in payment of certain employee-related costs, and reduced income tax payments compared to the corresponding period of 2019.
Investing Activities
Net cash used in investing activities during the six months ended June 30, 2020 was $133.6 million compared to $47.4 million used in the same period in 2019. During the first six months of 2020, the cash used in investing activities was primarily attributable to capital expenditures of $40.5 million and acquisitions of businesses net of cash acquired of $12.6 million compared to cash used for capital expenditures of $25.0 million and acquisitions of businesses net of cash acquired of $16.2 million during the six months of 2019. During the second quarter of 2020 we invested $60.0 million of cash into time deposits with maturities of six months or less.
Financing Activities
Net cash used in financing activities was $6.6 million in the first six months of 2020 compared to $8.2 million net cash provided by financing activities in the same period of 2019. During the first six months of 2020, we used cash for the payments of withholding taxes related to net share settlements of restricted stock units of $15.9 million, compared to $13.1 million paid in the corresponding period of 2019, and for the payment of $7.9 million of contingent consideration related to the acquisition of Think. These cash outflows were partially offset by cash received from the exercises of stock options issued under our long-term incentive plans of $17.1 million, compared to $22.4 million received in the corresponding period of 2019.

Contractual Obligations and Future Capital Requirements
We believe that our existing cash and cash equivalents combined with our expected cash flow from operations will be sufficient to meet our projected operating and capital expenditure requirements for at least the next twelve months and that we possess the financial flexibility to execute our strategic objectives, including the ability to make acquisitions and strategic investments in the foreseeable future.
However, our ability to generate cash is subject to our performance, general economic conditions, industry trends and other factors including the impact of the COVID-19 pandemic as described elsewhere in this MD&A. To the extent that existing cash and cash equivalents and operating cash flow are insufficient to fund our future activities and requirements, we may need to raise additional funds through public or private equity or debt financing. If we issue equity securities in order to raise additional funds, substantial dilution to existing stockholders may occur. If we raise cash through the issuance of additional indebtedness, we may be subject to additional contractual restrictions on our business. There is no assurance that we would be able to raise additional funds on favorable terms or at all.
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As June 30, 2020, we have deferred payment of $7.2 million of social security taxes as allowed by the Paycheck Protection Program Flexibility Act and will remit 50% of the outstanding balance by the due dates of December 31, 2021 and 2022.
See Note 12 “Commitments and Contingencies” of our condensed consolidated financial statements in “Part I. Item 1. Financial Statements (Unaudited)” of this Quarterly Report and “Part II. Item 7. Contractual Obligations and Future Capital Requirements” of our Annual Report on Form 10-K for the year ended December 31, 2019 for information regarding contractual obligations.
Off-Balance Sheet Commitments and Arrangements
We do not have any material obligations under guarantee contracts or other contractual arrangements other than as disclosed in Note 7 “Long-Term Debt” and Note 12 “Commitments and Contingencies” of our condensed consolidated financial statements in “Part I. Item 1. Financial Statements (Unaudited).” We have not entered into any transactions with unconsolidated entities where we have financial guarantees, subordinated retained interests, derivative instruments, or other contingent arrangements that expose us to material continuing risks, contingent liabilities, or any other obligation under a variable interest in an unconsolidated entity that provides financing, liquidity, market risk, or credit risk support to us, or engages in leasing, hedging, or research and development services with us.
Recent Accounting Pronouncements
See Note 1 “Business and Summary of Significant Accounting Policies” to our unaudited condensed consolidated financial statements in “Part I. Item 1. Financial Statements (Unaudited)” for additional information.
Forward-Looking Statements
This quarterly report on Form 10-Q contains estimates and forward-looking statements made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995, principally in “Part I. Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations” and “Part II. Item 1A. Risk Factors” and our Annual Report on Form 10-K for the year ended December 31, 2019 also contains estimates and forward-looking statements, principally in “Part I. Item 1A. Risk Factors.” Our estimates and forward-looking statements are mainly based on our current expectations and estimates of future events and trends, which affect or may affect our business and operations. Those future events and trends may relate to, among other things, the anticipated impact of the COVID-19 pandemic and the effect that it may have on our sales, operations, access to capital, revenues, profitability and customer demand. Although we believe that these estimates and forward-looking statements are based upon reasonable assumptions, they are subject to several risks, uncertainties and assumptions as to future events that may not prove to be accurate and are made in light of information currently available to us. Important factors, in addition to the factors described in this quarterly report and in our Annual Report, may materially and adversely affect our results as indicated in forward-looking statements. You should read this quarterly report, our Annual Report and the documents that we have filed as exhibits hereto completely and with the understanding that our actual future results may be materially different from what we expect.
 The words “may,” “will,” “should,” “could,” “expect,” “plan,” “anticipate,” “believe,” “estimate,” “predict,” “intend,” “potential,” “might,” “would,” “continue” or the negative of these terms or other comparable terminology and similar words are intended to identify estimates and forward-looking statements. Estimates and forward-looking statements speak only as of the date they were made, and, except to the extent required by law, we undertake no obligation to update, to revise or to review any estimate and/or forward-looking statement because of new information, future events or other factors. Estimates and forward-looking statements involve risks and uncertainties and are not guarantees of future performance. As a result of the risks and uncertainties described above, the estimates and forward-looking statements discussed in this quarterly report and our Annual Report might not occur and our future results, level of activity, performance or achievements may differ materially from those expressed in these forward-looking statements due to, including, but not limited to, the factors mentioned above, and the differences may be material and adverse. Because of these uncertainties, you should not place undue reliance on these forward-looking statements.
Item 3. Quantitative and Qualitative Disclosures About Market Risk
We are exposed to certain market risks in the ordinary course of our business. These risks primarily result from changes in concentration of credit, foreign currency exchange rates and interest rates. In addition, our international operations are subject to risks related to differing economic conditions, changes in political climates, differing tax structures, and other regulations and restrictions.

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Concentration of Credit and Other Credit Risks
Financial instruments that potentially subject us to significant concentrations of credit risk consist primarily of cash, cash equivalents, short-term investments and trade receivables.
We maintain our cash, cash equivalents and short-term investments with financial institutions. We believe that our credit policies reflect normal industry terms and business risk and we do not anticipate non-performance by the counterparties. We have cash in banks in countries such as Belarus, Russia, Ukraine, Kazakhstan, Armenia and Uzbekistan, 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 June 30, 2020, $164.4 million of our total cash was kept in banks in these countries, of which $100.4 million was held in Belarus. In this region, and particularly in Belarus, a banking crisis, bankruptcy or insolvency of banks that process or hold our funds, may result in the loss of our deposits or adversely affect our ability to complete banking transactions in the region, which could adversely affect our business and financial condition. Cash in this region is used for operational needs and cash balances in those banks change with the operating needs of our entities in the region. We regularly monitor cash held in these countries and, to the extent the cash held exceeds amounts required to support our business operations, we distribute the excess funds into markets with more developed banking sectors.
Trade receivables are generally dispersed across many customers operating in different industries; therefore, concentration of credit risk is limited and we do not believe significant credit risk existed at June 30, 2020. Though our results of operations depend on our ability to successfully collect payment from our customers for work performed, historically, credit losses and write-offs of trade receivables have not been material to our consolidated financial statements. If any of our customers enter bankruptcy protection or otherwise take steps to alleviate their financial distress resulting from the COVID-19 pandemic, our credit losses and write-offs of trade receivables could increase, which would negatively impact our results of operations.
Interest Rate Risk
Our exposure to market risk is influenced by the changes in interest rates on our cash and cash equivalent deposits and paid on any outstanding balance on our borrowings, mainly under our 2017 Credit Facility, which is subject to a variety of rates depending on the type and timing of funds borrowed. We do not believe we are exposed to material direct risks associated with changes in interest rates related to these deposits and borrowings.
Foreign Exchange Risk
Our global operations are conducted predominantly in U.S. dollars. Other than U.S. dollars, we generate revenues principally in euros, British pounds, Swiss francs, Canadian dollars and Russian rubles. Other than U.S. dollars, we incur expenditures principally in Russian rubles, Hungarian forints, Polish zlotys, British pounds, Swiss francs, euros, Indian rupees, Chinese yuan renminbi and Mexican pesos. As a result, currency fluctuations, specifically the depreciation of the euro, British pound, and Canadian dollar and the appreciation of the Russian ruble, Hungarian forint, Polish zloty, Chinese yuan renminbi and Indian rupee relative to the U.S. dollar, could negatively impact our results of operations.
During the quarter ended June 30, 2020, foreign exchange loss was $9.2 million compared to a loss of $3.6 million reported in the corresponding period last year. This loss is largely driven by the strengthening of the of the euro and British pound during the second quarter of 2020. During the six months ended June 30, 2020, foreign exchange loss was $2.6 million compared to a loss of $7.0 million in the corresponding period last year.
During the quarter ended June 30, 2020, approximately 30.4% of consolidated revenues and 39.8% of consolidated operating expenses were denominated in currencies other than the U.S. dollar.
To manage the risk of fluctuations in foreign currency exchange rates and hedge a portion of our forecasted foreign currency denominated operating expenses in the normal course of business, we implemented a hedging program through which we enter into a series of foreign exchange forward contracts with durations of twelve months or less that are designated as cash flow hedges of forecasted Russian ruble, Polish zloty and Indian rupee transactions. As of June 30, 2020, the net unrealized loss from these hedges was $2.1 million.

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Management supplements results reported in accordance with United States generally accepted accounting principles, referred to as GAAP, with non-GAAP financial measures. Management believes these measures help illustrate underlying trends in our business and uses the measures to establish budgets and operational goals, communicated internally and externally, for managing our business and evaluating its performance. When important to management’s analysis, operating results are compared on the basis of “constant currency”, which is a non-GAAP financial measure. This measure excludes the effect of foreign currency exchange rate fluctuations by translating the current period revenues and expenses into U.S. dollars at the weighted average exchange rates of the prior period of comparison.
During the second quarter of 2020, we reported revenue growth of 14.6% over the second quarter of 2019. Had our consolidated revenues been expressed in constant currency terms using the exchange rates in effect during the second quarter of 2019, we would have reported revenue growth of 15.5%. Our revenues have been mainly impacted by depreciation of the euro, British pound and Russian ruble relative to the U.S. dollar. During the second quarter of 2020, we reported a net income increase of 13.4% over the second quarter of 2019. Had our consolidated results been expressed in constant currency terms using the exchange rates in effect during the second quarter of 2019, we would have reported a net income increase of 7.2%. Net income has been most positively impacted by depreciation of the Hungarian forint, Russian ruble, Polish zloty and Mexican peso relative to the U.S. dollar partially offset by the appreciation of the euro relative to the U.S. dollar.

Item 4. Controls and Procedures
Conclusion Regarding the Effectiveness of Disclosure Controls and Procedures

Based on management’s evaluation, with the participation of our Chief Executive Officer and Chief Financial Officer, as of the end of the period covered by this report, these officers have concluded that our disclosure controls and procedures, as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), are effective to provide reasonable assurance that information required to be disclosed by us in reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in SEC rules and forms, and is accumulated and communicated to management, including our principal executive officer and principal financial officer, as appropriate, to allow timely decisions regarding required disclosure.

Changes in Internal Control Over Financial Reporting
There has been no change in our internal control over financial reporting during the quarter ended June 30, 2020 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.



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PART II. OTHER INFORMATION
Item 1. Legal Proceedings
From time to time, we are involved in litigation and claims arising out of our operations in the normal course of business. We are not currently a party to any material legal proceeding, nor are we aware of any material legal or governmental proceedings pending or contemplated to be brought against us.
Item 1A. Risk Factors
For a discussion of our potential risks and uncertainties, see the risk factor below and the risk factors disclosed under the heading “Part I. Item 1A. Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2019.
Our results of operations have been adversely affected and could in the future be materially adversely affected by the global coronavirus pandemic (COVID-19).
The global coronavirus pandemic (COVID-19) has created significant volatility in the price of our common stock, uncertainty in customer demand for our services, and widespread economic disruption. The extent to which the coronavirus pandemic will further impact our business, operations and financial results will depend on numerous factors that are frequently changing or unknown, and that we may not be able to accurately predict, including: the duration and scope of the pandemic; governmental, business and individuals’ responses or planned responses to the pandemic; the impact of the pandemic on economic activity and any interventions intended to mitigate decreased economic activity; the effect on our customers and customer demand for our products, services, and solutions; our ability to sell and provide our products, services, and solutions, including as a result of travel restrictions, personnel working from home or with diminished technology and communication abilities, and social distancing; the ability of our customers to pay timely, if at all, for our services and solutions with or without discounts requested by our customers; and closures of our and our customers’ offices and facilities. The closure of our customers’ facilities, restrictions that prevent our customers from accessing those facilities or their own customers, and broad disruptions in our customers’ markets and customer base, has disrupted, and could in the future disrupt the demand for our products, services, and solutions and result in, among other things, termination of customer contracts, delays or interruptions in the performance of contracts, losses of revenues, and an increase in bad debt expense. Customers may also slow or halt decision making, delay planned work, or suspend, terminate, or reduce existing contracts or services. Travel and immigration restrictions may delay or prevent our personnel from accessing worksites, and work-from-home or remote working arrangements could reduce profitability or increase information security, cyber security and connectivity vulnerabilities. In addition, when COVID-19-related restrictions on business are eased, our ability to deliver services to our customers could be affected by any outbreak of illness among employees returning to our facilities or to our customers' facilities. Moreover, there may be additional costs that we will have to incur in connection with further changes to, or a return to, normal operating conditions. To the extent the COVID-19 pandemic adversely affects our business and financial results, it may also have the effect of heightening many of the other risks described in the risk factors included in the Annual Report on Form 10-K for the year ended December 31, 2019, including, but not limited to, those relating to our operations in emerging markets, our ability to execute on our growth strategy through strategic acquisitions, our dependency on third parties for network infrastructure, attracting, hiring, and retaining personnel, the effects on movements in foreign currency exchange rates, and the effects that changes to fiscal, political, regulatory and other federal policies may have on EPAM, each of which could materially adversely affect our business, financial condition, results of operations and/or stock price.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

None.
Item 3. Defaults Upon Senior Securities
None.
Item 4. Mine Safety Disclosures
Not Applicable.
Item 5. Other Information
None.


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Item 6. Exhibits
Exhibit
Number
Description
  
31.1
31.2
32.1
32.2
101.INSXBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document
101.SCHInline XBRL Taxonomy Extension Schema Document
101.CALInline XBRL Taxonomy Extension Calculation Linkbase Document
101.DEFInline XBRL Taxonomy Extension Definition Linkbase Document
101.LABInline XBRL Taxonomy Extension Label Linkbase Document
101.PREInline XBRL Taxonomy Extension Presentation Linkbase Document
104Cover Page Interactive Data File - (formatted as Inline XBRL and contained in Exhibit 101)
Indicates management contracts or compensatory plans or arrangements

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Table of Contents
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

Date: August 6, 2020
 EPAM SYSTEMS, INC.
   
 By:/s/ Arkadiy Dobkin
  Name: Arkadiy Dobkin
  Title: Chairman, Chief Executive Officer and President
(principal executive officer)
   
 By:/s/ Jason Peterson
  Name: Jason Peterson
  Title: Senior Vice President, Chief Financial Officer and Treasurer
(principal financial officer)

45
Document

EXHIBIT 31.1

Certification by Chief Executive Officer
Pursuant to Securities Exchange Act Rule 13a-14(a)

I, Arkadiy Dobkin, certify that:
1.I have reviewed this quarterly report on Form 10-Q of EPAM Systems, Inc.;
2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4.The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f) for the registrant and have:
(a)Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
(b)Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
(c)Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
(d)Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and
5.The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):
(a)All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and
(b)Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.
Date: August 6, 2020


/s/ Arkadiy Dobkin
 
 
Arkadiy Dobkin 
Chairman, Chief Executive Officer and President
(principal executive officer)
 


Document

EXHIBIT 31.2
Certification by Chief Financial Officer
Pursuant to Securities Exchange Act Rule 13a-14(a)

I, Jason Peterson, certify that:
1.I have reviewed this quarterly report on Form 10-Q of EPAM Systems, Inc.;
2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4.The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f) for the registrant and have:
(a)Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
(b)Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
(c)Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
(d)Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and
5.The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):
(a)All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and
(b)Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.
Date: August 6, 2020

 
/s/ Jason Peterson
Jason Peterson
Senior Vice President, Chief Financial Officer and Treasurer
(principal financial officer)

Document

EXHIBIT 32.1
CERTIFICATION OF CHIEF EXECUTIVE OFFICER PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report on Form 10-Q of EPAM Systems, Inc. (the "Company") for the quarter ended June 30, 2020 as filed with the Securities and Exchange Commission on the date hereof (the "Report"), Arkadiy Dobkin, as Chief Executive Officer of the Company, hereby certifies, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that, to his knowledge:
(i)The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
(ii)The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
Date: August 6, 2020
 

/s/ Arkadiy Dobkin
 
 
Arkadiy Dobkin 
Chairman, Chief Executive Officer and President
(principal executive officer)
 



Document

EXHIBIT 32.2
CERTIFICATION OF CHIEF FINANCIAL OFFICER PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report on Form 10-Q of EPAM Systems, Inc. (the "Company") for the quarter ended June 30, 2020 as filed with the Securities and Exchange Commission on the date hereof (the "Report"), Jason Peterson, as Chief Financial Officer of the Company, hereby certifies, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that, to his knowledge:
(i)The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
(ii)The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
Date: August 6, 2020


/s/ Jason Peterson
Jason Peterson
Senior Vice President, Chief Financial Officer and Treasurer
(principal financial officer)


v3.20.2
Document and Entity Information - shares
6 Months Ended
Jun. 30, 2020
Jul. 31, 2020
Cover [Abstract]    
Document Type 10-Q  
Document Quarterly Report true  
Document Period End Date Jun. 30, 2020  
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 $0.001 per share  
Trading Symbol EPAM  
Security Exchange Name NYSE  
Entity Current Reporting Status Yes  
Entity Interactive Data Current Yes  
Entity Central Index Key 0001352010  
Current Fiscal Year End Date --12-31  
Entity Filer Category Large Accelerated Filer  
Entity Small Business false  
Entity Emerging Growth Company false  
Entity Shell Company false  
Entity Common Stock, Shares Outstanding   55,852,596
Document Fiscal Year Focus 2020  
Document Fiscal Period Focus Q2  
Amendment Flag false  
v3.20.2
CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited) - USD ($)
$ in Thousands
Jun. 30, 2020
Dec. 31, 2019
Current assets    
Cash and cash equivalents $ 993,724 $ 936,552
Short-term investments 60,025 9
Trade receivables and contract assets, net of allowance of $6,070 and $2,920, respectively 506,908 497,716
Prepaid and other current assets 37,679 39,934
Total current assets 1,598,336 1,474,211
Property and equipment, net 167,359 165,259
Operating lease right-of-use assets 234,760 238,991
Intangible assets, net 55,887 56,258
Goodwill 199,039 195,043
Deferred tax assets 78,102 75,013
Other noncurrent assets 55,647 39,433
Total assets 2,389,130 2,244,208
Current liabilities    
Accounts payable 7,596 7,831
Accrued compensation and benefits expenses 223,436 230,035
Accrued expenses and other current liabilities 62,639 82,476
Income taxes payable, current 10,972 9,064
Operating lease liabilities, current 60,937 57,542
Total current liabilities 365,580 386,948
Long-term debt 25,044 25,074
Income taxes payable, noncurrent 43,391 45,878
Operating lease liabilities, noncurrent 181,705 180,848
Other noncurrent liabilities 20,316 9,315
Total liabilities 636,036 648,063
Commitments and contingencies (Note 12)
Stockholders’ equity    
Common stock, $0.001 par value; 160,000,000 authorized; 55,845,686 and 55,207,446 shares issued, 55,825,951 and 55,187,711 shares outstanding at June 30, 2020 and December 31, 2019, respectively 56 55
Additional paid-in capital 630,679 607,051
Retained earnings 1,172,909 1,020,590
Treasury stock (177) (177)
Accumulated other comprehensive loss (50,373) (31,374)
Total stockholders’ equity 1,753,094 1,596,145
Total liabilities and stockholders’ equity $ 2,389,130 $ 2,244,208
v3.20.2
CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited) (Parenthetical) - USD ($)
$ in Thousands
Jun. 30, 2020
Dec. 31, 2019
Current assets    
Trade receivables and contract assets allowance $ 6,070 $ 2,920
Stockholders' equity    
Common stock, par value (in dollars per share) $ 0.001 $ 0.001
Common stock, shares authorized (in shares) 160,000,000 160,000,000
Common stock, shares issued (in shares) 55,845,686 55,207,446
Common stock, shares outstanding (in shares) 55,825,951 55,187,711
v3.20.2
CONDENSED CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME (Unaudited) - USD ($)
$ in Thousands
3 Months Ended 6 Months Ended
Jun. 30, 2020
Jun. 30, 2019
Jun. 30, 2020
Jun. 30, 2019
Income Statement [Abstract]        
Revenues $ 632,383 $ 551,587 $ 1,283,742 $ 1,072,920
Operating expenses:        
Cost of revenues (exclusive of depreciation and amortization) 419,540 355,915 843,342 700,604
Selling, general and administrative expenses 114,191 111,762 239,299 213,548
Depreciation and amortization expense 15,226 11,028 30,166 21,228
Income from operations 83,426 72,882 170,935 137,540
Interest and other income, net 1,817 1,190 4,203 4,266
Foreign exchange loss (9,167) (3,562) (2,643) (7,046)
Income before provision for income taxes 76,076 70,510 172,495 134,760
Provision for income taxes 9,452 11,733 20,306 15,229
Net income 66,624 58,777 152,189 119,531
Foreign currency translation adjustments, net of tax 12,442 2,620 (16,077) 5,563
Unrealized gain/(loss) on cash-flow hedging instruments, net of tax 6,446 1,537 (2,922) 4,637
Comprehensive income $ 85,512 $ 62,934 $ 133,190 $ 129,731
Net income per share:        
Basic (in dollars per share) $ 1.20 $ 1.07 $ 2.74 $ 2.19
Diluted (in dollars per share) $ 1.14 $ 1.02 $ 2.62 $ 2.08
Shares used in calculation of net income per share:        
Basic (in shares) 55,700,706 54,681,959 55,493,727 54,464,753
Diluted (in shares) 58,246,231 57,614,284 58,194,401 57,426,563
v3.20.2
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY - USD ($)
$ in Thousands
Total
Restricted stock units
Cumulative effect of adoption
Adjusted balance
Common Stock
Common Stock
Restricted stock units
Common Stock
Adjusted balance
Additional Paid-in Capital
Additional Paid-in Capital
Restricted stock units
Additional Paid-in Capital
Adjusted balance
Retained Earnings
Retained Earnings
Cumulative effect of adoption
Retained Earnings
Adjusted balance
Treasury Stock
Treasury Stock
Adjusted balance
Accumulated Other Comprehensive Loss
Accumulated Other Comprehensive Loss
Adjusted balance
Balance, beginning of period (in shares) at Dec. 31, 2018         54,080,192                        
Balance, beginning of period at Dec. 31, 2018 $ 1,262,596       $ 54     $ 544,700     $ 759,533         $ (41,514)  
Treasury stock, beginning of period (in shares) at Dec. 31, 2018                           19,735      
Treasury stock, beginning period at Dec. 31, 2018                           $ (177)      
Stock Issued During Period, Shares, Restricted Stock Award, Net of Forfeitures [Abstract]                                  
Stock units vested (in shares)           242,414                      
Stock units withheld for employee taxes   $ (13,483)             $ (13,483)                
Stock units withheld for employee taxes (in shares)           (81,562)                      
Proceeds from stock options exercises 11,890             11,890                  
Proceeds from stock options exercises (in shares)         323,464                        
Stock-based compensation expense 10,425             10,425                  
Foreign currency translation adjustments, net of tax 2,943                             2,943  
Change in unrealized gains and losses on cash flow hedges, net of tax 3,100                             3,100  
Net income 60,754                   60,754            
Balance, end of period (in shares) at Mar. 31, 2019         54,564,508                        
Balance, end of period at Mar. 31, 2019 1,338,225       $ 54     553,532     820,287         (35,471)  
Treasury stock, end of period (in shares) at Mar. 31, 2019                           19,735      
Treasury stock, end of period at Mar. 31, 2019                           $ (177)      
Balance, beginning of period (in shares) at Dec. 31, 2018         54,080,192                        
Balance, beginning of period at Dec. 31, 2018 1,262,596       $ 54     544,700     759,533         (41,514)  
Treasury stock, beginning of period (in shares) at Dec. 31, 2018                           19,735      
Treasury stock, beginning period at Dec. 31, 2018                           $ (177)      
Stock Issued During Period, Shares, Restricted Stock Award, Net of Forfeitures [Abstract]                                  
Foreign currency translation adjustments, net of tax 5,563                                
Change in unrealized gains and losses on cash flow hedges, net of tax 4,637                                
Net income 119,531                                
Balance, end of period (in shares) at Jun. 30, 2019         54,779,289                        
Balance, end of period at Jun. 30, 2019 1,422,247       $ 55     574,619     879,064         (31,314)  
Treasury stock, end of period (in shares) at Jun. 30, 2019                           19,735      
Treasury stock, end of period at Jun. 30, 2019                           $ (177)      
Balance, beginning of period (in shares) at Mar. 31, 2019         54,564,508                        
Balance, beginning of period at Mar. 31, 2019 1,338,225       $ 54     553,532     820,287         (35,471)  
Treasury stock, beginning of period (in shares) at Mar. 31, 2019                           19,735      
Treasury stock, beginning period at Mar. 31, 2019                           $ (177)      
Stock Issued During Period, Shares, Restricted Stock Award, Net of Forfeitures [Abstract]                                  
Stock units vested (in shares)           11,757                      
Stock units withheld for employee taxes   (363)             (363)                
Stock units withheld for employee taxes (in shares)           (2,084)                      
Proceeds from stock options exercises 10,584       $ 1     10,583                  
Proceeds from stock options exercises (in shares)         205,108                        
Stock-based compensation expense 10,867             10,867                  
Foreign currency translation adjustments, net of tax 2,620                             2,620  
Change in unrealized gains and losses on cash flow hedges, net of tax 1,537                             1,537  
Net income 58,777                   58,777            
Balance, end of period (in shares) at Jun. 30, 2019         54,779,289                        
Balance, end of period at Jun. 30, 2019 $ 1,422,247       $ 55     574,619     879,064         (31,314)  
Treasury stock, end of period (in shares) at Jun. 30, 2019                           19,735      
Treasury stock, end of period at Jun. 30, 2019                           $ (177)      
Balance, beginning of period (in shares) at Dec. 31, 2019 55,187,711       55,187,711   55,187,711                    
Balance, beginning of period at Dec. 31, 2019 $ 1,596,145     $ 1,596,275 $ 55   $ 55 607,051   $ 607,051 1,020,590   $ 1,020,720     (31,374) $ (31,374)
Balance, beginning of period (ASU 2016-13) at Dec. 31, 2019     $ 130                 $ 130          
Treasury stock, beginning of period (in shares) at Dec. 31, 2019                           19,735 19,735    
Treasury stock, beginning period at Dec. 31, 2019                           $ (177) $ (177)    
Stock Issued During Period, Shares, Restricted Stock Award, Net of Forfeitures [Abstract]                                  
Stock units vested (in shares)           273,904                      
Stock units withheld for employee taxes   (15,822)             (15,822)                
Stock units withheld for employee taxes (in shares)           (89,990)                      
Proceeds from stock options exercises 7,141       $ 1     7,140                  
Proceeds from stock options exercises (in shares)         217,475                        
Stock-based compensation expense 12,210             12,210                  
Foreign currency translation adjustments, net of tax (28,519)                             (28,519)  
Change in unrealized gains and losses on cash flow hedges, net of tax (9,368)                             (9,368)  
Net income 85,565                   85,565            
Balance, end of period (in shares) at Mar. 31, 2020         55,589,100                        
Balance, end of period at Mar. 31, 2020 $ 1,647,482       $ 56     610,579     1,106,285         (69,261)  
Treasury stock, end of period (in shares) at Mar. 31, 2020                           19,735      
Treasury stock, end of period at Mar. 31, 2020                           $ (177)      
Balance, beginning of period (in shares) at Dec. 31, 2019 55,187,711       55,187,711   55,187,711                    
Balance, beginning of period at Dec. 31, 2019 $ 1,596,145     $ 1,596,275 $ 55   $ 55 607,051   $ 607,051 1,020,590   $ 1,020,720     (31,374) $ (31,374)
Balance, beginning of period (ASU 2016-13) at Dec. 31, 2019     $ 130                 $ 130          
Treasury stock, beginning of period (in shares) at Dec. 31, 2019                           19,735 19,735    
Treasury stock, beginning period at Dec. 31, 2019                           $ (177) $ (177)    
Stock Issued During Period, Shares, Restricted Stock Award, Net of Forfeitures [Abstract]                                  
Foreign currency translation adjustments, net of tax (16,077)                                
Change in unrealized gains and losses on cash flow hedges, net of tax (2,922)                                
Net income $ 152,189                                
Balance, end of period (in shares) at Jun. 30, 2020 55,825,951       55,825,951                        
Balance, end of period at Jun. 30, 2020 $ 1,753,094       $ 56     630,679     1,172,909         (50,373)  
Treasury stock, end of period (in shares) at Jun. 30, 2020                           19,735      
Treasury stock, end of period at Jun. 30, 2020                           $ (177)      
Balance, beginning of period (in shares) at Mar. 31, 2020         55,589,100                        
Balance, beginning of period at Mar. 31, 2020 1,647,482       $ 56     610,579     1,106,285         (69,261)  
Treasury stock, beginning of period (in shares) at Mar. 31, 2020                           19,735      
Treasury stock, beginning period at Mar. 31, 2020                           $ (177)      
Stock Issued During Period, Shares, Restricted Stock Award, Net of Forfeitures [Abstract]                                  
Stock units vested (in shares)           18,649                      
Stock units withheld for employee taxes   $ (1,169)             $ (1,169)                
Stock units withheld for employee taxes (in shares)           (5,522)                      
Proceeds from stock options exercises 10,116             10,116                  
Proceeds from stock options exercises (in shares)         223,724                        
Stock-based compensation expense 11,153             11,153                  
Foreign currency translation adjustments, net of tax 12,442                             12,442  
Change in unrealized gains and losses on cash flow hedges, net of tax 6,446                             6,446  
Net income $ 66,624                   66,624            
Balance, end of period (in shares) at Jun. 30, 2020 55,825,951       55,825,951                        
Balance, end of period at Jun. 30, 2020 $ 1,753,094       $ 56     $ 630,679     $ 1,172,909         $ (50,373)  
Treasury stock, end of period (in shares) at Jun. 30, 2020                           19,735      
Treasury stock, end of period at Jun. 30, 2020                           $ (177)      
v3.20.2
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) - USD ($)
$ in Thousands
6 Months Ended
Jun. 30, 2020
Jun. 30, 2019
Cash flows from operating activities:    
Net income $ 152,189 $ 119,531
Adjustments to reconcile net income to net cash provided by operating activities:    
Depreciation and amortization expense 30,166 21,228
Operating lease right-of-use assets amortization expense 33,834 25,732
Bad debt expense 3,174 167
Deferred taxes 2,971 (1,193)
Stock-based compensation expense 31,320 37,553
Other 4,458 3,938
Changes in assets and liabilities:    
Trade receivables and contract assets (11,842) (75,332)
Prepaid and other assets 1,216 1,690
Accounts payable 633 (2,069)
Accrued expenses and other liabilities (5,835) (42,075)
Operating lease liabilities (30,857) (25,705)
Income taxes payable (2,016) (19,638)
Net cash provided by operating activities 209,411 43,827
Cash flows from investing activities:    
Purchases of property and equipment (40,524) (25,025)
Purchases of short-term investments (60,000) 0
Acquisition of business, net of cash acquired (Note 2) (12,573) (16,240)
Purchases of non-marketable securities (20,500) (5,000)
Other investing activities, net 26 (1,180)
Net cash used in investing activities (133,571) (47,445)
Cash flows from financing activities:    
Proceeds from stock option exercises 17,144 22,415
Payments of withholding taxes related to net share settlements of restricted stock units (15,899) (13,084)
Payment of contingent consideration for previously acquired business (7,869) (1,104)
Other financing activities, net (24) (19)
Net cash (used in)/provided by financing activities (6,648) 8,208
Effect of exchange rate changes on cash, cash equivalents and restricted cash (11,999) 2,248
Net increase in cash, cash equivalents and restricted cash 57,193 6,838
Cash, cash equivalents and restricted cash, beginning of period 937,688 771,711
Cash, cash equivalents and restricted cash, end of period $ 994,881 $ 778,549
v3.20.2
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOW (Unaudited) (Parenthetical) - USD ($)
$ in Thousands
Jun. 30, 2020
Dec. 31, 2019
Cash and cash equivalents $ 993,724 $ 936,552
Total restricted cash 1,157 1,136
Total cash, cash equivalents, restricted cash and restricted cash equivalents 994,881 937,688
Other noncurrent assets    
Restricted cash $ 1,157 $ 1,136
v3.20.2
BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
6 Months Ended
Jun. 30, 2020
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 global provider of digital platform engineering and software development services to customers located around the world, primarily in North America, Europe, Asia and Australia. 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 other emerging 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, 2019 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 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, all adjustments considered necessary for a fair presentation of the accompanying unaudited condensed consolidated financial statements have been included, and all adjustments are of a normal and recurring nature.
As previously disclosed in the Company’s Annual Report on Form 10-K for the year ended December 31, 2019, certain amounts recorded in the prior-period consolidated statement of cash flows presented have been reclassified to conform to the current-period financial statement presentation. These reclassifications had no effect on previously reported results of operations.
Adoption of New Accounting Standards
Unless otherwise discussed below, the adoption of new accounting standards did not have a material impact on the Company’s consolidated financial position, results of operations, changes in stockholders’ equity and cash flows.
Measurement of Credit Losses on Financial Instruments — In June 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2016-13, Financial Instruments—Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments.
The amendments in this update changed how companies measure and recognize credit impairment for many financial assets. The new credit loss model requires companies to immediately recognize an estimate of credit losses expected to occur over the remaining life of the financial assets (including trade receivables) that are in the scope of the update. The update also made amendments to the current impairment model for held-to-maturity and available-for-sale debt securities and certain guarantees. The Company adopted Topic 326, effective January 1, 2020, using a modified-retrospective approach through a cumulative effect adjustment to retained earnings as of the beginning of the period of adoption. As a result of the adoption of Topic 326, the Company recorded an immaterial reduction to its allowance for doubtful accounts for trade receivables and contract assets.
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. Unless otherwise discussed below, 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.
v3.20.2
ACQUISITION
6 Months Ended
Jun. 30, 2020
Business Combinations [Abstract]  
ACQUISITION ACQUISITION
2020 Acquisition — During the six months ended June 30, 2020, the Company completed one acquisition with a purchase price of $14,663 including contingent consideration with an acquisition-date fair value of $4,042. The Company committed to making contingent consideration payments with a maximum amount payable of $16,582 subject to attainment of specified performance targets in the first and second calendar years after the acquisition date. This acquisition increased EPAM’s software and service capabilities in financial services as well as added $6,300 of intangible assets, consisting mainly of customer relationships. Revenues generated by this acquisition totaled $1,190 and $2,233 during the three and six months ended June 30, 2020, respectively. Pro forma results of operations have not been presented because the effect of the acquisition on the Company’s condensed consolidated financial statements was not material.
test IO — During the second quarter of 2020, the Company finalized the fair value of the assets acquired and liabilities assumed in the acquisition of test IO. During 2020, the Company recorded insignificant purchase price adjustments to various accounts with corresponding net decreases to goodwill of $226.

The following table summarizes the estimated fair values of the assets acquired and liabilities assumed as of the date of acquisition as updated for any changes as of June 30, 2020 for test IO:
test IO
Cash and cash equivalents$663  
Trade receivables and contract assets621  
Prepaid and other current assets150  
Goodwill11,926  
Intangible assets6,219  
Property and equipment and other noncurrent assets305  
Total assets acquired$19,884  
Accounts payable, accrued expenses and other current liabilities$993  
Other noncurrent liabilities1,568  
Total liabilities assumed$2,561  
Net assets acquired$17,323  
v3.20.2
GOODWILL
6 Months Ended
Jun. 30, 2020
Goodwill and Intangible Assets Disclosure [Abstract]  
GOODWILL GOODWILL
Goodwill by reportable segment was as follows:
North AmericaEuropeRussiaTotal
Balance as of January 1, 2020$113,426  $80,873  $744  $195,043  
test IO purchase accounting adjustment863  (1,089) —  (226) 
Other 2019 acquisitions purchase accounting adjustments373  191  35  599  
2020 Acquisition6,293  —  —  6,293  
Effect of net foreign currency exchange rate changes(177) (2,460) (33) (2,670) 
Balance as of June 30, 2020$120,778  $77,515  $746  $199,039  
There were no accumulated impairment losses in the North America or Europe reportable segments as of June 30, 2020 or December 31, 2019. The Russia segment had accumulated goodwill impairment losses of $2,241 as of June 30, 2020 and December 31, 2019
v3.20.2
FAIR VALUE MEASUREMENTS
6 Months Ended
Jun. 30, 2020
Fair Value Disclosures [Abstract]  
FAIR VALUE MEASUREMENTS FAIR VALUE MEASUREMENTS
The Company carries certain assets and liabilities at fair value on a recurring basis on its 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 June 30, 2020 and December 31, 2019:
As of June 30, 2020
BalanceLevel 1Level 2Level 3
Foreign exchange derivative assets$932  $—  $932  $—  
Total assets measured at fair value on a recurring basis$932  $—  $932  $—  
Foreign exchange derivative liabilities$3,035  $—  $3,035  $—  
Contingent consideration4,705  —  —  4,705  
Total liabilities measured at fair value on a recurring basis
$7,740  $—  $3,035  $4,705  
As of December 31, 2019
BalanceLevel 1Level 2Level 3
Foreign exchange derivative assets$1,910  $—  $1,910  $—  
Total assets measured at fair value on a recurring basis$1,910  $—  $1,910  $—  
Foreign exchange derivative liabilities$243  $—  $243  $—  
Contingent consideration10,495  —  —  10,495  
Total liabilities measured at fair value on a recurring basis
$10,738  $—  $243  $10,495  

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 5 “Derivative Financial Instruments” in the condensed consolidated interim financial statements for additional information regarding derivative financial instruments.
The fair value of the contingent consideration 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 2020 Acquisition was 17.5%. 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, net in the Company’s consolidated statement of income and comprehensive income.

A reconciliation of the beginning and ending balances of Level 3 acquisition-related contingent consideration using significant unobservable inputs for the six months ended June 30, 2020 is as follows:
Amount
Contingent consideration liabilities as of January 1, 2020$10,495  
Payment of contingent consideration for previously acquired business(7,869) 
Acquisition date fair value of contingent consideration — 2020 Acquisition (Note 2)4,042  
Changes in fair value of contingent consideration included in Interest and other income, net (1,438) 
Effect of net foreign currency exchange rate changes (525) 
Contingent consideration liabilities as of June 30, 2020$4,705  
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 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 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
BalanceEstimated Fair ValueLevel 1Level 2Level 3
June 30, 2020
Financial Assets:
Cash equivalents:
Money market funds$189,873  $189,873  $189,873  $—  $—  
Total cash equivalents$189,873  $189,873  $189,873  $—  $—  
Restricted cash$1,157  $1,157  $1,157  $—  $—  
Time deposits$60,025  $60,025  $—  $60,025  $—  
Employee loans$1,491  $1,491  $—  $—  $1,491  
Financial Liabilities:
Borrowings under the 2017 Credit Facility$25,007  $25,007  $—  $25,007  $—  
Fair Value Hierarchy
BalanceEstimated Fair ValueLevel 1Level 2Level 3
December 31, 2019
Financial Assets:
Cash equivalents:
Money market funds$407,817  $407,817  $407,817  $—  $—  
Time deposits10,002  10,002  —  10,002  —  
Total cash equivalents$417,819  $417,819  $407,817  $10,002  $—  
Restricted cash$1,136  $1,136  $1,136  $—  $—  
Employee loans$2,434  $2,434  $—  $—  $2,434  
Financial Liabilities:
Borrowings under the 2017 Credit Facility$25,017  $25,017  $—  $25,017  $—  

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 $25,000 and $5,750 as of June 30, 2020 and December 31, 2019, respectively and is classified as Other noncurrent assets in the Company’s condensed consolidated balance sheets.
v3.20.2
DERIVATIVE FINANCIAL INSTRUMENTS
6 Months Ended
Jun. 30, 2020
Derivative Instruments and Hedging Activities Disclosure [Abstract]  
DERIVATIVE FINANCIAL INSTRUMENTS 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 Russian ruble, Polish zloty and Indian rupee transactions. As of June 30, 2020, all of the Company’s 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 consolidated balance sheets as of June 30, 2020 and December 31, 2019 were as follows:
As of June 30, 2020As of December 31, 2019
Balance Sheet ClassificationAsset DerivativesLiability DerivativesAsset DerivativesLiability Derivatives
Foreign exchange forward contracts -
Designated as hedging instruments
Prepaid expenses and other current assets$932  $1,910  
Accrued expenses and other current liabilities$3,035  $243  
The Company records changes in the fair value of its cash flow hedges in accumulated other comprehensive loss in the consolidated balance sheets until the forecasted transaction occurs. When the forecasted transaction occurs, the Company reclassifies the related gain or loss on the cash flow hedge to cost of revenues (exclusive of depreciation and amortization). In the event the underlying forecasted transaction does not occur, or it becomes probable that it will not occur, the Company reclassifies the gain or loss on the related cash flow hedge into income. If the Company does not elect hedge accounting, or the contract does not qualify for hedge accounting treatment, the changes in fair value from period to period are recorded in income.
The changes in the fair value of foreign currency derivative instruments in our unaudited condensed consolidated statements of income and comprehensive income for the three and six months ended June 30, 2020 and 2019 were as follows:
 Three Months Ended
June 30,
Six Months Ended
June 30,
2020201920202019
Foreign exchange forward contracts - Designated as hedging instruments:
Net gain/(loss) in fair value recognized in accumulated other comprehensive loss 
$8,317  $1,984  $(3,770) $5,983  
Net (loss)/gain reclassified from accumulated other comprehensive loss into cost of revenues (exclusive of depreciation and amortization)
$(1,851) $342  $(2,511) $(110) 
v3.20.2
LEASES
6 Months Ended
Jun. 30, 2020
Leases [Abstract]  
LEASES LEASESThe 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 years to 10.9 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 six months ended June 30, 2020 and 2019.
During the three and six months ended June 30, 2020 and 2019, the components of lease expense were as follows:
 Three Months Ended
June 30,
Six Months Ended
June 30,
Income Statement Classification2020201920202019
Operating lease costSelling, general and administrative expenses$18,851  $15,196  $37,714  $28,915  
Variable lease costSelling, general and administrative expenses579  1,999  3,214  4,096  
Short-term lease costSelling, general and administrative expenses269  1,006  809  1,904  
Total lease cost$19,699  $18,201  $41,737  $34,915  

Supplemental cash flow information related to leases for the three and six months ended June 30, 2020 and 2019 was as follows:
Three Months Ended
June 30,
Six Months Ended
June 30,
 2020201920202019
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows used for operating leases$16,481  $14,105  $33,372  $28,801  
Right-of-use assets obtained in exchange for lease obligations:
Operating leases$11,676  $40,722  $42,928  $53,547  
Non-cash net (decrease)/increase due to lease modifications:
Operating lease right-of-use assets$(8,566) $8,324  $(3,982) $3,150  
Operating lease liabilities$(8,562) $8,358  $(3,989) $3,252  

Weighted average remaining lease term and discount rate as of June 30, 2020 and 2019 were as follows:
 As of June 30, 2020As of June 30, 2019
Weighted average remaining lease term, in years:
Operating leases6.06.2
Weighted average discount rate:
Operating leases3.2 %3.6 %
As of June 30, 2020, operating lease liabilities will mature as follows:
Year ending December 31,Lease Payments
2020 (excluding six months ended June 30, 2020)$34,183  
202159,786  
202244,318  
202332,080  
202427,677  
Thereafter67,913  
Total lease payments265,957  
Less: imputed interest(23,315) 
Total$242,642  
The Company had committed to payments of $2,281 related to operating lease agreements that had not yet commenced as of June 30, 2020. These operating leases will commence on various dates during 2020 with lease terms ranging from 1.4 to 5.8 years. The Company did not have any material finance lease agreements that had not yet commenced.
v3.20.2
LONG-TERM DEBT
6 Months Ended
Jun. 30, 2020
Debt Disclosure [Abstract]  
LONG-TERM DEBT LONG-TERM DEBT
Revolving Line of Credit — On May 24, 2017, the Company entered into an unsecured credit facility (the “2017 Credit Facility”), as may be amended from time to time, with PNC Bank, National Association; PNC Capital Markets LLC; Citibank N.A.; Wells Fargo Bank, National Association; Fifth Third Bank and Santander Bank, N.A. (collectively the “Lenders”). The 2017 Credit Facility provides for a borrowing capacity of $300,000, with potential to increase the borrowing capacity up to $400,000 if certain conditions are met. The 2017 Credit Facility matures on May 24, 2022.
Borrowings under the 2017 Credit Facility may be denominated in U.S. dollars or up to a maximum of $100,000 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 2017 Credit 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, and (c) the Daily LIBOR Rate, plus 1.0%. As of June 30, 2020, the Company’s outstanding borrowings are subject to a LIBOR-based interest rate which resets regularly at issuance, based on lending terms.
The 2017 Credit Facility 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 June 30, 2020, the Company was in compliance with all covenants contained in the 2017 Credit Facility.
The following table presents the outstanding debt and borrowing capacity of the Company under the 2017 Credit Facility:
 As of
June 30,
2020
As of
December 31,
2019
Outstanding debt$25,000  $25,000  
Interest rate1.2 %2.8 %
Irrevocable standby letters of credit$—  $303  
Available borrowing capacity$275,000  $274,697  
Current maximum borrowing capacity$300,000  $300,000  
v3.20.2
REVENUES
6 Months Ended
Jun. 30, 2020
Revenue from Contract with Customer [Abstract]  
REVENUES 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 13 “Segment Information”) for the periods indicated:
Three Months Ended June 30, 2020
Reportable Segments
North AmericaEuropeRussiaConsolidated Revenues
Customer Locations
North America$370,693  $10,835  $408  $381,936  
Europe11,195  199,866   211,064  
CIS2,236   19,838  22,078  
APAC705  16,600  —  17,305  
        Revenues$384,829  $227,305  $20,249  $632,383  

Six Months Ended June 30, 2020
Reportable Segments
North AmericaEuropeRussiaConsolidated Revenues
Customer Locations
North America$748,477  $21,254  $2,035  $771,766  
Europe21,527  412,588   434,121  
CIS4,790  16  42,132  46,938  
APAC1,137  29,780  —  30,917  
        Revenues$775,931  $463,638  $44,173  $1,283,742  

Three Months Ended June 30, 2019
Reportable Segments
North AmericaEuropeRussiaConsolidated Revenues
Customer Locations
North America$323,221  $11,551  $16  $334,788  
Europe5,219  172,027  99  177,345  
CIS2,005  —  23,086  25,091  
APAC580  13,783  —  14,363  
        Revenues$331,025  $197,361  $23,201  $551,587  
Six Months Ended June 30, 2019
Reportable Segments
North AmericaEuropeRussiaConsolidated Revenues
Customer Locations
North America$626,966  $24,442  $32  $651,440  
Europe9,966  340,647  240  350,853  
CIS3,744  13  39,508  43,265  
APAC1,038  26,324  —  27,362  
        Revenues$641,714  $391,426  $39,780  $1,072,920  
        
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 13 “Segment Information”) for the periods indicated:
Three Months Ended June 30, 2020
Reportable Segments
North AmericaEuropeRussiaConsolidated Revenues
Industry Verticals
Business Information & Media$81,481  $58,338  $439  $140,258  
Financial Services47,687  66,655  13,633  127,975  
Software & Hi-Tech100,801  18,165  519  119,485  
Travel & Consumer52,193  51,253  3,824  107,270  
Life Sciences & Healthcare61,776  7,069  39  68,884  
Emerging Verticals40,891  25,825  1,795  68,511  
        Revenues$384,829  $227,305  $20,249  $632,383  

Six Months Ended June 30, 2020
Reportable Segments
North AmericaEuropeRussiaConsolidated Revenues
Industry Verticals
Business Information & Media$161,701  $116,484  $799  $278,984  
Financial Services95,555  134,249  29,814  259,618  
Software & Hi-Tech202,538  36,311  2,485  241,334  
Travel & Consumer106,917  112,320  7,563  226,800  
Life Sciences & Healthcare123,387  14,688  48  138,123  
Emerging Verticals85,833  49,586  3,464  138,883  
        Revenues$775,931  $463,638  $44,173  $1,283,742  
Three Months Ended June 30, 2019
Reportable Segments
North AmericaEuropeRussiaConsolidated Revenues
Industry Verticals
Business Information & Media$62,340  $35,691  $104  $98,135  
Financial Services43,517  58,879  18,009  120,405  
Software & Hi-Tech85,600  19,440  478  105,518  
Travel & Consumer48,178  56,175  2,761  107,114  
Life Sciences & Healthcare54,287  4,907   59,198  
Emerging Verticals37,103  22,269  1,845  61,217  
        Revenues$331,025  $197,361  $23,201  $551,587  
Six Months Ended June 30, 2019
Reportable Segments
North AmericaEuropeRussiaConsolidated Revenues
Industry Verticals
Business Information & Media$124,701  $68,222  $244  $193,167  
Financial Services81,911  120,714  31,041  233,666  
Software & Hi-Tech164,721  39,810  918  205,449  
Travel & Consumer95,178  111,377  4,885  211,440  
Life Sciences & Healthcare104,443  9,463  66  113,972  
Emerging Verticals70,760  41,840  2,626  115,226  
        Revenues$641,714  $391,426  $39,780  $1,072,920  

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 13 “Segment Information”) for the periods indicated:
Three Months Ended June 30, 2020
Reportable Segments
North AmericaEuropeRussiaConsolidated Revenues
Contract Types
Time-and-material$348,715  $192,173  $13,972  $554,860  
Fixed-price33,855  32,253  6,259  72,367  
Licensing1,958  545   2,512  
Other revenues
301  2,334   2,644  
        Revenues$384,829  $227,305  $20,249  $632,383  
Six Months Ended June 30, 2020
Reportable Segments
North AmericaEuropeRussiaConsolidated Revenues
Contract Types
Time-and-material$705,978  $382,493  $27,568  $1,116,039  
Fixed-price65,710  77,508  15,080  158,298  
Licensing3,728  707  1,467  5,902  
Other revenues
515  2,930  58  3,503  
        Revenues$775,931  $463,638  $44,173  $1,283,742  

Three Months Ended June 30, 2019
Reportable Segments
North AmericaEuropeRussiaConsolidated Revenues
Contract Types
Time-and-material$300,326  $167,581  $12,047  $479,954  
Fixed-price29,681  29,204  10,943  69,828  
Licensing624  142  196  962  
Other revenues
394  434  15  843  
        Revenues$331,025  $197,361  $23,201  $551,587  

Six Months Ended June 30, 2019
Reportable Segments
North AmericaEuropeRussiaConsolidated Revenues
Contract Types
Time-and-material$585,051  $335,794  $23,319  $944,164  
Fixed-price54,421  54,450  16,230  125,101  
Licensing1,460  540  202  2,202  
Other revenues
782  642  29  1,453  
        Revenues$641,714  $391,426  $39,780  $1,072,920  

Timing of Revenue Recognition
The following tables present the timing of revenue recognition for the periods indicated:
Three Months Ended June 30, 2020
Reportable Segments
North AmericaEuropeRussiaConsolidated Revenues
Timing of Revenue Recognition
Transferred over time$383,573  $227,073  $20,240  $630,886  
Transferred at a point of time1,256  232   1,497  
        Revenues$384,829  $227,305  $20,249  $632,383  
Six Months Ended June 30, 2020
Reportable Segments
North AmericaEuropeRussiaConsolidated Revenues
Timing of Revenue Recognition
Transferred over time$773,383  $463,244  $42,708  $1,279,335  
Transferred at a point of time2,548  394  1,465  4,407  
        Revenues$775,931  $463,638  $44,173  $1,283,742  

Three Months Ended June 30, 2019
Reportable Segments
North AmericaEuropeRussiaConsolidated Revenues
Timing of Revenue Recognition
Transferred over time$330,819  $197,255  $23,201  $551,275  
Transferred at a point of time206  106  —  312  
        Revenues$331,025  $197,361  $23,201  $551,587  

Six Months Ended June 30, 2019
Reportable Segments
North AmericaEuropeRussiaConsolidated Revenues
Timing of Revenue Recognition
Transferred over time$641,104  $391,273  $39,780  $1,072,157  
Transferred at a point of time610  153  —  763  
        Revenues$641,714  $391,426  $39,780  $1,072,920  

Performance obligations satisfied in prior periods led to a reduction of $3,669 of revenues during the three months ended June 30, 2020 and an increase of $4,182 of revenues during the six months ended June 30, 2020. The Company recognized revenues associated with performance obligations satisfied in previous periods of $7,693 and $4,119 during the three and six months ended June 30, 2019, respectively.
The following table includes the estimated revenues expected to be recognized in the future related to performance obligations that are partially or fully unsatisfied as of June 30, 2020. The Company applies a practical expedient and does not disclose the value of unsatisfied performance obligations for contracts that (i) have an original expected duration of one year or less and (ii) contracts for which it recognizes revenues at the amount to which it has the right to invoice for services provided:
Less than 1 year1 Year2 Years3 YearsTotal
Contract Type
Fixed-price$15,395  $546  $—  $—  $15,941  
The Company applies a practical expedient and does not disclose the amount of the transaction price allocated to the remaining performance obligations nor provide an explanation of when the Company expects to recognize that amount as revenue for certain variable consideration.
Contract Balances
The following table provides information on the classification of contract assets and liabilities in the condensed consolidated balance sheets:
 As of
June 30,
2020
As of
December 31,
2019
Contract assets included in Trade receivables and contract assets$12,353  $14,320  
Contract liabilities included in Accrued expenses and other current liabilities$11,461  $9,132  
Contract assets have not materially changed from December 31, 2019. Contract liabilities comprise amounts collected from the Company’s customers for revenues not yet earned. Such amounts are anticipated to be recorded as revenues when services are performed in subsequent periods. Contract liabilities have not materially changed from December 31, 2019.
During the three and six months ended June 30, 2020, the Company recognized $1,325 and $7,862 of revenues, respectively, that were included in Accrued expenses and other current liabilities at December 31, 2019. During the three and six months ended June 30, 2019, the Company recognized $610 and $3,661 of revenues, respectively, that were included in Accrued expenses and other current liabilities at December 31, 2018.
v3.20.2
STOCK-BASED COMPENSATION
6 Months Ended
Jun. 30, 2020
Share-based Payment Arrangement [Abstract]  
STOCK-BASED COMPENSATION STOCK-BASED COMPENSATION
The following table summarizes the components of stock-based compensation expense recognized in the Company’s condensed consolidated statements of income and comprehensive income for the periods indicated:
Three Months Ended
June 30,
Six Months Ended
June 30,
2020201920202019
Cost of revenues (exclusive of depreciation and amortization)$8,958  $7,480  $12,942  $20,261  
Selling, general and administrative expenses10,481  8,217  18,378  17,292  
Total$19,439  $15,697  $31,320  $37,553  

Stock Options
Stock option activity under the Company’s plans is set forth below:
 Number of
Options 
Weighted Average
Exercise Price 
Aggregate
Intrinsic Value 
Weighted Average
Remaining Contractual Term (in years)
Options outstanding at January 1, 20203,322,930  $50.85  
Options granted147,351  $176.21  
Options exercised(441,199) $39.12  
Options forfeited/cancelled(9,137) $117.40  
Options outstanding at June 30, 20203,019,945  $58.48  $584,445  4.7
Options vested and exercisable at June 30, 20202,641,633  $45.82  $544,682  4.1
Options expected to vest at June 30, 2020348,999  $145.93  $37,021  8.6
As of June 30, 2020, $17,196 of total remaining unrecognized stock-based compensation cost related to unvested stock options, net of estimated forfeitures, is expected to be recognized over the weighted-average remaining requisite service period of 2.9 years.
Restricted Stock and Restricted Stock Units
Service-Based Awards
The table below summarizes activity related to the Company’s equity-classified and liability-classified service-based awards for the six months ended June 30, 2020:
Equity-Classified
 Restricted Stock
Equity-Classified
Equity-Settled
Restricted Stock Units
Liability-Classified
Cash-Settled
Restricted Stock Units
 
Number of
Shares 
Weighted Average Grant Date
Fair Value Per Share 
Number of
Shares 
Weighted Average Grant Date
Fair Value Per Share 
Number of
Shares 
Weighted Average Grant Date
Fair Value Per Share 
Unvested service-based awards outstanding at January 1, 20209,791  $162.96  758,785  $122.48  242,288  $105.40  
Awards granted—  $—  251,864  $180.18  59,770  $180.37  
Awards vested—  $—  (294,872) $106.73  (118,777) $89.34  
Awards forfeited/cancelled—  $—  (28,126) $137.76  (3,456) $108.89  
Unvested service-based awards outstanding at June 30, 20209,791  $162.96  687,651  $149.74  179,825  $140.86  
As of June 30, 2020, $1,138 of total remaining unrecognized stock-based compensation cost related to service-based equity-classified restricted stock is expected to be recognized over the weighted-average remaining requisite service period of 2.2 years.
As of June 30, 2020, $83,125 of total remaining unrecognized stock-based compensation cost related to service-based equity-classified restricted stock units (“RSUs”), net of estimated forfeitures, is expected to be recognized over the weighted-average remaining requisite service period of 2.8 years. During the six months ended June 30, 2020, 19,201 equity-classified RSUs were granted in connection with a 2020 acquisition of a business. See Note 2 “Acquisitions” in the condensed consolidated interim financial statements for additional information regarding business acquisitions. During the first quarter of 2020, in connection with a 2019 acquisition of a business, the Company formally issued 5,793 equity-classified RSUs.
As of June 30, 2020, $32,302 of total remaining unrecognized stock-based compensation cost related to service-based liability-classified cash-settled RSUs, net of estimated forfeitures, is expected to be recognized over the weighted-average remaining requisite service period of 2.5 years. During the six months ended June 30, 2020, 9,736 liability-classified cash-settled RSUs were granted in connection with an acquisition of a business. See Note 2 “Acquisitions” in the condensed consolidated interim financial statements for additional information regarding business acquisitions.
The liability associated with the service-based liability-classified RSUs as of June 30, 2020 and December 31, 2019, was $9,122 and $21,902, respectively, and was classified as Accrued compensation and benefits expenses in the condensed consolidated balance sheets.
Performance-Based Awards
The table below summarizes activity related to the Company’s equity-classified performance-based awards for the six months ended June 30, 2020:
Equity-Classified
Equity-Settled
Restricted Stock
Equity-Classified
Equity-Settled
Restricted Stock Units
 
Number of
Shares 
Weighted Average Grant Date
Fair Value Per Share 
Number of
Shares 
Weighted Average Grant Date
Fair Value Per Share 
Unvested performance-based awards outstanding at January 1, 20209,393  $165.87  —  $—  
Awards granted—  $—  24,836  $177.81  
Unvested performance-based awards outstanding at June 30, 20209,393  $165.87  24,836  $177.81  
As of June 30, 2020, $1,236 of total remaining unrecognized stock-based compensation cost related to performance-based restricted stock is expected to be recognized over the weighted-average remaining requisite service period of 3.2 years.
During the first quarter of 2020, in connection with a 2019 acquisition of a business, the Company formally issued 24,836 performance-based equity-classified RSUs. As of June 30, 2020, $2,569 of total remaining unrecognized stock-based compensation cost related to performance-based equity-classified RSUs is expected to be recognized over the weighted-average remaining requisite service period of 2.9 years.
During the first quarter of 2020, the Company agreed to issue equity-classified RSUs at future dates worth up to $2,171 in connection with an acquisition of a business. The number of awards to be issued is subject to attainment of specified performance targets in the 2 years after the acquisition date as well as the Company’s stock price at the time of formal issuance. The awards require continued service and vest over 3 years from the date of acquisition.
v3.20.2
INCOME TAXES
6 Months Ended
Jun. 30, 2020
Income Tax Disclosure [Abstract]  
INCOME TAXES INCOME TAXES
In determining its interim provision for income taxes, the Company uses an estimated annual effective tax rate, which is based on expected annual profit before tax, statutory tax rates and tax planning opportunities available in the various jurisdictions in which the Company operates. Certain significant or unusual items are separately recognized in the quarter in which they occur and can be a source of variability in the effective tax rates from quarter to quarter.
The Company’s worldwide effective tax rates for the three months ended June 30, 2020 and 2019 were 12.4% and 16.6%, respectively, and 11.8% and 11.3% during the six months ended June 30, 2020 and 2019, respectively.
The Company’s effective tax rates benefited from excess tax benefits recorded upon vesting or exercise of stock-based awards of $8,129 and $4,741 during the three months ended June 30, 2020 and 2019, respectively, and $19,826 and $16,254 during the six months ended June 30, 2020 and 2019, respectively.
v3.20.2
EARNINGS PER SHARE
6 Months Ended
Jun. 30, 2020
Earnings Per Share [Abstract]  
EARNINGS PER SHARE EARNINGS PER SHAREBasic earnings per share is computed by dividing net income available to common shareholders by the weighted-average number of shares of common stock outstanding during the period. For purposes of computing basic earnings per share, any nonvested shares of restricted stock that have been issued by the Company and are contingently returnable to the Company are excluded from the weighted-average number of shares of common stock outstanding during the period. Diluted earnings per share is computed by dividing net income available to common shareholders by the weighted-average number of shares of common stock outstanding during the period increased to include the number of additional shares of common stock that would have been outstanding if the potentially dilutive securities had been issued. Potentially dilutive securities include outstanding stock options, unvested restricted stock and unvested equity-settled RSUs. The dilutive effect of potentially dilutive securities is reflected in diluted earnings per share by application of the treasury stock method.
The following table sets forth the computation of basic and diluted earnings per share of common stock as follows:
 Three Months Ended
June 30,
Six Months Ended
June 30,
 2020201920202019
Numerator for basic and diluted earnings per share:
Net income$66,624  $58,777  $152,189  $119,531  
Numerator for basic and diluted earnings per share$66,624  $58,777  $152,189  $119,531  
Denominator:  
Weighted average common shares for basic earnings per share55,700,706  54,681,959  55,493,727  54,464,753  
Net effect of dilutive stock options, restricted stock units and restricted stock awards
2,545,525  2,932,325  2,700,674  2,961,810  
Weighted average common shares for diluted earnings per share
58,246,231  57,614,284  58,194,401  57,426,563  
Net income per share:  
Basic$1.20  $1.07  $2.74  $2.19  
Diluted$1.14  $1.02  $2.62  $2.08  
The number of shares underlying equity-based awards that were excluded from the calculation of diluted earnings per share as their effect would be anti-dilutive was 146,732 and 77,925 during the three and six months ended June 30, 2020, respectively.
The number of shares underlying equity-based awards that were excluded from the calculation of diluted earnings per share as their effect would be anti-dilutive was 168,451 and 97,327 during the three and six months ended June 30, 2019, respectively.
v3.20.2
COMMITMENTS AND CONTINGENCIES
6 Months Ended
Jun. 30, 2020
Commitments and Contingencies Disclosure [Abstract]  
COMMITMENTS AND CONTINGENCIES COMMITMENTS AND CONTINGENCIES
Indemnification Obligations  In the normal course of business, the Company is a party to a variety of agreements under which it may be obligated to indemnify the other party for certain matters. These obligations typically arise in contracts where the Company customarily agrees to hold the other party harmless against losses arising from a breach of representations or covenants for certain matters, infringement of third party intellectual property rights, data privacy violations, and certain tortious conduct in the course of providing services. The duration of these indemnifications varies, and in certain cases, is indefinite.
The Company is unable to reasonably estimate the maximum potential amount of future payments under these or similar agreements due to the unique facts and circumstances of each agreement and the fact that certain indemnifications provide for no limitation to the maximum potential future payments under the indemnification. Management is not aware of any such matters that would have a material effect on the condensed consolidated financial statements of the Company.
Litigation — From time to time, the Company is involved in litigation, claims or other contingencies arising in the ordinary course of business. The Company accrues a liability when a loss is considered probable and the amount can be reasonably estimated. When a material loss contingency is reasonably possible but not probable, the Company does not record a liability, but instead discloses the nature and the amount of the claim, and an estimate of the loss or range of loss, if such an estimate can be made. Legal fees are expensed as incurred. In the opinion of management, the outcome of any existing claims and legal or regulatory proceedings, if decided adversely, is not expected to have a material effect on the Company’s business, financial condition, results of operations or cash flows.
Building Acquisition Commitments — During the year ended December 31, 2019, the Company entered into an agreement to purchase office space in Ukraine intended to support the global delivery center in that country. The agreement is subject to completion of construction and other ordinary closing conditions. As of June 30, 2020, the Company has committed to making future payments totaling approximately $36,900 including VAT to the sellers upon transfer of the building.
v3.20.2
SEGMENTS INFORMATION
6 Months Ended
Jun. 30, 2020
Segment Reporting [Abstract]  
SEGMENT INFORMATION SEGMENT INFORMATION
The Company determines its business segments and reports segment information in accordance with how the Company’s chief operating decision maker (“CODM”) organizes the segments to evaluate performance, allocate resources and make business decisions. Segment results are based on the segment’s revenues and operating profit, where segment operating profit is defined as income from operations before unallocated costs. Expenses included in segment operating profit consist principally of direct selling and delivery costs as well as an allocation of certain shared services expenses. Certain corporate expenses are not allocated to specific segments as these expenses are not controllable at the segment level. Such expenses include certain types of professional fees, non-corporate taxes, compensation to non-employee directors and certain other general and administrative expenses, including compensation of specific groups of non-production employees. In addition, the Company does not allocate amortization of intangible assets acquired through business combinations, goodwill and other asset impairment charges, stock-based compensation expenses, acquisition-related costs and certain other one-time charges. These unallocated amounts are combined with total segment operating profit to arrive at consolidated income from operations as reported below in the reconciliation of segment operating profit to consolidated income before provision for income taxes. Additionally, management has determined that it is not practical to allocate identifiable assets by segment since such assets are used interchangeably among the segments.
The Company manages its business primarily based on the managerial responsibility for its client base and market. As managerial responsibility for a particular customer relationship generally correlates with the customer’s geographic location, there is a high degree of similarity between customer locations and the geographic boundaries of the Company’s reportable segments. In some cases, managerial responsibility for a particular customer is assigned to a management team in another region and is usually based on the strength of the relationship between customer executives and particular members of EPAM’s senior management team. In such cases, the customer’s activity would be reported through the management team’s reportable segment.
During the fourth quarter of 2019, the Company changed its management reporting of segment revenue to exclude other income. Prior year amounts presented below have been changed to conform to the new presentation.
Revenues from external customers and operating profit/(loss), before unallocated expenses, by reportable segment for the three and six months ended June 30, 2020 and 2019, were as follows:
 Three Months Ended
June 30,
Six Months Ended
June 30,
 2020201920202019
Segment revenues:
North America$384,829  $331,025  $775,931  $641,714  
Europe227,305  197,361  463,638  391,426  
Russia20,249  23,201  44,173  39,780  
Total segment revenues$632,383  $551,587  $1,283,742  $1,072,920  
Segment operating profit/(loss):  
North America$82,752  $69,347  $161,679  $133,804  
Europe34,426  27,679  66,205  59,464  
Russia(5,645) 5,652  (5,126) 6,241  
Total segment operating profit$111,533  $102,678  $222,758  $199,509  
Intersegment transactions were excluded from the above on the basis that they are neither included in the measure of a segment’s profit and loss results, nor considered by the CODM during the review of segment results.
There were no customers that accounted for more than 10% of total segment revenues during the three and six months ended June 30, 2020 and 2019.
Reconciliation of segment operating profit to consolidated income before provision for income taxes is presented below:
Three Months Ended
June 30,
Six Months Ended
June 30,
2020201920202019
Total segment operating profit:$111,533  $102,678  $222,758  $199,509  
Unallocated amounts:
Stock-based compensation expense(19,439) (15,697) (31,320) (37,553) 
Amortization of intangibles assets(2,994) (2,601) (6,129) (4,739) 
Other acquisition-related expenses (148) (850) (616) (1,361) 
Other unallocated expenses(5,526) (10,648) (13,758) (18,316) 
Income from operations83,426  72,882  170,935  137,540  
Interest and other income, net1,817  1,190  4,203  4,266  
Foreign exchange loss(9,167) (3,562) (2,643) (7,046) 
Income before provision for income taxes$76,076  $70,510  $172,495  $134,760  
Geographic Area Information
Long-lived assets include property and equipment, net of accumulated depreciation and amortization, and management has determined that it is not practical to allocate these assets by segment since such assets are used interchangeably among the segments. Physical locations and values of the Company’s long-lived assets are presented below:
As of
June 30,
2020
As of
December 31,
2019
Belarus$73,989  $75,984  
Ukraine29,577  24,652  
United States17,697  15,637  
Russia15,249  17,980  
India6,553  7,443  
Poland4,803  5,029  
Hungary4,684  5,201  
China2,621  3,036  
Mexico2,591  2,353  
Other 9,595  7,944  
Total$167,359  $165,259  
The table below presents information about the Company’s revenues by customer location for the three and six months ended June 30, 2020 and 2019:
Three Months Ended
June 30,
Six Months Ended
June 30,
2020201920202019
United States$365,004  $318,988  $735,093  $618,668  
United Kingdom82,277  69,042  174,409  134,781  
Switzerland46,537  35,364  93,759  71,597  
Netherlands27,237  21,039  53,146  41,655  
Russia19,448  22,460  41,409  38,352  
Germany19,798  19,622  39,991  38,776  
Canada16,585  15,785  34,505  32,757  
Other locations55,497  49,287  111,430  96,334  
Total$632,383  $551,587  $1,283,742  $1,072,920  
v3.20.2
BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies)
6 Months Ended
Jun. 30, 2020
Accounting Policies [Abstract]  
Nature of Operations EPAM Systems, Inc. (the “Company” or “EPAM”) is a leading global provider of digital platform engineering and software development services to customers located around the world, primarily in North America, Europe, Asia and Australia. 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 other emerging industries. The Company is incorporated in Delaware with headquarters in Newtown, Pennsylvania.
Basis of Presentation 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, 2019 included in its Annual Report on Form 10-K.
Use of Estimates 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 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, all adjustments considered necessary for a fair presentation of the accompanying unaudited condensed consolidated financial statements have been included, and all adjustments are of a normal and recurring nature.
Reclassifications As previously disclosed in the Company’s Annual Report on Form 10-K for the year ended December 31, 2019, certain amounts recorded in the prior-period consolidated statement of cash flows presented have been reclassified to conform to the current-period financial statement presentation. These reclassifications had no effect on previously reported results of operations.
Adoption of New Accounting Standards
Adoption of New Accounting Standards
Unless otherwise discussed below, the adoption of new accounting standards did not have a material impact on the Company’s consolidated financial position, results of operations, changes in stockholders’ equity and cash flows.
Measurement of Credit Losses on Financial Instruments — In June 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2016-13, Financial Instruments—Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments.
The amendments in this update changed how companies measure and recognize credit impairment for many financial assets. The new credit loss model requires companies to immediately recognize an estimate of credit losses expected to occur over the remaining life of the financial assets (including trade receivables) that are in the scope of the update. The update also made amendments to the current impairment model for held-to-maturity and available-for-sale debt securities and certain guarantees. The Company adopted Topic 326, effective January 1, 2020, using a modified-retrospective approach through a cumulative effect adjustment to retained earnings as of the beginning of the period of adoption. As a result of the adoption of Topic 326, the Company recorded an immaterial reduction to its allowance for doubtful accounts for trade receivables and contract assets.
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. Unless otherwise discussed below, 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.
v3.20.2
FAIR VALUE MEASUREMENTS (Policies)
6 Months Ended
Jun. 30, 2020
Accounting Policies [Abstract]  
Fair Value of Financial Instruments
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 5 “Derivative Financial Instruments” in the condensed consolidated interim financial statements for additional information regarding derivative financial instruments.
The fair value of the contingent consideration 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 2020 Acquisition was 17.5%. 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, net in the Company’s consolidated statement of income and comprehensive income.
Equity Securities without Readily Determinable Fair Value These investments are recorded at cost and are remeasured to fair value based on certain observable price changes or impairment events as they occur
v3.20.2
DERIVATIVE FINANCIAL INSTRUMENTS (Policies)
6 Months Ended
Jun. 30, 2020
Accounting Policies [Abstract]  
Reporting of Cash Flow Hedges The Company records changes in the fair value of its cash flow hedges in accumulated other comprehensive loss in the consolidated balance sheets until the forecasted transaction occurs. When the forecasted transaction occurs, the Company reclassifies the related gain or loss on the cash flow hedge to cost of revenues (exclusive of depreciation and amortization). In the event the underlying forecasted transaction does not occur, or it becomes probable that it will not occur, the Company reclassifies the gain or loss on the related cash flow hedge into income.
Reporting of Derivative Activity If the Company does not elect hedge accounting, or the contract does not qualify for hedge accounting treatment, the changes in fair value from period to period are recorded in income.
v3.20.2
INCOME TAXES (Policies)
6 Months Ended
Jun. 30, 2020
Income Tax Disclosure [Abstract]  
Income Taxes In determining its interim provision for income taxes, the Company uses an estimated annual effective tax rate, which is based on expected annual profit before tax, statutory tax rates and tax planning opportunities available in the various jurisdictions in which the Company operates. Certain significant or unusual items are separately recognized in the quarter in which they occur and can be a source of variability in the effective tax rates from quarter to quarter.
v3.20.2
ACQUISITION (Tables)
6 Months Ended
Jun. 30, 2020
Business Combinations [Abstract]  
Fair Value of the Assets Acquired and Liabilities Assumed
The following table summarizes the estimated fair values of the assets acquired and liabilities assumed as of the date of acquisition as updated for any changes as of June 30, 2020 for test IO:
test IO
Cash and cash equivalents$663  
Trade receivables and contract assets621  
Prepaid and other current assets150  
Goodwill11,926  
Intangible assets6,219  
Property and equipment and other noncurrent assets305  
Total assets acquired$19,884  
Accounts payable, accrued expenses and other current liabilities$993  
Other noncurrent liabilities1,568  
Total liabilities assumed$2,561  
Net assets acquired$17,323  
v3.20.2
GOODWILL (Tables)
6 Months Ended
Jun. 30, 2020
Goodwill and Intangible Assets Disclosure [Abstract]  
Goodwill By Reportable Segment
Goodwill by reportable segment was as follows:
North AmericaEuropeRussiaTotal
Balance as of January 1, 2020$113,426  $80,873  $744  $195,043  
test IO purchase accounting adjustment863  (1,089) —  (226) 
Other 2019 acquisitions purchase accounting adjustments373  191  35  599  
2020 Acquisition6,293  —  —  6,293  
Effect of net foreign currency exchange rate changes(177) (2,460) (33) (2,670) 
Balance as of June 30, 2020$120,778  $77,515  $746  $199,039  
v3.20.2
FAIR VALUE MEASUREMENTS (Tables)
6 Months Ended
Jun. 30, 2020
Fair Value Disclosures [Abstract]  
Financial Assets and Liabilities Measured at Fair Value on a Recurring Basis 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 June 30, 2020 and December 31, 2019:
As of June 30, 2020
BalanceLevel 1Level 2Level 3
Foreign exchange derivative assets$932  $—  $932  $—  
Total assets measured at fair value on a recurring basis$932  $—  $932  $—  
Foreign exchange derivative liabilities$3,035  $—  $3,035  $—  
Contingent consideration4,705  —  —  4,705  
Total liabilities measured at fair value on a recurring basis
$7,740  $—  $3,035  $4,705  
As of December 31, 2019
BalanceLevel 1Level 2Level 3
Foreign exchange derivative assets$1,910  $—  $1,910  $—  
Total assets measured at fair value on a recurring basis$1,910  $—  $1,910  $—  
Foreign exchange derivative liabilities$243  $—  $243  $—  
Contingent consideration10,495  —  —  10,495  
Total liabilities measured at fair value on a recurring basis
$10,738  $—  $243  $10,495  
Acquisition-Related Contingent Consideration Roll Forward
A reconciliation of the beginning and ending balances of Level 3 acquisition-related contingent consideration using significant unobservable inputs for the six months ended June 30, 2020 is as follows:
Amount
Contingent consideration liabilities as of January 1, 2020$10,495  
Payment of contingent consideration for previously acquired business(7,869) 
Acquisition date fair value of contingent consideration — 2020 Acquisition (Note 2)4,042  
Changes in fair value of contingent consideration included in Interest and other income, net (1,438) 
Effect of net foreign currency exchange rate changes (525) 
Contingent consideration liabilities as of June 30, 2020$4,705  
Estimated Fair Values of Financial Assets and Liabilities not Measured at Fair Value on Recurring Basis 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
BalanceEstimated Fair ValueLevel 1Level 2Level 3
June 30, 2020
Financial Assets:
Cash equivalents:
Money market funds$189,873  $189,873  $189,873  $—  $—  
Total cash equivalents$189,873  $189,873  $189,873  $—  $—  
Restricted cash$1,157  $1,157  $1,157  $—  $—  
Time deposits$60,025  $60,025  $—  $60,025  $—  
Employee loans$1,491  $1,491  $—  $—  $1,491  
Financial Liabilities:
Borrowings under the 2017 Credit Facility$25,007  $25,007  $—  $25,007  $—  
Fair Value Hierarchy
BalanceEstimated Fair ValueLevel 1Level 2Level 3
December 31, 2019
Financial Assets:
Cash equivalents:
Money market funds$407,817  $407,817  $407,817  $—  $—  
Time deposits10,002  10,002  —  10,002  —  
Total cash equivalents$417,819  $417,819  $407,817  $10,002  $—  
Restricted cash$1,136  $1,136  $1,136  $—  $—  
Employee loans$2,434  $2,434  $—  $—  $2,434  
Financial Liabilities:
Borrowings under the 2017 Credit Facility$25,017  $25,017  $—  $25,017  $—  
v3.20.2
DERIVATIVE FINANCIAL INSTRUMENTS (Tables)
6 Months Ended
Jun. 30, 2020
Derivative Instruments and Hedging Activities Disclosure [Abstract]  
Fair Value of Derivative Instruments
The fair value of derivative instruments on the Company’s consolidated balance sheets as of June 30, 2020 and December 31, 2019 were as follows:
As of June 30, 2020As of December 31, 2019
Balance Sheet ClassificationAsset DerivativesLiability DerivativesAsset DerivativesLiability Derivatives
Foreign exchange forward contracts -
Designated as hedging instruments
Prepaid expenses and other current assets$932  $1,910  
Accrued expenses and other current liabilities$3,035  $243  
Changes in the Fair Value of Derivative Instruments
The changes in the fair value of foreign currency derivative instruments in our unaudited condensed consolidated statements of income and comprehensive income for the three and six months ended June 30, 2020 and 2019 were as follows:
 Three Months Ended
June 30,
Six Months Ended
June 30,
2020201920202019
Foreign exchange forward contracts - Designated as hedging instruments:
Net gain/(loss) in fair value recognized in accumulated other comprehensive loss 
$8,317  $1,984  $(3,770) $5,983  
Net (loss)/gain reclassified from accumulated other comprehensive loss into cost of revenues (exclusive of depreciation and amortization)
$(1,851) $342  $(2,511) $(110) 
v3.20.2
LEASES (Tables)
6 Months Ended
Jun. 30, 2020
Leases [Abstract]  
Components of Lease Expenses
During the three and six months ended June 30, 2020 and 2019, the components of lease expense were as follows:
 Three Months Ended
June 30,
Six Months Ended
June 30,
Income Statement Classification2020201920202019
Operating lease costSelling, general and administrative expenses$18,851  $15,196  $37,714  $28,915  
Variable lease costSelling, general and administrative expenses579  1,999  3,214  4,096  
Short-term lease costSelling, general and administrative expenses269  1,006  809  1,904  
Total lease cost$19,699  $18,201  $41,737  $34,915  
Supplemental Cash Flow Information
Supplemental cash flow information related to leases for the three and six months ended June 30, 2020 and 2019 was as follows:
Three Months Ended
June 30,
Six Months Ended
June 30,
 2020201920202019
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows used for operating leases$16,481  $14,105  $33,372  $28,801  
Right-of-use assets obtained in exchange for lease obligations:
Operating leases$11,676  $40,722  $42,928  $53,547  
Non-cash net (decrease)/increase due to lease modifications:
Operating lease right-of-use assets$(8,566) $8,324  $(3,982) $3,150  
Operating lease liabilities$(8,562) $8,358  $(3,989) $3,252  
Weighted Average Lease Terms and Discount Rates
Weighted average remaining lease term and discount rate as of June 30, 2020 and 2019 were as follows:
 As of June 30, 2020As of June 30, 2019
Weighted average remaining lease term, in years:
Operating leases6.06.2
Weighted average discount rate:
Operating leases3.2 %3.6 %
Maturity of Operating Lease Liabilities
As of June 30, 2020, operating lease liabilities will mature as follows:
Year ending December 31,Lease Payments
2020 (excluding six months ended June 30, 2020)$34,183  
202159,786  
202244,318  
202332,080  
202427,677  
Thereafter67,913  
Total lease payments265,957  
Less: imputed interest(23,315) 
Total$242,642  
v3.20.2
LONG-TERM DEBT (Tables)
6 Months Ended
Jun. 30, 2020
Debt Disclosure [Abstract]  
Outstanding Debt And Borrowing Capacity
The following table presents the outstanding debt and borrowing capacity of the Company under the 2017 Credit Facility:
 As of
June 30,
2020
As of
December 31,
2019
Outstanding debt$25,000  $25,000  
Interest rate1.2 %2.8 %
Irrevocable standby letters of credit$—  $303  
Available borrowing capacity$275,000  $274,697  
Current maximum borrowing capacity$300,000  $300,000  
v3.20.2
REVENUES (Tables)
6 Months Ended
Jun. 30, 2020
Revenue from Contract with Customer [Abstract]  
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 13 “Segment Information”) for the periods indicated:
Three Months Ended June 30, 2020
Reportable Segments
North AmericaEuropeRussiaConsolidated Revenues
Customer Locations
North America$370,693  $10,835  $408  $381,936  
Europe11,195  199,866   211,064  
CIS2,236   19,838  22,078  
APAC705  16,600  —  17,305  
        Revenues$384,829  $227,305  $20,249  $632,383  

Six Months Ended June 30, 2020
Reportable Segments
North AmericaEuropeRussiaConsolidated Revenues
Customer Locations
North America$748,477  $21,254  $2,035  $771,766  
Europe21,527  412,588   434,121  
CIS4,790  16  42,132  46,938  
APAC1,137  29,780  —  30,917  
        Revenues$775,931  $463,638  $44,173  $1,283,742  

Three Months Ended June 30, 2019
Reportable Segments
North AmericaEuropeRussiaConsolidated Revenues
Customer Locations
North America$323,221  $11,551  $16  $334,788  
Europe5,219  172,027  99  177,345  
CIS2,005  —  23,086  25,091  
APAC580  13,783  —  14,363  
        Revenues$331,025  $197,361  $23,201  $551,587  
Six Months Ended June 30, 2019
Reportable Segments
North AmericaEuropeRussiaConsolidated Revenues
Customer Locations
North America$626,966  $24,442  $32  $651,440  
Europe9,966  340,647  240  350,853  
CIS3,744  13  39,508  43,265  
APAC1,038  26,324  —  27,362  
        Revenues$641,714  $391,426  $39,780  $1,072,920  
        
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 13 “Segment Information”) for the periods indicated:
Three Months Ended June 30, 2020
Reportable Segments
North AmericaEuropeRussiaConsolidated Revenues
Industry Verticals
Business Information & Media$81,481  $58,338  $439  $140,258  
Financial Services47,687  66,655  13,633  127,975  
Software & Hi-Tech100,801  18,165  519  119,485  
Travel & Consumer52,193  51,253  3,824  107,270  
Life Sciences & Healthcare61,776  7,069  39  68,884  
Emerging Verticals40,891  25,825  1,795  68,511  
        Revenues$384,829  $227,305  $20,249  $632,383  

Six Months Ended June 30, 2020
Reportable Segments
North AmericaEuropeRussiaConsolidated Revenues
Industry Verticals
Business Information & Media$161,701  $116,484  $799  $278,984  
Financial Services95,555  134,249  29,814  259,618  
Software & Hi-Tech202,538  36,311  2,485  241,334  
Travel & Consumer106,917  112,320  7,563  226,800  
Life Sciences & Healthcare123,387  14,688  48  138,123  
Emerging Verticals85,833  49,586  3,464  138,883  
        Revenues$775,931  $463,638  $44,173  $1,283,742  
Three Months Ended June 30, 2019
Reportable Segments
North AmericaEuropeRussiaConsolidated Revenues
Industry Verticals
Business Information & Media$62,340  $35,691  $104  $98,135  
Financial Services43,517  58,879  18,009  120,405  
Software & Hi-Tech85,600  19,440  478  105,518  
Travel & Consumer48,178  56,175  2,761  107,114  
Life Sciences & Healthcare54,287  4,907   59,198  
Emerging Verticals37,103  22,269  1,845  61,217  
        Revenues$331,025  $197,361  $23,201  $551,587  
Six Months Ended June 30, 2019
Reportable Segments
North AmericaEuropeRussiaConsolidated Revenues
Industry Verticals
Business Information & Media$124,701  $68,222  $244  $193,167  
Financial Services81,911  120,714  31,041  233,666  
Software & Hi-Tech164,721  39,810  918  205,449  
Travel & Consumer95,178  111,377  4,885  211,440  
Life Sciences & Healthcare104,443  9,463  66  113,972  
Emerging Verticals70,760  41,840  2,626  115,226  
        Revenues$641,714  $391,426  $39,780  $1,072,920  

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 13 “Segment Information”) for the periods indicated:
Three Months Ended June 30, 2020
Reportable Segments
North AmericaEuropeRussiaConsolidated Revenues
Contract Types
Time-and-material$348,715  $192,173  $13,972  $554,860  
Fixed-price33,855  32,253  6,259  72,367  
Licensing1,958  545   2,512  
Other revenues
301  2,334   2,644  
        Revenues$384,829  $227,305  $20,249  $632,383  
Six Months Ended June 30, 2020
Reportable Segments
North AmericaEuropeRussiaConsolidated Revenues
Contract Types
Time-and-material$705,978  $382,493  $27,568  $1,116,039  
Fixed-price65,710  77,508  15,080  158,298  
Licensing3,728  707  1,467  5,902  
Other revenues
515  2,930  58  3,503  
        Revenues$775,931  $463,638  $44,173  $1,283,742  

Three Months Ended June 30, 2019
Reportable Segments
North AmericaEuropeRussiaConsolidated Revenues
Contract Types
Time-and-material$300,326  $167,581  $12,047  $479,954  
Fixed-price29,681  29,204  10,943  69,828  
Licensing624  142  196  962  
Other revenues
394  434  15  843  
        Revenues$331,025  $197,361  $23,201  $551,587  

Six Months Ended June 30, 2019
Reportable Segments
North AmericaEuropeRussiaConsolidated Revenues
Contract Types
Time-and-material$585,051  $335,794  $23,319  $944,164  
Fixed-price54,421  54,450  16,230  125,101  
Licensing1,460  540  202  2,202  
Other revenues
782  642  29  1,453  
        Revenues$641,714  $391,426  $39,780  $1,072,920  

Timing of Revenue Recognition
The following tables present the timing of revenue recognition for the periods indicated:
Three Months Ended June 30, 2020
Reportable Segments
North AmericaEuropeRussiaConsolidated Revenues
Timing of Revenue Recognition
Transferred over time$383,573  $227,073  $20,240  $630,886  
Transferred at a point of time1,256  232   1,497  
        Revenues$384,829  $227,305  $20,249  $632,383  
Six Months Ended June 30, 2020
Reportable Segments
North AmericaEuropeRussiaConsolidated Revenues
Timing of Revenue Recognition
Transferred over time$773,383  $463,244  $42,708  $1,279,335  
Transferred at a point of time2,548  394  1,465  4,407  
        Revenues$775,931  $463,638  $44,173  $1,283,742  

Three Months Ended June 30, 2019
Reportable Segments
North AmericaEuropeRussiaConsolidated Revenues
Timing of Revenue Recognition
Transferred over time$330,819  $197,255  $23,201  $551,275  
Transferred at a point of time206  106  —  312  
        Revenues$331,025  $197,361  $23,201  $551,587  

Six Months Ended June 30, 2019
Reportable Segments
North AmericaEuropeRussiaConsolidated Revenues
Timing of Revenue Recognition
Transferred over time$641,104  $391,273  $39,780  $1,072,157  
Transferred at a point of time610  153  —  763  
        Revenues$641,714  $391,426  $39,780  $1,072,920  
Revenue Expected to be Recognized in Future Related to Remaining Performance Obligations
The following table includes the estimated revenues expected to be recognized in the future related to performance obligations that are partially or fully unsatisfied as of June 30, 2020. The Company applies a practical expedient and does not disclose the value of unsatisfied performance obligations for contracts that (i) have an original expected duration of one year or less and (ii) contracts for which it recognizes revenues at the amount to which it has the right to invoice for services provided:
Less than 1 year1 Year2 Years3 YearsTotal
Contract Type
Fixed-price$15,395  $546  $—  $—  $15,941  
Contract Balances
The following table provides information on the classification of contract assets and liabilities in the condensed consolidated balance sheets:
 As of
June 30,
2020
As of
December 31,
2019
Contract assets included in Trade receivables and contract assets$12,353  $14,320  
Contract liabilities included in Accrued expenses and other current liabilities$11,461  $9,132  
v3.20.2
STOCK-BASED COMPENSATION (Tables)
6 Months Ended
Jun. 30, 2020
Share-based Payment Arrangement [Abstract]  
Components of Stock-Based Compensation Expenses
The following table summarizes the components of stock-based compensation expense recognized in the Company’s condensed consolidated statements of income and comprehensive income for the periods indicated:
Three Months Ended
June 30,
Six Months Ended
June 30,
2020201920202019
Cost of revenues (exclusive of depreciation and amortization)$8,958  $7,480  $12,942  $20,261  
Selling, general and administrative expenses10,481  8,217  18,378  17,292  
Total$19,439  $15,697  $31,320  $37,553  
Stock Options Activity
Stock option activity under the Company’s plans is set forth below:
 Number of
Options 
Weighted Average
Exercise Price 
Aggregate
Intrinsic Value 
Weighted Average
Remaining Contractual Term (in years)
Options outstanding at January 1, 20203,322,930  $50.85  
Options granted147,351  $176.21  
Options exercised(441,199) $39.12  
Options forfeited/cancelled(9,137) $117.40  
Options outstanding at June 30, 20203,019,945  $58.48  $584,445  4.7
Options vested and exercisable at June 30, 20202,641,633  $45.82  $544,682  4.1
Options expected to vest at June 30, 2020348,999  $145.93  $37,021  8.6
Service-Based Awards Activity
The table below summarizes activity related to the Company’s equity-classified and liability-classified service-based awards for the six months ended June 30, 2020:
Equity-Classified
 Restricted Stock
Equity-Classified
Equity-Settled
Restricted Stock Units
Liability-Classified
Cash-Settled
Restricted Stock Units
 
Number of
Shares 
Weighted Average Grant Date
Fair Value Per Share 
Number of
Shares 
Weighted Average Grant Date
Fair Value Per Share 
Number of
Shares 
Weighted Average Grant Date
Fair Value Per Share 
Unvested service-based awards outstanding at January 1, 20209,791  $162.96  758,785  $122.48  242,288  $105.40  
Awards granted—  $—  251,864  $180.18  59,770  $180.37  
Awards vested—  $—  (294,872) $106.73  (118,777) $89.34  
Awards forfeited/cancelled—  $—  (28,126) $137.76  (3,456) $108.89  
Unvested service-based awards outstanding at June 30, 20209,791  $162.96  687,651  $149.74  179,825  $140.86  
Performance-Based Awards Activity
The table below summarizes activity related to the Company’s equity-classified performance-based awards for the six months ended June 30, 2020:
Equity-Classified
Equity-Settled
Restricted Stock
Equity-Classified
Equity-Settled
Restricted Stock Units
 
Number of
Shares 
Weighted Average Grant Date
Fair Value Per Share 
Number of
Shares 
Weighted Average Grant Date
Fair Value Per Share 
Unvested performance-based awards outstanding at January 1, 20209,393  $165.87  —  $—  
Awards granted—  $—  24,836  $177.81  
Unvested performance-based awards outstanding at June 30, 20209,393  $165.87  24,836  $177.81  
v3.20.2
EARNINGS PER SHARE (Tables)
6 Months Ended
Jun. 30, 2020
Earnings Per Share [Abstract]  
Computation of Basic and Diluted Earnings Per Share
The following table sets forth the computation of basic and diluted earnings per share of common stock as follows:
 Three Months Ended
June 30,
Six Months Ended
June 30,
 2020201920202019
Numerator for basic and diluted earnings per share:
Net income$66,624  $58,777  $152,189  $119,531  
Numerator for basic and diluted earnings per share$66,624  $58,777  $152,189  $119,531  
Denominator:  
Weighted average common shares for basic earnings per share55,700,706  54,681,959  55,493,727  54,464,753  
Net effect of dilutive stock options, restricted stock units and restricted stock awards
2,545,525  2,932,325  2,700,674  2,961,810  
Weighted average common shares for diluted earnings per share
58,246,231  57,614,284  58,194,401  57,426,563  
Net income per share:  
Basic$1.20  $1.07  $2.74  $2.19  
Diluted$1.14  $1.02  $2.62  $2.08  
v3.20.2
SEGMENTS INFORMATION (Tables)
6 Months Ended
Jun. 30, 2020
Segment Reporting [Abstract]  
Revenues from External Customers and Operating Profit, Before Unallocated Expenses
Revenues from external customers and operating profit/(loss), before unallocated expenses, by reportable segment for the three and six months ended June 30, 2020 and 2019, were as follows:
 Three Months Ended
June 30,
Six Months Ended
June 30,
 2020201920202019
Segment revenues:
North America$384,829  $331,025  $775,931  $641,714  
Europe227,305  197,361  463,638  391,426  
Russia20,249  23,201  44,173  39,780  
Total segment revenues$632,383  $551,587  $1,283,742  $1,072,920  
Segment operating profit/(loss):  
North America$82,752  $69,347  $161,679  $133,804  
Europe34,426  27,679  66,205  59,464  
Russia(5,645) 5,652  (5,126) 6,241  
Total segment operating profit$111,533  $102,678  $222,758  $199,509  
Reconciliation of Segment Operating Profit to Consolidated Income Before Provision for Income Taxes
Reconciliation of segment operating profit to consolidated income before provision for income taxes is presented below:
Three Months Ended
June 30,
Six Months Ended
June 30,
2020201920202019
Total segment operating profit:$111,533  $102,678  $222,758  $199,509  
Unallocated amounts:
Stock-based compensation expense(19,439) (15,697) (31,320) (37,553) 
Amortization of intangibles assets(2,994) (2,601) (6,129) (4,739) 
Other acquisition-related expenses (148) (850) (616) (1,361) 
Other unallocated expenses(5,526) (10,648) (13,758) (18,316) 
Income from operations83,426  72,882  170,935  137,540  
Interest and other income, net1,817  1,190  4,203  4,266  
Foreign exchange loss(9,167) (3,562) (2,643) (7,046) 
Income before provision for income taxes$76,076  $70,510  $172,495  $134,760  
Physical Location and Values of Long-Lived Assets Physical locations and values of the Company’s long-lived assets are presented below:
As of
June 30,
2020
As of
December 31,
2019
Belarus$73,989  $75,984  
Ukraine29,577  24,652  
United States17,697  15,637  
Russia15,249  17,980  
India6,553  7,443  
Poland4,803  5,029  
Hungary4,684  5,201  
China2,621  3,036  
Mexico2,591  2,353  
Other 9,595  7,944  
Total$167,359  $165,259  
Revenues by Customer Location
The table below presents information about the Company’s revenues by customer location for the three and six months ended June 30, 2020 and 2019:
Three Months Ended
June 30,
Six Months Ended
June 30,
2020201920202019
United States$365,004  $318,988  $735,093  $618,668  
United Kingdom82,277  69,042  174,409  134,781  
Switzerland46,537  35,364  93,759  71,597  
Netherlands27,237  21,039  53,146  41,655  
Russia19,448  22,460  41,409  38,352  
Germany19,798  19,622  39,991  38,776  
Canada16,585  15,785  34,505  32,757  
Other locations55,497  49,287  111,430  96,334  
Total$632,383  $551,587  $1,283,742  $1,072,920  
v3.20.2
ACQUISITION (Narrative) (Details)
$ in Thousands
3 Months Ended 6 Months Ended
Jun. 30, 2020
USD ($)
Jun. 30, 2019
USD ($)
Jun. 30, 2020
USD ($)
Jun. 30, 2019
USD ($)
Business Acquisition [Line Items]        
Number of acquisitions     1  
Revenues $ 632,383 $ 551,587 $ 1,283,742 $ 1,072,920
2020 Acquisition        
Business Acquisition [Line Items]        
Purchase price including contingent consideration 14,663   14,663  
Contingent consideration fair value 4,042   4,042  
Maximum amount of earnout payable 16,582   16,582  
Intangible assets 6,300   6,300  
Revenues $ 1,190   $ 2,233  
v3.20.2
ACQUISITION (Fair Value of the Assets Acquired and Liabilities Assumed) (Details) - USD ($)
$ in Thousands
6 Months Ended
Jun. 30, 2020
Dec. 31, 2019
Apr. 30, 2019
Business Acquisition [Line Items]      
Goodwill $ 199,039 $ 195,043  
test IO      
Business Acquisition [Line Items]      
Cash and cash equivalents     $ 663
Trade receivables and contract assets     621
Prepaid and other current assets     150
Goodwill     11,926
Intangible assets     6,219
Property and equipment and other noncurrent assets     305
Total assets acquired     19,884
Accounts payable, accrued expenses and other current liabilities     993
Other noncurrent liabilities     1,568
Total liabilities assumed     2,561
Net assets acquired     $ 17,323
Goodwill, Purchase Accounting Adjustments $ 226    
v3.20.2
GOODWILL (Goodwill Roll Forward) (Details)
$ in Thousands
6 Months Ended
Jun. 30, 2020
USD ($)
Goodwill [Roll Forward]  
Balance as of January 1, 2020 $ 195,043
Effect of net foreign currency exchange rate changes (2,670)
Balance as of June 30, 2020 199,039
test IO  
Goodwill [Roll Forward]  
Purchase accounting adjustments (226)
Other 2019 Acquisitions  
Goodwill [Roll Forward]  
Purchase accounting adjustments 599
2020 Acquisition  
Goodwill [Roll Forward]  
Acquisition 6,293
North America  
Goodwill [Roll Forward]  
Balance as of January 1, 2020 113,426
Effect of net foreign currency exchange rate changes (177)
Balance as of June 30, 2020 120,778
North America | test IO  
Goodwill [Roll Forward]  
Purchase accounting adjustments 863
North America | Other 2019 Acquisitions  
Goodwill [Roll Forward]  
Purchase accounting adjustments 373
North America | 2020 Acquisition  
Goodwill [Roll Forward]  
Acquisition 6,293
Europe  
Goodwill [Roll Forward]  
Balance as of January 1, 2020 80,873
Effect of net foreign currency exchange rate changes (2,460)
Balance as of June 30, 2020 77,515
Europe | test IO  
Goodwill [Roll Forward]  
Purchase accounting adjustments (1,089)
Europe | Other 2019 Acquisitions  
Goodwill [Roll Forward]  
Purchase accounting adjustments 191
Europe | 2020 Acquisition  
Goodwill [Roll Forward]  
Acquisition 0
Russia  
Goodwill [Roll Forward]  
Balance as of January 1, 2020 744
Effect of net foreign currency exchange rate changes (33)
Balance as of June 30, 2020 746
Russia | test IO  
Goodwill [Roll Forward]  
Purchase accounting adjustments 0
Russia | Other 2019 Acquisitions  
Goodwill [Roll Forward]  
Purchase accounting adjustments 35
Russia | 2020 Acquisition  
Goodwill [Roll Forward]  
Acquisition $ 0
v3.20.2
GOODWILL (Goodwill Accumulated Impairment Losses) (Details) - USD ($)
$ in Thousands
Jun. 30, 2020
Dec. 31, 2019
North America    
Goodwill [Line Items]    
Accumulated impairment loss $ 0 $ 0
Europe    
Goodwill [Line Items]    
Accumulated impairment loss 0 0
Russia    
Goodwill [Line Items]    
Accumulated impairment loss $ 2,241 $ 2,241
v3.20.2
FAIR VALUE MEASUREMENTS (Financial Assets and Liabilities at Fair Value on Recurring Basis) (Details) - Recurring - USD ($)
$ in Thousands
Jun. 30, 2020
Dec. 31, 2019
Financial Assets:    
Total assets measured at fair value on a recurring basis $ 932 $ 1,910
Financial Liabilities:    
Contingent consideration 4,705 10,495
Total liabilities measured at fair value on a recurring basis 7,740 10,738
Foreign exchange contracts    
Financial Assets:    
Derivative assets 932 1,910
Financial Liabilities:    
Derivative liabilities 3,035 243
Level 1    
Financial Assets:    
Total assets measured at fair value on a recurring basis 0 0
Financial Liabilities:    
Contingent consideration 0 0
Total liabilities measured at fair value on a recurring basis 0 0
Level 1 | Foreign exchange contracts    
Financial Assets:    
Derivative assets 0 0
Financial Liabilities:    
Derivative liabilities 0 0
Level 2    
Financial Assets:    
Total assets measured at fair value on a recurring basis 932 1,910
Financial Liabilities:    
Contingent consideration 0 0
Total liabilities measured at fair value on a recurring basis 3,035 243
Level 2 | Foreign exchange contracts    
Financial Assets:    
Derivative assets 932 1,910
Financial Liabilities:    
Derivative liabilities 3,035 243
Level 3    
Financial Assets:    
Total assets measured at fair value on a recurring basis 0 0
Financial Liabilities:    
Contingent consideration 4,705 10,495
Total liabilities measured at fair value on a recurring basis 4,705 10,495
Level 3 | Foreign exchange contracts    
Financial Assets:    
Derivative assets 0 0
Financial Liabilities:    
Derivative liabilities $ 0 $ 0
v3.20.2
FAIR VALUE MEASUREMENTS (Acquisition-Related Contingent Consideration Roll Forward) (Details)
$ in Thousands
6 Months Ended
Jun. 30, 2020
USD ($)
Discount rate | 2020 Acquisition  
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items]  
Business Combination, Contingent Consideration, Liability, Measurement Input 0.175
Level 3  
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward]  
Contingent consideration liabilities as of January 1, 2020 $ 10,495
Payment of contingent consideration for previously acquired business (7,869)
Effect of net foreign currency exchange rate changes (525)
Contingent consideration liabilities as of June 30, 2020 4,705
Level 3 | Interest and other income, net  
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward]  
Changes in the fair value of contingent consideration (1,438)
Level 3 | 2020 Acquisition  
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward]  
Acquisition date fair value of contingent consideration $ 4,042
v3.20.2
FAIR VALUE MEASUREMENTS (Estimated Fair Values of the Financial Assets and Liabilities not Measured at Fair Value on a Recurring Basis) (Details) - Nonrecurring - USD ($)
$ in Thousands
Jun. 30, 2020
Dec. 31, 2019
Level 1    
Financial Assets:    
Cash equivalents:   $ 407,817
Restricted cash   1,136
Employee loans   0
Level 1 | Revolving credit facility | Credit Facility 2017    
Financial Liabilities:    
Borrowings   0
Level 2    
Financial Assets:    
Cash equivalents:   10,002
Restricted cash   0
Employee loans   0
Level 2 | Revolving credit facility | Credit Facility 2017    
Financial Liabilities:    
Borrowings   25,017
Level 3    
Financial Assets:    
Cash equivalents:   0
Restricted cash   0
Employee loans   2,434
Level 3 | Revolving credit facility | Credit Facility 2017    
Financial Liabilities:    
Borrowings   0
Balance    
Financial Assets:    
Cash equivalents: $ 189,873 417,819
Restricted cash 1,157 1,136
Employee loans 1,491 2,434
Balance | Revolving credit facility | Credit Facility 2017    
Financial Liabilities:    
Borrowings 25,007 25,017
Estimated Fair Value    
Financial Assets:    
Cash equivalents: 189,873 417,819
Restricted cash 1,157 1,136
Employee loans 1,491 2,434
Estimated Fair Value | Revolving credit facility | Credit Facility 2017    
Financial Liabilities:    
Borrowings 25,007 25,017
Estimated Fair Value | Level 1    
Financial Assets:    
Cash equivalents: 189,873  
Restricted cash 1,157 1,136
Employee loans 0 0
Estimated Fair Value | Level 1 | Revolving credit facility | Credit Facility 2017    
Financial Liabilities:    
Borrowings 0 0
Estimated Fair Value | Level 2    
Financial Assets:    
Cash equivalents: 0  
Restricted cash 0 0
Employee loans 0 0
Estimated Fair Value | Level 2 | Revolving credit facility | Credit Facility 2017    
Financial Liabilities:    
Borrowings 25,007 25,017
Estimated Fair Value | Level 3    
Financial Assets:    
Cash equivalents: 0  
Restricted cash 0 0
Employee loans 1,491 2,434
Estimated Fair Value | Level 3 | Revolving credit facility | Credit Facility 2017    
Financial Liabilities:    
Borrowings 0 0
Money market funds | Level 1    
Financial Assets:    
Cash equivalents:   407,817
Money market funds | Level 2    
Financial Assets:    
Cash equivalents:   0
Money market funds | Level 3    
Financial Assets:    
Cash equivalents:   0
Money market funds | Balance    
Financial Assets:    
Cash equivalents: 189,873 407,817
Money market funds | Estimated Fair Value    
Financial Assets:    
Cash equivalents: 189,873 407,817
Money market funds | Estimated Fair Value | Level 1    
Financial Assets:    
Cash equivalents: 189,873 407,817
Money market funds | Estimated Fair Value | Level 2    
Financial Assets:    
Cash equivalents: 0 0
Money market funds | Estimated Fair Value | Level 3    
Financial Assets:    
Cash equivalents: 0 0
Time deposits | Level 1    
Financial Assets:    
Cash equivalents:   0
Time deposits | Level 2    
Financial Assets:    
Cash equivalents:   10,002
Time deposits | Level 3    
Financial Assets:    
Cash equivalents:   0
Time deposits | Balance    
Financial Assets:    
Cash equivalents:   10,002
Short-term investments 60,025  
Time deposits | Estimated Fair Value    
Financial Assets:    
Cash equivalents:   10,002
Short-term investments 60,025  
Time deposits | Estimated Fair Value | Level 1    
Financial Assets:    
Cash equivalents:   0
Short-term investments 0  
Time deposits | Estimated Fair Value | Level 2    
Financial Assets:    
Cash equivalents:   10,002
Short-term investments 60,025  
Time deposits | Estimated Fair Value | Level 3    
Financial Assets:    
Cash equivalents:   $ 0
Short-term investments $ 0  
v3.20.2
FAIR VALUE MEASUREMENTS (Equity Securities Without Readily Determinable Fair Value) (Details) - USD ($)
$ in Thousands
Jun. 30, 2020
Dec. 31, 2019
Other noncurrent assets    
Equity Securities without Readily Determinable Fair Value [Line Items]    
Carrying amount of equity securities that do not have readily determinable fair values $ 25,000 $ 5,750
v3.20.2
DERIVATIVE FINANCIAL INSTRUMENTS (Fair Value of Derivative Instruments) (Details) - Foreign exchange contracts - USD ($)
$ in Thousands
Jun. 30, 2020
Dec. 31, 2019
Derivatives, Fair Value [Line Items]    
Financial collateral (including cash collateral) required to be posted $ 0  
Designated as hedging instruments | Cash flow hedging | Prepaid expenses and other current assets    
Derivatives, Fair Value [Line Items]    
Asset Derivatives 932 $ 1,910
Designated as hedging instruments | Cash flow hedging | Accrued expenses and other current liabilities    
Derivatives, Fair Value [Line Items]    
Liability Derivatives $ 3,035 $ 243
v3.20.2
DERIVATIVE FINANCIAL INSTRUMENTS (Changes in the Fair Value of Derivative Instruments) (Details) - Foreign exchange contracts - Designated as hedging instruments - Cash flow hedging - USD ($)
$ in Thousands
3 Months Ended 6 Months Ended
Jun. 30, 2020
Jun. 30, 2019
Jun. 30, 2020
Jun. 30, 2019
Cost of revenues (exclusive of depreciation and amortization)        
Derivative Instruments, Gain (Loss) [Line Items]        
Net (loss)/gain reclassified $ (1,851) $ 342 $ (2,511) $ (110)
Accumulated other comprehensive loss        
Derivative Instruments, Gain (Loss) [Line Items]        
Net gain/(loss) in fair value $ 8,317 $ 1,984 $ (3,770) $ 5,983
v3.20.2
LEASES (Narrative) (Details)
$ in Thousands
6 Months Ended
Jun. 30, 2020
USD ($)
Lessee, Lease, Description [Line Items]  
Operating leases description The Company leases office space, corporate apartments, office equipment, and vehicles
Terms and conditions of variable lease payments Many of the Company’s leases contain variable payments including changes in base rent and charges for common area maintenance or other miscellaneous expenses
Existence of options to extend true
Existence of options to terminate true
Description of operating leases that have not yet commenced The Company had committed to payments of $2,281 related to operating lease agreements that had not yet commenced as of June 30, 2020. These operating leases will commence on various dates during 2020 with lease terms ranging from 1.4 to 5.8 years
Description of finance leases that have not yet commenced The Company did not have any material finance lease agreements that had not yet commenced.
Commitments related to operating lease agreements that have not yet commenced $ 2,281
Minimum  
Lessee, Lease, Description [Line Items]  
Remaining lease term 1 month 6 days
Lease term of lease agreements that have not yet commenced 1 year 5 months 1 day
Maximum  
Lessee, Lease, Description [Line Items]  
Remaining lease term 10 years 10 months 24 days
Lease term of lease agreements that have not yet commenced 5 years 9 months 18 days
v3.20.2
LEASES (Components of Lease Expenses) (Details) - USD ($)
$ in Thousands
3 Months Ended 6 Months Ended
Jun. 30, 2020
Jun. 30, 2019
Jun. 30, 2020
Jun. 30, 2019
Lease, Cost [Line Items]        
Total lease cost $ 19,699 $ 18,201 $ 41,737 $ 34,915
Selling, general and administrative expenses        
Lease, Cost [Line Items]        
Operating lease cost 18,851 15,196 37,714 28,915
Variable lease cost 579 1,999 3,214 4,096
Short-term lease cost $ 269 $ 1,006 $ 809 $ 1,904
v3.20.2
LEASES (Supplemental Cash Flow Information) (Details) - USD ($)
$ in Thousands
3 Months Ended 6 Months Ended
Jun. 30, 2020
Jun. 30, 2019
Jun. 30, 2020
Jun. 30, 2019
Cash paid for amounts included in the measurement of lease liabilities:        
Operating cash flows used for operating leases $ 16,481 $ 14,105 $ 33,372 $ 28,801
Right-of-use assets obtained in exchange for lease obligations:        
Operating leases 11,676 40,722 42,928 53,547
Non-cash net (decrease)/increase due to lease modifications:        
Operating lease right-of-use assets (8,566) 8,324 (3,982) 3,150
Operating lease liabilities $ (8,562) $ 8,358 $ (3,989) $ 3,252
v3.20.2
LEASES (Weighted Average Lease Terms and Discount Rates) (Details)
Jun. 30, 2020
Dec. 31, 2019
Weighted average remaining lease term, in years:    
Operating leases 6 years 6 years 2 months 12 days
Weighted average discount rate:    
Operating leases 3.20% 3.60%
v3.20.2
LEASES (Maturity of Operating Lease Liabilities) (Details)
$ in Thousands
Jun. 30, 2020
USD ($)
Leases [Abstract]  
2020 (excluding six months ended June 30, 2020) $ 34,183
2021 59,786
2022 44,318
2023 32,080
2024 27,677
Thereafter 67,913
Total lease payments 265,957
Less: imputed interest (23,315)
Total $ 242,642
v3.20.2
LONG-TERM DEBT (Details) - Credit Facility 2017 - USD ($)
$ in Thousands
May 24, 2017
Jun. 30, 2020
Dec. 31, 2019
Revolving credit facility      
Debt Instrument [Line Items]      
Maturity date May 24, 2022    
Revolving credit facility | Overnight Bank Funding Rate      
Debt Instrument [Line Items]      
Variable interest rate spread 0.50%    
Revolving credit facility | Daily LIBOR Rate      
Debt Instrument [Line Items]      
Variable interest rate spread 1.00%    
Revolving credit facility | U.S. dollars      
Debt Instrument [Line Items]      
Line of credit, current borrowing capacity $ 300,000    
Line of credit, maximum borrowing capacity 400,000    
Outstanding debt   $ 25,000 $ 25,000
Interest rate   1.20% 2.80%
Available borrowing capacity   $ 275,000 $ 274,697
Revolving credit facility | U.S. dollars | Maximum      
Debt Instrument [Line Items]      
Line of credit, current borrowing capacity   300,000 300,000
Revolving credit facility | Other currencies, excluding U.S. dollars      
Debt Instrument [Line Items]      
Line of credit, maximum borrowing capacity $ 100,000    
Standby letters of credit      
Debt Instrument [Line Items]      
Irrevocable standby letters of credit   $ 0 $ 303
v3.20.2
REVENUES (Disaggregation of Revenues) (Details) - USD ($)
$ in Thousands
3 Months Ended 6 Months Ended
Jun. 30, 2020
Jun. 30, 2019
Jun. 30, 2020
Jun. 30, 2019
Disaggregation of Revenue [Line Items]        
Revenues $ 632,383 $ 551,587 $ 1,283,742 $ 1,072,920
Transferred over time        
Disaggregation of Revenue [Line Items]        
Revenues 630,886 551,275 1,279,335 1,072,157
Transferred at a point of time        
Disaggregation of Revenue [Line Items]        
Revenues 1,497 312 4,407 763
Time-and-material        
Disaggregation of Revenue [Line Items]        
Revenues 554,860 479,954 1,116,039 944,164
Fixed-price        
Disaggregation of Revenue [Line Items]        
Revenues 72,367 69,828 158,298 125,101
Licensing        
Disaggregation of Revenue [Line Items]        
Revenues 2,512 962 5,902 2,202
Other revenues        
Disaggregation of Revenue [Line Items]        
Revenues 2,644 843 3,503 1,453
Business Information & Media        
Disaggregation of Revenue [Line Items]        
Revenues 140,258 98,135 278,984 193,167
Financial Services        
Disaggregation of Revenue [Line Items]        
Revenues 127,975 120,405 259,618 233,666
Software & Hi-Tech        
Disaggregation of Revenue [Line Items]        
Revenues 119,485 105,518 241,334 205,449
Travel & Consumer        
Disaggregation of Revenue [Line Items]        
Revenues 107,270 107,114 226,800 211,440
Life Sciences & Healthcare        
Disaggregation of Revenue [Line Items]        
Revenues 68,884 59,198 138,123 113,972
Emerging Verticals        
Disaggregation of Revenue [Line Items]        
Revenues 68,511 61,217 138,883 115,226
North America        
Disaggregation of Revenue [Line Items]        
Revenues 381,936 334,788 771,766 651,440
Europe        
Disaggregation of Revenue [Line Items]        
Revenues 211,064 177,345 434,121 350,853
CIS        
Disaggregation of Revenue [Line Items]        
Revenues 22,078 25,091 46,938 43,265
APAC        
Disaggregation of Revenue [Line Items]        
Revenues 17,305 14,363 30,917 27,362
North America        
Disaggregation of Revenue [Line Items]        
Revenues 384,829 331,025 775,931 641,714
North America | Transferred over time        
Disaggregation of Revenue [Line Items]        
Revenues 383,573 330,819 773,383 641,104
North America | Transferred at a point of time        
Disaggregation of Revenue [Line Items]        
Revenues 1,256 206 2,548 610
North America | Time-and-material        
Disaggregation of Revenue [Line Items]        
Revenues 348,715 300,326 705,978 585,051
North America | Fixed-price        
Disaggregation of Revenue [Line Items]        
Revenues 33,855 29,681 65,710 54,421
North America | Licensing        
Disaggregation of Revenue [Line Items]        
Revenues 1,958 624 3,728 1,460
North America | Other revenues        
Disaggregation of Revenue [Line Items]        
Revenues 301 394 515 782
North America | Business Information & Media        
Disaggregation of Revenue [Line Items]        
Revenues 81,481 62,340 161,701 124,701
North America | Financial Services        
Disaggregation of Revenue [Line Items]        
Revenues 47,687 43,517 95,555 81,911
North America | Software & Hi-Tech        
Disaggregation of Revenue [Line Items]        
Revenues 100,801 85,600 202,538 164,721
North America | Travel & Consumer        
Disaggregation of Revenue [Line Items]        
Revenues 52,193 48,178 106,917 95,178
North America | Life Sciences & Healthcare        
Disaggregation of Revenue [Line Items]        
Revenues 61,776 54,287 123,387 104,443
North America | Emerging Verticals        
Disaggregation of Revenue [Line Items]        
Revenues 40,891 37,103 85,833 70,760
North America | North America        
Disaggregation of Revenue [Line Items]        
Revenues 370,693 323,221 748,477 626,966
North America | Europe        
Disaggregation of Revenue [Line Items]        
Revenues 11,195 5,219 21,527 9,966
North America | CIS        
Disaggregation of Revenue [Line Items]        
Revenues 2,236 2,005 4,790 3,744
North America | APAC        
Disaggregation of Revenue [Line Items]        
Revenues 705 580 1,137 1,038
Europe        
Disaggregation of Revenue [Line Items]        
Revenues 227,305 197,361 463,638 391,426
Europe | Transferred over time        
Disaggregation of Revenue [Line Items]        
Revenues 227,073 197,255 463,244 391,273
Europe | Transferred at a point of time        
Disaggregation of Revenue [Line Items]        
Revenues 232 106 394 153
Europe | Time-and-material        
Disaggregation of Revenue [Line Items]        
Revenues 192,173 167,581 382,493 335,794
Europe | Fixed-price        
Disaggregation of Revenue [Line Items]        
Revenues 32,253 29,204 77,508 54,450
Europe | Licensing        
Disaggregation of Revenue [Line Items]        
Revenues 545 142 707 540
Europe | Other revenues        
Disaggregation of Revenue [Line Items]        
Revenues 2,334 434 2,930 642
Europe | Business Information & Media        
Disaggregation of Revenue [Line Items]        
Revenues 58,338 35,691 116,484 68,222
Europe | Financial Services        
Disaggregation of Revenue [Line Items]        
Revenues 66,655 58,879 134,249 120,714
Europe | Software & Hi-Tech        
Disaggregation of Revenue [Line Items]        
Revenues 18,165 19,440 36,311 39,810
Europe | Travel & Consumer        
Disaggregation of Revenue [Line Items]        
Revenues 51,253 56,175 112,320 111,377
Europe | Life Sciences & Healthcare        
Disaggregation of Revenue [Line Items]        
Revenues 7,069 4,907 14,688 9,463
Europe | Emerging Verticals        
Disaggregation of Revenue [Line Items]        
Revenues 25,825 22,269 49,586 41,840
Europe | North America        
Disaggregation of Revenue [Line Items]        
Revenues 10,835 11,551 21,254 24,442
Europe | Europe        
Disaggregation of Revenue [Line Items]        
Revenues 199,866 172,027 412,588 340,647
Europe | CIS        
Disaggregation of Revenue [Line Items]        
Revenues 4 0 16 13
Europe | APAC        
Disaggregation of Revenue [Line Items]        
Revenues 16,600 13,783 29,780 26,324
Russia        
Disaggregation of Revenue [Line Items]        
Revenues 20,249 23,201 44,173 39,780
Russia | Transferred over time        
Disaggregation of Revenue [Line Items]        
Revenues 20,240 23,201 42,708 39,780
Russia | Transferred at a point of time        
Disaggregation of Revenue [Line Items]        
Revenues 9 0 1,465 0
Russia | Time-and-material        
Disaggregation of Revenue [Line Items]        
Revenues 13,972 12,047 27,568 23,319
Russia | Fixed-price        
Disaggregation of Revenue [Line Items]        
Revenues 6,259 10,943 15,080 16,230
Russia | Licensing        
Disaggregation of Revenue [Line Items]        
Revenues 9 196 1,467 202
Russia | Other revenues        
Disaggregation of Revenue [Line Items]        
Revenues 9 15 58 29
Russia | Business Information & Media        
Disaggregation of Revenue [Line Items]        
Revenues 439 104 799 244
Russia | Financial Services        
Disaggregation of Revenue [Line Items]        
Revenues 13,633 18,009 29,814 31,041
Russia | Software & Hi-Tech        
Disaggregation of Revenue [Line Items]        
Revenues 519 478 2,485 918
Russia | Travel & Consumer        
Disaggregation of Revenue [Line Items]        
Revenues 3,824 2,761 7,563 4,885
Russia | Life Sciences & Healthcare        
Disaggregation of Revenue [Line Items]        
Revenues 39 4 48 66
Russia | Emerging Verticals        
Disaggregation of Revenue [Line Items]        
Revenues 1,795 1,845 3,464 2,626
Russia | North America        
Disaggregation of Revenue [Line Items]        
Revenues 408 16 2,035 32
Russia | Europe        
Disaggregation of Revenue [Line Items]        
Revenues 3 99 6 240
Russia | CIS        
Disaggregation of Revenue [Line Items]        
Revenues 19,838 23,086 42,132 39,508
Russia | APAC        
Disaggregation of Revenue [Line Items]        
Revenues $ 0 $ 0 $ 0 $ 0
v3.20.2
REVENUES (Revenue Expected to be Recognized in Future Related to Remaining Performance Obligations) (Details) - Fixed-price
$ in Thousands
Jun. 30, 2020
USD ($)
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items]  
Estimated revenues expected to be recognized in the future $ 15,941
Less than 1 year  
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items]  
Estimated revenues expected to be recognized in the future 15,395
1 Year  
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items]  
Estimated revenues expected to be recognized in the future 546
2 Years  
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items]  
Estimated revenues expected to be recognized in the future 0
3 Years  
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items]  
Estimated revenues expected to be recognized in the future $ 0
v3.20.2
REVENUES (Contract Balances) (Details) - USD ($)
$ in Thousands
3 Months Ended 6 Months Ended
Jun. 30, 2020
Jun. 30, 2019
Jun. 30, 2020
Jun. 30, 2019
Dec. 31, 2019
Change in Contract with Customer, Liability [Abstract]          
Revenue recognized $ 1,325 $ 610 $ 7,862 $ 3,661  
Revenues from performance obligations satisfied in previous period (3,669) $ 7,693 4,182 $ 4,119  
Trade receivables and contract assets          
Change in Contract with Customer, Liability [Abstract]          
Contract assets 12,353   12,353   $ 14,320
Accrued expenses and other current liabilities          
Change in Contract with Customer, Liability [Abstract]          
Contract liabilties $ 11,461   $ 11,461   $ 9,132
v3.20.2
STOCK-BASED COMPENSATION (Components of Stock-Based Compensation Expenses) (Details) - USD ($)
$ in Thousands
3 Months Ended 6 Months Ended
Jun. 30, 2020
Jun. 30, 2019
Jun. 30, 2020
Jun. 30, 2019
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items]        
Stock-based compensation expense $ 19,439 $ 15,697 $ 31,320 $ 37,553
Cost of revenues (exclusive of depreciation and amortization)        
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items]        
Stock-based compensation expense 8,958 7,480 12,942 20,261
Selling, general and administrative expenses        
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items]        
Stock-based compensation expense $ 10,481 $ 8,217 $ 18,378 $ 17,292
v3.20.2
STOCK-BASED COMPENSATION (Stock Options Activity) (Details) - Employee Stock Option - USD ($)
$ / shares in Units, $ in Thousands
6 Months Ended
Jun. 30, 2020
Number of Options   
Options outstanding at January 1, 2020 3,322,930
Options granted 147,351
Options exercised (441,199)
Options forfeited/cancelled (9,137)
Options outstanding at June 30, 2020 3,019,945
Options vested and exercisable at June 30, 2020 2,641,633
Options expected to vest at June 30, 2020 348,999
Weighted Average Exercise Price   
Options outstanding at January 1, 2020 $ 50.85
Options granted 176.21
Options exercised 39.12
Options forfeited/cancelled 117.40
Options outstanding at June 30, 2020 58.48
Options vested and exercisable at June 30, 2020 45.82
Options expected to vest at June 30, 2020 $ 145.93
Aggregate Intrinsic Value   
Options outstanding at June 30, 2020 $ 584,445
Options vested and exercisable at June 30, 2020 544,682
Options expected to vest at June 30, 2020 $ 37,021
Weighted Average Remaining Contractual Term (in years)  
Options outstanding at June 30, 2020 4 years 8 months 12 days
Options vested and exercisable at June 30, 2020 4 years 1 month 6 days
Options expected to vest at June 30, 2020 8 years 7 months 6 days
v3.20.2
STOCK-BASED COMPENSATION (Stock Option Additional Information) (Details) - Employee Stock Option
$ in Thousands
6 Months Ended
Jun. 30, 2020
USD ($)
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]  
Remaining unrecognized stock-based compensation cost $ 17,196
Weighted-average remaining requisite service period 2 years 10 months 24 days
v3.20.2
STOCK-BASED COMPENSATION (Restricted Stock and Restricted Stock Units Activity) (Details) - $ / shares
3 Months Ended 6 Months Ended
Jun. 30, 2020
Mar. 31, 2020
Jun. 30, 2020
Service Period | Equity Classified Award | Equity-Settled Award | Restricted Stock      
Number of Shares      
Unvested awards outstanding at January 1, 2020   9,791 9,791
Awards granted     0
Awards vested     0
Awards forfeited/cancelled     0
Unvested awards outstanding at June 30, 2020 9,791   9,791
Weighted Average Grant Date Fair Value Per Share      
Unvested awards outstanding at January 1, 2020   $ 162.96 $ 162.96
Awards granted     0
Awards vested     0
Awards forfeited/cancelled     0
Unvested awards outstanding at June 30, 2020 $ 162.96   $ 162.96
Service Period | Equity Classified Award | Equity-Settled Award | Restricted stock units      
Number of Shares      
Unvested awards outstanding at January 1, 2020   758,785 758,785
Awards granted     251,864
Awards vested     (294,872)
Awards forfeited/cancelled     (28,126)
Unvested awards outstanding at June 30, 2020 687,651   687,651
Weighted Average Grant Date Fair Value Per Share      
Unvested awards outstanding at January 1, 2020   $ 122.48 $ 122.48
Awards granted     180.18
Awards vested     106.73
Awards forfeited/cancelled     137.76
Unvested awards outstanding at June 30, 2020 $ 149.74   $ 149.74
Service Period | Liability Classified Award | Cash-Settled Award | Restricted stock units      
Number of Shares      
Unvested awards outstanding at January 1, 2020   242,288 242,288
Awards granted     59,770
Awards vested     (118,777)
Awards forfeited/cancelled     (3,456)
Unvested awards outstanding at June 30, 2020 179,825   179,825
Weighted Average Grant Date Fair Value Per Share      
Unvested awards outstanding at January 1, 2020   $ 105.40 $ 105.40
Awards granted     180.37
Awards vested     89.34
Awards forfeited/cancelled     108.89
Unvested awards outstanding at June 30, 2020 $ 140.86   $ 140.86
Performance Target | Equity Classified Award | Equity-Settled Award | Restricted Stock      
Number of Shares      
Unvested awards outstanding at January 1, 2020   9,393 9,393
Awards granted     0
Unvested awards outstanding at June 30, 2020 9,393   9,393
Weighted Average Grant Date Fair Value Per Share      
Unvested awards outstanding at January 1, 2020   $ 165.87 $ 165.87
Awards granted     0
Unvested awards outstanding at June 30, 2020 $ 165.87   $ 165.87
Performance Target | Equity Classified Award | Equity-Settled Award | Restricted stock units      
Number of Shares      
Unvested awards outstanding at January 1, 2020   0 0
Awards granted     24,836
Unvested awards outstanding at June 30, 2020 24,836   24,836
Weighted Average Grant Date Fair Value Per Share      
Unvested awards outstanding at January 1, 2020   $ 0 $ 0
Awards granted     177.81
Unvested awards outstanding at June 30, 2020 $ 177.81   $ 177.81
2020 Acquisition | Service Period | Equity Classified Award | Equity-Settled Award | Restricted stock units      
Number of Shares      
Awards granted     19,201
2020 Acquisition | Service Period | Liability Classified Award | Cash-Settled Award | Restricted stock units      
Number of Shares      
Awards granted     9,736
2019 Acquisitions | Service Period | Equity Classified Award | Equity-Settled Award | Restricted stock units      
Number of Shares      
Awards granted   5,793  
2019 Acquisitions | Performance Target | Equity Classified Award | Equity-Settled Award | Restricted stock units      
Number of Shares      
Awards granted 24,836    
v3.20.2
STOCK-BASED COMPENSATION (Restricted Stock and Restricted Stock Units Additional Information) (Details) - USD ($)
$ in Thousands
3 Months Ended 6 Months Ended
Mar. 31, 2020
Jun. 30, 2020
Dec. 31, 2019
Service Period | Equity Classified Award | Equity-Settled Award | Restricted Stock      
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]      
Remaining unrecognized stock-based compensation cost   $ 1,138  
Weighted-average remaining requisite service period   2 years 2 months 12 days  
Service Period | Equity Classified Award | Equity-Settled Award | Restricted stock units      
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]      
Remaining unrecognized stock-based compensation cost   $ 83,125  
Weighted-average remaining requisite service period   2 years 9 months 18 days  
Service Period | Liability Classified Award | Cash-Settled Award | Restricted stock units      
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]      
Remaining unrecognized stock-based compensation cost   $ 32,302  
Weighted-average remaining requisite service period   2 years 6 months  
Performance Target | Equity Classified Award | Equity-Settled Award | Restricted Stock      
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]      
Remaining unrecognized stock-based compensation cost   $ 1,236  
Weighted-average remaining requisite service period   3 years 2 months 12 days  
Performance Target | Equity Classified Award | Equity-Settled Award | Restricted stock units      
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]      
Remaining unrecognized stock-based compensation cost   $ 2,569  
Weighted-average remaining requisite service period   2 years 10 months 24 days  
Accrued compensation and benefits expenses | Service Period | Liability Classified Award | Cash-Settled Award | Restricted stock units      
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]      
Liability associated with RSUs   $ 9,122 $ 21,902
2020 Acquisition | Performance Target | Equity Classified Award | Restricted stock units      
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]      
Award value $ 2,171    
Estimated future operating results, period 2 years    
Awards vesting period 3 years    
v3.20.2
INCOME TAXES (Details) - USD ($)
$ in Thousands
3 Months Ended 6 Months Ended
Jun. 30, 2020
Jun. 30, 2019
Jun. 30, 2020
Jun. 30, 2019
Income Tax Disclosure [Abstract]        
Effective tax rate 12.40% 16.60% 11.80% 11.30%
Excess tax benefit $ 8,129 $ 4,741 $ 19,826 $ 16,254
v3.20.2
EARNINGS PER SHARE (Details) - USD ($)
$ / shares in Units, $ in Thousands
3 Months Ended 6 Months Ended
Jun. 30, 2020
Mar. 31, 2020
Jun. 30, 2019
Mar. 31, 2019
Jun. 30, 2020
Jun. 30, 2019
Numerator for basic and diluted earnings per share:            
Net income $ 66,624 $ 85,565 $ 58,777 $ 60,754 $ 152,189 $ 119,531
Numerator for basic and diluted earnings per share $ 66,624   $ 58,777   $ 152,189 $ 119,531
Denominator:            
Weighted average common shares for basic earnings per share 55,700,706   54,681,959   55,493,727 54,464,753
Net effect of dilutive stock options, restricted stock units and restricted stock awards 2,545,525   2,932,325   2,700,674 2,961,810
Weighted average common shares for diluted earnings per share 58,246,231   57,614,284   58,194,401 57,426,563
Net income per share:            
Basic (in dollars per share) $ 1.20   $ 1.07   $ 2.74 $ 2.19
Diluted (in dollars per share) $ 1.14   $ 1.02   $ 2.62 $ 2.08
Anti-dilutive options not included in the calculation (in shares) 146,732   168,451   77,925 97,327
v3.20.2
COMMITMENTS AND CONTINGENCIES (Building Acquisition Commitments) (Details)
$ in Thousands
6 Months Ended
Jun. 30, 2020
USD ($)
Office Space Purchase Commitment | Ukraine  
Other Commitments [Line Items]  
Total commitment amount $ 36,900
v3.20.2
SEGMENTS INFORMATION (Revenues from External Customers and Operating Profit Before Unallocated Expenses) (Details) - USD ($)
$ in Thousands
3 Months Ended 6 Months Ended
Jun. 30, 2020
Jun. 30, 2019
Jun. 30, 2020
Jun. 30, 2019
Segment Reporting Information [Line Items]        
Revenues $ 632,383 $ 551,587 $ 1,283,742 $ 1,072,920
Segment operating profit 83,426 72,882 170,935 137,540
North America        
Segment Reporting Information [Line Items]        
Revenues 384,829 331,025 775,931 641,714
Segment operating profit 82,752 69,347 161,679 133,804
Europe        
Segment Reporting Information [Line Items]        
Revenues 227,305 197,361 463,638 391,426
Segment operating profit 34,426 27,679 66,205 59,464
Russia        
Segment Reporting Information [Line Items]        
Revenues 20,249 23,201 44,173 39,780
Segment operating profit (5,645) 5,652 (5,126) 6,241
Operating Segments        
Segment Reporting Information [Line Items]        
Segment operating profit $ 111,533 $ 102,678 $ 222,758 $ 199,509
v3.20.2
SEGMENTS INFORMATION (Major Customers) (Details)
3 Months Ended 6 Months Ended
Jun. 30, 2020
Jun. 30, 2019
Jun. 30, 2020
Jun. 30, 2019
Revenue, Segment Benchmark [Member] | Customer Concentration Risk | Operating Segments        
Revenue, Major Customer [Line Items]        
Number of customers 0 0 0 0
v3.20.2
SEGMENTS INFORMATION (Reconciliation of Segment Operating Profit to Consolidated Income Before Provision for Income Taxes) (Details) - USD ($)
$ in Thousands
3 Months Ended 6 Months Ended
Jun. 30, 2020
Jun. 30, 2019
Jun. 30, 2020
Jun. 30, 2019
Segment Reporting, Reconciling Item for Operating Profit (Loss) from Segment to Consolidated [Line Items]        
Segment operating profit $ 83,426 $ 72,882 $ 170,935 $ 137,540
Stock-based compensation expense     31,320 37,553
Interest and other income, net 1,817 1,190 4,203 4,266
Foreign exchange loss (9,167) (3,562) (2,643) (7,046)
Income before provision for income taxes 76,076 70,510 172,495 134,760
Operating Segments        
Segment Reporting, Reconciling Item for Operating Profit (Loss) from Segment to Consolidated [Line Items]        
Segment operating profit 111,533 102,678 222,758 199,509
Unallocated Amounts        
Segment Reporting, Reconciling Item for Operating Profit (Loss) from Segment to Consolidated [Line Items]        
Stock-based compensation expense (19,439) (15,697) (31,320) (37,553)
Amortization of intangibles assets (2,994) (2,601) (6,129) (4,739)
Other acquisition-related expenses (148) (850) (616) (1,361)
Other unallocated expenses $ (5,526) $ (10,648) $ (13,758) $ (18,316)
v3.20.2
SEGMENTS INFORMATION (Physical Location and Values of Long-Lived Assets) (Details) - USD ($)
$ in Thousands
Jun. 30, 2020
Dec. 31, 2019
Long-Lived Assets by Geographical Areas [Line Items]    
Long-lived assets $ 167,359 $ 165,259
Belarus    
Long-Lived Assets by Geographical Areas [Line Items]    
Long-lived assets 73,989 75,984
Ukraine    
Long-Lived Assets by Geographical Areas [Line Items]    
Long-lived assets 29,577 24,652
United States    
Long-Lived Assets by Geographical Areas [Line Items]    
Long-lived assets 17,697 15,637
Russia    
Long-Lived Assets by Geographical Areas [Line Items]    
Long-lived assets 15,249 17,980
India    
Long-Lived Assets by Geographical Areas [Line Items]    
Long-lived assets 6,553 7,443
Poland    
Long-Lived Assets by Geographical Areas [Line Items]    
Long-lived assets 4,803 5,029
Hungary    
Long-Lived Assets by Geographical Areas [Line Items]    
Long-lived assets 4,684 5,201
China    
Long-Lived Assets by Geographical Areas [Line Items]    
Long-lived assets 2,621 3,036
Mexico    
Long-Lived Assets by Geographical Areas [Line Items]    
Long-lived assets 2,591 2,353
Other    
Long-Lived Assets by Geographical Areas [Line Items]    
Long-lived assets $ 9,595 $ 7,944
v3.20.2
SEGMENTS INFORMATION (Revenues by Customer Location) (Details) - USD ($)
$ in Thousands
3 Months Ended 6 Months Ended
Jun. 30, 2020
Jun. 30, 2019
Jun. 30, 2020
Jun. 30, 2019
Segment Reporting, Revenue Reconciling Item [Line Items]        
Revenues $ 632,383 $ 551,587 $ 1,283,742 $ 1,072,920
United States        
Segment Reporting, Revenue Reconciling Item [Line Items]        
Revenues 365,004 318,988 735,093 618,668
United Kingdom        
Segment Reporting, Revenue Reconciling Item [Line Items]        
Revenues 82,277 69,042 174,409 134,781
Switzerland        
Segment Reporting, Revenue Reconciling Item [Line Items]        
Revenues 46,537 35,364 93,759 71,597
Netherlands        
Segment Reporting, Revenue Reconciling Item [Line Items]        
Revenues 27,237 21,039 53,146 41,655
Russia        
Segment Reporting, Revenue Reconciling Item [Line Items]        
Revenues 19,448 22,460 41,409 38,352
Germany        
Segment Reporting, Revenue Reconciling Item [Line Items]        
Revenues 19,798 19,622 39,991 38,776
Canada        
Segment Reporting, Revenue Reconciling Item [Line Items]        
Revenues 16,585 15,785 34,505 32,757
Other locations        
Segment Reporting, Revenue Reconciling Item [Line Items]        
Revenues $ 55,497 $ 49,287 $ 111,430 $ 96,334