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EPAM Systems' Acquisition Spree Continues With Just-BI Buyout

Zacks Equity Research
·4 min read

EPAM Systems, Inc. EPAM recently acquired Business Intelligence (BI) design solutions provider — Just-BI — to fortify their rich portfolio of Data, BI and Advanced Analytics services.

The deal will also strengthen EPAM Systems’ ability to consult with EU and APAC customers, and provide expert assistance in Consumer-Packaged Goods (CPG), Retail and Energy.

Valentin Tsitlik, VP, Technology Solutions, EPAM Systems, noted, “It (the deal) also will create significant depth for our in-market SAP/S4HANA expertise, enabling us to take on more complex and global programs. Together, we'll create new opportunities to drive digitization and help our clients become more product and data-driven organizations."

In fact, the acquisition comes in close heels with the buyout of cybersecurity services company, White Hat (May 4, 2021).

Notably, acquisitions have been one of the key growth strategies for EPAM Systems. Since its debut, the company has acquired 21 businesses. Acquisitions have enabled the company to enter new markets, and diversify and broaden its product portfolio. The company aims to widen its vertical-specific domain know-how, geographic foothold, service portfolio, client base and management skills via acquisitions.

Markedly, its service capabilities like digital strategy and design plus consulting and test automation have been enhanced with acquisitions. In April 2021, EPAM Systems acquired PolSource — one of the leading independent consulting service providers of Salesforce in the Americas and Europe. The acquisition is anticipated to enhance EPAM Systems’ application programming interface (API) and microservices capabilities, thereby boosting its technology consulting practices.

With the acquisition of Ricston in September 2020, the company strengthened its growing consulting and engineering portfolio of API, micro-services management and integration services. In March 2020, EPAM Systems acquired Deltix, which provides software and services for quantitative research in the financial sector. The acquisition enhanced EPAM Systems’ capabilities and offerings in the FinTech space.

It is important to note that EPAM Systems’ market share and revenues necessarily depend on client relationships and the number of contracts it secures. This, along with the limited scope for product differentiation, makes renegotiation of large contracts extremely important. As a result, competition from companies like Accenture ACN, Cognizant Technology Solutions Corporation CTSH and Infosys INFY is a constant pressure.

Competition is particularly tough in the case of resurgent regions like Europe, since all the major players are fighting for business. This naturally increases pricing pressure. In this backdrop, important integrations are aiding EPAM Systems to stay highly competitive in a rapidly-changing technology and services industry.

Moreover, EPAM Systems has a strong balance sheet with ample liquidity position and meager debt obligations. Cash and cash equivalents were $1.37 billion at the end of first-quarter 2021. It should be noted that the company has been able to regularly increase its cash and cash equivalents balance and cash from operations. The increasing liquidity and cash flow trend reflect that the company is making investments in the right direction. Moreover, since it carries just $25 million of long-term debt, excess cash is available for pursuing strategic acquisitions and investments in growth initiatives.

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Cognizant Technology Solutions Corporation (CTSH) : Free Stock Analysis Report
 
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EPAM Systems, Inc. (EPAM) : Free Stock Analysis Report
 
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