Greetings, and welcome to the EPAM Systems First Quarter 2013 Earnings Conference Call. [Operator Instructions] As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Mr. Anthony Conte, VP of Finance. Thank you, Mr. Conte, you may begin.

Thank you, operator, and good morning, everyone. By now, you should have received the copy of the earnings release for the company's first quarter results. If you have not, a copy is available on our website at www.epam.com, together with our supplemental data sheet. The speakers we have on today's call are Arkadiy Dobkin, CEO and President; and Ilya Cantor, Chief Financial Officer. Before we begin, I would like to remind you that some of the comments made on today's call and some of the responses to your questions may contain forward-looking statements. These statements are subject to the risks and uncertainties, as described in the company's earnings release and other filings with the SEC. I would now like to turn the call over to Arkadiy Dobkin. Please go ahead, Arkadiy.

Thank you, Anthony. Good morning, and thank you for joining us today for our fourth quarter 2013 earnings call. This morning, we are pleased to report another strong quarter of industry-leading performance. Total revenue grew 31.6% to $124.2 million year-over-year, and 32.7% on constant currency basis. That's the high end of our guidance. Adjusted income from operations increased 16.8% to $18.8 million year-over-year. Adjusted earnings per share were $0.35, ahead of expectations. Performance was strong across all geographies. North America, our largest market, grew 38%. Europe was up 24%, and the CIS region increased 31%. With North America, IT technology is a major growth driver in Q1. The flexibility and agility become the keywords for customers today, are increasingly seeking different and better ways to tap into new opportunities to grow business for their clients and for themselves. The maturing FAST Cloud Forum, emerging cloud models, Big Data and Analytics and Enterprise Mobility are defining the way how IT is design there today. Products and Solutions segment. All that puts very different demands on the skill set and experience for their development partners. EPAM has been historically focused on IT Technology segment, and while this focus we had built very strong expertise in most of these important emergent and adjacent technologies. As such, we are well-positioned to benefit further from this very fast growing segment within the broader global delivery market. Also during this quarter, EPAM significant progress with a number of big accounts in traveling consumer and business information and media verticals. In addition, we started to gain real traction and realize synergies from our acquisitions of Thoughtcorp in Canada and Empathy Lab in Europe. In Europe, we also have strong forward momentum. With continued economical volatility, companies in Europe are just facing the requirements, and EPAM was ideally…

Thank you, Ark, and good morning, everyone. As detailed in our press release, our first quarter revenue grew 31.6% over last year to $124.2 million, or 32.7% on a constant currency basis, while adjusted net income grew by 14.7% to $16.5 million, and earnings per share were $0.35. All of our verticals performed well. IT and Technology was up 37.5% year-over-year, and 5.1% sequentially, accounting for 26% of revenue. This growth was driven by several of our top accounts in those verticals, as well as continued broad-based demand for complex software development and solutions for many of our existing, as well as several new clients. Banking & Financial Services continue to be a fast-growing vertical for us, increasing 45.9% year-over-year to 26.2% of revenues. Travel & Consumer increased 14.5% to 22% of total. Business Information & Media grew 8.8% to 14.2% of revenue. However, excluding the impact of Thomson Reuters, this vertical would be up 54.1% year-over-year, but then you also have to adjust for the impact of Empathy Lab, so adjusting for both Thomson Reuters and Empathy Lab's organic growth in this segment is 15% year-over-year. In our other vertical, this is up 74.1% year-over-year to 10.4% of revenues. We were benefited, primarily, from growth in the single particular large oil and gas client, as well as good performance in several of our telco accounts. Turning now to our performance by service line. Software development services revenue, which includes product development and application software development increased 33% to $84 million or 67.5% total. Testing increased 28% to $24 million or 19.4% of revenue. Maintenance and support revenues increased 31.5% to $11 million or 8.7% of total, compared to 8.2% of total in Q4. And Infrastructure Services increased 31% to 2.10% of revenue. On performance by geography, North America increased…

[Operator Instructions] Our first question comes from the line of Ashwin Shirvaikar with Citi.

My first question is for -- just looking beyond Q2 for the rest of this year, should we expect a similar pattern of sequential revenue growth that we did to last year?

I think the short answer is approximately yes. And we don't guide quarter-to-quarter, we're still confident in the full year guidance that we did provide.

Just to add, it's Arkadiy. So it's very difficult to predict the jump, which we had in Q4 last year. So we're not counting on this type of event, so just to make sure we are on the same page.

Right. Actually, the right thing to do is to not have, at this stage, any assumptions around fourth quarter budget flush. So the second question, I guess, is, if I could just drill down on the DSOs and the unbilled DSOs in particular. And I know, Ilya, that you said that $17 million of the $53 million was billed in April. But in general, as your projects get a little bit more complex, I guess, to Ark's point, the key made in his remarks, should we expect the DSOs and unbilled DSOs to go up modestly from here, just from a cash flow modeling perspective?

I think it's probably -- we're not going to depart materially from today's DSO levels, and we're working diligently and continuously on making sure that we have favorable payment terms negotiated upfront in our contracts, and also that we follow-up diligently on collecting receivables. However, particularly as there is some fluctuations, in particular, where you saw in CIS region in Q4 in quarter 1, you can expect some volatility, in particular, from that region. But I wouldn't say that we're going to be materially different from today's level.

Got it. The last question, just a clarification. The 16% number that you gave, with regards to the, I guess, the Senate Bill, was that just for H-1s or H-1/L-1 combined? And if it was just for H-1, what is the L-1 percentage? Because there are elements in the bill that apply to L-1, as well as I think.

Sure. The 16% applies only to H-1Vs, and the difference being 15% and 16% for us is literally 5 people. So that's very small, if some or all go on green cards, which is the typical path, and we don't have an issue. L-1s are 27% of our US-based staffing. So together, it's about 43% on total on temporary visas.

Our next question comes from the line of Moshe Katri with Cowen and company.

Ilya and Arkadiy, can you talk a bit about some of the investments that you are going through, making actually, this year? Where are we in that phase, and maybe talk a bit about what you're doing on the sell-side of the business as well?

Moshe, so our investments, there is nothing drastically new in line of investments we do. So we were talking about increasing number of on-site people to make sure that our connection with clients are better, and we better prepare it to manage more complex projects as we're getting involved all the time, more and more. So this is one area of investment. We're investing in building competency centers, so this requires some level of dedication and non-billable people to be able to summarize the knowledge and actually distribute and provide guidance and very specific presale support. So it's clearly another area and require very qualified personnel to perform. And thanks for reminding us about our sales aspirations. So that's clearly one more investment focus for us, and we're hiring people in this segment as well. And as you all know, it all was kind of under-invested area at EPAM, where we were getting business a lot through referrals and existing relationships. So I would say that it's in focus today also. General stuff, each company like -- because we're growing in infrastructure and all that, but I would focus more on the kind of client base and capabilities and competency capabilities, which is very, very important for us.

Okay. And then can we talk a bit about Thomson Reuters? And it's still about 4% of revenues and I'm assuming, was it down or flat sequentially for the quarter?

It's still going down quarter-by-quarter, okay. But at this point...

I'm sorry, it's about 3.6%. I think it's stabilized, but we don't clearly...

So there is no -- like we -- again, we know what was scheduled for ramp-down from the past, and 3 in projects in exactly on this ramp-down. So I'll really mention right now, it's 3.6% of our revenue. And I don't think we can add anything else. So it's basically client-dependent. There are some new work coming. We're just quoting to get relatively sizeable, completely new deal inside of Thomson Reuters, but it's in our capabilities. But it's probably all I can share right now.

Our next question comes from the line of David Grossman with Stifel. David M. Grossman - Stifel, Nicolaus & Co., Inc., Research Division: I'm wondering if we could go to the gross margin. After a couple of periods of decline, it increased in the December quarter and then increased again in the March quarter. And I'm just wondering, is that from the core business? Is it acquisition-related? Or is there something else fundamentally going on in the gross margin line?

As far as the gross margin is concerned, we did improve our utilization a bit in this quarter, and we're continuing to work on improving it moderately during the rest of the year. If you notice, we've added, in the quarter, only 19% headcount year-over-year, compared to 32% revenue growth. While this gap is not expected to continue in its dimension, we do sort of expect a nonlinear pattern to headcount additions versus revenue growth. David M. Grossman - Stifel, Nicolaus & Co., Inc., Research Division: Okay. And then, as I think about that and the relationship between -- I know you talked about the investments just a minute ago that you're making in the business that's impacting operating expenses, at what point do those cross, where you get more stability in the operating margin? Or do you just think you're going to be bouncing around in this bandwidth of the 16% to 18%, just depending on the quarter and the year?

I mean, we're in rapid growth mode. And again, we continue to invest in the business. I think if we decide to stop investing, that's going to impact future revenue growth. And in our stage of development, this is -- our priority is to continue to grow. And so we will continue to live within our stated margin range. You might not see it sort of exactly linear quarter-to-quarter, but for the full year, we expect to be in the 16% to 18% range. And we feel pretty confident about that. David M. Grossman - Stifel, Nicolaus & Co., Inc., Research Division: Okay. And then just going back to the new customer activity, can you give us a sense of just how much, I guess, I don't know if I could call it pipeline or new business signed in the last 6 months, but some metric that will give us a sense of what the new customer acquisition activity has been over the last 2 quarters?

I would give you more like, what revenue we have today, which we closed during the last 12 months. And in Q1, it's approximately $12 million, $13 million for business, which was acquired during the previous 12 months. So this is not counting clients, which we got from Thoughtcorp or Empathy Lab. This is kind of new, new clients. But in our situation, when we're talking about sales and new business and investments, you also need to realize that we have very good client base, which is, from this point of view, should be considered as a pretty significant source of growth for us, in addition to new, new clients. And when we're talking, again, about sales and account management, it's not just about new, new business, it's about how we can bring more value to existing clients, and how we can convert this $1 million or $5 million accounts to, respectively, $5 million, $10 million and $15 million, $20 million accounts. And we have a number of very big opportunities with this and this is required investment from us for the right people who would be able to help in this setting, just to make sure it's very clear. David M. Grossman - Stifel, Nicolaus & Co., Inc., Research Division: In that context, did you say that the top 10 grew 15%. Is that what we said in the quarter?

Yes, that's correct. But if you exclude the impact of Thomson Reuters, then sort of the top 9 has grown 26%.

We still kind of floors in average growth of the company, which means that the next number of clients growing faster, and they actually create even more opportunities for us to grow. David M. Grossman - Stifel, Nicolaus & Co., Inc., Research Division: Okay, got it. And then, just one last thing, I'm wondering, Ilya, can you just remind us what your expectations are for the non-GAAP adjustments for the year in terms of stock comps and amortization?

Sure. Stock comp, approximately $12 million or $13 million for the year. And amortization, just one second, it's about $2.4 million on amortization. David M. Grossman - Stifel, Nicolaus & Co., Inc., Research Division: $2.6 million, I'm sorry?

$2.4 million.

[Operator Instructions] Our next question comes from the line of Elizabeth Colley with Needham & Company. Elizabeth Colley - Needham & Company, LLC, Research Division: This is Elizabeth for Mayank Tandon. Can you give us any color on M&A plans and what sort of areas you might be targeting, as far as geographies, verticals, services?

I think we can only restate what we were sharing before. Our M&A is focused in a couple of areas, mostly in competencies, to grow our technologies and some industry spectrum and potentially, capacity in additional geographies. And that's what we're looking for and that's what we're evaluating. But I don't think we can share a very specific plans at this point. Most likely, you will find out about it only from future press releases. Elizabeth Colley - Needham & Company, LLC, Research Division: Okay. And one more question. How should we think about wage inflation for the rest of the year? And what do you guys think the margin impact, what do you expect it to be this year, and even looking into next year?

I think it's a little bit too early to -- and we don't guide to wage inflation. So we had our main wage inflation cycle come through in January. It was within expectations. The competitive environment continues to be challenging, as it is for all the players in our industry, whether it's in India, China, Russia or wherever else. So the best we can say is that we're continuing to see wage inflation in a competitive environment, the stack up according to, more or less of how we predicted it. But for the rest of your, we'll see how it goes.

Mr. Dobkin, there are no further questions at this time. I'd like to turn the floor back over to you for closing comments.

Thank you. Thank you, everybody for attending our call today. In summary, we're pleased with the results of the previous quarter, and we feel good about the next quarter and for the 2013, at least, as it sounds for right now. So we look forward to talking to you next time and provide additional updates like in approaching within 3 months. So thank you for attending and have a great day.

Thank you. This concludes today's teleconference. You may disconnect your lines at this time. Thank you for your participation.