EPAM Systems, Inc. (EPAM) Q4 2013 Earnings Report, Transcript and Summary

Greetings, and welcome to the EPAM Systems Fourth Quarter and Full Year 2013 Results Conference Call. [Operator Instructions] As a reminder, this conference is being recorded. I would now like to turn the conference over to your host, Mr. Farrell Kramer. Thank you. Mr. Kramer, you may begin.

Thank you, and good morning, everyone. By now you should have received your copy of the earnings release for the company's fourth quarter and full year 2013 results. If you have not, a copy is available on our website, epam.com. The speakers on today's call are Arkadiy Dobkin, Chief Executive Officer; and Anthony Conte, 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.

Thank you, Farrell, and good morning, everyone. Thanks for joining us today. This December, we celebrated our 20th year in business and now I am proud to say that it was another strong year of growth for EPAM. EPAM's fourth quarter performance was better than we planned and in turn allow us to exceed our full year guidance, which we had revised upward in early October. Our fourth quarter revenue were $157 million, a sequential increase of 12% and an increase of 26% year-over-year. For the full year 2013, we delivered $555 million of revenue, which represented industry-leading growth of 28%. Our non-GAAP operating margin was within our target range at 17.4% for the quarter and 16.5% for the full year. Anthony will later review the quarter and year financials in more details, as well as give you our 2014 guidance. What I would like to discuss is the evolution of EPAM, some highlights of 2013, as well as explain a bit more on how we see the market growing and the opportunities for EPAM within this market. As we noted many times in the past, EPAM was born and iterated for many years as a company focusing on software engineering services for commercial software firms by helping them bring into life the products for their own clients. In turn, that focus on commercial software development allowed us to build a very strong engineering culture within the company and provided us with the opportunity to gain hands-on exposure to bring emerging technology trends, advanced development processes and techniques ahead of our competitors. Over time, our focus started to shift from only serving software and technology market to providing services to the firms operating outside of that segment. In 2007, the majority of our revenue was coming from ISVs & Technology. Just 6 years later, in 2013, financial services was 28% of our business, travel and consumer was 21% and Business Information & Media was 14%. Why invest in those industries? The driver to that was the number of firms which saw an increasing proportion of their value proposition coming from software and software-related services and had very quickly to adapt to new digitally-driven business models to stay competitive. These increasingly software-centric forms were not traditional software companies. Instead they were concentrated exactly in the industries of media, retail, financial services and information and data providers [indiscernible]. Target [indiscernible] business models, which rely on building commercial-grade software, they need to have access to engineering discipline, agile processes and deep technical know-how, which was difficult to find in traditional IT services shops or in-house corporate departments. Those of you who have been with us since our IPO will remember that we talked about this trend during the [indiscernible] show exactly 2 years ago. Since that time, the technology around mobile, social, cloud and analytics has continued to change and have only increased the software complexity and the potential value proposition for this class of clients. It is very clear now that our shift in this specific direction wasn't accidental. The clients in those industries are actively reinventing and redesigning large portions of their business models to stay relevant in fast-changing market situations. According to the industry analysts, the market for those clients is growing about 2x faster than traditional IT services. At the same time, the market expects a very challenging set of capabilities from the providers to satisfy the demands of this class of clients as they shift towards a very new type of client-to-client [indiscernible], interactive systems of engagement made possible by new, disruptive technologies, while in the past the main capabilities' drivers for IT members [indiscernible] were legacy systems of records and iterations [indiscernible]. It is important to understand that these new systems of engagement are also driving very new needs for that legacy part by forcing them to evolve or be replaced. So the legacy applications have to detach [indiscernible] more and more. All combined, this creates very challenging requirements for the application delivery process and to the skill sets necessary to deliver the solutions in this fast-growing market segment. To be relevant, providers have to demonstrate hybrid capabilities, including industry-domain expertise and technology consulting, very strong computer experience skills is a must requirement, ability to provide the demanded philosophy of the business [indiscernible], knowledge of the current [indiscernible] application security paradigms, middleware structures and legacy data models, ability to rely on broader partner [indiscernible] system because, in the constant argument of build or buy, the build and buy is winning [indiscernible]. Finally, on top of all that, a key requirement is that the provider should have a strong engineering product development mindset and engineering culture. Why they are focusing on all this right now? First, because there are a few global delivery service providers in the market with a strong engineering product development mindset and culture. It's very difficult to build that fast. We do believe that we have all that as a result of our last 20 years and that is why we see it as a significant opportunity for EPAM to capitalize on that specific market. Second, it allows us to identify a number of key investments, which we started several years ago and continue to make today to bridge the skills and experience gap and equip EPAM with this hybrid skill set. So let's see what progress we did during the last year. We are investing in our client management capabilities across our all current locations, also setting new offices in North America, in L.A., in Philadelphia and Washington, D.C.; and Europe, in Netherlands; and expanding in new-for-us places like Hong Kong, Singapore and Sydney. We improved significantly our capabilities in financial services and Retail and Consumer by hiring directly from the industry senior individuals with strong domain expertise. This strengthened our [indiscernible] organization and specific technology consulting capabilities by bringing a number of high-profile technologies with good client interactive skills in such key domains as BI, data warehousing, Big Data, e-Commerce and content, enterprise mobility and cloud. We expanded our digital strategy and user experience capabilities, both from the depth of the skill set and from the proximity to the clients point of view. Now EPAM [indiscernible] has representation in L.A., in London, in Moscow and Hong Kong. We continue to invest in the development of a number of accelerators to improve our solution sourcing [indiscernible] in our key industries. We started, also, to capitalize on partnerships with market leaders in e-Commerce, Digital marketing and BI/Big Data. We are investing in new enterprise social knowledge managing platform with integrated HR-ADOC [ph] functions, which is very important for productivity and agility of our production process. Finally, we continue to invest in internal and preproduction training programs for our people and into general IT educational processes via strong university relationship. We are very keen to maintain our engineering and product development mindset, which is critically important to deliver tangible results to our clients. In connection to that, I would note that we still have a strong revenue share from the enterprise software product and technology vertical, which is 24% of our business and over 80 clients, which allow us to maintain very close relationship with emerging technology skills, trends and processes and help us to understand well what is coming next. We believe that as a result of these efforts, in the second half of 2013, EPAM started to receive much more attention from the industry analysts. About 20 different reports published by Gartner, Forrester, Everest and several others focusing on general IT services as well as very specific topics of capital markets and welcomed [indiscernible] e-Commerce and content, mobile and cloud, SAP and application testing mentioned EPAM. We also believe that our investments help us to address many of our existing and new client informational [indiscernible] challenges. I would show you just one program for a large retailer in North America, which we started to bill royalties about 18 months ago. First of all, EPAM global team benefited from our strong on-site capabilities to lead the complex engagement locally and provide consultative, close-to-client approach to the whole program. On-site team also led the client in Agile transformation to delivery and also helped closely manage the whole Agile process in one multi-pronged [indiscernible] development centers and client staff. Our specialized user experience, e-Commerce content and mobility solution units were helping to address complex digital transformational challenges by bringing to life end-to-end digital experience to clients' customers. Our Big Data competency helped to put in place enabled partnership [indiscernible] with analytics. Our SAP advanced technology unit helped to solve a number of unfavorable programs in clients' legacy supply management system and enabled necessary integration for installing other components. On top of that, we got involved in the extended legacy integration and support programs. It is an excellent illustration of how our investment help us to prepare for such type of engagement, which would be, for us, practically impossible to win several years ago. More and more, we are seeing that our competencies and solution-focused efforts are making the difference, demonstrating our growing capabilities to cross-sell into existing clients as well as leading new logos for EPAM. So going forward, we expect to continue improving our hybrid capabilities to help clients innovate and outperform their competition. However, I would stress that it's still too early to quantify direct effect of this efforts. And as we shared last time, we have a long-term view and believe that continuous innovation, constant result evaluation and, if necessary, real-time adjustment to the process is a fast forward rather than a specific phase of doing business. Now I would like to take a minute to come back to an important milestone in our history. As I mentioned today, in December last year, we celebrated our 20th anniversary as a company. I would like to say thank you to all of our employees, our clients and our partners who enabled our success, and to our investors who continue to believe in us. It was very difficult to predict that it would be possible to grow from nothing back in '93 to today over 10,000 people with several hundred clients around the world. While we went through 2 large economic downturns and many technology shifts during those years, I would like to stress one more time that we started this company by helping our customers to bring to life complex, mission-critical, software solutions at a time when the market wasn't ready to accept services from the tiny company with small presence in Eastern Europe. We took in [indiscernible] some clients to try them, and that allowed us to start the journey. Today, when the market demands providers to deliver such solutions, we continue to benefit significantly from those 20 years of strong software-engineering focus. Coupled with the fast-developing new capabilities we talked about today and our historical focus on innovation, it will allow us to continue to position EPAM as a strong partner for the future. I would like now to turn over to Anthony to discuss our performance and provide more financial details. Over to you, Anthony.

Thank you, Ark, and good morning, everyone. I'm going to spend a few minutes talking -- taking you through the fourth quarter and full year results, and then I will talk about our 2014 outlook. As usual, the full details of our results can be found in our press release and the quarterly fact sheet located on the Investors section of our website. As detailed in our press release, our fourth quarter revenues grew 25.5% over last year and 12.4% sequentially to $157.6 million, above the top end of our guidance. For the full year, revenues grew 28% to $555.1 million, coming in above our guidance. The revenue overperformance was driven by our ability to successfully complete projects ahead of schedule, combined with new client acquisitions at the end of the year. Looking at service lines, we experienced no significant change in our revenue mix. Software development and application testing services continue to be our largest service offerings in both the fourth quarter and the full year 2013. For the full year, North America represented 50.8% of revenue, up 36.2%; Europe was up 36.1%, representing 29% growth over prior year; and CIS represented 11.7% of revenue. Within CIS, Russia grew 12.3% and represents approximately 10% of revenue. Revenues from other locations in CIS declined due to the completion of a onetime project in 2012. Our growth continues to be fueled by new clients and deeper penetration into existing accounts. Our top 20 clients accounted for 56.9% of total revenues and grew 23.8%, while all clients below the top 20 grew 34.3% year-over-year. Our customer loyalty remains high with 94% of customers working for us at least a year and 78% coming from those who have been with us for 2 years or more. We talked about growing new clients into significant relationships and we were successful in this effort during 2013. In 2012, we had 81 clients that generated at least $1 million in revenues. For 2013, that number increased more than 17% to 95 clients. Each of our verticals grew in excess of 20% year-over-year, led by banking and financial services, our fastest-growing vertical, increasing 39.7% from the prior year and representing 28.2% of our 2013 revenues. ISV & Technology grew 26.3% in 2013 and accounted for 24.3% of the total revenue. Travel and consumer increased 22.2% and was 21.1% of revenue. In addition, during 2013, we managed to reverse the negative growth trend in the business information and media vertical that had been caused by declining revenues from Thomson Reuters. This vertical regained growth momentum and was up 21.3% in 2013, accounting for 13.6% of total revenue. GAAP income from operations increased 24.3% in the fourth quarter of 2013 when compared to 2012, and 14.6% sequentially, to represent 14.7% of revenue. For the full year, GAAP income from operations grew 15.9%, representing 13.8% of revenue. Included in our operating results on a GAAP basis were stock-based compensation expenses, amortization of purchased intangible assets, acquisition-related costs and certain other onetime items that we exclude from our non-GAAP measures. Full details on these items can be found in our press release. Non-GAAP income from operations increased 33.2% over the prior year to $27.4 million, representing 17.4% of revenues. For the full year, non-GAAP income from operations grew 22.6% to $91.8 million or 16.5% of revenues. GAAP net income increased 25.1% in the fourth quarter of 2013. And for the full year, GAAP net income grew 13.8% year-over-year. Non-GAAP net income grew 38.9% in the fourth quarter of 2013 when compared to 2012 and 13.9% sequentially. For the full year, non-GAAP net income increased 22.3% compared to guidance of 15% to 20%. We completed the year with 9,340 IT professionals, an increase of 10% compared to 2012. And combined with a 2% increase in utilization, bringing it to 76%, supported the 28% growth in revenues. For the quarter, we generated $0.48 of non-GAAP EPS, also above the top end of our guidance, and $0.38 of GAAP EPS. For the full year, we generated non-GAAP EPS of $1.66 and GAAP EPS of $1.28. During the fourth quarter and full year 2013, we had approximately 49.1 million and 48.4 million diluted shares outstanding, respectively. Diluted share count for both the fourth quarter and the full year increased by over 2 million shares mainly due to employee stock option grants and exercises as well as stock issued in connection with our 2012 acquisitions. Turning to our balance sheet. We finished the year with approximately $169 million of cash, up approximately $46.2 million from September 30. During the fourth quarter, operating activities generated approximately $46.4 million of cash, and full year 2013 free cash flow almost doubled to $42.3 million. Unbilled revenues were at $43 million at December 31, an increase of $9.7 million compared to prior year. Of this increase, approximately 75% was attributable to services rendered in November and December to our 2 largest accounts. In January, we subsequently billed $29 million of the total unbilled revenue. Accounts receivable were at $95 million at the end of Q4, up 21% from last year. And DSO ended the year at 55 days, flat with last year. Before I share guidance, and for modeling purposes, I would like to highlight that we will be continuing to make strategic investments into the business, as we have over the past year. These investments are included within the guidance numbers I will share shortly. I would like to remind everyone that, historically, our year contains seasonal pattern, with Q1 being our softest quarter followed by sequential growth through the balance of the year. Q1 is typically our slowest due to Russian holidays in January and the short month of February. In addition, all annual salary increases are processed in Q1, creating a squeeze in margins that improves over the year. Turning to our guidance. For the full year 2014, based on current conditions, EPAM expects year-over-year revenue growth to be 21% to 23%. Non-GAAP net income growth for 2014 is expected to be in the range of 18% to 20% year-over-year, with an effective tax rate of 20%. The full year weighted average share count is expected to be just over 50 million diluted shares outstanding. For the first quarter of 2014, EPAM expects revenues between $151 million and $153 million, representing a growth rate of 21.6% to 23.2% over first quarter 2013 revenues. First quarter 2014 non-GAAP diluted EPS is expected to be in the range of $0.37 to $0.41 based on an estimated first quarter 2014 weighted average of 49.6 million diluted shares. GAAP diluted EPS is expected to be in a range of $0.28 to $0.31. I would now like to turn the call back over to Arkadiy. Ark?

Thank you, Anthony, and we would like to, before we start with the questions, to address clearly critical issue, which probably everybody worry about, the situation in Ukraine. And it's, as we all understand, very difficult and sad situation, to say the least, and our thoughts go to the people who were injured or killed and to their families there. To understand what impact it having on EPAM, first of all, we have about 2,600 engineers in Ukraine, and 1,500 of them are in Kyiv in several office buildings. Fortunately for us, those offices not in close proximity to any of the main government buildings in Kyiv, basically pretty far from the site of the main events, which you might be seeing on TV. So to this point, we didn't experience any interruption in our office infrastructure, in utility supply, in Internet, power and so on. And we don't anticipate any -- the scenario that would cause infrastructure interruption at this point. So all EPAM offices remain open and fully functional, including those we support several large financial clients, which is operating 24/7. However, the closure of main public transportation, the metro, by the government makes it difficult or sometimes impossible for us to have to get into the office. We definitely considered such situation during the last couple of months, and many of our teams were already configured to be securer access, either which relied on EPAM infrastructure or directly client infrastructure. And those measures allow them to work from home. So we are managing the situation in real time and clearly making some decisions in real time right now to make sure -- to address any concern for staff safety and to make sure that people will be capable to return home safely in a situation of worsened. We also allocated additional staff and additional equipment to build and strengthen our capacity for remote communication, for VPN, for any secure communication methods. So today, we have close to 50% of our people in the office. Yesterday, it was closer to 60%. And we have another 40%, 45% of people connected and working with a client project by secure VPN. So basically, at this point, we experiencing about under 10% drop in productivity in Kyiv. No any interruptions in other offices in Ukraine. We continue to monitor situation closely to understand if it would be necessary to execute any other specific plans for all contingencies. And we also consider in these plans very closely to specific account situation because there are different requirements in different situations. To this point, project continue to move forward, and we really appreciate our clients' understanding and support in this situation. So with this, I would like to turn back to operator to start Q&A session.

[Operator Instructions] Our first question is from Moshe Katri of Cowen and Company.

Maybe you can talk a bit about guidance. Give us some more color here. If you look at the -- at calendar year 2014, what's embedded in terms of adjusted EBIT margins for the year? And then how do we expect the revenues to flow on a quarterly basis throughout the year?

Moshe, thanks. The revenue component flow should be very similar to what you've seen in past years. As I mentioned in my initial comments, Q1 is typically our slowest and then we ramp slowly over the course of the year, with Q4 being our strongest revenue quarter. So I would expect a very similar pattern to prior years as far as the revenue flow. And as far as the second part of it, you asked what was embedded within EBITDA. Are you referencing the investment?

The investment of EBIT margins. What sort of EBIT margin assumptions do you have in the model for calendar year 2014?

We're expecting kind of adjusted EBITDA margins to be roughly in the 18% to 19%, which is historically where we've existed.

Okay. And then if you look at Q1, is there anything specific that would -- because it seems that the revenue numbers are within what we're looking for but then your adjusted EPS are a bit lower. Is there anything that would actually change your EBIT margin or EBIT adjusted -- adjusted EBIT margins for Q1 from where it has been historically?

Well, historically, I think our Q1 for 2014 is actually relatively in line with other Q1 performance. So there's nothing specific to highlight that's different. It's just that Q1 is a quarter that just deals with a little bit of a squeeze because we do have a lighter revenue quarter and we put in effect annual raises, so we just feel that normal squeeze. If you look at it, it's fairly consistent with Q1s in previous periods. It's not -- from a margin perspective, it's not that dramatically off.

Understood. And then last question. For Q4, you had a pretty big ramp from your top clients and then from your top 5 customers. The rest of the business obviously didn't grow as fast. Maybe you can give us some color on that?

The...

[indiscernible].

The Q4 ramp did come from some of our larger clients. We saw a Q4 push to complete some projects. We brought in some new clients in Q4 that ramped up faster than we anticipated. And that was really the drive behind the increased revenue in Q4. And I think when you look at it, the top clients versus the other, the top clients are the ones that ramped faster. It's just a function of the mathematics. They ramped up a little quicker so we saw more of an uptick from them, and the other clients just continued to trend as they had throughout the rest of the year.

And should that -- should we assume that, that kind of reverses itself a bit throughout this year?

It's definitely very difficult to say right now. So -- and we understand that it's kind of similar to last year's situation. But at this point, we cannot say that anything like this would be happening or not.

The next question is from Mayank Tandon of Needham & Company. Mayank Tandon - Needham & Company, LLC, Research Division: So I just wanted to look at some of the key metrics here. Maybe, Anthony or Ark, if you could just share where utilization came in, in the fourth quarter? What your expectations are for 2014? And also, how should we think about hiring over the course of the year to hit your revenue growth targets?

So utilization trend is -- were kind of -- were changing during the year, and it's 2013 where it's basically a function of what was happening with us in 2012, where our bench reached pretty significant levels because, like, all our training capacity were working at full, and plus what was happening with Thomson Reuters during that 2012, when it was still very aggressively downsizing. So what's happened in 2013 is that we had an opportunity to utilize bench, which builds up and then -- at the beginning actually of this last year. And if you will track our increase in headcount quarter-by-quarter you will see that, while our utilization was going up in Q4, at the same time the number of new employees were much higher in Q4 in comparison with Q3 or Q2. So we basically worked to bring more people to the company and utilization during the year will be maintaining around 76%, 78%. Mayank Tandon - Needham & Company, LLC, Research Division: Okay. So just to be clear, utilization is going to be -- remain consistent with what it was in 2013 and then it'll really be hiring and then maybe some price increases that will provide the revenue?

Yes, we're always -- we're maintaining the bench because if you put in staff for new projects internally, usually not hiring just for that specific opportunity but would like to make sure that we have a reliable team to start new projects. So basically, we're going to hire. We probably will be a little bit higher utilization rate than average for the last year, but it wouldn't be at 80%. Mayank Tandon - Needham & Company, LLC, Research Division: Okay. And then maybe we can get some thoughts around attrition rates in your business as you finish 2013? And also, what is the expectation for wage inflation that is embedded in your model?

Okay. So let me answer on attritions. Attritions for our actual operations was -- voluntary attrition around 11%, which is a little bit -- maybe a little bit higher than last year, maybe 1%, but generally in line with expectations. And in regards to wage inflation, I'll pass it to...

Yes. Wage inflation for 2013 was running roughly at 9%, 10%, and we're building into the model roughly a similar trend for 2014. So we expect to keep wage inflation right within that band. Mayank Tandon - Needham & Company, LLC, Research Division: Okay. And then just finally on pricing. I know in the past you talked about pricing increments, I believe, in the mid to high single digits. Is that something you saw in 2013? And then what is the expectation for 2014?

Yes, pricing was roughly right around 8% that we saw in 2013, and we're modeling roughly about the same going forward, possibly a little bit higher. But the range that we keep is roughly in that 6% to 8% range from a modeling perspective.

[Operator Instructions] And the next question is from Darrin Peller of Barclays.

I just want to go back for a moment to the situation in Ukraine. Can you give us a little more understanding? Are clients giving you any feedback? Is there any -- has there been any response from clients on new work? And then in terms of your hiring plan, maybe a little bit more specifics on the numbers in general? I might have missed that in the question -- in the answer before. And how the plan in terms of hiring is going to shape up around where you go for hiring given, again, what's happening in Ukraine right now?

So the -- like in Ukraine, clearly clients who operate in there are going [indiscernible]. And we have constant communication and update with them. So one of the key member of our management team, Karl Robb, he located in Kyiv. So he has very close touch on situation. He lives, like, probably much closer to the main kind of event field than our offices. But again, we communicate constantly with clients and are providing updates. So some clients allowed -- formally actually offer us to move some people to working from home and help us to provide infrastructure necessary from their side. So we have kind of very good level of partnership cooperation with the clients right now. So how it affected the revenue or future work? It's very difficult to say. We didn't see much from existing clients that something changed. So clearly, during the last 2 days, situation become less predictable. We hope that it would be still be stabilizing during the next week. But again, this is -- we can evaluate only real time. So in regards to hiring people, we still plan to hire in Ukraine. We still plan to hire in Belarus, Russia, Poland and Hungary. So all these countries where we have locations today is growing. We will have to evaluate the situation again in regards to Ukraine in next weeks. But I don't -- we don't believe that it would affect any long-term plans for us.

Okay. And I may have missed it, but did you mention anything about number of employees or number of net additions throughout 2014? I know there's -- sometimes you've said for -- on a quarterly basis what you've done, but have you mentioned anything going forward?

Are you talking forecast? Or are you talking what our net hires were in 2013?

Well, I guess relative to 2013, what you're expecting for '14?

So we expect around 16%, 17% headcount growth.

All right, that's helpful. And just one follow-up question. In terms of -- on that topic, in terms of the type of people you hired throughout 2013, I know a lot of them -- you were -- there was a pretty real goal of building out non-engineering personnel, a lot more around senior relationship management. Can you talk to some of that? And has that been successful? Has that helped with new business generation with some of your key clients?

Yes, I can give you some color on this. Yes, we have some very good success and we have some disappointments, which, I guess, normal. So -- and increase in business development was visible. But also, hiring the senior staff, for us, was very important to grow existing accounts. So we brought -- as I mentioned, we brought a good number of people from industries with very strong domain expertise in financial services and capital markets space. We brought number of people in retail and consumer vertical, as well. Also, we brought many strong technologies with client-facing capabilities, as I mentioned also, which extremely important for us because we have very good engineers globally but sometimes we have kind of the difficulties and a real gap between what they can do in offshore and actually how this links and communicated to our clients. So that was one of the important, for us, area of focus and specifically around all these competencies which we talked. So I think it's really proved to us that it should work. And I think that this kind of case study, which I was using this morning, is very good illustration of direction which we're going to continue. Because that's exactly combination, when you have strong enough on-site presence, new -- actually, new people which were hired even this year on technology competency were helping to bring this account to the level which is right now.

Okay. Just one last follow-up and I'll go back to the queue. In terms of the areas of growth that are going to be sort of above company average in your guidance, your guidance being sort of -- I'll call it, top line, 19%, 20%. If -- which verticals are you expecting to outperform? Which verticals should we look to being slightly slower than that? Maybe specifically what's happening around telecommunications also? And then I'll turn it back.

Around telecommunication, we -- I don't think we work in telecommunication right now.

And it's probably...

So it's very, very, very small portion of our business in other category. So -- but at this point, we expect that all 3 industry verticals will be growing pretty significantly for us. You saw last year all of them were growing over 20%, and that's an expectation for this year, too.

Okay. I guess the -- what I was referring to is more business and media kind of area, specifically.

Okay, Business Information & Media. Yes, this was interesting year because, several years ago, majority of Business Information & Media, it was Thomson Reuters. And during 2011 and '12, it really kind of went down and brought the whole vertical with them. But as you can see, this year we're starting to grow back and Reuters actually itself is starting to grow back. So this is the second quarter in a row when we're growing with Reuters. Now we have pretty high expectations here.

We have no further questions in queue at this time. I would like to turn the floor back over to management for any closing remarks.

Thank you, everyone, again. So it was a very good year for EPAM and clearly with a lot of challenges. And you see that the challenges may come in sometimes very unexpectedly. So we hope that they kind of will work it over and the situation in Ukraine would improve. So thank you, again, and talk to you in a few months. Thank you.

Thank you. Ladies and gentlemen, this does conclude today's teleconference. You may disconnect your lines at this time, and thank you for your participation.