Demand by Vertical

Demand by Vertical

EPAM sells into five named industry verticals plus a growing "Emerging" group, and it discloses growth in each every quarter. Across a decade, that disclosure shows the slowdown is not uniform: Financial Services has become the largest vertical at 24.1% of revenue and is growing organically at a double-digit pace, while Business Information & Media and, in the United States, Software & Hi-Tech have stalled. EPAM's demand weakness is concentrated, not broad — the distinction that separates a cyclical markdown from structural impairment.

Sources: FY2025 Annual Report (Form 10-K), Revenues by Vertical [1]; Business Information & Media change derived from FY2023 and FY2025 10-K vertical tables [2].

EPAM tells its buyers apart by industry, not just geography. A "substantial majority" of clients sit in five verticals — Financial Services; Software & Hi-Tech; Business Information & Media; Consumer Goods, Retail & Travel; and Life Sciences & Healthcare — with everything else, from energy to telecom to industrial materials, filed under Emerging Verticals [3]. That concentration is itself a stated risk: a downturn in any one of the five would pull revenue with it [4]. It is also the lens the other chapters skip: the financials and the moat work view EPAM by segment (Americas, Europe) and by total; the demand story lives one level down, in which industries are spending.

The mix has shifted

Source: derived from reported financials, FY2020–FY2025 10-K Revenues by Vertical tables [5]; [6].

Two lines move against the pack. Financial Services rose from roughly 21% of revenue in 2020 to 24.1% in 2025 and is now clearly the largest book [7]. Emerging Verticals — energy, manufacturing, telecom and industrial materials — climbed from about 11% to 17.2%, part organic and part acquired [8]. Against them, Business Information & Media fell from around 21% of revenue in 2020 to 12.4%, and Software & Hi-Tech drifted from roughly 19% to 15%. The company that IPO'd as a technology-and-media engineering shop now earns most of its keep from banks, insurers and industrial clients.

Who grew, who stagnated

Share shifts can flatter or mislead when the base is moving, so the cleaner test is absolute dollars. Using FY2023 — the first full year after the Russia exit — as the base removes the wind-down distortion and isolates who has actually added revenue since.

Source: FY2023 and FY2025 10-K Revenues by Vertical tables [9]; [10].

Group revenue rose 16.3% over the two years, but the growth is lopsided. Financial Services (+29.3%), Emerging Verticals (+45.2%) and Life Sciences & Healthcare (+27.7%) carried it; Software & Hi-Tech added 16.1%; Consumer, Retail & Travel was flat (+0.4%); and Business Information & Media shrank 10.4% in absolute terms while everything around it grew.

The honest caveat is that FY2025's headline vertical growth is inflated by the two late-2024 acquisitions and by currency: management attributes 9.2 points of the year's 15.4% total growth to the first-year contribution of NEORIS and First Derivative, and another 1.3 points to foreign exchange [11]. First Derivative is a capital-markets consultancy, so it lands almost entirely in Financial Services; the filing says the vertical's 16.1% Americas gain "benefit[ed] from new revenues from clients gained through our 2024 acquisitions," as did Emerging Verticals' 29.3% Americas jump, which came "due to revenues from our fourth quarter 2024 acquisitions of NEORIS and First Derivative" [12]; the Europe book's 41.8% gain drew on the same acquired clients [13]. Strip the acquired revenue out — as the organic-growth work does at the group level — and the FY2025 vertical picture is far more muted than the bars suggest.

The clean organic signal

Because both acquisitions closed by December 2024, the first-quarter 2026 year-over-year vertical growth is essentially organic — both periods already include NEORIS and First Derivative. That is the cleanest read the corpus offers on where demand is actually turning, and EPAM reports it separately for its two operating segments.

Source: Q1 FY2026 Quarterly Report (Form 10-Q), Americas and Europe segment vertical tables [14]; [15].

Financial Services is the one vertical growing at a double-digit organic rate in both geographies — up 10.8% in the Americas on "a large wealth management client and growth in fintech, insurance, and payment processing clients," and 12.2% in Europe on asset-management and insurance demand [16] [17]. Consumer, Retail & Travel grew in both regions (6.6% and 7.7%), a recovery off the cyclical trough of FY2024, when the vertical declined 5.7% in Europe on weak retail and consumer-goods demand [18].

The soft spots sit in the Americas. Software & Hi-Tech fell 2.1% in the US on "lower spend from our technology clients," and Emerging Verticals fell 3.1% [19]. Europe's 43.2% Software & Hi-Tech jump reads dramatic but the filing pins it to "increased demand at a large hardware client and several technology services clients" — one account, not a broad tech re-acceleration [20]. Business Information & Media was the only vertical to decline outright in Europe (down 7.2%), extending a multi-year fade [21].

Cyclical drag, structural fade

The demand map splits EPAM's soft verticals into two kinds of weakness, and the distinction is what the impairment-versus-cycle question turns on at the client level.

Consumer, Retail & Travel is the cyclical one: discretionary corporate spend that fell 5.7% in Europe in FY2024 and is now growing 6–8% again as retail budgets thaw [22] [23]. Business Information & Media looks structural: down roughly a quarter as a share of revenue since 2020 and shrinking in absolute dollars, as media and publishing clients consolidate and cut discretionary engineering [24]. Software & Hi-Tech sits between the two — flat-to-soft in the US, where EPAM's technology clients are the most capable of building their own AI tooling in-house, the self-cannibalization risk the AI chapter frames.

On balance, the vertical data supports the cyclical reading over the impairment one: the drag is localized in a discretionary vertical that is already recovering and in a structurally fading media book that is now only 12% of revenue, while the largest and fastest-growing vertical — Financial Services, a quarter of the company — is expanding organically at double digits across both regions. The strongest fact against that read is that Financial Services' recent prominence was bought as much as earned: First Derivative's capital-markets revenue lifted the vertical's reported growth well above its organic rate, so the "healthiest vertical" is partly an acquisition that the valuation work still books as an unproven return. What would change the read is a second consecutive quarter of organic decline in US Software & Hi-Tech, or Financial Services organic growth slipping toward the group average once the acquired base fully anniversaries — either would move the weakness from a couple of nameable verticals toward the whole book.