Document and Entity Information
Document and Entity Information - shares | 9 Months Ended | |
Sep. 30, 2018 | Oct. 31, 2018 | |
Document Documentand Entity Information [Abstract] | ||
Entity Registrant Name | EPAM Systems, Inc. | |
Entity Central Index Key | 1,352,010 | |
Current Fiscal Year End Date | --12-31 | |
Entity Current Reporting Status | Yes | |
Entity Filer Category | Large Accelerated Filer | |
Entity Emerging Growth Company | false | |
Entity Small Business | false | |
Entity Common Stock, Shares Outstanding | 54,009,372 | |
Document Fiscal Year Focus | 2,018 | |
Document Fiscal Period Focus | Q3 | |
Document Period End Date | Sep. 30, 2018 | |
Document Type | 10-Q | |
Amendment Flag | false | |
Trading Symbol | EPAM |
CONDENSED CONSOLIDATED BALANCE
CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited) - USD ($) $ in Thousands | Sep. 30, 2018 | Dec. 31, 2017 |
Current assets | ||
Cash and cash equivalents | $ 685,108 | $ 582,585 |
Accounts receivable, net of allowance of $3,039 and $1,186, respectively | 282,276 | 265,639 |
Unbilled revenues | 129,683 | 86,500 |
Prepaid and other current assets, net of allowance of $50 and $45, respectively | 29,646 | 23,196 |
Employee loans, current, net of allowance of $23 and $0, respectively | 2,289 | 2,113 |
Total current assets | 1,129,002 | 960,033 |
Property and equipment, net | 99,465 | 86,419 |
Employee loans, noncurrent, net of allowance of $0 and $0, respectively | 1,456 | 2,097 |
Intangible assets, net | 52,669 | 44,511 |
Goodwill | 144,987 | 119,531 |
Deferred tax assets | 61,905 | 24,974 |
Other noncurrent assets, net of allowance of $0 and $140, respectively | 14,498 | 12,691 |
Total assets | 1,503,982 | 1,250,256 |
Current liabilities | ||
Accounts payable | 8,422 | 5,574 |
Accrued expenses and other current liabilities | 98,442 | 89,812 |
Due to employees | 52,405 | 38,757 |
Deferred compensation due to employees | 9,174 | 5,964 |
Taxes payable | 52,530 | 40,860 |
Total current liabilities | 220,973 | 180,967 |
Long-term debt | 25,028 | 25,033 |
Taxes payable, noncurrent | 50,242 | 59,874 |
Other noncurrent liabilities | 11,804 | 9,435 |
Total liabilities | 308,047 | 275,309 |
Commitments and contingencies (Note 11) | ||
Stockholders’ equity | ||
Common stock, $0.001 par value; 160,000,000 authorized; 54,011,579 and 53,003,420 shares issued, 53,991,844 and 52,983,685 shares outstanding at September 30, 2018 and December 31, 2017, respectively | 54 | 53 |
Additional paid-in capital | 530,837 | 473,874 |
Retained earnings | 699,568 | 518,820 |
Treasury stock | (177) | (177) |
Accumulated other comprehensive loss | (34,347) | (17,623) |
Total stockholders’ equity | 1,195,935 | 974,947 |
Total liabilities and stockholders’ equity | $ 1,503,982 | $ 1,250,256 |
CONDENSED CONSOLIDATED BALANC_2
CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited) (Parenthetical) - USD ($) $ in Thousands | Sep. 30, 2018 | Dec. 31, 2017 |
Current assets | ||
Accounts receivable allowance | $ 3,039 | $ 1,186 |
Prepaid and other assets allowance | 50 | 45 |
Employee loans current allowance | 23 | 0 |
Assets, Noncurrent [Abstract] | ||
Employee loans long-term allowance | 0 | 0 |
Other long-term assets allowance | $ 0 | $ 140 |
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) | 54,011,579 | 53,003,420 |
Common stock, shares outstanding (in shares) | 53,991,844 | 52,983,685 |
CONDENSED CONSOLIDATED STATEMEN
CONDENSED CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME (Unaudited) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | |
Income Statement [Abstract] | ||||
Revenues | $ 468,186 | $ 377,523 | $ 1,337,981 | $ 1,051,151 |
Operating expenses: | ||||
Cost of revenues (exclusive of depreciation and amortization) | 301,081 | 239,369 | 867,890 | 667,231 |
Selling, general and administrative expenses | 92,490 | 81,190 | 272,110 | 240,062 |
Depreciation and amortization expense | 9,319 | 7,174 | 26,457 | 20,866 |
Other operating expenses, net | 736 | 542 | 4,030 | 2,096 |
Income from operations | 64,560 | 49,248 | 167,494 | 120,896 |
Interest and other income, net | 1,941 | 1,416 | 2,442 | 2,802 |
Foreign exchange (loss)/gain | (514) | (77) | 1,069 | (1,470) |
Income before provision for/(benefit from) income taxes | 65,987 | 50,587 | 171,005 | 122,228 |
Provision for/(benefit from) income taxes | 369 | 7,953 | (9,286) | 18,594 |
Net income | 65,618 | 42,634 | 180,291 | 103,634 |
Foreign currency translation adjustments, net of tax | (2,118) | 5,703 | (14,643) | 16,640 |
Unrealized net loss on cash-flow hedging instruments, net of tax | (74) | 0 | (2,081) | 0 |
Comprehensive income | $ 63,426 | $ 48,337 | $ 163,567 | $ 120,274 |
Net income per share: | ||||
Basic (in dollars per share) | $ 1.22 | $ 0.81 | $ 3.37 | $ 2 |
Diluted (in dollars per share) | $ 1.15 | $ 0.77 | $ 3.19 | $ 1.90 |
Shares used in calculation of net income per share: | ||||
Basic (in shares) | 53,851,865 | 52,545,155 | 53,485,339 | 51,806,700 |
Diluted (in shares) | 56,962,867 | 55,228,781 | 56,599,638 | 54,661,196 |
CONDENSED CONSOLIDATED STATEM_2
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) - USD ($) $ in Thousands | 9 Months Ended | |
Sep. 30, 2018 | Sep. 30, 2017 | |
Cash flows from operating activities: | ||
Net income | $ 180,291 | $ 103,634 |
Adjustments to reconcile net income to net cash provided by operating activities: | ||
Depreciation and amortization expense | 26,457 | 20,866 |
Bad debt expense | 1,765 | 79 |
Deferred taxes | (36,372) | 1,386 |
Stock-based compensation expense | 46,736 | 39,920 |
Other | (3,434) | (3,496) |
(Increase)/decrease in operating assets: | ||
Accounts receivable | (16,258) | (24,396) |
Unbilled revenues | (41,544) | (42,540) |
Prepaid expenses and other assets | (1,765) | 2,036 |
Increase/(decrease) in operating liabilities: | ||
Accounts payable | 1,574 | 1,885 |
Accrued expenses and other liabilities | 9,625 | 18,725 |
Due to employees | 4,009 | 5,939 |
Taxes payable | (1,996) | (2,458) |
Net cash provided by operating activities | 169,088 | 121,580 |
Cash flows from investing activities: | ||
Purchases of property and equipment | (27,465) | (16,881) |
Employee housing loans issued | (264) | (618) |
Proceeds from repayments of employee housing loans | 1,213 | 1,897 |
Decrease/(increase) in time deposits, net | 418 | (408) |
Acquisition of businesses, net of cash acquired | (50,264) | (6,810) |
Other investing activities, net | (1,471) | (1,304) |
Net cash used in investing activities | (77,833) | (24,124) |
Cash flows from financing activities: | ||
Proceeds from stock option exercises | 32,007 | 44,315 |
Payments of withholding taxes related to net share settlements of restricted stock units | (7,068) | (3,088) |
Proceeds from debt (Note 6) | 0 | 25,000 |
Repayment of debt (Note 6) | (3,485) | (25,089) |
Other financing activities, net | (603) | (922) |
Net cash provided by financing activities | 20,851 | 40,216 |
Effect of exchange rate changes on cash, cash equivalents and restricted cash | (8,660) | 10,435 |
Net increase in cash, cash equivalents and restricted cash | 103,446 | 148,107 |
Cash, cash equivalents and restricted cash, beginning of period | 582,855 | 364,664 |
Cash, cash equivalents and restricted cash, end of period | $ 686,301 | $ 512,771 |
CONDENSED CONSOLIDATED STATEM_3
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS CONDENSED CONSOLIDATED STATEMENT OF CASH FLOW (Unaudited) (Parenthetical) - USD ($) $ in Thousands | Sep. 30, 2018 | Dec. 31, 2017 |
Cash and cash equivalents | $ 685,108 | $ 582,585 |
Restricted cash | 1,193 | 270 |
Cash, cash equivalents, restricted cash and restricted cash equivalents | 686,301 | 582,855 |
Prepaid and other current assets | ||
Restricted cash | 56 | 91 |
Other noncurrent assets | ||
Restricted cash | $ 1,137 | $ 179 |
SUMMARY OF SIGNIFICANT ACCOUNTI
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | 9 Months Ended |
Sep. 30, 2018 | |
Accounting Policies [Abstract] | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | 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 clients located around the world, primarily in North America, Europe, Asia and Australia. The Company has expertise in various industries, including software and hi-tech, financial services, business information and media, travel and hospitality, retail and distribution and life sciences and healthcare. The Company is incorporated in Delaware and headquartered in Newtown, PA. 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”) and Article 10 of Regulation S-X under the Securities Exchange Act of 1934, as amended. The 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, 2017 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. Adoption of New Accounting Standards Unless otherwise discussed below, the adoption of new accounting standards did not have an impact on the Company’s consolidated financial position, results of operations, and cash flows. Revenue Recognition — Effective January 1, 2018, the Company adopted the new accounting standard ASU 2014-09, Revenue from Contracts with Customers (Topic 606) as amended using the modified retrospective method. The standard effectively replaced previously existing revenue recognition guidance (Topic 605) and requires entities to recognize revenue to depict the transfer of promised goods or services in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services as well as requires additional disclosure about the nature, amount, timing and uncertainty of revenues and cash flows arising from customer contracts, including significant judgments and changes in judgments. The following table summarizes the cumulative effect of adopting Topic 606 using the modified retrospective method of adoption as of January 1, 2018: Balance as of Adjustments Balance as of Balance Sheet Assets Unbilled revenues $ 86,500 $ (78 ) $ 86,422 Deferred tax assets $ 24,974 $ (173 ) $ 24,801 Liabilities Accrued expenses and other current liabilities $ 89,812 $ (708 ) $ 89,104 Stockholders’ equity Retained earnings $ 518,820 $ 457 $ 519,277 The Company applied a practical expedient to aggregate the effect of all contract modifications that occurred before the adoption date. See Note 7 “Revenues” in the condensed consolidated interim financial statements for additional information regarding revenues. Restricted cash and restricted cash equivalents — Effective January 1, 2018, the Company adopted Accounting Standard Update (“ASU”) No. 2016-18, Statement of Cash Flows (Topic 230): Restricted Cash which requires the Company to include in its cash and cash equivalents balances presented in the statements of cash flows amounts that are deemed to be restricted in nature. As a result of the adoption, the Company restated its condensed consolidated statements of cash flows for all of the prior periods presented. The impact of adoption on the Company’s condensed consolidated statement of cash flows was as follows for the nine months ended September 30, 2017 : As Originally Reported Restated Effect Cash flows from operating activities: Changes in operating assets and liabilities: Prepaid expenses and other assets $ 4,436 $ 2,036 $ (2,400 ) Net cash provided by operating activities $ 123,980 $ 121,580 $ (2,400 ) Cash flows from investing activities: Decrease in restricted cash and time deposits, net $ (268 ) $ (408 ) $ (140 ) Acquisition of businesses, net of cash acquired $ (6,840 ) $ (6,810 ) $ 30 Net cash used in investing activities $ (24,014 ) $ (24,124 ) $ (110 ) Effect of exchange rate changes on cash, cash equivalents, and restricted cash $ 10,286 $ 10,435 $ 149 Net increase in cash, cash equivalents and restricted cash $ 150,468 $ 148,107 $ (2,361 ) Cash, cash equivalents and restricted cash, beginning of period 362,025 364,664 2,639 Cash, cash equivalents and restricted cash, end of period $ 512,493 $ 512,771 $ 278 Derivatives and Hedging — Effective April 1, 2018, the Company early-adopted ASU 2017-12, Derivatives and Hedging (Topic 815): Targeted Improvements to Accounting for Hedging Activities . The new guidance is intended to simplify and amend hedge accounting and reporting to better align and disclose the economic results of an entity’s risk management activities in its financial statements. The ASU makes more financial and non-financial hedging strategies eligible for hedge accounting. It also changes how companies assess hedge effectiveness and amends the presentation and disclosure requirements by eliminating the requirement to separately measure and report hedge ineffectiveness and generally requires companies, for qualifying hedges, to present the entire change in the fair value of a hedging instrument in the same income statement line as the hedged item. The guidance also eases documentation and assessment requirements and modifies the accounting for components excluded from the assessment of hedge effectiveness. The guidance requires entities to apply the amended presentation and disclosure guidance prospectively as of the period of adoption. The adoption of this guidance did not have any effect on the consolidated financial results. The Company enters into derivative financial instruments to manage exposure to fluctuations in certain foreign currencies. During 2018, for accounting purposes, these foreign currency forward contracts became designated as hedges, as defined under FASB ASC Topic 815, Derivatives and Hedging . The Company measures these foreign currency derivative contracts at fair value on a recurring basis utilizing Level 2 inputs. The Company records changes in the fair value of these hedges in accumulated other comprehensive income/(loss) in our consolidated balance sheet until the forecasted transaction occurs. When the forecasted transaction occurs, the related gain or loss on the cash flow hedge is reclassified to the same line item in the statement of income as the forecasted transaction is recorded. 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 underlying hedge from accumulated other comprehensive income/(loss) into income. The cash flow impact of derivatives identified as hedging instruments is reflected as cash flows from operating activities. The cash flow impact of derivatives not identified as hedging instruments is reflected as cash flows from investing activities. 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. Leases — Effective January 1, 2019, the Company will be required to adopt the new guidance of ASC Topic 842, Leases (Topic 842) (with early adoption permitted effective January 1, 2018). This amendment supersedes previous accounting guidance (Topic 840) and requires all leases, with the exception of leases with a term of twelve months or less, to be recorded on the balance sheet as lease assets and lease liabilities. The standard allows for two methods of adoption to recognize and measure leases: retrospectively to each prior period presented in the financial statements with the cumulative effect of initially applying the guidance recognized at the beginning of the earliest comparative period presented or retrospectively at the beginning of the period of adoption with the cumulative effect of initially applying the guidance recognized at the beginning of the period in which the guidance is first applied. Both adoption methods include a number of optional practical expedients that entities may elect to apply. These practical expedients relate to the identification and classification of leases that commenced before the effective date, initial direct costs for leases that commenced before the effective date, and the ability to use hindsight in evaluating lessee options to extend or terminate a lease or to purchase the underlying asset. An entity that elects to apply the practical expedients will, in effect, continue to account for leases that commence before the effective date in accordance with previous GAAP unless the lease is modified, except that lessees are required to recognize a right-of-use asset and a lease liability for all operating leases based on the present value of the remaining minimum rental payments that were tracked and disclosed under previous GAAP. The transition guidance in Topic 842 also provides specific guidance for the amounts previously recognized in accordance with the business combinations guidance for leases. The Company has developed a transition plan, which includes making necessary changes to policies, processes, internal controls and system enhancements to generate the information necessary to comply with the new standard. The Company has identified a global lease management and accounting software solution, which is currently being tested and implemented. The Company has collected relevant data and is finalizing its evaluation of lease arrangements, potential embedded leases and accounting policy elections. While the Company is currently assessing the quantitative impact, the Company expects the new guidance will have a material impact on its consolidated balance sheet due to the addition of right-of-use assets and lease liabilities principally related to its office space leases. EPAM does not expect the new guidance to have a material impact on its consolidated statement of income and comprehensive income or its consolidated statement of cash flows. The Company expects to adopt this standard on January 1, 2019 using the method of adoption whereby the cumulative effect of adoption is recognized at the beginning of the period of adoption. Measurement of Credit Losses on Financial Instruments — Effective January 1, 2020, the Company will be required to adopt the amended guidance of ASC Topic 326, Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments , (with early adoption permitted effective January 1, 2019.) The amendments in this update change how companies measure and recognize credit impairment for many financial assets. The new expected credit loss model will require 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. Entities are required to adopt the standard using a modified-retrospective approach through a cumulative effect adjustment to retained earnings as of the beginning of the period of adoption. The Company has not yet completed its assessment of the impact of the new guidance on its consolidated financial statements or concluded on when it will adopt the standard. |
ACQUISITIONS
ACQUISITIONS | 9 Months Ended |
Sep. 30, 2018 | |
Business Combinations [Abstract] | |
ACQUISITIONS | ACQUISITIONS Continuum — On March 15, 2018 , the Company acquired all of the outstanding equity of Continuum Innovation LLC together with its subsidiaries (“Continuum”) to enhance the Company’s consulting capabilities as well as its digital and service design practices. Continuum, headquartered in Boston with offices located in Milan, Seoul, and Shanghai, focuses on four practices including strategy, physical and digital design, technology and its Made Real Lab. The acquisition of Continuum added approximately 125 design consultants to the Company’s headcount. In connection with the Continuum acquisition, the Company paid $52,515 as cash consideration, of which $5,410 was placed in escrow for a period of 9 to 15 months as security for the indemnification obligations of the sellers under the terms of the equity purchase agreement. Furthermore, subject to attainment of specified performance targets in the 12 months after the acquisition, the Company will make a cash earnout payment with a maximum amount payable of $3,135 . The Company recorded $2,400 related to this earnout payment as contingent consideration as of the acquisition date. During the three months ended September 30, 2018, the Company recorded a $900 reduction to the fair value of the contingent consideration (Note 4 “Fair Value Measurements”). The following table summarizes the preliminary fair values of the assets acquired and liabilities assumed in connection with the acquisition of Continuum as originally reported and as adjusted as of September 30, 2018 : As Originally Reported As Adjusted Cash and cash equivalents $ 2,251 $ 2,251 Accounts receivable 6,676 6,676 Unbilled revenues 2,463 2,463 Prepaid and other current assets 942 942 Goodwill 29,805 26,693 Intangible assets 16,600 14,450 Property and equipment and other noncurrent assets 8,902 8,902 Total assets acquired $ 67,639 $ 62,377 Accounts payable, accrued expenses and other current liabilities $ 2,991 $ 2,751 Due to employees 1,001 1,001 Long-term debt (Note 6) 3,220 3,220 Other noncurrent liabilities 5,412 490 Total liabilities assumed $ 12,624 $ 7,462 Net assets acquired $ 55,015 $ 54,915 During the three months ended September 30, 2018 , the Company updated the valuation of the acquired intangible asset related to a favorable lease decreasing its value by $400 . This adjustment resulted in a corresponding increase in the value of acquired goodwill. The effect of the adjustment recorded during the three months ended September 30, 2018 that would have been recognized in a prior period if the adjustment to the preliminary amounts had been recognized as of the acquisition date was not material. The Company expects to complete the purchase price allocation as soon as practicable but no later than one year from the acquisition date. The following table presents the estimated fair values and useful lives of intangible assets acquired in connection with the acquisition of Continuum: Continuum Weighted Average Useful Life (in years) Amount Customer relationships 6.5 $ 5,800 Favorable lease 11.2 5,500 Contract royalties 8 1,900 Trade names 5 1,250 Total $ 14,450 The goodwill recognized as a result of the Continuum acquisition is attributable primarily to strategic and synergistic opportunities related to the consulting business, the assembled workforce of Continuum and other factors. The goodwill is expected to be deductible for income tax purposes. Revenues generated by Continuum totaled $8,472 and $18,696 during the three and nine months ended September 30, 2018 . Pro forma results of operations have not been presented because the effect of the Continuum acquisition on the Company’s condensed consolidated financial statements was not material. |
GOODWILL
GOODWILL | 9 Months Ended |
Sep. 30, 2018 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
GOODWILL | GOODWILL Goodwill by reportable segment was as follows: North America Europe Total Balance as of December 31, 2017 $ 77,290 $ 42,241 $ 119,531 Continuum acquisition (Note 2) 26,693 — 26,693 Effect of net foreign currency exchange rate changes (193 ) (1,044 ) (1,237 ) Balance as of September 30, 2018 $ 103,790 $ 41,197 $ 144,987 There were no accumulated impairment losses in the North America or Europe reportable segments as of September 30, 2018 or December 31, 2017 . |
FAIR VALUE MEASUREMENTS
FAIR VALUE MEASUREMENTS | 9 Months Ended |
Sep. 30, 2018 | |
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 table shows the fair values of the Company’s financial assets and liabilities measured at fair value on a recurring basis as of September 30, 2018 : As of September 30, 2018 Balance Level 1 Level 2 Level 3 Foreign exchange derivative assets $ 114 $ — $ 114 $ — Total assets measured at fair value on a recurring basis $ 114 $ — $ 114 $ — Contingent consideration $ 1,500 $ — $ — $ 1,500 Foreign exchange derivative liabilities 2,806 — 2,806 — Total liabilities measured at fair value on a recurring basis $ 4,306 $ — $ 2,806 $ 1,500 The Company had no material financial assets or liabilities measured at fair value on a recurring basis as of December 31, 2017. Our Level 2 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” for further information regarding the Company’s derivative financial instruments. As of September 30, 2018 , contingent consideration included amounts payable in cash in connection with the acquisition of Continuum (Note 2 “Acquisitions”). The fair value of the contingent consideration is based on the expected future payments to be made to the sellers of the acquired business in accordance with the provisions outlined in the purchase agreement. 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 agreement and adjusted those estimates to reflect the probability of their achievement. Those future payments were then discounted to present value using a rate based on the weighted-average cost of capital of guideline companies. The Company believes its estimates and assumptions are reasonable; however, there is significant judgment involved. 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 liability. 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 acquisition-related contractual contingent liabilities using significant unobservable inputs (Level 3) for the nine months ended September 30, 2018 is as follows: Amount Contractual contingent liabilities at December 31, 2017 $ — Acquisition date fair value of contractual contingent liabilities — Continuum (Note 2) 2,400 Changes in fair value of contractual contingent liabilities included in Interest and other income, net (900 ) Contractual contingent liabilities at September 30, 2018 $ 1,500 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 Company uses the following methods to estimate the fair values of its financial instruments: • for financial instruments that have quoted market prices, those quoted prices are used to estimate fair value; • for financial instruments for which no quoted market prices are available, fair value is estimated using information obtained from independent third parties, or by discounting the expected cash flows using an estimated current market interest rate for the financial instrument; • for financial instruments for which no quoted market prices are available and that have no defined maturity, have a remaining maturity of 360 days or less, or reprice frequently to a market rate, the Company assumes that the fair value of these instruments approximates their reported value, after taking into consideration any applicable credit risk. The generally short duration of certain of the Company’s assets and liabilities results in a number of assets and liabilities for which fair value equals or closely approximates the amount recorded on the Company’s condensed consolidated balance sheets. These types of assets and liabilities which are reported on the Company’s condensed consolidated balance sheets include: • cash and cash equivalents; • time deposits and restricted cash; • employee loans; • borrowings under the Company’s 2017 Credit Facility (Note 6 “Long-Term Debt”). The fair value of employee housing loans is estimated using information on the rates of return that market participants in Belarus would require when investing in unsecured U.S. dollar-denominated government bonds with similar maturities (a “risk-free rate”), after taking into consideration any applicable credit and liquidity risk. The following tables present the reported amounts and estimated fair values of the financial assets and liabilities for which disclosure of fair value is required, as they would be categorized within the fair value hierarchy, as of the dates indicated: Fair Value Hierarchy Balance Estimated Fair Value Level 1 Level 2 Level 3 September 30, 2018 Financial Assets: Cash and cash equivalents $ 685,108 $ 685,108 $ 685,108 $ — $ — Restricted cash $ 1,193 $ 1,193 $ 1,193 $ — $ — Employee loans $ 3,745 $ 3,745 $ — $ — $ 3,745 Financial Liabilities: Borrowings under the 2017 Credit Facility $ 25,016 $ 25,016 $ — $ 25,016 $ — Fair Value Hierarchy Balance Estimated Fair Value Level 1 Level 2 Level 3 December 31, 2017 Financial Assets: Cash and cash equivalents $ 582,585 $ 582,585 $ 582,585 $ — $ — Time deposits and restricted cash $ 673 $ 673 $ — $ 673 $ — Employee loans $ 4,210 $ 4,210 $ — $ — $ 4,210 Financial Liabilities: Borrowings under the 2017 Credit Facility $ 25,009 $ 25,009 $ — $ 25,009 $ — |
DERIVATIVE FINANCIAL INSTRUMENT
DERIVATIVE FINANCIAL INSTRUMENTS | 9 Months Ended |
Sep. 30, 2018 | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |
DERIVATIVE FINANCIAL INSTRUMENTS | DERIVATIVE FINANCIAL INSTRUMENTS The Company conducts a large portion of its operations in international markets that subject it to foreign currency fluctuations. To manage the risk of fluctuations in foreign currency exchange rates, during the nine months ended September 30, 2018 , the Company implemented a hedging program whereby it entered 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. The Company measures derivative instruments and hedging activities at fair value and recognizes them as either assets or liabilities in its consolidated balance sheets. Accounting for the gains and losses resulting from changes in fair value depends on the use of the derivative and whether it is designated and qualifies for hedge accounting. As of September 30, 2018 , all of the Company’s foreign exchange forward contracts were designated as hedges. To receive hedge accounting treatment, all hedging relationships are formally documented at the inception of the hedge, and the hedges must be highly effective in offsetting changes to future cash flows on hedged transactions. Derivatives may give rise to credit risks from the possible non-performance by counterparties. The Company has limited its credit risk by entering into derivative transactions only with highly-rated financial institutions and by conducting an ongoing evaluation of the creditworthiness of the financial institutions with which the Company does business. 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 September 30, 2018 and December 31, 2017 were as follows: As of September 30, 2018 As of December 31, 2017 Balance Sheet Classification Asset Derivatives Liability Derivatives Asset Derivatives Liability Derivatives Foreign exchange forward contracts - Designated as hedging instruments Prepaid and other current assets $ 114 $ — Accrued expenses and other current liabilities $ 2,806 $ — Foreign exchange forward contracts - Not designated as hedging instruments Prepaid and other current assets $ — $ 114 The Company records changes in the fair value of its cash flow hedges in accumulated other comprehensive income/(loss) in the consolidated balance sheet 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 nine months ended September 30, 2018 and 2017 were as follows: Three Months Ended Nine Months Ended September 30, 2018 2017 2018 2017 Foreign exchange forward contracts - Designated as hedging instruments: Change in fair value recognized in accumulated other comprehensive loss (86 ) — (2,692 ) — Net loss reclassified from accumulated other comprehensive loss into cost of revenues (exclusive of depreciation and amortization) (1,604 ) — (2,541 ) — Foreign exchange forward contracts - Not designated as hedging instruments: Net gain recognized in foreign exchange (loss)/gain — 111 44 270 |
LONG-TERM DEBT
LONG-TERM DEBT | 9 Months Ended |
Sep. 30, 2018 | |
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”) with PNC Bank, National Association; PNC Capital Markets LLC; Wells Fargo Bank, National Association; Santander Bank, N.A.; Fifth Third Bank and Citibank N.A. (collectively the “Lenders”). The 2017 Credit Facility provides for a borrowing capacity of $300,000 , with potential to increase the credit facility 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 or 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 September 30, 2018 , 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 September 30, 2018 , 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 As of Outstanding debt $ 25,000 $ 25,000 Interest rate 3.2 % 2.6 % Irrevocable standby letters of credit $ 387 $ 1,294 Available borrowing capacity $ 274,613 $ 273,706 Current maximum borrowing capacity $ 300,000 $ 300,000 As part of the acquisition of Continuum, the Company assumed $3,448 of long-term debt associated with a leased facility and payable to Continuum’s landlord. The debt was payable in monthly installments through March 2029 and bore interest at a rate of 8% per annum. In March 2018, the Company paid $3,448 to settle this assumed long-term debt. |
REVENUES
REVENUES | 9 Months Ended |
Sep. 30, 2018 | |
Revenue from Contract with Customer [Abstract] | |
REVENUES | REVENUES Adoption of ASC Topic 606, “Revenue from Contracts with Customers” and Change in Accounting Policies Effective January 1, 2018, the Company adopted ASU No. 2014-09, Revenue from Contracts with Customers (Topic 606) as amended. The Company adopted the new guidance using the modified retrospective method by recognizing the cumulative effect of adoption as an adjustment to retained earnings as of January 1, 2018. Results for reporting periods beginning after January 1, 2018 are presented under Topic 606, while prior period amounts are not adjusted and continue to be reported in accordance with Topic 605. The impact of adoption of the new guidance on the Company’s consolidated financial statements as of January 1, 2018 are presented in Note 1 “Summary of Significant Accounting Policies.” The Company recognizes revenues when control of goods or services is passed to a customer in an amount that reflects the consideration the Company expects to be entitled to in exchange for those goods or services. Such control may be transferred over time or at a point in time depending on satisfaction of obligations stipulated by the contract. Consideration expected to be received may consist of both fixed and variable components and is allocated to each separately identifiable performance obligation based on the performance obligation’s relative standalone selling price. Variable consideration usually takes the form of volume-based discounts, service level credits, price concessions or incentives. Determining the estimated amount of such variable consideration involves assumptions and judgment that can have an impact on the amount of revenues reported. The Company derives its revenues from a variety of service offerings, which represent specific competencies of its IT professionals. Fees for these contracts may be in the form of time-and-materials or fixed-price arrangements. The majority of the Company’s revenues are generated under time-and-material contracts which are billed using hourly, daily or monthly rates to determine the amounts to be charged directly to the client. The Company applies a practical expedient and revenues related to time-and-material contracts are recognized based on the Company’s right to invoice for services performed. Fixed-price contracts include maintenance and support arrangements, which may exceed one year in duration, as well as application development arrangements. Maintenance and support arrangements generally relate to the provision of ongoing services. Revenues for such agreements are recognized ratably over the expected service period. Application development arrangements are accounted for using input or output methods for measuring the progress towards satisfaction of the performance obligation. Input methods are used only when there is a direct correlation between hours incurred and the end product delivered. Assumptions, risks and uncertainties inherent in the estimates used to measure progress could affect the amount of revenues, receivables and deferred revenues at each reporting period. Revenues from licenses which have significant stand-alone functionality are recognized at a point in time when control of the license is transferred to the customer. Revenues from licenses which do not have stand-alone functionality are recognized over time. If there is an uncertainty about the receipt of payment for the services, revenue is deferred until the uncertainty is sufficiently resolved. The Company applies a practical expedient and does not assess the existence of a significant financing component if the period between when the Company transfers the service to a customer and when the customer pays for that service is one year or less. The Company reports gross reimbursable “out-of-pocket” expenses incurred as both revenues and cost of revenues in the condensed consolidated statements of income and comprehensive income. The following tables summarize the impacts of changes in accounting policies after adoption of Topic 606 on the Company’s condensed consolidated financial statements for the three and nine months ended September 30, 2018 , which primarily resulted from deferring the timing of revenue recognition for contracts that were previously recognized on a cash basis and recognizing revenues from certain license agreements at a point-in-time rather than over time: As of September 30, 2018 As Reported Balances Without Adoption of Topic 606 Effect of Change Higher/(Lower) Balance Sheet Liabilities Accrued expenses and other current liabilities $ 98,442 $ 98,354 $ 88 Other noncurrent liabilities 11,804 11,823 (19 ) Stockholders’ equity Retained earnings $ 699,568 $ 699,637 $ (69 ) Three Months Ended September 30, 2018 Nine Months Ended September 30, 2018 As Reported Balances Without Adoption of Topic 606 Effect of Change As Reported Balances Without Adoption of Topic 606 Effect of Change Income Statement Revenues $ 468,186 $ 468,257 $ (71 ) $ 1,337,981 $ 1,338,069 $ (88 ) Income from operations $ 64,560 $ 64,631 $ (71 ) $ 167,494 $ 167,582 $ (88 ) Provision for/(benefit from) income taxes $ 369 $ 385 $ (16 ) $ (9,286 ) $ (9,267 ) $ (19 ) Net income $ 65,618 $ 65,673 $ (55 ) $ 180,291 $ 180,360 $ (69 ) Disaggregation of Revenues The following tables show the disaggregation of the Company’s revenues by major client location, including a reconciliation of the disaggregated revenues with the reportable segments (Note 12 “Segment Information”) for the three and nine months ended September 30, 2018 : Three Months Ended September 30, 2018 Reportable Segments North America Europe Russia Total Segment Revenues Other Income Included in Segment Revenues Consolidated Revenues Client Locations North America $ 271,551 $ 12,536 $ 17 $ 284,104 $ (27 ) $ 284,077 Europe 5,408 146,990 3 152,401 (166 ) 152,235 CIS 2,208 142 16,184 18,534 — 18,534 APAC 1,671 11,814 4 13,489 (149 ) 13,340 Revenues $ 280,838 $ 171,482 $ 16,208 $ 468,528 $ (342 ) $ 468,186 Nine Months Ended September 30, 2018 Reportable Segments North America Europe Russia Total Segment Revenues Other Income Included in Segment Revenues Consolidated Revenues Client Locations North America $ 747,894 $ 40,074 — $ 46 — $ 788,014 $ (40 ) $ 787,974 Europe 11,234 444,468 — 45 — 455,747 (623 ) 455,124 CIS 6,300 233 — 53,192 — 59,725 — 59,725 APAC 3,709 31,545 — 91 — 35,345 (187 ) 35,158 Revenues $ 769,137 $ 516,320 $ 53,374 $ 1,338,831 $ (850 ) $ 1,337,981 The following tables show the disaggregation of the Company’s revenues by industry vertical, including a reconciliation of the disaggregated revenues with the reportable segments (Note 12 “Segment Information”) for the three and nine months ended September 30, 2018 : Three Months Ended September 30, 2018 Reportable Segments North America Europe Russia Total Segment Revenues Other Income Included in Segment Revenues Consolidated Revenues Industry Verticals Financial Services $ 30,488 $ 61,713 $ 12,786 $ 104,987 $ (189 ) $ 104,798 Travel & Consumer 45,690 53,634 1,891 101,215 (122 ) 101,093 Software & Hi-Tech 68,572 19,035 569 88,176 — 88,176 Business Information & Media 64,152 17,650 — 81,802 — 81,802 Life Sciences & Healthcare 39,550 5,078 12 44,640 (31 ) 44,609 Emerging Verticals 32,386 14,372 950 47,708 — 47,708 Revenues $ 280,838 $ 171,482 $ 16,208 $ 468,528 $ (342 ) $ 468,186 Nine Months Ended September 30, 2018 Reportable Segments North America Europe Russia Total Segment Revenues Other Income Included in Segment Revenues Consolidated Revenues Industry Verticals Financial Services $ 79,176 $ 190,027 $ 43,102 $ 312,305 $ (697 ) $ 311,608 Travel & Consumer 133,481 155,208 5,356 294,045 (122 ) 293,923 Software & Hi-Tech 193,672 59,186 1,957 254,815 — 254,815 Business Information & Media 181,021 54,637 — 235,658 — 235,658 Life Sciences & Healthcare 99,893 15,550 12 115,455 (31 ) 115,424 Emerging Verticals 81,894 41,712 2,947 126,553 — 126,553 Revenues $ 769,137 $ 516,320 $ 53,374 $ 1,338,831 $ (850 ) $ 1,337,981 The following tables show the disaggregation of the Company’s revenues by contract type including a reconciliation of the disaggregated revenues with the Company’s reportable segments (Note 12 “Segment Information”) for the three and nine months ended September 30, 2018 : Three Months Ended September 30, 2018 Reportable Segments North America Europe Russia Total Segment Revenues Other Income Included in Segment Revenues Consolidated Revenues Contract Types Time-and-material $ 256,549 $ 155,797 $ 9,441 $ 421,787 $ — $ 421,787 Fixed-price 23,241 15,001 6,759 45,001 — 45,001 Licensing 798 173 1 972 — 972 Other revenues 250 511 7 768 (342 ) 426 Revenues $ 280,838 $ 171,482 $ 16,208 $ 468,528 $ (342 ) $ 468,186 Nine Months Ended September 30, 2018 Reportable Segments North America Europe Russia Total Segment Revenues Other Income Included in Segment Revenues Consolidated Revenues Contract Types Time-and-material $ 704,612 $ 471,900 $ 29,302 $ 1,205,814 $ — $ 1,205,814 Fixed-price 61,716 42,035 24,038 127,789 — 127,789 Licensing 2,098 1,119 12 3,229 — 3,229 Other revenues 711 1,266 22 1,999 (850 ) 1,149 Revenues $ 769,137 $ 516,320 $ 53,374 $ 1,338,831 $ (850 ) $ 1,337,981 Timing of Revenue Recognition The following tables show the timing of revenue recognition: Three Months Ended September 30, 2018 Reportable Segments North America Europe Russia Total Segment Revenues Other Income Included in Segment Revenues Consolidated Revenues Timing of Revenue Recognition Transferred at a point of time $ 194 $ 289 $ — $ 483 $ (342 ) $ 141 Transferred over time 280,644 171,193 16,208 468,045 — 468,045 Revenues $ 280,838 $ 171,482 $ 16,208 $ 468,528 $ (342 ) $ 468,186 Nine Months Ended September 30, 2018 Reportable Segments North America Europe Russia Total Segment Revenues Other Income Included in Segment Revenues Consolidated Revenues Timing of Revenue Recognition Transferred at a point of time $ 832 $ 1,351 $ 10 $ 2,193 $ (850 ) $ 1,343 Transferred over time 768,305 514,969 53,364 1,336,638 — 1,336,638 Revenues $ 769,137 $ 516,320 $ 53,374 $ 1,338,831 $ (850 ) $ 1,337,981 During the three and nine months ended September 30, 2018 , the Company recognized $3,610 and $6,627 of revenues, respectively, from performance obligations satisfied in previous periods. 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 September 30, 2018 . 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 year 1 Year 2 Years 3 Years Total Contract Type Fixed-price $ 4,590 $ 568 $ 126 $ — $ 5,284 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 As of Contract assets included in unbilled revenues $ 19,180 $ 7,901 Contract liabilities included in accrued expenses and other current liabilities $ 3,376 $ 4,498 Contract assets included in unbilled revenues are recorded when services have been provided but the Company does not have an unconditional right to receive consideration. The Company recognizes an impairment loss when the contract carrying amount is greater than the remaining consideration receivable, less directly related costs to be incurred. Contract assets have increased from December 31, 2017 primarily due to new contracts entered into in 2018 where the Company’s right to bill is contingent upon achievement of contractual milestones. Contract liabilities comprise amounts collected from the Company’s clients for revenues not yet earned. Such amounts are anticipated to be recorded as revenues when services are performed in subsequent periods. During the three and nine months ended September 30, 2018 , the Company recognized $258 and $3,690 of revenues, respectively, that were included in Accrued expenses and other current liabilities at January 1, 2018. |
INCOME TAXES
INCOME TAXES | 9 Months Ended |
Sep. 30, 2018 | |
Income Tax Disclosure [Abstract] | |
INCOME TAXES | INCOME TAXES In determining its interim provision for/(benefit from) 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 rate for the three months ended September 30, 2018 and 2017 was 0.6% and 15.7% , respectively, and (5.4)% and 15.2% during the nine months ended September 30, 2018 and 2017 , respectively. The interim provision for/(benefit from) income taxes in the three months ended September 30, 2018 was unfavorably impacted by the recognition of $252 of net deferred tax liabilities and the interim provision for/(benefit from) income taxes in the nine months ended September 30, 2018 was favorably impacted by the recognition of $25,088 of net deferred tax assets as a result of the election to disregard as separate entities for U.S. tax purposes certain foreign subsidiaries of the Company. In addition, the Company recorded excess tax benefits upon vesting or exercise of stock-based awards of $6,067 and $2,620 during the three months ended September 30, 2018 and 2017 , respectively, and $16,197 and $8,452 during the nine months ended September 30, 2018 and 2017 , respectively. Due to the timing of the enactment and the complexity involved in applying the provisions of the Tax Cuts and Jobs Act (“U.S. Tax Act”), the Company made reasonable estimates of the effects and recorded provisional amounts in its financial statements as of December 31, 2017. As the Company collects and prepares necessary data and interprets the U.S. Tax Act and any additional guidance issued by the U.S. Treasury Department, the IRS, and other standard-setting bodies, and further refines the calculations, the Company may make adjustments to the provisional amounts recorded. During the three and nine months ended September 30, 2018 , the Company further refined its estimate and recorded net provisional reductions of $7,053 and $4,896 , respectively, associated with the provisional charge for the one-time transition tax on accumulated foreign subsidiary earnings not previously subject to U.S. income tax which now totals $59,425 . The provisional reductions were primarily driven by a decrease in repatriation taxes as a result of the Company completing its analysis of the earnings of relevant foreign subsidiaries in the third quarter of 2018. Of this amount, $49,117 is classified as Taxes payable, noncurrent as of September 30, 2018 . The Company continues to analyze the impact of certain foreign tax credits, continues to assess the application of certain state income tax laws and expects to complete its analysis during the fourth quarter of 2018. Any adjustments during this measurement period will be included in the provision for income taxes in the reporting period when such adjustments are determined. The U.S. Tax Act subjects a U.S. shareholder to tax on global intangible low-taxed income (“GILTI”) earned by certain foreign subsidiaries. The FASB Staff Q&A, Topic 740, No. 5, Accounting for Global Intangible Low-Taxed Income , states that an entity can make an accounting policy election to either recognize deferred taxes for temporary basis differences expected to reverse as GILTI in future years or provide for the tax expense related to GILTI in the year the tax is incurred. During the nine months ended September 30, 2018 , the Company elected to provide for the tax expense related to GILTI in the year the tax is incurred. This election did not have a material impact on the interim financial statements for the three and nine months ended September 30, 2018 . |
STOCK-BASED COMPENSATION
STOCK-BASED COMPENSATION | 9 Months Ended |
Sep. 30, 2018 | |
Disclosure of Compensation Related Costs, Share-based Payments [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 Nine Months Ended 2018 2017 2018 2017 Cost of revenues (exclusive of depreciation and amortization) $ 7,492 $ 4,913 $ 22,835 $ 14,452 Selling, general and administrative expenses 7,838 6,304 23,901 25,468 Total $ 15,330 $ 11,217 $ 46,736 $ 39,920 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, 2018 4,901,748 $ 40.91 Options granted 157,133 $ 112.91 Options exercised (863,365 ) $ 36.90 Options forfeited/cancelled (30,819 ) $ 63.39 Options expired (250 ) $ 61.38 Options outstanding at September 30, 2018 4,164,447 $ 44.29 $ 388,977 5.7 Options vested and exercisable at September 30, 2018 3,251,127 $ 35.94 $ 330,834 5.2 Options expected to vest at September 30, 2018 870,538 $ 73.59 $ 55,810 7.5 As of September 30, 2018 , $16,124 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 2.0 years . As of September 30, 2018 , a total of 1,000 shares underlying options exercised through September 30, 2018 , were in transit with the Company’s transfer agent. Effective January 1, 2018, the Company changed the methodology for estimating volatility used in the Black-Scholes option valuation model. Prior to January 1, 2018, the Company estimated the volatility of its common stock by using the historical volatility of peer public companies including the Company’s historical volatility. In the first quarter of 2018, the Company began exclusively using its own historical volatility as it believes this is a more accurate estimate of future volatility of the price of the Company’s common stock. The Company did not change the methodology for estimating any other Black-Scholes option valuation model assumptions as disclosed in Note 13 “Stock-Based Compensation” to the audited consolidated financial statements included in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2017 . 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 nine months ended September 30, 2018 . 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, 2018 1,840 $ 54.37 688,012 $ 71.60 314,829 $ 72.50 Awards granted — $ — 332,683 $ 114.35 85,380 $ 112.65 Awards modified — $ — (2,299 ) $ 72.80 2,299 $ 116.63 Awards vested (1,047 ) $ 47.76 (215,263 ) $ 70.09 (91,052 ) $ 72.42 Awards forfeited/cancelled — $ — (39,644 ) $ 82.59 (6,998 ) $ 79.19 Unvested service-based awards outstanding at September 30, 2018 793 $ 63.10 763,489 $ 90.08 304,458 $ 83.96 As of September 30, 2018 , $44 of total remaining unrecognized stock-based compensation cost related to service-based restricted stock is expected to be recognized over the weighted-average remaining requisite service period of 1.8 years . As of September 30, 2018 , $51,937 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 2.7 years . As of September 30, 2018 , there were 3,894 restricted share units vested for which the holders elected to defer delivery of EPAM Systems, Inc. ordinary shares. During the first quarter of 2018, 44,228 RSUs were granted in connection with the acquisition of Continuum. As of September 30, 2018 , $29,486 of total remaining unrecognized stock-based compensation cost related to service-based liability-classified RSUs, net of estimated forfeitures, is expected to be recognized over the weighted-average remaining requisite service period of 2.5 years . The liability associated with the service-based liability-classified RSUs as of September 30, 2018 and December 31, 2017 , was $9,174 and $5,964 , respectively, and was classified as Deferred compensation due to employees 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 nine months ended September 30, 2018 . Equity-Classified Equity-Settled Restricted Stock Units Number of Shares Weighted Average Grant Date Fair Value Per Share Unvested performance-based awards outstanding at January 1, 2018 — $ — Awards granted 45,375 $ 121.75 Awards vested — $ — Awards forfeited/cancelled — $ — Unvested performance-based awards outstanding at September 30, 2018 45,375 $ 121.75 As of September 30, 2018 , $4,514 of total remaining unrecognized stock-based compensation cost related to performance-based equity-classified restricted stock units is expected to be recognized over the weighted-average remaining requisite service period of 2.1 years . Performance-based equity-classified RSUs were granted during the period in connection with the acquisition of Continuum and have a variable vesting period, subject to satisfaction of the applicable performance conditions with each vesting portion having its own service inception date. Compensation is recognized over the vesting period and adjusted for the probability of achievement of the performance criteria for each vesting portion separately. As of September 30, 2018 , the Company reduced the expected likelihood of achieving the performance conditions underlying these unvested and outstanding performance-based equity-classified RSUs based on performance to date and expectations for future performance and therefore reduced the compensation cost recognized by $ 183 associated with these RSUs. The Company will continue to reassess the probability of achievement of the performance criteria and adjust the amount of compensation expense accordingly. |
EARNINGS PER SHARE
EARNINGS PER SHARE | 9 Months Ended |
Sep. 30, 2018 | |
Earnings Per Share [Abstract] | |
EARNINGS PER SHARE | EARNINGS PER SHARE Basic earnings per share is computed by dividing income available to common shareholders by the weighted-average number of shares of common stock outstanding during the period. Diluted earnings per share is computed by dividing 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 Nine Months Ended 2018 2017 2018 2017 Numerator for basic and diluted earnings per share: Net income $ 65,618 $ 42,634 $ 180,291 $ 103,634 Numerator for basic and diluted earnings per share $ 65,618 $ 42,634 $ 180,291 $ 103,634 Denominator: Weighted average common shares for basic earnings per share 53,851,865 52,545,155 53,485,339 51,806,700 Net effect of dilutive stock options, restricted stock units and restricted stock awards 3,111,002 2,683,626 3,114,299 2,854,496 Weighted average common shares for diluted earnings per share 56,962,867 55,228,781 56,599,638 54,661,196 Net income per share: Basic $ 1.22 $ 0.81 $ 3.37 $ 2.00 Diluted $ 1.15 $ 0.77 $ 3.19 $ 1.90 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 157,316 and 121,896 during the three and nine months ended September 30, 2018 , 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 606,047 and 1,177,453 during the three and nine months ended September 30, 2017 , respectively. |
COMMITMENTS AND CONTINGENCIES
COMMITMENTS AND CONTINGENCIES | 9 Months Ended |
Sep. 30, 2018 | |
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 such as title to assets, intellectual property rights and data privacy matters associated with certain arrangements. 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. |
SEGMENTS INFORMATION
SEGMENTS INFORMATION | 9 Months Ended |
Sep. 30, 2018 | |
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. Generally, operating expenses for each reportable segment have similar characteristics and are subject to similar factors, pressures and challenges. 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 and recruitment and development expenses, non-corporate taxes, compensations 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 acquisition-related intangible assets, goodwill and other assets 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/(benefit from) income taxes. The Company manages its business primarily based on the managerial responsibility for its client base. As managerial responsibility for a particular client relationship generally correlates with the client’s geographic location, there is a high degree of similarity between client locations and the geographic boundaries of the Company’s reportable segments. In some cases, managerial responsibility for a particular client is assigned to a management team in another region and is usually based on the strength of the relationship between client executives and particular members of EPAM’s senior management team. In such cases, the client’s activity would be reported through the management team’s reportable segment. Revenues from external customers and operating profit, before unallocated expenses, by reportable segments for the three and nine months ended September 30, 2018 and 2017 , were as follows: Three Months Ended Nine Months Ended 2018 2017 2018 2017 Segment revenues: North America $ 280,838 $ 206,389 $ 769,137 $ 578,717 Europe 171,482 157,446 516,320 431,472 Russia 16,208 14,455 53,374 41,825 Total segment revenues $ 468,528 $ 378,290 $ 1,338,831 $ 1,052,014 Segment operating profit: North America $ 60,763 $ 45,529 $ 155,944 $ 126,243 Europe 28,871 25,984 84,329 66,453 Russia 543 1,685 8,211 7,129 Total segment operating profit $ 90,177 $ 73,198 $ 248,484 $ 199,825 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 revenues during the three and nine months ended September 30, 2018 and 2017 . Accounts receivable and unbilled revenues are generally dispersed across the Company’s clients in proportion to their revenues. There were no customers individually exceeding 10% of total unbilled revenues as of September 30, 2018 . As of December 31, 2017 , unbilled revenues from one customer, individually exceeded 10% and accounted for 13.0% of total unbilled revenues. There were no customers individually exceeding 10% of total accounts receivable as of September 30, 2018 and December 31, 2017 . Reconciliation of segment revenues to consolidated revenues and segment operating profit to consolidated income before provision for/(benefit from) income taxes is presented below: Three Months Ended Nine Months Ended 2018 2017 2018 2017 Total segment revenues $ 468,528 $ 378,290 $ 1,338,831 $ 1,052,014 Other income included in segment revenues (342 ) (767 ) (850 ) (863 ) Revenues $ 468,186 $ 377,523 $ 1,337,981 $ 1,051,151 Total segment operating profit: $ 90,177 $ 73,198 $ 248,484 $ 199,825 Unallocated amounts: Other income included in segment revenues (342 ) (767 ) (850 ) (863 ) Stock-based compensation expense (15,330 ) (11,217 ) (46,736 ) (39,920 ) Non-corporate taxes (2,063 ) (1,966 ) (7,041 ) (7,212 ) Professional fees (1,420 ) (1,050 ) (4,736 ) (5,870 ) Depreciation and amortization expense (2,011 ) (1,883 ) (5,754 ) (5,763 ) Bank charges (782 ) (574 ) (1,950 ) (1,417 ) One-time charges and other acquisition-related expenses (155 ) (289 ) (2,016 ) (1,187 ) Other operating expenses (3,514 ) (6,204 ) (11,907 ) (16,697 ) Income from operations 64,560 49,248 167,494 120,896 Interest and other income, net 1,941 1,416 2,442 2,802 Foreign exchange (loss)/gain (514 ) (77 ) 1,069 (1,470 ) Income before provision for/(benefit from) income taxes $ 65,987 $ 50,587 $ 171,005 $ 122,228 Geographic Area Information Long-lived assets include property and equipment, net of accumulated depreciation and amortization. Geographical information about the Company’s long-lived assets based on physical location of the assets is presented below: As of As of Belarus $ 48,728 $ 49,866 United States 11,542 3,371 Russia 10,279 9,617 Ukraine 8,529 6,995 India 6,783 2,698 Hungary 3,198 3,901 China 2,830 2,608 Other locations 7,576 7,363 Total $ 99,465 $ 86,419 The table below presents information about the Company’s revenues by client location for the three and nine months ended September 30, 2018 and 2017 . Three Months Ended Nine Months Ended 2018 2017 2018 2017 United States $ 266,065 $ 202,364 $ 736,579 $ 571,513 United Kingdom 50,482 48,471 152,315 141,177 Switzerland 35,524 33,185 105,396 90,400 Germany 20,732 16,053 60,331 42,291 Canada 18,008 15,711 51,391 41,854 Netherlands 17,031 14,118 51,934 35,345 Russia 15,609 14,079 51,930 40,614 Other locations 44,735 33,542 128,105 87,957 Total $ 468,186 $ 377,523 $ 1,337,981 $ 1,051,151 |
SUBSEQUENT EVENTS (Notes)
SUBSEQUENT EVENTS (Notes) | 9 Months Ended |
Sep. 30, 2018 | |
Subsequent Events [Abstract] | |
SUBSEQUENT EVENTS | SUBSEQUENT EVENTS On November 1, 2018 , the Company acquired 100% of the equity interests of Think Limited, a digital transformation agency headquartered in London, UK. This acquisition is intended to strengthen EPAM’s digital and organizational consulting capabilities in the UK and Western European markets and enhance the Company’s global product and design offerings. The aggregate purchase price included approximately $27,000 cash and up to approximately $8,200 of contingent consideration subject to attainment of specified performance targets in the 12 months after the acquisition. |
SUMMARY OF SIGNIFICANT ACCOUN_2
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies) | 9 Months Ended |
Sep. 30, 2018 | |
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 clients located around the world, primarily in North America, Europe, Asia and Australia. The Company has expertise in various industries, including software and hi-tech, financial services, business information and media, travel and hospitality, retail and distribution and life sciences and healthcare. The Company is incorporated in Delaware and headquartered in Newtown, PA. |
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”) and Article 10 of Regulation S-X under the Securities Exchange Act of 1934, as amended. The 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, 2017 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. |
Adoption of New Accounting Standards | Adoption of New Accounting Standards Unless otherwise discussed below, the adoption of new accounting standards did not have an impact on the Company’s consolidated financial position, results of operations, and cash flows. Revenue Recognition — Effective January 1, 2018, the Company adopted the new accounting standard ASU 2014-09, Revenue from Contracts with Customers (Topic 606) as amended using the modified retrospective method. The standard effectively replaced previously existing revenue recognition guidance (Topic 605) and requires entities to recognize revenue to depict the transfer of promised goods or services in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services as well as requires additional disclosure about the nature, amount, timing and uncertainty of revenues and cash flows arising from customer contracts, including significant judgments and changes in judgments. The following table summarizes the cumulative effect of adopting Topic 606 using the modified retrospective method of adoption as of January 1, 2018: Balance as of Adjustments Balance as of Balance Sheet Assets Unbilled revenues $ 86,500 $ (78 ) $ 86,422 Deferred tax assets $ 24,974 $ (173 ) $ 24,801 Liabilities Accrued expenses and other current liabilities $ 89,812 $ (708 ) $ 89,104 Stockholders’ equity Retained earnings $ 518,820 $ 457 $ 519,277 The Company applied a practical expedient to aggregate the effect of all contract modifications that occurred before the adoption date. See Note 7 “Revenues” in the condensed consolidated interim financial statements for additional information regarding revenues. Restricted cash and restricted cash equivalents — Effective January 1, 2018, the Company adopted Accounting Standard Update (“ASU”) No. 2016-18, Statement of Cash Flows (Topic 230): Restricted Cash which requires the Company to include in its cash and cash equivalents balances presented in the statements of cash flows amounts that are deemed to be restricted in nature. As a result of the adoption, the Company restated its condensed consolidated statements of cash flows for all of the prior periods presented. The impact of adoption on the Company’s condensed consolidated statement of cash flows was as follows for the nine months ended September 30, 2017 : As Originally Reported Restated Effect Cash flows from operating activities: Changes in operating assets and liabilities: Prepaid expenses and other assets $ 4,436 $ 2,036 $ (2,400 ) Net cash provided by operating activities $ 123,980 $ 121,580 $ (2,400 ) Cash flows from investing activities: Decrease in restricted cash and time deposits, net $ (268 ) $ (408 ) $ (140 ) Acquisition of businesses, net of cash acquired $ (6,840 ) $ (6,810 ) $ 30 Net cash used in investing activities $ (24,014 ) $ (24,124 ) $ (110 ) Effect of exchange rate changes on cash, cash equivalents, and restricted cash $ 10,286 $ 10,435 $ 149 Net increase in cash, cash equivalents and restricted cash $ 150,468 $ 148,107 $ (2,361 ) Cash, cash equivalents and restricted cash, beginning of period 362,025 364,664 2,639 Cash, cash equivalents and restricted cash, end of period $ 512,493 $ 512,771 $ 278 Derivatives and Hedging — Effective April 1, 2018, the Company early-adopted ASU 2017-12, Derivatives and Hedging (Topic 815): Targeted Improvements to Accounting for Hedging Activities . The new guidance is intended to simplify and amend hedge accounting and reporting to better align and disclose the economic results of an entity’s risk management activities in its financial statements. The ASU makes more financial and non-financial hedging strategies eligible for hedge accounting. It also changes how companies assess hedge effectiveness and amends the presentation and disclosure requirements by eliminating the requirement to separately measure and report hedge ineffectiveness and generally requires companies, for qualifying hedges, to present the entire change in the fair value of a hedging instrument in the same income statement line as the hedged item. The guidance also eases documentation and assessment requirements and modifies the accounting for components excluded from the assessment of hedge effectiveness. The guidance requires entities to apply the amended presentation and disclosure guidance prospectively as of the period of adoption. The adoption of this guidance did not have any effect on the consolidated financial results. The Company enters into derivative financial instruments to manage exposure to fluctuations in certain foreign currencies. During 2018, for accounting purposes, these foreign currency forward contracts became designated as hedges, as defined under FASB ASC Topic 815, Derivatives and Hedging . The Company measures these foreign currency derivative contracts at fair value on a recurring basis utilizing Level 2 inputs. The Company records changes in the fair value of these hedges in accumulated other comprehensive income/(loss) in our consolidated balance sheet until the forecasted transaction occurs. When the forecasted transaction occurs, the related gain or loss on the cash flow hedge is reclassified to the same line item in the statement of income as the forecasted transaction is recorded. 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 underlying hedge from accumulated other comprehensive income/(loss) into income. The cash flow impact of derivatives identified as hedging instruments is reflected as cash flows from operating activities. The cash flow impact of derivatives not identified as hedging instruments is reflected as cash flows from investing activities. 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. Leases — Effective January 1, 2019, the Company will be required to adopt the new guidance of ASC Topic 842, Leases (Topic 842) (with early adoption permitted effective January 1, 2018). This amendment supersedes previous accounting guidance (Topic 840) and requires all leases, with the exception of leases with a term of twelve months or less, to be recorded on the balance sheet as lease assets and lease liabilities. The standard allows for two methods of adoption to recognize and measure leases: retrospectively to each prior period presented in the financial statements with the cumulative effect of initially applying the guidance recognized at the beginning of the earliest comparative period presented or retrospectively at the beginning of the period of adoption with the cumulative effect of initially applying the guidance recognized at the beginning of the period in which the guidance is first applied. Both adoption methods include a number of optional practical expedients that entities may elect to apply. These practical expedients relate to the identification and classification of leases that commenced before the effective date, initial direct costs for leases that commenced before the effective date, and the ability to use hindsight in evaluating lessee options to extend or terminate a lease or to purchase the underlying asset. An entity that elects to apply the practical expedients will, in effect, continue to account for leases that commence before the effective date in accordance with previous GAAP unless the lease is modified, except that lessees are required to recognize a right-of-use asset and a lease liability for all operating leases based on the present value of the remaining minimum rental payments that were tracked and disclosed under previous GAAP. The transition guidance in Topic 842 also provides specific guidance for the amounts previously recognized in accordance with the business combinations guidance for leases. The Company has developed a transition plan, which includes making necessary changes to policies, processes, internal controls and system enhancements to generate the information necessary to comply with the new standard. The Company has identified a global lease management and accounting software solution, which is currently being tested and implemented. The Company has collected relevant data and is finalizing its evaluation of lease arrangements, potential embedded leases and accounting policy elections. While the Company is currently assessing the quantitative impact, the Company expects the new guidance will have a material impact on its consolidated balance sheet due to the addition of right-of-use assets and lease liabilities principally related to its office space leases. EPAM does not expect the new guidance to have a material impact on its consolidated statement of income and comprehensive income or its consolidated statement of cash flows. The Company expects to adopt this standard on January 1, 2019 using the method of adoption whereby the cumulative effect of adoption is recognized at the beginning of the period of adoption. Measurement of Credit Losses on Financial Instruments — Effective January 1, 2020, the Company will be required to adopt the amended guidance of ASC Topic 326, Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments , (with early adoption permitted effective January 1, 2019.) The amendments in this update change how companies measure and recognize credit impairment for many financial assets. The new expected credit loss model will require 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. Entities are required to adopt the standard using a modified-retrospective approach through a cumulative effect adjustment to retained earnings as of the beginning of the period of adoption. The Company has not yet completed its assessment of the impact of the new guidance on its consolidated financial statements or concluded on when it will adopt the standard. |
DERIVATIVE FINANCIAL INSTRUME_2
DERIVATIVE FINANCIAL INSTRUMENTS (Policies) | 9 Months Ended |
Sep. 30, 2018 | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |
Derivative Instruments and Hedging Activities | The Company measures derivative instruments and hedging activities at fair value and recognizes them as either assets or liabilities in its consolidated balance sheets. Accounting for the gains and losses resulting from changes in fair value depends on the use of the derivative and whether it is designated and qualifies for hedge accounting. As of September 30, 2018 , all of the Company’s foreign exchange forward contracts were designated as hedges. To receive hedge accounting treatment, all hedging relationships are formally documented at the inception of the hedge, and the hedges must be highly effective in offsetting changes to future cash flows on hedged transactions. |
Reporting of Cash Flow Hedges | The Company records changes in the fair value of its cash flow hedges in accumulated other comprehensive income/(loss) in the consolidated balance sheet 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. |
REVENUES (Policies)
REVENUES (Policies) | 9 Months Ended |
Sep. 30, 2018 | |
Revenue from Contract with Customer [Abstract] | |
Revenue Recognition | Effective January 1, 2018, the Company adopted ASU No. 2014-09, Revenue from Contracts with Customers (Topic 606) as amended. The Company adopted the new guidance using the modified retrospective method by recognizing the cumulative effect of adoption as an adjustment to retained earnings as of January 1, 2018. Results for reporting periods beginning after January 1, 2018 are presented under Topic 606, while prior period amounts are not adjusted and continue to be reported in accordance with Topic 605. The impact of adoption of the new guidance on the Company’s consolidated financial statements as of January 1, 2018 are presented in Note 1 “Summary of Significant Accounting Policies.” The Company recognizes revenues when control of goods or services is passed to a customer in an amount that reflects the consideration the Company expects to be entitled to in exchange for those goods or services. Such control may be transferred over time or at a point in time depending on satisfaction of obligations stipulated by the contract. Consideration expected to be received may consist of both fixed and variable components and is allocated to each separately identifiable performance obligation based on the performance obligation’s relative standalone selling price. Variable consideration usually takes the form of volume-based discounts, service level credits, price concessions or incentives. Determining the estimated amount of such variable consideration involves assumptions and judgment that can have an impact on the amount of revenues reported. The Company derives its revenues from a variety of service offerings, which represent specific competencies of its IT professionals. Fees for these contracts may be in the form of time-and-materials or fixed-price arrangements. The majority of the Company’s revenues are generated under time-and-material contracts which are billed using hourly, daily or monthly rates to determine the amounts to be charged directly to the client. The Company applies a practical expedient and revenues related to time-and-material contracts are recognized based on the Company’s right to invoice for services performed. Fixed-price contracts include maintenance and support arrangements, which may exceed one year in duration, as well as application development arrangements. Maintenance and support arrangements generally relate to the provision of ongoing services. Revenues for such agreements are recognized ratably over the expected service period. Application development arrangements are accounted for using input or output methods for measuring the progress towards satisfaction of the performance obligation. Input methods are used only when there is a direct correlation between hours incurred and the end product delivered. Assumptions, risks and uncertainties inherent in the estimates used to measure progress could affect the amount of revenues, receivables and deferred revenues at each reporting period. Revenues from licenses which have significant stand-alone functionality are recognized at a point in time when control of the license is transferred to the customer. Revenues from licenses which do not have stand-alone functionality are recognized over time. If there is an uncertainty about the receipt of payment for the services, revenue is deferred until the uncertainty is sufficiently resolved. The Company applies a practical expedient and does not assess the existence of a significant financing component if the period between when the Company transfers the service to a customer and when the customer pays for that service is one year or less. The Company reports gross reimbursable “out-of-pocket” expenses incurred as both revenues and cost of revenues in the condensed consolidated statements of income and comprehensive income. |
Unbilled Revenues | Contract assets included in unbilled revenues are recorded when services have been provided but the Company does not have an unconditional right to receive consideration. |
Impairment Loss | The Company recognizes an impairment loss when the contract carrying amount is greater than the remaining consideration receivable, less directly related costs to be incurred. |
Deferred Revenues | Contract liabilities comprise amounts collected from the Company’s clients for revenues not yet earned. Such amounts are anticipated to be recorded as revenues when services are performed in subsequent periods. |
SUMMARY OF SIGNIFICANT ACCOUN_3
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Tables) | 9 Months Ended |
Sep. 30, 2018 | |
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |
Cummulative Effect of Adoption of ASU | The following tables summarize the impacts of changes in accounting policies after adoption of Topic 606 on the Company’s condensed consolidated financial statements for the three and nine months ended September 30, 2018 , which primarily resulted from deferring the timing of revenue recognition for contracts that were previously recognized on a cash basis and recognizing revenues from certain license agreements at a point-in-time rather than over time: As of September 30, 2018 As Reported Balances Without Adoption of Topic 606 Effect of Change Higher/(Lower) Balance Sheet Liabilities Accrued expenses and other current liabilities $ 98,442 $ 98,354 $ 88 Other noncurrent liabilities 11,804 11,823 (19 ) Stockholders’ equity Retained earnings $ 699,568 $ 699,637 $ (69 ) Three Months Ended September 30, 2018 Nine Months Ended September 30, 2018 As Reported Balances Without Adoption of Topic 606 Effect of Change As Reported Balances Without Adoption of Topic 606 Effect of Change Income Statement Revenues $ 468,186 $ 468,257 $ (71 ) $ 1,337,981 $ 1,338,069 $ (88 ) Income from operations $ 64,560 $ 64,631 $ (71 ) $ 167,494 $ 167,582 $ (88 ) Provision for/(benefit from) income taxes $ 369 $ 385 $ (16 ) $ (9,286 ) $ (9,267 ) $ (19 ) Net income $ 65,618 $ 65,673 $ (55 ) $ 180,291 $ 180,360 $ (69 ) |
Topic 606 | |
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |
Cummulative Effect of Adoption of ASU | The following table summarizes the cumulative effect of adopting Topic 606 using the modified retrospective method of adoption as of January 1, 2018: Balance as of Adjustments Balance as of Balance Sheet Assets Unbilled revenues $ 86,500 $ (78 ) $ 86,422 Deferred tax assets $ 24,974 $ (173 ) $ 24,801 Liabilities Accrued expenses and other current liabilities $ 89,812 $ (708 ) $ 89,104 Stockholders’ equity Retained earnings $ 518,820 $ 457 $ 519,277 |
ASU 2016-18 | |
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |
Cummulative Effect of Adoption of ASU | The impact of adoption on the Company’s condensed consolidated statement of cash flows was as follows for the nine months ended September 30, 2017 : As Originally Reported Restated Effect Cash flows from operating activities: Changes in operating assets and liabilities: Prepaid expenses and other assets $ 4,436 $ 2,036 $ (2,400 ) Net cash provided by operating activities $ 123,980 $ 121,580 $ (2,400 ) Cash flows from investing activities: Decrease in restricted cash and time deposits, net $ (268 ) $ (408 ) $ (140 ) Acquisition of businesses, net of cash acquired $ (6,840 ) $ (6,810 ) $ 30 Net cash used in investing activities $ (24,014 ) $ (24,124 ) $ (110 ) Effect of exchange rate changes on cash, cash equivalents, and restricted cash $ 10,286 $ 10,435 $ 149 Net increase in cash, cash equivalents and restricted cash $ 150,468 $ 148,107 $ (2,361 ) Cash, cash equivalents and restricted cash, beginning of period 362,025 364,664 2,639 Cash, cash equivalents and restricted cash, end of period $ 512,493 $ 512,771 $ 278 |
ACQUISITIONS (Tables)
ACQUISITIONS (Tables) | 9 Months Ended |
Sep. 30, 2018 | |
Business Combinations [Abstract] | |
Fair Values of Net Assets Acquired | The following table summarizes the preliminary fair values of the assets acquired and liabilities assumed in connection with the acquisition of Continuum as originally reported and as adjusted as of September 30, 2018 : As Originally Reported As Adjusted Cash and cash equivalents $ 2,251 $ 2,251 Accounts receivable 6,676 6,676 Unbilled revenues 2,463 2,463 Prepaid and other current assets 942 942 Goodwill 29,805 26,693 Intangible assets 16,600 14,450 Property and equipment and other noncurrent assets 8,902 8,902 Total assets acquired $ 67,639 $ 62,377 Accounts payable, accrued expenses and other current liabilities $ 2,991 $ 2,751 Due to employees 1,001 1,001 Long-term debt (Note 6) 3,220 3,220 Other noncurrent liabilities 5,412 490 Total liabilities assumed $ 12,624 $ 7,462 Net assets acquired $ 55,015 $ 54,915 |
Fair Values and Useful Lives of Intangible Assets Acquired | The following table presents the estimated fair values and useful lives of intangible assets acquired in connection with the acquisition of Continuum: Continuum Weighted Average Useful Life (in years) Amount Customer relationships 6.5 $ 5,800 Favorable lease 11.2 5,500 Contract royalties 8 1,900 Trade names 5 1,250 Total $ 14,450 |
GOODWILL (Tables)
GOODWILL (Tables) | 9 Months Ended |
Sep. 30, 2018 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Schedule of Goodwill By Reportable Segment | Goodwill by reportable segment was as follows: North America Europe Total Balance as of December 31, 2017 $ 77,290 $ 42,241 $ 119,531 Continuum acquisition (Note 2) 26,693 — 26,693 Effect of net foreign currency exchange rate changes (193 ) (1,044 ) (1,237 ) Balance as of September 30, 2018 $ 103,790 $ 41,197 $ 144,987 |
FAIR VALUE MEASUREMENTS (Tables
FAIR VALUE MEASUREMENTS (Tables) | 9 Months Ended |
Sep. 30, 2018 | |
Fair Value Disclosures [Abstract] | |
Financial Assers and Liabilities Measured at Fair Value on Recurring Basis | The following table shows the fair values of the Company’s financial assets and liabilities measured at fair value on a recurring basis as of September 30, 2018 : As of September 30, 2018 Balance Level 1 Level 2 Level 3 Foreign exchange derivative assets $ 114 $ — $ 114 $ — Total assets measured at fair value on a recurring basis $ 114 $ — $ 114 $ — Contingent consideration $ 1,500 $ — $ — $ 1,500 Foreign exchange derivative liabilities 2,806 — 2,806 — Total liabilities measured at fair value on a recurring basis $ 4,306 $ — $ 2,806 $ 1,500 |
Acquisition-Related Contractual Contingent Liabilities Roll Forward | A reconciliation of the beginning and ending balances of acquisition-related contractual contingent liabilities using significant unobservable inputs (Level 3) for the nine months ended September 30, 2018 is as follows: Amount Contractual contingent liabilities at December 31, 2017 $ — Acquisition date fair value of contractual contingent liabilities — Continuum (Note 2) 2,400 Changes in fair value of contractual contingent liabilities included in Interest and other income, net (900 ) Contractual contingent liabilities at September 30, 2018 $ 1,500 |
Reported Amounts and Estimated Fair Values of the Financial Assets and Liabilities Requiring Fair Value Disclosure | The following tables present the reported amounts and estimated fair values of the financial assets and liabilities for which disclosure of fair value is required, as they would be categorized within the fair value hierarchy, as of the dates indicated: Fair Value Hierarchy Balance Estimated Fair Value Level 1 Level 2 Level 3 September 30, 2018 Financial Assets: Cash and cash equivalents $ 685,108 $ 685,108 $ 685,108 $ — $ — Restricted cash $ 1,193 $ 1,193 $ 1,193 $ — $ — Employee loans $ 3,745 $ 3,745 $ — $ — $ 3,745 Financial Liabilities: Borrowings under the 2017 Credit Facility $ 25,016 $ 25,016 $ — $ 25,016 $ — Fair Value Hierarchy Balance Estimated Fair Value Level 1 Level 2 Level 3 December 31, 2017 Financial Assets: Cash and cash equivalents $ 582,585 $ 582,585 $ 582,585 $ — $ — Time deposits and restricted cash $ 673 $ 673 $ — $ 673 $ — Employee loans $ 4,210 $ 4,210 $ — $ — $ 4,210 Financial Liabilities: Borrowings under the 2017 Credit Facility $ 25,009 $ 25,009 $ — $ 25,009 $ — |
DERIVATIVE FINANCIAL INSTRUME_3
DERIVATIVE FINANCIAL INSTRUMENTS (Tables) | 9 Months Ended |
Sep. 30, 2018 | |
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 September 30, 2018 and December 31, 2017 were as follows: As of September 30, 2018 As of December 31, 2017 Balance Sheet Classification Asset Derivatives Liability Derivatives Asset Derivatives Liability Derivatives Foreign exchange forward contracts - Designated as hedging instruments Prepaid and other current assets $ 114 $ — Accrued expenses and other current liabilities $ 2,806 $ — Foreign exchange forward contracts - Not designated as hedging instruments Prepaid and other current assets $ — $ 114 |
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 nine months ended September 30, 2018 and 2017 were as follows: Three Months Ended Nine Months Ended September 30, 2018 2017 2018 2017 Foreign exchange forward contracts - Designated as hedging instruments: Change in fair value recognized in accumulated other comprehensive loss (86 ) — (2,692 ) — Net loss reclassified from accumulated other comprehensive loss into cost of revenues (exclusive of depreciation and amortization) (1,604 ) — (2,541 ) — Foreign exchange forward contracts - Not designated as hedging instruments: Net gain recognized in foreign exchange (loss)/gain — 111 44 270 |
LONG-TERM DEBT LONG-TERM DEBT (
LONG-TERM DEBT LONG-TERM DEBT (Tables) | 9 Months Ended |
Sep. 30, 2018 | |
Debt Disclosure [Abstract] | |
Outstanding Dept And Borrowing Capacity under 2017 Credit Facility | The following table presents the outstanding debt and borrowing capacity of the Company under the 2017 Credit Facility: As of As of Outstanding debt $ 25,000 $ 25,000 Interest rate 3.2 % 2.6 % Irrevocable standby letters of credit $ 387 $ 1,294 Available borrowing capacity $ 274,613 $ 273,706 Current maximum borrowing capacity $ 300,000 $ 300,000 |
REVENUES (Tables)
REVENUES (Tables) | 9 Months Ended |
Sep. 30, 2018 | |
Revenue from Contract with Customer [Abstract] | |
Impact of Changes After Adoption of Topic 606 | The following tables summarize the impacts of changes in accounting policies after adoption of Topic 606 on the Company’s condensed consolidated financial statements for the three and nine months ended September 30, 2018 , which primarily resulted from deferring the timing of revenue recognition for contracts that were previously recognized on a cash basis and recognizing revenues from certain license agreements at a point-in-time rather than over time: As of September 30, 2018 As Reported Balances Without Adoption of Topic 606 Effect of Change Higher/(Lower) Balance Sheet Liabilities Accrued expenses and other current liabilities $ 98,442 $ 98,354 $ 88 Other noncurrent liabilities 11,804 11,823 (19 ) Stockholders’ equity Retained earnings $ 699,568 $ 699,637 $ (69 ) Three Months Ended September 30, 2018 Nine Months Ended September 30, 2018 As Reported Balances Without Adoption of Topic 606 Effect of Change As Reported Balances Without Adoption of Topic 606 Effect of Change Income Statement Revenues $ 468,186 $ 468,257 $ (71 ) $ 1,337,981 $ 1,338,069 $ (88 ) Income from operations $ 64,560 $ 64,631 $ (71 ) $ 167,494 $ 167,582 $ (88 ) Provision for/(benefit from) income taxes $ 369 $ 385 $ (16 ) $ (9,286 ) $ (9,267 ) $ (19 ) Net income $ 65,618 $ 65,673 $ (55 ) $ 180,291 $ 180,360 $ (69 ) |
Disaggregation of Revenues | The following tables show the disaggregation of the Company’s revenues by major client location, including a reconciliation of the disaggregated revenues with the reportable segments (Note 12 “Segment Information”) for the three and nine months ended September 30, 2018 : Three Months Ended September 30, 2018 Reportable Segments North America Europe Russia Total Segment Revenues Other Income Included in Segment Revenues Consolidated Revenues Client Locations North America $ 271,551 $ 12,536 $ 17 $ 284,104 $ (27 ) $ 284,077 Europe 5,408 146,990 3 152,401 (166 ) 152,235 CIS 2,208 142 16,184 18,534 — 18,534 APAC 1,671 11,814 4 13,489 (149 ) 13,340 Revenues $ 280,838 $ 171,482 $ 16,208 $ 468,528 $ (342 ) $ 468,186 Nine Months Ended September 30, 2018 Reportable Segments North America Europe Russia Total Segment Revenues Other Income Included in Segment Revenues Consolidated Revenues Client Locations North America $ 747,894 $ 40,074 — $ 46 — $ 788,014 $ (40 ) $ 787,974 Europe 11,234 444,468 — 45 — 455,747 (623 ) 455,124 CIS 6,300 233 — 53,192 — 59,725 — 59,725 APAC 3,709 31,545 — 91 — 35,345 (187 ) 35,158 Revenues $ 769,137 $ 516,320 $ 53,374 $ 1,338,831 $ (850 ) $ 1,337,981 The following tables show the disaggregation of the Company’s revenues by industry vertical, including a reconciliation of the disaggregated revenues with the reportable segments (Note 12 “Segment Information”) for the three and nine months ended September 30, 2018 : Three Months Ended September 30, 2018 Reportable Segments North America Europe Russia Total Segment Revenues Other Income Included in Segment Revenues Consolidated Revenues Industry Verticals Financial Services $ 30,488 $ 61,713 $ 12,786 $ 104,987 $ (189 ) $ 104,798 Travel & Consumer 45,690 53,634 1,891 101,215 (122 ) 101,093 Software & Hi-Tech 68,572 19,035 569 88,176 — 88,176 Business Information & Media 64,152 17,650 — 81,802 — 81,802 Life Sciences & Healthcare 39,550 5,078 12 44,640 (31 ) 44,609 Emerging Verticals 32,386 14,372 950 47,708 — 47,708 Revenues $ 280,838 $ 171,482 $ 16,208 $ 468,528 $ (342 ) $ 468,186 Nine Months Ended September 30, 2018 Reportable Segments North America Europe Russia Total Segment Revenues Other Income Included in Segment Revenues Consolidated Revenues Industry Verticals Financial Services $ 79,176 $ 190,027 $ 43,102 $ 312,305 $ (697 ) $ 311,608 Travel & Consumer 133,481 155,208 5,356 294,045 (122 ) 293,923 Software & Hi-Tech 193,672 59,186 1,957 254,815 — 254,815 Business Information & Media 181,021 54,637 — 235,658 — 235,658 Life Sciences & Healthcare 99,893 15,550 12 115,455 (31 ) 115,424 Emerging Verticals 81,894 41,712 2,947 126,553 — 126,553 Revenues $ 769,137 $ 516,320 $ 53,374 $ 1,338,831 $ (850 ) $ 1,337,981 The following tables show the disaggregation of the Company’s revenues by contract type including a reconciliation of the disaggregated revenues with the Company’s reportable segments (Note 12 “Segment Information”) for the three and nine months ended September 30, 2018 : Three Months Ended September 30, 2018 Reportable Segments North America Europe Russia Total Segment Revenues Other Income Included in Segment Revenues Consolidated Revenues Contract Types Time-and-material $ 256,549 $ 155,797 $ 9,441 $ 421,787 $ — $ 421,787 Fixed-price 23,241 15,001 6,759 45,001 — 45,001 Licensing 798 173 1 972 — 972 Other revenues 250 511 7 768 (342 ) 426 Revenues $ 280,838 $ 171,482 $ 16,208 $ 468,528 $ (342 ) $ 468,186 Nine Months Ended September 30, 2018 Reportable Segments North America Europe Russia Total Segment Revenues Other Income Included in Segment Revenues Consolidated Revenues Contract Types Time-and-material $ 704,612 $ 471,900 $ 29,302 $ 1,205,814 $ — $ 1,205,814 Fixed-price 61,716 42,035 24,038 127,789 — 127,789 Licensing 2,098 1,119 12 3,229 — 3,229 Other revenues 711 1,266 22 1,999 (850 ) 1,149 Revenues $ 769,137 $ 516,320 $ 53,374 $ 1,338,831 $ (850 ) $ 1,337,981 Timing of Revenue Recognition The following tables show the timing of revenue recognition: Three Months Ended September 30, 2018 Reportable Segments North America Europe Russia Total Segment Revenues Other Income Included in Segment Revenues Consolidated Revenues Timing of Revenue Recognition Transferred at a point of time $ 194 $ 289 $ — $ 483 $ (342 ) $ 141 Transferred over time 280,644 171,193 16,208 468,045 — 468,045 Revenues $ 280,838 $ 171,482 $ 16,208 $ 468,528 $ (342 ) $ 468,186 Nine Months Ended September 30, 2018 Reportable Segments North America Europe Russia Total Segment Revenues Other Income Included in Segment Revenues Consolidated Revenues Timing of Revenue Recognition Transferred at a point of time $ 832 $ 1,351 $ 10 $ 2,193 $ (850 ) $ 1,343 Transferred over time 768,305 514,969 53,364 1,336,638 — 1,336,638 Revenues $ 769,137 $ 516,320 $ 53,374 $ 1,338,831 $ (850 ) $ 1,337,981 |
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 September 30, 2018 . 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 year 1 Year 2 Years 3 Years Total Contract Type Fixed-price $ 4,590 $ 568 $ 126 $ — $ 5,284 |
Contract Balances | The following table provides information on the classification of contract assets and liabilities in the condensed consolidated balance sheets: As of As of Contract assets included in unbilled revenues $ 19,180 $ 7,901 Contract liabilities included in accrued expenses and other current liabilities $ 3,376 $ 4,498 |
STOCK-BASED COMPENSATION (Table
STOCK-BASED COMPENSATION (Tables) | 9 Months Ended |
Sep. 30, 2018 | |
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |
Costs Related to Stock Compensation Plans | 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 Nine Months Ended 2018 2017 2018 2017 Cost of revenues (exclusive of depreciation and amortization) $ 7,492 $ 4,913 $ 22,835 $ 14,452 Selling, general and administrative expenses 7,838 6,304 23,901 25,468 Total $ 15,330 $ 11,217 $ 46,736 $ 39,920 |
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, 2018 4,901,748 $ 40.91 Options granted 157,133 $ 112.91 Options exercised (863,365 ) $ 36.90 Options forfeited/cancelled (30,819 ) $ 63.39 Options expired (250 ) $ 61.38 Options outstanding at September 30, 2018 4,164,447 $ 44.29 $ 388,977 5.7 Options vested and exercisable at September 30, 2018 3,251,127 $ 35.94 $ 330,834 5.2 Options expected to vest at September 30, 2018 870,538 $ 73.59 $ 55,810 7.5 |
Service-based Awards Activity | The table below summarizes activity related to the Company’s equity-classified and liability-classified service-based awards for the nine months ended September 30, 2018 . 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, 2018 1,840 $ 54.37 688,012 $ 71.60 314,829 $ 72.50 Awards granted — $ — 332,683 $ 114.35 85,380 $ 112.65 Awards modified — $ — (2,299 ) $ 72.80 2,299 $ 116.63 Awards vested (1,047 ) $ 47.76 (215,263 ) $ 70.09 (91,052 ) $ 72.42 Awards forfeited/cancelled — $ — (39,644 ) $ 82.59 (6,998 ) $ 79.19 Unvested service-based awards outstanding at September 30, 2018 793 $ 63.10 763,489 $ 90.08 304,458 $ 83.96 |
Performance-based Awards Activity | The table below summarizes activity related to the Company’s equity-classified performance-based awards for the nine months ended September 30, 2018 . Equity-Classified Equity-Settled Restricted Stock Units Number of Shares Weighted Average Grant Date Fair Value Per Share Unvested performance-based awards outstanding at January 1, 2018 — $ — Awards granted 45,375 $ 121.75 Awards vested — $ — Awards forfeited/cancelled — $ — Unvested performance-based awards outstanding at September 30, 2018 45,375 $ 121.75 |
EARNINGS PER SHARE (Tables)
EARNINGS PER SHARE (Tables) | 9 Months Ended |
Sep. 30, 2018 | |
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 Nine Months Ended 2018 2017 2018 2017 Numerator for basic and diluted earnings per share: Net income $ 65,618 $ 42,634 $ 180,291 $ 103,634 Numerator for basic and diluted earnings per share $ 65,618 $ 42,634 $ 180,291 $ 103,634 Denominator: Weighted average common shares for basic earnings per share 53,851,865 52,545,155 53,485,339 51,806,700 Net effect of dilutive stock options, restricted stock units and restricted stock awards 3,111,002 2,683,626 3,114,299 2,854,496 Weighted average common shares for diluted earnings per share 56,962,867 55,228,781 56,599,638 54,661,196 Net income per share: Basic $ 1.22 $ 0.81 $ 3.37 $ 2.00 Diluted $ 1.15 $ 0.77 $ 3.19 $ 1.90 |
SEGMENTS INFORMATION (Tables)
SEGMENTS INFORMATION (Tables) | 9 Months Ended |
Sep. 30, 2018 | |
Segment Reporting [Abstract] | |
Revenues from External Customers and Operating Profit/(Loss) Before Unallocated Expenses | Revenues from external customers and operating profit, before unallocated expenses, by reportable segments for the three and nine months ended September 30, 2018 and 2017 , were as follows: Three Months Ended Nine Months Ended 2018 2017 2018 2017 Segment revenues: North America $ 280,838 $ 206,389 $ 769,137 $ 578,717 Europe 171,482 157,446 516,320 431,472 Russia 16,208 14,455 53,374 41,825 Total segment revenues $ 468,528 $ 378,290 $ 1,338,831 $ 1,052,014 Segment operating profit: North America $ 60,763 $ 45,529 $ 155,944 $ 126,243 Europe 28,871 25,984 84,329 66,453 Russia 543 1,685 8,211 7,129 Total segment operating profit $ 90,177 $ 73,198 $ 248,484 $ 199,825 |
Reconciliation of Segment Revenues to Consolidated Revenues and Segment Operating Profit to Consolidated Income Before Provision for Income Taxes | Reconciliation of segment revenues to consolidated revenues and segment operating profit to consolidated income before provision for/(benefit from) income taxes is presented below: Three Months Ended Nine Months Ended 2018 2017 2018 2017 Total segment revenues $ 468,528 $ 378,290 $ 1,338,831 $ 1,052,014 Other income included in segment revenues (342 ) (767 ) (850 ) (863 ) Revenues $ 468,186 $ 377,523 $ 1,337,981 $ 1,051,151 Total segment operating profit: $ 90,177 $ 73,198 $ 248,484 $ 199,825 Unallocated amounts: Other income included in segment revenues (342 ) (767 ) (850 ) (863 ) Stock-based compensation expense (15,330 ) (11,217 ) (46,736 ) (39,920 ) Non-corporate taxes (2,063 ) (1,966 ) (7,041 ) (7,212 ) Professional fees (1,420 ) (1,050 ) (4,736 ) (5,870 ) Depreciation and amortization expense (2,011 ) (1,883 ) (5,754 ) (5,763 ) Bank charges (782 ) (574 ) (1,950 ) (1,417 ) One-time charges and other acquisition-related expenses (155 ) (289 ) (2,016 ) (1,187 ) Other operating expenses (3,514 ) (6,204 ) (11,907 ) (16,697 ) Income from operations 64,560 49,248 167,494 120,896 Interest and other income, net 1,941 1,416 2,442 2,802 Foreign exchange (loss)/gain (514 ) (77 ) 1,069 (1,470 ) Income before provision for/(benefit from) income taxes $ 65,987 $ 50,587 $ 171,005 $ 122,228 |
Geographical Information of Long-Lived Assets Based on Physical Location | Geographical information about the Company’s long-lived assets based on physical location of the assets is presented below: As of As of Belarus $ 48,728 $ 49,866 United States 11,542 3,371 Russia 10,279 9,617 Ukraine 8,529 6,995 India 6,783 2,698 Hungary 3,198 3,901 China 2,830 2,608 Other locations 7,576 7,363 Total $ 99,465 $ 86,419 |
Revenues by Client Location | The table below presents information about the Company’s revenues by client location for the three and nine months ended September 30, 2018 and 2017 . Three Months Ended Nine Months Ended 2018 2017 2018 2017 United States $ 266,065 $ 202,364 $ 736,579 $ 571,513 United Kingdom 50,482 48,471 152,315 141,177 Switzerland 35,524 33,185 105,396 90,400 Germany 20,732 16,053 60,331 42,291 Canada 18,008 15,711 51,391 41,854 Netherlands 17,031 14,118 51,934 35,345 Russia 15,609 14,079 51,930 40,614 Other locations 44,735 33,542 128,105 87,957 Total $ 468,186 $ 377,523 $ 1,337,981 $ 1,051,151 |
SUMMARY OF SIGNIFICANT ACCOUN_4
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Revenue Recognition) (Details) - USD ($) $ in Thousands | Sep. 30, 2018 | Jan. 01, 2018 | Dec. 31, 2017 |
Assets | |||
Unbilled revenues | $ 129,683 | $ 86,422 | $ 86,500 |
Deferred tax assets | 61,905 | 24,801 | 24,974 |
Liabilities | |||
Accrued expenses and other current liabilities | 98,442 | 89,104 | 89,812 |
Stockholders’ equity | |||
Retained earnings | 699,568 | 519,277 | 518,820 |
Balance under Revenue Guidance in Effect before Topic 606 | |||
Assets | |||
Unbilled revenues | 86,500 | ||
Deferred tax assets | 24,974 | ||
Liabilities | |||
Accrued expenses and other current liabilities | 98,354 | 89,812 | |
Stockholders’ equity | |||
Retained earnings | 699,637 | $ 518,820 | |
Topic 606 | Adjustments | |||
Assets | |||
Unbilled revenues | (78) | ||
Deferred tax assets | (173) | ||
Liabilities | |||
Accrued expenses and other current liabilities | 88 | (708) | |
Stockholders’ equity | |||
Retained earnings | $ (69) | $ 457 |
SUMMARY OF SIGNIFICANT ACCOUN_5
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Restricted Cash and Restricted Cash Equivalents) (Details) - USD ($) $ in Thousands | 9 Months Ended | |
Sep. 30, 2018 | Sep. 30, 2017 | |
Changes in operating assets and liabilities: | ||
Prepaid expenses and other assets | $ (1,765) | $ 2,036 |
Net cash provided by operating activities | 169,088 | 121,580 |
Cash flows from investing activities: | ||
Decrease in restricted cash and time deposits, net | 418 | (408) |
Acquisition of businesses, net of cash acquired | (50,264) | (6,810) |
Net cash used in investing activities | (77,833) | (24,124) |
Effect of exchange rate changes on cash, cash equivalents and restricted cash | (8,660) | 10,435 |
Net increase in cash, cash equivalents and restricted cash | 103,446 | 148,107 |
Cash, cash equivalents and restricted cash, beginning of period | 582,585 | |
Cash, cash equivalents and restricted cash, beginning of period | 582,855 | 364,664 |
Cash, cash equivalents and restricted cash, end of period | 685,108 | |
Cash, cash equivalents and restricted cash, end of period | $ 686,301 | 512,771 |
As Originally Reported | ||
Changes in operating assets and liabilities: | ||
Prepaid expenses and other assets | 4,436 | |
Net cash provided by operating activities | 123,980 | |
Cash flows from investing activities: | ||
Decrease in restricted cash and time deposits, net | (268) | |
Acquisition of businesses, net of cash acquired | (6,840) | |
Net cash used in investing activities | (24,014) | |
Effect of exchange rate changes on cash, cash equivalents, and restricted cash | 10,286 | |
Net increase in cash, cash equivalents and restricted cash | 150,468 | |
Cash, cash equivalents and restricted cash, beginning of period | 362,025 | |
Cash, cash equivalents and restricted cash, end of period | 512,493 | |
ASU 2016-18 | Effect | ||
Changes in operating assets and liabilities: | ||
Prepaid expenses and other assets | (2,400) | |
Net cash provided by operating activities | (2,400) | |
Cash flows from investing activities: | ||
Decrease in restricted cash and time deposits, net | (140) | |
Acquisition of businesses, net of cash acquired | 30 | |
Net cash used in investing activities | (110) | |
Effect of exchange rate changes on cash, cash equivalents, and restricted cash | 149 | |
Net increase in cash, cash equivalents and restricted cash | (2,361) | |
Cash, cash equivalents and restricted cash, beginning of period | 2,639 | |
Cash, cash equivalents and restricted cash, end of period | $ 278 |
ACQUISITIONS (Narrative) (Detai
ACQUISITIONS (Narrative) (Details) - Continuum $ in Thousands | Mar. 15, 2018USD ($) | Sep. 30, 2018USD ($) |
Business Acquisition [Line Items] | ||
Acquisition date | Mar. 15, 2018 | |
Cash consideration | $ 52,515 | |
Cash consideration placed in escrow | $ 5,410 | |
Estimated future operating results, period | 12 months | |
Maximum amount of earnout payable | $ 3,135 | |
Earnout payment | $ 2,400 | |
Reduction to the fair value of the contingent consideration | $ (900) | |
Minimum | ||
Business Acquisition [Line Items] | ||
Consideration placed in escrow, period | 9 months | |
Maximum | ||
Business Acquisition [Line Items] | ||
Consideration placed in escrow, period | 15 months | |
Design Consultants | ||
Business Acquisition [Line Items] | ||
Numbers of employees acquired | 125 |
ACQUISITIONS (Fair Value of Net
ACQUISITIONS (Fair Value of Net Assets Acquired) (Details) - USD ($) $ in Thousands | Sep. 30, 2018 | Mar. 31, 2018 | Jan. 01, 2018 | Dec. 31, 2017 |
Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Assets [Abstract] | ||||
Unbilled revenues | $ 129,683 | $ 86,422 | $ 86,500 | |
Goodwill | 144,987 | $ 119,531 | ||
Continuum | ||||
Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Assets [Abstract] | ||||
Cash and cash equivalents | 2,251 | $ 2,251 | ||
Accounts receivable | 6,676 | 6,676 | ||
Unbilled revenues | 2,463 | 2,463 | ||
Prepaid and other current assets | 942 | 942 | ||
Goodwill | 26,693 | 29,805 | ||
Intangible assets | 14,450 | 16,600 | ||
Property and equipment and other noncurrent assets | 8,902 | 8,902 | ||
Total assets acquired | 62,377 | 67,639 | ||
Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Liabilities [Abstract] | ||||
Accounts payable, accrued expenses and other current liabilities | 2,751 | 2,991 | ||
Due to employees | 1,001 | 1,001 | ||
Long-term debt (Note 6) | 3,220 | 3,220 | ||
Other noncurrent liabilities | 490 | 5,412 | ||
Total liabilities assumed | 7,462 | 12,624 | ||
Net assets acquired | $ 54,915 | $ 55,015 |
ACQUISITIONS (Fair Values and U
ACQUISITIONS (Fair Values and Useful Lives of Intangible Assets Acquired) (Details) - Continuum - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended |
Sep. 30, 2018 | Sep. 30, 2018 | |
Acquired Finite-Lived Intangible Assets [Line Items] | ||
Estimated fair value of intangible assets acquired | $ 14,450 | |
Customer relationships | ||
Acquired Finite-Lived Intangible Assets [Line Items] | ||
Weighted average useful life | 6 years 6 months 12 days | |
Estimated fair value of intangible assets acquired | $ 5,800 | |
Favorable lease | ||
Acquired Finite-Lived Intangible Assets [Line Items] | ||
Adjustment related to incomplete initial accounting | $ (400) | |
Weighted average useful life | 11 years 2 months | |
Estimated fair value of intangible assets acquired | $ 5,500 | |
Contract royalties | ||
Acquired Finite-Lived Intangible Assets [Line Items] | ||
Weighted average useful life | 8 years | |
Estimated fair value of intangible assets acquired | $ 1,900 | |
Trade names | ||
Acquired Finite-Lived Intangible Assets [Line Items] | ||
Weighted average useful life | 5 years | |
Estimated fair value of intangible assets acquired | $ 1,250 |
ACQUISITIONS (Income Statement
ACQUISITIONS (Income Statement Effect) (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | |
Business Acquisition [Line Items] | ||||
Revenues | $ 468,186 | $ 377,523 | $ 1,337,981 | $ 1,051,151 |
Continuum | ||||
Business Acquisition [Line Items] | ||||
Revenues | $ 8,472 | $ 18,696 |
GOODWILL (Goodwill Roll Forward
GOODWILL (Goodwill Roll Forward) (Details) $ in Thousands | 9 Months Ended |
Sep. 30, 2018USD ($) | |
Goodwill [Roll Forward] | |
Balance as of December 31, 2017 | $ 119,531 |
Effect of net foreign currency exchange rate changes | (1,237) |
Balance as of September 30, 2018 | 144,987 |
North America | |
Goodwill [Roll Forward] | |
Balance as of December 31, 2017 | 77,290 |
Effect of net foreign currency exchange rate changes | (193) |
Balance as of September 30, 2018 | 103,790 |
Europe | |
Goodwill [Roll Forward] | |
Balance as of December 31, 2017 | 42,241 |
Effect of net foreign currency exchange rate changes | (1,044) |
Balance as of September 30, 2018 | 41,197 |
Continuum | |
Goodwill [Roll Forward] | |
Goodwill acquired | 26,693 |
Balance as of September 30, 2018 | 26,693 |
Continuum | North America | |
Goodwill [Roll Forward] | |
Goodwill acquired | 26,693 |
Continuum | Europe | |
Goodwill [Roll Forward] | |
Goodwill acquired | $ 0 |
GOODWILL (Goodwill Accumulated
GOODWILL (Goodwill Accumulated Impaitment Losses) (Details) - USD ($) $ in Thousands | Sep. 30, 2018 | Dec. 31, 2017 |
North America | ||
Goodwill [Line Items] | ||
Accumulated impairment loss | $ 0 | $ 0 |
Europe | ||
Goodwill [Line Items] | ||
Accumulated impairment loss | $ 0 | $ 0 |
FAIR VALUE MEASUREMENTS (Financ
FAIR VALUE MEASUREMENTS (Financial Assets and Liabilities at Fair Value on Recurring Basis) (Details) - USD ($) $ in Thousands | Sep. 30, 2018 | Mar. 15, 2018 | Dec. 31, 2017 |
Continuum | |||
Financial Liabilities: | |||
Contingent consideration | $ 2,400 | ||
Recurring | |||
Financial Assets: | |||
Total assets measured at fair value on a recurring basis | $ 114 | $ 0 | |
Financial Liabilities: | |||
Total liabilities measured at fair value on a recurring basis | 4,306 | $ 0 | |
Recurring | Foreign exchange contracts | |||
Financial Assets: | |||
Derivative assets | 114 | ||
Financial Liabilities: | |||
Derivative Liability | 2,806 | ||
Recurring | Continuum | |||
Financial Liabilities: | |||
Contingent consideration | 1,500 | ||
Recurring | Level 1 | |||
Financial Assets: | |||
Total assets measured at fair value on a recurring basis | 0 | ||
Financial Liabilities: | |||
Total liabilities measured at fair value on a recurring basis | 0 | ||
Recurring | Level 1 | Foreign exchange contracts | |||
Financial Assets: | |||
Derivative assets | 0 | ||
Financial Liabilities: | |||
Derivative Liability | 0 | ||
Recurring | Level 1 | Continuum | |||
Financial Liabilities: | |||
Contingent consideration | 0 | ||
Recurring | Level 2 | |||
Financial Assets: | |||
Total assets measured at fair value on a recurring basis | 114 | ||
Financial Liabilities: | |||
Total liabilities measured at fair value on a recurring basis | 2,806 | ||
Recurring | Level 2 | Foreign exchange contracts | |||
Financial Assets: | |||
Derivative assets | 114 | ||
Financial Liabilities: | |||
Derivative Liability | 2,806 | ||
Recurring | Level 2 | Continuum | |||
Financial Liabilities: | |||
Contingent consideration | 0 | ||
Recurring | Level 3 | |||
Financial Assets: | |||
Total assets measured at fair value on a recurring basis | 0 | ||
Financial Liabilities: | |||
Total liabilities measured at fair value on a recurring basis | 1,500 | ||
Recurring | Level 3 | Foreign exchange contracts | |||
Financial Assets: | |||
Derivative assets | 0 | ||
Financial Liabilities: | |||
Derivative Liability | 0 | ||
Recurring | Level 3 | Continuum | |||
Financial Liabilities: | |||
Contingent consideration | $ 1,500 |
FAIR VALUE MEASUREMENTS (Acquis
FAIR VALUE MEASUREMENTS (Acquisition-Related Contractual Contingent Liabilities Roll Forward) (Details) - Level 3 $ in Thousands | 9 Months Ended |
Sep. 30, 2018USD ($) | |
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward] | |
Contractual contingent liabilities at December 31, 2017 | $ 0 |
Contractual contingent liabilities at September 30, 2018 | 1,500 |
Continuum | |
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward] | |
Acquisition date fair value of contractual contingent liabilities — Continuum (Note 2) | 2,400 |
Continuum | Interest and other income, net | |
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward] | |
Changes in fair value of contractual contingent liabilities | $ (900) |
FAIR VALUE MEASUREMENTS (Fina_2
FAIR VALUE MEASUREMENTS (Financial Assets and Liabilities that Require Fair Value Disclosure) (Details) - USD ($) $ in Thousands | Sep. 30, 2018 | Dec. 31, 2017 |
Balance | ||
Financial Assets: | ||
Cash and cash equivalents | $ 685,108 | $ 582,585 |
Restricted cash | 1,193 | 673 |
Employee loans | 3,745 | 4,210 |
Balance | Revolving Credit Facility | Credit Facility 2017 | ||
Financial Liabilities: | ||
Borrowings | 25,016 | 25,009 |
Estimated Fair Value | ||
Financial Assets: | ||
Cash and cash equivalents | 685,108 | 582,585 |
Restricted cash | 1,193 | 673 |
Employee loans | 3,745 | 4,210 |
Estimated Fair Value | Revolving Credit Facility | Credit Facility 2017 | ||
Financial Liabilities: | ||
Borrowings | 25,016 | 25,009 |
Estimated Fair Value | Level 1 | ||
Financial Assets: | ||
Cash and cash equivalents | 685,108 | 582,585 |
Restricted cash | 1,193 | 0 |
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 and cash equivalents | 0 | 0 |
Restricted cash | 0 | 673 |
Employee loans | 0 | 0 |
Estimated Fair Value | Level 2 | Revolving Credit Facility | Credit Facility 2017 | ||
Financial Liabilities: | ||
Borrowings | 25,016 | 25,009 |
Estimated Fair Value | Level 3 | ||
Financial Assets: | ||
Cash and cash equivalents | 0 | 0 |
Restricted cash | 0 | 0 |
Employee loans | 3,745 | 4,210 |
Estimated Fair Value | Level 3 | Revolving Credit Facility | Credit Facility 2017 | ||
Financial Liabilities: | ||
Borrowings | $ 0 | $ 0 |
DERIVATIVE FINANCIAL INSTRUME_4
DERIVATIVE FINANCIAL INSTRUMENTS (Fair Value of Derivative Instruments) (Details) - Foreign exchange contracts - USD ($) $ in Thousands | Sep. 30, 2018 | Dec. 31, 2017 |
Derivatives, Fair Value [Line Items] | ||
Financial collateral posted | $ 0 | |
Designated as hedging instruments | Cash Flow Hedging | Prepaid and other current assets | ||
Derivatives, Fair Value [Line Items] | ||
Asset Derivatives | 114 | $ 0 |
Designated as hedging instruments | Cash Flow Hedging | Accrued expenses and other current liabilities | ||
Derivatives, Fair Value [Line Items] | ||
Liability Derivatives | 2,806 | 0 |
Not designated as hedging instruments | Prepaid and other current assets | ||
Derivatives, Fair Value [Line Items] | ||
Asset Derivatives | $ 0 | $ 114 |
DERIVATIVE FINANCIAL INSTRUME_5
DERIVATIVE FINANCIAL INSTRUMENTS (Changes in teh Fair Value of Derivative Instruments) (Details) - Foreign exchange contracts - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | |
Designated as hedging instruments | Cash Flow Hedging | Accumulated Other Comprehensive Loss | ||||
Derivative Instruments, Gain (Loss) [Line Items] | ||||
Change in fair value | $ (86) | $ 0 | $ (2,692) | $ 0 |
Designated as hedging instruments | Cash Flow Hedging | Cost of revenues (exclusive of depreciation and amortization) | ||||
Derivative Instruments, Gain (Loss) [Line Items] | ||||
Net loss reclassified | (1,604) | 0 | (2,541) | 0 |
Not designated as hedging instruments | Foreign exchange gain/(loss) | ||||
Derivative Instruments, Gain (Loss) [Line Items] | ||||
Net gain recognized | $ 0 | $ 111 | $ 44 | $ 270 |
LONG-TERM DEBT (Details)
LONG-TERM DEBT (Details) - USD ($) $ in Thousands | Mar. 15, 2018 | May 24, 2017 | Mar. 31, 2018 | Sep. 30, 2018 | Dec. 31, 2017 |
Continuum | |||||
Debt Instrument [Line Items] | |||||
Maturity date | Mar. 31, 2029 | ||||
Long-term debt assumed | $ 3,448 | ||||
Contractual interest rate | 8.00% | ||||
Repayments of Debt | $ 3,448 | ||||
Revolving Credit Facility | Credit Facility 2017 | |||||
Debt Instrument [Line Items] | |||||
Maturity date | May 24, 2022 | ||||
Revolving Credit Facility | Credit Facility 2017 | Federal Funds Open Rate | |||||
Debt Instrument [Line Items] | |||||
Variable interest rate spread | 0.50% | ||||
Revolving Credit Facility | Credit Facility 2017 | London Interbank Offered Rate (LIBOR) | |||||
Debt Instrument [Line Items] | |||||
Variable interest rate spread | 1.00% | ||||
Revolving Credit Facility | Credit Facility 2017 | 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 | 3.20% | 2.60% | |||
Available borrowing capacity | $ 274,613 | $ 273,706 | |||
Revolving Credit Facility | Credit Facility 2017 | U.S. dollars | Maximum | |||||
Debt Instrument [Line Items] | |||||
Line of credit, current borrowing capacity | 300,000 | 300,000 | |||
Revolving Credit Facility | Credit Facility 2017 | Other currencies, excluding U.S. dollars | |||||
Debt Instrument [Line Items] | |||||
Line of credit, maximum borrowing capacity | $ 100,000 | ||||
Standby Letters of Credit | Credit Facility 2017 | |||||
Debt Instrument [Line Items] | |||||
Irrevocable standby letters of credit | $ 387 | $ 1,294 |
REVENUES (Impact of Changes Aft
REVENUES (Impact of Changes After Adoption of Topc 606) (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||||
Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | Jan. 01, 2018 | Dec. 31, 2017 | |
Liabilities | ||||||
Accrued expenses and other current liabilities | $ 98,442 | $ 98,442 | $ 89,104 | $ 89,812 | ||
Other noncurrent liabilities | 11,804 | 11,804 | 9,435 | |||
Stockholders’ equity | ||||||
Retained earnings | 699,568 | 699,568 | 519,277 | 518,820 | ||
Income Statement | ||||||
Revenues | 468,186 | $ 377,523 | 1,337,981 | $ 1,051,151 | ||
Income from operations | 64,560 | 49,248 | 167,494 | 120,896 | ||
Provision for/(benefit from) income taxes | 369 | 7,953 | (9,286) | 18,594 | ||
Net income | 65,618 | $ 42,634 | 180,291 | $ 103,634 | ||
Balances Without Adoption of Topic 606 | ||||||
Liabilities | ||||||
Accrued expenses and other current liabilities | 98,354 | 98,354 | 89,812 | |||
Other noncurrent liabilities | 11,823 | 11,823 | ||||
Stockholders’ equity | ||||||
Retained earnings | 699,637 | 699,637 | $ 518,820 | |||
Income Statement | ||||||
Revenues | 468,257 | 1,338,069 | ||||
Income from operations | 64,631 | 167,582 | ||||
Provision for/(benefit from) income taxes | 385 | (9,267) | ||||
Net income | 65,673 | 180,360 | ||||
Effect of Change Higher/(Lower) | Topic 606 | ||||||
Liabilities | ||||||
Accrued expenses and other current liabilities | 88 | 88 | (708) | |||
Other noncurrent liabilities | (19) | (19) | ||||
Stockholders’ equity | ||||||
Retained earnings | (69) | (69) | $ 457 | |||
Income Statement | ||||||
Revenues | (71) | (88) | ||||
Income from operations | (71) | (88) | ||||
Provision for/(benefit from) income taxes | (16) | (19) | ||||
Net income | $ (55) | $ (69) |
REVENUES (Disaggregation of Rev
REVENUES (Disaggregation of Revenues) (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | |
Disaggregation of Revenue [Line Items] | ||||
Revenues | $ 468,186 | $ 377,523 | $ 1,337,981 | $ 1,051,151 |
Transferred at a point of time | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenues | 141 | 1,343 | ||
Transferred over time | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenues | 468,045 | 1,336,638 | ||
Time-and-material | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenues | 421,787 | 1,205,814 | ||
Fixed-price | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenues | 45,001 | 127,789 | ||
Licensing | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenues | 972 | 3,229 | ||
Other revenues | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenues | 426 | 1,149 | ||
Financial Services | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenues | 104,798 | 311,608 | ||
Travel & Consumer | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenues | 101,093 | 293,923 | ||
Software & Hi-Tech | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenues | 88,176 | 254,815 | ||
Business Information & Media | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenues | 81,802 | 235,658 | ||
Life Sciences & Healthcare | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenues | 44,609 | 115,424 | ||
Emerging Verticals | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenues | 47,708 | 126,553 | ||
North America | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenues | 284,077 | 787,974 | ||
Europe | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenues | 152,235 | 455,124 | ||
CIS | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenues | 18,534 | 59,725 | ||
APAC | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenues | 13,340 | 35,158 | ||
North America | ||||
Disaggregation of Revenue [Line Items] | ||||
Segment revenues | 280,838 | 206,389 | 769,137 | 578,717 |
North America | Transferred at a point of time | ||||
Disaggregation of Revenue [Line Items] | ||||
Segment revenues | 194 | 832 | ||
North America | Transferred over time | ||||
Disaggregation of Revenue [Line Items] | ||||
Segment revenues | 280,644 | 768,305 | ||
North America | Time-and-material | ||||
Disaggregation of Revenue [Line Items] | ||||
Segment revenues | 256,549 | 704,612 | ||
North America | Fixed-price | ||||
Disaggregation of Revenue [Line Items] | ||||
Segment revenues | 23,241 | 61,716 | ||
North America | Licensing | ||||
Disaggregation of Revenue [Line Items] | ||||
Segment revenues | 798 | 2,098 | ||
North America | Other revenues | ||||
Disaggregation of Revenue [Line Items] | ||||
Segment revenues | 250 | 711 | ||
North America | Financial Services | ||||
Disaggregation of Revenue [Line Items] | ||||
Segment revenues | 30,488 | 79,176 | ||
North America | Travel & Consumer | ||||
Disaggregation of Revenue [Line Items] | ||||
Segment revenues | 45,690 | 133,481 | ||
North America | Software & Hi-Tech | ||||
Disaggregation of Revenue [Line Items] | ||||
Segment revenues | 68,572 | 193,672 | ||
North America | Business Information & Media | ||||
Disaggregation of Revenue [Line Items] | ||||
Segment revenues | 64,152 | 181,021 | ||
North America | Life Sciences & Healthcare | ||||
Disaggregation of Revenue [Line Items] | ||||
Segment revenues | 39,550 | 99,893 | ||
North America | Emerging Verticals | ||||
Disaggregation of Revenue [Line Items] | ||||
Segment revenues | 32,386 | 81,894 | ||
North America | North America | ||||
Disaggregation of Revenue [Line Items] | ||||
Segment revenues | 271,551 | 747,894 | ||
North America | Europe | ||||
Disaggregation of Revenue [Line Items] | ||||
Segment revenues | 5,408 | 11,234 | ||
North America | CIS | ||||
Disaggregation of Revenue [Line Items] | ||||
Segment revenues | 2,208 | 6,300 | ||
North America | APAC | ||||
Disaggregation of Revenue [Line Items] | ||||
Segment revenues | 1,671 | 3,709 | ||
Europe | ||||
Disaggregation of Revenue [Line Items] | ||||
Segment revenues | 171,482 | 157,446 | 516,320 | 431,472 |
Europe | Transferred at a point of time | ||||
Disaggregation of Revenue [Line Items] | ||||
Segment revenues | 289 | 1,351 | ||
Europe | Transferred over time | ||||
Disaggregation of Revenue [Line Items] | ||||
Segment revenues | 171,193 | 514,969 | ||
Europe | Time-and-material | ||||
Disaggregation of Revenue [Line Items] | ||||
Segment revenues | 155,797 | 471,900 | ||
Europe | Fixed-price | ||||
Disaggregation of Revenue [Line Items] | ||||
Segment revenues | 15,001 | 42,035 | ||
Europe | Licensing | ||||
Disaggregation of Revenue [Line Items] | ||||
Segment revenues | 173 | 1,119 | ||
Europe | Other revenues | ||||
Disaggregation of Revenue [Line Items] | ||||
Segment revenues | 511 | 1,266 | ||
Europe | Financial Services | ||||
Disaggregation of Revenue [Line Items] | ||||
Segment revenues | 61,713 | 190,027 | ||
Europe | Travel & Consumer | ||||
Disaggregation of Revenue [Line Items] | ||||
Segment revenues | 53,634 | 155,208 | ||
Europe | Software & Hi-Tech | ||||
Disaggregation of Revenue [Line Items] | ||||
Segment revenues | 19,035 | 59,186 | ||
Europe | Business Information & Media | ||||
Disaggregation of Revenue [Line Items] | ||||
Segment revenues | 17,650 | 54,637 | ||
Europe | Life Sciences & Healthcare | ||||
Disaggregation of Revenue [Line Items] | ||||
Segment revenues | 5,078 | 15,550 | ||
Europe | Emerging Verticals | ||||
Disaggregation of Revenue [Line Items] | ||||
Segment revenues | 14,372 | 41,712 | ||
Europe | North America | ||||
Disaggregation of Revenue [Line Items] | ||||
Segment revenues | 12,536 | 40,074 | ||
Europe | Europe | ||||
Disaggregation of Revenue [Line Items] | ||||
Segment revenues | 146,990 | 444,468 | ||
Europe | CIS | ||||
Disaggregation of Revenue [Line Items] | ||||
Segment revenues | 142 | 233 | ||
Europe | APAC | ||||
Disaggregation of Revenue [Line Items] | ||||
Segment revenues | 11,814 | 31,545 | ||
Russia | ||||
Disaggregation of Revenue [Line Items] | ||||
Segment revenues | 16,208 | 14,455 | 53,374 | 41,825 |
Russia | Transferred at a point of time | ||||
Disaggregation of Revenue [Line Items] | ||||
Segment revenues | 0 | 10 | ||
Russia | Transferred over time | ||||
Disaggregation of Revenue [Line Items] | ||||
Segment revenues | 16,208 | 53,364 | ||
Russia | Time-and-material | ||||
Disaggregation of Revenue [Line Items] | ||||
Segment revenues | 9,441 | 29,302 | ||
Russia | Fixed-price | ||||
Disaggregation of Revenue [Line Items] | ||||
Segment revenues | 6,759 | 24,038 | ||
Russia | Licensing | ||||
Disaggregation of Revenue [Line Items] | ||||
Segment revenues | 1 | 12 | ||
Russia | Other revenues | ||||
Disaggregation of Revenue [Line Items] | ||||
Segment revenues | 7 | 22 | ||
Russia | Financial Services | ||||
Disaggregation of Revenue [Line Items] | ||||
Segment revenues | 12,786 | 43,102 | ||
Russia | Travel & Consumer | ||||
Disaggregation of Revenue [Line Items] | ||||
Segment revenues | 1,891 | 5,356 | ||
Russia | Software & Hi-Tech | ||||
Disaggregation of Revenue [Line Items] | ||||
Segment revenues | 569 | 1,957 | ||
Russia | Business Information & Media | ||||
Disaggregation of Revenue [Line Items] | ||||
Segment revenues | 0 | 0 | ||
Russia | Life Sciences & Healthcare | ||||
Disaggregation of Revenue [Line Items] | ||||
Segment revenues | 12 | 12 | ||
Russia | Emerging Verticals | ||||
Disaggregation of Revenue [Line Items] | ||||
Segment revenues | 950 | 2,947 | ||
Russia | North America | ||||
Disaggregation of Revenue [Line Items] | ||||
Segment revenues | 17 | 46 | ||
Russia | Europe | ||||
Disaggregation of Revenue [Line Items] | ||||
Segment revenues | 3 | 45 | ||
Russia | CIS | ||||
Disaggregation of Revenue [Line Items] | ||||
Segment revenues | 16,184 | 53,192 | ||
Russia | APAC | ||||
Disaggregation of Revenue [Line Items] | ||||
Segment revenues | 4 | 91 | ||
Total Segments | ||||
Disaggregation of Revenue [Line Items] | ||||
Segment revenues | 468,528 | 378,290 | 1,338,831 | 1,052,014 |
Total Segments | Transferred at a point of time | ||||
Disaggregation of Revenue [Line Items] | ||||
Segment revenues | 483 | 2,193 | ||
Total Segments | Transferred over time | ||||
Disaggregation of Revenue [Line Items] | ||||
Segment revenues | 468,045 | 1,336,638 | ||
Total Segments | Time-and-material | ||||
Disaggregation of Revenue [Line Items] | ||||
Segment revenues | 421,787 | 1,205,814 | ||
Total Segments | Fixed-price | ||||
Disaggregation of Revenue [Line Items] | ||||
Segment revenues | 45,001 | 127,789 | ||
Total Segments | Licensing | ||||
Disaggregation of Revenue [Line Items] | ||||
Segment revenues | 972 | 3,229 | ||
Total Segments | Other revenues | ||||
Disaggregation of Revenue [Line Items] | ||||
Segment revenues | 768 | 1,999 | ||
Total Segments | Financial Services | ||||
Disaggregation of Revenue [Line Items] | ||||
Segment revenues | 104,987 | 312,305 | ||
Total Segments | Travel & Consumer | ||||
Disaggregation of Revenue [Line Items] | ||||
Segment revenues | 101,215 | 294,045 | ||
Total Segments | Software & Hi-Tech | ||||
Disaggregation of Revenue [Line Items] | ||||
Segment revenues | 88,176 | 254,815 | ||
Total Segments | Business Information & Media | ||||
Disaggregation of Revenue [Line Items] | ||||
Segment revenues | 81,802 | 235,658 | ||
Total Segments | Life Sciences & Healthcare | ||||
Disaggregation of Revenue [Line Items] | ||||
Segment revenues | 44,640 | 115,455 | ||
Total Segments | Emerging Verticals | ||||
Disaggregation of Revenue [Line Items] | ||||
Segment revenues | 47,708 | 126,553 | ||
Total Segments | North America | ||||
Disaggregation of Revenue [Line Items] | ||||
Segment revenues | 284,104 | 788,014 | ||
Total Segments | Europe | ||||
Disaggregation of Revenue [Line Items] | ||||
Segment revenues | 152,401 | 455,747 | ||
Total Segments | CIS | ||||
Disaggregation of Revenue [Line Items] | ||||
Segment revenues | 18,534 | 59,725 | ||
Total Segments | APAC | ||||
Disaggregation of Revenue [Line Items] | ||||
Segment revenues | 13,489 | 35,345 | ||
Other Income Included in Segment Revenues | ||||
Disaggregation of Revenue [Line Items] | ||||
Segment revenues | (342) | (767) | (850) | (863) |
Other income included in segment revenues | (342) | $ (767) | (850) | $ (863) |
Other Income Included in Segment Revenues | Transferred at a point of time | ||||
Disaggregation of Revenue [Line Items] | ||||
Other income included in segment revenues | (342) | (850) | ||
Other Income Included in Segment Revenues | Transferred over time | ||||
Disaggregation of Revenue [Line Items] | ||||
Other income included in segment revenues | 0 | 0 | ||
Other Income Included in Segment Revenues | Time-and-material | ||||
Disaggregation of Revenue [Line Items] | ||||
Other income included in segment revenues | 0 | 0 | ||
Other Income Included in Segment Revenues | Fixed-price | ||||
Disaggregation of Revenue [Line Items] | ||||
Other income included in segment revenues | 0 | 0 | ||
Other Income Included in Segment Revenues | Licensing | ||||
Disaggregation of Revenue [Line Items] | ||||
Other income included in segment revenues | 0 | 0 | ||
Other Income Included in Segment Revenues | Other revenues | ||||
Disaggregation of Revenue [Line Items] | ||||
Other income included in segment revenues | (342) | (850) | ||
Other Income Included in Segment Revenues | Financial Services | ||||
Disaggregation of Revenue [Line Items] | ||||
Other income included in segment revenues | (189) | (697) | ||
Other Income Included in Segment Revenues | Travel & Consumer | ||||
Disaggregation of Revenue [Line Items] | ||||
Other income included in segment revenues | (122) | (122) | ||
Other Income Included in Segment Revenues | Software & Hi-Tech | ||||
Disaggregation of Revenue [Line Items] | ||||
Other income included in segment revenues | 0 | 0 | ||
Other Income Included in Segment Revenues | Business Information & Media | ||||
Disaggregation of Revenue [Line Items] | ||||
Other income included in segment revenues | 0 | 0 | ||
Other Income Included in Segment Revenues | Life Sciences & Healthcare | ||||
Disaggregation of Revenue [Line Items] | ||||
Other income included in segment revenues | (31) | (31) | ||
Other Income Included in Segment Revenues | Emerging Verticals | ||||
Disaggregation of Revenue [Line Items] | ||||
Other income included in segment revenues | 0 | 0 | ||
Other Income Included in Segment Revenues | North America | ||||
Disaggregation of Revenue [Line Items] | ||||
Other income included in segment revenues | (27) | (40) | ||
Other Income Included in Segment Revenues | Europe | ||||
Disaggregation of Revenue [Line Items] | ||||
Other income included in segment revenues | (166) | (623) | ||
Other Income Included in Segment Revenues | CIS | ||||
Disaggregation of Revenue [Line Items] | ||||
Other income included in segment revenues | 0 | 0 | ||
Other Income Included in Segment Revenues | APAC | ||||
Disaggregation of Revenue [Line Items] | ||||
Other income included in segment revenues | $ (149) | $ (187) |
REVENUES (Revenue Expected to b
REVENUES (Revenue Expected to be Recognized in Future Related to Remaining Performance Obligations) (Details) - Fixed-price $ in Thousands | Sep. 30, 2018USD ($) |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items] | |
Estimated revenue related to partially or fully unsatisfied performance obligations | $ 5,284 |
Less than 1 year | |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items] | |
Estimated revenue related to partially or fully unsatisfied performance obligations | 4,590 |
1 Year | |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items] | |
Estimated revenue related to partially or fully unsatisfied performance obligations | 568 |
2 Years | |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items] | |
Estimated revenue related to partially or fully unsatisfied performance obligations | 126 |
3 Years | |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items] | |
Estimated revenue related to partially or fully unsatisfied performance obligations | $ 0 |
REVENUES (Contract Balances) (D
REVENUES (Contract Balances) (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | |
Sep. 30, 2018 | Sep. 30, 2018 | Dec. 31, 2017 | |
Schedule of Contract Balances [Line Items] | |||
Unbilled revenues | $ 19,180 | $ 19,180 | $ 7,901 |
Change in Contract with Customer, Liability [Abstract] | |||
Revenue recognized that was previously included in deferred revenues | 258 | 3,690 | |
Revenues from performance obligations satisfied in previous periods | 3,610 | 6,627 | |
Accrued expenses and other current liabilities | |||
Schedule of Contract Balances [Line Items] | |||
Deferred revenues | $ 3,376 | $ 3,376 | $ 4,498 |
INCOME TAXES (Details)
INCOME TAXES (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | Dec. 31, 2017 | |
Schedule of Components and Changes in Income Tax Expense (Benefit) and Respective Balance Sheet Items [Line Items] | |||||
Effective tax rate | 0.60% | 15.70% | (5.40%) | 15.20% | |
Deferred income tax | $ (36,372) | $ 1,386 | |||
Excess tax benefit | $ 6,067 | $ 2,620 | 16,197 | $ 8,452 | |
Taxes payable, noncurrent | 50,242 | 50,242 | $ 59,874 | ||
Check the Box Election | |||||
Schedule of Components and Changes in Income Tax Expense (Benefit) and Respective Balance Sheet Items [Line Items] | |||||
Deferred income tax | (252) | 25,088 | |||
Tax Cuts and Jobs Act | |||||
Schedule of Components and Changes in Income Tax Expense (Benefit) and Respective Balance Sheet Items [Line Items] | |||||
Provisional income tax expense | 7,053 | 4,896 | |||
Tax payable | 59,425 | 59,425 | |||
Taxes payable, noncurrent | $ 49,117 | $ 49,117 |
STOCK-BASED COMPENSATION - Cost
STOCK-BASED COMPENSATION - Costs Related To Stock Compensation Plans (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | |
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items] | ||||
Stock-based compensation expense | $ 15,330 | $ 11,217 | $ 46,736 | $ 39,920 |
Cost of revenues (exclusive of depreciation and amortization) | ||||
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items] | ||||
Stock-based compensation expense | 7,492 | 4,913 | 22,835 | 14,452 |
Selling, general and administrative expenses | ||||
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items] | ||||
Stock-based compensation expense | $ 7,838 | $ 6,304 | $ 23,901 | $ 25,468 |
STOCK-BASED COMPENSATION - Stoc
STOCK-BASED COMPENSATION - Stock Option Activity (Details) - Employee Stock Option $ / shares in Units, $ in Thousands | 9 Months Ended |
Sep. 30, 2018USD ($)$ / sharesshares | |
Number of Options | |
Options outstanding at January 1, 2018 | shares | 4,901,748 |
Options granted | shares | 157,133 |
Options exercised | shares | (863,365) |
Options forfeited/cancelled | shares | (30,819) |
Options expired | shares | (250) |
Options outstanding at September 30, 2018 | shares | 4,164,447 |
Options vested and exercisable at September 30, 2018 | shares | 3,251,127 |
Options expected to vest at September 30, 2018 | shares | 870,538 |
Weighted Average Exercise Price | |
Options outstanding at January 1, 2018 | $ / shares | $ 40.91 |
Options granted | $ / shares | 112.91 |
Options exercised | $ / shares | 36.90 |
Options forfeited/cancelled | $ / shares | 63.39 |
Options expired | $ / shares | 61.38 |
Options outstanding at September 30, 2018 | $ / shares | 44.29 |
Options vested and exercisable at September 30, 2018 | $ / shares | 35.94 |
Options expected to vest at September 30, 2018 | $ / shares | $ 73.59 |
Aggregate Intrinsic Value | |
Options outstanding at September 30, 2018 | $ | $ 388,977 |
Options vested and exercisable at September 30, 2018 | $ | 330,834 |
Options expected to vest at September 30, 2018 | $ | $ 55,810 |
Weighted Average Remaining Contractual Term (in years) | |
Options outstanding at September 30, 2018 | 5 years 8 months 5 days |
Options vested and exercisable at September 30, 2018 | 5 years 1 month 28 days |
Options expected to vest at September 30, 2018 | 7 years 6 months 2 days |
STOCK-BASED COMPENSATION - St_2
STOCK-BASED COMPENSATION - Stock Option Additional Information (Details) - Employee Stock Option $ in Thousands | 9 Months Ended |
Sep. 30, 2018USD ($)shares | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Unrecognized compensation expense | $ | $ 16,124 |
Weighted-average remaining requisite service period | 2 years 1 day |
Number of options exercised in transfer | shares | 1,000 |
STOCK-BASED COMPENSATION - Rest
STOCK-BASED COMPENSATION - Restricted Stock and Restricted Stock Units Activity (Details) - $ / shares | 3 Months Ended | 9 Months Ended |
Mar. 31, 2018 | Sep. 30, 2018 | |
Service Period | Equity Classified Award | Equity-Settled Award | Restricted Stock | ||
Number of Shares | ||
Unvested awards outstanding at January 1, 2018 | 1,840 | 1,840 |
Awards granted | 0 | |
Awards modified | 0 | |
Awards vested | (1,047) | |
Awards forfeited/cancelled | 0 | |
Unvested awards outstanding at September 30, 2018 | 793 | |
Weighted Average Grant Date Fair Value Per Share | ||
Unvested awards outstanding at January 1, 2018 | $ 54.37 | $ 54.37 |
Awards granted | 0 | |
Awards modified | 0 | |
Awards vested | 47.76 | |
Awards forfeited/cancelled | 0 | |
Unvested awards outstanding at September 30, 2018 | $ 63.10 | |
Service Period | Equity Classified Award | Equity-Settled Award | Restricted Stock Units | ||
Number of Shares | ||
Unvested awards outstanding at January 1, 2018 | 688,012 | 688,012 |
Awards granted | 332,683 | |
Awards modified | (2,299) | |
Awards vested | (215,263) | |
Awards forfeited/cancelled | (39,644) | |
Unvested awards outstanding at September 30, 2018 | 763,489 | |
Weighted Average Grant Date Fair Value Per Share | ||
Unvested awards outstanding at January 1, 2018 | $ 71.60 | $ 71.60 |
Awards granted | 114.35 | |
Awards modified | 72.80 | |
Awards vested | 70.09 | |
Awards forfeited/cancelled | 82.59 | |
Unvested awards outstanding at September 30, 2018 | $ 90.08 | |
Service Period | Liability Classified Award | Cash-Settled Award | Restricted Stock Units | ||
Number of Shares | ||
Unvested awards outstanding at January 1, 2018 | 314,829 | 314,829 |
Awards granted | 85,380 | |
Awards modified | 2,299 | |
Awards vested | (91,052) | |
Awards forfeited/cancelled | (6,998) | |
Unvested awards outstanding at September 30, 2018 | 304,458 | |
Weighted Average Grant Date Fair Value Per Share | ||
Unvested awards outstanding at January 1, 2018 | $ 72.50 | $ 72.50 |
Awards granted | 112.65 | |
Awards modified | 116.63 | |
Awards vested | 72.42 | |
Awards forfeited/cancelled | 79.19 | |
Unvested awards outstanding at September 30, 2018 | $ 83.96 | |
Performance Target | Equity Classified Award | Equity-Settled Award | Restricted Stock Units | ||
Number of Shares | ||
Unvested awards outstanding at January 1, 2018 | 0 | 0 |
Awards granted | 45,375 | |
Awards vested | 0 | |
Awards forfeited/cancelled | 0 | |
Unvested awards outstanding at September 30, 2018 | 45,375 | |
Weighted Average Grant Date Fair Value Per Share | ||
Unvested awards outstanding at January 1, 2018 | $ 0 | $ 0 |
Awards granted | 121.75 | |
Awards vested | 0 | |
Awards forfeited/cancelled | 0 | |
Unvested awards outstanding at September 30, 2018 | $ 121.75 | |
Continuum | Service Period | Equity Classified Award | Equity-Settled Award | Restricted Stock Units | ||
Number of Shares | ||
Awards granted | 44,228 |
STOCK-BASED COMPENSATION - Re_2
STOCK-BASED COMPENSATION - Restricted Stock and Restricted Stock Units Additional Information (Details) - USD ($) $ in Thousands | 9 Months Ended | |
Sep. 30, 2018 | Dec. 31, 2017 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Liability associated with RSUs | $ 9,174 | $ 5,964 |
Service Period | Equity Classified Award | Equity-Settled Award | Restricted Stock | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Unrecognized compensation expense | $ 44 | |
Weighted-average remaining requisite service period | 1 year 9 months 8 days | |
Service Period | Equity Classified Award | Equity-Settled Award | Restricted Stock Units | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Unrecognized compensation expense | $ 51,937 | |
Weighted-average remaining requisite service period | 2 years 8 months 30 days | |
Vested RSUs with deferred delivery | 3,894 | |
Service Period | Liability Classified Award | Cash-Settled Award | Restricted Stock Units | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Unrecognized compensation expense | $ 29,486 | |
Weighted-average remaining requisite service period | 2 years 6 months 11 days | |
Performance Target | Equity Classified Award | Equity-Settled Award | Restricted Stock Units | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Unrecognized compensation expense | $ 4,514 | |
Weighted-average remaining requisite service period | 2 years 19 days | |
Adjustment to compensation cost | $ (183) | |
Deferred compensation due to employees | 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 | $ 9,174 | $ 5,964 |
EARNINGS PER SHARE (Details)
EARNINGS PER SHARE (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | |
Numerator for basic and diluted earnings per share: | ||||
Net income | $ 65,618 | $ 42,634 | $ 180,291 | $ 103,634 |
Numerator for basic and diluted earnings per share | $ 65,618 | $ 42,634 | $ 180,291 | $ 103,634 |
Denominator: | ||||
Weighted average common shares for basic earnings per share | 53,851,865 | 52,545,155 | 53,485,339 | 51,806,700 |
Effect of dilutive securities (in shares): | ||||
Net effect of dilutive stock options, restricted stock units and restricted stock awards | 3,111,002 | 2,683,626 | 3,114,299 | 2,854,496 |
Weighted average common shares for diluted earnings per share | 56,962,867 | 55,228,781 | 56,599,638 | 54,661,196 |
Net income per share: | ||||
Basic (in dollars per share) | $ 1.22 | $ 0.81 | $ 3.37 | $ 2 |
Diluted (in dollars per share) | $ 1.15 | $ 0.77 | $ 3.19 | $ 1.90 |
Anti-dilutive options not included in the calculation (in shares) | 157,316 | 606,047 | 121,896 | 1,177,453 |
SEGMENTS INFORMATION - Revenues
SEGMENTS INFORMATION - Revenues from External Customers and Operating Profit/(Loss) Before Unallocated Expenses (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | |
Segment Reporting Information [Line Items] | ||||
Operating profit | $ 64,560 | $ 49,248 | $ 167,494 | $ 120,896 |
North America | ||||
Segment Reporting Information [Line Items] | ||||
Segment revenues | 280,838 | 206,389 | 769,137 | 578,717 |
Operating profit | 60,763 | 45,529 | 155,944 | 126,243 |
Europe | ||||
Segment Reporting Information [Line Items] | ||||
Segment revenues | 171,482 | 157,446 | 516,320 | 431,472 |
Operating profit | 28,871 | 25,984 | 84,329 | 66,453 |
Russia | ||||
Segment Reporting Information [Line Items] | ||||
Segment revenues | 16,208 | 14,455 | 53,374 | 41,825 |
Operating profit | 543 | 1,685 | 8,211 | 7,129 |
Operating Segments | ||||
Segment Reporting Information [Line Items] | ||||
Segment revenues | 468,528 | 378,290 | 1,338,831 | 1,052,014 |
Operating profit | $ 90,177 | $ 73,198 | $ 248,484 | $ 199,825 |
SEGMENTS INFORMATION - Major Cu
SEGMENTS INFORMATION - Major Customers (Details) - Customer Concentration Risk | 3 Months Ended | 9 Months Ended | 12 Months Ended | ||
Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | Dec. 31, 2017 | |
Sales Revenue, Net [Member] | Operating Segments | |||||
Revenue, Major Customer [Line Items] | |||||
Number of customers | 0 | 0 | 0 | 0 | |
Accounts Receivable | Billed Revenues | |||||
Revenue, Major Customer [Line Items] | |||||
Number of customers | 0 | 0 | |||
Accounts Receivable | Unbilled Revenues | |||||
Revenue, Major Customer [Line Items] | |||||
Number of customers | 0 | 1 | |||
Concentration percentage | 13.00% |
SEGMENTS INFORMATION - Reconcil
SEGMENTS INFORMATION - Reconciliation of Segment Revenues to Consolidated Revenues and Segment Operating Profit to Consolidated Income Before Provision for Income Taxes (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | |
Segment Reporting, Revenue Reconciling Item [Line Items] | ||||
Revenues | $ 468,186 | $ 377,523 | $ 1,337,981 | $ 1,051,151 |
Segment Reporting Information [Line Items] | ||||
Income from operations | 64,560 | 49,248 | 167,494 | 120,896 |
Stock-based compensation expense | (46,736) | (39,920) | ||
Depreciation and amortization expense | (9,319) | (7,174) | (26,457) | (20,866) |
Interest and other income, net | 1,941 | 1,416 | 2,442 | 2,802 |
Foreign exchange (loss)/gain | (514) | (77) | 1,069 | (1,470) |
Income before provision for income taxes | 65,987 | 50,587 | 171,005 | 122,228 |
Operating Segments | ||||
Segment Reporting, Revenue Reconciling Item [Line Items] | ||||
Segment revenues | 468,528 | 378,290 | 1,338,831 | 1,052,014 |
Segment Reporting Information [Line Items] | ||||
Income from operations | 90,177 | 73,198 | 248,484 | 199,825 |
Unallocated amounts | ||||
Segment Reporting, Revenue Reconciling Item [Line Items] | ||||
Segment revenues | (342) | (767) | (850) | (863) |
Segment Reporting Information [Line Items] | ||||
Other income included in segment revenues | (342) | (767) | (850) | (863) |
Stock-based compensation expense | (15,330) | (11,217) | (46,736) | (39,920) |
Non-corporate taxes | (2,063) | (1,966) | (7,041) | (7,212) |
Professional fees | (1,420) | (1,050) | (4,736) | (5,870) |
Depreciation and amortization expense | (2,011) | (1,883) | (5,754) | (5,763) |
Bank charges | (782) | (574) | (1,950) | (1,417) |
One-time charges and other acquisition-related expenses | (155) | (289) | (2,016) | (1,187) |
Other operating expenses | $ (3,514) | $ (6,204) | $ (11,907) | $ (16,697) |
SEGMENTS INFORMATION - Geograph
SEGMENTS INFORMATION - Geographical Information of Long-Lived Assets Based on Physical Location (Details) - USD ($) $ in Thousands | Sep. 30, 2018 | Dec. 31, 2017 |
Long-Lived Assets by Geographical Areas [Line Items] | ||
Long-lived assets | $ 99,465 | $ 86,419 |
Belarus | ||
Long-Lived Assets by Geographical Areas [Line Items] | ||
Long-lived assets | 48,728 | 49,866 |
United States | ||
Long-Lived Assets by Geographical Areas [Line Items] | ||
Long-lived assets | 11,542 | 3,371 |
Russia | ||
Long-Lived Assets by Geographical Areas [Line Items] | ||
Long-lived assets | 10,279 | 9,617 |
Ukraine | ||
Long-Lived Assets by Geographical Areas [Line Items] | ||
Long-lived assets | 8,529 | 6,995 |
India | ||
Long-Lived Assets by Geographical Areas [Line Items] | ||
Long-lived assets | 6,783 | 2,698 |
Hungary | ||
Long-Lived Assets by Geographical Areas [Line Items] | ||
Long-lived assets | 3,198 | 3,901 |
China | ||
Long-Lived Assets by Geographical Areas [Line Items] | ||
Long-lived assets | 2,830 | 2,608 |
Other locations | ||
Long-Lived Assets by Geographical Areas [Line Items] | ||
Long-lived assets | $ 7,576 | $ 7,363 |
SEGMENTS INFORMATION - Revenu_2
SEGMENTS INFORMATION - Revenues by Client Location (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | |
Segment Reporting, Revenue Reconciling Item [Line Items] | ||||
Revenues | $ 468,186 | $ 377,523 | $ 1,337,981 | $ 1,051,151 |
United States | ||||
Segment Reporting, Revenue Reconciling Item [Line Items] | ||||
Revenues | 266,065 | 202,364 | 736,579 | 571,513 |
United Kingdom | ||||
Segment Reporting, Revenue Reconciling Item [Line Items] | ||||
Revenues | 50,482 | 48,471 | 152,315 | 141,177 |
Switzerland | ||||
Segment Reporting, Revenue Reconciling Item [Line Items] | ||||
Revenues | 35,524 | 33,185 | 105,396 | 90,400 |
Germany | ||||
Segment Reporting, Revenue Reconciling Item [Line Items] | ||||
Revenues | 20,732 | 16,053 | 60,331 | 42,291 |
Canada | ||||
Segment Reporting, Revenue Reconciling Item [Line Items] | ||||
Revenues | 18,008 | 15,711 | 51,391 | 41,854 |
Netherlands | ||||
Segment Reporting, Revenue Reconciling Item [Line Items] | ||||
Revenues | 17,031 | 14,118 | 51,934 | 35,345 |
Russia | ||||
Segment Reporting, Revenue Reconciling Item [Line Items] | ||||
Revenues | 15,609 | 14,079 | 51,930 | 40,614 |
Other locations | ||||
Segment Reporting, Revenue Reconciling Item [Line Items] | ||||
Revenues | $ 44,735 | $ 33,542 | $ 128,105 | $ 87,957 |
SUBSEQUENT EVENTS (Details)
SUBSEQUENT EVENTS (Details) - Subsequent Event - Think Limited $ in Thousands | Nov. 01, 2018USD ($) |
Subsequent Event [Line Items] | |
Acquisition date | Nov. 1, 2018 |
Equity interest acquired | 100.00% |
Cash consideration | $ 27,000 |
Maximum amount of contingent consideration | $ 8,200 |
Estimated future operating results, period | 12 months |