RNT Group (formerly EPAM in Russia)

Performance indicators

2023:85% revenue decline, way out of loss

As TAdviser found out, the revenue of RNT (formerly Epam Systems), a former Russian subsidiary of Epam, in 2023 decreased by 85% compared to 2022, to 2.2 billion rubles. At the same time, the company completed the reporting period with a net profit of 439.2 million rubles, while a year earlier it received a large loss - almost 3 billion rubles.

The explanations to the financial accounting published to the FTS database indicate that, as before, the overwhelming share of revenue falls on software development.

The number of RNT employees and individuals providing it with services under GPC contracts in 2023 amounted to 842 people, a slight decrease compared to 2022. And in 2021, for comparison, almost 10 thousand people worked at Epam Systems.

Freepik

RNT chose not to comment on its results of fiscal 2023, but shared with TAdviser plans for business development for the near future and expectations for 2024. Evgeny Grachev, CEO of RNT Group, notes that now the market is in a situation where digital technologies have become a factor in survival in all industries without exception. Customer requests are growing almost exponentially, and we are talking about extremely complex projects that affect key production processes, interaction with customers, building data-driven companies and import substitution.

The Reksoft group, which includes the RNT Group, has a unique advantage in this sense. We are able to offer services to the customer throughout the chain of creating business value and import substitution of the IT landscape - strategic consulting, migration and implementation of business applications, custom development, industrial automation, finally, the supply of IT equipment and services in the field of infrastructure. And, as our practice shows, such a comprehensive service was in demand among Russian customers. Therefore, today, together with colleagues from Reksoft, we successfully help clients in finance and insurance with the transformation of business architectures and import substitution of critical infrastructure - ABS and insurance systems, processing platforms, system software, decision support systems, DBMS, - says Evgeny Grachev.

Also, according to him, there are new projects in the field ICC of and production in metallurgy, the oil and gas industry, industry, where work is carried out in close cooperation with industry leaders. Active, retail where there is a need for migration of eCommerce platforms and architectures, strengthening personalization, implementation. AI For RNT, these are focal areas for business development in the near future.

The departure of global IT companies has launched the process of restructuring the IT market, which is not yet finished. Unlike the vast majority of former subsidiaries of Western vendors, we have retained a workable structure, management, key specialists, as well as production processes and culture, which have been built for years and provided our ability to make large-scale projects and provide high-quality service with guarantee and responsibility for the result, - notes Evgeny Grachev.

The merger in 2023 with the Reksoft group in RNT is considered another step forward for itself, as the company has become able to offer customers the implementation of complex turnkey projects.

We traditionally do not give forecasts in the form of specific figures, but we have determined for ourselves quite ambitious development plans for 2024 and are looking into the future with a certain confidence, - said TAdviser CEO of RNT Group.

History

2023

Reksoft acquired Russian assets of EPAM

Reksoft bought Epam's Russian business. The deal took place on August 2, 2023, Interfax reports, citing data from the Unified State Register of Legal Entities (USRUL).

It is clarified that Reksoft Group LLC acquired 100% of RNT Group, which is the copyright holder of EPAM Systems LLC, a subsidiary of Epam Systems Inc. (Epam) in Russia. The "Reksoft" confirmed TAdviser information about the transaction. It received approval from state regulators in Russia and the United States. The terms of the agreement do not involve asset buybacks. It is planned that the main steps to unite will take about a year, and the total staff will exceed 1.5 thousand people. The financial terms of the transaction were not disclosed.

Reksoft bought the Russian business EPAM

The merger with RNT Group, one of the best teams in the field of software engineering and custom development, has become an important stage for us in the implementation of our strategy for the supply of advanced turnkey business solutions, "said Alexander Egorov, General Director of the Reksoft Group.

RNT Group CEO Yevgeny Grachev commented on the deal:

We are always guided by responsibility to customers and employees. Our priorities are offering high-quality service and creating value for companies from different industries in an open competitive market, developing a platform for professional and personal growth of employees and investing in expanding competencies. With the Reksoft group, we share the same principles of doing business and equally represent its future, have a similar corporate culture. The combined competencies and services of our companies organically complement each other and strengthen the joint offer for customers.

The Russian government allowed Epam to sell its Russian business

The Russian government allowed Epam to sell its Russian business. This is stated in the statements for the first quarter of 2023, which the IT company published in May 2023.

Epam said that the Russian authorities agreed on the sale of assets in the country after March 31, 2023. At the same time, the company did not name the buyer. In April 2023, Epam reformulated the sale agreement. The timing of the transaction depends on the usual conditions, including the approval of US regulators, according to the reports for January-March 2023. At the end of February 2023, it was reported that the company continued negotiations with an unnamed buyer, and was also looking for other ways to leave Russia.

Epam received permission to sell Russian business

According to Epam forecasts, leaving the Russian market will affect financial performance in 2023 - revenue due to this will not grow by an additional 1.2%. It also follows from the materials that Epam's decision not to serve customers in the Russian Federation led to the depreciation of assets in the country. In particular, we are talking about losses of $15.1 million from the write-off of real estate and equipment, $3.8 million from assets in the form of right of use and $0.7 million from the write-off of goodwill. And these losses are only for the first quarter of 2023.

At the end of March 2023, Epam had $68.3 million and $27.1 million in its accounts in Ukraine in Russia. The main assets of the company are in Ukraine (at the end of March 2023 - $69.3 million) and the United States ($65.2 million). The company reduced the global staff by almost 2 thousand people, and reduced the costs of employee relocation to a minimum since the beginning of 2022.

In 2022, Epam spent $38.7 million on moving employees. Mainly employees of Russian, Ukrainian and Belarusian offices moved. In January - March 2023, only $212 thousand was spent on the relocate, this is at least from the beginning of 2022.

EPAM Reports Results for First Quarter 2023 and Updates Full Year Outlook

EPAM was unable to sell its Russian business. The company changed its name to RNT Group and continues to operate

For the past six months, EPAM has been waiting for permission from Russian regulatory authorities to close or sell its business in Russia, which is under "unfriendly" control. At the end of February 2023, TAdviser was told about this by Julie Hansberry, senior director of global marketing and communications at EPAM. The company expects to obtain the required permits in March.

Julie Hansberry told TAdviser that EPAM, "like many other companies that stop operating in Russia, faces significant delays and obstacles in the process of obtaining regulatory approvals" and has absolutely no ability to influence this process.

As of February 2023, the owner of the largest "daughter" EPAM remains the American legal entity of the company "(photo - EPAM)"

Our position is clear. In early March 2022, we announced that we were terminating our activities and leaving Russia. From that moment, we worked with great speed and took the necessary steps to stop operations and transfer client projects. In addition, we reduced personnel from more than 9 thousand people a year ago to a small number of people today, and we completely separated this group from EPAM activities in anticipation of the necessary regulatory permits to close the business, says Julie Hansberry.

The senior director of global marketing and communications added that EPAM is on the side of Ukraine and Ukrainians.

It is known that the global EPAM donated money to the Ukrainian military and promoted this assistance. So, for example, in a partnership material dated September 2022 on EPAM assistance to "Ukrainians and the state," including through its EPAM Ukraine Assistance Fund, it is said that evacuation cars were purchased for almost UAH 26 million for "defenders, clothes and shoes, helmets and body armor, equipment for demining territories and other^[1].

The global EPAM did not answer TAdviser's question about whether the money that EPAM continues to earn in Russia was sent to help the Ukrainian military.

EPAM's annual report on Form 10-K states that on September 7, 2022, the company legally executed an agreement to sell almost all of its assets in Russia to a third party. Who is this party, the company does not specify.

The same report notes that in December 2022, the deadline for the execution of the agreement has expired, and the company is now negotiating new terms of the transaction and exploring "other strategic alternatives"^[2]. At the same time, due to regulatory moments, the timing of the transaction and its very completion remain uncertain.

According to the Unified State Register of Legal Entities, as of February 2023, the largest Russian legal entity EPAM (EPAM Systems LLC) still has the same founder - the US-based company EPAM Systems Inc. In 2021, this Russian legal entity brought about 28.7 billion rubles in revenue with an increase of 47%. Financial reporting for 2022, EPAM Systems LLC has not yet published.

Two legal entities, where the founder or co-founder is the American EPAM Systems Inc., while from November and December 2022 are in liquidation. We are talking about EPAM Solutions LLC and Koudweb LLC. Against the background of EPAM Systems LLC, they did not bring significant revenue.

In its quarterly reports, the global EPAM previously reported that as of June 30, 2022, it had about $17.2 million in money and cash equivalents in Russian banks, as of September 30, 2022 - $33.1 million, and the annual report as of December 31, 2022 indicates the presence of $29 million of money and cash equivalents from EPAM in Russian banks.

Meanwhile, as TAdviser saw, EPAM Systems LLC rebranded: now it operates on the market under the RNT Group brand. Its headquarters is located in Moscow, and branches are also open in St. Petersburg, Nizhny Novgorod, Ryazan, Saratov, Samara, Izhevsk. The RNT Group website says that more than 1,000 IT and consulting professionals work for it. The company is included in the register of accredited IT companies of the Ministry of Digital Development.

At the time of publication, EPAM Systems LLC could not answer TAdviser's questions about the company's work.

2022

Supporting Ukraine Epam received a record billion dividends from the Russian "daughter" in 2022

As TAdviser found out, in 2022 USA , based at Epam Systems Inc., it twice decided to pay dividends on the retained earnings of its Russian subsidiary Epam Systems LLC, of which it is the 100% owner. This follows from the explanations to the balance sheet and financial statements of the Russian Epam Systems for 2021 and 2022, published in the database. FTS Russia The total amount of dividends amounted to about 7.99 billion. rubles More. here

What remains of Epam's Russian business by the end of 2022. The company disclosed performance indicators

As TAdviser found out, as of December 31, 2022, the number of working employees of Epam Systems LLC and individuals providing it with services under civil law contracts amounted to 898 people. The same indicator a year earlier was 9,941 people, and in 2020 - 6,963 people. Such data are given in the explanations to the balance sheet and financial accounting of the company, published in the database FTS Russia in April 2023.

Epam Systems LLC is a key legal entity of Epam in Russia. Its sole founder since 2021 is based in the USA, in the state of Pennsylvania, the global headquarters of Epam is Epam Systems Inc. The company receives the vast majority of revenue on software development.

In 2022, most of the separate divisions of Epam Systems in different cities of Russia were closed "(photo - Yandex.Maps)"

Global Epam, we recall, after February 24, 2022 condemned the actions of Russia, announced its support for Ukraine, the termination of work with Russian clients and began to massively export people working for it from Russia to other countries. The company tried to find a buyer for its Russian assets, but this could not be done as soon as possible.

From the explanations to the financial reporting of Epam Systems LLC, it follows that in 2022 15 of its 22 separate units in different cities of Russia were gradually closed. Units operating at the end of the year are listed in Saratov, Ryazan, Izhevsk, Samara, St. Petersburg, Moscow, Nizhny Novgorod.

Revenue of Epam Systems LLC in 2022 decreased by 47.6%, to 15.044 billion rubles (total revenue of Epam Systems LLC and Epam Solutions LLC from the financial statements for 2021-2022 excluding VAT). In the ranking " TAdviser100: The largest IT companies in Russia 2023," such an indicator allowed the company to take 38th place.

The company ended the year with a net loss of almost 3 billion rubles. A significant share of income transactions, as before, was carried out with foreign legal entities Epam in dollars and euros.

In 2022, its American founder decided to pay a record dividend of about 7.99 billion rubles from the accumulated retained earnings, which at the beginning of January 2022 amounted to 13.24 billion rubles. More on this here.

The Russian Epam Systems, as TAdviser previously wrote, has rebranded and is now operating on the market under the RNT Group brand. At the same time, as of April 2023, its legal entity has not yet been renamed.

The organization will continue to carry out its financial and economic activities in the near future and has no intention or need to terminate or liquidate it, according to the explanations to its financial accounting for 2022.

It also emphasizes that Epam Systems LLC is registered as a taxpayer and carries out its main activities in the Russian Federation, but at the same time it is an affiliate of Epam Inc. Therefore, in accordance with the requirements of the latter, created under US law, Epam Systems LLC is obliged to follow the requirements of the legislation established for both Russian and American public companies whose shares are listed on the New York Stock Exchange.

Russian Asset Sale Agreement

EPAM Systems has reached an agreement to sell its assets in Russia. This became known on November 7, 2022.

The transaction was carried out on September 7, 2022. The name of the buyer and the amount of the sale were not disclosed.

By the time this material was published, the deal had not yet been closed. To complete it, it is required, among other things, to obtain permission from the Russian Government.

According to the source, this refers to the permission of the government commission for monitoring the implementation of foreign investments, which should give permission to transfer funds abroad.

EPAM representatives had not responded to a request for a deal by the time of publication.

The press service of the FAS (Federal Antimonopoly Service) also did not respond to a request whether EPAM Systems filed a petition to sell its Russian subsidiaries.

According to to data bases Contour Focus"," the American EPAM Systems, directly and through its own " the Cyprian daughter" of the same name, owns several organizations in Russia: EPAM Solutions LLC, Epam Systems LLC and Koudweb LLC. Changes in the scheme of their ownership have not yet been^[3]

Epam is trying to keep Russian business

As it became known to TAdviser, Epam, which in early March was one of the first to announce its departure from Russia, will keep its business in the country, transferring it to Russian owners. Epam plans to complete the re-registration of the legal entity by early July, retaining the TIN, but changing the name. TAdviser was informed about this by a source in the company in June 2022.

According to the source, all existing contracts will be serviced by a new company created on the basis of the Russian team. The Russian company will retain the rights to part of the intellectual property created within the country, and some patents registered outside the country, but necessary for the implementation of domestic Russian projects, will also be transferred to it. According to the source, after the exchange of intellectual property rights, Epam's international business will not be connected with the Russian company in any way.

The Belarusian office, from which the company also took out employees in early March, the company decided not to close.

Epam will keep its business in Russia, handing it over to Russian owners. The photo is hrlike.ru

On March 4, the company announced the termination of work with Russian clients, of which Epam at that time had more than 200. At the same time, the source told TAdviser that work on the contracts continued, cooperation was terminated only with companies that were on the US sanctions list. (See blocks below for details)

At the same time, in March, the company announced the relocation of employees of Russian and Belarusian offices in 10 countries of the world, including Uzbekistan, Kazakhstan, Armenia, Georgia, Latvia, Montenegro, UAE, Mexico and even Colombia. When asked how many specialists left Russia, the source refused to answer.

At the same time, a representative of one of the Russian developers told TAdviser that Epam in March-April held talks with some of its competitors and customers about the transition of its employees to work with them. Therefore, as the source clarifies, Epam employees were not "thrown" into the market, but continued to service the projects they were working on, including Sberbank and VTB, which were under sanctions.

According to the Kontur.Fokus service, the revenue of Epam Systems, the main legal entity of the Russian division of Epam, in 2021 increased by 46.9% to 28.7 billion rubles, net profit increased by 120% to 5.5 billion rubles. At the same time, the Russian division of the company participated in public procurement, providing services, including to the country's largest banks - Sberbank and VTB.

In March 2022, another international developer with Russian roots, Luxoft, announced his departure. The company, in order to keep customers, sold its Russian business to the IBS group, from which it stood out in the "zero" years.

In April 2022, a number of Russian companies - iFellow, Reksoft, etc. - announced their readiness to accept development teams of vendors leaving Russia.

Among the most significant Epam projects are IT outsourcing in Sberbank, VTB and Otkritie Bank, the creation of a trading automation system for M.Video-Eldorado, the construction of an information security system for the All-Russian Union of Insurers (VSS), the launch of a loyalty system for Nokian Tyres, etc.

The export of hundreds of employees from Russia and Belarus to Uzbekistan

On April 18, 2022, it became known that Epam transported hundreds of employees from Russia and Belarus to Uzbekistan. The company has an office in Tashkent, and the software developer is also a resident of the local IT cluster.

Two local entrepreneurs told Forbes about the relocation of Russian and Belarusian specialists to Uzbekistan. One of the Epam employees who moved to Uzbekistan, as well as one of the Russian investors who is there, confirmed this information to the magazine.

The export of hundreds of employees from Russia and Belarus to Uzbekistan

Шаблон:Quote 'We have about 600 people in general chat for Uzbekistan, so, most likely, Epam transported up to a thousand employees to Uzbekistan, "said one of the company's employees. Another Epam employee after the flight to Uzbekistan told Forbes that the company completely helped with the relocation: financially, with the flight and housing. Epam also paid for the flight of the employee's family members, their accommodation and daily expenses in the first month. As an interlocutor, this option was available to all developers who decided to move. According to him, in addition to Uzbekistan, the company offered employees relocation to 10 countries, including Georgia and Armenia.

One of the local entrepreneurs, in a conversation with the publication, said that hotels in the country are packed, and 80% of people who moved from Russia and Belarus to Uzbekistan are Epamites.

{{quote 'Under the company's business continuity plans, which were introduced in February 2022, Epam is accelerating the transfer of its Russian operations by actively relocating employees. Currently, a significant number of employees have already moved outside the country, the company explained then. }} On April 7, 2022, Epam announced its decision to cease operations in Russia, it will end all operations in the country within three months. The company named as one of the reasons for such a long departure from the Russian Federation the need to carry out the move of all employees from Russia.^[4]

Export of developers from Russia by charter flights to Armenia, Georgia and Canada

In March 2022, it became known that EPAM takes out thousands of employees (often with families) who developed software for companies from all over the world by charters and regular flights from Russia. In total, about 4,000 employees worked in Russia. They will settle in other countries (part in Armenia, Georgia, more important employees in Canada)

Termination of work with Russian customers

On March 4, 2022, Epam announced the termination of work with Russian clients amid a special operation that the Russian Federation is conducting in Ukraine. At the same time, the company did not specify what would happen to the Russian development centers, which employ about 9 thousand people.

Epam will stop serving customers in Russia. At the same time, Epam is ready to provide support for customers in this market as part of the transition period. EPAM does not work for the government in Russia and fully complies with all sanctions. The company is also actively evaluating its other activities in the region, Epam said in a statement.

According to the information on the vendor's website, by the beginning of March 2022, the company has offices in 13 cities of Russia, and the number of active projects in the country exceeds 200.

The company also said that it is implementing business continuity plans and accelerating recruitment at several offices in Central and Eastern Europe, Latin America and India. Epam has sufficient resources, including infrastructure and capital, to sustain and expand, the EPAM said.

In addition, Epam announced "additional humanitarian support in the amount of $100 million," which will be provided to its employees and their families located in Ukraine. According to the general director and president of Epam Arkady Dobkin, about 14 thousand employees work in Epam's offices in Ukraine by the beginning of March 2022, of which 13 thousand are IT specialists.

We are doing everything possible to support our Ukrainian colleagues and friends. We thank our teams around the world who are working tirelessly to ensure a stable service as well as our customers for their support and continued trust in us, "he noted.[5]

2021: Revenue growth in Russia by 47.9% to RUB 28,689 million

At the end of 2021, EPAM's revenue in Russia amounted to 28,689 million rubles, an increase of 47.9% compared to 2020, which allowed it to take 24th place in the ranking of TAdviser100: The largest IT companies in Russia 2022. The total revenue of Epam Systems LLC and Epam Solutions LLC from the financial statements for 2020-2021 was taken into account. Excluding VAT.

2020

Revenue growth by 32.4% to RUB 19,401 million.

At the end of 2020, EPAM's revenue amounted to 19,401 million rubles, an increase of 32.4% compared to 2019, which allowed it to take 28th place in the ranking of TAdviser100: The largest IT companies in Russia 2021.

Inclusion of "Epam Systems" in the list of system-forming organizations

In March 2020, the Government Commission for Improving the Sustainability of the Russian Economy included EPAM Systems in the list of strategic organizations. Read more here.

2019

Revenue growth by 25% to RUB 14.65 billion.

At the end of 2019, EPAM took 14th place in the TAdviser Ranking: the 50 most profitable representative offices of foreign IT companies in Russia. The EPAM indicator for Russia includes the revenue of legal entities of Epam Systems LLC, Epam Solutions LLC. The company's revenue for 2019 amounted to 14,652,774 thousand rubles, which is 25% higher than in 2018.

Acquisition of Competentum

EPAM Systems, a global provider of digital platform development services and, software on July 2, 2019, announced TAdviser the acquisition Competentum of an expert company in the development, optimization and personalization of content training programs and the creator of a corporate one. distance learning systems ShareKnowledge Financial terms of the deal were not disclosed. More. here

2018: Revenue - RUB 11.7 bln

EPAM revenue in Russia (Epam Systems LLC, Epam Solutions LLC) for 2018 amounted to 11,710,948 thousand rubles.

2010: VTB Capital acquires minority stake in EPAM Systems

VTB Capital has acquired a minority stake in software developer EPAM Systems, the investment bank said in a statement. The parties do not disclose the amount of the transaction and the volume of the purchased package.

The deal with VTB Capital is not the first round of selling minority stakes. In May 2008, during the placement, the company raised $50 million, then the lead investors were Renaissance Investment Management (RIM) and Da Vinci Capital, and the co-investor was Euroventures Capital.

RIM used to own a stake in EPAM, but then sold it, said Renaissance Capital spokesman Queen Martin in 2010, without naming a buyer. Da Vinci Capital did not reduce its stake in EPAM and did not participate in the transaction with VTB Capital, said co-owner of the fund Oleg Zhelezko.

2009: Decrease in the share of CIS customers to 20%

As the commercial director of Epam Systems Yuri Ovcharenko told CNews, the share of clients from the CIS has decreased. If in 2007-2008 it held at the level of 30%, then in 2009 it fell to 20%. "

2007: opening a development center in Izhevsk

In 2007, a development center was opened in Izhevsk.

2006: Merger of Epam Systems and Vested Development

September 19, 2006 there was a merger between Epam Systems and Vested Development, Inc (VDI). Arkady Dobkin became the president of the combined company, which continued to work under the name EPAM Systems. Anatoly Haverdovsky headed the activities of EPAM Systems in Russia. The number of employees amounted to more than 2200 people.

Anatoly Haverdovsky, CEO of VDI: "Our companies had well-complemented services and office geography. Therefore, the new company will have a much more optimal structure for work, both in the CIS markets, as well as in North America and the European Union. Today we will be able to take responsibility for much more complex and large projects and compete with almost all world leaders in our market segment. Our association speaks of the achievement of a certain degree of maturity of the IT industry in our region as a whole. There is a shift from talk of consolidation to real implementation. We are confident that the merger of VDI and EPAM will be a successful example of the merger of large software companies and accelerate the process of further consolidation of the market to increase its global competitiveness. "

Arkady Dobkin, CEO of EPAM: "The merger with VDI will allow our company to strengthen its position in the market of Russia and other CIS countries, offering our customers from this region a more complete range of IT solutions and services, the experience of which we have accumulated working with leading global corporations over the past ten years. In Russia alone, the company will now have seven large software development centers that will specialize in management and IT consulting, the implementation of ERP systems, application integration in distributed systems, the development of solutions for e-business, complex software development. We also plan to create much more opportunities for the professional and career development of our employees under the new ERAM and significantly strengthen investments in the training system for engineers. "

2004-2005: Opening of development centers

In 2004 and 2005, Epam Systems opened a number of development centers in Russia.

2002: Acquisition of Exteria

On June 13, 2002, Epam Systems, a provider of offshore development services software in the former USSR, announced the acquisition of Exteria, a Russian company engaged in the design and implementation of electronic business systems based on Internet technologies. The acquisition and merger is a logical step for both companies in the context of the long history of their joint operations. In particular, in 2001, Epam Systems and Exteria introduced an advanced e-commerce system for the market's largest USA provider of legal information, West Group (USA). As a result of the transaction, the combined company began to have about 400 employees.

Notes