The Powerful Relationship of Technology and Economic Moats

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We believe EPAM is a valuable provider of services and it is increasing its own competitive moat accordingly. This relationship of EPAM’s services and its competitive moat continues to expand with the company currently at the forefront of new technology that it offers to its clients.

problem solving services to students. It has dominant market share and its moat is widening. Consistent with our theme of seeking smaller innovative companies leveraging technology to drive their businesses, Chegg invests approximately 30% of its revenue in research and development, including building a unique library of content and delivering its services via its technology platform through real time video conferencing or chatting. Chegg services enhance the learning of millions of students. By developing new content and continuing to enhance its technology, Chegg may strengthen its already considerable competitive moat. An Agent of Change Many companies lack internal resources for effectuating significant change such as digitizing business processes that are required to expand their own economic moats. However, third-party firms are providing these services, including helping clients build enterprise software such as e-commerce applications. As these consulting firms continuously develop new technology, they in turn strengthen their own moats by expanding the resources that they offer to clients. EPAM Systems is an information technology services firm with expertise in emerging technologies that helps clients execute digital transformation of their businesses. EPAM engages with customers in a consultative way to help design and build customized software solutions, including websites, databases and mobile applications. Among other projects, it has developed software that lets a leading beauty product company market and sell products through mobile phones. By developing these resources for its clients, EPAM may strengthen its clients’ moats and in turn may become a significant vendor resource. We believe EPAM is a valuable provider of services and it is increasing its own competitive moat accordingly. This relationship of EPAM’s services and its competitive moat continues to expand with the company currently at the forefront of new technology that it offers to its clients. Going Forward As investors in what we believe are high-quality smaller cap growth companies, we believe the accelerating pace of change driven by innovation underscores the importance of thorough fundamental research on businesses that we consider investing in. As the pace of change continues to accelerate, adoption of new technology and business models are increasingly becoming high stakes endeavors as companies that fail to embrace innovation may lose out to competitors and become irrelevant. At Weatherbie Capital, we will continue to conduct in-depth fundamental research as we seek innovative companies with compelling business models that are growing their economic moats.

EATHERBIE CAPITAL

EATH

Matt Weatherbie, CFA Chief Executive Officer Co-Chief Investment Officer

Joshua D. Bennett, CFA Senior Managing Director Director of Research

H. George Dai, Ph.D. Senior Managing Director Co-Chief Investment Officer