Medpace Holdings, Inc. Q1 FY2025 earnings call

• Net awards were down sequentially and year over year with a net book-to-bill ratio of 0.90, primarily due to high pipeline cancellations.
• RFP flow was strong but quality was variable and decisions were slowing.
• Revenue for Q1 2025 was $558.6M, up 9.3% y/y. Net new business awards entering backlog decreased 18.8% to $500M, resulting in a 0.9 net book-to-bill. Ending backlog as of March 31, 2025, was approximately $2.8B, a decrease of 2.1% from the prior year. Projected backlog conversion in the next twelve months was $1.61B, and backlog conversion in Q1 was 19.2% of beginning backlog.
• Financials: EBITDA was $118.6M, up 2.6%; net income was $114.6M, up 11.7%; net income per diluted share was $3.67. Cash flow from operating activities was $125.8M, and net days sales outstanding was -67.8 days. Cash at quarter end was $441.4M, with $344.8M remaining under share repurchase authorization.

Revenue for the first quarter of 2025 was $558.6 million, a year-over-year increase of 9.3%. EBITDA was $118.6 million, an increase of 2.6% compared to the first quarter of 2024. Net income was $114.6 million, up 11.7% from the prior year period. Net income per diluted share was $3.67, compared to $3.20 in the prior year. The top five customers represented roughly 22% of first quarter 2025 revenue, and the top ten customers represented 32%. Cash flow from operating activities was $125.8 million in the first quarter, and net days sales outstanding was negative 67.8 days. As of March 31, 2025, cash was $441.4 million, and approximately 1.19 million shares were repurchased for $389.8 million during the quarter.

• Full year 2025 total revenue is expected in the range of $2.14 billion to $2.24 billion, representing growth of 1.5% to 6.2% over 2024.
• 2025 EBITDA is expected in the range of $462 million to $492 million, a decline of 3.8% to growth of 2.5% compared to 2024.
• 2025 net income is forecast in the range of $378 million to $402 million.
• Earnings per diluted share is expected to be in the range of $12.26 to $13.04. Guidance is based on foreign exchange rates as of March 31, 2025, and no additional share repurchases are reflected.

• Cancellations, particularly pre-backlog cancellations, impacting bookings and future revenue projections.
• Price competition due to more CROs participating in bids, leading to potential margin pressure.
• Funding issues for clients causing project reprioritization or cancellations.
• Uncertainty in the FDA environment and its potential impact on client project timelines and funding.

Q: David Windley asks about RFP quality and price competition.

A: August Troendle mentions more CROs in bids leading to price competition, and quality of RFPs being affected by funding and project stage.

Q: Max Smock asks about book-to-bill and FDA talk on trials.

A: August Troendle discusses book-to-bill dependence on environment and FDA talk as hypothetical, with rare disease being a part of business but not a major risk.

Q: Ann Hynes asks about cancellations.

A: August Troendle states they don't disclose cancellation rates, with cancellations broad due to funding issues.

Q: Dan Leonard asks about biotech exposure.

A: August Troendle talks about funding issues over companies closing, with no specific metrics on negative enterprise value.

Q: Eric Coldwell asks about backlog burn.

A: Kevin Brady says backlog burn is due to revenue acceleration and higher reimbursable costs.

Q: Charles Rhyee asks about cancellations mix.

A: August Troendle says pre-backlog cancellations were worse than backlog cancellations.

Q: Mike Cherney asks about cancellations cadence.

A: August Troendle says cancellations were across the board, not related to FDA movements.

Q: Jalindra Singh asks about backlog conversion and biotech competition.

A: Kevin Brady talks about confidence in backlog conversion and no major change in pitch to biotech clients.

Q: Justin Bowers asks about program progression and cancellations.

A: Kevin Brady says programs progress normally, with cancellations due to funding and drug performance.

Q: David Windley asks about sites and pass-through.

A: August Troendle discusses pass-through drivers as complexity, inflation, and site costs.