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Medpace Holdings, Inc. Stock Price: Quote, Forecast, Splits & News (MEDP)

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Company Profile

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Medpace Holdings, Inc. Price & Performance (MEDP)

Stock Performance

Updated Mar 14, 8:00 PM UTC

MEDP:NASDAQ

$324.95USD

2.21% · $7.02

After Hours

-0.99% · $3.21

Open

$321.20

High

$328.38

Low

$320.23

Market Cap

$9.90B

P/E Ratio

25.7

Volume

358.60K

Year High

$459.77

Year Low

$302.01

News & Market Insights

Victory Capital Management Reduces Medpace Holdings Stake
Mar 16, 2025
Victory Capital Management Inc. has significantly reduced its stake in Medpace Holdings, cutting its holdings by 56.2% during Q4 2024. This move leaves the firm with 16,928 shares valued at $5.62 million. Other institutional investors have also adjusted their positions in the company, reflecting a dynamic investment landscape.12
Medpace Faces Market Reaction to Earnings Guidance
Feb 25, 2025
Medpace Holdings experienced a 7.05% drop in stock price after issuing revenue and earnings guidance below Wall Street expectations for 2025. Despite strong operational metrics and exceeding Q4 earnings forecasts, concerns over slowing momentum and a book-to-bill ratio of 0.99x have weighed on investor sentiment.34
Insider Transactions Highlight Medpace's Stock Movements
Feb 26, 2025
Medpace President Jesse Geiger acquired 9,886 stock options at $325.73 per share, signaling confidence in the company. However, broader insider activity reveals a mixed picture, with significant stock sales by other insiders. These moves could reflect varied perspectives on the company's valuation and future performance.56

What's Happening

Peers

Earnings

Report Date

—

Rev Estimate

—

Avg 1d Change

10.37%

Report Period

Q4 2024

EPS Estimate

—

Implied Move 1d

—

Transcript

10m 36s

Note that we assume no obligation to update forward looking statements even if estimates Accordingly, you should not rely on any of today's forward looking statements as representing our views as of any date after today. During this call, we will also be referring to certain non GAAP financial measures. These non GAAP measures are not superior to or replacement for the comparable GAAP measures, but we believe these measures help investors A reconciliation of such non GAAP financial measures to the most directly comparable GAAP measures is available in the earnings press release and earnings call presentation slides provided in connection with today's call. Slides are available in the InvestorRelationssectionofourwebsite@investor.medbase.

11m 27s

Thank you, Laurence. Backlog cancellations in Q4 were within our normal range. Our book to bill ratio was 0.99 influenced by prior pipeline cancellations as well as the delay of some projects previously expected to enter backlog. RFPs were down slightly in Q4 compared to Q3. As the overall business environment weakened somewhat. But remained up relative to Q4 twenty twenty three. To the 2024 calendar year, backlog increased 3%. However, total awards and outstanding unperformed work Considering both backlog and pre backlog awards, This reflects the high level of cancellations we experienced in 2024. All this provides a challenging backdrop to growth in 2025. Assuming cancellations remain in our historical range, and the business environment does not continue to deteriorate, we remain hopeful that we can achieve growth in bookings with a book to bill ratio above 1.15 in the second half of the year. Revenue growth for 2025 is expected to be in the low single I will now turn things over to Jesse for comments on Q4. Thank you, August, and good morning, everyone.

12m 56s

Our revenue in the fourth quarter of twenty twenty four was $536,600,000.0 which represents a year over year increase of 7.7% and full year 2024 revenue was 2,110,000,000.00 an 11.8% increase from 2023.

13m 17s

Net new business awards entering backlog in the fourth quarter decreased 13.8% from the prior year. $529,700,000 resulting in a 0.99 net book to bill. [indiscernible] For the full year 2024, net new business awards were $2,230,000,000 a decrease of 5.4%. And ending backlog as of 12/31/2024, was approximately 2,900,000,000.0 an increase of 3.2% from the prior year.

13m 53s

Project that approximately $1,630,000,000 of backlog will convert to revenue in the next twelve months, and backlog conversion in the fourth quarter was 18.3% of beginning backlog. Now with that, I will turn the call over to Kevin to review our financial performance in more detail in and discuss our 2025 guidance.

14m 15s

Kevin?

14m 17s

Thank you, Jesse, and good morning to everyone listening in. Of 7.7%. Full year 2024 revenue was $2,110,000,000 and increased 11.8% in 2023. EBITDA of 133,500,000.0 increased 39.3% compared to $95,800,000 in the fourth quarter of twenty twenty three. Full year EBITDA was $480,200,000 and increased 32.5% from the comparable prior year period. EBITDA margin in the fourth quarter was 24.9%, compared to 19.2% in the prior year period. Full year EBITDA margin was 22.8% compared to 19.2% in 2023. EBITDA margin for the quarter and for the full year favorably impacted by reimbursable cost. Which decreased by 400 basis points and 180 basis points respectively from the comparable prior year periods. EBITDA margin also benefited and productivity on slower headcount growth. The fourth quarter saw additional benefit from foreign exchange behind the strengthening of the U. S. Dollar in the quarter. The fourth quarter of twenty twenty four, net income of $117,000,000 increased 49.5% compared to net income of $78,300,000 in the prior year period. For the full year 2024, net income was $404,400,000 compared to 282,800,000.0 in 2023. Which represents a 43% increase Net income growth ahead of EBITDA growth was driven by interest income and a lower effective tax rate.

16m 39s

Net income per diluted share for the quarter was $3.67 compared to $2.46 in the prior year period. For the full year 2024, net income per diluted share was $12.63 compared to net income per diluted share of $8.88 in 2023. Regarding customer concentration, our top five and top 10 customers represent roughly 2229% respectively, of our full year 2024 revenue, In the fourth quarter, we generated $190,700,000 in dollars in cash flow from operating activities. And our net day sales outstanding was negative seventy one days. As of December 31, 2024, we had $669,400,000 in cash. During the fourth quarter and full year 2024, we repurchased approximately 527,000 shares for $174,200,000 At the end of the quarter, we had 134 point remaining under our share repurchase authorization program. Moving now to our guidance for 2025. Full year 2025 total revenue is expected in the range of $2,110,000,000 to 2,210,000,000.00 which represents flat to 4.8% growth over 2024 total revenue of $2,110,000,000 Our 2025 EBITDA is expected in the range of $462,000,000 to $492,000,000 representing a decline of 3.8% to growth of 2.5% compared to EBITDA of $480,200,000 in 2024. We forecast 2025 net income in the range of $378,000,000 to $4.00 $2,000,000 This guidance assumes a full year 2025 effective tax rate of 18% to 19%.

18m 59s

Interest income of $30,500,000 and $31,700,000 diluted weighted average shares outstanding There are no additional share repurchases reflected in our guidance. Earnings per diluted share is expected to be in the range of $11.93 to $12.69 Guidance is based on foreign exchange rates as of 12/31/2024. With that, I will turn the call back over to the operator, so we can take your [indiscernible] Certainly. And our first question for today comes from the line of Dan Leonard from UBS. Your question please.

19m 47s

Thank you. Couple of questions. First off on the service gross margins in the quarter, I understand the pass through mix component. I was hoping you could elaborate on some of the other factors that drove the outperformance on that line, whether they be headcount related or otherwise?

20m 5s

Hey, Dan, this is Kevin. No, it's really just the productivity of our existing staff and the programs that are in backlog progressing very nicely. And so it's really the kind of the second quarter that we've seen great progress on the direct service side.

20m 24s

Okay. And then as a follow-up, what are the assumptions that would get you to the high end of your revenue guidance in 2025, Say that again, Dan? Sorry.

20m 37s

What are the assumptions that would get you to the high end of your revenue guidance in 2025?

20m 44s

Yes. I mean, really just the business environment improving a bit and your programs that kind of are sitting in that pre backlog bucket progressing, in the backlog as awards in those programs continuing.

21m 3s

Understood. Thank you. Thank you. And our next question comes from the line of Max Schmitt from William Blair. Your question please. Hi, good morning, everyone. Thanks for taking our questions. August, you mentioned the business environment deteriorated some over the last couple of months here. I guess my question is, are you surprised by that given the better funding environment that we saw in 2024? And what do you think is behind that deterioration? Do you think it could just be some of these companies maybe taking bit of a pause to digest, I guess, some of the uncertainty caused by the election? Or is there something else going on that you would call out that is really driving that weakness?

21m 44s

Yes. I don't really have a explanation for it. And it was just and this is a subjective thing. I think RFP flow was fine.

21m 57s

It's the qualitative aspects of the type of size and type of projects we're getting and likelihood of them moving forward. And I just thought it wasn't as quite as robust as what we've seen in the prior couple of quarters, was really kind of accelerating and it seemed decelerate. Some. And yes, I don't know if it's because of the election and just concern what what the situation is, whether it's going to turn around soon. But I did note that it wasn't as robust as it had been in the prior couple of quarters. In terms of core business environment, now cancellations on the other side So there's kind of two sides to the environment and one is kind of new opportunities and that is maybe weakening a bit. But the cancellations were down in Q4 relative to the prior three quarters really. So it was the first quarter of the year we had kind of a closer to normalized cancellation rate, although I think the cancellations were still toward the high side. So cancellation is improving, business environment may be just a little bit weaker, we'll have to see a Q1.

23m 12s

Understood. Thank you for that helpful commentary. And then just following up on your comments about some of those delays. I think you called out a couple that were couple projects that were expected to hit bookings in the quarter. Is there any color you can provide around what was behind that or those delays and how much visibility you have into those projects hitting bookings in the next couple of And then how do you think about the risk that those delays eventually turn into cancellations in the first half of this year?

23m 39s

Yes, I do expect those studies like I mentioned, being delayed as progressing just being a little bit slightly delayed, not greatly delayed. We do have some projects that are on longer kind of hold pattern. And there's always a risk that anything cancels I can't edge that and cancellations are still top of my mind in terms of risks of us performing this year. But I I think that most of what was kind of pushed out of Q4 I think we'll hit here in the first half of twenty twenty five.

24m 23s

Understood. Thanks again for taking the questions. I'll hop back in the queue.

24m 28s

Thank you. And our next question comes from the line of Eric Codewell from Baird. Your question please. Thanks very much. Good morning. I'm curious about the revenue phasing expectations through the year.

24m 43s

With a 0% to 5% growth range. Are you anticipating a big drop off here in the beginning of the year and then a ramp towards the back half? Is it more linear through the year? And then what is the indirect revenue mix component or growth component Is it down like you saw here in the fourth quarter and the deceleration we've seen over the last year? Are you expecting it to stabilize? At this percent of revenue go back up? What's the what's the mix between direct and indirect fees, please?

25m 13s

Yes. Eric, as it relates to the indirect, our modeling would suggest that 2025 as a percentage of revenue will be somewhere around where we landed in the fourth quarter here. So you're down from where we were in total year '24. At levels similar to what we saw in the fourth quarter here. What was the first part of your question?

25m 41s

Phasing on revenue, the 0% to 5% range, are we starting at the low end and moving to a higher level in the back half, is it more linear growth through the year, just the thought process on timing [indiscernible] Yes. It will somewhat depend on how those programs progress into awards throughout the year. Certainly, we've got a pipeline of those backlog opportunities. So I I would expect there to be some linear progression throughout the year. I wouldn't expect a major step up in the first quarter here, but hopefully sequentially growing revenues throughout the year from there. But it will depend on how the bookings progress as well.

26m 26s

And then if I could just squeeze in one more. Advanced billings, kind of an intriguing topic, doesn't get a lot of airtime, but You did show quarter to quarter increases in advanced billings 2Q, 3Q, 4Q, you finished the year with advanced billings up 27% year over year. I'm not quite sure what drove that and how that happens in a year where bookings were down, what, 5% plus and down 14% in the fourth quarter, revenue slowed. I'm What's keeping these advanced billings at such a high level and actually improving a little bit sequentially through the last three quarters.

27m 8s

Yes, good question, Eric. I mean, a lot of that is going to be timing based on the active programs that are in backlog and how those programs are progressing You saw the nice growth rates that we've seen on the direct side of the business and we try to create payment schedules and milestone payments that kind of stand a bit ahead of the work that we're doing. And so a lot of it's just timing related how the mix of programs is going and our ability to bill according to that milestone, there's milestone payments and collect against us. As you know, we stay on top of kind of sponsors and credit and making sure that we're getting paid as we're we're doing the work.

28m

Yes, fewer clients that are not paying us. We continue to work. Maybe that's it.

28m 7s

Thanks very much.

28m 11s

Thank you. And our next question comes from the line of David Windley from Jefferies. Your question please.

28m 18s

Hi. Good morning. Thank you for taking my questions. I wanted to focus on the cost side a little bit. I wondered, when we were together in November, you talked about [indiscernible] very high levels, much higher than historical norms and that was leading to greater levels of productivity. I think the expectation was that it was probably at a peak and couldn't get much better.

28m 41s

Fourth quarter was better. And it seems like at least some of your margin expectation next year assumes that that continues. So I wondered if you could maybe provide a little bit more precision around the productivity levels of the staff and when you would anticipate or if you are anticipating kind of restarting hiring at any point during the '25 Yes. Hey, Dave, it's Jesse. Yes. And in terms of productivity, it does remain at a very high level. Good productivity continues, good retention continues, a lot of experienced staff just continuing to work diligently on projects.

29m 33s

The headcount growth was fairly flat in 2024. We We do anticipate accelerating hiring here in 2025. So we are targeting at the moment headcount growth in the mid mid to maybe upper mid single digit level. For the year. How that progresses throughout the year will will be somewhat determined by what the business environment looks like and how that progresses. But we do anticipate hiring and kind of restarting hiring engine a little bit little bit more aggressively as we work through the year. And that will have likely a little bit of an impact on margins. Got it.

30m 22s

And Dave, just to build on that, we do expect headwinds on margins if you look at look at the guidance that's out there, And the other thing to call out on question that I answered previously is, as it relates to the indirect and reimbursement We do expect 2025 to be at a level similar to what we saw in the fourth quarter, which would mean that that is a percentage of revenue in 25% comes down a little bit.

30m 49s

Right. [indiscernible] other cost actions, one of the things that I think you had talked about, I can't remember if it was last quarter or February ago, is the beginnings of investment in offshoring.

31m 2s

Some back office functions, maybe data management, things like that. Where do those stand? And are some of the benefits of that activity beginning to show through in your financial expectations? I was going to say, I still think it's early times, but yes, go ahead, Jesse.

31m 22s

Yes. And I just said, we're just getting started there. I mean, that's more of a long term play there. We haven't really seen any of the of the positive impact of that just yet. We are continuing to hire in in India. In a couple of back office functions and administrative functions. But I think any sort of tailwind that that creates or margin help it will be some, but it won't be a major margin driver. If you think about just the overall picture of margin profile, But it is a longer term play more so than anything that we're expecting to materialize here in 2025.

32m 5s

Got it. And then last question for me is, is just I guess around competition It kind of comes back to a bookings question, but I'm thinking about it more again from a a margin sustainability standpoint and what we hear in the market is I know you wouldn't normally say that you typically see the bigger competitors, but it it sounds like in the absence of a stronger demand environment broadly that they are moving down into what would be your more traditional space more aggressively So I wonder if your if you're seeing that And I would assume your reaction would be to to not sacrifice price, so maybe August you could speak to that.

32m 55s

Sure. Look, I think the environment has tightened everybody's built some. I think clients are funding challenged frequently in our at least in our our clients. And I think there is heightened competition and pricing is is a part of that. And I think you have to be as efficient as possible. Certainly, we have to be competitive and bring value. To the table. And yes, price is part of that. And we've had we've had to defend our our volume as well as our margin.

33m 45s

Got it. That's helpful. Thank you very much.

33m 49s

Thank you. And our next question comes from the line of Jalindra Singh from Choice Securities. Your question please.

33m 57s

Thank you and good morning everyone. So going back to the comment around biotech slow decision making and delays etcetera. Understand it is tough to know what might be driving that.

34m 7s

But based on your conversation with these companies, are there any key catalysts they're watching for before they're comfortable going forward with the project? And related to that, have you seen any signs that spawn are putting pressure on these companies to put dollars into play? Because seems like funding is not an issue. And if that's the case, it could create some pent up demand in near term. Any thoughts on that?

34m 30s

Yes.

34m 30s

I think for our clients, funding is the issue. I can't speak to clients that have cash and just don't want to spend it. So, yes, I just don't know. I mean, look, there's also things do take time and clients that do have cash may not be ready with their IP. To move forward for other reasons. So I don't think I mean, I don't perceive A significant number of our clients holding on to cash despite they have a program that's ready to move forward and don't want to spend it. I just don't see that. But Okay. That makes sense. And then my follow-up on the RFP trends in the quarter being down slightly sequentially versus Q3. Can you guys speak a little bit more to the quality of RFPs? Are you seeing customers kind of prioritizing research on drugs with more promising data on drugs than later stage trials or mix of RFPs and focus still pretty consistent And to that point, can you remind us where your mix is across Phase one to four?

35m 44s

Yes. Okay. So I think RFPs were okay in Q4. Q4 just tends to be a little bit lighter in general. So I think the volume, the dollar volume of RFPs was fine. From my perspective, so it was the qualitative side that I didn't think there was quite as many opportunities that looked promising in terms of size and likelihood of moving [indiscernible] a little bit more maybe churn in the RFP. Bucket than I would like. So that was kind of just my qualitative assessment, which is difficult to quantify. In terms of our breakout, Phase one through four, [indiscernible] one itself is a very small part of our business. We're talking about a couple of percent. It 1%. If you talk about our CPU type operations now, you could generally other Phase 1s in oncology, etcetera, you throw in with Phase two and three. That's the majority of the business. And Dollar dollar numbers, Phase two and then the Phase three are are somewhat comparable type of size of the business. And we don't have a lot of very late phase type trials.

37m 11s

Great.

37m 12s

Thanks a lot.

37m 15s

Thank you. And our next question comes from the line of Justin Bowers from Deutsche Bank. Your question please.

37m 23s

Hi, good morning, everyone.

37m 26s

Can you talk about the trends that you're seeing in your pre backlog awards and how cancellations are trending there? Is there Similar pattern that you're seeing in the bookings or sort of in line above [indiscernible] What you're seeing in the backlog.

37m 44s

I'm sorry, the cancellation and pre backlog The pre backlog awards, yes.

37m 53s

So, okay, so our new order notification, that's you're just asking what the kind of volume was there?

38m

Volume was and then are you seeing is there any divergence in the cancellations there versus what you're seeing in your net business, right? Okay.

38m 13s

Forking your backlog.

38m 15s

Jeff, and then kind of that awards that have been awarded awards that we have that are not yet in backlog. Yes, so I think the flow is still okay. Again, I think that the business environment did soften a little bit in Q4. But our win rate was fine. And so I think that things moving into our kind of awarded, but not backlog yet is still looking okay and good enough to kind of get what we want to get. Second half of this year if everything else remains the same. Cancellations came down both across the portfolio, so both in more into our normal range for backlog cancellations as well as a reduction in our cancellations in that pre backlog kind of phase. So those came down bigger part of cancellations in 2024 and drove Most of our booking difficulty were from that pre backlog group. Rather than the backlog group itself. So they came down nicely also along with the backlog cancellations.

39m 33s

Understood. And then just in terms of the demand environment and piecing together some of the other questions It seems like quality started to improve. Late last year and pricing was at least stabilizing maybe improving a smidge is Is that still the trajectory or is that [indiscernible] Gains direction as well.

40m 4s

And then maybe just comments on decision making like there's been a lot of delays throughout 2024.

40m 12s

Is Is that sort of a persistent trend or is the velocity change there at all?

40m 19s

So I think the business environment was much improved for the first three quarters of 'twenty four. So I think 'twenty four came out with accelerating kind of opportunities.

40m 35s

And aside from the cancellations. So if we look at just new opportunities and that what was happening in our business environment with things being pulled, or funding problems of many of our clients. There was a lot of opportunities and they were kind of accelerating. Q4 was a little bit a little bit weaker maybe. But the environment is still not not [indiscernible] So I don't know which direction it's going. Could just be maybe a little bit of a slowdown in Q4 and then things are going to reaccelerate. Or it could be the signs of things are slowing down more. Delays and things like that I wasn't delays on really it was funding really We've had a few delays in push things out of Q4, but it hasn't really been just to quarter delays in prior in the year, it was more financial difficulty and cancellations.

41m 34s

Does that answer your question? I missed that question. Thank you.

41m 37s

Yes.

41m 38s

Yes.

41m 38s

Thank you, August.

41m 41s

Thank you.

41m 45s

Our next question comes from the line of Charles Reeve from TD Cowen. Your question please.

41m 54s

Yes, thanks for taking the questions. Maybe just maybe a little bit more clarification as we think about sort of cancellation rates, you're saying that's kind of come back to normal. I know we've talked about sort of cancellations from pre backlog. How much longer should we expect that kind of these kind of dynamics to be impacting book to bill as we move through the course of the year? Do you feel like we're kind of getting at the end of that and And so when we think about the difference between, let's say, the 0.99 book to bill the fourth quarter sort of getting to this 1.15 as we get to the back half. Of the year. How would you kind of characterize that as a mix between sort of reducing sort of these pre backlog cancellations or just expectations for RFP growth and awards Yes. So I think the elevated pre backlog cancellations [indiscernible] 2024 will have an impact throughout 2025. And I expect [indiscernible] bookings in the first couple of quarters of twenty twenty five. And then hopefully in the second half, we will get bookings that are accelerating and getting above that 1.15 sort of threshold that I look at, hopefully moving in 2026 to 1.2, etcetera.

43m 27s

But that's kind of the trajectory seeing based upon the cancellations in our portfolio of pre backlog work, which can take up to a year to translate into backlog.

43m 43s

Okay.

43m 43s

So just to follow-up there. So if we assume that that kind of activity sounds like you're saying is kind of you feel it's going to be relatively constant. When we think about the weaker first half bookings, is that a function where you think you said the RFP activity in the fourth quarter was down slightly. We should expect You're seeing RFP activity here in the first quarter. Lower. And so is it right to think that book to bill? I'm not I'm not projecting future RFPs. I'm projecting the bookings. I thought that's what you were asking about. Yes. I'm sorry. Yes. Are you expecting bookings to be book to bill here to be lower in the first half than the fourth quarter and then kind of ramping back up?

44m 28s

No, I do not I hope nothing is lower than Q4 in terms of booking book to bill. So I'm hoping that that is improved, but still well below that 1.15. So I'm looking for rather weak bookings in the first couple quarters here of 2025.

44m 48s

I certainly hope that's above one point zero. And I have every reason to believe it will be. But just not anywhere near our kind of more longer term run rate.

45m 1s

Got it. Appreciate that.

45m 6s

Thank you. And our next question comes from the line of Ann Hite from Mizuho. Your question please. [indiscernible] Great. Thank you. So I know this is an uncertain environment, but I guess given your guidance, do you think your revenue guidance encompasses just the uncertainty? And when you talk to your how much visibility do they have in the funding environment? So I'm just trying to figure out With this new guidance, how confident are you in the visibility you have at this point in time? And maybe, what do you think at this point in time would drive upside versus downside? That would be great.

45m 51s

Okay. That's a little bit tough. How confident MIN I have no idea where the business is going. The business environment in twenty twenty five I think we've tried to make reasonable assumptions about the future path and that's the guidance we came out with I think there's substantial downside potential with further cancellations, a weakening business environment and cancellations really drop to well into our normal range and the business environment strengthens as it had been in most of 2024. So I think we're kind of equipposed here. I think we've got a good guidance that reflects the environment we're in. But there's certainly quite a bit. And look, this is a business that has a lot of it is established backlog for this 2025. Is already in place. It's a matter of cancellations. And cancellations can completely destroy those hopes. But there's also the opportunity that cancellations are very low. And that's going to be the big driver. Yes, I don't know what else I can say to get you comfortable with the guidance we have. Maybe on the cancellation part, were there any trials canceled that surprised you like meaning, is the industry acting different than historical drivers of cancellations.

47m 42s

And then that would be great. And then just on the competitive environment, are there any any notable changes sequentially that you would call out?

47m 52s

No real changes. On cancellations, it's for this past year, it's been very largely funding related Now like there's cancellations come for a number of reasons. We've had products fail. Various reasons for a cancellation occur, competitive environment changed substantially, There's a broad number of reasons for cancellations, but overwhelmingly, they've been at least linked in good part to funding.

48m 26s

So that is the primary kind of driver that we see in terms of cancellations.

48m 32s

All right. Thank you.

48m 36s

And our next question is a follow-up from the line of Max Muck from William Blair. Your question please.

48m 44s

Hi, thanks for squeezing in a follow-up here. I just wanted to ask it clear. [indiscernible] around whether there's any sort of tailwind to gross margins from the elevating cancellations that you saw in twenty twenty twenty four. So just hoping you can walk through the payments that you received for those cancellations I guess the way I think about it, just for work completed and then for wind down costs, but I wanted to confirm that there's not any sort of incremental payments in there that would have artificially inflated your margins this year. And then therefore would be a bit of a headwind to margins in 2025 given that cancellation seemed to normalize in a bit. Thank you.

49m 22s

Evan, I don't know if you want me to take Yes, let me take a stab at that first.

49m 26s

I think that [indiscernible] historically have been something of a tailwind for margin. And often it kind of accelerates a lot of work on that closeout, etcetera. And also just I think our our routine monitoring of percent completion And I think we're reasonably conservative about revenue accrual that sometimes catches up some aspects at closeout.

50m 6s

So I think that in general, there is something of a tailwind from cancellations. Kevin, I don't know if you have any quantification for that.

50m 15s

Yes. No, it's nothing that I can quantify, but I would say, while there is some slight tailwind from that, [indiscernible] tailwind on margins this year has again been just the productivity of the existing employee base, it's been tremendous. Again, your headcount is flat year over year and the organization and the employee base continues to be productive and advancing programs and And that's really what's driving margins. Yes, there might be a slight tailwind from some of these cancellations. And as August mentioned, closing out those programs but by and large, it's just the retention of the employee base and good utilization and just great execution. And you said again for squeezing in a follow-up. Thank you. And our next question is a follow-up from the line of Eric Kodala from Baird. Your question please. [indiscernible] Thanks. I was hoping you could help us with performance obligations. Your performance obligations as reported in SEC filings actually grew at a nice and accelerating clip all year. Third quarter was up 25% year over year, it was up over 9% quarter over quarter. So I'm struggling a bit with trying to triangulate between what should be and that's historically been an extremely high positive correlation to future revenue growth.

51m 50s

Which was a number that spiked dramatically in 3Q. Versus what you're telling us on the bookings and the revenue outlook for this year, which obviously are are much lower. So how did that come to pass? Performance obligations were up 25% in the third quarter And why is that not as correlated to revenue growth in 'twenty five as it has been historically. [indiscernible] Those look very far out.

52m 19s

We have a five year project and all of it goes into performance obligation.

52m 28s

Right.

52m 29s

Only a portion of that is near term. As that is included in our backlog, even if it reaches backlog. I mean, so you get backlog, okay, we get an award usually by the time we got a signed contract and it's a obligation. It's usually in backlog, but it's it's only a part of it that's in backlog. And you'd expect if you have a lot of project canceling, a lot of new stuff, being added in. That the average duration goes up and that would increase your the gap between performance obligations and backlog. But that's I don't know quantitatively break that down into exactly, but it's not something I think that would be unexpected. Your revenue growth is going to be based upon late stage projects, you don't have your fastest conversion and you it's all in backlog and early stage stuff There's still a lot of stuff held out. [indiscernible] on top of the timing nuance of cancels now, awards for later, Is there any other more structural shift in the the nature of the programs or the average duration [indiscernible] Is there anything like that occurring? And then finally, I don't know if you could help us with this, but would you be willing to foreshadow what the performance obligations look like in the 10 ks that will be coming later? [indiscernible] Yes.

54m 5s

I mean, in terms of the foreshadowing, I mean, we'll publish that later today. Okay. I don't think that the difference will be dramatically different than what you saw in the third quarter. Again, as August had mentioned, the tail on studies is really the largest driver of that delta. Because remember, we only put in the first three years of a program in the backlog.

54m 30s

And there's other factors like if there's an interim analysis, we only put the study in up to that interim analysis. So a lot of differences between the accounting version versus the backlog version, but it's consistent from period to period.

54m 47s

No structural changes, I guess, In other words, there Okay. Thank you very much.

54m 51s

I do think backlog is a better reflection of what we think is we do have that obligate look, we've given them a price We've given them what we do and we're obligated to do it even if they go into that next phase of the study. But sometimes those are really just options that the client holds And it's not likely even get to I mean, I think our backlog is better reflection of what we think is qualified stuff that we're likely to perform.

55m 18s

Yes, I agree.

55m 23s

Thank you. And our next question comes from the line of David Windley from Jefferies. Your question please.

55m 30s

Hi. The beauty of a short conference call is we get to have multiple follow ups here. Maybe I don't know if you like that or not, but I wanted to ask one as well.

55m 41s

First of all, to clarify an answer you just gave to Eric. So August, you said late stage programs are I think your point was burning more in burning more directly into revenue versus early stage programs. I want to clarify by that that you mean that you mean the late stage of programs, right? So not the difference between Phase one and Phase three, but the latter part of the Phase three rather than the earlier part of the Phase three.

56m 11s

Correct.

56m 12s

Correct. It's all in backlog. So that's equal to the performance obligation and it's going to burn all in the next year or two.

56m 19s

Right. So just for kind of purposes of transcript, so we get that clear.

56m 25s

Okay. Not a reference to clinical trial phase, early stage versus late stage but a comment on trials in their in the latter part of their progression as opposed to trials that are starting earlier?

56m 37s

That's what we're talking about.

56m 39s

Right. Appreciate that. And then Kevin, I think you mentioned on margins some benefit, I believe, from FX I didn't hear a quantification of that. Wondered if you might quantify that and then what is your FX assumption in the guidance for 2025? Yes. The guidance assumes FX rates as of December 31.

57m 1s

And in terms of the impact in the fourth quarter, it was probably about $4,000,000 EBITDA impact for the fourth quarter net. Okay.

57m 11s

All right, great. That's all for me. Thank you.

57m 14s

Thank you. This does conclude the question and answer session of today's program. I'd like to hand the program back to Lauren Morris for any further remarks.

57m 24s

Thank you for joining us on today's call and for your interest in Medpace. We look to speaking with you again on our first quarter twenty twenty five earnings call.

57m 33s

Thank you, ladies and gentlemen for your participation in today's conference. This does conclude the program. You may now disconnect. Good day.

Key Insights

Q4 2024 Financial Performance: Revenue for Q4 2024 was $536.6M, a 7.7% YoY increase. Full-year 2024 revenue reached $2.11B, up 11.8% from 2023. EBITDA for Q4 was $133.5M, a 39.3% YoY increase, with a full-year EBITDA of $480.2M, up 32.5%. EBITDA margin for the year improved to 22.8% from 19.2% in 2023.
Bookings and Backlog: Q4 2024 net new business awards were $529.7M, down 13.8% YoY, resulting in a book-to-bill ratio of 0.99. Full-year 2024 net new business awards totaled $2.23B, a 5.4% decline YoY. Ending backlog as of December 31, 2024, was $2.9B, up 3.2% YoY, with $1.63B expected to convert to revenue in the next 12 months.
2025 Guidance: Revenue for 2025 is projected between $2.11B and $2.21B, representing flat to 4.8% growth. EBITDA is expected in the range of $462M to $492M, reflecting a potential decline of 3.8% to growth of 2.5%. Net income is forecasted between $378M and $402M, with EPS guidance of $11.93 to $12.69.
Operational Highlights: Productivity and retention of staff remained strong in 2024, with flat headcount growth contributing to margin improvements. Hiring is expected to accelerate in 2025, targeting mid to upper single-digit growth in headcount.
Market Environment and Risks: The business environment softened slightly in Q4 2024, with delays in project bookings and elevated cancellations impacting performance. Management anticipates weaker bookings in the first half of 2025 but expects improvement in the second half with a book-to-bill ratio above 1.15. Cancellations remain a key risk factor for achieving guidance targets.

Income Statement

Revenue

	2020	2021	2022	2023	2024
Revenue	$926M	$1.1B	$1.5B	$1.9B	$2.1B
Cost of Revenue	$647M	$814M	$1B	$1.4B	$1.5B
Gross Profit	$279M	$328M	$432M	$525M	$656M
Gross Profit %	30%	29%	30%	28%	31%
R&D Expenses	$0	$0	$0	$0	$0

2020

2021

2022

2023

2024

Revenue

$926M

$1.1B

$1.5B

$1.9B

$2.1B

Cost of Revenue

$647M

$814M

$1B

$1.4B

$1.5B

Gross Profit

$279M

$328M

$432M

$525M

$656M

Gross Profit %

30%

29%

30%

28%

31%

R&D Expenses

Cash Flow

Net Income

	2020	2021	2022	2023	2024
Net Income	$145M	$182M	$245M	$283M	$404M
Dep. & Amort.	$20M	$21M	$22M	$26M	$29M
Def. Tax	$527K	-$37M	-$23M	-$25M	-$27M
Stock Comp.	$14M	$14M	$21M	$21M	$26M
Chg. in WC	$66M	$67M	$106M	$106M	$157M

2020

2021

2022

2023

2024

Net Income

$145M

$182M

$245M

$283M

$404M

Dep. & Amort.

$20M

$21M

$22M

$26M

$29M

Def. Tax

$527K

-$37M

-$23M

-$25M

-$27M

Stock Comp.

$14M

$21M

$26M

Chg. in WC

$66M

$67M

$106M

$157M

Balance Sheet

Cash

	2020	2021	2022	2023	2024
Cash	$278M	$461M	$28M	$245M	$669M
ST Investments	$0	$0	$0	$0	$0
Cash & ST Inv.	$278M	$461M	$28M	$245M	$669M
Receivables	$161M	$186M	$253M	$298M	$296M
Inventory	$0	$0	$0	$0	$0

2020

2021

2022

2023

2024

Cash

$278M

$461M

$28M

$245M

$669M

ST Investments

Cash & ST Inv.

$278M

$461M

$28M

$245M

$669M

Receivables

$161M

$186M

$253M

$298M

$296M

Inventory

Go Deeper

Financial information provided by Financial Modeling Prep. Options data provided by Unusual Whales. Live transcripts provided by Quartr. All data is provided for informational purposes only, and is not intended for trading purposes or financial, investment, tax, legal, accounting or other advice. · See all tickers.

Earnings

Report Date

—

Rev Estimate

—

Avg 1d Change

10.37%

Report Period

Q4 2024

EPS Estimate

—

Implied Move 1d

—

Transcript

10m 36s

11m 27s

12m 56s

13m 17s

13m 53s

14m 15s

Kevin?

14m 17s

16m 39s

18m 59s

19m 47s

20m 5s

20m 24s

Okay. And then as a follow-up, what are the assumptions that would get you to the high end of your revenue guidance in 2025, Say that again, Dan? Sorry.

20m 37s

What are the assumptions that would get you to the high end of your revenue guidance in 2025?

20m 44s

21m 3s

21m 44s

Yes. I don't really have a explanation for it. And it was just and this is a subjective thing. I think RFP flow was fine.

21m 57s

23m 12s

23m 39s

24m 23s

Understood. Thanks again for taking the questions. I'll hop back in the queue.

24m 28s

24m 43s

25m 13s

25m 41s

26m 26s

27m 8s

28m

Yes, fewer clients that are not paying us. We continue to work. Maybe that's it.

28m 7s

Thanks very much.

28m 11s

Thank you. And our next question comes from the line of David Windley from Jefferies. Your question please.

28m 18s

28m 41s

29m 33s

30m 22s

30m 49s

Right. [indiscernible] other cost actions, one of the things that I think you had talked about, I can't remember if it was last quarter or February ago, is the beginnings of investment in offshoring.

31m 2s

31m 22s

32m 5s

32m 55s

33m 45s

Got it. That's helpful. Thank you very much.

33m 49s

Thank you. And our next question comes from the line of Jalindra Singh from Choice Securities. Your question please.

33m 57s

Thank you and good morning everyone. So going back to the comment around biotech slow decision making and delays etcetera. Understand it is tough to know what might be driving that.

34m 7s

34m 30s

Yes.

34m 30s

35m 44s

37m 11s

Great.

37m 12s

Thanks a lot.

37m 15s

Thank you. And our next question comes from the line of Justin Bowers from Deutsche Bank. Your question please.

37m 23s

Hi, good morning, everyone.

37m 26s

37m 44s

I'm sorry, the cancellation and pre backlog The pre backlog awards, yes.

37m 53s

So, okay, so our new order notification, that's you're just asking what the kind of volume was there?

38m

Volume was and then are you seeing is there any divergence in the cancellations there versus what you're seeing in your net business, right? Okay.

38m 13s

Forking your backlog.

38m 15s

39m 33s

40m 4s

And then maybe just comments on decision making like there's been a lot of delays throughout 2024.

40m 12s

Is Is that sort of a persistent trend or is the velocity change there at all?

40m 19s

So I think the business environment was much improved for the first three quarters of 'twenty four. So I think 'twenty four came out with accelerating kind of opportunities.

40m 35s

41m 34s

Does that answer your question? I missed that question. Thank you.

41m 37s

Yes.

41m 38s

Yes.

41m 38s

Thank you, August.

41m 41s

Thank you.

41m 45s

Our next question comes from the line of Charles Reeve from TD Cowen. Your question please.

41m 54s

43m 27s

But that's kind of the trajectory seeing based upon the cancellations in our portfolio of pre backlog work, which can take up to a year to translate into backlog.

43m 43s

Okay.

43m 43s

44m 28s

44m 48s

I certainly hope that's above one point zero. And I have every reason to believe it will be. But just not anywhere near our kind of more longer term run rate.

45m 1s

Got it. Appreciate that.

45m 6s

45m 51s

47m 42s

And then that would be great. And then just on the competitive environment, are there any any notable changes sequentially that you would call out?

47m 52s

48m 26s

So that is the primary kind of driver that we see in terms of cancellations.

48m 32s

All right. Thank you.

48m 36s

And our next question is a follow-up from the line of Max Muck from William Blair. Your question please.

48m 44s

49m 22s

Evan, I don't know if you want me to take Yes, let me take a stab at that first.

49m 26s

50m 6s

So I think that in general, there is something of a tailwind from cancellations. Kevin, I don't know if you have any quantification for that.

50m 15s

51m 50s

52m 19s

We have a five year project and all of it goes into performance obligation.

52m 28s

Right.

52m 29s

54m 5s

54m 30s

54m 47s

No structural changes, I guess, In other words, there Okay. Thank you very much.

54m 51s

55m 18s

Yes, I agree.

55m 23s

Thank you. And our next question comes from the line of David Windley from Jefferies. Your question please.

55m 30s

Hi. The beauty of a short conference call is we get to have multiple follow ups here. Maybe I don't know if you like that or not, but I wanted to ask one as well.

55m 41s

56m 11s

Correct.

56m 12s

Correct. It's all in backlog. So that's equal to the performance obligation and it's going to burn all in the next year or two.

56m 19s

Right. So just for kind of purposes of transcript, so we get that clear.

56m 25s

Okay. Not a reference to clinical trial phase, early stage versus late stage but a comment on trials in their in the latter part of their progression as opposed to trials that are starting earlier?

56m 37s

That's what we're talking about.

56m 39s

57m 1s

And in terms of the impact in the fourth quarter, it was probably about $4,000,000 EBITDA impact for the fourth quarter net. Okay.

57m 11s

All right, great. That's all for me. Thank you.

57m 14s

Thank you. This does conclude the question and answer session of today's program. I'd like to hand the program back to Lauren Morris for any further remarks.

57m 24s

Thank you for joining us on today's call and for your interest in Medpace. We look to speaking with you again on our first quarter twenty twenty five earnings call.

57m 33s

Thank you, ladies and gentlemen for your participation in today's conference. This does conclude the program. You may now disconnect. Good day.

Key Insights

Q4 2024 Financial Performance: Revenue for Q4 2024 was $536.6M, a 7.7% YoY increase. Full-year 2024 revenue reached $2.11B, up 11.8% from 2023. EBITDA for Q4 was $133.5M, a 39.3% YoY increase, with a full-year EBITDA of $480.2M, up 32.5%. EBITDA margin for the year improved to 22.8% from 19.2% in 2023.
Bookings and Backlog: Q4 2024 net new business awards were $529.7M, down 13.8% YoY, resulting in a book-to-bill ratio of 0.99. Full-year 2024 net new business awards totaled $2.23B, a 5.4% decline YoY. Ending backlog as of December 31, 2024, was $2.9B, up 3.2% YoY, with $1.63B expected to convert to revenue in the next 12 months.
2025 Guidance: Revenue for 2025 is projected between $2.11B and $2.21B, representing flat to 4.8% growth. EBITDA is expected in the range of $462M to $492M, reflecting a potential decline of 3.8% to growth of 2.5%. Net income is forecasted between $378M and $402M, with EPS guidance of $11.93 to $12.69.
Operational Highlights: Productivity and retention of staff remained strong in 2024, with flat headcount growth contributing to margin improvements. Hiring is expected to accelerate in 2025, targeting mid to upper single-digit growth in headcount.
Market Environment and Risks: The business environment softened slightly in Q4 2024, with delays in project bookings and elevated cancellations impacting performance. Management anticipates weaker bookings in the first half of 2025 but expects improvement in the second half with a book-to-bill ratio above 1.15. Cancellations remain a key risk factor for achieving guidance targets.

Medpace Holdings, Inc. Price & Performance (MEDP)

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