Q1 2024 Medpace Holdings Inc Earnings Call
Yeah.
Operator: Good morning, ladies and gentlemen, and welcome to Medpace's first quarter 2024 earnings conference call. At this time, all participants are in a listen-only mode. Later we will conduct a question and answer session, and instructions will follow at that time. As a reminder, this call may be recorded. I would like to introduce your host for today's conference, Lauren Morris, Medpace's Director of Investor Relations. You may begin.
Yeah.
Speaker Change: Good day, ladies and gentlemen, and welcome to <unk> first quarter 2024 earnings Conference call. At this time all participants are in a listen only mode. Later, we will conduct a question and answer session and instructions will follow at that time as a reminder, this call maybe recorded.
I'd now like to introduce your host for today's conference Tomorrow in Morris Med pieces director of Investor Relations you may begin.
Lauren Morris: Good morning, and thank you for joining Medpace's first quarter 2024 earnings conference call. Also on the call today is our CEO, August Troendle, our President, Jesse Geiger, and our CFO, Kevin Brady.
Lauren Morris: Good morning, and thank you for joining Matt pieces first quarter 'twenty 'twenty four earnings conference call also on the call today is our CEO August Troendle, our president Jesse Geiger and our CFO, Kevin Brady before we begin I would like to remind you that our remarks and responses to your questions. During this teleconference may include forward looking statements within the meaning.
Lauren Morris: Before we begin, I would like to remind you that our remarks and responses to your questions during this teleconference may include forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These statements involve inherent assumptions with known and unknown risks and uncertainties, as well as other important factors that could cause actual results to differ materially from our current expectations. These factors are discussed in our Form 10-K and other filings with the SEC.
Lauren Morris: Of the private Securities Litigation Reform Act of 1995. These statements involve inherent assumptions with known and unknown risks and uncertainty and as well the other important factors that could cause actual results to differ materially from our current expectations.
Lauren Morris: These factors are discussed in our Form 10-K and filings with the SEC. Please note that we assume no obligation to update forward looking statements. Even if estimates change accordingly, you should not rely on any of today's forward looking statements as representing our views as of any date after today.
Lauren Morris: Please note that we assume no obligation to update forward-looking statements, even if estimates change. 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 a replacement for the comparable GAAP measures, but we believe these measures help investors gain a more complete understanding of results.
Lauren Morris: 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 gain a more complete understanding of results.
Lauren Morris: 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. The slides are available in the investor relations section of our website at investor.medpace.com. With that, I would now like to turn the call over to August Troendle.
Lauren Morris: 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.
Lauren Morris: The slides are available in the Investor Relations section of our website at Investor <unk> Dot com with that I would now like to turn the call over to August Troendle.
August James Troendle: Good day everyone.
August James Troendle: Revenue for the first quarter came in a bit lower than our internal projections, and this was driven entirely by reimbursable costs coming in lower than anticipated. Reimbursable costs are difficult to model, and it is unclear if this will impact our full-year revenue numbers. Direct Revenue Drivers remain in line with plan, and we have not altered our revenue guidance. Net Awards came in below our internal projections.
August James Troendle: Revenue for the first quarter came in a bit lower.
August James Troendle: Turtle projections and this was driven entirely by reimbursable costs coming in lower than anticipated.
August James Troendle: Reimbursable costs are difficult to model and it is unclear. If this will impact our full year revenue numbers.
August James Troendle: Direct revenue drivers remained in line with plan and we have not altered our revenue guidance.
August James Troendle: Net awards came in below our internal projections.
August James Troendle: This was driven by increased cancellations, which were above our usual range of below 4.5%. By and large, these cancellations were not related to funding problems. The funding environment remains guarded but stable and improved from last year. We believe the current environment is strong enough for us to grow backlog nicely and generate accelerating revenue growth next year. RFP dollar value and quality remain stable to improve from Q4. Our profit margin was strong in the first quarter, and we have raised our full year guidance for EBITDA and, therefore, our implied margin for 2024.
August James Troendle: This was driven by increased cancellations, which were above our usual range of below four 5%.
August James Troendle: By and large the cancellations were not related to funding problems.
August James Troendle: Funding environment remains guarded but stable and improved from last year.
August James Troendle: We believe the current environment is strong enough for us to grow backlog backlog nicely and generate accelerating revenue growth next year.
August James Troendle: RFP dollar value and quality remains stable to improving from Q4.
August James Troendle: Our profit margin was strong in the first quarter and we have raised our full year guidance for EBITDA.
August James Troendle: And therefore, our implied margin for 2024.
August James Troendle: We're committed to delivering year over year margin improvement on a full year basis. This past year, we increased our investment productivity through automation, process improvements, and optimizing the geographic distribution of staff. Last quarter, we were anticipating approximately 10% employee growth to achieve our 2024 revenue, but now expect five to seven percent employee growth this year while maintaining direct revenue growth of roughly 15 percent as previously planned. With that, I'll turn the call over to Jesse for his comments on the quarter.
August James Troendle: We are committed to delivering year over year margin improvement on a full year basis.
August James Troendle: This past year, we've increased our investment productivity through automation and process improvements and optimizing geographic distribution of staff.
August James Troendle: Last quarter, we were anticipating approximately 10%.
August James Troendle: Employee growth to achieve our 2020 for revenue, but now expect 5% to 7% employee growth this year, while maintaining direct revenue growth of roughly 15% as previously planned.
August James Troendle: With that I will turn the call over to Jesse for his comments on the quarter.
Jesse J. Geiger: Thank you, August. Good morning, everyone.
Jesse J. Geiger: Thank you Robert and good morning, everyone.
Jesse J. Geiger: Revenue for the first quarter of 2024 was $511 million, which represented a year-over-year increase of 17.7%. Net new business awards entering backlog in the first quarter increased 10.8% from the prior year to $615.6 million, resulting in a 1.2 net book to bill. Ending backlog as of March 31st, 2024 was approximately $2.9 billion, an increase of 18.2% from the prior year. We project that approximately $1.56 billion of backlog will convert to revenue in the next 12 months. And our backlog conversion in the first quarter was 18.2% of beginning backlog. Now, with that, I will turn the call over to Kevin to review our financial performance in more detail and discuss our 2024 guidance.
Jesse J. Geiger: Revenue for the first quarter of 2024 was $511 million, which represented a year over year increase of 17, 7%.
Jesse J. Geiger: Net new business awards entering backlog in the first quarter increased 10, 8% from the prior year to $615 6 million.
Jesse J. Geiger: Resulting in a 1.2 net book to Bill.
Ending backlog as of March 31, 2024 was approximately $2 9 billion, an increase of 18, 2% from the prior year.
Jesse J. Geiger: We projected approximately 1.5 dollars 6 billion of backlog will convert to revenue in the next 12 months.
Jesse J. Geiger: Our backlog conversion in the first quarter was 18, 2% of beginning backlog.
Jesse J. Geiger: Now with that I'll turn the call over to Kevin to review, our financial performance in more detail and discuss our 2020 for guidance.
Kevin M. Brady: Thank you, Jesse, and good morning to everyone listening in. As Jesse mentioned, revenue was $511 million in the first quarter of 2024. This represented a year-over-year increase of 17.7% on a reported basis, and 17.6% on a constant currency basis. EBITDA of $115.7 million increased 24.6% compared to $92.8 million in the first quarter of 2023. Even the EBITDA margin for the first quarter was 22.6% compared to 21.4% in the prior year period. Similar to the first quarter of 2023, the EBITDA margin benefited from direct service activity. Productivity, and Foreign Exchange.
Jesse J. Geiger: Kevin.
Kevin M. Brady: Thank you Jessie and good morning to everyone listening in.
Kevin M. Brady: As Jesse mentioned revenue was $511 million in the first quarter of 2024.
Kevin M. Brady: This represented a year over year increase of 17, 7% on a reported basis and 17, 6% on a constant currency basis.
Kevin M. Brady: EBITDA of $115 7 million.
Kevin M. Brady: <unk> 24, 6% compared to $92 8 million in the first quarter of 2023.
Kevin M. Brady: EBITDA margin for the first quarter was 20 2022, 6% compared to 21, 4% in the prior year period.
Kevin M. Brady: Similar to the first quarter of 2023.
Kevin M. Brady: EBITDA margin benefited from direct service activities productivity and foreign exchange.
Kevin M. Brady: In the first quarter of 2024, net income of $102.6 million increased 40.7% compared to net income of $72.9 million in the prior year period. Net income gross above EBITDA gross was primarily driven by interest income in the quarter, as well as a lower effective tax rate of 9%, compared to 15.3% in the prior year period. Net income per diluted share for the quarter was $3.20, compared to $2.27 in the prior year period.
Kevin M. Brady: In the first quarter of 2024 net income of $102 6 million increased 47% compared to net income of $72 9 million in the prior year period.
Kevin M. Brady: Net income growth above EBIT growth was primarily driven by interest income in the quarter.
Kevin M. Brady: As well as a lower effective tax rate of 9%.
Kevin M. Brady: Compared to 15, 3% in the prior year period.
Kevin M. Brady: Net income per diluted share for the quarter was $3 20.
Kevin M. Brady: Compared to $2 27.
Kevin M. Brady: The prior year period.
Kevin M. Brady: Regarding customer concentration, our top five and top 10 customers represent roughly 22% and 29%, respectively, of our first quarter 2024 revenue. In the first quarter, we generated $152.7 million in cash flow from operating expenses, and our net day sales outstanding was negative 60.1 days. We did not repurchase any shares during the fourth quarter.
Kevin M. Brady: Regarding customer concentration our top five and top 10 customers represent roughly 22% and 29, 29% respectively of our first quarter 2020 for revenue.
Kevin M. Brady: In the first quarter, we generated $152 7 million in cash flow from operating activities.
Kevin M. Brady: And our net days sales outstanding was negative 61 days.
Kevin M. Brady: We did not repurchase any shares during the fourth quarter.
Operator: As of March 31st, 2024, we had $407 million in cash and $308.8 million remaining under a share purchase authorization program. Moving now to our updated guidance for 2024. Full year 2024 total revenue is unchanged and expected in the range of $2.15 billion to $2.2 billion, representing growth of 14% to 16.7% over 2023 total revenue of $1.89 billion. Our 2024 EBITDA is now expected in the range of $415 million to $445 million, representing growth of 14.5% to 22.8% compared to EBITDA of $362.5 million in 2023.
Kevin M. Brady: As of March 31, 2024, we had $407 million in cash and $308 8 million remaining under our share repurchase authorization program.
Speaker Change: Moving now to our updated guidance for 2024.
Speaker Change: Full year 2020 for total revenue is unchanged and expected in the range of $2, one 5 billion to $2 2 billion representing.
Speaker Change: Representing growth of 14% to 16, 7%.
Speaker Change: Over 2023 total revenue of 189 billion.
Speaker Change: Our 2020 for EBITDA is now expected in the range of $415 million to $445 million.
Speaker Change: Representing growth of 14, 5% to 22, 8% compared to EBITDA of $362 5 million in 2023.
Operator: We forecast 2024 net income in the range of $347 million to $369 million. This guidance assumes a full year 2024 effective tax rate of 15% to 16%. Interest income of $22.9 million, and 32.1 million diluted weighted average shares outstanding for 2024. There are no additional share purchases in our guidance. Earnings per diluted share is now expected to be in the range of $10.79 to $11.47. This guidance is based on foreign exchange rates as of March 31st, 2024. With that, I will turn the call back over to the operator so we can take your questions. Thank you.
Speaker Change: We forecast 2024 net income in the range of $347 million to $369 million.
Speaker Change: This guidance assumes a full year 2024 effective tax rate of 15% to 16%.
Speaker Change: First income of $22 9 million.
Speaker Change: And $32 1 million diluted weighted average shares outstanding for 2024.
Speaker Change: There are no additional share repurchases in our guidance.
Speaker Change: Earnings per diluted share is now expected to be in the range of $10 79.
Speaker Change: To $11 47.
Speaker Change: Guidance is based on foreign exchange rates as of March 31, 2024.
Speaker Change: With that I will turn the call back over to the operator, so we can take your questions.
Operator: Thank you. To ask a question, please press star 11 on your telephone and wait for your name to be announced. To withdraw your question, please press star 11 again.
Speaker Change: Thank you.
Speaker Change: To ask a question. Please press star one on your telephone and wait for your name to be announced to withdraw. Your question. Please press star one again, one moment, while we compile our Q&A roster.
Operator: One moment while we compile our Q&A roster. And our first question is going to come from the line of Max Schmute with William Blair. Your line is open. Please go ahead.
Speaker Change: And our first question is going to come from the line of Max <unk> with William Blair. Your line is open. Please go ahead.
Maxwell Andrew Smock: Hey, good morning. Thanks for taking our questions. Maybe I should start off with one on the bookings number for the quarter. As you mentioned, the miss relative to your expectations was driven by elevated cancellations. Just wondering if you can give us some commentary on how gross bookings trended in the quarter and then if cancellations kind of were within a normal range, what that would have implied for bookings throughout here in the first quarter?
Max: Hey, good morning, Thanks for taking the questions, maybe just starting off with one on the bookings number for the quarter. So you mentioned that the.
Max: Miss relative to your expectations was driven by elevated cancellations. Just wondering if you can give us some commentary on how gross bookings trended in the quarter and then if cancellations kind of or within a normal range.
Max: What would that have been applied for bookings growth here in the first quarter.
August James Troendle: Yeah, sure. Hi, it's August.
Speaker Change: Yeah sure Hi as August.
August James Troendle: sequentially, gross bookings were up nicely in the quarter, and it was cancellations that drove the miss, and they were outside of our usual range, which we've taken to be less than four and a half percent more recently. And so I think that was all of it. I don't have a specific book to bill number for without those cancellations, but it would have been, you know, up in the range we were expecting coming into the year.
Speaker Change: Okay.
Speaker Change: Sequentially, the gross bookings were up nicely in the quarter.
Speaker Change: And it was cancellations that drove drove the miss and they were outside of our.
Speaker Change: Usual range, which we've taken would be less than four 5% more recently.
Speaker Change: And so I think that was all of it I don't have.
Speaker Change: Specific book to Bill number four without those cancellations, but it would have been up in the range I think we were expecting coming into the call.
Maxwell Andrew Smock: Yeah, that's helpful. Thanks, August.
Maxwell Andrew Smock: And then maybe one higher level one here just over, or in terms of the month over month trends you've seen so far in the second quarter in terms of RFP flows, booking, and some of the other key metrics here. In general, customer sentiment around the funding environment. Obviously, we got off to a great start of the year here, but it seems like things may be normalized a bit as we move through this year.
Speaker Change: Got it that's helpful. Thanks August and then maybe one high level one here just over right in terms of the month over month trends you've seen so far in the second quarter in terms of RFP flows bookings.
Speaker Change: And some of the other key metrics and general customer sentiment around the funding environment. Obviously, we got off to a great start of the year here, but it seems like things maybe normalize a bit as we move through this year. So.
Speaker Change: Are you seeing clients nervous about the funding environment at all or in general how do you get the sense that there's still a lot of optimism around funding from here in spite of the changed.
Maxwell Andrew Smock: So are you seeing clients nervous about the funding environment at all? Or, in general, do you get the sense that there's still a lot of optimism around funding from here in spite of the change in expectations for interest rates as we move throughout 2024?
Speaker Change: Our expert changing expectations for interest rates as we move throughout 2024.
Speaker Change: Yes, I guess I don't really see there.
Speaker Change: Expectations their excitement.
Speaker Change: Hi.
August James Troendle: Yeah, I guess I don't really see their expectations there or excitement, but yeah, look, I look at my clients, and whether they're positive about moving forward with programs or not, we still have some clients that are struggling. And, you know, so that hasn't changed, but there is also a very strong business environment with opportunities, good opportunities that are moving forward. So it remains somewhat of a mix, you know; there's always going to be clients in our client base that are struggling for funding, but I think overall, things are much better than last year and are continuing to improve. So I think it looks good for the year in terms of opportunities. We just have to win them.
Speaker Change: I look at clients whether they are.
Speaker Change: Positive about moving forward with programs or <unk>.
Speaker Change: Not we still have some clients that are struggling.
Speaker Change: And.
Speaker Change: That hasnt changed but there is.
Speaker Change: Very strong.
Speaker Change: Also business environment with opportunities good opportunities that are moving forward.
Speaker Change: So it remains somewhat of a mix, there's always going to be clients.
Speaker Change: <unk>.
Speaker Change: Client base, there is always going be clients that are struggling for funding but.
Speaker Change: I think overall.
Speaker Change: Things are much better than last year and.
Continuing to improve so I think it looks good for the year in terms of opportunities, we just have to win them.
Speaker Change: And maybe just sneak in one final one and at that point. So you mentioned came out and confirm that you're still expecting revenue to revenue growth to step up in 2025.
August James Troendle: Yeah, maybe just a sneaky one final one and off that point, August. So you mentioned that you were still expecting revenue to revenue growth to step up in 2025. To get to that target, what level of bookings do you think you need to see in order to have that revenue pick up next year, and how should we think about the cadence for bookings growth as we move through 2024?
Speaker Change: To get to that target level of bookings do you think you need to see.
Speaker Change: There to have that revenue pick up next year and how should we think about the cadence for bookings growth as we move through 2024.
Speaker Change: Okay.
Speaker Change: Yes.
Speaker Change: I think that.
Speaker Change: <unk> bookings in what we have had in the past year will permit us.
Speaker Change: Without a lot of cancellations too.
Speaker Change: To generate accelerating growth.
Speaker Change: So it's really a matter of getting.
Speaker Change: New awards in which even predate.
August James Troendle: Yeah, I think that continuing bookings like we have had in the past year will permit us, without a lot of cancellations, to generate that accelerating growth. So, you know, it's really a matter of getting, you know, new awards in, which even predate, you know, some of our booking numbers, and, You know, so it's, I think the environment's there. It's a matter of us winning them and having the new awards that will start, you know, pushing our book to bills back to between two points, you know, two something, you know, close to 2.25. And I think we'll see a nice acceleration next year.
Speaker Change: Some of our booking numbers.
Speaker Change: And.
Speaker Change: So it's I think the environment's there, it's a matter of us winning them and having the new awards that will start push our book to bills back to the.
Speaker Change: Between two point.
Speaker Change: Two something.
Speaker Change: Close to 225, and I think we'll see nice acceleration next year.
Speaker Change: I'll leave it there thanks again for taking my questions.
Speaker Change: Thank you and one moment as we move onto our next question.
Speaker Change: And our next question is going to come from the line of Eric Coldwell with Baird. Your line is open. Please go ahead.
Eric White Coldwell: Thank you good morning, I wanted to do a couple on the Reimbursable revenue first do you have any.
Maxwell Andrew Smock: A little bit there. Thanks again for taking our question.
Concept on why the Reimbursable revenue was lower than expected or are there any market drivers or was it just the random walk that's hard to project and then within the bookings that you did report in the quarter what was the mix of Reimbursable versus service revenue and the bookings did that change versus.
Operator: Thank you, and one moment as we move on to our next question. And our next question is going to come from the line of Eric Coldwell with Baird. Your line is open. Please go ahead.
Eric White Coldwell: Thank you. Good morning.
Eric White Coldwell: I want to do a couple on reimbursable revenue. First, do you have any idea why the reimbursable revenue was lower than expected? Are there any market drivers, or was it just a random walk that's hard to project? And then, within the bookings that you did report in the quarter, what was the mix of reimbursable versus service revenue in the bookings? Did that change versus the recent past?
Eric White Coldwell: In the recent past.
Speaker Change: I guess I'll take that bookings.
Speaker Change: Part of it.
Speaker Change: Don't have that breakout, but there was nothing particularly unusual in of course.
Speaker Change: Bookings in the quarter and awards in the quarter.
Speaker Change: I think things are continuing along.
Speaker Change: <unk> as they as they have.
August James Troendle: I guess I'll take that bookings part of it because I don't have that breakout.
Speaker Change: <unk>.
Speaker Change: It's.
August James Troendle: But there was nothing particularly unusual. And of course, you know, bookings in the quarter and awards in the quarter, you know, I think things are continuing along largely as they have. It's the timing of, you know, burn on the indirect that is, you know, very difficult to predict. Kevin, do you want to comment on that? Yeah, I can take the first.
Speaker Change: The timing of.
Speaker Change: Burn on that.
On the.
Speaker Change: Indirect debt is.
Speaker Change: Very difficult to predict.
Speaker Change: Kevin do you want to comment on that.
Kevin M. Brady: Yes, I can take the first part of your question, Eric just in terms of Reimbursable costs.
Kevin M. Brady: No quarter to quarter it is very volatile.
Kevin M. Brady: I did mentioned in the last call and even the call before that I do expect reimbursable costs to be elevated and they were year over year, we're kind of seeing a similar patter pattern to what we saw last year.
Kevin M. Brady: And so there's just a lot of variables in there. You've got, you know, study mix, you've got how sites are starting up, you've got, you know, some inflationary costs in there, and you're talking over thousands of sites. And so it is challenging to predict. But I still expect those costs to come in as a percentage of revenue, similar to what we saw in 2023.
Kevin M. Brady: And it just there's just a lot of variables in there you've got the study mix you've got how sites are starting up you've got.
Kevin M. Brady: Some inflationary cost in there and youre talking over thousands of sites and so it is challenging to predict.
Kevin M. Brady: I still expect those costs to come in as a percentage of revenue similar to what we saw in 2023 and so.
Kevin M. Brady: As a result of that, my expectation is that the balance of the year those reimbursable costs will accelerate from where we saw in the first quarter. However, the weaker reimbursable costs in the first quarter do lead me to lean a little bit more towards the lower end of the revenue guidance. Again, we'll have to kind of wait and see how those costs come in and balance out.
Kevin M. Brady: As a result of that my expectation is that the balance of the year that those reimbursable costs.
Kevin M. Brady: Accelerated from where we saw in the first quarter.
Kevin M. Brady: However, the weaker reimbursable costs that in the first quarter does lead me to lean a little bit more towards the lower end of the revenue guidance, but.
Kevin M. Brady: Again, we'll have to kind of wait and see how those cost come in the balance of the year.
Eric White Coldwell: If I could... Eric, if you're trying to, if you're trying to look at our indirect or pass-through costs going to increase or decrease as a portion of revenue going forward, they're probably going to be in this range that we've seen. You know, I mean, we're not seeing bookings that are disproportionately indirect or disproportionately direct. Yeah, that's fair.
Kevin M. Brady: If I could Eric if you're trying to if you're trying to look to.
Kevin M. Brady: R R.
Kevin M. Brady: Indirect or pass through costs going to increase or decrease as a portion of <unk>.
Kevin M. Brady: Revenue going forward.
Kevin M. Brady: Probably be in this range that we've seen I mean, we're not.
Kevin M. Brady: We're not seeing bookings that are.
Kevin M. Brady: Disproportionately indirect or disproportionately direct.
Speaker Change: That's fair and I understand the Lumpiness and difficult.
Eric White Coldwell: And I understand the lumpiness and difficult prediction model there on awards. You know, this is maybe a bit conceptually a bit hard to communicate, but Medpace has historically talked about a somewhat unique award recognition profile where you don't go out 6, 12 months on taking an award into street facing bookings. You wait till it gets closer to revenue generation. I'm curious, and maybe my theory is wrong about this, but I've always thought of Medpace as a company.
Prediction model there on awards.
Speaker Change: This is maybe a bit conceptually a bit hard to.
Speaker Change: To communicate but that pace has historically talked about a.
Somewhat unique award recognition profile, where you don't go out six months 12 months on taking on award industry facing bookings you wait till it gets closer to revenue generation.
Speaker Change: I'm curious.
Speaker Change: And maybe my theory is wrong on this but I've always thought of med paces accompany the bookings we see when you report a quarter might be might be awards that were given a quarter or two ago and are just getting to revenue generation phase.
Eric White Coldwell: That the bookings we see when you report a quarter might be awards that were given a quarter or two ago and are just getting to the revenue generation phase. So, I thought, perhaps some of this, the bookings this quarter could be, you know, the aftermath of maybe a little bit softer awards a quarter or two ago, or less of gross awards. And, of course, you mentioned the higher cancels. I'm just curious based on the bookings or the, you know, whether it's initial award notifications or awards that you have but aren't close to revenue generation.
Speaker Change: I thought perhaps some of this the bookings this quarter could be the aftermath of maybe a little bit softer awards, a quarter or two ago or less of gross awards and of course, you mentioned the higher cancels I'm just curious based on the bookings or the whether its initial award notifications are awards that you have but aren't close to revenue generation.
Eric White Coldwell: Are you seeing an uplift in that performance based on the stronger biotech funding in the 1st quarter? Or is this this theory that there's a bit of a delay from when you get the award to when you actually take it into bookings? Is this theory off base relative to your peers that, you know, would take an award 12 months in advance in some cases?
Speaker Change: Are you seeing an.
Speaker Change: An uplift in that that performance based on the stronger biotech funding in the first quarter or is this.
Speaker Change: This theory that there is a bit of a delay from when you get the award to when you actually take it into bookings.
Speaker Change: Is the theory of space relative to your peers.
Speaker Change: We've taken award 12 months in advance in some cases.
August James Troendle: Yeah, I think everyone has a lag there because I think a number of the other reporting companies do it based on contract, and of course, contract lags when you first hear of an award. So there's always, you know, some lag, no matter who's reporting. So that is definitely true.
Speaker Change: Yes, I think everyone has.
Speaker Change: Has a lag there because I think a number of the.
Speaker Change: Other reporting companies do it based on contract and of course contract lags. When you first year of an award. So there's always some lag no matter who's reporting so that as that is definitely true there is.
Some things go through same quarter.
Speaker Change: Some things are right there ready to run sometimes it's a change in our program and that award.
August James Troendle: There is, you know, some things go through the same quarter, you know, I mean, some things are, you know, right there, ready to run, you know, sometimes it's a change in a program. And, you know, that award, you know, is recognized rather rapidly. But there are, in general, new studies awarded that, you know, do have a lag before they reach, you know, backlog recognition. I don't know, you know, and then you asked about the change in our, you know, bookings here.
Speaker Change: It.
Speaker Change: As recognized rather rapidly, but there is in general new new studies awarded that.
Speaker Change: Do have a lag before they reach.
Speaker Change: Backlog recognition.
Speaker Change: I don't.
Speaker Change: And then you asked about.
Speaker Change: Is the change in our bookings here.
Speaker Change: Our Miss was.
Speaker Change: Missing our expectations in our booking.
Speaker Change: Bookings that did not increasing or kind of flat quarter over quarter.
Speaker Change: It was really driven by cancellations, but on the other side of it we did have.
August James Troendle: I mean, our miss was, you know, missing our expectations in our bookings that did not increase, kind of flat quarter over quarter, was really driven by cancellations. But on the other side of it, we did have a relatively weaker wind rate in the quarter. So that was true too, and that's something that bounces around. We came off of a couple of quarters of very strong wind. I think we talked about strong wind rates.
Speaker Change: Relatively.
Speaker Change: Weaker.
Speaker Change: Win rate in the quarter.
Speaker Change: So that was true too and Thats something that bounces around we came off of a couple of quarters of very strong I think we've talked about strong win rates.
Speaker Change: So that was down a little bit in the quarter, two but I do think that that just bounces around and I don't make any long term.
Projections based upon that.
August James Troendle: So that was down a little bit in the quarter, too, but I do think that that just bounces around, and I don't make any long-term, you know, projections based on that.
Speaker Change: If I could do one more with Kevin just the tax rate.
Kevin M. Brady: I missed the driver of the lower tax rate in the quarter and the lowering for the year.
Kevin M. Brady: Its option exercises again in the first quarter.
Speaker Change: Discrete items in the quarter.
Eric White Coldwell: If I could do one more with Kevin, just the tax rate, I missed the driver of the lower tax rate in the quarter and the lower rate for the year.
Kevin M. Brady: So that was that just the option exercises.
Kevin M. Brady: The stock setting new highs in the quarter, that's right. Okay. Thanks, guys.
Speaker Change: Thank you one moment as we move onto our next question.
Kevin M. Brady: It's option exercises again in the first quarter; as you know, there are discrete items in the quarter.
Speaker Change: And our next question is going to come from the line of Jack Wallace with Guggenheim Securities. Your line is open. Please go ahead.
Eric White Coldwell: That was it, just the option exercises on the stock setting new highs in the quarter? That's right, Eric. Okay, thanks guys.
Jack Dawson Wallace: Hi, Thanks for taking my questions just wanted to ask about the hiring.
Jack Dawson Wallace: Slower head count growth this year.
Operator: Thank you. And one moment as we move on to our next question. And our next question is going to come from the line of Jack Wallace with Guggenheim Securities. Your line is open. Please go ahead.
Jack Dawson Wallace: Of that related.
Jack Dawson Wallace: To your lower expectations of growth re acceleration next year or is there any change in regrettable churn versus prior quarters and the first quarter.
Speaker Change: Yes, I don't think of it.
I guess I just wanted to add I don't I don't think our.
Speaker Change: Hiring is.
Speaker Change: As you know.
Jack Dawson Wallace: Hi, thanks for taking my questions. I just wanted to ask about the hiring process.
Speaker Change: At this point directed.
Speaker Change: Or is reflective of.
Speaker Change: <unk>.
Speaker Change: Optimism about 2025.
Speaker Change: I think that our hiring is influenced by productivity and where we need staff and things like that which is.
August James Troendle: Yeah, I don't think that's it. I just wanted to add, I don't, I don't think our, our
Speaker Change: I think has improved quite a bit.
Unknown Executive: No, I was just going to echo some of those same comments, you know, Q1 Q1 traditionally is sometimes a lower net headcount quarter for us, but we feel very comfortable and in line with the staffing we have to handle current projects to handle future projects. We will continue to hire, although, as August mentioned in his opening comments, at a slightly lower rate of headcount growth projection and retention has continued to be very, very good.
Speaker Change: I addressed that but Jesse go ahead.
Jesse J. Geiger: No I was just going to echo some of those some of those same same comments.
Jesse J. Geiger: Q1, Q1 traditionally is sometimes a lower.
Jesse J. Geiger: Net head count quarter for us.
But we feel very comfortable and in line with the staffing we have to handle current projects to handle future projects, we will continue to hire.
Jesse J. Geiger: Although as August mentioned in his opening comments at a slightly lower rate.
Jesse J. Geiger: Of head count growth projection and retention has continued to be very very good.
Jack Dawson Wallace: Gotcha. That's helpful.
Jack Dawson Wallace: And then just to ask the pass-through question a different way, is there, you know, the mix of pass-throughs in the backlog relative to your expectations of revenue this year? Is there any material change there? And maybe you could also comment on some of the near-term awards you're looking at. And again, the point we're trying to get at is thinking about the direct revenue progression. And if there is some noise in bookings over the next couple of quarters, if it's going to be partially explained by changes in pass-throughs relative to, say, prior periods where pass-throughs may have been more elevated. Thank you.
Speaker Change: Got you that's helpful and then just to.
Speaker Change: As the pass through your question a different way.
Speaker Change: The mix of passengers in the backlog relative to your expectations of revenue. This year is there any material change there and maybe if you could also comment on some of the near term awards Youre looking at and again.
The point, we're trying to get here as you're thinking about the direct revenue.
Speaker Change: Progression and if there is some noise in bookings over the next couple of quarters, if it's going to be partially explained by changes in the pass throughs relative to say prior periods, where passengers may have been more elevated thank you.
Kevin M. Brady: No, I mean, Jack, this is Kevin. I mean, I, as August mentioned, we're not seeing any, any big next shifts in terms of bookings and backlog. It's more just a progression of how things are burning across our portfolio of programs. And so, just in terms of kind of direct revenue, we're seeing some continued good progress in direct activities, and we expect that to continue throughout 2024. As August mentioned, the guide is to expect something around a 15% direct revenue growth for 2024.
Jack This is Kevin.
Speaker Change: As August mentioned, we're not seeing.
Kevin M. Brady: Any any big mix shifts in terms of.
Bookings and backlog, it's more just the progression of how things are burning across our portfolio of programs.
Kevin M. Brady: And so just in terms of kind of direct revenue.
Kevin M. Brady: We're seeing some some some continued good progress in direct activities.
Kevin M. Brady: And expect that to continue throughout 2024.
Kevin M. Brady: As long as mentioned.
Kevin M. Brady: Kind of the guidance to expect something around 15% direct revenue growth for 2024.
August James Troendle: Yeah, I think one thing we can say is we feel more comfortable with our direct revenue projections than the pass-through costs which, you know, drive the pass-through revenue. So, you know, it is, I think we're more confident in the one than the other, but if we did have a miss, it would more likely be on the indirect.
Speaker Change: Yes, I think one thing we can say is I think we feel more comfortable in our direct revenue.
Kevin M. Brady: Perfect external event.
Kevin M. Brady: And then the Zip.
Kevin M. Brady: Pass through costs, which drive the pass through revenue so.
Speaker Change: It is I think we're more confident in the one than the other but.
Speaker Change: So if we did have a miss it would more likely be on the indirect.
Jack Dawson Wallace: Got it. That's helpful. Thank you so much.
Got it that's helpful. Thank you so much.
Operator: Thank you, and one moment as we move on to our next question. And our next question is going to come from the line of Dan Leonard with UBS.
Speaker Change: Thank you and one moment as we move on to our next question.
Speaker Change: And our next question is going to come from the line of Dan Leonard with UBS. Your line is open. Please go ahead.
Daniel Louis Leonard: Thank you very much. You made a comment in the presentation that RFPs were stable in Q1 compared to Q4. But, how does that compare to what you might have expected given the improvement in the funding environment?
Dan Leonard: Thank you very much.
Dan Leonard: Made a comment in the prepared that Rfps were stable in Q1 compared to Q4, how does that compare to what you might have expected given the improvement in the funding environment.
August James Troendle: Yeah, and they were actually up. I think I was saying, you know, kind of, from last year, they were coming across both in quality and in number in, you know, stable to improved. Numbers were actually a bit up in Q1 over Q4.
Dan Leonard: Yes, they were actually up I think I was.
Speaker Change: Got it.
Dan Leonard: Last year, they were coming across both in quality and.
Dan Leonard: Yes.
Dan Leonard: And number in.
Dan Leonard: It's stable to improved numbers were actually a bit up in Q1 over Q4.
Daniel Louis Leonard: And I think they're kind of where we expect them based upon the improvement in the environment. They, you know, they're very good opportunities. I mean, sometimes you get a lot of opportunities that people are just shopping around for, you know, fundraising plans, but there's a, you know, we have strong signals that confidence and funded companies coming to us with programs that are moving forward. So I think the environment has improved.
And I think they're kind of where we expect based upon the improvement in the environment.
Dan Leonard: They are very good opportunities, sometimes you get a lot of opportunities that people are just shopping around for.
Dan Leonard: Fund raising plans, but.
Dan Leonard: We have strong signals that.
Dan Leonard: And confidence and funded compass.
Dan Leonard: Companies coming to us with programs that are moving forward. So I think the environment has has improved.
August James Troendle: Thank you. And just a quick follow-up. Do you think the recent uptick we've seen in biotech M&A activity over the past couple of quarters might impact your outlook at all?
Speaker Change: Thank you and just a quick follow up do you think the recent uptick we've seen in biotech M&A activity over the past couple of quarters might impact your outlook at all.
Daniel Louis Leonard: I don't think M&A, particularly in the short term, has an effect on our performance. It, in the long term, sometimes takes out a client, sometimes that's good, sometimes not, you know, depending upon whether we keep them. But in the shorter term, you know, we tend to book and keep what we win.
Speaker Change: I don't think M&A has particularly in the short term effect on our.
Speaker Change: Our performance.
Speaker Change: It.
Speaker Change: It.
Speaker Change: Along term sometimes takes out of clients, sometimes that good sometimes not depending upon where do we keep it but on the shorter term we tend to book.
Speaker Change: And keep what we win.
Operator: Thank you, and one moment as we move on to our next question. Our next question is going to come from the line of Justin Bowers with Deutsche Bank. Your line is open, please go ahead.
Speaker Change: Thank you.
Speaker Change: Thank you and one moment as we move onto our next question.
Speaker Change: Our next question comes from the line of Justin Bowers with Deutsche Bank. Your line is open. Please go ahead.
Justin D. Bowers: Good morning, everyone. Thank you for the questions.
Justin Bowers: Hi, good morning, everyone and thank you for the questions.
Justin D. Bowers: So in terms of young the lower employee growth assumption.
Justin Bowers: So in terms of the year.
Justin Bowers: The lower employee growth assumption.
Justin D. Bowers: or projection for this year.
Justin Bowers: Projection for this year are those.
Justin D. Bowers: Are those... I'm just trying to understand...
Justin Bowers: I'm just trying to understand.
August James Troendle: I'm just trying to understand why the change there if there's really no change in the revenue outlook. And it sounds like it's related to productivity. So, is that something that's durable as we think about sort of, you know, growth into 2025 and beyond? Is there an ability to get some more operating leverage there? Yeah, I think that's what we're signaling, that we do think we've invested quite a bit in productivity and are improving that.
Justin Bowers: Why the change there.
Justin Bowers: Yes.
Justin Bowers: Theres really no change in the revenue outlook and it sounds like it's related to productivity.
Justin Bowers: So is that something that's durable as we think about sort of the growth into 2025 and beyond is there is there an ability to get some more operating leverage there.
Speaker Change: Yes, I think Thats. We are signaling is that we do think we've invested quite a bit and productivity improvement that we did do a little bit of trimming.
August James Troendle: We did a little bit of trimming and, you know, optimization of staffing. So, you've seen a little bit of that in terms of our, you know, reduced growth rates, but it's driven by productivity gains. Part of that is the retention that, you know, has come down over the last, you know, from starting with COVID and elevated turnover. And now we're at a very good range for turnover, but it's, it's beyond that. It's a lot of productivity improvements that we have tried to put in place and are improving continuously. And I think that through this past year, and we'll continue through this year.
Speaker Change: And.
Speaker Change: And optimization of <unk>.
Speaker Change: Staffing so.
Speaker Change: <unk> seen a little bit of that in terms of our reduced growth rates, but it's driven by productivity gains.
Speaker Change: Part of that is.
Speaker Change: <unk> that has come down.
Speaker Change: Over the last from.
Speaker Change: He started with Covid and elevated <unk>.
Speaker Change: Turnover and now we are at.
Speaker Change: Very good range for turnover, but it's beyond that.
Speaker Change: Yes.
Speaker Change: A lot of productivity improvement that we have tried to put in place and are improving.
Speaker Change: Continuously and I think through this past year and will continue through this year. So I think there is opportunities.
August James Troendle: So I think there's opportunities on at least a core margin basis to improve. You know, there are other factors like the proportion of pass-throughs and FX and other things that can sometimes swallow that productivity gain, but I think, on net, we're improving our productivity. Okay, and then in terms of the cancellations, you did call out that they were a little higher than normal this quarter. Do you have a sense of whether that was driven more by data or funding or programs that maybe you thought would restart but didn't? And is there anything to call out by either phase or therapeutic area just to sort of help us get a better sense of it? Yeah, sure.
Speaker Change: On a at.
Speaker Change: At least.
Speaker Change: Core margin basis to improve.
Speaker Change: There is other factors like the proportion of pass throughs, and FX and other things that can sometimes swallow that productivity gain but I think on net we're improving our productivity.
Speaker Change: Okay, and then in terms of the cancellations you did call out that they were a little higher than normal.
Speaker Change: This quarter do you have a sense of.
Speaker Change: Was that driven more by by the data or funding or or programs that maybe you saw it with <unk>.
Speaker Change: Restart.
Speaker Change: And is there anything to call out by either fees or therapeutic area, just to sort of help us get a better sense of.
Speaker Change: Yes sure.
August James Troendle: It was, from our view, entirely based upon product performance and failed compounds. You know, it's sometimes difficult to sort out whether reprioritization and hence, you know, funding behind the scenes was a factor, but it did not appear to be in the cases, by and large, in the cancellations that we saw this quarter and this past quarter. So it really was kind of the usual random product performance activities that led to the cancellation.
Speaker Change: It was.
Speaker Change: From our view entirely based upon product performance.
Speaker Change: And failed compounds.
Speaker Change: It's sometimes difficult to sort out whether re prioritization and hence funding behind the scenes was a factor but it.
Speaker Change: Did not appear to be in the cases.
Speaker Change: By and large.
Speaker Change: The cancellations that we saw this this quarter.
Speaker Change: Quarter.
Speaker Change: So it really was kind of the usual random.
Speaker Change: Product performance.
Speaker Change: Activities that.
Speaker Change: Cancellations.
Operator: Thank you, and one moment as we move to our next question. And our next question comes from the line of David Windley with Jefferies. Your line is open. Please go ahead.
Speaker Change: Okay. Thank you.
Speaker Change: Thank you and one moment as we move to our next question.
Speaker Change: And our next question comes from the line of David Windley with Jefferies. Your line is open. Please go ahead.
David Howard Windley: Hi, good morning. Thanks for taking my questions. I wanted to first start with a clarification. So, to Max's earlier question on bookings or book-to-bill levels that you would be looking to achieve to support that accelerating growth in 2025?
David Howard Windley: Hi, Good morning, Thanks for taking my questions I wanted to first start with a clarification so to Max's earlier question on.
David Howard Windley: Bookings or book to Bill levels that you would be looking to achieve to support that accelerating growth in 'twenty. Five August I think you said two two to $2 two five I suspect everybody knows you mean, one two to one to five but just for purposes of getting your transcript right I just wanted to make sure yes.
August James Troendle: August, I think you said 2.2 to 2.25. I suspect everybody knows you mean 1.2 to 1.25, but just for purposes of getting the transcript right, I just wanted to make sure. Yeah, I was going to the second digit to start with. You're right. 1.2 something. So 1.22 to 1.25 is kind of what I was trying to get right.
David Howard Windley: Yes.
David Howard Windley: I was going to the second digit to start with you at one point to something so one to two to one to five is kind of the.
David Howard Windley: Right, right. Figured as much on the cancellations. Just thinking more precisely about how you guys book. So the cancellations that you're taking, you're referencing today, were taken as bookings already in the past, I would presume, and given your lateness, your kind of, You know, bookings very close to when the study starts. That suggests to me that maybe these studies have already been started. Maybe you could talk about whether those cancellations are having any near-term impact on your actual revenue cycle.
Speaker Change: What I was trying to say right right figured as much.
Speaker Change: On the on the cancellations.
Speaker Change: I'm just thinking more precisely about how you guys book, so the cancellations that you're taking you're referencing today.
Speaker Change: Were taken as bookings already in the past I would presume.
Speaker Change: And given your late Youre kind of.
Speaker Change: Bookings very close to when the study starts that suggest to me that maybe these studies were already started maybe you could talk about whether those cancellations or having any near term impact on your actual revenue cadence.
August James Troendle: Yeah, they do. These are ongoing processes. You're right. These are studies that were in backlog, were running, and do have an effect on near-term revenue. But again, we do feel confident in this year's roughly 15% direct revenue in spite of that. And it was not massive. Although they were outside of our normal range, they did result in what would have been an in-line booking quarter pushing it to a flat quarter. So that's kind of how it played out.
Speaker Change: Yes. They do these are these are all you are right. These are studies that we're in.
Speaker Change: Backlog, we're running.
Speaker Change: And do have an effect on near term.
Speaker Change: Revenue, but again, we do feel confident in our.
Speaker Change: In this years.
Speaker Change: Roughly 15% direct.
Speaker Change: Revenue.
Speaker Change: Instead of that.
Speaker Change: And they were not.
Speaker Change: Massive they were outside of our normal range. They did result in a and what would have been.
Speaker Change: In line.
Speaker Change: Booking quarter to push it to a flat quarter.
David Howard Windley: Got it. And then you also commented about win rate. In that regard, are you referencing win rate of initial award notifications from a couple of quarters ago that then manifest in lower gross bookings to be taken in this quarter, or are you talking about IANs and the award rate in the current quarter? I'm just trying to make sure I'm calibrating correctly on the commentary.
Speaker Change: So thats kind of help played out.
Speaker Change: Got it and then.
Speaker Change: You also commented about win rates.
Speaker Change: That regard are you are you referencing.
Speaker Change: Win rate of of initial award notifications from a couple of quarters ago, then manifest in lower gross bookings to be taken in this quarter or are you talking about like ian's.
Speaker Change: And the award right.
Speaker Change: In the current quarter I'm, just trying to make sure Im calibrating correctly on the commentary.
August James Troendle: Yeah, so whenever I talk about win rates, we're talking about what happened in the current quarter and do not necessarily reflect changes in backlog. So they are awards. They're wins or not wins, which would be initial awards, most of which do not appear in the current quarter. So I wouldn't refer to winning a lot because a lot of things were put into the backlog that quarter. They're kind of a mixture of things that happen currently and things in the past, etc.
Speaker Change: Yes, so whenever I talk about win rate.
Speaker Change: We're talking about what happened in the current quarter and do not necessarily reflect changes in backlog.
Speaker Change: They are awards.
Speaker Change: They're wins are not wins, which would be initial awards.
Speaker Change: Most of which do not appear in the current quarter, So I wouldn't refer to.
Speaker Change: Winning a lot because a lot of things were put into backlog that quarter.
Speaker Change: A mixture of things that happened currently and things in the past et cetera.
August James Troendle: Got it. And then on the cost points and productivity points that you're making, and you mentioned, I think, moving some costs around by geography. Could you elaborate on that a little bit? Are those, are you offshoring some functions to take advantage of labor arbitrage or what's going on there?
Speaker Change: Got it and then on the cost points in productivity points that you're making and you mentioned I think moving some costs around by geography could you elaborate on that a little bit are those are you offshoring some.
Speaker Change: Some functions to take advantage of labor arbitrage or what's going on there.
Speaker Change: That's correct, it's exactly that.
August James Troendle: That's correct. That's exactly what it is. Partially on the IT side, but partially on the operations side too.
Speaker Change: Partially on the on the it side, but.
Speaker Change: Partially on operation side too yes.
Speaker Change: And any.
Speaker Change: Quantification you can give us on what you think that might yield over time.
Speaker Change: No I don't.
Speaker Change: We don't we don't pick particular.
Speaker Change: <unk> specific financial goals on that but we are.
August James Troendle: Um, no, I don't, you know.
Speaker Change: Moving a number of things to some cheaper geographies both in.
David Howard Windley: I'm going to ask one more, and I apologize for anybody who's behind me, but.., on the pass-throughs. Last year, the elevated level, you had talked about, you know, a few factors, but one of those was, Inflation coming through from the sites, essentially site Asking for more reimbursement for their participation in the trials, I wondered if, I mean, acknowledging everything that's already been said, I wondered if, if that is persistent, or if some amount of that inflation or, you know, site rates, so to speak, has started to normalize in a way that would actually cause these pass-throughs to bias lower.
Speaker Change: In Europe and in.
Speaker Change: In India so.
Speaker Change: <unk>.
Speaker Change: But it's not going to be drastic, but I do think we will provide some.
Speaker Change: Support for.
Speaker Change: Keeping our productivity improvement improving over time.
Speaker Change: I'm going to ask one more and I apologize for anybody who is behind me, but.
Speaker Change: On the pass throughs.
Speaker Change: Last year the elevated level.
Speaker Change: You had talked about a few factors, but one of those was in.
Speaker Change: Inflation coming through from the site essentially sites.
Speaker Change: Asking for more reimbursement for their participation in the trials I wondered if I mean acknowledging everything that's already been said I wondered if if that is persistence or if some amount of that inflation or site right so to speak.
Speaker Change: Has started to normalize in a way that would actually cause these pass throughs the bias lower.
August James Troendle: I don't think we can look at the current miss on pass-through projections as reflective of that change. I mean, these are things that have been, you know, in backlog, etc., for a while. I do think that the inflationary spiral that we saw, you know, after COVID and, and, you know, the last few years is done. I mean, I don't know that we're going to see a reversion to prior pricing, but I don't think there's a continued spiral.
Speaker Change: I don't think we can.
Speaker Change: Look at the current.
Speaker Change: Miss on pass through projections is reflective of that change I mean these are things.
Speaker Change: Things that have been.
Speaker Change: Backlog et cetera for a while.
I do think that the inflationary spiral that we saw.
Speaker Change: After COVID-19.
Speaker Change: <unk>.
Speaker Change: Over the last few years.
Speaker Change: I think Thats I think thats done.
I don't know that we're going.
Speaker Change: Okay.
Speaker Change: <unk> two prior pricing, but I don't think there is a continued spiral. So it has certainly moderated whether we'll pull back down as staffing at sites improves there was really a crunch at one time in and bidding for staffs and and do that kind of premium.
August James Troendle: So it is certainly moderated, whether it will pull back down as staffing at sites improves. You know, there was really a crunch at one time, and the bidding for staff and the kind of premium was substantial, or at least appeared that way in terms of inflation. But I don't see that as being an acute issue, so it may come down slowly over time, but I don't think there's an acute change.
Speaker Change: Was substantial at least appear that way in terms of inflation, but.
Speaker Change: I don't see that as being an acute issue. So it may come down slowly over time, but.
Speaker Change: I don't think there is an acute change.
David Howard Windley: Okay, thank you.
Speaker Change: Okay. Thank you.
Lauren Morris: Thank you, and I'm showing no further questions at this time, and I would like to hand the conference back over to Lauren Morris for any closing remarks.
Speaker Change: Thank you and I'm showing no further questions at this time I would like to hand, the conference back over to Mike Morris for any closing remarks.
Lauren Morris: Thank you for joining us on today's call and for your interest in Medpace. We look forward to speaking with you again on our second quarter 2024 earnings call.
Mike Morris: Thank you for joining us on today's call and for your interest in Med D. We look forward to speaking with you again on our second quarter 2024 earnings call.
Operator: This concludes today's conference call. Thank you for participating. You may now disconnect.
Speaker Change: This concludes today's conference call. Thank you for participating you may now disconnect.
Speaker Change: Okay.
Speaker Change: [music].
Speaker Change: Okay.
Okay.
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Speaker Change: Okay.
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