Q2 2025 ICON PLC Earnings Call

July 24, 2025

CFO Nigel Clerkin NRC COO very balanced I would like to note that this call webcast and that there are slides available to download on our website to accompany today's call certain statements in today's call will be forward looking statements. These statements are based on management's current expectations and information currently available include.

The current economic and industry conditions actual results may differ materially from those stated or implied by forward looking statements due to risks and uncertainties associated with the company's business and listeners are cautioned that forward looking statements are not guarantees of future performance.

Forward looking statements are only as of the date. They are made and we do not undertake any obligation to update publicly any forward looking statements either as a result of new information future events or otherwise more information about the risks and uncertainties relating to these forward looking statements may be found in our SEC reports filed by the company, including the form 20-F filed on <unk>.

February 21 2025.

This presentation includes selected non-GAAP financial measures, which Steve and Nigel will be referencing in their prepared remarks for our presentation of the most directly comparable GAAP financial measures. Please refer to the press release section titled Condensed consolidated statements of operations, while non-GAAP financial measures are not superior to or a substitute for the comparable.

GAAP measures, we believe certain non-GAAP information is more useful to investors for historical comparison purposes.

Included in the press release and the earnings side, you'll note a reconciliation of non-GAAP measures adjusted EBITDA adjusted net income and adjusted diluted earnings per share excludes stock compensation expense restructuring costs foreign currency gains and losses amortization and transaction related and integration related costs in the respective tax benefits.

We'll be limiting the call today to one hour and would therefore ask participants to keep their questions to one each in the interest of time.

I would now like to hand, the call over to our CEO Dr. Steve Cutler.

Good.

Second quarter results showed good progress across a number of key areas as we navigated ongoing volatility in the broader clinical development market.

Gross business awards increased 11% on a sequential basis over quarter, one with notable wins from several board to customers as well as the continued ramp up of several large pharma partnerships that have been added in the last 18 months.

Our revenue performance was ahead of expectations assisted by higher pass through revenue in the quarter.

Just on that mix helped to increase our burn rate slightly to eight 2% in quarter two.

Was in line with our expectations of holding a stable burn rate as we progress through this year.

While studying the elongation of timelines from contracting to stock I have presented a headwind to this metric there are a number of initiatives. We are focused on to improve cycle times and ultimately increased burn rate, which is showing promising results. So I'm influx studies.

So execution of our cost management initiatives across the business as well as continued automation, we saw progression in adjusted EBITDA does sequentially.

Gross margin improved over quarter, 1% to 28, 3%.

SG&A costs reduced by $9 million year over year, demonstrating our ability to optimize our efficient global operations.

Overall, adjusted EBITDA margin increased over quarter, one to 19, 6% with solid cost control offsetting higher pass through revenue.

This translated to a 2% increase in earnings per share sequentially, resulting in adjusted earnings per share of $3 26.

While we achieved solid conversion on the opportunities that went to decision in this quarter. Our net book to Bill result of 1.02 times was negatively impacted by elevated cancellations as we anticipate.

Overall cancellations increased sequentially and on a year over year basis in the quarter driven by the cancellation of one of the large next generation Covid vaccine trials.

You saw a similar trend to recent periods with a mix of cancellations across customer groups. Excluding the Covid studies with in line with our relative distribution of revenue.

The reasons for cancellations remains broad based ranging from decisions related to portfolio rationalization and re prioritization to negative clinical trial results.

As we look forward to the second half of the year, we expect largely similar conditions to persist in the market.

While challenges remain we entered the third quarter with an encouraging level of actionable opportunities in the popular.

We have seen good momentum in our ability to win across customer segments.

With our scale and differentiated offering we are presenting compelling clinical solutions that can deliver optimal efficiencies with customers positioning us well in an increasingly competitive market.

Further despite the fact that net bookings will continue to be challenged by elevated cancellations and extended decision, making in the near term.

We believe that as market conditions stabilized cancellations will return to historic levels and net business wins will increase.

In addition, the currently for many large pharma is to address the loss of patent exclusivity in the short to medium term.

<unk> continue and in many cases increased investment in the late stage development pipelines.

In quarter, two we began to see early but encouraging signs of this in the market with increased M&A and licensing activity amongst large pharma companies.

At Archrock, we are well positioned to benefit from this activity given a significant number of established strategic relationships across large pharma companies alongside our differentiated biotech golfer.

We have seen recent notable wins across our business, where we have leveraged the strength of our existing relationships and experience with smaller biotech organizations that were acquired by midsized and large pharma companies to then broaden our relationships with those acquired organizations.

In fact in quarter two two of our largest award with a midsized pharma company, where we successfully expanded our relationships that originated with one of their required biotech companies.

Icons demonstrated performance and the delivery of prior studies was a key consideration in the further development of this expanded relationship.

We updated our full year guidance to reflect it to reflect our expectation of higher pass through revenue disease, including the restart of next generation Covid vaccine trial that resumed activity in quarter two.

<unk> dosing patients.

We remain confident in the prudent approach we took in setting our full year outlook in April and have kept our assumptions consistent regarding macro conditions through the balance of the year.

These factors result in our revised guidance range, increasing by $100 million at the low end to $785 billion and the high end of the range remaining unchanged at 814 billion, increasing the midpoint to $8 billion.

Given the expected range to our full year revenue is largely related to increased pass through revenue. We are maintaining the midpoint of our adjusted earnings per share guidance range of $13 50.

Unknown Executive: We have our CEO, Dr. Steve Cutler, our CFO, Nigel Clerkin, and our COO, Barry Balfe.

In addition, the current need for many large pharma to address the loss of patent exclusivity in the short to medium term necessitate to continue and in many cases increased investment in their late stage development pipelines.

While we were pleased to see progress across financial and bookings metrics included two I also want to highlight developments in key operational areas and our broader business.

Unknown Executive: I would like to note that this call is webcast and that there are slides available to download on our website to accompany today's call.

Unknown Executive: Certain statements in today's call will be forward-looking statements. These statements are based on management's current expectations and information currently available, including current economic and industry conditions. Actual results may differ materially from those stated or implied by forward-looking statements due to risks and uncertainties associated with the company's business, and listeners are cautioned that forward-looking statements are not guaranteed the future performance.

Our customer satisfaction scores have shown positive momentum driven by accelerated site activation patient recruitment and trial completion.

In quarter, two we began to see early but encouraging signs of this in the market with increased M&A and licensing activity.

Large pharma companies.

In addition, we continue to focus on further investments to strengthen our offerings and expertise, where we can develop distinct advantages to our customers through delivery of novel solutions.

Unknown Executive: Forward-looking statements are only as of the date they are made, and we do not undertake any obligation to update publicly any forward-looking statement, either as a result of new information, future events, or otherwise.

One of these areas has been to advance our capabilities in key therapeutic areas that had been growing rapidly in the market such as obesity and related metabolic diseases.

We have seen recent notable wins across our business, we have leveraged the strength of our existing relationships and experience with smaller biotech organizations that were acquired by midsized and large pharma companies to then broaden our relationships with those acquiring organizations.

Unknown Executive: More information about the risks and uncertainties relating to these poor-looking statements may be found in SEC reports filed by the company, including the Form 20-F filed on February 21, 2021.

<unk> launched its center for obesity. This year a purpose built network of over 100 U S sites that will ultimately have access to over 10000 pre screened potential patients in this disease area.

Unknown Executive: This presentation includes selected non-GAAP financial measures, which Steve and Nigel will be referencing in their prepared remarks.

In fact in quarter two two of our largest award with a midsized pharma company, where we successfully expanded our relationship that originated with one of their required biotech companies.

Our strategic approach streamline startup activities, such as contracting site training and documentation harmonization, leading to targeted site activation in 30 days or less.

Unknown Executive: For a presentation of the most directly comparable GAAP financial measures, please refer to the press release section titled, Condensed Consolidated Statements of Operations. While non-GAAP financial measures are not superior to or a substitute for the comparable GAAP measures, we believe certain non-GAAP information is more useful to investors for historical comparison. Included in the press release in the earnings slide, you will note a reconciliation of non-GAAP measures. Adjusted EBITDA, adjusted net income, and adjusted diluted earnings per share exclude stock compensation expense, restructuring costs, foreign currency gains and losses, amortization and transaction-related and integration-related costs, and their respective tax benefits.

Icons demonstrated performance and the delivery of prior studies with a key consideration in the further development of this expanded relationship.

In addition, 85% of the sites operate on the same integrated technology platform, allowing for improved efficiencies and processes across the enrollment and recruitment as well as in real time monitoring.

We updated our full year guidance to reflect it to reflect our expectation of higher pass through revenue this year, including the restarted next generation Covid vaccine trial that resumed activity in quarter, two and is actively dosing patients.

Separately, our digital innovation strategy continues to produce meaningful applause advances across our business.

Our center of excellence and operational teams collaborate to identify processes and opportunities to develop II enabled tools to enhance our delivery of services.

We remain confident in the prudent approach we took in setting our full year outlook April and have kept our assumptions consistent regarding macro conditions through the balance of the year.

Unknown Executive: We will be limiting the call today to one hour and would therefore ask participants to keep their questions to one each in the inter...

Our latest development centers on protocol Digitization process to extract information from a trial protocol and then setup standard documentation and system specifications before the trial begins which is currently highly manual in nature.

These factors result in our revised guidance range, increasing by $100 million at the low end to $785 billion and the high end of the range remaining unchanged at $8 1 billion, increasing the midpoint to $8 billion.

Steven Cutler: I would now like to hand the call over to our CEO, Dr. Steve. Thank you, Kate. Icon's second quarter results showed good progress across a number of key areas as we navigated ongoing volatility in the broader clinical development market. Gross Business Awards increased 11% on a sequential basis over quarter one, with notable wins from several Biotech customers. as well as the continued ramp-up of several large pharma partnerships that have been added in the last 18 months. Our revenue performance was ahead of expectations, assisted by higher pass-through revenue in the quarter. This dynamic helped to increase our burn rate slightly to 8.2% in Q2 and was in line with our expectations of holding a stable burn rate as we progressed through this year.

This agent, which is now utilized in the laboratory setting intelligently reads protocol data identifies the relevant tests and auto populate data to create the study deliverables. This.

Given the expected range to our full year revenue is largely related to increased pass through revenue. We are maintaining the midpoint of our adjusted earnings per share guidance range of $13 50.

This is enabling icon to achieve upper quartile performance metrics for our sponsors, allowing significantly reduced study startup times and improve overall project timelines as well as overall quality.

While we were pleased to see progress across financial and bookings metrics included two I also want to highlight developments in key operational areas and our broader business.

This is a tangible example of how we are adopting IR to evolve our offering in a way that is considered practical and most importantly, driving efficiency in the overall clinical trial process for our customers.

Our customer satisfaction scores have shown positive momentum driven by accelerated site activation patient recruitment and trial completion.

Steven Cutler: While study delays and the elongation of timelines from contracting to start date have presented a headwind to this metric, there are a number of initiatives we are focused on to improve cycle times and ultimately increase burn rate, which are showing promising results on in-flight studies. So execution of our cost management initiatives across the business, as well as continued automation, we saw progression in adjusted EBITDA dollars sequentially. Gross Margin improved over Q1 to 28.3%, and SGA costs reduced by $9 million year-over-year, demonstrating our ability to optimise our efficient global operations. Overall adjusted EBITDA margin increased over Q1 to 19.6% with solid cost control offsetting higher pass-through revenue.

In addition, we continue to focus on further investments to strengthen our offerings and expertise, where we can develop distinct advantages to our customers through delivery of novel solutions.

Our financial position remains very strong and we continue to be disciplined narrow approach to capital deployment.

In quarter, two we again repurchased $250 million in shares and our board also approved a new share repurchase authorization for up to $1 billion, an increase of $500 million.

One of these areas has been to advance our capabilities in key therapeutic areas that had been growing rapidly in the market such as obesity and related metabolic diseases.

What was remaining on our prior authorization.

I can't launch the center for obesity. This year a purpose built network of over 100 U S sites that will ultimately have access to over 10000 pre screened potential patients in this disease area.

We remain active in evaluating potential acquisition opportunities that will enhance our offering alongside continued internal investment in areas that will help fuel our growth such as key technology platforms and tools capabilities in our labs and other services.

Our strategic approach streamline startup activities, such as contracting site training and documentation harmonization, leading to targeted site activation in 30 days or less.

As the leading provider of clinical development services in the industry.

Cumbent upon us to continue to innovate and evolve our offerings to meet the needs of our customers and our strong financial position affords us the ability to continue to invest in key strategic growth areas. While also returning capital to shareholders.

In addition, 85% of the sites operate on the same integrated technology platform, allowing for improved efficiencies and processes across enrolment and recruitment as well as in real time monitoring.

Steven Cutler: This translated to a 2% increase in earnings per share sequentially, resulting in adjusted earnings per share of $3.26. While we achieved solid conversion on the opportunities that went to decision in this quarter, our net book-to-bill result of 1.02 times was negatively impacted by elevated cancellations as we anticipated. Overall cancellations increased sequentially and on a year-over-year basis in the quarter, driven by the cancellation of one of the large next-generation COVID vaccine trials. We saw a similar trend to recent periods where the mix of cancellations across customer groups, excluding the large COVID studies, was in line with our relative distribution of revenue.

Separately, our digital innovation strategy continues to produce meaningful apply advances across our business.

June marked the 35th anniversary of iphones found in Dublin, Ireland.

Have evolved significantly as an organization since that time going from a team of five to 40000 individuals.

Our center of excellence and operational teams to collaborate to identify processes and opportunities to develop AI enabled tools to enhance our delivery of services.

Speaker Change: I'd like to thank the employees of icon that have joined US on this path that was set out in 1990 to be the global leader in clinical development for their hard work and ongoing commitment to the customers we serve.

Our latest development centers on protocol Digitization process to extract information from a trial protocol and then setup standard documentation and systems specifications before the trial begins which is currently highly manual in nature.

Speaker Change: I'll now hand, it over to Laurie will review of our financial results.

Laurie: Thanks, Steve.

Laurie: Revenue in quarter, two was $2.017 billion, representing a year on year decrease of 4.8% revs.

This agent, which is now utilized in the laboratory setting intelligently reach protocol data identifies the relevant tests and auto populate data to create the study deliverables.

Steven Cutler: The reasons for cancellations remain broad based, ranging from decisions related to portfolio rationalisation and reprioritisation to negative clinical trials. As we look forward to the second half of the year, we expect largely similar conditions to persist in the month ahead.

Laurie: Revenue was up approximately 1% sequentially.

Laurie: <unk> 2025.

Laurie: Overall customer concentration in our top 25 customers was aligned with quarter one 2025.

Steven Cutler: challenges remain we entered the third quarter with an encouraging level of actionable opportunities in the pipeline. We have seen good momentum in our ability to win across customs. With our scale and differentiated offering, we are presenting compelling clinical solutions that can deliver optimal efficiencies for customers, positioning us well in an increasingly competitive market. Further, despite the fact that net bookings will continue to be challenged by elevated cancellations and extended decision making in the near term, we believe that as market conditions stabilise, cancellations will return to historic levels and net business wins will increase. In addition, the current need for many large farmers to address their loss of patent exclusivity in the short to medium term necessitates continued, and in many cases, increased investment in their late-stage development pipeline.

Laurie: Our top five customers represented 25% of revenue in the quarter.

Laurie: Our top 10 represented 39, 7%, while our top 25 represented 65, 6%.

This is a tangible example of how we are adopting IR to evolve our offering in a way that it can fill practical and most importantly, driving efficiency in the overall clinical trial process for our customers.

Laurie: Adjusted gross margin for the quarter was 28, 3% compared to 29, 9% in quarter, two 2024, and up 10 basis points on quarter one 2025.

Our financial position remains very strong and we continue to be disciplined narrow approach to capital deployment.

In quarter, two we again repurchased $250 million in shares and our board also approved a new share repurchase authorization for up to $1 billion in.

Laurie: Adjusted SG&A expense was $174 8 million in quarter, two or <unk>, 7% of revenue.

Laurie: Relative to the comparative period last year, adjusted SG&A was done by <unk> $6 million in quarter two.

An increase of $500 million.

From what was remaining on our prior authorization.

We remain active in evaluating potential acquisition opportunities that will enhance our offering alongside continued internal investment areas that will help fuel our growth such as key technology platforms and tools.

Laurie: Adjusted EBITDA was $396 million for the quarter, an increase of $5 $4 million sequentially adjust.

Steven Cutler: Reporter 2, we began to see early but encouraging signs of this in the market with increased M&A and licensing activity amongst large pharma companies. At Icon, we are well positioned to benefit from this activity given our significant number of established strategic relationships across large pharma companies alongside our differentiated biotech offering. We have seen recent notable wins across our business where we have leveraged the strength of our existing relationships.

Laurie: Adjusted EBITDA margin increased 10 basis points over quarter, one 2025 to 19, 6% of revenue.

Abilities in our labs and other services.

As the leading provider of clinical development services in the industry.

Laurie: Adjusted operating income for quarter, two was $357 $4 million pilot.

Incumbent upon us to continue to innovate and evolve our offering to meet the needs of our customers and our strong financial position affords us the ability to continue to invest in key strategic growth areas. While also returning capital to shareholders.

Laurie: While adjusted net interest expense was $46 $6 million.

Laurie: The effective tax rate was 16, 5% for the quarter.

Laurie: We continue to expect the full year 2025, adjusted effective tax rate to be approximately 16, 5%.

June marked the 35th anniversary of iphones founding in Dublin, Ireland.

Steven Cutler: I am going to tell you about some things that were acquired by mid-sized and large pharma companies to then broaden our relationships with those acquiring organ donations. In fact, in quarter two, two of our largest awards were with a mid-sized pharma company where we successfully expanded our relationship. that originated with one of their acquired biotech.

We have evolved significantly as an organization since that time going from a team of five to 40000 individuals.

Laurie: Adjusted net income for the quarter was $259 $5 million equating to adjusted earnings per share of $3 26, a decrease of 13, 1% year over year or an increase of two 2% on quarter one 2025.

Like to thank the employees of icon that have joined US on this path that was set out in 1990 to be the global leader in clinical development for their hard work and ongoing commitment to the customers we serve.

Laurie: U S. GAAP income from operations amounted to $209 2 million or 10, 4% of quarter two revenue.

Steven Cutler: ICON's demonstrated performance in the delivery of prior studies was a key consideration in the further development of this expanded relationship.

Nigel: I'll now hand, it over to Nigel who will review of our financial results.

Speaker Change: Thanks, Dave Rev.

Nigel: Revenue in quarter, two was 2.017 billion, representing a year on year decrease of four 8%.

Laurie: U S. GAAP net income in quarter, two was $183 million or $2 30 per diluted share compared to $1 76 per share for the equivalent prior year period, an increase of 37%.

Steven Cutler: We updated our full year guidance to reflect our expectation for higher pass-through revenue. including the restarted next generation COVID vaccine trial that resumed activity in quarter two and is actively dosing patients. We remain confident in the prudent approach we took in setting our full year outlook in April and have kept our assumptions consistent regarding macro conditions through the balance of the year.

Nigel: Revenue was up approximately 1% sequentially and quarter one 2025.

Nigel: Overall customer concentration in our top 25 customers was aligned with quarter one 2025.

Laurie: From a cash perspective quarter to had cash from operating activities coming in at $146 $2 million.

Nigel: Our top five customers represented 25% of revenue in the quarter. Our top 10 represented 39, 7%, while our top 25 represented 65, 6%.

Laurie: And free cash flow of $113 $9 million.

Laurie: While overall cash collections were solid in quarter, two our free cash flow was lower than quarter, one, reflecting the timing of interest and tax payments as well as restructuring expenses.

Steven Cutler: These factors result in our revised guidance range increasing by $100 million at the low end to $7.85 billion and the high end of the range remaining unchanged at $8.15 billion, increasing the midpoint to $8 billion. Given the expected range to our full year revenue is largely related to increased pass-through revenue, we are maintaining the mid-point of our Adjusted Earnings Per Share guidance at $13.

Nigel: Adjusted gross margin for the quarter was 28, 3% compared to 29, 9% in quarter, two 2024, and up 10 basis points on quarter one 2025.

Laurie: At June 32025, cash totaled $394 million and that totaled $3 $4 billion, leaving.

Nigel: Adjusted SG&A expense was $174 8 million in quarter, two or <unk>, 7% of revenue.

Laurie: Leaving a net debt position of $3 zero billion dollars.

Laurie: This was broadly in line with net debt at March 31, 2025 of $2 $9 billion.

Nigel: Relative to the comparative period last year, adjusted SG&A was down by <unk> $6 million in quarter two.

Laurie: We ended the quarter with a leverage ratio of one nine times net debt to adjusted trailing 12 month EBITDA.

Steven Cutler: While we were pleased to see progress across financial and bookings metrics in Q2, I also want to highlight developments in key operational areas in our broader business. Our customer and site satisfaction scores have shown positive momentum driven by accelerated site activation, patient recruitment and trial training. In addition, we continue to focus on further investments to strengthen our offering and expertise.

Nigel: Adjusted EBITDA was $396 million for the quarter, an increase of $5 $4 million sequentially adjust.

Laurie: Our balance sheet position remains very strong and we continue to execute our disciplined capital deployment strategy.

Nigel: Adjusted EBITDA margin increased 10 basis points over quarter, one 2025 to 19, 6% of revenue.

Laurie: We are focused on an approach to deployment the balances further investments and strengthen strengthening our business. While also returning capital to shareholders.

Nigel: Adjusted operating income for quarter, two was $357 $4 million pilot.

Laurie: We made significant share repurchases in quarter, two totaling $250 million at an average.

Steven Cutler: where we can develop distinct advantages to our. through delivery of novel solutions. One of these areas has been to advance our capability in key therapeutic areas that have been growing rapidly in the market, such as obesity and related metabolism. ICON launched its Centre for Obesity this year, a purpose-built network of over 100 US sites that will ultimately have access to over 10,000 pre-screened potential patients in this key disease area. Strategic approach streamlines start-up activities such as contracting, site training and documentation harmonisation leading to targeted site activation in 30 days or less. In addition, 85% of these sites operate on the same integrated technology platform, allowing for improved efficiencies in processing.

Nigel: While adjusted net interest expense was $46 $6 million.

Nigel: The effective tax rate was 16, 5% for the quarter.

Laurie: Price of $146 per share.

Laurie: We plan to remain active in buying back shares in the near term with our total current authorization now expanded to $1 billion.

Nigel: We continue to expect the full year 2025, adjusted effective tax rate to be approximately 16, 5%.

Laurie: With us we'll now open it up for questions.

Nigel: Adjusted net income for the quarter was $259 $5 million equating to adjusted earnings per share of $3 26, a decrease of 13, 1% year over year or an increase of two 2% on quarter one 2025.

Laurie: Thank you.

Laurie: If you'd like to ask a question you will need to press star one on one on your telephone and wait for your name to be announced.

Laurie: Withdraw your question. Please press star one on one again, we would please ask that you limit your questions to one question per caller.

Nigel: U S. GAAP income from operations amounted to $209 2 million or 10, 4% of quarter two revenue.

Laurie: We will take our first question comes from the line of <unk>.

Laurie: Listen from Evercore ISI. Please go ahead.

Nigel: U S. GAAP net income in quarter, two was $183 million or $2 30 per diluted share compared to $1 76 per share for the equivalent prior year period, an increase of 37%.

Speaker Change: Hi, guys. Thanks, so much for the question and congrats on a really nice quarter.

Steven Cutler: cross-enrolment and recruitment, as well as in real-time monitoring.

Speaker Change: I was wondering if you could give us a little bit more detail, Steve maybe about what you're seeing in terms of different market segments, maybe sort of biotech versus pharma.

Steven Cutler: Separately, our digital innovation strategy continues to produce meaningful applied advances across the world. Our AI Centre of Excellence and operational teams collaborate to identify processes and opportunities to develop AI-enabled tools to enhance our delivery of services. Our latest development centers on protocol digitization, a process to extract information from a trial protocol and then set up standard documentation and system specifications before the trial begins. currently highly manual. This A.I. agent is now utilized in the laboratory setting, intelligently reads protocol data, identifies the relevant tests, and auto-populates data to create the study deliverable. This is enabling ICON to achieve upper quartile performance metrics for our sponsors, allowing significantly reduced study start-up times and improved overall project timelines as well as overall quality.

Speaker Change: Or if there's any sort of difference in terms of demand inflection that you are seeing by by page. Thank you very much.

Nigel: From a cash perspective quarter to had cash from operating activities coming in at $146 $2 million and free cash flow of $113 9 million.

Speaker Change: Sure.

Speaker Change: Things haven't changed dramatically over the last few months and systems first quarter call. The environment is pretty much. The same certainly from an RFP basis, we've seen a modest uptick sort of in the mid single digit range, that's probably been more in the biotech segment, but it has been the large pharma segment.

Nigel: On an overall cash collections were solid in quarter, two our free cash flow was lower than quarter one.

Nigel: Reflecting the timing of interest and tax payments as well as restructuring expenses.

Speaker Change: We've certainly seen some positives in that respect in terms of our early phase business and our phase III business.

Nigel: At June 32025, cash totaled $394 million and that totaled $3 4 billion.

Speaker Change: So those areas looking are looking positive levels are pleased within the wins that we've won we've been able to start to really leverage the partnerships that we've been able to secure over the last 18 months or two years. So the team's done a nice job in bringing those partnerships not just winning initial projects, but expanding within there.

Nigel: Leaving a net debt position of $3 zero billion dollars.

Nigel: This was broadly in line with net debt at March 31, 2025 of $2 $9 billion.

Nigel: We ended the quarter with a leverage ratio of one nine times net debt to adjusted trailing 12 months EBITDA.

Speaker Change: Those partnerships. So so overall, we see a reasonably constructive.

Steven Cutler: This is a tangible example of how we are adopting AI to evolve our offering in a way that is considered practical, and most importantly, driving efficiency in the overall clinical trial process for our patients.

Nigel: Our balance sheet position remains very strong and we continue to execute our disciplined capital deployment strategy.

Speaker Change: Development sort of environment, if you like across across the business, probably a little bit more in biotech and large pharma. We tend to look at these things on a trailing 12 month basis, rather than a quarter basis within the quarter. There is still a fair bit of volatility things go up and down.

Nigel: We are focused on an approach to deployment the balances further investments and strengthen strengthening our business. While also returning capital to shareholders.

Steven Cutler: Our financial position remains very strong and we continue to be disciplined in our approach to capital. Quarter 2 we again repurchased $250 million in shares and our board also approved a new share repurchase authorisation for up to $1 billion, an increase of $500 million from what was remaining on our prior authorisation. We remain active in evaluating potential acquisition opportunities that will enhance our offering, alongside continued internal investment in areas that will help fuel our growth, such as key technology platforms and tools, capabilities in our labs and other services. As the leading provider of clinical development services in the industry, it is incumbent upon us to continue to innovate and evolve our offering to meet the needs of our customers, and our strong financial position affords us the ability to continue to invest in key strategic growth areas while also returning capital to shareholders.

Speaker Change: But on a trailing 12 month basis it looks positive.

Nigel: We made significant share repurchases in quarter, two totaling $250 million at an average price of $146 per share.

Speaker Change: Thank you.

Speaker Change: Next question is from Michael Cherny Leerink partners. Please go ahead.

Nigel: We plan to remain active in buying back shares in the near term with our total current authorization now expanded to $1 billion.

Michael Cherny: Good morning, and thanks for taking my question, maybe if I can just dive Steve a little bit more into the biotech comment youre not the only CRM has talked about biotech improvements over the course of the quarter.

Nigel: With us we'll now open it up for questions.

Nigel: Thanks.

Nigel: If you'd like to ask a question you will need to press star one on one on your telephone.

Michael Cherny: Seems to fly somewhat in the face of the general Patrick funding environment I.

Nigel: To be announced to withdraw your question. Please press star one on one again, we would please ask that you limit your questions to one question per caller.

Michael Cherny: I appreciate the cautious optimism here, but what do you think is getting more awards.

Michael Cherny: Over the finish line in terms of what drove the better bookings performance and how do you think that factors into the current funding environment in terms of bookings wins to bookings conversion.

Nigel: Okay.

Nigel: We will take our first question which comes from.

Nigel: Lineup.

Nigel: Anderson from Evercore ISI. Please go ahead.

Michael Cherny: Yes.

Anderson: Hi, guys. Thanks, so much for the question and congrats on a really nice quarter.

Michael Cherny: To get too far ahead of ourselves on the on the budget on the positive part is as I said, that's on a trailing 12 months basis within the quarters and across the quarters. It has been a little bit more volatile and we still continue to see caution in terms of decision, making times et cetera et cetera.

Anderson: I was wondering if you could give us a little bit more detail, Steve maybe about what you're seeing in terms of different market segments, maybe sort of biotech versus pharma.

Steven Cutler: June marks the 35th anniversary of ICON's founding in Dublin, Ireland. We have evolved significantly as an organization since that time, going from a team of five to 40,000 individuals.

Anderson: Or if there's any sort of difference in terms of demand inflection that you are seeing bye bye. Thank you very much.

Michael Cherny: But we are seeing I mean overall it does seem to be moving in the right direction three of the top four awards that we had during the quarter were in the biotech segment. So we're pleased with our performance in terms of winning some fairly substantial but a project. So it's really the top four notwithstanding that as I said the large pharma also suddenly.

Steve: Sure Elizabeth.

Steven Cutler: I'd like to thank the employees of Icon that have joined us on this path that was set out in 1990 to be the global leader in clinical development for their hard work and ongoing commitment to the customers.

Steve: You know things Havent changed dramatically over the last few months as systems first quarter call. The environment is pretty much. The same certainly from an RFP basis, yeah, we've seen a modest upticks would've been in the mid single digit range, that's probably been more in the biotech segment, but it has been the large pharma segment.

Nigel Clerkin: I'll now hand it over to Nigel for a review of our financial results. Thanks, Steve. Revenue in quarter two was $2.017 billion, representing a year on year decrease of 4.8%. Revenue was up approximately 1% sequentially on quarter one 2025. Overall, customer concentration in our top 25 customers was aligned with quarter one 2025. Our top five customers represented 25% of revenue in the quarter. Our top 10 represented 39.7%. On our top 25 represented 65.6%. Adjusted gross margin for the quarter was 28.3%. compared to 29.9% in Q2 2024 and up 10 basis points on Q1 2025. Adjusted SG&A expense was $174.8 million in Q2, or 8.7% of revenue.

Michael Cherny: Tribute with those expansions on the part on the on the partnership side of things so.

Steve: We've certainly seen some positives in that respect in terms of our early phase business and our phase III business.

Michael Cherny: There is a little bit of a <unk>.

Michael Cherny: Absent a confluence if you like or.

Steve: So those areas looking are looking positive. We are also pleased within the wins that we've won we've been able to start to really leverage the partnerships that we've been able to secure over the last 18 months or two years. So the team's done a nice job in bringing those partnerships not just winning initial projects, but expanding within.

Michael Cherny: It's not quite lining up I, suppose where do you see with the biotech funding.

Michael Cherny: It's probably a bit of a lag here and we're seeing that there's some some positivity is starting to come through.

Michael Cherny: Encouraged about but we're certainly not declaring victory just at this point and we we wait too to continue that positive progress.

Steve: Those partnerships. So so overall, we see a reasonably constructive.

Michael Cherny: Thank you.

Michael Cherny: Okay.

Steve: Development sort of environment, if you like across across the business, probably a little bit more in biotech and large pharma. We tend to look at these things on a trailing 12 month basis, rather than a quarter basis within the quarter. There is still a fair bit of volatility seems to go up and down.

Speaker Change: Next question is from Patrick Donnelly from Citi. Please go ahead.

Patrick Donnelly: Hey, guys. Thank you for taking the questions.

Speaker Change: Steve maybe maybe another one on just the bookings side nice to see the results come through there did you see things changed at all as the quarter progressed, obviously again, a few of your peers sounded better as well as the last few days it caught people a little bit by surprise.

Steve: But on a trailing 12 months basis.

Steve: <unk> positive.

Speaker Change: In turn as the quarter went into here any changes from the pharma customers just given all the noise on tariffs Amazon et cetera.

Steve: Thank you.

Speaker Change: Next question is from Michael Cherny Leerink partners. Please go ahead.

Nigel Clerkin: Relative to the comparative period last year, adjusted SG&A was down by $8.6 million in Q2. Adjusted EBITDA was $396 million for the quarter, an increase of $5.4 million sequentially. Adjusted EBITDA margin increased 10 basis points over quarter one 2025 to 19.6% of revenue. Adjusted Operating Income for Q2 was $357.4 million. while adjusted net interest expense was $46.6 million. The effective tax rate was 16.5% for the quarter. We continue to expect the full year 2025 adjusted effective tax rate to be approximately 16.5%. Adjusted net income for the quarter was $259.5 million, equating to adjusted earnings per share of $3.26, a decrease of 13.1% year over year, or an increase of 2.2% on quarter one 2025.

Speaker Change: It sounds like again biotech neighborhoods with a little bit better, but just curious in terms of breaking that down and how things progressed during the quarter and what that means for the go forward again, you feel pretty confident that we have.

Michael Cherny: Good morning, and thanks for taking the question.

Michael Cherny: Maybe if I can just dive Steve a little bit more into the biotech comment youre not the only CRO that's talked about biotech improvements over the course of the quarter. This seems to fly somewhat in the face of the general biotech funding environment I appreciate the cautious optimism here, but what do you think is getting more award.

Speaker Change: Turned the corner a little bit here on the cancelled.

Speaker Change: The Bill should continue to trend the right direction. Thank you.

Speaker Change: We feel constructive on the environment and.

Speaker Change: Moving forward on the environment, but as I say, we don't want to get too far ahead of ourselves I think our pharma sponsors probably.

Michael Cherny: Words over the finish line in terms of what drove the better bookings performance.

Speaker Change: They have at least heard all the bad news and they probably digesting that bad news and.

Michael Cherny: Do you think that factors into the current funding environment in terms of bookings wins to bookings conversion.

Speaker Change: And working through and it's not all bad news I mean, there is some.

Michael Cherny: Yes, we don't.

Michael Cherny: Want to get too far ahead of ourselves on the on the budget on the positive part is as I said, that's on a trailing 12 month basis within the quarters and across the quarters. It has been a little bit more volatile.

Speaker Change: Some positives coming out in terms of opportunities for early review with an FDA, we've seen a reduction in animal testing, which I think will help.

Speaker Change: The tax potentially been tax benefits for R&D, that's done in the U S.

Michael Cherny: We still continue to see caution in terms of decision, making times et cetera, et cetera, but we are seeing I mean overall it does seem to be moving in the right direction three of the top four awards that we had during the quarter were in the biotech segment. So we're pleased with our performance in terms of winning some fairly substantial.

Speaker Change: I think our customers are sort of looking at it saying that there's a that it's starting to settle down a little bit and hence the plans and their spending plans notwithstanding.

Speaker Change: The patent cliffs that they need to confront.

Speaker Change: We are also looming and they need to make those decisions. So I think things are starting to move forward.

Michael Cherny: But the project. So it's really the top four notwithstanding that as I said the large pharma are also starting to contribute with those expansions on the part on the on the partnership side of things so.

Nigel Clerkin: U.S. GAAP income from operations amounted to $209.2 million, or 10.4% of Q2 revenue. U.S. GAAP net income in Q2 was $183 million, or $2.30 per diluted share, compared to $1.76 per share for the equivalent prior year period, an increase of 30.7%. From a cash perspective, Quarter 2 had cash from operating activities coming in at $146.2 million and free cash flow of $113.9 million. While overall cash collections were solid in Q2, our free cash flow was lower than Q1, reflecting the timing of interest and tax payments, as well as restructuring expenses. At June 30, 2025, cash totaled $390.4 million and debt totaled $3.4 billion, leaving a net debt position of $3.0 billion.

Speaker Change: Got.

Speaker Change: It's still a sort of somewhat volatile and uncertain environment.

Speaker Change: But we're working and we were very encouraged by the gross bookings that was 10.

Michael Cherny: There is a little bit of a.

Speaker Change: 10% improvement over the previous quarter was something I was really pleased about the team was very pleased about we did a good job on.

Michael Cherny: A confluence if you like or.

Michael Cherny: It's not quite lining up I, suppose where do you see with the biotech funding.

Speaker Change: But it remains to be seen as to whether those opportunities I mean, we certainly have opportunities in the pipeline no question about that some actionable good actionable opportunities.

Michael Cherny: It's probably a bit of a lag here and we're seeing that there's some some positivity starting to come through.

Michael Cherny: Encouraged about but we're certainly not declaring victory just at this point and we we wait too to continue that positive progress.

Speaker Change: We need to continue that obviously you mentioned the cancellations will continue to be elevated certainly in the very short term.

Speaker Change: So we've got to manage that through but we see a constructive environment, albeit I don't think we're quite through everything just yet.

Michael Cherny: Thank you.

Michael Cherny: Okay.

Speaker Change: Next question is from Patrick Donnelly from Citi. Please go ahead.

Speaker Change: Thank you.

Speaker Change: Hey, guys. Thank you for taking the questions Steve.

Speaker Change: Next question is from the line of David Windley from Jefferies. Please go ahead.

Speaker Change: Steve maybe maybe another one on just the booking side nice to see the results come through there did you see things changed at all as the quarter progressed, obviously again, a few of your peers sounded better as well as the last few days it caught people a little bit by surprise.

David Windley: Hi, Good morning, good afternoon. Thanks for taking my question my.

Speaker Change: My question is focused on your partnerships.

David Windley: Multi partner as you might imagine our anticipated.

Speaker Change: Turn as the quarter went into here any changes from the pharma customers just given all the noise on tariffs Amazon et cetera.

You you talked about progress in those those partnerships I think in some meetings that we had with with you with Berry in particular.

Nigel Clerkin: This was broadly in line with net debt at March 31, 2025 of $2.9 billion. We ended the quarter with a leverage ratio of 1.9 times net debt to adjusted trailing 12-month EBITDA. Our balance sheet position remains very strong and we continue to execute our disciplined capital deployment strategy. We are focused on an approach to deployment that balances further investment in strengthening our business while also returning capital to shareholders. We made significant share repurchases in Q2 totaling $250 million at an average price of $146 per share. We plan to remain active in buying back shares in the near term, with our total current authorisation now expanded to $1 billion.

David Windley: There were some discussion about one of those recent partnerships beam.

David Windley: Somewhat.

Speaker Change: Turn the corner a little bit here on the canceled and the book to Bill should continue to trend the right direction. Thank you.

David Windley: Our expanded a restructured to give you access.

David Windley: So more of that customer's wallet and I wondered if you could.

Speaker Change: We feel constructive on the environment and <unk>.

David Windley: Maybe talk about that a little bit on what expanded opportunity and if you've already seen benefit from that.

Speaker Change: Moving forward on the environment, but as I say, we don't want to get too far ahead of ourselves I think al pharma sponsors probably.

David Windley: And then a second.

David Windley: Second point here was for <unk>.

David Windley: Part of the question is that I think our strategy has been to also replicate the success that you've had in kind of top 25 focused partnerships and.

Speaker Change: And they have at least heard all the bad news and there are probably digesting that bad news and and working through and it's not all bad news I mean, there's some.

David Windley: And pursue some of that same type of structure down market and I wondered what progress or what opportunity you see there. Thank you.

Speaker Change: Some positives coming out in terms of opportunities for early review with an FDA, we've seen a reduction in animal testing, which I think will will help.

David Windley: Sure.

Speaker Change: Maybe I'll, let Craig hit in the first.

The tax in terms of potentially been tax benefits for R&D, that's done in the U S.

Speaker Change: And then very much jump in on the specifically on when we made some progress in the top.

Unknown Executive: With that, we'll now open it up for questions. Thank you.

Speaker Change: I think our customers are sort of looking at it saying that there's a <unk>.

Speaker Change: 25 or so.

Unknown Executive: If you'd like to ask a question, you will need to press star 1 and 1 on your telephone and wait for your name to be announced. And to withdraw your question, please press star 1 and 1 again. We would please ask that you do limit your questions to one question per caller. Thank you.

Speaker Change: It is a let's be honest it is it remains and probably has intensified.

Speaker Change: Starting to settle down a little bit and hence the plans and their spending plans notwithstanding notwithstanding.

Speaker Change: The competitive nature of the business has probably intensified a little bit over the last I'd say three to six months and so as we get approached by customers to look at the ships and even rigid partnerships.

Speaker Change: The patent cliffs that they need to confront.

Speaker Change: Or also looming and they need to make those decisions. So I think things are starting to move forward.

Speaker Change: Got.

Speaker Change: It's still a sort of somewhat volatile and uncertain environment.

Speaker Change: Embed ourselves.

Elizabeth Anderson: We will take our first question, which is from the line of Elizabeth Anderson from Evercore ISI. Please go ahead. Hi guys, thanks so much for the question and congrats on a really nice quarter.

Speaker Change: But we're working and we were very encouraged by the gross bookings that was.

Speaker Change: Approach, bringing the scale of operation that we are is we.

Speaker Change: We look to do more of their work and that's been we've been able to help them on efficiencies.

Speaker Change: 10% improvement over the previous quarter was something I was really pleased about the team was very pleased about we did a good job on.

Speaker Change: In exchange for getting a greater share of their wallet and that's generally been a successful strategy for us or it continues to be the strategy. We're pursuing in the as I said, it's one of the larger players I believe we have an advantage in that space and that we cover all of the areas that they want to outsource and we cover all areas of the development. So that's.

Steven Cutler: I was wondering if you could give us a little bit more detail, Steve, maybe about what you're seeing in terms of different market segments, maybe sort of biotech versus pharma, or if there's any sort of difference in terms of demand inflection that you're seeing by phase. Thank you very much. Sure, Elizabeth. You know, things haven't changed dramatically over the last few months since our first quarter call. The environment is pretty much the same. Certainly from an RFP basis, you know, we've seen a modest uptick sort of in the mid-single-digit range. That's probably been more in the biotech segment than it has been in the large pharma segment.

Speaker Change: We need to continue that obviously.

Speaker Change: I've mentioned the cancellations will continue to be elevated certainly in the very short term.

Speaker Change: We've got to manage that through but we see a constructive environment, albeit I don't think we're quite through everything just yet.

Speaker Change: Been working well for US we've also been pushing that down to the to the board.

Speaker Change: Mid sized companies as well and we buy.

Speaker Change: Thank you.

Speaker Change: Some of our recent partnerships are really beginning in that area of the business and again, we're saying while they don't have quite the volume of spin the larger farmers that they they are customers and they are companies that do have a significant amount of work and we can engage them and brought it right across the business.

Speaker Change: Next question is from the line of David Windley from Jefferies. Please go ahead.

Steven Cutler: We've certainly seen some positives in that respect in terms of our early phase business and our phase three business. So those areas are looking positive. We've also, I was pleased within the wins that we've won, we've been able to start to really leverage the partnerships that we've been able to secure over the last 18 months or two years. So the team's done a nice job in bringing those partnerships on and not just winning initial projects but expanding within those partnerships. So overall, we see a reasonably constructive development environment, if you like, across the business. Probably a little bit more in biotech than in large pharma.

David Windley: Hi, Good morning, good afternoon, Thanks for taking my question.

David Windley: My question is focused on your partnerships.

David Windley: It's a multi parter as you might imagine our anticipated.

Speaker Change: Ill, let Barry perhaps jumping on any sort of specifics on that front yet data on the first part of your question I guess I'm slow the comment too much on any one of a partnership but I can certainly think of an example.

David Windley: You you talked about progress in those those partnerships I think in some meetings that we had with with you with Berry in particular.

Speaker Change: We were brought into a partnership for the full service component of that relationship was significantly smaller that beta component, we have access to the FSP component, which we were not at that stage partnered on and since coming in the customer has decided to pivot much more heavily toward that blended full service model that we're already.

David Windley: There was some discussion about one of those recent partnerships being.

David Windley: Somewhat.

David Windley: <unk> expanded our restructured to give you access.

David Windley: More of that customer's wallet and I wondered if you could.

David Windley: Maybe talk about that a little bit on what expanded opportunity and if you've already seen benefit from that.

Steven Cutler: We tend to look at these things on a trailing 12-month basis rather than a quarter basis. Within the quarter, there's still a fair bit of volatility, things go up and down. But on a trailing 12-month basis, it looks positive. Thank you.

Speaker Change: Two which gives us some cause for optimism as we continue to progress that relationship I think your second point is also well made we have had.

David Windley: And then a second.

David Windley: Second point here was.

David Windley: Part of the question is that I think our strategy has been to also replicate the success that you've had in kind of top 25 focused partnerships and.

Speaker Change: Encouraging success in recent times about broadening the partnership base across the top 25.

Speaker Change: And really we look at those partnerships between maybe $20 60 or those companies between 2016.

David Windley: And pursue some of that same type of structure down market and I wondered what progress or what opportunity you see there. Thank you.

Michael Cherny: Next question is from Michael Cherny, Lyrinc Partners, please go ahead. Good morning and thanks for taking the question. Maybe if I can just dive, Steve, a little bit more into that biotech comment. You're not the only CRO that's talked about biotech improvements over the course of the quarter. seems to fly somewhat in the face of the general biotech funding environment. I appreciate the cautious optimism here, but what do you think is getting more awards over the finish line in terms of what drove the better bookings performance? And how do you think that factors into the current funding environment in terms of bookings wins to bookings conversion?

Speaker Change: As one of some opportunity and we continue not just to add customers in that domain, but also to broaden these out from more transactional relationships deeper.

David Windley: Sure.

David Windley: Maybe I'll, let a crisis the first but even then very much jump in on the on specifically on when we made some progress in the top.

Speaker Change: Opportunities, where you have more qualified RFP flow.

David Windley: 25 or so.

David Windley: It is let's be honest it is it remains and probably has intensified.

Speaker Change: Perhaps a deeper engagement with that customer. So yes that is the plan not just to see a broader base of RFP flow outside of the top 20, but to develop more what I'll call portfolio relationships in that segment and continued to build on that and that remains the strategy and I'm encouraged by the progress.

David Windley: The competitive nature of the business has probably intensified a little bit over the last I'd say three to six months and so as we get approached by customers to look at partnerships and even reduce partnerships.

Speaker Change: Yeah.

David Windley: Embed ourselves.

Speaker Change: Thank you.

David Windley: <unk> being the scale operation that we are is we.

David Windley: We look to do more of their work and that's been we've been able to help them on efficiencies.

Speaker Change: Next question is from Justin Bowers with Deutsche Bank. Please go ahead.

Steven Cutler: Yeah Michael, we don't want to get too far ahead of ourselves on the biotech, on the positive biotech. As I said, that's on a trailing 12-month basis. Within the quarters and across the quarters, it has been a little bit more volatile, and we still continue to see caution in terms of decision-making times, etc, etc. But we are seeing, I mean overall, it does seem to be moving in the right direction. Three of the top four awards that we had during the quarter were in the biotech segment, so we were pleased with our performance in terms of winning some fairly substantial biotech projects, and I said three of the top four.

David Windley: In exchange for getting a greater share of their wallet and that's generally been a successful strategy for us or it continues to be the strategy. We're pursuing in the as I said, it's one of the larger players I believe we have an advantage in that space that we cover all of the areas that they want to outsource we cover earlier is that the development. So that's.

Justin Bowers: Hi, good afternoon, and good morning, everyone.

Speaker Change: Stephen Barry can you help us understand some of the new opportunities that are that youre seeing.

Speaker Change: And your funnel and your pipeline seems like RFP growth has been pretty solid.

Speaker Change: Over the last few quarters.

Speaker Change: Or is that across the board our pharma large pharma related.

David Windley: Been working well for US we've also been pushing that down to the to the board.

Speaker Change: Biotech related and what do we need to see an industry four.

David Windley: Mid sized companies as well and we buy.

Speaker Change: For that to start to confer an and.

David Windley: Some of our recent partnerships are really beginning in that area of the business and again, we're saying while they don't have quite the volume of spin the larger farmers that they they are customers and they are companies that do have a significant amount of work and we can engage them and run it right across the business.

Speaker Change: Monetize into our into bookings.

Steven Cutler: Notwithstanding that, as I said, the large pharma are also starting to contribute with those expansions on the partnership side of things. So there is a little bit of a, perhaps a confluence, if you like, or it's not quite lining up, I suppose, where you see with the biotech funding.

Justin Bowers: Yeah, Justin I mean, there's a couple of aspects of therapeutically oncology continues to be a main the main sort of ballpark or if you like of out of our backlog and our new wins were an effective oncology shop, and though we have a very good unit buzzing biotech and large pharma spaces.

David Windley: I'll, let Barry perhaps jumping on any sort of specifics on that front yet data on the first part of your question I guess I'm slow the comment too much on any one of a partnership but I can certainly think of an example, where we were brought into a partnership for the full service component of that relationship was significantly smaller that being the component we had access to.

Steven Cutler: I suspect there's probably a bit of a lag here, and we're seeing that there's some positivity starting to come through that we're encouraged about, but we're certainly not declaring victory just at this point, and we wait to continue that biotech program.

Justin Bowers: That's an area, we've certainly seen an uptick in the metabolism cardiovascular what we call the cardiovascular and metabolism, that's really I think around the.

Justin Bowers: Obesity mash Nash follow what you all indications are that that's an area that we've seen tick up as well I think those are probably the two sort of mine move as if you like.

David Windley: And the FSP component, which we were not at that stage partnered on and since coming in the customer has decided to pivot much more heavily toward that blended full service model that were already two which gives us some cause for optimism as we continue to progress that relationship.

Patrick Donnelly: Next question is from Patrick Donnelly from City, please go ahead. Hey, guys, thank you for taking the questions. Steve, maybe maybe another one on just the booking side, you know, nice to see the results come through there. Did you see things change at all as the quarter progressed? Obviously, again, a few of your peers sounded better as well, the last few days, I think it caught people a little bit by surprise. Did things turn as the quarter went? Did you hear any changes from from the pharma customers just given all the noise on tariffs, MFN, etc?

Justin Bowers: The Covid vaccine work remains at about 1% to 2% of our backlog and about our revenue we haven't seen much of an uptick in that one although of course as we've talked about that study movie ahead.

David Windley: I think your second point is also well made we have had.

Justin Bowers: In terms of.

Justin Bowers: <unk> as I mentioned in my remarks early phases.

David Windley: Encouraging success in recent times about broadening the partnership base across the top 25.

Justin Bowers: Moving forward nicely and we also see phase three moving forward. So it's a little bit of a customer's focusing their attention obviously on their phase III assets and moving them to market that makes a lot of sense, but also theyre not forgetting about moving some of their early assets.

David Windley: And really we look at those partnerships between maybe $20 60.

David Windley: <unk> between 2016.

Steven Cutler: It sounds like again, biotech news was a little bit better. But just curious in terms of breaking that down, and how things progress during the quarter, and what that means for the go forward? Again, do you feel pretty confident that we have turned the corner a little bit here on the cancels and the book the bill should continue to turn the right direction?

David Windley: The zone and some opportunity and we continue not just to add customers in that domain, but also to broaden these out from more transactional relationships deeper.

Justin Bowers: Through as well so I'm encouraged by the long term opportunity that.

Justin Bowers: But that presents as well so overall, we're constructive on the market or it hasnt changed dramatically, but we certainly see some some nice progress over the last quarter or so.

David Windley: Opportunities, where you have more qualified RFP flow.

David Windley: Perhaps a deeper engagement with that customer. So yes that is the plan not just to see a broader base of RFP flow outside the top 20, but to develop more what I'll call portfolio relationships in that segment continued to build on that and that remains our strategy and I'm encouraged by the progress.

Steven Cutler: Thank you. Pat, you know, we feel constructive on the environment and moving forward on the environment, but as I say, we don't want to get too far ahead of ourselves. I think our pharma sponsors have probably, you know, they've at least heard all the bad news, and they're probably digesting that bad news and working through it. It's not all bad news. I mean, there's some, you know, some positives coming out in terms of opportunities for early review within FDA. We've seen the reduction in animal testing, which I think will help the tax, some potential even tax benefits for R&D that's done in the US.

Speaker Change: Thank you.

Jack Meehan: Next question is from Jack Meehan from Nephron Research. Please go ahead.

David Windley: Yeah.

Jack Meehan: Thank you Hello, everyone.

David Windley: Thank you.

Jack Meehan: I think everybody is trying to take them and the early results from some of this euros and feel like we only have a piece of the aperture here with the bigger guys reporting.

Speaker Change: Next question is from Justin Bowers with Deutsche Bank. Please go ahead.

Justin Bowers: Hi, good afternoon, and good morning, everyone. Stephen Barry can you help us understand some of the new opportunities that are that youre seeing.

Speaker Change: Steve I was wondering if you could comment on what you think is happening in terms of share dynamics in the industry.

Speaker Change: Just any color on what youre seeing in terms of win rate would be helpful.

Justin Bowers: In your funnel and your pipeline seems like RFP growth has been pretty solid.

Steven Cutler: So, you know, it's not all, I think our customers are sort of looking at it, seeing that there's, it's starting to settle down a little bit, and hence their plans and their spending plans, notwithstanding the patent cliffs that they need to confront, you know, are also looming, and they need to make those decisions. So I think things are starting to move forward, but, you know, it's still a sort of somewhat volatile and uncertain environment that we're working in. We were very encouraged by the gross bookings. That was, that 10% improvement over the previous quarter was something I was really pleased about.

Steve Cutler: Yeah, Jeff it's always hard to get too specific about that sit on MSA I was very pleased with our gross wins.

Justin Bowers: Over the last few quarters.

Speaker Change: Is that across the board our pharma large pharma related.

Speaker Change: Biotech related and what do we need to see in the industry for.

Steve Cutler: As I said, we were fairly broad based in those wins across the customer segments that we service. So that was a pleasing aspect of it.

Speaker Change: For that to start to confer an and.

Speaker Change: Monetize into our into bookings.

Steve Cutler: But we are being successful in moving our market share food, but it's it's hard to be too quantitative on that it's something that we try to monitor as much as we can but.

Justin Bowers: Yes, Justin.

Justin Bowers: There's a couple of aspects of therapeutically oncology continues to be a main the main sort of ballpark or if you like of out of our backlog and our new wins were an effective oncology shop, and though we have a very good unit Belgian biotech and large pharma spaces.

Steven Cutler: The team was very pleased about it. We did a good job on it. But it remains to be seen as to whether those opportunities, I mean, we certainly have opportunities in the pipeline, no question about that, some actionable, good actionable opportunities. We need to continue that. Obviously, as I've mentioned, the cancellations will continue to be elevated, certainly in the very short term. So we've got to manage that through, but we see a constructive environment, albeit I don't think we're quite through everything.

Steve Cutler: The market data that we have as you know is variable and somewhat volatile to be honest with you. It we're certainly seeing progress in the biotech segment.

Justin Bowers: That's an area, we've certainly seen an uptick in the metabolism cardiovascular what we call the cardiovascular and metabolism, that's really I think around the obesity mash Nash <unk>.

Steve Cutler: We our FSP business is continues to grow we've made nice progress in our early phase business. Our lab business has grown in the in the.

Justin Bowers: Indications are that that's an area that we've seen tick up as well I think those are probably the two sort of mine move as if you like.

Steve Cutler: In the in the teens.

Steve Cutler: The amount of non SaaS base of that business are businesses that are moving forward and reflecting.

Justin Bowers: What does the Covid vaccine work remains at about 1% to 2% of our backlog and about our revenue we haven't seen much of an uptick in that one although of course as we've talked about that study movie ahead.

Steve Cutler: Think in areas areas that do indicate that we are gaining share not just in the functional business, but also in the in the full service business and in the clinical sides of our business labs early phase imaging et cetera, et cetera. So overall as I say constructive, but we're not getting too far ahead of vessels.

David Windley: Next question is from the line of David Windley from Jeffreys, please go ahead. Hi, good morning, good afternoon. Thanks for taking my question.

Justin Bowers: In terms of.

Justin Bowers: Phases as I mentioned in my remarks early phases.

David Windley: My question is focused on your partnership. And it's a multi-parter, as you might imagine, or anticipate. You talked about progress in those partnerships. I think in some meetings that we had with you, with Barry in particular, there was some discussion about one of those recent partnerships being somewhat expanded or restructured to give you access to more of that customer's wallet. And I wondered if you could maybe talk about that a little bit, and what expanded opportunity, and if you've already seen benefit from that. And then a second point here was, or the second part of the question is that I think your strategy has been to also replicate the success that you've had in kind of top 25 focused partnerships.

Justin Bowers: Moving forward nicely and we also see phase three moving forward. So it was a little bit of a customer's focusing their attention obviously on the phase III assets and moving them to market that makes a lot of sense, but also theyre not forgetting about moving some of their early assets through.

Steve Cutler: Alright.

Steve Cutler: Thank you.

Speaker Change: Next question is from Eric Coldwell from Baird. Please go ahead.

Speaker Change: I'm going to have to dial.

Justin Bowers: Through as well so I'm encouraged by the long term opportunities that are.

Speaker Change: Star one a lot sooner next time I think I've rewritten my question list eight times in a row now.

Justin Bowers: But that presents as well so overall, we're constructive on the market or it hasn't changed dramatically, but we certainly see some some nice progress over the last quarter or so.

Speaker Change: So.

Speaker Change: So I'll ask a clarification and then maybe try to win a bigger topic on the clarification, Steve you've talked a couple of times about the cancels remaining elevated short term if we've done the math right it looks like.

Justin Bowers: Thank you.

Speaker Change: Next question is from Jack Meehan from Nephron Research. Please go ahead.

Speaker Change: The BARDA cancel you were probably around that two 5% of backlog that has historically mark the higher end of our range for you are you seeing more of more of that ZIP code or are you actually signaling something higher than that.

Jack Meehan: Thank you Hello, everyone.

Jack Meehan: I think everybody is trying to take them and the early results from some of this euros and feel like we only have a piece of the aperture here with the bigger guys reporting.

David Windley: and pursue some of that same type of structure down market and I wondered what progress or what opportunity you see there. Thank you.

Speaker Change: Steve I was wondering if you could comment on what you think is happening in terms of share dynamics in the industry.

Speaker Change: Well I think what we're saying Eric is the current level of cancellations. We would expect is likely to sort of continue in that sort of ballpark in the near term.

Steven Cutler: Sure. Maybe I'll have a crack at the first part, Dave, and then Barry might jump in on specifically on where we've made some progress in the top 25 or so. You know, it is a, let's be honest, it remains and probably has intensified, the competitive nature of the business has probably intensified a little bit over the last, I'd say, three to six months. And so as we get approached by customers to look at partnerships and even rejig partnerships and embed ourselves, you know, our approach being the scale operation that we are is we look to do more of their work.

Speaker Change: Just any color on what youre seeing in terms of win rate would be helpful.

Speaker Change: Yes, Jeff it's always hard to get too specific about that sit on MSA I was very pleased with our gross wins.

Speaker Change: We're looking at it.

Speaker Change: So.

Speaker Change: That clarifies your question. So we I think we were at $916 million that was on the.

Speaker Change: As I said, we were fairly broad based in those wins across the customer segments that we service. So that was a pleasing aspect of it.

Speaker Change: The number from a cancellation number we would expect a broadly similar number.

Speaker Change: In the next quarter in the near term before we would see it anticipate some attenuation of that.

Speaker Change: But we are being successful in moving market share food, but it's it's hard to be too quantitative on that it's something that we try to monitor as much as we can but.

Speaker Change: Q4, and perhaps to keep up with the market and the environment continues to be volatile and continues to be a little uncertain and so you know.

Barry Balfe: And that's been, you know, we've been able to help them on efficiencies in exchange for, you know, getting a greater share of their wallet. And that's generally been a successful strategy for us, or it continues to be a strategy we're pursuing. And as I say, as one of the larger players, I believe we have an advantage in that space in that we cover all of the areas that they want to outsource and we cover all the areas that they develop. And so that's been working well for us. We've also been pushing that down to the, you know, to the more into the mid-size companies as well.

Speaker Change: The market data that we have as you know is variable and somewhat volatile to be honest with you. It we're certainly seeing progress in the biotech segment.

Speaker Change: We're not declaring victory on the on the cancellations back to one of the historical norm just at this point as I say in the near term, we're expecting to see some.

Speaker Change: We are our FSP business is continues to grow we've made nice progress in our early phase business. Our lab business has grown in the in the in the <unk>.

Speaker Change: Still some fairly significant cancellations.

Speaker Change: Thanks Danny.

Speaker Change: Anyway.

Speaker Change: There was a backup question and I think we'll give it to them.

Speaker Change: In the teens.

Speaker Change: Each of them because they are pushing stuff.

Speaker Change: So there's a lot of non SaaS base of that business are businesses that are moving forward and reflecting I think in areas areas that do indicate that we are gaining share not just in the functional business, but also in the in the full service business and in the clinical sides of our business labs early phase imaging.

Speaker Change: Sorry, sorry.

Speaker Change: Sorry about that and thank you, yes, just I guess more.

Barry Balfe: We've made some of our recent partnerships have really been in that area of the business. And again, we're seeing while they don't have quite the volume of spend the larger farmers have, they are customers and they are companies that do have a significant amount to work and we can engage them right across the business.

Speaker Change: Big picture here, we've had you and several of your peers have highlighted.

Speaker Change: <unk> towards higher pass through indirect revenue in the moment. It seems like most are suggesting that it has to do with mix changes.

Speaker Change: Et cetera, et cetera, so overall as I say constructive, but we're not getting too far ahead of vessels.

Barry Balfe: So I'll let Barry perhaps jump in on any sort of specific. Yeah, Dave, on the first part of your question, I guess I'm slow to comment too much on any one partnership. But I can certainly think of an example where we were brought into a partnership for the full service component of that relationship. was significantly smaller, that being the component we had access to, than the FSP component, which we were not at that stage partnered on, and since coming in, the customer has decided to pivot much more heavily towards that blended full-service model that we're party to, which gives us some cause for optimism as we continue to progress that relationship.

Speaker Change: And at least in some cases mix changes, but is there something more is there something broader coming in.

Speaker Change: Alright.

Speaker Change: Thank you.

Speaker Change: A different twist or dynamic that you.

Moderator: Next question is from Eric Coldwell from Baird. Please go ahead.

Speaker Change: Either clients are asking you to do more on the pass throughs or somehow we're seeing study site inflation or some other form of inflation really kicking in again is it is it just some oddity and the timing and the moment of when things are hitting and you're recognizing these pass throughs. It just it does seem to be a bit of an industry.

Speaker Change: I'm going to have to dial.

Speaker Change: Star one a lot sooner next time I think I've rewritten my question list eight times in a row now.

Moderator: Uh huh.

Moderator: Yes.

Moderator: So I'll ask.

Moderator: Ask a clarification and then maybe try to win.

Speaker Change: Wide mantra right now, but some.

Speaker Change: A bigger topic on the clarification, Steve you've talked a couple of times about the cancels remaining elevated short term if we've done the math right. It looks like ex the BARDA cancel you were probably around that two 5% of backlog that.

Speaker Change: Some of the bookings and some of the revenue growth increases have been.

Speaker Change: <unk> had much more to indirect revenue then.

Barry Balfe: I think your second point is also well made, you know, we have had encouraging success in recent times about broadening the partnership. top 25. And really we look at those partnerships between maybe 20 and 60, or those companies between 20 and 60.

Speaker Change: And then perhaps we've seen here in recent quarters.

Speaker Change: Yeah, I mean, it's a.

Speaker Change: It's a question we ask ourselves a lot as well to be honest with you and there are various reasons, but I'll, let Bert I'll, let Barry.

Speaker Change: Historically, mark the higher end of a of a range for you are you seeing more of more of that ZIP code or are you actually signaling something higher than that.

Barry: Crack at that one.

Speaker Change: I think you nailed it in the question Eric I think this is overwhelmingly a business mix trend that youre seeing.

Speaker Change: Well I think what we're saying Eric is the current level of cancellations. We would expect is likely to sort of continue in that sort of ballpark in the near term.

Speaker Change: We've already talked about the uptick in cardio metabolic opportunity flow and indeed revenue flow over the course of the last year I think that is a significant contributor.

Barry Balfe: at www.gasguruitasis.com All of that is available at haynes.org.au. So yes, that is the plan, not just to see a broader base of or a peak flow outside the top 20, but to develop more of what I'll call portfolio relationships in that segment and continue to build on that. And that remains the strategy and I'm encouraged by the progress.

Speaker Change: And I don't think there is anything below the line that we've seen that would speak to other trends you get lots of calls I'm sure.

Speaker Change: That's the way we're looking at it.

Speaker Change: So that.

Speaker Change: That clarifies your question. So we I think we were at $916 million that was another number from a cancellation number we would expect a broadly similar number.

Speaker Change: About a period of time.

Speaker Change: Number one driver here I would see it and I think as we have observed it in our own numbers is that this is driven by therapeutic mix primarily up the study that we're running.

Speaker Change: In the next quarter in the near term before we would see it anticipate some attenuation of that.

Speaker Change: Thank you.

Speaker Change: Q4, and perhaps indicative of the market and the environment continues to be volatile and continues to be a little uncertain and so we're.

Justin Bowers: Next question is from Justin Bowers, Deutsche Bank. Please go ahead. Good afternoon and good morning, everyone.

Speaker Change: Next question is from <unk> from <unk> Securities. Please go ahead.

Speaker Change: We're not declaring victory on the on the cancellations back to one of the historical norm just at this point as I say in the near term, we're expecting to see some still some fairly significant cancellations.

Speaker Change: Thank you and thanks for taking my questions now if this mix Eric feel better. He just told my boss through question.

Steven Cutler: Steven, Barry, can you help us understand some of the new opportunities that are that you're seeing in your funnel and your pipeline? Seems like RFP growth has been pretty solid, you know, over the last few quarters. Is that across the board, large pharma-related, biotech-related? And what do we need to see in industry for that to start to convert and monetize into blockchain? Yeah, Justin, I mean, there's a couple of aspects there. Therapeutically, oncology continues to be the main sort of bulwark, if you like, of our backlog and our new wins. We're an effective oncology shop, and we have a very good unit, both in biotech and in the large pharma space.

Speaker Change: I went to actually sits to my question about getting your updated thoughts on the pricing environment, a little bit more what exactly are you seeing in large pharma and <unk> be some other of your peers have talked about getting a little bit more open to taking a little bit more pricing concession. Just curious if you can share their thoughts on the pricing environment booked.

Speaker Change: Thanks Danny.

Speaker Change: Anyway.

Speaker Change: There was a backup question and I think we'll give it kind of a breakeven because pushing stuff.

Speaker Change: Sorry.

Speaker Change: Sorry about that and thank you.

Speaker Change: Yes, just I guess more.

Speaker Change: <unk> large pharma.

Speaker Change: Sure. So again I'll have a crack at it then.

Speaker Change: The Big picture here, we've had you and several of your peers have highlighted a trend towards higher pass through indirect revenue in the moment. It seems like most are suggesting that it has to do with mix changes.

Speaker Change: Very much jump in Georgia.

Speaker Change: I think as I said in my prepared remarks, we are seeing probably a more intense pricing environment going forward.

Speaker Change: Our customers as we've talked about going through that.

Speaker Change: And at least in some cases mix changes, but is there something more is there something broader coming in.

Speaker Change: How that how they are dealing with the patent cliffs and they are expecting more and more value.

Steven Cutler: So I'd say that's an area. We've certainly seen an uptick in the metabolism, cardiovascular. We call it cardiovascular and metabolism. That's really, I think, around the obesity, MASH, NASH, call it what you like, indication. That's an area that we've seen tick up as well. I think those are probably the two sort of main movers, if you like. The COVID vaccine work remains at about 1% to 2% of our backlog and of our revenue. We haven't seen much of an uptick in that one, although, of course, as we talked about that study moving ahead. In terms of phases, as I mentioned in my remarks, early phase has moved forward nicely, and we also see phase three moving forward.

Speaker Change: A different twist or dynamic that either clients are asking you to do more on the pass throughs or somehow we're seeing study site inflation or some other form of inflation really kicking in again is it is it just some oddity and the timing and the moment of when things are heading and you recognize.

Speaker Change: So we are in a competitive very competitive and volatile we talk about typically it's a competitive environment is always competitive its probably intensified a little bit more I think more recently.

Speaker Change: And we believe we have some good opportunities to gain market share, but I'll, let Barry talk perhaps a little bit about how we're competing in that environment.

Speaker Change: These pass throughs. It just it does seem to be a bit of an industry wide mantra right now but.

Barry: Yes, I think thats right I think while it's always been competitive it perhaps has notched up a little bit as you might imagine.

Speaker Change: Some of the bookings and some of the revenue growth increases have been.

Speaker Change: <unk> had much more to indirect revenue then.

Speaker Change: The first thing to say is I don't know anybody who thinks that drug development.

Speaker Change: And then perhaps we've seen here in recent quarters.

Speaker Change: Yeah.

Speaker Change: Benefit from greater cost efficiency. So we see it is our role to create value through reducing the cost of clinical development and by all competitive advantages time bound where we identify competitive advantage through our technology through our strategies through our superior execution, and we're able to bring a competitive price point versus the competition, we're going to do that and were very <unk>.

Speaker Change: It's a question we ask ourselves a lot as well to be honest with you and there are various reasons, but I'll, let Bert I'll, let Barry.

Steven Cutler: So it's a little bit of customers focusing their attention, obviously, on their phase three assets and moving them to market. That makes a lot of sense. But also, they're not forgetting about moving some of their early assets through as well. So I'm encouraged by the long-term opportunity that that presents as well. So, you know, overall, we're, as I say, constructive on the market. It hasn't changed dramatically, but we certainly see some nice progress over the last...

Speaker Change: Crack at that one.

Speaker Change: I think you nailed it in the question Eric I think this is overwhelmingly a business mix trend that youre seeing.

Speaker Change: We've already talked about the uptick in cardio metabolic opportunity flow and indeed revenue flow over the course of the last year I think that's a significant contributor.

Speaker Change: Happy to do that.

Speaker Change: On the other side, we also see value in volume and were significant opportunities come across we're happy to get start to make sure. We win that incumbency in the large pharma as we've talked about and continue to build a broader base in the biotech community. So I think on both of those metrics. It's fair to say, it's pretty competitive out there and maybe it's such as on where it was before but for us.

Speaker Change: And I don't think there is anything below the line that we've seen that would speak to other trends you get lots of calls I'm sure right around about a period of time, but the number one driver here I would see it and I think as we have observed it in our own numbers is that this is driven by the therapeutic mix primarily up the study that we're running.

Jack Meehan: Next question is from Jack Meehan from Nephron Research. Please go ahead. Thank you. Hello, everyone. You know, I think everybody's trying to take in the early results from some of the CROs and feel like we only have a piece of the aperture here with, you know, the bigger guys reporting.

Speaker Change: The key remains can we bring higher confidence in the time cost and predictability.

Speaker Change: Thank you.

Speaker Change: Trial execution plans to our customers, we still see that as probably the number one metric notwithstanding perhaps a slight uptick in the competitive agenda.

Speaker Change: Next question is from Joe <unk> from <unk> Securities. Please go ahead.

Steven Cutler: Steve, I was wondering if you could comment on what you think's happening in terms of share dynamics in the industry. Just any color on what you're seeing in terms of win rate would be helpful. Yeah Jack, it's always hard to get too specific about share dynamics. I was very pleased with our gross wins and as I said we were fairly broad based in those wins across the customer segments that we service, so that was a pleasing aspect of it. I sense that we are being successful in moving our market share forward, but it's hard to be too quantitative on that.

Speaker Change: Thank you and thanks for taking my questions Eric feel better. He just told my box question.

Speaker Change: Thank you.

Speaker Change: I went to actually sits to my question about getting your updated thoughts on the pricing environment, a little bit more what exactly are you seeing in large pharma and ABB. Some other of your peers have talked about getting a little bit more open to taking a little bit more pricing concessions or just curious if you can share your thoughts on the pricing environment booked.

Luke Saga: Next question is from Luke Saga from Barclays. Please go ahead.

Speaker Change: Awesome great. Thank you.

Speaker Change: At risk of just diarrhea of the mouth I just wanted to figure this out like so you have a big step up in bookings you have a big step up in revenue.

Speaker Change: We've seen it across all of the other ones just kind of came out of nowhere and every company is talking about is coming from biotech.

Speaker Change: <unk> large pharma.

Speaker Change: Sure. So again I'll have a crack at it then.

Speaker Change: Sorry, Marc jump in Georgia.

Speaker Change: By lack of funding data.

Speaker Change: I think as I said in my prepared remarks, we are seeing probably a more intense.

Speaker Change: And all the data and channel checks to the contrary.

Speaker Change: Pricing environment going forward.

Speaker Change: And then everybody is talking about metabolic and faster burning higher pass through trials. So like is there a risk here that there is just an air pocket that could be coming from you get some big bolus of like a couple of quarters at these big metabolic trials and then there are a lot faster burning shorter duration et.

Steven Cutler: It's we try to monitor as much as we can, but the market data that we have is variable and somewhat volatile to be honest with you. We're certainly seeing progress in the biotech segment. Our FSP business continues to grow. We've made nice progress in our early phase business. Our lab business has grown in the teens and so there's a lot of nice aspects of our businesses that are moving forward and reflecting I think in areas that do indicate that we are gaining share not just in the functional business, but also in the full service business and in the preclinical sides of our business, labs, early phase imaging etc.

Speaker Change: Our customers as we've talked about going through that.

Speaker Change: How they are dealing with the patent cliffs and they are expecting more and more value.

Speaker Change: Cetera, that's like the first part and then the second part is.

Speaker Change: Just metabolic coming on or just from recent M&A doesn't really add up to the massive step up we've seen across the board.

Speaker Change: And we believe we have some good opportunities to gain market share, but I'll, let Barry talk and perhaps a little bit about how we're competing in that environment.

Speaker Change: And so I'm just trying to foot the bill with what's been going on in general because our <unk> nobody really sounded positive on on the demand environment.

Barry: Yes, I think thats right I think while it's always been competitive it perhaps has notched up a little bit as you might imagine.

Barry: The first thing to say is I don't know anybody who thinks that drug development.

Speaker Change: Yes, well.

Steven Cutler: So overall as I say constructive, but we're not getting too far ahead of ourselves. Thank you.

Barry: Benefit from greater cost efficiency. So we see it is our role to create value through reducing the cost of clinical development and by the all competitive advantages time bound where we identify competitive advantage through our technology through our strategies through our superior execution, and we're able to bring a competitive price point versus the competition, we're going to do that.

Speaker Change: Well I hesitate to be your therapist look but.

Speaker Change: [laughter].

Eric: Let me know on that Eric.

Speaker Change: Yes.

Eric Coldwell: Next question is from Eric Coldwell from Baird. Please go ahead. I'm going to have to dial star one a lot sooner next time.

Speaker Change: Dropped down to the sort of therapeutic area and we do see the metabolic via obesity. So all other things being an ongoing in the long term.

Speaker Change: A trend that is going to fuel us in our portfolio our backlog for some time to come I mean this is a huge you on us a huge market there.

Barry: Happy to do that.

Unknown Executive: I think I've rewritten my question list eight times in a row now. So, I'll ask a clarification and then maybe try to wing a bigger topic. On the clarification, Steve, you've talked a couple of times about the cancels remaining elevated short term. If we've done the math right, it looks like X the bar to cancel, you were probably around that 2.5% of backlog that has historically marked the higher end of a range for you. Are you saying more of that zip code or are you actually signaling something higher than Well, I think what we're saying, Eric, is that the current level of cancellations we would expect is likely to sort of continue in that sort of ballpark in the near term.

Barry: On the other side, we also see value in volume and were significant opportunities come across we're happy to get start to make sure. We win that incumbency in the large pharma as we've talked about and continue to build a broader base in the biotech community. So I think on both of those metrics. It's fair to say, it's pretty competitive out there and maybe you can touch up on where it was before but for us.

Speaker Change: There are lots of opportunities for improving those drugs whether it be.

Speaker Change: They are administered or the side effect profile.

Speaker Change: <unk>.

Speaker Change: And they are going to need to be large scale trials.

Barry: The key remains can we bring higher confidence in the time cost and predictability.

Speaker Change: In the scheme of things relatively easy to recruit and I don't think its easy, but relatively competitive difficult oncology trial that should burn fossil they should be larger so we think theres, a long and a significant opportunity there for us and hence out basically center of excellence.

Barry: Trial execution plans to our customers, we still see that as probably the number one metric.

Barry: Standing, perhaps a slight uptick in the competitive generic.

Speaker Change: That I talked about it's not just though in the metabolic you look at things like mash as they call. It now rather than that that's an area that we're seeing a lot of activity.

Barry: Thank you.

Speaker Change: Next question is from Luke Saga from Barclays. Please go ahead.

Speaker Change: The company is doing a lot of work in a lot of progress being made in oncology continues to be a.

Speaker Change: Awesome great. Thank you.

Steven Cutler: That's the way we're looking at it, so I hope that clarifies your question. So I think we were at 916 million, I think that was the sort of number from a cancellation number, and we would expect a broadly similar number in the next quarter, in the near term, before we would see or anticipate some attenuation of that Q4, but the market and the environment continues to be volatile and continues to be a little uncertain, and so we're not declaring victory on the cancellations back to what had been a historical norm just at this point. As I say, in the near term, we're expecting to see some fairly similar numbers.

Speaker Change: At risk of just diarrhea of the mouth I just wanted to figure this out like so you have a big step up in bookings you have a big step up in revenue.

Speaker Change: Driver.

Speaker Change: Even in the CV pleased about the cardiovascular space, we've seen some significant opportunities as well so.

Speaker Change: Reputedly there are I think a number of there's all medical science thing in bringing new drugs to market Hasnt gone away. There is still a huge area of unmet medical need and a lot of very important.

Speaker Change: We've seen it across all of the other ones just kind of came out of nowhere and every company is talking about is coming from biotech.

Speaker Change: By lack of funding data.

Speaker Change: And all the data and channel checks to the contrary.

Speaker Change: Therapeutic areas that I think we can we can help too.

Speaker Change: So I don't think its an air pocket, but.

Speaker Change: I think as I've said a number of times. This is it is this somewhat volatile environment and as you say the biotech funding doesn't really support necessarily the.

Speaker Change: The talk on what we're seeing here Bob.

Speaker Change: Et cetera, that's like the first part and then the second part is I mean, just metabolic coming on or just from recent M&A doesn't really add up to the massive step up we've seen across the board and.

Speaker Change: I think we I think that might be a little bit in the lag and I think we're seeing.

Unknown Executive: There was a backup question. I think we'll cut him a break, I think, because he was pushing stuff. Sorry about that. And thank you.

Speaker Change: Some companies get funded that are that do have some good science, we are able to access those companies our win rate within that segment is improving we feel good about what we're offering in that segment now certainly a win rate in the large pharma segment continues to be to be very strong and as I say, we're leveraging the partnerships and the.

Speaker Change: And so I'm just trying to foot the bill with what's been going on in general because I don't know <unk>, nobody really sounded positive on on the demand environment.

Unknown Executive: Yeah, just, I guess, more big picture here. We've had you and several of your peers have highlighted a trend towards higher pass-through and direct revenue in the moment. It seems like most are suggesting that it has to do with mixed changes, at least in some cases, mixed changes. But is there something more? Is there something broader coming in, a different twist or dynamic that either clients are asking you to do more on the pass-throughs? Or somehow we're seeing study site inflation or some other form of inflation really kicking in again? Is it just some oddity in the timing in the moment of when things are hitting and you're recognizing these pass-throughs?

Speaker Change: In that large pharma segment. So all overall I will say it again, we feel constructive without feeling over the top on where this is going could there be a little bit of a slow yes. There could be no question that I'm sure quite out of the woods, yet as I said, but we're happy to have.

Speaker Change: Yes.

Speaker Change: Well I hesitate to be your therapist look but.

Speaker Change: Yeah.

Eric: Let me know on that Eric.

Speaker Change: Yes.

Speaker Change: Dropped down to the sort of therapeutic area and we do see the metabolic the obesity sort of thing.

Speaker Change: On a decent quarter, particularly from a gross bookings point of view and we feel we can continue that.

Speaker Change: As being an ongoing in the long term.

Speaker Change: The material is in the pipeline in the sausage machine to Mike.

Speaker Change: Trend that is going to fuel us in our portfolio our backlog for some time to come I mean, this is a huge huge market.

Speaker Change: These are these are the numbers to continue and as I said notwithstanding some continued elevation on on cancels, we still see some optimism moving as we move into the back end of the do you want to add to that.

Speaker Change: There are lots of opportunities for improving those drugs, whether it be how they have.

Steven Cutler: It does seem to be a bit of an industry-wide mantra right now that some of the bookings and some of the revenue growth increases have been skewed much more to indirect revenue than perhaps we've seen here in recent quarters. Yeah, I mean, it's a, it's a question we ask ourselves a lot as well, Eric, to be honest with you, and there are various reasons for it.

Speaker Change: They were administered or the side effect profile.

Speaker Change: And they are going to need to be large scale trials.

Speaker Change: I think you've covered it might've been Patrick earlier on you asked about whether there was a pivot points during the quarter I don't think there was an <unk>.

Speaker Change: In the scheme of things relatively easy to recruit and I don't think its easy, but relatively competitive difficult oncology trial that should burn fossil they should be larger. So we think there is a long and a significant opportunity there for us and ends out basically center of excellence.

Speaker Change: What's harder to convey than just the opportunity flow is more qualitative assessment I.

Barry Balfe: I'll let Barry, I'll let Barry have a crack. I think you nailed it in the question, Eric. I think this is overwhelmingly a... I don't think there's anything below the line that we've seen that would speak to other trends. You get lots of calls. Yeah, I'm sure, you know, rates are up at a period of time, but the number one driver here as I would see it, and I think as we have observed it in our own numbers. driven by therapeutic mix primarily. Thank you.

Speaker Change: I think Steve you just alluded to it we were pretty satisfied as we moved through the quarter that there was some attractive opportunities that we're transacting and as we came out of Q2 into Q3 Nobody's.

Speaker Change: That I talked about it's not just though in the metabolic you look at places like mash as they call. It now rather than that that's an area that we're seeing a lot of activity a lot.

Speaker Change: A couple of as follows in declaring the permanent summer, but we do feel like qualitatively theres, some encouraging observations there but.

Speaker Change: The company is doing a lot of work in a lot of progress being made in oncology continues to be a driver.

Speaker Change: It is not straight line industry things can move relatively quickly so conservatively optimistic with the signs that we're seeing I think a fair summation.

Speaker Change: And the C V pleased about the cardiovascular space, we've seen some some significant opportunities as well so.

Speaker Change: Reputedly there are I think a number of his all medical science thing and then bringing new drugs to market hasn't gone away. There is still a huge area of unmet medical need and a lot of very important.

Speaker Change: Yes.

Speaker Change: Thank you.

Speaker Change: Next question is from Max Smock from William Blair. Please go ahead.

Speaker Change: Therapeutic areas that I think we can we can help to.

Max Smock: Hey, good morning. Good afternoon. Thanks for taking my questions, maybe just a quick one here for Nigel on the burn rate. It seems like the midpoint of the guide implies about a 20 basis point step down in the second half of this year, even though you've kicked off that faster burning COVID-19 trial.

Speaker Change: The address.

Speaker Change: I don't think its an air pocket, but.

Jailendra Singh: Next question is from Jailendra Singh from Truist Securities. Please go ahead. Thank you. Thanks for taking my questions. Now, if this makes Eric feel better, he just stole my pass through question.

Speaker Change: I think as I've said, a number of times. This is a somewhat volatile environment and as you say the biotech funding doesn't really will support necessarily the.

Max Smock: There just is that just conservatism or is there something else that we should kind of be thinking about that's driving that implied step down. Thank you.

Jailendra Singh: Anyway, I want to actually switch to my other question about getting your updated thoughts on the pricing environment a little bit more. What exactly are you seeing in large pharma and EBP? Some other of your peers have talked about getting a little bit more open to taking a little bit more pricing concession. Just curious if you can share your thoughts on the pricing environment in both EBP and large pharma.

Speaker Change: The talk on what we're seeing here Bob.

Nigel: Yeah Max.

Speaker Change: I think we I think that might be a little bit in the lag and I think we're seeing some.

Max Smock: Look I think our view on the burn rate fundamentally is it would be broadly stable through the course of the year Lookout is what's built into the guide it was what we had assumed.

Speaker Change: Some companies get funded that are that do have some good science, we are able to access those companies are win rates within that segment is improving we feel good about what we're offering in that segment now certainly a win rate in the large pharma segment continues to be to be very strong and as I say, we're leveraging the partnerships and the.

Nigel: Sandy back in April.

Speaker Change: As Steve mentioned earlier fundamentally our underlying assumptions in terms of the backdrop remains the same so we'd still expect book to Bill was at roughly the same level through the rest of the year and within that as well then the burn rate being broadly consistent as well.

Steven Cutler: Sure, so again I'll have a crack at it and then Barry might jump in, Jailendra, you know I think as I said in my prepared remarks, we are seeing probably a more intense Welcome to 脚本質講座 And we believe we have some good opportunities to gain market share, but I'll let Barry talk perhaps a little bit about how we're competing in that environment. Yeah, I think Steve's right. I think while it's always been competitive, it perhaps has notched up a little bit, as you might imagine. I guess the first thing to say is I don't know anybody who thinks that probe development benefit from greater cost efficiency.

Speaker Change: Net large pharma segment. So all overall I will say it again, we feel constructive without feeling over the top on where this is going could there be a little bit of a slow yes. There could be no question that I'm not sure we're quite out of the woods, yet as I said, but we're happy to have it.

Speaker Change: The step up in the revenue guide again, it's fundamentally.

Speaker Change: Really driven by the increased pass throughs that were seeing so look let's see where we end up ultimately in terms of the end of the year, but at this point, we would expect burn rate to be broadly stable over the balance of the year on somewhere around 8% for the full year.

Speaker Change: On a decent quarter, particularly from a gross bookings point of view and we feel we can continue that.

Speaker Change: The material is in the pipeline in the sausage machine to Mike.

Speaker Change: Thank you.

Speaker Change: Next question is from Charles <unk> from TD Cowen. Please go ahead.

Speaker Change: Yes, thanks for taking part of it maybe if I could just ask some clarification from some earlier.

Speaker Change: Steve I think you said that for next quarter you.

Speaker Change: I think you've covered it might've been Patrick earlier on you asked about whether there was a pivot points during the quarter I don't think there was an <unk>.

Speaker Change: I expect that from a cancellation of a summer quarter around 900 and something million dollars.

Speaker Change: This quarter Im sorry, $300 million cancellation other commentary also.

Speaker Change: What's harder to convey than just the opportunity flow is more qualitative assessment I.

Barry Balfe: So we see it as our role to create value through reducing the cost of clinical development. And while all competitive advantage is time bound, where we identify competitive advantage through our technologies, through our strategies, through our superior execution, and we're able to bring a competitive price point versus the competition, we're going to do that. We're very happy. On the other side, we also see value in volume and where significant opportunities come across. We're happy to get assertive to make sure we win that incumbency in the large pharma, as we've talked about, and continue to build a broader base in the biotech community.

Speaker Change: Are we expecting more like sometimes something next quarter or.

Speaker Change: And Youre seeing a step up and maybe what does that mean for <unk>.

Speaker Change: Bill expectations for next quarter then.

Speaker Change: Last quarter, you gave sort of a breakdown.

Speaker Change: A couple of smaller and declaring the permanent summer, but we do feel like qualitatively theres, some encouraging observations there but.

Speaker Change: FX impact.

Speaker Change: The final impact maybe for Nigel if you can give us a sense for this.

Speaker Change: This quarter as well as just sort of.

Speaker Change: Components and the Rev Guide thanks.

Speaker Change: It is not straight line industry things can move relatively quickly so conservatively optimistic with the signs that we're seeing I think a fair summation.

Speaker Change: Okay.

Speaker Change: Let me be clear on the on the cancels were expecting to see a number in the same sort of post code as what we saw this quarter from the.

Barry Balfe: So I think on both of those metrics, it's fair to say it's pretty competitive out there, and maybe it's touched up on where it was before.

Speaker Change: Okay.

Speaker Change: Thank you.

Barry Balfe: But for us, the key remains. Can we bring higher confidence? Time, the cost, and the predictability of trial execution plans to our customers. We still see that as probably the number one metric, notwithstanding, perhaps, a slight uptick. Thank you.

Speaker Change: The fact that we did call out the border.

Speaker Change: Next question is from Max Smock from William Blair. Please go ahead.

Speaker Change: Cancel earlier and so you were aware of that that doesn't that doesn't make it.

Speaker Change: Exceptional.

Speaker Change: There are you know we have some cancels when we get them, we will be putting them into our numbers in the third quarter. So the number the number will be in the same sort of approach what it will be only a third of the way through the quarter. We're working on these things is some some slow some delays on the so it sounds as if it don't think of it is done type don't think of it as borrowers.

Max Smock: There just is that just conservatism or is there something else that we should kind of be thinking about that's driving that implied step down. Thank you.

Luke Sergott: Next question is from Luke Sergott from Barclays, please go ahead. Awesome, great. Thank you.

Max Smock: Yeah.

Luke Sergott: And at risk of just diarrhea, the mouth, I just want to figure this out. Like, so you have a big step up in bookings, you have a big step up in revenue. It's we've seen it across all the other ones, it's kind of came out of nowhere. And every company's talking about this coming from biotech, despite lack of funding data, and all the data and channel checks to the contrary. And then everybody's talking about, you know, metabolic and faster burning higher pass through trials. So like, is there a risk here, that there's just an air pocket that could be coming from you get some big bolus of like a couple quarters of these big metabolic trials, and then they're a lot faster burning, shorter duration, etc.

Max Smock: Look I think our view on the burn rate fundamentally is it will be broadly stable through the course of the year Lookout is what's built into the guide it was what we had assumed.

Speaker Change: An exceptional item I would say at this stage I think certainly for the very near term that's the expectation.

Speaker Change: I think as we get into fourth quarter into next year, I think things will normalize that's our expectation, but again that remains to be seen it will depend upon the environment, becoming a little less volatile on the list.

Sandy: Sandy back in April.

Sandy: As Steve mentioned earlier fundamentally our underlying assumptions in terms of the backdrop remains the same we still expect book to Bill is at roughly the same level through the rest of the year and within that as well then the burn rate being broadly consistent as well.

Speaker Change: So that's all we've usually code.

Charles: Yeah, Charles so on the on the guidance change from April to today.

Sandy: The step up in the revenue guide again, it's fundamentally.

Speaker Change: <unk> is really neutral.

Sandy: Really driven by the increase pass throughs that were seeing so look let's see where we end up ultimately in terms of the end of the year, but at this point, we expect burn rate to be broadly stable over the balance of their own somewhere around 8% for the full year.

Speaker Change: Remember most of that dollar shift that we saw over the last few months had already happened actually by the end of April when we came out with the April guidance. So there's really no impact in terms of our revenue guidance change from FX, it's fundamentally driven from.

Luke Sergott: That's like the first part.

Luke Sergott: And the second part is, I mean, just metabolic coming on, or just from recent M&A doesn't really add up to the massive step up we've seen across the board. And so just trying to like, foot the bill with what's been going on, in general, because out of one cue, nobody really sounded positive on, on the demand environment.

Sandy: Thank you.

Speaker Change: From the uptick in pass throughs, and maybe just circling back.

Speaker Change: Next question is from Charles <unk> from TD Cowen. Please go ahead.

Speaker Change: On the burn rate point, we do think it'll be broadly 8% for the year as a whole the pattern between Q3 for Q3, and Q4 will depend a bit on.

Charles: Yes, thanks for taking part of it maybe if I could just ask one clarification from some earlier.

Speaker Change: Steve I think you said that for next quarter you.

Speaker Change: The pass through activity in particular in that cohort study.

Speaker Change: I expect that from a cancellation of a summer quarter around 900 and something million dollars.

Speaker Change: At this point, it's ramping whereas it may well be that we see that burn a bit faster in Q3 than in Q4.

Steven Cutler: Yeah, well... Well, I hesitate to be your therapist, Luke, but let me have a crack at it. No one better. There you go. You know, let's just drop down to the sort of therapeutic area. We do see the metabolic, the obesity side of things being an ongoing and a long-term trend that is going to, you know, fuel us and our portfolio, our backlog for some time to come. I mean, this is a huge, you all know, it's a huge market. There are lots of opportunities for improving those drugs, whether it be how they're administered or the side effect profile, and they are going to need to be large-scale trials that are, in the scheme of things, relatively easy to recruit.

Speaker Change: This quarter Im sorry, $300 million cancellation other commentary also.

Speaker Change: So you might see a slightly better burn rates.

Speaker Change: In the near term Q3 versus Q4, but let's see how that evolves.

Speaker Change: Or are we expecting more like sometimes something next quarter or.

Speaker Change: And Youre seeing a step up and maybe what does that mean for <unk>.

Speaker Change: So hopefully that's helpful chart.

Speaker Change: Thanks Joseph.

Speaker Change: Bill expectations for next quarter then.

Speaker Change: I didn't didn't answer your other question around book to Bill our expectation on book to Bill would be again in the same ballpark as what we did.

Speaker Change: Last quarter, you gave sort of a breakdown.

Speaker Change: FX impact.

Speaker Change: The final impact maybe for Nigel if you can give us a sense for this quarter as well as just sort of.

Speaker Change: This quarter notwithstanding.

Speaker Change: As I say continued elevation on the cancellation. So we as I said, we have some strong opportunities in the pipeline, we feel very focused we feel like those opportunities are actionable.

Speaker Change: Components and the Rev Guide thanks.

Speaker Change: Okay.

Speaker Change: Let me be clear on the on the cancels were expecting to see a number in the same sort of post code as what we saw this quarter from a yeah.

Speaker Change: And real.

Speaker Change: So we feel that the similar ish.

Speaker Change: Book to Bill is is certainly possible.

Speaker Change: Possible.

Speaker Change: And just to underline that Charles Yes look we've assumed roughly.

Speaker Change: We did call out the border.

Steven Cutler: And I don't think it's easy, but relatively, compared to, you know, your difficult oncology trial. They should burn faster. They should be larger. So we think there's a long and a significant opportunity there for us, and hence our obesity centre of excellence that I talked about.

Speaker Change: Cancel earlier until you were aware of that.

Speaker Change: Onex book to Bill over the balance of the year, which does reflects.

Speaker Change: Doesn't make it.

Speaker Change: Exceptional.

Speaker Change: Elevated counts of continuing out through that period as well.

Speaker Change: There are we have some cancels when we get it we will be putting them into our numbers in the third quarter. So the number the number will be in the same sort of approach what it will be only a third of the way through the quarter. We're working on these things is some some slow some delays on the so it sounds as if it don't think of it as a done type don't think of it as bother them.

Speaker Change: And Thats reflected in the guide that we put out.

Steven Cutler: It's not just, though, in the metabolic area. You look at things like MASH, as they call it now, rather than NASH. That's an area that we're seeing a lot of activity in. A lot of companies doing a lot of work in, a lot of progress being made in there. Oncology continues to be a driver, and even in the CVT space, cardiovascular space, we're seeing some significant opportunities as well. So, you know, therapeutically, you know, there are, I think, a number of areas. The whole medical science thing and then bringing new drugs to market hasn't gone away.

Speaker Change: Yes.

Speaker Change: Thank you.

Okay.

Speaker Change: Next question is from Casey Woodring from Jpmorgan. Please go ahead.

Speaker Change: Good morning. This is Sebastian Sandler on for Casey. Thanks for taking my question.

Speaker Change: Exceptional item I would say at this stage I think certainly for the very near term that's the expectation.

Speaker Change: Called out licensing activity among large pharma in your prepared remarks in terms of your operations in China, given some of the recent sizable bio pharma licensing deals with Chinese biotechs, you've seen since last quarter.

Speaker Change: As we get into fourth quarter into next year, I think things will normalize thats, our expectation, but again that remains to be seen it will depend upon the environment, becoming a little less volatile on the list.

Steven Cutler: There's still a huge area of unmet medical need and a lot of very important, you know, therapeutic areas that I think we can help to address.

Speaker Change: Walk us through icon role in these types of deals and how you see this dynamic playing out for icon.

Speaker Change: That's all we've usually code yeah, Charles so on the on the guidance change from April to today FX is really neutral.

Speaker Change: Think Chinese biotechs will rely primarily on Chinese <unk> or.

Steven Cutler: So I don't think it's an air pocket, but, you know, I think, as I've said a number of times, you know, this is, it is a somewhat volatile environment. And as you say, the biotech funding doesn't really support, necessarily, the, The talk and what we're seeing here, but I think that may be a little bit in the lag and I think we're seeing some companies get funded that do have some good science. We're able to access those companies, our win rate within that segment is improving. We feel good about what we're offering in that segment.

Speaker Change: Or just pharma acquire these assets and run the remaining trials through icon.

Speaker Change: Remember most of that dollar shift that we saw over the last few months have already happened actually by the end of April the April guidance. So there's really no impact in terms of our revenue guidance change from FX, it's fundamentally driven from.

Speaker Change: And then lastly, what percentage of your revenues coming from China now I think in the past you've called out China, not being a large part of the business. So just wondering how this has trended in recent times. Thank you.

Speaker Change: Okay, you got a couple of questions in there. So that's into will let me let me try to Unpick. Some of that first of all then that'd be two easy ones.

Speaker Change: From the uptick in pass throughs, and maybe just circling back.

Speaker Change: On the burn rate point, we do think it would be broadly 8% for the year as a whole pattern between Q3 for Q3, and Q4 will depend a bit on.

Speaker Change: Revenue in China, approximately 3% is so.

Speaker Change: Low single digits.

Speaker Change: About 200 people in China, It's a good operation one of our one of the best operations, we have in the company will stop some.

Steven Cutler: Now, certainly our win rate in the large pharma segment continues to be very strong and as I said, we're leveraging the partnerships in that large pharma segment.

Speaker Change: The pass through activity in particular and that cohort study.

Speaker Change: At this point, it's ramping whereas it may well be that we see that burn a bit faster in Q3 and Q4.

Speaker Change: Some really good strong people, we have some good connections with the Chinese biotech industry and this is I mean, there's a lot happening in China. As you will know I mean, I think it's something like a third of the new clinical trial starts globally are happening in China, and they're not all happening outside of China, but there's a lot of activity in the in the certainly the Chinese government is giving a lot of.

Steven Cutler: So overall, I'll say it again, we feel constructive without feeling over the top on where this is going. Could there be a little bit of a slowdown? Yeah, there could be. There's no question there could be. I'm sure we're quite out of the woods yet, as they say, but we're happy to have had a decent quarter, particularly from a gross bookings point of view and we feel we can continue that.

Speaker Change: So you might see a slightly better burn rates.

Speaker Change: In the near term Q3 versus Q4, but let's see how that evolves.

Speaker Change: So hopefully that's helpful chart.

Speaker Change: Joseph I realize I didn't didn't answer your other question around book to Bill our expectation on on book to Bill would be again in the same ballpark as what we did.

Speaker Change: A lot of our focus on biotech and we have a number of customers in the U S who are accessing.

Unknown Executive: The material is in the pipeline, in the sockets machine to make these sort of numbers to continue and as I said, notwithstanding some continued elevation on cancels, we still see some optimism moving as we move into the back end of the year.

Speaker Change: This quarter notwithstanding.

Speaker Change: Our portfolio is accessing new compounds in drugs and opportunity in licensing opportunities from Chinese companies and we've been we've been lucky enough to to partner with them to develop some of those activities. Some of those drugs, we see that as being a.

Speaker Change: As I say continued elevation on cancellations. So we as I said, we have some strong opportunities in the pipeline, we feel very focused we feel like those opportunities are actionable.

Speaker Change: And real.

Speaker Change: And so we feel that the similar ish.

Unknown Executive: Do you want to add to that? No, I think you covered it.

Speaker Change: Albeit more longer term medium to longer term view for our business and we certainly see China as being a source of innovation.

Speaker Change: Book to Bill is is certainly possible.

Unknown Executive: It might have been Patrick earlier on who asked about whether there was a need for a Water. I don't think there was. And I suppose what's harder to convey than just the opportunity flow is a more qualitative I think Steve Hughes just alluded to. We were pretty satisfied as... that there were some attractive opportunities that were transactional Q2 and Q3. Nobody's, you know, seeing a couple of swallows and declaring a permanent summer, but we do feel like qualitatively there's some encouraging observations there. is not, you know, a straight line industry, things can move relatively.

Speaker Change: Just to underline that Charles Yes look we've assumed roughly.

Speaker Change: New compounds.

Speaker Change: I won't expect to build over the balance of the year, which does reflects.

Speaker Change: In the next again realistically medium to long term three to five years this doesn't happen overnight.

Speaker Change: Elevate accounts of continuing that through that period as well.

Speaker Change: And Thats reflected in the guide that we put out.

Speaker Change: But certainly the Chinese are putting a huge amount of focus on the pharmaceutical and biotech industries.

Speaker Change: Thank you.

Speaker Change: Helping the companies and those companies are not using local C. Arrows to do international trials I, certainly use that means up to do load to do trials within China.

Speaker Change: Okay.

Speaker Change: Next question is from Casey Woodring from J P. Morgan. Please go ahead.

Speaker Change: Good morning. This is Sebastian Sandler on for Casey. Thanks for taking my question.

Speaker Change: That's certainly an area that I have a lockdown.

Speaker Change: Locked down but in terms of doing global trials trials in the west for registration in Europe for registration in the U S.

Speaker Change: You called out licensing activity among large pharma in your prepared remarks in terms of your operations in China, given some of the recent sizable pharma licensing deals with Chinese biotechs, you've seen since last quarter can you just walk us through icon role in these types of deals and how you see this dynamic playing out for icon you think.

Unknown Executive: So, conservatively optimistic with the signs that we're seeing. Thank you.

Speaker Change: Turning to two organizations like iPhone to do those sort of trials and we're very happy to see that we have those connections. We have a strong business development team in China, which is going to allow us to absolutely Mike.

Max Smock: Next question is from Max Smock from William Blair, please go ahead. Good morning. Good afternoon. Thanks for taking our questions.

Speaker Change: Make those connections and develop that business, so I'm optimistic about China.

Nigel Clerkin: There is a quick one here for Nigel. On the burn rate, it seems like the midpoint of the guide implies about a 20 basis point step down in the second half of this year, even though you've kicked off that faster burning COVID trial. Is there just is that just conservatism? Or is there something else that we should kind of be thinking about that's driving that implied step down?

Speaker Change: These biotechs will rely primarily on Chinese <unk>.

Speaker Change: Albeit.

Speaker Change: Or just pharma acquire these assets and run the remaining trials through icon.

Speaker Change: This is not a short term thing this is a more longer term partnerships with our with the country as much as as much as anything else and we certainly see some benefits over the longer term.

Nigel Clerkin: Thank you. Yeah, Max, look, I think our view on the burn rate fundamentally is it will be broadly stable through the course of the year, that is what's built into the guide, it was what we had. We assumed back in April, and as Steve mentioned earlier, fundamentally our underlying assumptions in terms of the backdrop remained the same, so we'd still expect book-to-bills at roughly the same level. and within that as well then the burn rate being brought. The Step-Up and the Revenue Guide, again, is fundamentally really driven by So let's see where we end up ultimately in terms of the end of the year but at this point we expect Burnery to be broadly successful.

Speaker Change: Thank you.

Speaker Change: Okay, you got a couple of questions in this Sebastian So let me let me try to Unpick some of that first of all the intermediary easy ones.

Speaker Change: Next question is from Michael Riskin from Bank of America. Please go ahead.

Michael Riskin: Alright, Thanks for taking my question I'll do I got one big one just quick clarification.

Speaker Change: Revenue in China, approximately 3% ish.

Speaker Change: Low single digits.

Michael Riskin: On the clarification, you talked about competitive environment and sort of how you see that evolving if you could just expand on that a little bit in terms of where youre seeing the most competition in terms of who you're running into the most.

Speaker Change: We have about 200 people in China, It's a good operation one about one of the best operation We have in the company will stop some.

Michael Riskin: The big three where you see more competition or maybe some other more niche players are really doing.

Michael Riskin: Waller scenarios out there just where you see that environment.

Michael Riskin: Ramping up in the last three or six months, and then or if there's any other way for you to break down in terms of therapeutic area or a customer class and then the other question was gonna have was on the cost controls you talked about earlier this year.

Speaker Change: A lot of our focus on biotech and we have a number of customers in.

Michael Riskin: But you've implemented.

Unknown Executive: Thank you.

Michael Riskin: Could you just you know obviously you maintained.

Speaker Change: In the U S who are accessing.

Michael Riskin: Your EPS numbers and some of your.

Charles Rhyee: Next question is from Charles Rhyee from TD Cowan, please go ahead. Yeah, thanks for taking the question. Maybe if I could just add some clarifications, just from some of the stuff earlier. Steve, I think you said that for next quarter, you're expecting sort of cancellations to be similar to this quarter around 900 and something million, but this quarter included the 300 million cancellation of the COVID trial.

Michael Riskin: Margin color on costs, but if you've got an update how that's going and how you think about leveraging the cost out of the business as you go through the rest of the year. If you do see some of the improvements in bookings continue thanks.

Michael Riskin: Okay, Michael I'll take the second part of the question and very much talk about the competitive environment. What are you seeing in the large pharma biotechs, but some cost.

Speaker Change: We see China as being a source of innovation.

Speaker Change: And a new compounds.

Michael Riskin: Cost controls.

Michael Riskin: We've made good progress and we continue to make good progress I think we have a reputation as being a very good cost managers and the team's done an excellent job in and looking at that and working that through.

Speaker Change: In the next again realistically medium to long term three to five years this doesn't happen overnight.

Steven Cutler: So are we expecting more like 600 something next quarter or are you seeing a step up and maybe what does that mean for book to bill expectations for next quarter? And then, you know, I think last quarter you gave sort of a breakdown of FX impact, sort of the COVID trial impact. Maybe for Nigel, if you can give us a sense for either this quarter, as well as sort of those components in the rev guide. Thanks. Okay, so Charles, let me be clear on the cancels. We're expecting to see a number, you know, in the same sort of, you know, postcode as what we saw this quarter from, you know, the fact that we did call out the BARDA cancel earlier, and so you were aware of that.

Speaker Change: But certainly the Chinese are putting a huge amount of focus on the pharmaceutical and biotech industries.

Michael Riskin: Reduced.

Michael Riskin: SG&A is about $9 million a year on year.

Speaker Change: Helping the companies and those companies are not using local C. Arrows to do international trials I, certainly use that means up to do load to do trials within China.

Michael Riskin: We continue to focus on that the <unk> that I talked about the technology.

Michael Riskin: The bots that we've been deploying in doing much more routine sort of work has been very effective for.

Speaker Change: That's certainly an area that I have.

Speaker Change: But in terms of doing global trials trials in the west for a registration in Europe for registration in the U S.

Michael Riskin: For us and continues to drive down our overall SG&A costs and ultimately improves our efficiency.

Speaker Change: Turning to two organizations like iPhone to do those sort of trials and we're very happy to see that we have those connections we have a strong business development team.

Michael Riskin: Already alluded to that being a very important component of us being.

Michael Riskin: Actively competitive on the pricing side of things with the with.

Speaker Change: In China, which is going to allow us to absolutely Mike.

Steven Cutler: That doesn't make it exceptional. There are, you know, we have some cancels and we're going to, you know, we will be putting them into our numbers in the third quarter. So the number will be in the same sort of postcode. What it will be, we're only a third of the way through the quarter, we're working on these things, these things, some slow, some delay, some delay. So it's, but don't think of it as a, don't take, don't think of it as BARDA as an exceptional item, I would say at this stage. I think certainly for the very near term, that's the expectation.

Michael Riskin: With our larger customers and with the biotech customers for that matter, but certainly in the partnerships that that gives us an opportunity to compete actively.

Speaker Change: Make those connections and develop that business so.

Speaker Change: Domestic about China.

Be it.

Michael Riskin: And we're doing that very effectively so I'm really pleased with the way we are managing our costs, we have more to do and it's an ongoing challenge for us, but whether we do it through the right where we are optimizing our labor force.

Speaker Change: Thank you.

Michael Riskin: <unk> supporting our Labor force.

Michael Riskin: Pleased with with new technology and AI, it's all grist for the mill and it's something that we.

Speaker Change: Next question is from Michael Riskin from Bank of America. Please go ahead.

Michael Riskin: We take very seriously.

Steven Cutler: As we, I think as we get into fourth quarter into next year, I think things will normalise, that's our expectation. But again, that remains to be seen and will depend upon the environment becoming a little less volatile, a little less uncertain.

Speaker Change: Alright, Thanks for taking the question I'll do I got one quick clarification.

Speaker Change: Barry will talk about the competitive environment, yes. The two honestly are linked I mean, the teams really have done an excellent job of executing with efficiency over the course of the year productivity and utilization on a broad basis right across the company on a year over year basis that doesn't just help us with cost controls that also helps us to get these studies to deliberate cost.

Speaker Change: On the clarification, you talked about competitive environment and sort of how you see that evolving if you could just expand on that a little bit in terms of where youre seeing the most competition in terms of who you are running into the most.

Nigel Clerkin: Nigel, I'll leave you for the COVID. Yeah, Charles. So on the guide change from April to today, FX is really neutral. You know, you'll remember most of that dollar shift that we saw over the last few months had already happened actually by the end of April when we came out with the April guidance. So there's really no impact in terms of our revenue guidance change from FX. It's fundamentally driven from. from the uptake and pass-throughs. Maybe just essentially on the burn rate point, while we do think it'll be, you know, broadly 8% for the year as a whole, the pattern between Q3 and Q4 will depend a bit on the pass-through activity and in particular, that COVID study.

Speaker Change: So the big three where youre seeing a little more competition or maybe some of the more niche players are really.

Speaker Change: So on the competitive environment.

Speaker Change: The smaller CRM was out there just where you see that environment.

Speaker Change: I guess, we're still icahn, we're happy to compete with anybody.

Speaker Change: Ramping up in the last three or six months.

Speaker Change: And then or if presented the way for you to break it down in terms of therapeutic area or customer class and then the other question I'm going to have was on the cost controls that you talked about earlier this year that you've implemented.

Speaker Change: By and large we do but it particularly in the pharma space. I think you are probably in the right neighborhood. These are large global diverse partnerships across broad portfolios of different therapeutic modalities, we do tend to run into the more established players more and more I guess, it's a harder market for others to compete in that somewhat more diversified in the biotech space, particularly at the earlier.

Speaker Change: Obviously you maintained.

Speaker Change: You your EPS numbers and some of your.

Speaker Change: Margin color on cost, but if you could update how that's going and how you think about leveraging the cost out of the business as we go through the rest of the year. If you do see some of the improvements in bookings continue thanks.

Speaker Change: Okay, Mark I'll take the second part of the question and very much talk about the competitive environment. What are you seeing in the large pharma in the biotech space cost.

Nigel Clerkin: So at this point, it's ramping wells. It may well be that we see that burn a bit faster in Q3 than in Q4. So you might see a slightly better burn rate. Q3 vs.

Speaker Change: Cetera. So.

Speaker Change: We are slightly different dynamic across those two market segments, but with a bias towards larger more global and more diversified competitors.

Speaker Change: Cost controls.

Speaker Change: We've made good progress and we continue to make good progress I think we have a reputation as being a very good cost manages and the team's done an excellent job in and looking at that and working that really we've reduced.

Charles Rhyee: Q4 I didn't answer your other question around book-to-bill. Our expectation on book-to-bill would be again in the same ballpark as what we did this quarter, notwithstanding the continued elevation on cancellation. So as I said, we have some strong opportunities in the pipeline. We feel very focused. We feel like those opportunities are actionable and real. So we feel that the similar-ish book-to-bill is certainly possible. And just to underline that, Charles, yes, look, we've assumed roughly... One Extra Book to Build Over the Balance of the Year, which does reflect Elevated Council. and through that period. It reflected in the game.

Speaker Change: Thank you.

Speaker Change: We have one more question and this is from Rob <unk> from Cleveland Research. Please go ahead.

Speaker Change: SG&A is about $9 million year on year.

Speaker Change: We continue to focus on that.

Speaker Change: Yeah.

Rob: Hi, good morning, Thanks for taking our questions just in terms of the medium term revenue and booking outlook you talk about.

Speaker Change: That I talked about the technology.

Speaker Change: The bots that we've been deploying in doing much more routine sort of work has been very effective.

Rob: Elevated near term pass throughs, but also increased price intensity.

Speaker Change: For us and continues to drive down our overall SG&A costs and ultimately improves our efficiency is.

Rob: Are those offsetting factors or just one outweigh the other in terms of.

Rob: Future bookings and then can you remind us how the pilot.

Rob: Top creators start flowing through to the quarterly booking and backlog numbers, particularly.

Speaker Change: Barry alluded to that being a very important component of us being actively.

Speaker Change: Actively competitive on the pricing side of things with.

Rob: Alright.

Rob: Yes.

Speaker Change: With our logic customers and with the biotech customers for that matter, but certainly in the partnerships that that gives us an opportunity to compete actively and we're doing that very effectively so I'm really pleased with the way we're managing our costs, we have more to do and it's an ongoing challenge for us, but whether we do it throughout the world, where we are optimizing our labor force.

Rob: Rob.

Rob: For me, but.

Rob: I don't think we got the second part of that question Unfortunately, but.

Rob: Do you want to take the first part.

Unknown Executive: Thank you.

Rob: <unk>.

Rob: Medium term.

Sebastian Sandler: Next question is from Casey Woodring from J.P.

Rob: Do you want to just repeat the questions, Rob, we probably got a little bit distracted with the feedback.

Sebastian Sandler: Morgan. Please go ahead. Good morning, this is Sebastian Sandler on for Casey. Thanks for taking my question. So you called out licensing activity among large pharma and your prepared remarks.

Speaker Change: Effectively supporting our labor force and our employees with with new technology and AI.

Speaker Change: Yes can you hear me now.

Speaker Change: Grist for the mill and it's something that we.

Speaker Change: We take very seriously.

Rob: Alright, great. Thank you.

Speaker Change: So I guess the first one just on the how.

Sebastian Sandler: In terms of your operations in China, given some of the recent sizable pharma licensing deals with Chinese biotechs you've seen since last quarter, can you just walk us through ICON's role in these types of deals and how you see this dynamic playing out for ICON? Do you think Chinese biotechs will rely primarily on Chinese CROs? Or does pharma acquire these assets and run the remaining trials through ICON? And then lastly, what percentage of your revenue is coming from China now? I think in the past, you've called out China not being a large part of the business.

Rob: How we should.

Rob: How we should per the comments around higher near term pass throughs, but increased price competition.

Rob: And did those two offset each other or does one outweigh the other positive or negative and then the second question was how to treat.

Speaker Change: Broad basis right across the company on a year over year basis that doesn't just help us with cost controls that also helps us to get these studies deliberate customers so on the competitive environment.

Rob: Treat the near term elevated pass throughs in terms of bookings and backlog for the second quarter.

Speaker Change: Yes, we're still icahn, we're happy to compete with anybody.

Rob: Okay.

Speaker Change: And by and large we do but it particularly in the pharma space I think you're probably in the right neighborhood. These are large global diverse partnerships across broad portfolios of different therapeutic modalities, we do tend to run into the more established players more and more I guess, it's a harder market for others to compete in that somewhat more diversified in the biotech space, particularly at the early.

Rob: Yeah, maybe I'll do the first one and maybe nodular month jumping in ovarian and the second one certainly offsetting between higher pass throughs and price competition.

Steven Cutler: So just wondering how this has trended in recent times. Thank you. Okay, you've got a couple of questions in there, Sebastian. So let me try to unpick some of that. First of all, let me do the easy one.

Rob: Really see it as an offset I mean price competition is what it is and it tends to be around the direct piece of our margin producing revenue, whereas postures doesn't have any margin.

Steven Cutler: Revenue in China, approximately 3%-ish. So, you know, low single digits. We have about 1,200 people in China. It's a good operation. One of the best operations we have in the company, well-staffed, some really good, strong people. We have some good connections with the Chinese biotech industry. And this is, I mean, there's a lot happening in China, as you all know. I mean, I think it's something like a third of the new clinical trial starts globally are happening in China. And they're not all happening outside of China, but there's a lot of activity. And certainly the Chinese government is giving a lot of focus on biotech.

Speaker Change: <unk> phase biotech end of the market as I say some of the larger biotech pushing into the mid sized space. They start to become more leg portfolio accounts with multiple studies governance cycle <unk>, etc. So probably a slightly different dynamic across those two market segments, but with a bias towards larger more global.

Rob: Tend to be what they are what they are I mean customers don't necessarily.

Rob: Ask us to reduce on that it is the fact that they go up and we talked about that from a therapeutic point of view whether that be around vaccine studies metabolism study that basically.

Rob: Is it helps us on the top line, but certainly doesn't produce any.

Rob: Margin for us and so I don't really see them as offsetting price competition tends to be around those directly.

Speaker Change: More and more diversified competitors.

Speaker Change: Thank you.

Rob: So I hope that gives you some sort of flavor for how we.

Speaker Change: How we consider that price competition as I say is that that will potentially hurt our margin, but as Barry talked about earlier in the call. We have some pretty creative and innovative ways of being able to deliver these studies.

Speaker Change: We have one more question and this is from Rob Cottrell from Cleveland Research. Please go ahead.

Steven Cutler: And we have a number of customers in the US who are accessing portfolios and accessing new compounds and drugs and opportunities and licensing opportunities from Chinese companies. And we've been lucky enough to partner with them to develop some of those activities, some of those drugs. We see that as being a nice, albeit more longer term, medium to longer term fuel for our business. And we certainly see China as being a source of innovation and of new compounds, you know, in the next, again, realistically, medium to long term, three to five years. This doesn't happen overnight.

Rob Cottrell: Hi, good morning, Thanks for taking our questions.

Rob Cottrell: In terms of the medium term revenue and booking outlook you talk about elevated near term pass throughs, but also increased price intensity.

Speaker Change: Why is it doesn't impact our margins as much and so we can be competitive on price without sacrificing too much on margin.

Rob Cottrell: Are those offsetting factors or just one outweigh the other in terms of.

Speaker Change: The way, we try to do it and that's the same it's been very successful so far.

Rob Cottrell: Future bookings and then can you remind us how these higher cost players start flowing through to the quarterly bookings your backlog numbers, particularly.

Speaker Change: Yes sure Rob.

Speaker Change: On bookings so pass throughs are just part of the growth and wins basically it's you know.

Speaker Change: Sorry, Rob.

Rob Cottrell: Okay.

Speaker Change: So the award is a direct pass through and so it's you know what.

Rob Cottrell: Your line.

Rob Cottrell: But.

Speaker Change: It's not a particular factor there other than obviously the comments Orion just patriot generally being an increasing proportion of what we're seeing but.

Rob Cottrell: I don't think we got the second part of that question Unfortunately, but.

Steven Cutler: But certainly the Chinese are putting a huge amount of focus on their pharmaceutical and biotech industries, helping their companies. And those companies are not using local CROs to do international trials. They certainly use them to do trials within China. That's certainly an area that they have locked down. But in terms of doing global trials, trials in the West for registration in Europe and for registration in the US, they're turning to organizations like ICON to do those sort of trials. And we're very happy to see that. We have those connections. We have a strong business development team in China, which is going to allow us to absolutely make those connections and develop that business.

Rob Cottrell: Do you want to take the first part.

Speaker Change: So that's all I can say on that.

Rob Cottrell: E.

Speaker Change: And then we obviously talked about elevated cancels in Q2, and the likelihood of those continuing to see the other factor in terms of the overall book to Bill number and so I wouldn't call out anything in particular on pass rates in terms of that pattern into the future. We were more commenting on is in relation to the change in the revenue guide from April to now being driven by that.

Rob Cottrell: Medium term.

Rob Cottrell: Do you want to just repeat the questions, Rob we kind of got a little bit distracted with the feedback.

Rob Cottrell: Yes can you hear me now.

Rob Cottrell: Alright, great. Thank you.

Rob Cottrell: So I guess first was just on the how.

Rob Cottrell: How we should.

Speaker Change: Higher Apache pattern, we're seeing currently in revenue.

Rob Cottrell: How we should per the comments around higher near term pass throughs, but increased price competition.

Speaker Change: Okay.

Rob Cottrell: And did those two offset each other or does one outweigh the other positive or negative and then the second question was how to.

Speaker Change: Thank you.

Speaker Change: There are no further questions I will hand back to the speakers for any closing comments.

Speaker Change: Thank you operator, as we navigate the current conditions, we're pleased with the progress we made in quarter, two and remain focused on capitalizing on the opportunities we have in front of US. We thank you all for joining the call and field support Viper good afternoon.

Steven Cutler: So I'm optimistic about China, albeit this is not a short term thing. This is a more longer term partnership, if you like, with a country as much as anything else. We certainly see some benefits over the longer term. Thank you.

Rob Cottrell: Treat the near term elevated pass throughs in terms of bookings and backlog for the second quarter.

Rob Cottrell: Okay.

Rob Cottrell: Maybe I'll do the first one maybe knowledgeable month jumping in ovarian and the second one certainly offsetting between higher pass throughs and price competition.

Rob Cottrell: We really see it as an offset I mean.

Rob Cottrell: Price competition is what it is and it tends to be around the direct piece of our margin producing revenue, whereas postures doesn't have any margin.

Michael Ryskin: Next question is from Michael Ryskin from Bank of America. Please go ahead. Right, thanks for taking the question. I'll do, I got one big one, just a quick clarification. On the clarification, you talked about competitive environment and sort of how you see that evolving. If you could just expand on that a little bit in terms of where you're seeing the most competition in terms of who you're running into the most. Is it the big three where you're seeing a little more competition, or maybe some of the more niche players are really The smaller CROs out there, just where you see that environment.

Rob Cottrell: Tend to be what they are what they are I mean customers don't necessarily.

Rob Cottrell: Ask us to reduce on that it is the fact that they go up and we talked about that from a therapeutic point of view, whether they be around vaccine studies or metabolism study that basically.

Rob Cottrell: Is it helps us on the top line, but certainly doesn't produce any.

Rob Cottrell: Margin for us inside of it.

Rob Cottrell: Really see them as offsetting price competition tends to be around those directly.

Steven Cutler: Ramping up in the last three or six months and then or if there's any other way for you to break it down. And then the other question I was going to have was on the cost controls you talked about earlier this year that you implemented. I just obviously maintain. You know, your your EPS numbers and some of your Margin Color on Cost, but if you could update how that's going and how you think about leveraging the cost out of the business as you go through the rest of the year.

Rob Cottrell: So I hope that gives you some sort of flavor for how we.

Rob Cottrell: How we consider that price competition as I say.

Rob Cottrell: That will potentially.

Rob Cottrell: But as Barry talked about earlier in the call, we have some pretty creative and innovative ways of being able to deliver these studies in a way that doesn't impact our margins as much and so we can be competitive on price without sacrificing too much on margin.

Speaker Change: That's the way we try to do it and that's a that the teams have been very successful. So far. He went took a pause yes sure Ralph M. On bookings. So pass throughs are just part of the growth and wins basically as you know.

Steven Cutler: Okay Michael, I'll take the second part of the question and Barry might talk about the competitive environment, what he's seeing in the large pharma and the biotech space. So cost controls, you know, we've made good progress and we continue to make good progress. I think we have a reputation in the industry as being pretty good cost managers and the team's done an excellent job in looking at that and in working that through. We've reduced our SG&A $9 million year on year. We continue to focus on that. The AI that I talked about, the technology, the bots that we've been deploying in doing much, you know, the more routine sort of work has been very effective for us and continues to drive down our overall SG&A costs and that ultimately improves our efficiency as Barry alluded to that being a very important component of us being, you know, actively competitive on the pricing side of things with, you know, with our larger customers and with the biotech customers for that matter, but certainly in the partnerships that gives us an opportunity to compete actively and we're doing that very effectively.

Ralph M.: So the award is both direct fee and pathway.

Speaker Change: So it's you know what.

Speaker Change: Not a particular factor there other than obviously the comments Ryan just Patrick generally being an increasing proportion of what we're seeing but.

Ralph M.: So that's all I can say on that.

Ralph M.: And then we obviously talked about elevated cancels in Q2, and the likelihood of those continuing to stay in the other factor in terms of the overall book to Bill number and I wouldn't call out anything particular on past rates in terms of that pattern into the future. We were more commenting on is in relation to the change in the revenue guide from April to now being driven by that.

Ralph M.: Higher passenger pattern, we're seeing currently in revenue.

Ralph M.: Okay.

Ralph M.: Thank you.

Speaker Change: There are no further questions I will hand back to the speakers for any closing comments.

Speaker Change: Thank you operator, as we navigate current conditions, we're pleased with the progress we made in quarter, two and remain focused on capitalizing on the opportunities we have in front of US. We thank you all for joining the call and field support Viper go up.

Steven Cutler: So I'm really pleased with the way we're managing our costs. We have more to do and it's an ongoing challenge for us, but whether we do it through where we're optimising our labour force, effectively supporting our labour force and our employees with new technology and AI, it's all grist for the mill and it's something that we take very seriously.

Speaker Change: And.

Speaker Change: Thank you. This concludes today's conference call. Thank you for participating and you may now disconnect.

Speaker Change: Okay.

Speaker Change: [music].

Barry Balfe: Barry, you want to talk about the competitive environment? Yeah, and the two honestly are linked. I mean, the teams really have done an excellent job. Productivity and Utilization. on a broad basis right across the country. That doesn't just help us with costs. Federal Health I'm a competitive environment. I guess we're still icons, we're happy to compete with anybody, and by and large we do. But particularly in the pharma space, I think you're probably in the right neighborhood. These are large, global, diverse partnerships across broad portfolios of different therapeutic modalities. We do tend to run into the more established players more and more, I guess it's a harder market for others to compete in.

Speaker Change: Okay.

Speaker Change: Yes.

Speaker Change: [music].

Speaker Change: Yeah.

Speaker Change: Yes.

Barry Balfe: That's somewhat more diversified in the biotech space, particularly at the earlier phase biotech end of the market. As I say, some of the larger biotech pushing into the mid-sized space, they start to become more like portfolio accounts of multiple studies, governance and oversight layers. So probably a slightly different dynamic across those two market segments, but with a bias towards larger, more global, and more diverse markets. Thank you.

Speaker Change: Yes.

Speaker Change: Okay.

Rob Cottrell: We have one more question and this is from Rob Cottrell from Cleveland Research. Please go ahead. Hi, good morning. Thanks for taking our questions. Just in terms of the medium term revenue and booking outlook, you talk about, you know, elevated near term pass-throughs, but also increased price intensity. Are those offsetting factors or does one outweigh the other in terms of, you know, future bookings? And then can you remind us how these pass-throughs are flowing through to the quarterly booking and backlog numbers for 2Q? Sorry Rob, we didn't hear you.

Unknown Executive: Unknown Speaker3- Time is I would be surprised if he fucked up you know, I'd have been a foresighter I don't think we got the second part of that question, unfortunately. Take the first part in terms of the medium.

Rob Cottrell: Do you want to just repeat the questions, Rob? We kind of got a little bit distracted with the feedback. Unknown Speaker Yeah, can you hear me now? All right, great. Thank you. So I guess first was just on the how we should How we should pair the comments around higher near-term pass-throughs, but increased price competition. And, you know, do those two offset each other, or does one outweigh the other, positive or negative? And then the second question was how to treat the near-term elevated pass-throughs in terms of bookings and backlog for the second quarter. Yeah, maybe I'll do the first one and maybe Nigel might jump in or Barry on the second one.

Speaker Change: [music].

Steven Cutler: Certainly offsetting between higher pass-throughs and price competition, I don't really see it as an offset. I mean, price competition is what it is and it tends to be around the direct fees, so our margin producing revenue, whereas pass-throughs don't have any margin in them and they tend to be what they are what they are. I mean, customers don't necessarily ask us to, you know, reduce on those. The fact that they go up, and we talked about that from a therapeutic point of view, whether they be around vaccine studies or metabolism studies, obesity, you know, it helps us on the top line but certainly doesn't produce any margin for us and so I don't really see them as offsetting.

Speaker Change: Yes.

Speaker Change: [music].

Speaker Change: Yes.

Speaker Change: [music].

Nigel Clerkin: Price competition tends to be around those direct fees. So I hope that gives you some sort of flavour for how we consider that. Price competition, as I say, that will potentially hurt our margin, but as Barry talked about earlier in the call, you know, we have some pretty creative and innovative ways of being able to deliver these studies in a way that doesn't impact our margins as much and so we can be competitive on price without sacrificing too much on margin. That's the way we try to do it and the team's been very successful in that so far.

Nigel Clerkin: Yeah, sure. And Rob, on booking, so pass-throughs are just part of the gross wins, basically. So the award is both direct fee and pass. and... Not a particular factor there, other than obviously the comments around just pass-throughs generally being an increasing proportion of what we're seeing, but, um, so that's all I'd say on that. You know, and then we obviously talked about elevated councils in Q2, and the likelihood of those continuing has been the other factor in terms of the overall book-to-bill number. So I wouldn't call out anything particular on pass-throughs in terms of that.

Nigel Clerkin: We were more commenting on it in relation to the change in the Revenue Guide from April to now. The Higher Posture Pattern we're seeing currently...

Speaker Change: Okay.

Speaker Change: [music].

Unknown Executive: Thank you and there are no further questions so I will hand back to the speakers for any closing comments. Thank you, Operator. As we navigate current conditions, we're pleased with the progress we made in Quarter 2 and remain focused on capitalising on the opportunities we have in front of us. We thank you all for joining the call and for your support of ICON. Good afternoon.

Speaker Change: Okay.

Speaker Change: [music].

Speaker Change: Okay.

Speaker Change: [music].

Speaker Change: Yes.

Speaker Change: [music].

Speaker Change: Okay.

Speaker Change: [music].

Speaker Change: Good morning.

Speaker Change: Sure.

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