Q3 2025 ICON PLC Earnings Call

And our former CEO and Nonexecutive Board member Steve Cutler.

I'd like to note that this call and webcast.

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.

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 guarantees of future performance.

Forward looking statements are only as of the date. They are made and we do not under 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 its form.

20-F filed on February 21, 2025.

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

For a presentation of the most directly comparable GAAP financial measures. Please refer to the press release section titled condensed consolidated statements of operations.

All 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 earnings slides you will 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 exchange amortization transaction related and integration related costs goodwill impairment in there.

Related tax effects.

We will 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 handle handover the call to our former CEO and Nonexecutive director Dr. Steve Cutler for opening remarks.

Thank you Kelly and good day everyone.

It was almost like back when the last 14 years Ive spent at icon and I feel a strong sense of pride in what we've accomplished over that time.

For a company of the off thousands employees that was number six in the industry to 40000 people worldwide in the ranking in the top tier of global <unk>.

It's played in order to lead this organization and I have no doubt that the future opportunity for our tone is robust and the leadership team in place is the what one to move forward.

Sealy. Thank all my colleagues and friends that I call them for their partnership and dedicated efforts that have fueled our success over the years.

I also want to thank our customers for their partnership and loyalty in working with us to deliver their projects through some external challenges, including Covid and several geopolitical conflicts.

Finally, I want to thank the analyst community and our many loyal shareholders.

Come to know well and who have supported our company and its evolution in <unk>, particularly as the CEO.

I look forward to continuing to support.

The rest of the icon team in my role as a nonexecutive director and I remain confident in the continuing success of volatile over the longer term.

I'll now hand, it over to you.

Thank you Steve.

I'd like to start by expressing my gratitude to you for your partnership and ensuring a smooth transition period and for your leadership and support over many years.

On behalf of the whole icon team I wish you the very best in retirement.

Forward to your continued engagement and contributions as a valued member of our board.

Turning to our results for the third quarter. Our performance was broadly in line with expectations as we successfully navigated a mixed market characterized by known challenges and emerging opportunities.

We executed well on the encouraging level of RFP that went to decision in the quarter.

Steven Cutler: Leadership team in place is the right one to move it forward. I want to sincerely thank all my colleagues and friends at ICON for their partnership and dedicated efforts that have fueled our success over the years. I also want to thank our customers for their partnership and loyalty in working with us to deliver their projects through some external challenges, including COVID and several geopolitical conflicts. Finally, I want to thank the analyst community and our many loyal shareholders who I've come to know well and who have supported our company and its evolution in my time here, particularly as the CEO. I look forward to continuing to support Dr. Steve Cutler and the rest of the ICON team in my role as a Non-Executive Director, and I remain confident in the continuing success of ICON over the longer term. Steve, I'll now hand it over to you.

Similar to quarter two overall gross business awards were strong totaling $3 billion.

And we're up mid single digits on a year over year basis.

Encouragingly. These awards were broad based across large mid sized and biotech customers with notable strength in the areas of oncology cardio metabolic disease and FSP.

Revenue increased on both a sequential and year over year basis in the quarter with therapeutic mix driving strong pass through revenues.

Our overall burn rate was flat sequentially in quarter three at eight 2% in line with our previously communicated expectations.

While our quarter three results reflect continued strong cost control across the business. Our overall margin profile was negatively impacted by the higher pass through revenue.

Nigel Clerkin: Thank you, Steve. I'd like to start by expressing my gratitude to you for your partnership in ensuring such a smooth transition period and for your leadership and support over many years. On behalf of the whole ICON team, I wish you the very best in retirement and look forward to your continued engagement and contributions as a valued member of our board. Turning to our results for the third quarter, our performance was broadly in line with expectations as we successfully navigated a mixed market characterized by known challenges and emerging opportunities. We executed well on the encouraging level of RFPs that went to decision in the quarter. Similar to Q2, overall gross business awards were strong, totaling $3 billion and were up mid-single digits on a year-over-year basis.

Adjusted EBITDA margin was 19, 4%, a 20 basis point sequential decline.

During quarter, three we bought back $250 million in shares, bringing our total share repurchases to $750 million year to date.

This all translated into adjusted earnings per share of $3 31, a one 5% increase over quarter two.

Additionally, we generated strong free cash flow totaling $334 million in the quarter and $687 million on a year to date basis.

While I'm, particularly pleased with gross business awards in the quarter. Our net book to Bill of 1.02 times was negatively impacted by elevated cancellations of $900 million.

Nigel Clerkin: Encouragingly, these awards were broad-based across large, mid-sized, and biotech customers with notable strength in the areas of oncology, cardiometabolic disease, and FSP. Revenue increased on both a sequential and year-over-year basis in the quarter, with therapeutic mix driving strong pass-through revenues. Our overall burn rate was flat sequentially in Q3 at 8.2%, in line with our previously communicated expectations. While Q3 results reflect continued strong cost control across the business, our overall margin profile was negatively impacted by the higher pass-through revenue mix. Adjusted EBITDA margin was 19.4%, a 20 basis point sequential decline. During Q3, we bought back $250 million in shares, bringing our total share repurchases to $750 million year to date. This all translated into adjusted EPS of $3.31, a 1.5% increase over Q2. Additionally, we generated strong free cash flow, totaling $334 million in the quarter and $687 million on a year-to-date basis.

Broadly flat with quarter two levels with a bias towards previously awarded studies that were canceled prior to commencing enrollment.

Looking to the remainder of the year, we expect largely similar conditions to persist in the market and have assumed this in our updated guidance.

I am, particularly encouraged by our strong pipeline of actionable opportunities, reflecting our continued focus on commercial excellence.

Rotor and deeper market penetration across all customer groups.

A notable area of strength in quarter three within the biotech sector with a significant increase of RFP flow on a year over year and sequential basis.

However, despite recent improvements biotech funding environment remains mixed regarding the timelines for conversion of opportunities to awards and contracts.

Adjusted even down, margin was 19.4% at 20 basis point, sequential decline.

We have amended our full year guidance range to reflect the nature and phasing of business wins and cancellations as well as stronger pass through revenue activity.

During quarter 3, we bought back 250 million in shares. Bringing our total share repurchases to 750 million year to date.

We now expect full year revenue to be in the range of 8.05 billion.

This all translated into adjusted earnings per share of $3.31 a 1.5% increase over.

2.

$1 billion and full year adjusted earnings per share to be in the range of $13 to $13 20.

While we're not providing 2026 guidance at this stage our outlook for the year will in part influenced by the extent to which we can sustain the positive trends of the last two quarters regarding RFP flow and gross booking.

Nigel Clerkin: While I'm particularly pleased with gross business awards in the quarter, our net book-to-bill of 1.02 times was negatively impacted by elevated cancellations of $900 million, broadly flat with Q2 levels, with a bias towards previously awarded studies that were canceled prior to commencing enrollment. Looking to the remainder of the year, we expect largely similar conditions to persist in the market and have assumed this in our updated guidance. I am particularly encouraged by our strong pipeline of actionable opportunities, reflecting our continued focus on commercial excellence and broader and deeper market penetration across customer groups. A notable area of strength in Q3 was in the biotech sector, with a significant increase of RFP flow on a year-over-year and sequential basis. However, despite recent improvements in biotech funding, the environment remains mixed regarding the timelines for conversion of opportunities to award and contract.

Additionally, we generated strong free cash flow, totaling 334 million in the quarter and 687 million on a year-to-date basis.

Transition to more normalized levels of cancellations in 2026.

While I'm particularly pleased with growth Business Awards in the quarter, our Netbook to Bill of 1.02 times was negatively impacted by elevated cancellations of 900 million.

And optimize the burn rate of studies that are actively enrolling.

Accordingly, we remain focused on executing our strategy with an emphasis on accelerating topline growth rigorous cost management the deployment of novel technologies to enhance our offering and a balanced approach to capital allocation.

Broadly flat with quarter 2 levels with a bias towards previously. Awarded studies that were cancelled prior to commencing in Rome.

Looking to the remainder of the year, we expect largely similar conditions to persist in the market and have assumed this in our updated guidance.

Regarding revenue, our plans prioritize expansion of opportunity flow and win rates and biotech diversification of our revenue streams in large pharma.

I am particularly encouraged by our strong pipeline of actionable opportunities, reflecting a continued focus on commercial excellence and broader and deeper market penetration across customer groups.

Increased share of market and the important mid sized segment.

Further acceleration of strong growth in our labs early phase and FSP business.

A notable area of strength in quarter. 3 was in the biotech sector with a significant increase of RFP flow on a year-over-year and sequential basis.

Icon continues to manage cost effectively.

And our investments in enhanced resource demands management allocation technologies continued to play a key role in our ability to scale, our workforce rapidly and effectively in line with business needs.

Nigel Clerkin: We have amended our full-year guidance range to reflect the nature and phasing of business wins and cancellations, as well as stronger pass-through revenue activity. We now expect full-year revenue to be in the range of $8.05 billion to $8.1 billion, and full-year adjusted EPS to be in the range of $13 to $13.20. While we're not providing 2026 guidance at this stage, our outlook for the year will in part be influenced by the extent to which we can sustain the positive trends of the last two quarters regarding RFP flow and gross booking, transition to more normalized levels of cancellations in 2026, and optimize the burn rate of studies that are actively enrolling. Accordingly, we remain focused on executing our strategy with an emphasis on accelerating top-line growth, rigorous cost management, the deployment of novel technologies to enhance our offering, and a balanced approach to capital allocation.

However, despite recent improvements in deck funding, the environment remains mixed regarding the timelines for converting opportunities to awards and contracts.

While revenue mix on the pricing pressure are expected to weigh on gross margins in the near term. We continue to differentiate primarily based on capability expertise solution design and technological disruption of the clinical trials process.

We have amended our full year guidance range to reflect the nature and phasing of business wins and cancellations as well as stronger path through Revenue activity.

We now expect full year Revenue to be in the range of 8.05 billion to 8.1 billion and full year, adjusted earnings per share to be in the range of $13 to $13.20.

This enables us to take time and cost out of the development cycle, while creating and capturing value.

A key priority for me is the deployment of innovative technologies that allow for greater speed and predictability as well as enhanced efficiency.

RFP flow and gross booking.

We're building on the significant progress that we've made in the area of process automation and will accelerate investment in AI enabled technologies and external partnerships that enhance our capabilities and provide for seamless analysis and interpretation clinical trial data.

Transition to more normalized levels of cancellations in 2026 and optimize the burn rate of studies that are actively enrolled.

Nigel Clerkin: Regarding revenue, our plans prioritize expansion of opportunity flow and win rates in biotech, diversification of our revenue streams in large pharma, increased share of market in the important mid-sized segment, and further acceleration of strong growth in our labs, early phase, and FSP businesses. ICON plc continues to manage costs effectively, and our investments in enhanced resource demand management and allocation technologies continue to play a key role in our ability to scale our workforce rapidly and effectively in line with business needs. While revenue mix and pricing pressure are expected to weigh on gross margins in the near term, we continue to differentiate primarily based on capability, expertise, solution design, and technological disruption of the clinical trials process. This enables us to take time and cost out of the development cycle while creating and capturing value.

We continue to see value in returning capital to shareholders, while our strong financial position also gives us latitude to invest organically in our capabilities and to consider opportunities for inorganic growth in the right circumstances.

Accordingly. We remain focused on executing our strategy with an emphasis on accelerating Topline growth, rigorous cost management the deployment of Novel Technologies to enhance our offering and a balanced approach to Capital allocation

Regarding revenue, our plans prioritize the expansion of opportunity flow and win rates in biotech.

Diversification of our revenue streams in large Pharma.

In summary, while the recent cancellation levels are a headwind to revenue growth in the immediate term iconic global scale industry, leading capabilities and financial strength provide us with an excellent platform for growth.

Increased share of Market in the important midsize segment and further acceleration of strong growth in our Labs, early phase, and fsp businesses.

The recent demand dynamics provide significant grounds for optimism regarding the midterm trajectory as we move beyond a period of volatility and return to normalized levels of growth.

icon continues to manage costs effectively and our investments, in enhanced resource demand management and allocation Technologies continue to play a key role in our ability to scale our Workforce rapidly and effectively in line with business needs

I am excited by the path ahead, given the strong market position. We've established how we can continue to evolve our offerings to better serve our customers and patients around the world.

I'll now hand, it over to Nigel for a more detailed review of our financial results.

while Revenue mix and pricing. Pressure are expected to weigh on Gross margins. In the near term, we continue to differentiate primarily based on capability, expertise solution, design and technological, disruption of the clinical trials, process,

Thanks, Barry <unk>.

Revenue in quarter, three was 2.043 billion representing.

Nigel Clerkin: A key priority for me is the deployment of innovative technologies that allow for greater speed and predictability, as well as enhanced efficiency. We're building on the significant progress that we've made in the area of process automation and will accelerate investments in AI-enabled technologies and external partnerships that enhance our capabilities and provide for seamless analysis and interpretation of clinical trial data. We continue to see value in returning capital to shareholders, while our strong financial position also gives us latitude to invest organically in our capabilities and to consider opportunities for inorganic growth in the right circumstances. In summary, while recent cancellation levels are a headwind to revenue growth in the immediate term, ICON plc's global scale, industry-leading capabilities, and financial strength provide us with an excellent platform for growth.

This enables us to take time and cost out of the development cycle while creating and capturing value.

Representing a year to year on year increase of 056 percent.

Revenue was up approximately one 3% sequentially on quarter two 2025.

Key priority for me is the deployment of Innovative Technologies that allow for greater speed and predictability as well as enhanced efficiency.

Overall customer concentration in our top 25 customers was broadly aligned with quarter two 2025.

Our top five customers represented 24, 6% of revenue in the quarter. Our top 10 represented 39, 8% on our top 25 represented 66, 6%.

We're building on the significant progress that we've made in the area of process Automation and will accelerate investment in AI enabled Technologies and external Partnerships that enhance our capabilities and provide for seamless analysis and interpretation of clinical trial data.

Adjusted gross margin for the quarter was 28.2% compared to 29, 5% in quarter, three 2024, and down 10 basis points on quarter two 2025.

We continue to see value in returning Capital to shareholders, while our strong financial position. Also gives us latitude to invest organically in our capabilities and to consider opportunities for inorganic growth. In the right circumstances,

In summary while recent cancellation levels are a headwind to revenue growth in the immediate term.

Adjusted SG&A expense was $179 $2 million in quarter, three or <unk>, 8% of revenue.

Nigel Clerkin: The recent demand dynamics provide significant grounds for optimism regarding the midterm trajectory as we move beyond a period of volatility and return to normalized levels of growth. I'm excited by the path ahead, given the strong market position we've established and how we can continue to evolve our offering to better serve our customers and patients around the world. I'll now hand it over to Nigel for a more detailed review of our financial results. Nigel.

Icon's global scale, industry-leading capabilities, and financial strengths provide us with an excellent platform for growth.

Relative to the comparative period last year, adjusted SG&A was down by $1 $2 million in quarter three.

The recent demand Dynamics provide significant grants for optimism regarding the midterm trajectory as we move Beyond a period of volatility and return to normalized levels of growth.

Adjusted EBITDA was $396 $7 million for the quarter, an increase of <unk> $7 million sequentially.

Adjusted EBITDA margin decreased 20 basis points over quarter, two 2025 to 19, 4% of revenue.

I'm excited by the path ahead, given the strong Market position we've established, and how we can continue to evolve our offerings to better serve our customers and the patience around the world.

[Company Representative]: Thanks, Nigel. Revenue in quarter three was $2.043 billion, representing a year-on-year increase of 0.6%. Revenue was up approximately 1.3% sequentially on quarter two, 2025. Overall, customer concentration in our top 25 customers was broadly aligned with quarter two, 2025. Our top five customers represented 24.6% of revenue in the quarter, our top 10 represented 39.8%, and our top 25 represented 66.6%. Adjusted gross margin for the quarter was 28.2% compared to 29.5% in quarter three, 2024, and down 10 basis points on quarter two, 2025. Adjusted FG&A expense was $179.2 million in quarter three, or 8.8% of revenue. Relative to the comparative period last year, adjusted FG&A was down by $1.2 million in quarter three. Adjusted EBITDA was $396.7 million for the quarter, an increase of $0.7 million sequentially. Adjusted EBITDA margin decreased 20 basis points over quarter two, 2025, to 19.4% of revenue.

I'll now hand it over to Nigel for a more detailed review of our financial results. Nigel. Thanks, Barry.

Adjusted operating income for quarter, three was $356 $9 million.

Adjusted net interest expense was $47 million.

Revenue in quarter 3 was 2.043 billion representing a year. Year-on-year, increase of 0.6%

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

Revenue was up approximately 1.3%. Sequentially on quarter 2 2025,

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

Overall customer concentration in our top 25. Customers was broadly aligned with quarter 2 2025

Adjusted net income for the quarter was $258.8 million.

Creating two adjusted earnings per share of $3 31.

our top 5, customers represented, 24.6% of Revenue in the quarter, our top 10 represent 39.8% and our top 25 represented 66.6%

A decrease of one 2% year over year or an increase of one 5% on quarter two 2025.

U S. GAAP income from operations amounted to $86 6 million or four 2% of quarter three revenue.

adjusted gross margin for the quarter was 28.2% compared to 29.5% in quarter 3 2024 and down 10 basis points on quarter 2 2025,

U S. GAAP net income in quarter, three was $2 $4 million or 0.0, $3 three sorry per diluted share.

Adjusted sgna expense was 179.2 million in quarter 3 or 8.8% of Revenue.

<unk> to $2 36 per share for the equivalent to prior year periods.

Relative to the comparative period last year, adjusted sgna was down by 1.2 million in quarter 3.

From a cash perspective quarter, three had cash from operating activities coming in at 387 $6 million.

Adjusted EBITDA was $396.7 million for the quarter, an increase of $0.7 million sequentially.

This resulted in free cash flow in the quarter of $333 $9 million, bringing our total year to date to $687 $2 million.

Adjusted EBA margin decreased 20 basis points over quarter 2 2025.

[Company Representative]: Adjusted operating income for quarter three was $356.9 million, while adjusted net interest expense was $47 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 $258.8 million, equating to adjusted earnings per share of $3.31, a decrease of 1.2% year-over-year, or an increase of 1.5% on quarter two, 2025. U.S. GAAP income from operations amounted to $86.6 million, or 4.2% of quarter three revenue. U.S. GAAP net income in quarter three was $2.4 million, or $0.03 per diluted share, compared to $2.36 per share for the equivalent prior year period. From a cash perspective, quarter three had cash from operating activities coming in at $387.6 million. This resulted in free cash flow in the quarter of $333.9 million, bringing our total year to date to $687.2 million.

To 19.4% of Revenue.

Overall cash collections were solid in quarter, three with our free cash flow higher than quarter, two reflecting the timing of interest and tax payments as well as restructuring expenses.

Adjusted operating income for quarter. 3, was 356.9 Million while adjusted net interest. Expense was 47 million.

At September 32025, cash totaled $468 9 million and <unk> totaled $3 $4 billion, leaving a net debt position of $2 $9 billion.

.5% for the quarter.

We continue to expect the full-year 2025 adjusted effective tax rate to be approximately 16.5%.

This was broadly in line with net debt at June 32025 of $3 billion.

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

Our balance sheet position remains very strong, which affords us the flexibility to continue to strategically deploy capital.

Adjusted net income for the quarter was $258.8 million, equating to adjusted earnings per share of $3.31. This reflects a decrease of 1.2% year-over-year, but an increase of 1.5% quarter-over-quarter.

We are focused on an approach that balances further investments in our business as well as future growth, while also returning capital to shareholders.

US GAAP income from operations was $86.6 million, or 4.2% of Q3 revenue.

We made significant share repurchases in quarter, three totaling $250 million at an average price of $175 per share bringing.

Under US GAAP, net income in Q3 was $2.4 million, or $0.033 per diluted share, compared to $2.36 per share for the equivalent prior year period.

Bringing our total share repurchases year to date to $750 million.

With that we'll now open it up for questions.

From a cash perspective quarter 3 had cash from operating activities coming in at 3 8. 7. 6, 6.

Thank you.

I'll ask a question you will need to press star one on your telephone.

Name to be announced to withdraw your question. Please press star one again.

[Company Representative]: Overall, cash collections were solid in quarter three, with our free cash flow higher than quarter two, reflecting the timing of interest and tax payments, as well as restructuring expenses. At September 30, 2025, cash totaled $468.9 million and debt totaled $3.4 billion, leaving a net debt position of $2.9 billion. This was broadly in line with net debt at June 30, 2025, of $3 billion. We ended the quarter with a leverage ratio of 1.8 times net debt to adjusted trailing 12 months EBITDA. Our balance sheet position remains very strong, which affords us the flexibility to continue to strategically deploy capital. We are focused on an approach that balances further investment in our business as well as future growth, while also returning capital to shareholders.

This resulted in free cash flow in the quarter of 333.9 million, bringing our total year to date to 687 million.

We will now go to a SaaS question.

And your first question today comes from the line.

Anderson from Evercore. Please go ahead.

Overall cash collections were solid in quarter 3 with our free cash flow higher than quarter, 2 reflective interest, and tax payments as well as restructuring expenses.

Good morning, guys. Thanks, so much further question, congrats Steve and congrats Barry.

For the next.

Steps for both of you.

Maybe turning to the question could you maybe dive a little bit more into the cancellation dynamics I appreciate that the cancellations in the quarter came spot on with what Steve previewed on the <unk> call.

At set at September 3020 2025 cash totaled, 468.9 million, and debt totaled, 3.4 billion leaving a net debt position of 2.9 billion.

This was broadly in line with net debt at June 30th 2025 of 3 billion.

So how do you kind of think about those trends going forward are you sort of saying, maybe we will see elevated levels in fourth quarter, and then you kind of that should taper down is there something other kinds of dynamics that are sort of driving some of that just a little bit more color. There would be helpful. Thanks guys.

We ended the quarter with a leverage ratio of 1.8 times net debt to adjusted trailing 12 months. EBA

Elizabeth It's Barry here I'll take that I think as you say cancellations came in broadly in line with where we projected.

Our balance sheet position remains very strong, which affords US the flexibility, to continue to strategically deploy capital.

[Company Representative]: We made significant share repurchases in quarter three, totaling $250 million at an average price of $175 per share, bringing our total share repurchases year to date to $750 million. With that, we'll now open it up for questions.

There was a balance of concept across group some significant activity in pharma. It has to be said within the quarter and as I mentioned in my prepared remarks, there was a bias in those cancellations towards studies that had been <unk>.

We are focused on an approach that balances further investment in our business as well as future growth while also returning Capital to shareholders.

We made significant share repurchases in Q3, totaling $250 million at an average price of $175 per share.

Awarded prior to quarter, three and were canceled prior to commencing enrollment in I suppose that it addresses your question in the context of the profile of canceled these were not by and large studies that are in flight and burning at a good clip.

Bringing our total share repurchases year to date to 750 million.

Operator: Thank you. To ask a question, you will need to press star one and one on your telephone and wait for your name to be announced. To withdraw your question, please press star one and one again. We will now go to your first question. Your first question today comes from the line of Elizabeth Anderson from Evercore. Please go ahead.

With that. We'll now open it up for questions.

So perhaps moderately preferable in that regard I still think that as we reflected in our guidance. We expect conditions to remain broadly similar throughout the rest of the year, but I also think we will see this moderate as we move into 2026, certainly over the course of the year, So I'm not quite sure where the high watermark in the low watermark is but I do.

Thank you to ask a question. You will need to press star 1 and 1 on your telephone and wait for your name, to be announced to withdraw your question. Please press star 1 and 1 again.

We will now go to your first question.

[Analyst 1]: Good morning, guys. Thanks so much for the question. Congrats, Steve, and congrats, Nigel. Excited for the next steps for both of you. Maybe turning to the question, could you maybe dive a little bit more into the cancellation dynamics? I appreciate that the cancellations in the quarter came spot on with what Steve previewed on the Q2 call. How do you kind of think about those trends going forward? Are you sort of saying maybe we'll see elevated levels in the fourth quarter, and then you kind of that should taper down? Is there something, other kinds of dynamics that are sort of driving some of that? Just a little bit more color there would be helpful. Thanks, guys.

And your first question today, comes from the line of Elizabeth Anderson from evercore, please go ahead.

Do think we're certainly closer to the end of the period of elevated cancels than to the beginning.

Thank you.

We will now take the next question.

The question comes from the line of Michael Cherny from Leerink Partners. Please go ahead.

Good morning, and thanks for taking the question.

Maybe if I can dive in a little bit on some of the gross margin commentary you had I think the.

<unk> on mix and pass through clearly work.

In place is there anything that youre working on proactively from a gross margin side to try and offset some of those dynamics and.

Nigel Clerkin: Elizabeth, it's Nigel here. I'll take that. I think, as you say, cancellations came in broadly in line with where we projected. There was a balance of cancels across groups, some significant activity in pharma, it has to be said, within the quarter. As I mentioned in my prepared remarks, there was a bias in those cancellations towards studies that had been awarded prior to Q3 and were canceled prior to commencing enrollment. I suppose that addresses your question in the context of the profile of cancels. These were not, by and large, studies that were in flight and burning at a good clip, so perhaps moderately preferable in that regard. I still think that, as we reflected in our guidance, we expect conditions to remain broadly similar throughout the rest of the year.

Good morning guys. Uh, thanks so much for the question. Congrats. Steve and congrats Barry, uh, excited for the next, uh, steps for both of you. Um, maybe turning to the the question. Um, could you maybe dive a little bit more, um, into the cancellation Dynamics? I appreciate that. The cancellations and the quarter came spot on with what Steve previewed on the 2q call. Um, so you know, how do you kind of think about those Trends going forward? Are you sort of saying maybe we'll see elevated levels in fourth quarter and then you kind of you know that should taper down. Is there something other kinds of dynamics that are sort of driving some of that just a little bit more color? There would be helpful. Thanks guys.

On the pricing side, how you think about firming up price in certain markets areas, where you'll compete where you won't compete anything more you can give on that front would be great.

And Michael why don't I start and then very obviously feel free to chime in and so you are right in terms of the gross margin.

Elizabeth. It's Barry here. I'll take that. Um, I think as you say cancellations came in broadly in line with where we projected, um, there was a balance on councils across the group, some significant uh activity in Pharma, it had to be said within the quarter and as I mentioned, in my prepared remarks, there was a bias in those cancellations toward studies that had been

Picture, obviously earlier in the year, we had hope to exit the year at a margin closer to where we exited last year in terms of EBITDA margin.

Clearly as we've gone through this year, we have seen an increase in the proportion of pass throughs, we've talked about that as we've gone through the year and.

So that is certainly weighing on the margin outlook for the balance of this year and frankly into next year as well.

Nigel Clerkin: I also think we will see this moderate as we move into 2026, certainly over the course of the year. I'm not quite sure where the high watermark and the low watermark is, but I do think we're certainly closer to the end of a period of elevated cancels than to the beginning.

We've also of course talked about the increasing.

Awarded prior to quarter 3 and were cancelled prior to commencing enrollments. And I suppose that addresses your question in the context of the profile of canceled, these were not by and large studies that were in flight and burning at a good clip. Um, so perhaps moderately preferable in that regard, I still think that as we reflected in our guidance, we expect engineering broadly similar throughout the rest of the year, but I also think we will see this moderate as we move into 2026.

Pricing.

Patterns that we're seeing in the market generally nobody can touch more on that which again is not so much of an impact for this year, but it is a factor that might weigh on margin outlook for next year, having said all of that you're absolutely right icon and of course all of this has had a very long track record of managing its cost base appropriately and we've continued to do that.

Get me over the course of the year. So I'm not quite sure where the high water mark and the low water mark is, but I do think we're certainly closer to the end of the period of elevated cancels than to

Operator: Thank you. We'll now take the next question. The question comes from the line of Michael Turney from Leirink Partners. Please go ahead.

Okay.

Question.

Through the course of this year that is partly through adjusting our resource thing to the demand environment that we see out there and you can see that for example in our in our staffing numbers are about 5% lower now than they were at the end of last year.

And the question comes from the line of Michael Tony from Lying Partners. Please go ahead.

[Analyst 2]: Good morning, and thanks for taking the question. Maybe if I can dive in a little bit on some of the gross margin commentary you had. I think the dynamics on mix and pass-through clearly were in place. Is there anything that you're working on proactively from a gross margin side to try and offset some of those dynamics? Especially on the pricing side, how do you think about firming up price in certain markets, areas where you'll compete, where you won't compete? Anything more to give on that front would be great.

Uh, good morning and thanks for taking the question.

As an example of that but also and very touched on highway or leveraging technology as well for sure in terms of efficiency and how that can help in terms of margin profile, but also in terms of effectiveness in how we deliver to our customers as well for all the reasons you mentioned Im sorry, I don't know if you want about it in terms of how we can use.

Two to deliver for our customers and ultimately improve our own margins over time to yes, I think it's a fair question, Mike I mean, the first one obviously you do is you try and win more opportunities with heavy direct fee on them I don't want to give back any of the opportunities that have high pass through mix I just want to augment them with even more direct V Awards and that's our focus in terms of driving <unk>.

Nigel Clerkin: Michael, why don't I start? Then Nigel, obviously, feel free to chime in. You are right in terms of the gross margin picture. Earlier in the year, we had hoped to exit the year at a margin closer to where we exited last year in terms of EBITDA margin. Clearly, as we've gone through this year, we have seen an increase in the proportion of pass-throughs. We've talked about that as we've gone through the year. That is certainly weighing on the margin outlook for the balance of this year and frankly into next year as well. We've also, of course, talked about the increasing pricing competitiveness that we're seeing in the market generally. Nigel can touch more on that, which again is not so much of an impact for this year, but is a factor that might weigh on margin outlook for next year.

Maybe if I can dive in a little bit on some of the gross margin commentary. You had, I think, the dynamics on mix and, uh, pass-through clearly were in place. Is there anything that you're working on proactively from a gross margin side to try and offset some of those dynamics? And especially on the pricing side, how do you think about firming up price in certain markets? Are there areas where you'll compete and areas where you won't compete? Anything more on that front would be great.

<unk> excellence, making sure we can see more of this market and convert more of it into wind that's important to US we will continue to do that.

I am pleased with our progress in quarter three in that regard.

In terms of technology Nigel the point is well made we are looking to enhance the technological ecosystem here at icon will continue to do that the deployment of agents to whom we can delegate workflows rather than simply ask questions is really important to us of course in parallel we do manage the processes that underlie those workflows manage RGA.

Nigel Clerkin: Having said all of that, you're absolutely right. ICON, of course, always has had a very long track record of managing its cost base appropriately. We've continued to do that through the course of this year. That is partly through adjusting our resourcing to the demand environment that we see out there. You can see that, for example, in our staffing numbers are about 5% lower now than they were at the end of last year, just as an example of that. Also, and Nigel touched on, how we are leveraging technology as well, for sure, in terms of efficiency and how that can help in terms of margin profile, but also in terms of effectiveness and how we deliver to our customers as well for all the reasons you mentioned.

Uh, Michael. Why don't I start? And I'm very obviously feel free to chime in. Um, so you are right in terms of the growth margin, um uh picture, obviously earlier in the year, we we had hoped to exit the year out of margin uh, closer to where we exited last year, in terms of ibadan margin, um, purely as we've gone through this year, we we have seen an increase in the proportion of pastures. We've talked about that as we've gone through the year, um, so that is certainly Weighing on the margin outlook for the balance of this year and frankly, into next year as well. Um, we've also of course, talked about, uh, the increasing, uh, pricing, uh, competitiveness that we're seeing in the market generally, which are barry can touch more on that. Um, which again is not so much of an impact for this year, but but is the factor that might weigh on on margin and Outlook.

Graphical footprint and as I mentioned in my remarks, utilizing some of our existing technology to resource just in time and appropriately identifying those projects that will burn faster and they benefit from some additional resources or frankly areas of the organization, where we might have a surplus of resource migrating those resources, where they can be.

More impact.

On your last point about pricing I suppose there's a degree to which that will always bleed into the gross margin line, but we remain really focused on how we win we're not going to cut our way to victory in terms of pricing. We've never done that we're not going to do it now we do tend to differentiate when we win we win by virtue of superior capability.

Nigel Clerkin: Nigel, I don't know if you want to add in in terms of how we can use that to help deliver for our customers and ultimately improve our own margins over time too.

<unk> greater expertise scientific and operational and frankly, better solutions design being able to bring a study in faster and more cost effectively is a function of those things more than it is a pricing. So they are all factors, but there are some of the top level.

[Company Representative]: Yeah, I think it's a fair question, Mike. The first and obvious thing you do is you try and win more opportunities with heavy direct fee on them. I don't want to give back any of the opportunities that have high pass-through mix. I just want to augment them with even more direct fee awards. That's our focus in terms of driving commercial excellence, making sure we can see more of this market and convert more of it into wins. That's important to us. We'll continue to do that. I'm certainly pleased with our progress in Q3 in that regard. In terms of technology, Nigel's point is well made. We are looking to enhance the technological ecosystem here at ICON plc. We'll continue to do that. The deployment of agents to whom we can delegate workflows rather than simply ask questions is really important to us.

Thank you.

For next year. I'm excited all of that you're absolutely right icon and of course all of us has had a very long track record of managing its cost base appropriately and we've continued to do that through the course of this year. That is partly through adjusting our resourcing to the demand environment that we see out there and you can see that for example, in our in our staffing, numbers are about 5% lower now than they were at the end of last year, um, just as, as an example of that, but also in Barry touched on, you know, how were your leveraging technology as well, for sure, in terms of efficiency and how that can help, uh, in terms of margin profile, but also, in terms of Effectiveness and and how we deliver to our customers as well for all the reasons you mentioned and Barry. I don't know if you want to add in, in terms of, you know, how we can use that to to help deliver for our customers and ultimately improve our own minds over time, too. Yeah. I I think it's a fair question, Mike. I mean, the first and obvious thing you do is you try and win more opportunities with heavy direct fee on them. I don't want to give back any of the opportunities that have high pass through me because I just want to augment them with even more direct

Your next question comes from the line of Justin <unk> from Deutsche Bank. Please go ahead.

Thank you and good morning, everyone and also echo <unk> sentiment.

Direct to the awards, and that's our focus in terms of driving commercial excellence. Making sure we can see more of this market and convert more of it into win. That's important to us. We'll continue to do that and are certainly pleased with our progress in Q3 in that regard.

Stephen Berry so.

Barry can you.

Maybe discuss the Andrew industry environment, a little bit bifurcated between pharma and biotech end.

Maybe more specifically around the tenor of those conversations.

[Company Representative]: Of course, in parallel, we do manage the processes that underline those workflows, manage our geographical footprint. As I mentioned in my remarks, utilizing some of our existing technology to resource just in time and appropriately, identifying those projects that will burn faster and they benefit from some additional resources, or frankly, areas of the organization where we might have a surplus of resource, migrating those resources where they can be more impactful. On your last point about pricing, I suppose there's a degree to which that will always bleed into the gross margin line. We remain really focused on how we win. We're not going to cut our way to victory in terms of pricing. We've never done that. We're not going to do it now. We do tend to differentiate.

In light of what seems to be.

Our regulatory and trade environment of increasing clarity.

Yes, it's a good question Justin there's a lot in there. So I'll certainly do my best I think the first thing to say is I understand why people would be looking very carefully at biotech funding and taken some hard from the Q3 numbers, albeit it is a single quarter.

Likewise in pharma I think we're pretty clear on why the markets reacted positively to some of the news over the course of the quarter end from Forex and the interactions with pharma in that regard. So there is certainly a sense that we may be getting closer to a point of some consistency and I think we've said this before on the call good policy or bad consistent policy.

In terms of technology, the nodules point made, you know, we are looking to enhance the technological ecosystem here at ICON. We'll continue to do that. The deployment of agents to whom we can delegate workflows, rather than simply asking questions, is really important to us. Of course, in parallel, we do manage the processes that underlie those workflows and manage our geographical footprint. As I mentioned in my remarks, we're utilizing some of our existing technology to resource just in time and appropriately, identifying those projects that will burn faster. They benefit from some additional resources or, frankly, areas of the organization where we might have a surplus of resources, migrating those resources where they can be more impactful.

[Company Representative]: When we win, we win by virtue of superior capabilities, greater expertise, scientific and operational, and frankly, better solution design. Being able to bring a study in faster and more cost-effectively is a function of those things more than it is of pricing. They're all factors, but they're some of the top-level goals.

Certainty dealing with some of the uncertainty that our customers have been facing is certainly net good for the sector, whether or not that's what has driven the.

Significant double digit increases in RFP flow, whether thats whats trickling down into the successes we've had over the last couple of quarters in terms of gross bookings, it's a little early to see but we're certainly glad to see it what I would say just in terms of balancing that though is we said for a while we would expect to see improvement on those leading indicator.

Operator: Thank you. Your next question comes from the line of Justin Bowers from Deutsche Bank. Please go ahead.

On your last point about pricing, I suppose there's a degree to which that will always bleed into the gross margin line. But we remain really focused on how we win. We're not going to put our way to victory in terms of pricing. We've never done that. We're not going to do it. Now, we do tend to differentiate when we win, we win by virtue of superior capabilities. Greater expertise scientific and operational and frankly, better solution design. Being able to bring a study in faster and more cost-effectively is a function of those things more than it is of pricing. So they're all factors. But there are some of the top level goals.

Thank you.

[Analyst 3]: Thank you. Good morning, everyone. I also echo Liz's sentiment, Dr. Steve. Dr. Cutler, can you maybe discuss the industry environment a little bit and bifurcate between pharma and biotech and maybe more specifically around the tenor of those conversations in light of what seems to be a regulatory and trade environment of increasing clarity?

For the next question, we will go to the line of Just About Hours, from Deutsche Bank. Please go ahead.

There is like RFP flow and gross bookings being trailed somewhat by followed through on to the revenue and earnings line. So some positive indicators in terms of the environment. Some interesting signs that perhaps deal flow is starting to tick up around large pharma as well theyre encouraging signs but of course, we're still on tangling the consequences of the last couple of years.

<unk>. So I think we should characterize the environment is encouraging but still somewhat mixed.

Nigel Clerkin: Yeah, it's a good question, Justin. There's a lot in there. I'll certainly do my best. I think the first thing to say is I understand why people have been looking very carefully at biotech funding and taking some heart from the Q3 numbers, albeit it is a single quarter. Likewise, in pharma, I think we're pretty clear on why the markets reacted positively to some of the news over the course of the quarter around Trump Rx and the interactions with pharma in that regard. There is certainly a sense that we may be getting closer to a point of some consistency. I think we've said this before on the call. Good policy or bad, consistent policy, certainty, dealing with some of the uncertainty that our customers have been facing is certainly net good for the sector.

Thank you. Good morning, everyone. And also echo Liz's, uh, sentiment: Stephen, Barry. So, Barry, can you, um, maybe discuss the industry environment a little bit and bifurcate between pharma and biotech, and maybe more specifically around the tenor of those conversations in light of what seems to be, um, a regulatory and trade environment that is increasing clarity.

Okay.

Thank you.

Your next question comes from the line of sale I'm dressing from <unk> Securities. Please go ahead.

Thank you and thanks for taking my questions I wanted to get more color around the competitive pricing environment.

You gave some flavor of that has got worse than what you guys have talked about in the Bob is it across the board are there any particular market segments Youre seeing it and based on your observation. How do you think pricing pressure driven by clients looking to squeeze extra dollar or is it more driven by your competitors trying to win more business.

It's a good question Julien I don't think it's gotten worse for sure I think what we've talked about over the last couple of quarters that the prevailing environment in 'twenty five is more competitive than in certain prior years, but I don't think thats something that we have seen continued to deteriorate by any means over the course of the year I think that's fair to say.

Nigel Clerkin: Whether or not that's what has driven the significant double-digit increases in RFP flow, whether that's what's trickling down into the successes we've had over the last couple of quarters in terms of gross bookings, it's a little early to see, but we're certainly glad to see it. What I would say, just in terms of balancing that, is we've said for a while we would expect to see improvement on those leading indicators like RFP flow and gross bookings being trailed somewhat by follow-through onto the revenue and earnings line. Some positive indicators in terms of the environment, some interesting signs that perhaps deal flow is starting to tick up around large pharma as well. They're encouraging signs. Of course, we're still untangling the consequences of the last couple of years of volatility. I think we should characterize the environment as encouraging, but still somewhat mixed.

It's also fair to say that just given the structure of the relationships. We have in large pharma that that's where a lot of the pressure comes from which is not to say that our biotech customers don't require significant support not just getting to the right price getting to really good predictability about that price and this is a significant priority for us at icon, we invest not just being in.

Quarter and likewise in Pharma, I think we're pretty clear on why the markets reacted positively to some of the news over the course of the quarter and Trump RX and the interaction Department in that regard. So there is certainly a sense that we may be getting closer to a point of some consistency. And I think we've said this before on the call good policy or bad consistent policy certainty dealing with some of the uncertainty that our customers have been facing is certainly not good for the sector, whether or not that's what has driven, the significant, double digit increases in RFP flow whether that's what's trickling down into the successes, we've had over the last couple of quarters in terms of gross, bookings. It's a little early to see but we're glad to see it. What I would say just in terms of balancing, that though is we've said for a while, we would expect to see Improvement on those leading indicators, like, RFP flow and gross bookings being trailed somewhat by follow through onto the revenue and earnings line. So some positive indicators in terms of the environment, you know,

Cost effective high quality and speedy, but we also invest carefully to make sure we can be predictable our biotech customers really need to know when those studies are going to start when their patients are going to be enrolled and when they are likely to be completed. So that's certainly something we've focused on so I don't think its something thats gotten worse over the course of the year, but I would.

an interesting sign that perhaps deal flow is starting to tick up around large farm as well. They're encouraging signs. But of course, we're still on tangling, the consequences of the last couple of years of volatility. So I think we should characterize the environment as encouraging, but still somewhat mixed,

Operator: Thank you. Your next question comes from the line of Jalandra Singh from Truist Securities. Please go ahead.

Thank you.

Characterize it as a particularly competitive environment and to the last part of your question I think when the bowl is smaller the dogs are hungry or to a certain degree. So I think one feeds the other we certainly see heightened level of competitive activity among our competitors, but I think that's driven by the upstream dynamics that are impacting our customers.

[Analyst 4]: Thank you, and thanks for taking my questions. I want to get more color around the competitive pricing environment. You gave some flavor of that. Has this got worse than what you guys have talked about in the past? Is it across the board? Are there any particular market segments you're seeing it? Based on your observation, are you seeing pricing pressure more driven by clients looking to squeeze extra dollar, or is it more driven by your competitors trying to win more business?

Your next question comes from the line of DeAndre Singh from tourist Securities. Please go ahead.

Thank you.

Your next question comes from the line of Patrick Donnelly from Citi. Please go ahead.

Nigel Clerkin: It's a good question, Jalandra. I don't think it's gotten worse for sure. I think what we've talked about over the last couple of quarters is that the prevailing environment in 2025 is more competitive than in certain prior years. I don't think that's something that we've seen continue to deteriorate by any means over the course of the year. I think that's fair to say. I think it's also fair to say that just given the structure of the relationships we have in large pharma, that's where a lot of the pressure comes from, which is not to say that our biotech customers don't require significant support, not just getting to the right price, but getting to really good predictability about that price. This is a significant priority for us at ICON plc.

Thank you, and thanks for taking my questions. Uh, I want to get more color around the comparative pricing environment. Uh, you give some flavor of that has this got worse than what you guys have talked about in the past, is it across the board or are there any particular market segments? You're seeing it and based on your observation, are you seeing pricing pressure more driven by clients looking to squeeze extra dollars or is it more driven by your competitors trying to win more more business?

Hey, guys. Thank you. Thank you for taking the question.

Maybe one that you know kind of following up on some earlier ones in terms of pricing and pass through environment.

I know he doesn't want to call. It 26 too much but in terms of what those impacts could look like on the moving pieces on margins into next year. It seems like higher packages will continue a little bit on the pricing that you've talked about so.

Can you just talk about the levers on margin as we get into next year just high level in terms of the moving pieces again, obviously pricing capacity werent impact, but just trying to think about potential offsets.

Nigel Clerkin: We invest not just being cost-effective, high quality, and speedy, but we also invest carefully to make sure we can be predictable. Our biotech customers really need to know when their studies are going to start, when their patients are going to be enrolled, and when they're likely to be completed. That's certainly something we've focused on. I don't think it's something that's gotten worse over the course of the year, but I would characterize it as a particularly competitive environment. To the last part of your question, I think when the bowl is smaller, the dogs are hungrier to a certain degree. I think one feeds the other. We certainly see a heightened level of competitive activity among our competitors, but I think that's driven by the upstream dynamics that are impacting our customers.

Opportunity to keep that flat.

Potentially up.

On the table. Thank you guys.

Hey, Patrick it's Nigel and so yeah look I think you've touched on the key the key major moving pieces, there and again just as Mike went through.

It's a good question, joandra. I don't think it's gotten worse for sure. I think what we've talked about over the last couple of quarters is that the prevailing environment in 25 is more competitive than in certain prior years, but I don't think that's something that we've seen continued to deteriorate by any means over the course of the year. I think that's fair to say. I think it's also fair to say that just given the structure of the relationships. We have in large Pharma that. That's where a lot of the pressure comes from which is not to say that our biotech customers. Don't require significant support, not just getting to the right price but getting to really good, predictability about that price and this is a significant priority for us at Icon. We invest not just being in cost effective, high quality and Speedy. But we also invest carefully to make sure we can be predictable. Our biotech customers. Really need to know when their studies are going to start when their patients are going to be enrolled.

Through earlier.

Youre absolutely right posture is an increasing component of our compensation of pathways within the overall revenue mix is certainly going to be a weighing factor for next year.

When they're likely to be completed. So that's certainly something we'd focused on. So I don't think it's something that gotten worse over the course of the year, but I would characterize it as a particularly competitive environment.

The pricing environments to Barry's point.

Has been tougher through the course of this year than perhaps previously.

Not so much kind of impact is really too much this year, but it certainly would be more of a weighing factor as you go through next year.

And again.

Operator: Thank you. Your next question comes from the line of Patrick Donnelly from Citi. Please go ahead.

And to the last part of your question, I think when the bowl is smaller, the dogs are hungrier to a certain degree. So I think 1 feed the other, we certainly see heightened level of competitive activity among our competitors, but I think that's driven by the Upstream dynamics that are impacting our customers.

Contacting us all of the subsequent icon has always had a long track record of doing managing the business efficiently investing in technologies that allow us to be more efficient as well as being more effective for our customers all of the above so exactly what that means in terms of margin outlook for next year Patrick.

Thank you.

Your next question.

Comes from the line of Patrick. Please go ahead.

[Analyst 5]: Thank you for taking the question. Maybe kind of following up with some earlier ones in terms of the pricing and pass-through environment. I know you guys don't want to talk 2026 too much, but just in terms of what those impacts could look like on the moving pieces on margins into next year, it seems like higher pass-throughs will continue a little bit on the pricing that you've talked about. Can you just talk about the levers on margins as we get into next year, just high level in terms of the moving pieces? Obviously, pricing and pass-throughs are an impact, but just trying to think about potential offsets and the opportunity to keep those flat to potentially up. Is that on the table? Thank you, guys.

We.

We're not going to walk through today, we will provide that when we provide our guidance for next year in January or February when we get to there.

So please get your patience as we work through that ourselves.

Thank you.

Your next question comes from the line of Jack Meehan from Nephron Research. Please go ahead.

Thank you good morning, and good afternoon, everyone.

Wanted to follow up on kind of the margin question I was wondering if you could provide more color on the level of pass throughs Im not sure. If there's any metrics you can share like as a percentage of gross revenue where it was in 2024, where it's tracking in 2025 and based on what you look at the backlog now like.

Nigel Clerkin: Hey, Patrick. It's Nigel. Yeah, I think you've touched on the key major moving pieces there. Just as Mike went asked through earlier, you're absolutely right. Pass-throughs and the increasing component of our composition of pass-throughs within the overall revenue mix is certainly going to be a weighing factor for next year. The pricing environment, to Dr. Steve Cutler's point, you know it has been tougher through the course of this year than perhaps previously. That's not so much going to impact us really too much this year, but it certainly would be more of a weighing factor as you go through next year. Countering that, all of the stuff that ICON plc has always had a long track record of doing, managing the business efficiently, investing in technologies that allow us to be more efficient as well as being more effective for our customers, all of the above.

Hey guys, thank you. Uh thank you for taking the question. Um maybe you want to you know kind of following up with some earlier ones in terms of the pricing and pass through environment. Um you know I know you guys don't want to talk 26 too much but just in terms of you know what those impacts could look like on the moving pieces on margins into next year, seems like higher passes will continue a little bit on the pricing, uh, that you've talked about. So, um, can you just talk about just the levers on margins as we get into next year? Just high level in terms of moving pieces. Uh, again obviously, pricing and passes are an impact but uh, you know, just trying to think about potential offsets and and the opportunity to keep those flat to, to potentially up, is that on the table? Thank you guys.

Hey Patrick. It's Nigel. Um, so yeah. No, look. I think you've touched on the the, the key the key. Major moving pieces there. And again just as as Mike went,

How much that could shift in 2026, I think just trying to get a sense for.

Where gross margins.

Start to bottom out is do you think 27% as close to a floor.

Jackass again.

So yes look we report revenue in aggregate and we don't obviously break that out between pass throughs on direct fee.

All we can do really do is because your qualitative commentary around that is as we are doing in terms of an increasing proportion of pass throughs.

Nigel Clerkin: Exactly what that means in terms of margin outlook for next year, Patrick, you'll understand we're not going to walk through today. We will provide that when we provide our guidance for next year in January or February when we get to there. Appreciate your patience as we work through that ourselves.

So and likewise in terms of margins I think we've touched on the various factors that are weighing on margins next year and also how we can hopefully help mitigate some of that some of the challenge and so again, it's premature for us to give you any any.

Our guidance on margin outlook for next year again, we will do that when we get to there I don't know if you wanted to us anything else for us. Thank you.

Managing the business efficiently investing in uh technologies that allow us to be more efficient as well, uh, as being more effective for our customers, all of the above. So exactly what that means in terms of margin, um, outlook for next year. Patrick, uh, we we, you'll understand, we're we're not going to walk through today, you know, we will provide that when we provide our guidance for next year in January or February when we get to there. Um so we appreciate your patience as we work through that ourselves.

Operator: Thank you. Your next question, Steve, comes from the line of Jack Meehan from Nephron Research. Please go ahead.

Thank you.

It really well I mean, there's multiple different puts and calls one of the big ones is business mix.

And the degree at which awards in different therapeutic areas manifest into revenue.

[Analyst 2]: Thank you. Good morning and good afternoon, everyone. I wanted to follow up on kind of the margin question. I was wondering if you could provide more color on the level of pass-throughs. I'm not sure if there's any metrics you can share, like as a % of gross revenue, where it was in 2024, where it's tracking in 2025, and based on what you look at the backlog now, like how much that could shift in 2026. I think just trying to get a sense for where gross margins can start to bottom out, do you think 27% is close to a floor?

John next question. Today comes from the line of Zack. Mihan from nefron research, please give a head

Not always linear and it's not always obvious but as an indicator over the last year excuse me.

Our level of RFP activity and indeed, our level of awards in an area like cardio metabolic which carries a very significant pass through load have increased by more than an order of magnitude. So when you see significant shifts in pass through heavy Tas. This is good news. These are gross bookings that will drive direct fees that will drive margins in time.

But they do also consider what the passenger load will be so it takes time to work how that works through the flow will certainly be taken that into account when we set guidance early in the new year.

Nigel Clerkin: Jack, yes. Nigel, again, I'll take that. We report revenue in aggregate. We don't obviously break that out between pass-throughs and direct fee. All we can really do is give you qualitative commentary around that as we have done in terms of that increasing proportion of pass-throughs. Likewise, in terms of margins, I think we've touched on the various factors that are weighing on margins next year and also how we can hopefully help mitigate some of that challenge. It's premature for us to give you any guidance on margin outlook for next year. We'll do that when we get to there. I don't know if you wanted to add anything else to that.

Thank you. Good morning and good afternoon everyone. Um, I wanted to follow up on kind of the margin question. I was wondering if you could provide more color on the level of pass throughs. I'm not sure if there's any metrics you can share like as a percentage of gross revenue where it was in 2024, where it's tracking in 2025, and based on what you look at the backlog now, like where how much that could shift in 2026. I think, just trying to get a sense for, um, where gross margins, you know, can start to bottom out is, do you think 27% is close to a floor?

Thank you.

Your next question.

Comes from the line of Eric Coldwell from Baird. Please go ahead.

Yes.

Alright, Thanks, good morning I am.

Curious when looking at backlog and bookings.

You've always had an approach of taking written confirmation as opposed to formally contracted awards, which is a bit unique versus the rest of the group, but you've been clear about that.

How have those ratios changed over time.

And when you parse the higher cancels that you are facing today.

[Company Representative]: Yeah, I think you covered it well. I mean, there's multiple different puts and calls, but one of the big ones is business mix. The degree at which awards in different therapeutic areas manifest into revenue is not always linear and it's not always obvious. As an indicator, over the last year, our level of RFP activity and indeed our level of awards in an area like cardiometabolic, which carries a very significant pass-through load, have increased by more than an order of magnitude. When you see significant shifts in pass-through heavy TAs, this is good news. These are gross bookings that will drive direct fees, that will drive margins in time. They do also make us consider what the pass-through load will be.

Percent of those cancels are coming from the non contracted bookings for ones that don't have <unk>.

Jackass or Nigel again, I'll I'll take that. Um, so yeah, look, we report Revenue in aggregate, um, so we we don't obviously break that out between pass throughs and direct fee. All, all we can do really do is give you qualitative commentary around that as as we have done in terms of that increasing proportion of pass throughs. Um, so and likewise in terms of margins, I think we've we've touched on the the the various factors that are weighing on margins next year and also how we can hopefully help mitigate some of that. Some of um, that challenge. Um, so again it's premature for us to give you any any, um, guidance on on margin outlook for next year. Again, we'll do that when we get to there. I don't know if you wanted to add anything else to that. Yeah, I think you covered it. There's multiple different, put some calls, but 1 of the big ones is business. Business makes

Emily legally bound.

Terms and conditions and I'm, just curious what that again the ratio of <unk>.

And the degree of which Awards in different therapeutic, areas manifest, into Revenue.

Non contracted in bookings and backlog and then how that ratio has changed and then where the cancels are coming from.

It's not always linear and it's not always obvious. But as an indicator over the last year, excuse me.

Eric maybe I'll take that one barring obviously feel free to add.

I can't really comment on what others do frankly in terms of how they book Awards I'll leave you to assess that on what they do you are right. Our practice has been to take bookings on.

An award on the logic, rather than a contract on the logic for docs is that that is closer to know if you will in terms of what's happening on the ground commercially because obviously there is a lag from award to signing a contract it can be several months.

[Company Representative]: It takes time to work how that works through the flow, and we'll certainly be taking that into account when we set guidance early in the new year.

Our level of RFP activity and indeed our level of Awards in an area, like cardio metabolic, which carries a very significant path through load have increased by more than an order of magnitude. So when you see significant shifts in pass through heavy toss, this is good news. These are gross, bookings, that will drive direct fees that will drive margins in time. Um, but they do also make us consider what the pass through load will be. So it takes time to work how that works through the flow and we'll certainly be taking that.

into account when we said guidance, early in the new year,

Operator: Thank you. Your next question comes from the line of Eric Caldwell from William Blair. Please go ahead.

Thank you.

So it is a more real time measure if you would've heard us what's happening in terms of.

Your next question comes from the line of Eric, colewell from bed, please. Go ahead.

[Analyst 3]: Thanks. Good morning. I am curious, when looking at backlog and bookings, you've always had an approach of taking written confirmations as opposed to formally contracted awards, which is a bit unique versus the rest of the group, but you've been clear about that. How have those ratios changed over time? When you parse the higher cancels that you're facing today, what % of those cancels are coming from the non-contracted bookings, the ones that don't have formally legally bound terms and conditions in them? I'm just curious what that, again, the ratio of non-contracted in bookings and backlog, and then how that ratio has changed and where the cancels are coming from.

Commercial demand.

On your question on the training is out over time or that the pattern of awards in consoles and I think Bob touched on the point us the predominance of the content that we've seen have been in awards that haven't yet moved to enrollment and so that is a mixture of both.

Actually I don't have at my fingertips, the mix of that between the two.

But it is reflective of again the factors that we've seen and touched on over the last few quarters around contracts being elevated because of re prioritization decisions because of for example in the biotech arena.

<unk> environments and companies, helping to raise money or havent raised money or have been delayed until one re prioritizing where they stand and likewise in large pharma and so it is a mixture frankly.

Uh, thanks, good morning. I am, uh, Curious when looking at backlog and bookings. Um, you've always had an approach of uh taking written, uh, confirmations as opposed to formally contracted Awards, which is a bit unique for the rest of the group, but you've been clear about that. Um, how have those ratios changed over time? Uh, and and when you parse the higher cancels that you're facing today, what what percent of those cancels are coming from the non-contracted bookings. The ones that don't have formally legally bound, uh, terms and conditions in them. I'm, I'm just curious what that again, the ratio of

And that's that's what we've seen so far.

Nigel Clerkin: All right, maybe I'll take that, and Dr. Steve Cutler, obviously, feel free to add. I can't really comment on what others do, frankly, in terms of how they book awards. I'll leave you to assess that on what they do. You are right. Our practice has been to take bookings on award rather than on contract. The logic for that is that that is closer to now, if you will, in terms of what's happening on the ground commercially, because obviously there is a lag from awards to signing a contract that can be several months. It is a more real-time measure, if you will, of what's happening in terms of commercial demand.

non-contracted in bookings and backlog and then how that ratio has changed and where the cancels are coming from.

Thank you.

Your next question comes from the line of Charles <unk> from TD Cowen. Please go ahead.

Yes, thanks for taking my questions.

Maybe if I could follow up.

To Eric's question.

When you look at the backlog and I'm sure you've done sort of analysis.

The backlog itself I mean, do you feel comfortable that maybe we've gotten through most of the potential projects that could do you think could be cancelled or I mean, do you have a better sense of what the quality of that of the remaining backlog that youre looking at today and then a follow up Barry at the beginning you've kind of talked about.

All right. Maybe I'll check that and biography. Feel free to add. Um, I can't really comment on what others do frankly, in terms of how they book awards, I'll, I'll leave you to set that up on on what they do. You are right. Our our partners has been to take bookings on, um, on award and the logic rather than a contract. And the logic for that is that that is closer to. Now, if you will, in terms of what's happening on the ground,

Nigel Clerkin: On your question on the trending of that over time or the pattern of awards and cancels, I think Dr. Steve Cutler touched on the point that the predominance of the cancels that we've seen have been in awards that haven't yet moved to enrollment. That is a mixture of both. Frankly, I don't have at my fingertips the mix of that between the two. It is reflective of, again, the factors that we've seen and touched on over the last few quarters around cancels being elevated because of reprioritization decisions, because of, for example, in the biotech arena, funding environment and companies hoping to raise money or haven't raised money or have been delayed and reprioritizing where they spend, and likewise in large pharma. It is a mixture, frankly. That's what we've seen so far.

Good RFP flow in biotech.

Any kind of additional information can kind of give us in terms of sort of win rates in biotech and how your market share has changed in barco.

The increase during the third quarter or in 2025 versus 2024, and maybe sort of what you're seeing there. Thanks.

And expertly managed to partner Charles I'll do my best to address both I think on the backlog look as we said there are a mix of reasons why studies council, whether its emerging clinical data from an ongoing study, whether it's re prioritization of the portfolio or other reasons and the remix of contracted ongoing.

<unk> ongoing pre contract et cetera, so there arent really a mix what I would say is that to the degree that the turmoil of the last couple of years did result in some delays and some disruption in terms of awards proceeding to contract and contract proceedings to restart.

So that is a mixture of both. Um, frankly I don't have my fingertips, the mix of that between the 2. Um, but it is reflective of again, you know, the factors that we've seen and what's done over the last few quarters around canceled being elevated because of rep prioritization decisions. Because of, for example, in the biotech Arena, funding environment and companies hoping to raise money, or having to raise money, or have been delayed, and so on, and re prioritizing, where they spend and likewise in large Pharma, um, so it is a mixture frankly. Um, and uh, that's, you know, that's what we've seen so far.

Operator: Thank you. Your next question comes from the line of Charles Rhyee from TD Cowen. Please go ahead.

Thank you.

Your next question comes from the line of Charles. Ray from TD Howen, please go ahead.

[Analyst 3]: Yeah, thanks for taking the questions. Maybe if I could follow up to Eric's question. When you look at the backlog, and I'm sure you've done sort of analysis of the backlog itself, do you feel comfortable that maybe we've gotten through most of the potential projects that you think could get canceled? Do you have a better sense of what the quality of the remaining backlog that you're looking at today is? A follow-up, Dr. Steve, at the beginning, you kind of talked about good RFP flow in biotech. Any kind of additional information you can kind of give us in terms of sort of win rates in biotech and how your market share has changed in biotech? Has that increased here in the third quarter or in 2025 versus 2024? Maybe sort of what you're seeing there. Thanks.

I'm confident we are closer to the end of that process than the beginning now who knows what normal looks like in this business, but as I said earlier I do anticipate that we will return to more normalized levels of cancels, which I think is remains of the question that youre asking about backlog.

So encouraged by the profile of the awards that are going into backlog of late I do think there is a much healthier association between the awards that are coming in.

Now and in the last number of quarters than perhaps those that are coming out of backlog or at least those that are driving us above.

So I'm encouraged by that for sure.

Uh, yeah, thank thanks for taking the questions. Um, maybe if I could, uh, follow up, um, to to Eric's question, uh, when when you look at the backlog, um, and I'm sure you've done sort of analysis, uh, of the backlog itself. I mean, do you feel comfortable that maybe we've gotten through most of the potential projects? That could that you think could be get canceled? Or, I mean, do you do, do you have a better system, what the quality of that of the remaining backlog that you're looking at today? And then a follow-up barrier at the beginning, you kind of talk about

Biotech RFP flow.

I mean retrospective rationalization is a dangerous thing.

We know biotech funding has improved somewhat we spoken repeatedly that that's sort of a two sided coin. There is the level of funding, but there's also the amount of the allocated funding that gets deployed and I think thats, probably the <unk> side of the argument, we do see a number of our biotech customers not just moving forward to deploy capital with a deployed in <unk>.

Nigel Clerkin: An expertly managed two-parter, Charles. I'll do my best to address both. I think on the backlog, as we said, there are a mix of reasons why studies cancel, whether it's emerging clinical data from an ongoing study, whether it's reprioritization of the portfolio, or other reasons. They're a mix of contracted and ongoing, ongoing, pre-contract, etc. There are really a mix. What I would say is that to the degree that the turmoil of the last couple of years did result in some delays and some disruption in terms of awards proceeding to contract and contract proceeding to study start, I am confident we are closer to the end of that process than the beginning. Now, who knows what normal looks like in this business?

Um, put RFP flow in in biotech, uh, any kind of additional information, you can kind of give us in terms of sort of, in rates in biotech. And, you know, how your market share has changed in B, has has that increased. The end of the quarter or in 2025 versus 2024 and

Occasions, where theyre running larger studies relatively deep into the development cycle.

Good for US, Yes, I think it is doesn't mean occasionally you see some larger cancels come out of that biotech organization or that biotech field, yes. It does but I think in the main.

Im optimistic and encouraged we made a strategic priority out of seeing more of the biotech market. We are being successful in that regard. We're looking at very significant increases in RFP flow quarter over quarter year over year trailing 12 month, that's a good thing.

We also imbalance said that we wanted to see significantly higher win rates and biotech and thats materially flat on a quarter over quarter basis. So there's work to do for icon there.

Nigel Clerkin: As I said earlier, I do anticipate that we will return to more normalized levels of cancels, which I think is germane to the question that you're asking about backlog. I'm also encouraged by the profile of the awards that are going into backlog of late. I do think there's a much healthier association between the awards that are coming in now and in the last number of quarters than perhaps those that are coming out of backlog, or at least those that are driving us above historical norms for cancels. I'm encouraged by that for sure. In terms of biotech RFP flow, retrospective rationalization is a dangerous thing. We know biotech funding has improved somewhat. We've spoken repeatedly that that's sort of a two-sided coin. There's the level of funding, but there's also the amount of the allocated funding that gets deployed.

In all honesty, there's areas of the biotech market, where icon wasn't historically as present or is focused at I want us to be and as I believe we are now and if that means we show up on other People's radar more than we did in the past and I think that's a really good thing and the focus of the teams will be.

Expertly, managed, 2 partner Charles? Uh, I'll do my best to, uh, to address but I think on the backlog, look, as we said, there are a mix of reasons why studies Council whether it's emerging clinical data from an ongoing study, whether it's rep, prioritization of the portfolio or other reasons and there were mixed of contracted and ongoing ongoing pre contracts, Etc. So there are really a mix. What I would say is that to the degree that the turmoil of the last couple of years did result in some delays and some disruption in terms of awards, pleading to contract the contract proceeding to study start. I am confident. We are closer to the end of that process than the beginning. Now, who knows what normal looks like in this business. But, as I said earlier, I do anticipate that we will return to more normalized levels of cancels, which I think is Germaine to the question that you're asking about backlog.

Burton that elevated RFP flow into sustained higher book.

I'm also encouraged by the profile of the awards that are going into backlog of late. I do think there's a much healthier association between the awards that are coming in, uh, now and in the last number of quarters, then perhaps those that are coming out of backlog and or at least those that are driving us above historical norms for Council, so I'm encouraged by that for sure.

Thank you.

in terms of Biotech, RFP flow,

Your next question.

Comes from the line of Macao, we skin from Bank of America. Please go ahead.

Great. Thanks for taking my question.

Lumpy.

Nigel Clerkin: I think that's probably the under-discussed side of the argument. We do see a number of our biotech customers not just moving forward to deploy capital, but to deploy it in indications where they're running larger studies relatively deep into the development cycle. Now, is that good for us? Yes, I think it is. Does it mean occasionally you see some larger cancels come out of that biotech organization or that biotech field? Yes, it does. I think in the main, I am optimistic and encouraged. We made a strategic priority out of seeing more of the biotech market. We are being successful in that regard. We're looking at very significant increases in RFP flow, quarter over quarter, year over year, trailing 12 months. That's a good thing.

Small and smaller dogs are hungry man.

I'm squaring reporting.

I wanted to go back to that and maybe comment the pricing on the pass through component from another angle.

I'm just curious.

Obviously fluctuation from therapeutic mix customer mix.

Pricing dynamics, perhaps through this all happens on a regular quarter to quarter basis.

You could say in terms of what Youre seeing now.

How short term event.

One of our more cyclical or a more structural.

You walk forward longer term.

Any visibility or any comments you can make on.

The duration of this dynamic and when you think things could.

Nigel Clerkin: We also, in balance, said that we wanted to see a significantly higher win rate in biotech, and that's materially flat on a quarter over quarter basis. There is work to do for ICON there. In all honesty, there are areas of the biotech market where ICON was not historically as present or as focused as I want us to be and as I believe we are now. If that means we show up on other people's radar more than we did in the past, I think that is a really good thing. The focus of the teams will be converting that elevated RFP flow into sustained higher bookings.

Normalize all of them.

Got it.

I think I said on our last call Mike that history makes fools of adult so I am going to be careful prognosticating around what the pricing environment might be like a year or two or five from now I think the important thing to note that it's stable.

I mean retrospective rationalization is a dangerous thing um we know biotech funding has improved somewhat. We've spoken repeatedly that that's sort of a 2-sided coin, there's the level of funding but there's also the amount of the allocated funding that gets deployed and I think that's probably the under discussed side of the argument. We do see a number of our biotech customers, not just moving forward to deploy Capital but to deploy it in indications where they're running larger studies relatively deep into the development cycle. Um, is that good for us? Yes, I think it is. Does it mean occasionally you see some larger? Uh, cancels come out of that biotech organization or that biotech field? Yes it does. But I think in the main I am optimistic and encouraged, we made a strategic priority out of seeing more of the biotech Market. We are being successful in that regard. We're looking at very significant increases in our PE flow order over quarter year over year, trailing 12 months. That's a good thing. We also in Balance said that we wanted to see a significantly higher win rate.

In biotech and that's materially flat on a quarter over quarter basis. So there's work to do for Icon there.

It is an elevated competitive markets and I've always said food companies are branded competitors and that's a good thing. So there is an onus on all of us to realize that drug developments too expensive and it takes too long.

And the over under on more cost effective drug development skewed substantially towards better process more effective interaction with regulators to reduce the onerous burden on patients on our drug developers and on the deployment of technologies to move this whole industry in the right direction I think that will drive up net spending.

In all honesty, there are areas of the biotech market where ICON wasn't historically as present or as focused as I want us to be. And as I believe we are now. If that means we show up on other people's radar more than we did in the past, I think that's a really good thing. The focus of the teams will be on converting that elevated ERP flow into sustained, higher bookings.

Operator: Thank you. Your next question comes from the line of Michaël Wiskin from Bank of America. Please go ahead.

Thank you.

Your next question.

[Analyst 2]: Great. Thanks for taking the question. I love the "when the ball is smaller, dogs are hungry" metaphor. That's a great way of putting it. I want to sort of go back to that and maybe comment on the pricing and the pass-through component from another angle. Just curious, you know there's obviously fluctuations in therapeutic mix, customer mix, pricing dynamics, you know, pass-through. This all happens on a regular quarter-to-quarter basis. Just anything you could say in terms of what you're seeing now, you know, how short-term is it? Is it a little bit more cyclical, a little bit more structural? You know, as you look forward longer term, just any visibility or any comments you can make on the duration of this dynamic and when you think things could sort of normalize a little bit. Thanks.

Comes from the line of mica we skin from Bank of America. Please go ahead.

The sector actually I don't think it will drive it down I just think we'll get more research done per dollar spend so I don't want to overstate the impact of pricing per se.

Great. Thanks for taking the question.

The cost pressures that are actually creating those pricing dynamics in the first place. So it stable is it competitive yes, do I think that's a function of the upstream dynamics vs. A regulatory geopolitical or low related for our customers absolutely do in pharma Likewise funding for our biotech customers have said a few times now we didn't get to where we are.

Or in a heartbeat and I don't think we will get back in a heartbeat, but as things begin to normalize in terms of funding in terms of deployment of capital in terms of a clearer regulatory and political picture I imagine, we will see things graduate back towards more normalized levels right across the sector, but I'm afraid I'm not going to throw out a number on a date.

Nigel Clerkin: I think I said on our last call, Mike, that history makes fools of us all. I'm going to be careful prognosticating around what the pricing environment might be like a year or two or five from now. I think the important thing to note is that it's stable, right? It is an elevated competitive market. I've always said, you know good companies have great competitors, and that's a good thing. There's an onus on all of us to realize that drug development is too expensive and it takes too long. The over-under on more cost-effective drug development skews substantially towards better process, more effective interaction with regulators to reduce the onerous burden on patients and on drug developers, and on the deployment of technologies to move this whole industry in the right direction. I think that will drive up net spend in the sector, actually.

Trying to, you know, there's obviously fluctuations in therapeutic, mix customer mix, um, pricing Dynamics, you know, pass through this all happens on a regular quarter to quarter basis, just saying you could say, in terms of what you're seeing now, you know, is it how short term is it? Is it a little bit more cyclical, a little bit more structural, um, you know, as you look forward longer term, um, just any visibility or any comments you can make on, um, the the duration of this Dynamic and when you think things could sort of, uh, normalize a little bit. Thanks.

I think that would be a little premium.

Thank you.

Your next question today comes from the line of David Windley from Jefferies. Please go ahead.

Hi, Thanks for taking my questions best wishes to Steve and Barry for your next phases.

I think I said on our last call, Mike, that history makes schools of us all. So I'm going to be careful prognosticating around what the pricing environment might be like a year, two, or five from now. I think the important thing to note is that it's stable, right? It is an elevated competitive market, and I've always said, you know, good companies have great competitors, and that's a good thing. So there's an onus on all of us to realize that drug development is too expensive and it takes too long.

I wanted to try to combine two of the major themes here margins and bookings together and ask the question.

How do you balance.

Labor force stability and the benefits of that in both productivity and also perceptions of clients a stability of their project teams and things like that.

Nigel Clerkin: I don't think it will drive it down. I just think we'll get more research done per dollar spent. I don't want to overstate the impact of pricing per se on the cost pressures that are actually creating those pricing dynamics in the first place. It's stable. Is it competitive? Yes. Do I think that's a function of the upstream dynamics, be they regulatory, geopolitical, or LOE-related for our customers? I absolutely do in pharma, and likewise, funding for our biotech customers. I've said a few times now, we didn't get to where we are in a heartbeat, and I don't think we'll get back in a heartbeat. As things begin to normalize in terms of funding, in terms of deployment of capital, in terms of a clearer regulatory and political picture, I imagine we will see things graduate back towards more normalized levels right across the sector.

With the defense of margin.

I figure over a multiple years icon is has had several risks both synergy driven by PRA in market environment demand driven so again, how do you balance that stability of workforce and the external perceptions that that can create thanks.

And the overall under on more cost-effective drug development, skews substantially, towards better process, more effective interaction with Regulators. To reduce, the own-race burden on patients and on drug developers and on the deployment of Technologies to move this whole industry in the right direction. I think that will drive up net, spend in the in the sector actually. I don't think it will drive it down. I just think we'll get more research done per dollar spent so I don't want to overstate the impact of pricing per se on the cost pressures that are actually creating those pricing Dynamics in the first place. So it's stable.

It's a pretty broad question data and I think I appreciate where youre coming from albeit I'm not entirely sure how to answer to be candid, maybe the easiest way is to say that our head count move by about 100 FTE over the course of the quarter, which ended 40000 person in the organization.

Substantial I think.

Our trailing.

Nigel Clerkin: I'm afraid I'm not going to throw out a number and a date for you. I think that would be a little previous.

Attrition remains near historic lows.

And that's been a good number for us pretty much in a straight line since the COVID-19 piece for the whole industry saw a bit of a peak. So we focus on really driving efficiency, making sure. We have the right resources in the right roles in the right location at the right times and that's not so much a function of bookings actually as it is a function of what is required.

Is it competitive? Yes do I think that's a function of the Upstream Dynamics? Be they regulatory geopolitical or LOE related for our customers. I absolutely do in the Pharma and likewise funding for a biotech customers. A set a few times now we didn't get to where we are in a heartbeat and I don't think we'll get back in a heartbeat but as things begin to normalize in terms of funding in terms of deployment of capital in terms of a clearer Regulatory and political picture, I imagine we will see things graduate back towards more normalized levels. Right across the sector but I'm afraid I'm not going to throw out a number and a date for you. I think that would be a little previous.

Operator: Thank you. Your next question, Steve, comes from the line of David Windley from Jefferies. Please go ahead.

Thank you.

[Analyst 3]: Hi. Thanks for taking my questions. Best wishes to Steve and Nigel for your next phases. I wanted to try to combine two of the major themes here, margins and bookings, together and ask the question, how do you balance labor force stability and the benefits of that in both productivity and also perceptions of clients, of stability of their project teams, and things like that with the defense of margin? I figure over multiple years, ICON has had several risks, both synergy-driven by PRA and market environment demand-driven. How do you balance that stability of workforce and the external perceptions that that can create? Thanks.

Your next question, today comes from the line of David Woodley from Jeffrey's. Please go ahead.

Wired to move these studies forward I talked earlier on about more algorithmic approach to resource management part of that is being able to spread your risk over your portfolio you remember earlier in the year when we talked about some very large studies coming in than going on hold some canceling some renewing and then stopping and we didn't see mass.

Hi. Thanks for taking my questions, best of wishes to uh Steve and Barry for your next phases. Um I wanted to try to combine 2 of the major themes here.

Margins and and bookings together and ask the question.

How do you balance?

Swings in the Labor force, we didnt see massive swings in the margin dynamics, we didn't see massive disruption of the customers on the other studies that we are in the book. So I think the answer is we pull all the levers that any professional service company does we continue to invest in the best talent I believe we have the best expertise in the industry. It is absolutely vital.

Labor force stability and the benefits of that in, you know, both productivity and also perceptions of clients of stability of their project teams and things like that.

Lead that we sustain and improve that position, but I don't really see it as a trade off of margin and bookings, it's more about making sure that we give our customers the best people and we give our people the best environment in which to be successful.

Nigel Clerkin: It's a pretty broad question, David, and I think I appreciate where you're coming from, albeit I'm not entirely sure how to answer you to be candid. Maybe the easiest way is to say that our headcount moved by about 100 FTE over the course of the quarter, which in a 40,000-person organization isn't substantial. I think our trailing attrition remains near historic lows, and that's been a good number for us, pretty much in a straight line since the COVID peaks, where the whole industry saw a bit of a peak. We focus on really driving efficiency, making sure we have the right resources in the right roles, in the right locations, at the right times. That's not so much a function of bookings, actually, as it is a function of what is required to move these studies forward.

With the defense of margin. Um I figure over multiple years, icon has has had several risks, both Synergy driven by P and and in the market environment, demand driven. So again how do you balance that stability of Workforce and the you know, the external perceptions that that can create thanks.

Thank you.

Okay.

Our next question comes from the line of Tom <unk> from UBS. Please go ahead.

Alright. Thank you for taking the questions. This is Kyle on for now and then.

It sounds like you expect cancellations to moderate in 2026, given your current view on the backlog, but is there a risk with elevated cancellations relating to order not yet started studies will persist throughout 2026 separately could you provide an update on BARDA funded COVID-19 related trials that you continue to service. Thank you.

I'll take the second one I mean, I think we've talked about 1% to 2% Cove.

Nigel Clerkin: I talked earlier on about a more algorithmic approach to resource management. Part of that is being able to spread your risk over your portfolio. You remember earlier in the year when we talked about some very large studies coming in, then going on hold, some canceling, some renewing, and then stopping. We didn't see massive swings in the labor force. We didn't see massive swings in the margin dynamics, and we didn't see massive disruption of the customers on the other studies that were in the book. I think the answer is we pull all the levers that any professional service company does. We continue to invest in the best talent. I believe we have the best expertise in the industry. It's absolutely vital to me that we sustain and improve that position. I don't really see it as a trade-off of margin and bookings.

Covid revenue, so theres not much of a lift a falloff there more of a curve fully basis, yes, I think expectation any change there is to the upside very honestly.

In terms of cancels.

One can never say there is not a risk of anything happening probabilistic Lee I think it's unlikely what we think we're seeing at least my sense of it is we are seeing the consequences of the last couple of years, you've got a confluence of a couple of issues funding pressures low driving re prioritization, perhaps some of the science that got funded when money was cheap and abundant.

Pretty broad question David. And I think I appreciate where you're coming from, albeit. I'm not entirely sure how to answer you if you can. Maybe the easiest way is to say that our headcount moved by about 100, FTE over the course of the quarter, which in a 40,000 person organization isn't substantial. I think our trailing, uh, attrition remains near historic lows. Uh, and that's been a good number for us, pretty much in a straight line since the co Peaks, where the whole industry saw a bit of a peek. So we focus on really driving efficiency. Making sure we have the right resources in the right roles in the right locations at the right times. And that's not so much a function of booking actually, as it is a function of what is required to move these studies forward. I talked earlier on about a more algorithmic approach to Resource Management. Part of that is being able to spread your risk over your portfolio. You remember earlier in the year, when we talked about some very large studies coming in, then going on, hold some canceling, some renew.

Not perhaps being followed through and that has put.

A different light on some of the studies that were planned awarded and in some cases started.

Nigel Clerkin: It's more about making sure that we give our customers the best people and we give our people the best environment in which to be successful.

My confidence that we will see a return to more normalized level of cancels in 2020, yes, I am I am I willing to sign on the dotted line and say that will be linear from January one no I'm not but I do think we're closer to the ninth inning done the first.

And then stopping and we didn't see massive swings in the labor force. We didn't see massive swings in the margin Dynamics and we didn't see massive disruption of the customers on the other studies that were in the book. So I think the answer is we pull all the levers that any Professional Service Company does. We can continue to invest in the best talent. I believe, we have the best expertise in the industry. It's absolutely vital to me that we sustain and improve that position, but I don't really see it as a trade-off of margin and bookings. It's more about making sure that we give our customers, the best people and we give our people the best environment in which to be successful.

Operator: Thank you. Our next question comes from the line of Dan Leonard from UBS. Please go ahead.

Thank you.

On the basis of how we interpret the backlog on the basis of how we speak with our customers on the basis of the broad demand dynamics across the industry I think that's a reasonable assumption how far how fast and how soon I think it's a little early to say.

[Analyst 2]: Hi, thank you for taking the questions. This is Kyle on Pernell. Dan, it sounds like you expect cancellations to moderate in 2026 given your current view on the backlog. Is there a risk that elevated cancellations relating to older, not yet started studies will persist throughout 2026? Separately, could you provide an update on BARDA-funded COVID-related trials that you continue to service? Thank you.

Of gun Leonard from UBS. Please go ahead.

Thank you for taking the questions. This is Kyle on for now, and it's

It sounds like you expect cancellations to moderate in 2020.

But as we've said, we do consider them likely to remain elevated in the fourth.

Thank you.

Your next question comes from the line of Lee from Barclays. Please go ahead.

Is there a risk that elevated cancellations related to order? Not yet started studies will persist throughout 2026. Separately could you provide an update on Barna funded coid related trials that you continue to service? Thank you.

Nigel Clerkin: I'll take the second one, Dan. I think we've talked about 1% to 2% COVID revenue, so there's not much of a cliff to fall off there, more of a curve.

Great. Thanks for the question I, just wanted to talk a little bit about the burn rate and the <unk>.

[Analyst 1]: On a full-year basis.

It's been relatively stable here at <unk>.

Nigel Clerkin: Yeah, I think any change there is to the upside, very honestly. In terms of cancels, no one can ever say there's not a risk of anything happening. Probabilistically, I think it's unlikely. What we think we're seeing, at least my sense of it is, we are seeing the consequences of the last couple of years. You've got the confluence of a couple of issues, funding pressures, LOE driving reprioritizations, perhaps some of the science that got funded when money was cheap and abundant, not perhaps being followed through. That has put a different light on some of the studies that were planned, awarded, and in some cases started. Am I confident that we will see a return to more normalized level of cancels in 2026? Yes, I am. Am I willing to sign on the dotted line and say that will be linear from January 1? No, I'm not.

I'll take the second 1, Dan. I mean, I think we talked about 1 to 2%, uh, coid Revenue. So there's not much of a cliff to follow up there, more of a curb, a full year basis. Yeah. I think expectations.

Based on the midpoint kind of implies like a little bit of a step down there.

Talk about the recent bookings that you're getting what's coming out of the backlog.

Any change there to the upside, very honestly. Um, in in terms of

And just the visibility that these burn rates will stick around this like.

0.2 level as we think about kind of modeling in the toggles for 26.

Luke it's bearing aerostar to nudge them I want to elaborate a little bit I would point you first in my remarks.

The cancels that we took during the quarter not entirely but they did skewed disproportionately towards studies that had not yet started that we're sitting in the backlog effectively zero percent burn rate I'd also point you to the increase in gross bookings, which in the immediate term actually are a drag on burn rate as studies take time to ramp up. So I think there are some of the primary.

Canceled. I mean no 1 can ever say there's not a risk of anything happening. Probabilistically, I think it's unlikely. What we think we're seeing. At least my sense of it is we are seeing the consequences of the last couple of years. You got the Confluence of a couple of issues funding pressures Eloy driving re prioritization. Perhaps some of the signs that got funded when money was cheap and abundant uh not perhaps being followed through and that has, you know, put a different light on some of the studies that were planned awarded. And in some cases started

Am I confident that we will see a return to more? Normalized level of cancers in 201.

Nigel Clerkin: I do think we're closer to the ninth inning than the first. On the basis of how we interpret the backlog, on the basis of how we speak with our customers, and on the basis of the broad demand dynamics across the industry, I think that's a reasonable assumption. How far, how fast, and how soon, I think it's a little early to say. As we've said, we do consider them likely to remain elevated in Q4.

But Nigel you might want to respond yes look I think look again youre right, obviously, we had.

Expected burn to be approximately stable.

Stable at approximately 8% through the course of the year and that is one thing if I could come in better than us and as you've noted at year to date, let's say exactly where we landed in Q4, but in around 8% was what we anticipated on what we are seeing.

I am. Am I willing to sign on the dotted line and say that will be linear from January 1? No, I'm not. But I do think we're closer to the 9th Inning than the first um, on the basis of how we interpret the backlog and the basis of how we speak with our customers and on the basis of the broad demand Dynamics across the industry. I think that's a reasonable assumption. How far, how fast and how soon? I think it's a little early to say,

but as we've said, we do consider them likely to remain elevated in quarter.

Operator: Thank you. Your next question comes from the line of Luke Sagot from Barclays. Please go ahead.

Thank you.

Going into next year, absolutely it'll be a function of of course, what happens in charges countless inspiring touched on unimportant to gross wins as well, but also on all the initiatives that we have.

[Analyst 2]: Great. Thanks for the question. I just want to talk a little bit about the burn rate and, you know, it's been relatively stable here. Your Q4, basically, the midpoint kind of implies like a little bit of a step down there. You know, talk about the recent bookings that you're getting, what's coming out of the backlog, and just the visibility that these burn rates will stick around this like 8 to 8.2 level as we think about kind of modeling in the toggles for 2026.

Your next question comes from the line of Luke sagot from Barclays. Please go ahead.

Driving frankly to enhance zucker unmatched overtime.

Look again, that's also of course, one of the important components of off highway framework guidance for next year.

Great, thanks for the question. Um, I just want to talk a little bit about the burn rate and the, you know, it's been relatively stable here, your 4 q. Uh, basically the midpoint kind of implies like a little bit of a step down there. Um,

Which we will provide you more color on what do we get to there.

Thank you.

Your next question.

Nigel Clerkin: Luke, it's Dr. Steve Cutler here. I'll start, and Nigel might want to elaborate a little bit. I would point you first to my remark that the cancels that we took during the quarter, not entirely, but they did skew disproportionately towards studies that had not yet started that were sitting in the backlog effectively at a 0% burn rate. I'd also point you to the increase in gross bookings, which in the immediate term actually are a drag on burn rate as studies take time to ramp up. I think there are some of the primary dynamics, but Nigel, you might want to expand. Yeah. I think you combat look, again, you're right. Obviously, we had expected burn to be approximately stable at approximately 8% through the course of the year, and that is what we have seen.

Comes from the line of Max <unk> from William Blair. Please go ahead.

You know, talk about the the the Recent Bookings that you're getting, what's coming out of the backlog. Um, and just the visibility of the burn rates will stick around this like 8 to 8.2% in the toggles for 26.

Good morning, it's Christina <unk> on for Lax.

Look, it's about here. I'll start and Nigel might want to elaborate a little bit. I would point you first to my remark that uh

Echo the congratulations to both Steve and Barry.

In terms of our questions.

Hoping you can discuss if it.

We're still seeing strength in the early phase work that you called out previously or if there has been more of a shift towards late phase work. Thanks.

Thanks, Christine good wishes and the answer is yes, we continue to see good activity in our early phase business with strong growth both on a year over year on a sequential basis.

To cancel that, we took during the quarter—not entirely, but they did skew disproportionately towards studies that had not yet started, that were sitting in the backlog effectively at a 0% burn rate. I'd also point you to the increase in growth bookings, which in the immediate term actually are a drag on the burn rate of studies. They take time to ramp up. So I think there are some of the primary dynamics. But, Nigel, you might want to expand.

That's a business that has grown in double digits on a year over year basis, and that's growth that we intend to sustain an improvement.

Nigel Clerkin: In fact, it's come in a little better than that, as you've noted, year to date. Let's see exactly where we land in Q4, but in around 8% was what we anticipated and what we are seeing. Going into next year, absolutely, it'll be a function of, you know, of course, what happens in terms of cancels, as Dr. Steve Cutler touched on, and importantly, gross wins as well, but also on all the initiatives that we are driving, frankly, to enhance and improve that burn rate over time. Again, that's also, of course, one of the important components of how we frame our guidance for next year, which we will provide you more color on when we get to there.

Thank you.

So next question.

Comes from the line of Casey Woodring from J P. Morgan. Please go ahead.

Yeah, look I think you come back. Look again, you're you're right. Obviously. We we had, um, you know, expected burn to be approximately stable at at stable at approximately 8% through the course of the Year and that is what we have seen. In fact, it's come in a little better than that as you've noted a year to date. Let's see exactly where we land in Q4, but in around 8% was what we anticipated and what we are seeing, um, going into next year, the absolutely it'll be a function of, you know,

Great.

Yes, Steve Perry congratulations.

Okay.

So just quickly two quick ones first one any more granularity on the trial mix that drove the higher pass throughs. This quarter was all cardio metabolic.

And then just one on the cost management side automation has been a theme you've called out in the past is a margin driver.

Going back to your last analyst day, you talked a lot about the advancements you've made there taking man hours out.

Of course, what happens in terms of cancel this by touchdown and importantly growth wins as well. But also on, uh, all the initiatives that that we are driving frankly to enhance and improve that burn rate over time. Um look again that's also of course 1 of the important components of of how we frame our guidance for next year. Um which we will provide you more color on when we get to their

Operator: Thank you. Your next question comes from the line of Max Smart from William Blair. Please go ahead.

Thank you.

So I'm just curious on kind of the progress you've made on that front and how much you can offset pricing pressure therapy automation and AI. Thank you.

Your next question.

[Analyst 1]: Good morning. It's Christine Ranson from Max. Wanted to echo the congratulations to both Steve and Nigel. In terms of our question, hoping you can discuss if you're still seeing strength in early-phase work that you called out previously or if there's been more of a shift towards late-phase work. Thanks.

Comes from the line of Max Smart from William Blair. Please go ahead.

Chris I'll start on the trial. The next survey that is a factor and Barry touched on you know the strength, we're seeing there in terms of opportunities and wins.

Of course, you touched on that.

Cohort study as well as the vaccine study that was ongoing.

Was particularly active in the third quarter and was particular impact there.

Nigel Clerkin: Thanks, Christine. Appreciate your good wishes. The answer is, yeah, we continue to see good activity in our early-phase business with strong growth, both on a year-over-year and a sequential basis. That's a business that's grown at double digits on a year-over-year basis, and that's growth that we intend to sustain and improve on.

Um, good morning. It's Christine Reigns on, for Max, um, wanted to Echo the congratulations to both Stephen Barry. Uh, in terms of our question, um, hoping you can discuss. Um, if you're still seeing strength in early phase work that you called out previously, or if there's been more of a shift towards um, late phase work. Thanks.

But in general.

The comments you made before around pasture as being an increasing proportion of our revenue.

Over a more sustained period is not so much that it's more around the therapeutic mix as we've talked about.

On automation, you're absolutely right that is of course.

Thanks Christine, appreciate your good. Wishes, the answer is, yeah, we continue to see good activity in our early phase business with, you know, strong growth, both on a year-over-year, and a sequential basis. Um, as a business that's grown at double digits on a year-over-year basis, and that's growth that we intend to sustain and improve.

Operator: Thank you. Your next question comes from the line of Casey Woodring from JP Morgan. Please go ahead.

One of the levers that we lean into always in terms of driving more efficiency and it's something we will continue to do.

Thank you.

Your next question.

Alright, I don't know if theres anything you want to answer that in terms of I know you've touched on already our priorities. There, yes, I think you've dealt with it well I mean at the end of the day Casey.

[Company Representative]: Great. Yeah, Steve, Nigel, congratulations. Yeah. Just quickly, two quick ones. First one, any more granularity on the trial mix that drove the higher pass-throughs this quarter? Was it all cardiometabolic? Just one on the cost management side, automation has been a theme you've called out in the past as a margin driver. Going back to your last analyst day, you talked a lot about the advancements you've made there on taking man-hours out. Just curious on kind of the progress you've made on that front and how much you can offset pricing pressure there via automation and AI. Thank you.

Great. Uh yes. Steve Barry. Congratulations. Um

Turned on us to take time and cost out of the development cycle and create value in that regard we get to share in some of that value that the basic premise of our partnership. So when we think about cost management, there's puts and calls there in terms of what we save in what we share, but certainly technology is a huge part of it and I've talked before that important to me.

Yeah. Uh, so just quickly, two quick ones first. One, any more granularity on the trial mix that drove the higher passes this quarter? Was it all cardio, metabolic?

Leaning more assertively into some of these AI enabled technologies, we just actually progressed a project rollout of end to end project management workflow management system, which is a really important evolution for us to be able to bring all that data together and put it in the 100 P M and <unk> for a more rapid and accurate decision making.

Nigel Clerkin: Casey, I'll start on the trial mix. Certainly, that is a factor. Dr. Steve Cutler touched on, you know, the strengths we're seeing there in terms of opportunities and wins. Of course, you touched on the COVID study as well, or the vaccine study that was ongoing that was particularly active in the third quarter, so it was a particular impact there. In general, you know, the comments we made before around pass-throughs being an increase in proportion of our revenue over a more sustained period is not so much that. It's more around a therapeutic mix, as we've talked about. On automation, you're absolutely right. That is, of course, one of the levers that we lean into always in terms of driving more efficiency and is something we will continue to do. Dr.

And then, you know, just 1 on the cost management side. You know, automation has been a theme you've called out in the past as a margin driver. Uh, you know, going back to your last analyst day, you talked a lot about the advancements, you've made their on taking man-hour out. Um, so just curious, um, uh, kind of the progress you've made on that front and you know how much you can offset pricing pressure there via Automation and AI. Thank you.

Obviously engaged in a range of external partnerships, where these technologies allow us to recruit patients more effectively more quickly to manage patients. Both in terms of their care stipends that they're paid more effectively our clinical trial management systems with our external partners and indeed risk based quality management, one of the big areas that will drive efficiency.

Actually in the area of agenda AI. So we started deploying over the course of the last year or so agents across our business to help us delegate workflow and process to these agents rather than simply information gathering via large language models et cetera, and one that I would call out as a proprietary technology we develop.

Nigel Clerkin: Cutler, I don't know if there's anything you wanted to add to that in terms of, I know you've touched on already, our priorities there.

But and then Orbis, which is effectively a multi agent digital assistant if you think about multiple agents across the icon landscape. This is the front door through which employees can go in and relate to multiple agents at the same time without needing a ph D. In the organization's digital infrastructure to access that information so effectively an agent of <unk>.

All starts on the trial, mixer service, that that is a factor in Barry touchdown, you know, the strengths we're seeing there in terms of of opportunities and, and wins. Um, of course, you touched on the, um, Co study as well or the vaccine study, that was ongoing that, um, was particularly active in the third quarter and was was a particular impact there. Um, but but in general, you know, the comments we've made before around pastors being an increase in proportion of our Revenue over over a more sustained. Period is not so much that it's more around therapeutic mix. As we've talked about, um, on automation, you're absolutely right. That is, of course, A A 1 of the leaders that we lean into always in terms of driving more efficiency, and is something we will, uh, continue to do. Um, all right, I don't know if there's anything you wanted to add to that in terms of

[Company Representative]: Yeah, I think you've dealt with it well. I mean, at the end of the day, Casey, our customers depend on us to take time and cost out of the development cycle and create value in that regard. We get to share with some of that value. That's the basic premise of our partnership. When we think about cost management, there's puts and calls there in terms of what we save and what we share. Certainly, technology is a huge part of it. I've talked before about the importance to me of leaning more assertively into some of these AI-enabled technologies. We've just actually progressed a project to roll out an end-to-end project management workflow management system, which is a really important evolution for us to be able to bring all of the data together, put it in the hands of the PMs, and inform more rapid and accurate decision-making.

We have touched on already. Our priorities are. Yeah I I think you've dealt with it. Well I mean at the end of the day Casey our customers depend on us to take time and cost out of the development side.

Create value in that.

To share in some of that value, that's the basic premise of our Partnerships.

That allows you to run multiple analyses source multiple different data points from multiple different agents across the system. Now that's early days, that's exactly the kind of thing that would create and I hope to capture value for the company and its customers.

Thank you.

So when we think about cost management, there's there's put some calls there in terms of what we say and what we share, but certainly technology is a huge part of it. And I talked before about the importance to me of leaning more assertively into some of these AI enabled Technologies. We just actually progressed a project to roll out an end to end project management.

We will now take our final question for today.

The final question comes from the line of Bob <unk> from Cleveland Research. Please go ahead.

[Company Representative]: We're obviously engaged in a range of external partnerships where these technologies allow us to recruit patients more effectively, more quickly, to manage patients, both in terms of their care and the stipends that they're paid more effectively, our clinical trial management systems with our external partners, and indeed risk-based quality management. One of the big areas that will drive efficiency is actually in the area of agentic AI. We've started deploying over the course of the last year or so agents across our business to help us delegate workflow and process to these agents rather than simply information gathering via large language models, etc. One that I would call out is a proprietary technology we developed by the name of Orbus, which is effectively a multi-agent digital assistant.

Hey, good morning. Good afternoon, Thanks for taking our questions I guess I wanted to dig back into the margin and potential benefit from technology investments that both Barry and Nigel are you focused on to help offset some of the price and pass through or margin pressure can you just share.

How some of these customer conversations are developing.

As it relates to how you balance sharing the savings with customers versus capturing.

Moving to help your margins in the near term and when you expect these potential efficiency savings to begin to flow through for you all into 2026 or 27.

[Company Representative]: If you think about multiple agents across the ICON plc landscape, this is the front door through which employees can go in and relate to multiple agents at the same time without needing a PhD in the organization's digital infrastructure to access that information. Effectively, an agent of agents that allows you to run multiple analyses, source multiple different data points from multiple different agents across the system. Now, that's early days, but that's exactly the kind of thing that would create and I hope capture value for the company and its customers.

It's a good question Rob on a multifaceted one I guess I wouldn't I wouldn't encourage you to think about it as a single day on which we start managing margin through technologies or otherwise that's an organic process. It's been going on for the 20 years I've been here and it's continuing the other thing I'd point out before I get to the heart of your question is we are calling at sustained margin pressure in the immediate term.

Workflow management system, which is a really important uh Evolution for us to be able to bring all of the data together. Put it in the hands of the PMs and inform more rapid and accurate decision making. We're obviously engaged in a range of external Partnerships where these Technologies allow us to recruit patients more effectively or quickly to manage patients, both in terms of their care and the siphons that they're paid more effectively, our clinical trial Management systems with our external partners and indeed, risc-based quality management, 1 of the big areas that will drive. Efficiency is actually in the area of agentic AI. So we started deploying over the course of the last year or so agents across our business to help us delegate workflow and process to these agents, rather than simply information gathering via large language models, Etc, and 1 that I would call out is a proprietary technology we developed by the name of orbus, which is effectively a multi- agency.

It's not like we're calling a massive upside in the immediate term because of a particular technology, that's going to solve all of our problems.

Digital assistant. If you think about multiple agents across the icon landscape, this is front door through which employees can go in and relate to multiple agents at the same time without needing a PhD in the organization's digital infrastructure to access that information. So effectively an agent of agents that allows you to run multiple analyses Source. Multiple different data points from multiple different agents across the system.

Early days, but that's exactly the kind of thing that.

But to your question about the customer conversations one of the interesting things that's cropped up as we're developing and in many instances co developing these transformational technologies and capabilities with our customers. It forces us to think in the context of long term relationships about whether our pricing in commercial arrangement now will be reflected.

Creates and I hope to capture value for the company as well.

Operator: Thank you. We will now take our final question for today. The final question comes from the line of Rob Cottrell from Cleveland Research. Please go ahead.

Thank you.

We will now take our final question for today.

And the final question comes from the line of robot control from Cleveland research, please go ahead.

[Analyst 3]: Hey, good morning. Good afternoon. Thanks for taking our questions. I guess I want to dig back into the margin and potential benefit from technology investments that both Dr. Steve Cutler and Nigel, you focused on to help offset some of the price and pass-through margin pressure. Can you just share how some of these customer conversations are developing as it relates to how you balance sharing the savings with customers versus capturing the savings to help your margins in the near term, and when you expect these potential efficiency savings to begin to flow through for you all into 2026 or 2027?

<unk> of the situation by the time those relationships come to maturity. So if youre signing a five year partnership 10 years ago, you probably agreed year terms plus or minus inflation now we're very much building into those discussions hey, guys. Here's how efficient we believe we can be together based on the nature of that relationship, but let's build into the governance model.

Our forum in a format, where we can recognize efficiencies as these new capabilities come on stream. That's a big part of the attraction of working with a company like icons, we're going to get incrementally more efficient with you through you and for you and we want to be in a creative conversation about how do we share the benefit and that co development piece is actually quite a high bar.

Hey, good morning, good afternoon. Thanks for taking our questions. Uh, I guess I want to dig back into the margin and potential, uh, benefit from technology Investments that both Barry. And I told you you focused on uh to help offset some of the price and pass through margin pressure, can you just share how some of these customer conversations are developing

Nigel Clerkin: It's a good question, Rob, and a multifaceted one. I guess I wouldn't encourage you to think about it as a single day on which we start managing margins through technologies or otherwise. That's an organic process. It's been going on for the 20 years I've been here, and it's continuing. The other thing I'd point out before I get to the heart of your question is we are calling out sustained margin pressure in the immediate term. It's not like we're calling out massive upside in the immediate term because of a particular technology that's going to solve all of our problems.

As it relates to how you balance sharing the savings with customers versus capturing, uh, the savings to help your margins in the near term. And when you expect these potential efficiency savings to begin to flow through, uh, for you all into 20126 or 2027,

Because there's a huge level of technological investments between ourselves and probably one or two others under larger customers in this space, but we are very much having conversations with them about how we will revisit the commercial terms.

Clinical trial paradigm gets disrupted and as we become more efficient as a company Nigel I don't know if theres anything you want to grab it.

Thank you for your client is WILDBERRY, Rob I guess anything that I would add is that as far as just went straight up.

Nigel Clerkin: To your question about the customer conversation, one of the interesting things that's cropped up as we're developing and in many instances co-developing these transformational technologies and capabilities with our customers, it forces us to think in the context of long-term relationships about whether our pricing and commercial arrangements now will be reflective of the situation by the time those relationships come to maturity. If you're signing a five-year partnership 10 years ago, you probably agreed to your terms, plus or minus inflation. Now we're very much building into those discussions. Hey guys, here's how efficient we believe we can be together based on the nature of that relationship. Let's build into the governance model a forum and a format where we can recognize efficiencies as these new capabilities come on screen. That's a big part of the attraction of working with a company like ICON.

A clear example of the benefits of scale that frankly, we can bring to those conversations we are able to we have the capability of making those investments providing that sort of longer term perspective.

Our problem.

And secondly, the only other thing I would add is that point of how do we share. These benefits together. It's a great question, but also is fundamental frankly to the philosophy culture that you should have as a service organization.

Do your customers in the end it is about delivering better service to them.

Effectively and more efficiently and jointly sharing in that and that is why we always have been and will continue to approach. These topics.

Thank you.

I would now like to hand, the call back to Barry for closing remarks.

Well. Thank you very briefly before we close out I would like to extend my thanks to our 40000 dedicated employees across icon for their continued commitment and outstanding delivery for our customers and the patients we all serve.

Nigel Clerkin: We're going to get incrementally more efficient with you, through you, and for you. We want to be in a creative conversation about how we share the benefits. That co-development piece is actually quite a high bar because there's a huge level of IT and technological investments between ourselves and probably one or two others and the larger customers in the space. We are very much having conversations with them about how we will revisit commercial terms as the clinical trial paradigm gets disrupted and as we become more efficient as a company. Nigel, I don't know if there's anything you wanted to add there.

But to your question about the customer conversation, 1 of the interesting things that's cropped up as we're developing and in many instances co-developing these transformational Technologies and capabilities with our customers. It forces us to think in the context of long-term relationships about whether our pricing and Commercial Arrangements. Now will be reflective of the situation by the time those, uh, relationships come to maturity. So if you're signing a 5-year partnership, 10 years ago, you probably agreed your terms plus or minus inflation. Now, we're very much building into those discussions. Hey guys, here's how efficient we believe we can be together based on the nature of that relationship but let's build into the governance model, a forum and a format where we can recognize efficiencies as these new capabilities. Come on screen. That's a big part of the attraction of working with a company like icon, we're going to get incrementally, more efficient with you, through you, and for you, and we want to be in a creative conversation about how we share the benefits, and that co-development piece.

And for all of you joining us on the call today. Thank you for your support and look forward to connecting again over the course of the coming quarters.

[Company Representative]: Yeah, no, I think you've outlined it well. Rob, I guess the only things I would add is that, as Dr. Steve Cutler just went through, that's a clear example of the benefits of scale that, frankly, we can bring to those conversations. We are able to. We have the capability of making those investments, providing that sort of longer-term perspective. Secondly, the only other thing I would add is that point of how do we share these benefits together? It's a great question, but also is fundamental, frankly, to the philosophy and culture that you should have as a service organization to your customers. In the end, you know it is about delivering better service to them more effectively and more efficiently and jointly sharing in that. That is, you know, how we always have and will continue to approach these topics.

It's actually quite a high bar because there's a huge level of it and technological Investments between ourselves and probably 1 or 2 others and the larger customers in the space. But we are very much having conversations with them about how we will revisit commercial terms as the clinical trial Paradigm gets disrupted and as we become more efficient as a company. Nigel, I don't know if there's anything you want to add there. Yeah, no. I think if I client as well, Barry Rabe. I I guess the only things I would add is that as Barry just went through. That's you know, a, a clear

For example, of the benefits of scale that frankly, we can't bring to those conversations. We are able to, you know, we we have the the capability of making those Investments providing that sort of longer term perspective and and secondly, the only other thing I would add is that point of, how do we share these benefits together? It's a great question. But also is fundamental frankly to the philosophy and culture that you should have as a service organization uh, to your customers in the end, you know, it is by to them more effectively and more efficiently and jointly, sharing in that and that is, you know, how we always have and and will continue to approach uh, these topics.

Operator: Thank you. I would now like to hand the call back to Dr. Steve Cutler for closing remarks.

Thank you.

Nigel Clerkin: Thank you. Very briefly, before we close out, I would like to extend my thanks to our 40,000 dedicated employees across ICON plc for their continued commitment and outstanding delivery for our customers and the patients we all serve. For all of you joining us on the call today, we thank you for your support and look forward to connecting again over the course of the coming quarter. Thank you.

I would now like to hand the call back to Barry Bar for closing remarks.

Well, thank you very briefly before we close out I would like to extend. My thanks to our 40,000 dedicated employees across icon for their continued commitment and outstanding delivery for our customers and the patients we all serve. And for all of you joining us on the call today we thank you for your support and look forward to connecting again over the course.

Thank you.

Operator: Thank you. This concludes today's conference call. Thank you for participating. You may now disconnect.

Thank you. This concludes today's conference call. Thank you for participating. You may now disconnect