Medpace (MEDP) Q3 2024 earnings summary

Executive summary

• Q3 2024 revenue rose 8.3% year-over-year to $533.3 million, with net income up 36.7% to $96.4 million and EBITDA up 31.7% to $118.8 million; backlog increased 8.8% to $2.93 billion, with a book-to-bill ratio of 1.00.

• Net new business awards for Q3 2024 were $533.7 million, down 12.7% year-over-year, with elevated cancellations mainly from clients funded during COVID running out of capital, not due to dissatisfaction or performance.

• The business environment remains stable outside of cancellations, with RFP flow and new business awards down modestly year-over-year, but quality remains good.

• Management expects several quarters will be needed to replenish the pipeline and return book-to-bill ratios to historical norms, with normalization anticipated in the second half of 2025.

• Cash and cash equivalents stood at $656.9 million as of September 30, 2024, supporting future growth and investments.

Financial highlights

• Q3 2024 revenue was $533.3 million (+8.3% YoY); nine-month revenue was $1.57 billion (+13.3% YoY).

• Q3 EBITDA was $118.8 million (+31.7% YoY), with an EBITDA margin of 22.3% (vs. 18.3% prior year); year-to-date EBITDA was $346.7 million (22.0% of revenue).

• Q3 net income was $96.4 million (+36.7% YoY); EPS was $3.01 (vs. $2.22 prior year); nine-month net income was $287.4 million (+40.5% YoY).

• Cash flow from operations in Q3 was $149.1 million; year-to-date operating cash flow was $418.1 million.

• Free cash flow for Q3 was $138.5 million, with a conversion rate of 116.6%.

Outlook and guidance

• Full-year 2024 revenue expected at $2.09–$2.13 billion, representing 10.8%–12.9% growth over 2023.

• 2024 EBITDA guidance is $450–$470 million, up 24.1%–29.7% year-over-year.

• Net income forecasted at $376–$388 million; EPS expected at $11.71–$12.09.

• Book-to-bill ratio expected to remain depressed in Q4 and Q1 2025, with normalization (>1.15) anticipated in the second half of 2025.

• Guidance assumes a tax rate of 15.5%–16.5% and interest income of $24.4 million.