Earnings call transcript Q1 2023

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Operator

Ladies and gentlemen, thank you for standing by, and welcome to ICON Q1 Results 2023 Conference Call. [Operator Instructions]

I would now like to turn the conference over to the speaker today, Kate Haven. Please go ahead, ma'am.

Your line is open.

Kate Haven

you ended us March thank covering this and quarter the XX, day, for on joining call Good XXXX. Also have on our we CEO, Dr. the call today, Steve CFO, Cutler; and our Mr. Brennan. Brendan webcast note on download website to to would available call. our I today's that are slides and this like there call accompany that to is

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

and or publicly reports including undertake otherwise. obligation forward-looking new XX, Forward-looking the be statements are these about forward-looking on only filed may found any XXXX. and by to information, as of relating a do February made, future to any filed risks we uncertainties result More update the either Form XX-F are statements information as in date of the events not SEC statements the company, they

referencing This non-GAAP Brendan be which remarks. financial in their Steve presentation will prepared and measures selected includes

please the comparable most a titled For of presentation the GAAP refer financial press Consolidated of directly operations. measures, Statements to Condensed section release

gains cash per for we While measures. the their purposes. restructuring non-GAAP comparison compensation share integration-related and and and a measures, information net you for certain diluted believe of financial costs, press and to earnings historical GAAP benefits. income measures the respective are transaction-related comparable amortization non-GAAP expense, non-GAAP investors and note and adjusted stock EBITDA, losses, not more costs superior reconciliation will foreign slides, substitute currency Adjusted to exclude or adjusted Included the a earnings release is in useful

We [Operator will to the call one limiting Instructions] be today hour.

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

Steve Cutler

good Thanks, Kate. day, everyone. And

results while delivering continuing XXXX, health to strategic initiatives quarter in intelligence. to good a care made our in ICON develop solid one, start

industry. to navigate continue our are impacting We macroeconomic headwinds that

expect ICON -- capabilities cause than stable we optimally service and is functions. to are the challenges has to broad and medium turning manage that in their to now more uncertainty these partner short resources the While a strong, clinical development ever, strategic and to our customers term, programs

this, from we Notwithstanding biopharma the a in by underlying trends companies FSP increasing growth Within customer fundamental R&D opportunities. in large supported continues RFP sequential of stable recent one. have spend resulted drivers mid- of seen outsourcing number and further a demand the market larger in generally and This quarter segments, to demand segments, show has improving customer increase penetration. across with

In cash cautiousness visibility programs the with improved the as prioritizing Companies emerging additional funding to are segment, challenged. and continued to remained have spending environment actively broader regard conserving they until funding. biotech has

As in and this on within a studies. assessments their we result, have the segment decision-making and more seen of scale some timing delays considered

continues in to this in dynamic commitment in our more that the a in the remains this segment near of fuel challenging the While creates environment unchanged market area term, innovation R&D.

at teams leadership our conduct with experts development studies. plans to partnering collaboratively are and optimal operational an biotech and with many our of medical customers of connecting and their phase We regenerate development early their

We and broadly are In remain builds this ICON. ahead the and we marketplace to opportunity the gaining understand encouraged customers' doing we get traction objectives, of by so, in our the truly and meaningful partnerships. long-term

since Sciences. all mid-sized to PRA of pharma strategic we've customers good unique position union progress discussions development advancing segments. across clinical with and with as appeals a our Our in Health services of world-leading a companies And made provider number large

review increasing level is in companies and accounts development customer strategic their evaluate a There at as strategies. an taking place engagement optimal amount of clinical

and functional to full-service, and/or for partner need growing execute their and seamlessly a of has experience augment with their necessary hybrid customers infrastructure. solutions, breadth expertise, that existing offering scale, a seeking seeing programs the are We

global outsourced To functional in dermatology, while in managing will innovative hybrid tailored improved ICON a services. and This that development. with end, sole with and of flexible LEO's both as acting activities leverage and in unique quarter patients their development provider one, a access designed to to flexibly portfolio. approach model LEO a is clinical strategic we leader The development outsourcing announced trials to provide effectively partnership partnership fully Pharma,

late-phase awarding a customer of to this In This key decision cited studies, solutions history and when awarded in partnership. of by was delivering criteria approach a real-world addition, strong real-world full-service evidence solutions strategic CRO assessment leadership ICON's in biopharma business one. collaborative our large quarter partnership sponsor deliver as

our expand. We Study development in continue complexity as see key to recruitment opportunity activities improve and durations identification to site selection, Up, as Start patient execution increases such and trial

overall novel in for need is With regulatory dynamics populations new uptick challenging an sites resource the the constraints, as solutions patient requirements, market and facing increasingly accelerating. approaches in niche such and

As a our has areas and innovation investment consequence, in organization. to number across increase focus of within a our continued

with tools believe development. stages the in in developed creating demonstrated improvements early success have are have of we several more clinical even we We and at meaningful ICON

value XX% experience and and deliver site Our selection, AI in integrated studies. of solutions studies, ICON with technology is percentage alongside non-enrolling customers. sites median the develop of and to recognizes reduction reduction identification delivery our our XX% site innovation the expertise better in a approach driving of on coupling importance for OneSearch, for time to tool identification remarkably that unique a the for

more to Cassandra, machine our with our This technologies, model along and have generate and post-marketing late-phase utilizes clinical we called designed customer-facing Phase leading commitments. IV expertise in tool Separately, trials, late-phase learning on launched a post-marketing strategy with to accurately predict insights new planning. business

further venture engagement site and shares clinical participation and we the with global Oncacare, joint uniquely technology, of patient-led our a in trial is of positioned the clinical increase more delivery patient to approach. purchase network. through Outside a remaining in oncologists' cancer efficient capabilities are differentiated in our with investing research Oncacare research

to further to experience enhance excited solutions Oncacare therapeutic our patient offer. leading are site critical expertise We it to our with brings and add business and

financial our performance one. a quarter over revenue ICON basis results growth with delivered to one organic a solid constant XXXX. X.X% Moving currency on quarter in

Excluding Gross on modifications COVID-related quarter the X% over four growth X% but year-over-year. of bookings work increased in contract XXXX of increased X.XX. currency in a bookings revenue net basis, quarter net and and sequentially, constant book-to-bill a of X% higher level cancellations a resulted

direct Solid basis. revenue margin on XXX of points gross year-over-year expansion drove basis growth fee a

increase resulting the driven services. across saw another also of impressive hub an We of in by location execution strategy business year-over-year, growth in our adjusted management EBITDA and global XX.X% quarter continued of cost

Our strategy with floating-rate in a as our capital continued debt exposure deployment planned, in further quarter. the reduction

opportunities align that our with Additionally, active our offering. further enhance remain potential and in portfolio we acquisition strategically evaluating

per share over in growth the We assumes XX.X% billion to of basis. The double-digit basis; year-over-year are our year-over-year to growth the representing X.X% year full financial X.X% adjusted of reaffirming year and billion, a range earnings reported $XX.XX guidance XXXX, full $X.XX representing to X.X% $XX.XX, on of in the adjusted on XXXX EBITDA guidance $X.XX range revenue XXXX. of a to growth for

in our sites the and value thank employees encouraged for across and significant clinical advancing and performance are Finally, customers, our steadfast development; accelerating our ICON We we delivering commitment to I by remain patients. to in contributions to their we quarter one. want for are

to on additional Brendan financial the now call for I'll turn comments results. over our Brendan?

Brendan Brennan

Thanks, Steve.

of one, book-to-bill In quarter and $XXX billion, of worth net business This X.XXx. $X.XX a net wins gross awards recorded of the ICON resulted billion quarter achieved of million $X.XX in cancellations. in

representing With an the X.X% year-over-year. addition quarter quarter of our to the four of new $XX.X increase on X.X% grew backlog or of increase 'XX record awards in billion, an one, a of

slightly our quarter This Overall, levels Revenue Our represents constant in organic XXXX. quarter expected. was XX burn in $X.XXX.X a of or from as backlog a X.X% down X.X% one the currency was in quarter customers basis. million. increase customer decreased top year-on-year four concentration on four X%, from quarter,

our XX.X% X customers top customer quarter revenue. X.X% and of in of total Our top represented represented one, revenue

compared margin one margin four XX.X% quarter Our top represented XXXX. XX.X% to 'XX. XXX XX.X%, quarter top Gross basis gross of quarter -- in of Gross increased represented our XX over XX.X%. the was while to for XX.X% in points XX margin

million million $XX driven by was X.X% the SG&A year, revenue. was total was in of comparable last of SG&A In SG&A the increase million or in or X.X% approximately $XXX.X quarter. of bad $XXX.X general expense quarter in provision one Total an revenue. expense period expense our uptick The debt in

a customers that quarter is -- As environment, the Adjusted our are $XXX of EBITDA of challenging for the Steve was small economic mentioned, reflection revenue. or subset this a XX.X% million of environment facing.

million, adjusted XX.X%, of income a one representing of XX.X%. in was an In the $XXX.X million increase for operating or four was of income quarter XX.X% million, period $XXX.X year-on-year adjusted of over XXXX. year, This XX.X% a margin XX.X%. a of EBITDA operating $XXX.X of Adjusted increase was last margin quarter of revenue, comparable

expense quarter anticipated. interest million sequential was higher rate Net increases $XX as drove as expenses one interest for

be XXXX. We expect approximately rate continue XX.X%. was effective full to continue expense effective we approximately full the in and expect to The quarter, interest adjusted million for the year to $XXX tax rate year XX.X% total tax the XXXX to

GAAP group per of the per operations million year-over-year. attributable a transaction the quarter or $XXX.X company prior integration-related income attributed to XX.X%, to quarter, share of quarter $XXX.X period increase during earnings group equating costs. was the one. in margin per $X.XX $XX.X one amounted XX% diluted of the $XXX.X $X.XX, to of from X.X% the $X.XX in to net GAAP for Adjusted the U.S. revenue an was income or the quarter and U.S. In income to first equivalent net million, share year. of compared recorded for share million million adjusted

this line year, for other year, the our expect dynamics to full X.X% with see In consider terms average of in to conversion for previous backlog we expectations.

a overall Separately, from complex see decrease our quarter in two duration, expense interest one to as quarter a in proportion to programs grow longer expect of our we modest therapeutic As levels. continue backlog.

compares of from receivable from at March days XXXX. balance XX comparable in net Net basis $X.XXX XX March was at XX, with basis at days comparable accounts on a December and DSO XXst XXXX. billion December on accounts This quarter, of $X.XXX XXst the XX, a was a billion of flat up the receivable XXXX. XXXX, the

operating $XXX quarter Cash million. from in the activities was

as levels as with billing our activities, of continue DSO We which in collection focus of to encouraged quarter cash management were one. record in $X.X well billion are and our excess on

in remain work year. the to improve ensure sequentially However, will this we the our the area, have and performance of collections we for both our and remainder focus more to do add-on

expenditure $ XXXX debt net a to position debt of $XXX XXXX, debt of $X.XXX XX, At had company at a debt March Capital on facility $XX.X leaving million. leverage $X.XXX This of XXXX. of XX, €XXX of the our one loan billion, a March term made and during cash December net the compared and million at adjusted billion. payment net of with the million XX, a a quarter quarter and billion net ended X.XXX X.Xx balance $X.XXX EBITDA. debt billion was to We B ratio quarter in

facility our B totaling $X of the $XXX continue Loan on payments for year. over Term to the billion expect course to We our million XXXX, full approximately

to increase of our have addition, In negotiated revolving result the the in a million €XXX scale organization. facilities we credit million an of increased from as €XXX

throughout the In to and Q&A, again employees gratitude around contributions efforts quarter. want we for to move their globe to closing, before extend we ICON our the

now are we for ready questions. Operator,

Operator

go John the And question Instructions] Please from Sourbeer UBS. [Operator ahead. first from

Your line is open.

John Sourbeer

a was guess provide wondering thanks pharma seeing color Hi, demand. if on little you what the taking I could for large you're I from question.

companies Some cancellations? that R&D in played into seeing demand on large of announced in have those some any you And there? And projects. of increases pharma changes are has optimization the any

SteveCutler

as I from haven't calls, said demand, we seen think sort pretty significant pretty of -- consistent has so we've pharma on John, large Yes, and the is solid, any downturn. been previous

probably part customers. better of pharma of that parts been over the or large has group demand the so. And best-performing business -- Our of one of XX our our months the last from business continues

trend. a demand some to space opportunities FSP I'm comments, in in last area, certainly that seeing alluded has months. I that to but in declare ready that we're not But in strongly as the XX quite continued As the my

John Sourbeer

Great. one just And if follow-up I can here. ask

there, XX% dynamics out Just at that expect the remainder rate you to of the do to to the that when play you run the that And conversion you below for be expect do continue the look backlog year? rate of and some throughout year? how

SteveCutler

the around we'd Yes, expect is. to at continue it rate it

we've mid-Xs, for think as change so said there, I we've through Brendan, do you think I the don't X.X% going the dramatically to... gone that's year. year, want to

Brendan Brennan

exactly that's it. Yes,

that. on clear pretty were we think I

for X.X% full on the So to expect yes, average we be it about year.

SteveCutler

Yes.

John Sourbeer

Thanks Great. for taking the questions.

Operator

for your question. you Thank

next Group. Please from ahead. We Hynes are The Mizuho question from go question. taking the next Ann

open. is line Your

Ann Hynes

customer about at then that maybe, RFP Can you. about issue, trials? you it? growing? primate when that activity you you type. were is will your Thank all -- XXXX? the And Great. clinical worried do about late-stage could impact for And by talking What's XXXX are the nonhuman What's and maybe secondly, growing? Thanks. not talk think something And this customers

SteveCutler

that second down issue for short there go certainly but to primate, our we take on I customers NHP, issue, that If point. track, us, at one one anticipate some in our worse XX moment. well me models That's that first, that impacts so told presumably the and that's talking about haven't I least before the what going the this things let could, about, have seen to nonhuman clinical top get And sorted or Sure. And believe really things front, at heard I the medium customers the that my customers to continue don't speak. in be me space they've at think don't if our the from not an in as us can it there be would impact term. or space, risks, concerned that, that so customers implement I I this, our out of say, are as different something will in are

point mentioned In on segments, seen as large of we've across terms John's of activity the RFPs view. continuation customer question, from a RFP I pharma the solid to

a bit muted. I more has been think biotech

a view, We've seems that. we've I that or XX in sequentially what that, from said Having months the over in basis. as seen areas think point we've from an we're last said consistent of said we've some on quarter, seeing so last that both direction, been the I in so. say, it positive upticks RFP sequential steps

we're on labs, seeing things strong across consistently basis. evidence, then some like phase, real-world year-to-year And late a trends

biotech but little overall So I market, overall of to, bit we opportunities, and the we've of space, think, in solid. and think see demand I've volatility is decision-making continuing being alluded solid; -- terms a in RFP the constructive as I

Ann Hynes

Thanks. Great.

Operator

your Thank question. for you

Please now next ISI. We Anderson from question. the from Evercore standby. go next Elizabeth question are Please The ahead. taking

Your line is open.

Elizabeth Anderson

are the the flowed Hi, guys. of debt Where obviously you question. the to the through the of that. Thanks on are for like of sort your What given macro mentioned expecting line half -- SG&A of so year? quarter, current much in that cadence expense you bad first that, outlook? the incremental back How the Thanks. opportunities through sort continue the

Brendan Brennan

we one. I that that across provision, take we a quarterly of increased it at we of as that was that it as quarter eye kind on might normal quantum be was go we just million $XX customer obviously, will basis, to have And so that the go it we'll of I across that, quantum forward. million, maybe a but couple an in to dollars be don't beyond course, I'm It the a quarter. Elizabeth, repeated in don't anticipate one this in Yes, certainly mentioned group. as the point. remarks, keep would sure to general it. board, the We expect prepared be

expect So the that we in I which the we -- level debt bad think, be it $XX was, that again sequentially And about appropriate, still totality don't have is same appropriate. but only million, in is across of ballpark. to about provision group,

Elizabeth Anderson

the talk to and players shifts think different can in share among market, on either get I or how you year-over-year, And CROs? different heard you terms sense of we've it. of about commentary Got or share changes a from notable know that of sort different trying just so anything? of about of shift kind sequentially I'm depending notable changes any any in sort

SteveCutler

ourselves Yes. I comments have make don't to very think of on we any see that, specific sort We well. Elizabeth. competing

it mid-sized larger odd probably, do the take past, the but about positioned the believe we the to It's some shares. hear us. from we're coming well CROs recent You smaller, study story than a to in of most from ones, is

do significant -- larger some opportunity or all I be we've to that larger we that, are might the had can't competitors there from of changes, we'll of be and looking the take our going we on through some we at advantage I customers us. think As know, for And there some a but see share that say front shift present can't competitors time. larger

Elizabeth Anderson

Okay. Thanks so guys. much

Operator

Thank your for you question.

Please We are now question. go the question next ahead. taking from William Max Blair. Smock next The from

Your line open. is

Max Smock

-- questions. a we first X% know year. this that there expectations your outlook have taking Starting just here than Thanks. headwind. a you Thank given clarify I you being quick it Brendan, that update headwind for morning. how FX on one with a good Is moderate to less wanted in changed our for for off here, me to and any Hi, more previously talked the quarter? about little the saw I

Brendan Brennan

we're gone it mean year. little outlook a XXX. it obviously at full of really so of is to I we the hanging of this this tailwind Max, have Or a so has on that course reaffirming in that, At overall our the that should that FX for guidance, bit you we've in quarter certainly thinking in I those will during be around little major Yes. terms point, point, a positive, gone pair. noticed being numbers. think this included the And certainly the are our currency

Max Smock

was 'XX with And hear we you quarter In through Thanks. your million I XXX like to about last implied change something of in the roughly have is work something there in up, quarter million XXXX? other your of COVID, curious total revenue million think you. headwind this which any excluding XX commentary then to revenue do line said, X% in COVID 'XX X% of was And here to year? believe headwind in COVID we the of was expectation. XX be I in a a terms Thank to in total quarter, saw if Okay. remainder a following the I'd thinking down. implies stepping in And like so growth this in the X% In headwind the in that XXXX, only words, headwind headwind.

SteveCutler

coming Max. down. at coming lot there. -- coming around around rate our the think, headwinds that outlined you is about -- year of and We this see revenues there, COVID to of down I X%. X% probably X% obviously about Lot see The backlog, We

down, I on your are your think So front or they yes, coming line are in so is ours. assumptions broadly it expectations that with

Kate Haven

Yes, the Max. sequential -- into is the that decrease as year. expectation I coming year were mean through this we going to progress we we see

So terms trials highest starting we that work wind QX expectation of to some through to was contribution the continuing down. as the in COVID are are

Max Smock

Thank Great. Okay. you.

Operator

for question. you your Thank

We The next go the are Citi. taking ahead. next question now Donnelly Patrick question. Please from from

Your is open. line

Patrick Donnelly

the questions. on picked taking through worked guys. one seems a Hi, little Steve, like, maybe you up as your high guess, a chime quarter, Brendan I and guidance, the you the maybe bit. level. it in mean Thank as for way cancellations just I well, at can philosophy

the beating guess, how level? on line, have it's to in and are think the you given You bad guys guess. you the numbers, January, up the just about confidence I great today cracks bookings high guidance level track on you of compared with a year, here guess, think as this at last the biotech I there. execution, be sit macro little comfortable hitting here upside this debt you to the guess it the sit you numbers kind a curious four guide, expense. even. to record well, be? months there do the about into might I soft, guide when top Early-stage whether how continues time have maybe so year, held particularly of the Obviously some are side whatever showing bit I

SteveCutler

back than believe moment. Having reaffirmed challenging have that, to I'll ago, reasonable midpoint. it that can macro in Brendan That so that, be there we can a can environment couple when the now of very get was all the through. are we of but our we set guidance months and very crack we Patrick. want is that a jump team. guidance to in. probably Yes, with where we're at then things and some We're expectation we the to we have we a get And more said wanting of guidance, level so is doing do feel at our things. that, work with engaged on we moment, can to And confidence We've at the the reaffirm side actively

Brendan Brennan

to exchange than And caution. would to we macro have, Yes. but Max, some that said echo I the of environment have we there other the when the in I in we maybe again Steve's elements been foreign left that, Patrick. more set guidance. mean are so -- just a now Obviously slightly comments been favorable place. Overall, you'll same some to have we've see have point, it given we

we're see even certainly place, pulls So basis. we're can going and that are on leaving considering the you it quarterly number are there same that, puts a that in into though and

Patrick Donnelly

Brendan, Yes. then that's DSO the And Understood, obviously been on focus. okay. a piece, maybe

quarter was To of any just done flagged you it a more don't about being I sequential talk kind it and point, guess, quarter. your think there improvement. talked this what's Can I there? bit little about, You last

so year, of just there, to the can any changes just like you throughout the I to the payment see level picked unbilled what want expectations that we'll obviously, up about a and there, terms, talking through You're talk talk little some are. so The bit, that? customer improvement things side focus about

Brendan Brennan

some correct course of Obviously What I making done we piece, Patrick. doing? Biggest own good half of quarters. billion outlined, during the of that QX in excess I've suppose, and Effectively in that on missed, of that in is quarters it sure in up that's $X excess this an first item our on And of each with couple on a quarterly the last the those the building we've both radar. working XXXX. of in kind is in fact, been now make progress our are just teams to the those basis. was billing year. We've makes well is catching sure as sure, revenue, over and usually QX I of that over of that, billing we're quarters, Sure, the of seen quantums effectively, my

that. out back cash that bills We're to the within having that entered we can of are So ongoing we line they're conversations terms; door. process making in that we're to obviously get our with happy and credit and get sure course, in we of getting with that Those in. -- the point now the needed sure them the customers to make with

So is then up I the ticked terms over I done into QX, right progress nicely billing into from quarters. seen our at QX sure and making really, made think we've good what of level our last the is that collections really QX We've in cash that say. into couple QX of should

significant And go that So focused progress on. the into like to we'd we're as is DSO we year, we're the what of from sure see what on course some two. we're the and seeing exactly that's one that continuing making really good impacts certainly to then over

Patrick Donnelly

Appreciate guys. Okay. it,

Operator

question. your for you Thank

The We Please go are R. ahead. from W. Coldwell now next taking the question Baird. next question. from Eric

line Your is open.

Eric Coldwell

of here. to lot direction but A a morning. two mine Good go have I'm you. little covered, been Thank different going with

reimbursable out know I you and details. break off, pass-through don't First pass-throughs.

it of can I seeing in you're Are give or volatile. us more that is qualitative normal. view I segment in you normal than of I'm am volatility specifically, revenue revenue, just break the you curious. -- one all of You bookings? cohesive impact on pretty We've some pass-through out don't And terms revenue, in know what I as seen think, sector than marketplace? you curious model, more it but trends that some -- but

SteveCutler

Yes.

think right. we'll -- you, I think, volatile I volatile. Eric, you're been said and to I as are Pass-throughs have

kind there some we've COVID headwinds some had had the exited as challenges. have -- given of well, that phase some we've As us

of digits the think was is maybe answer high in single growth that, way direct revenue the best for that say fee the I quarter. sort on a basis, question to to

say pass-throughs probably And headwind about and X.X%, and a that were forward, you business solid be little so to clearly, a continuing very think the confident as of underlying the revenue going margin-generating we're we've at was, and constant the at very quarter but is can at bit clip. it I currency, a happy grow reported that to very, very continue

-- that question. to that's I probably best so address the think that's And way

Eric Coldwell

it's Fair here, years. couple then inflation. high last Obviously enough. the second years. opportunities rather There's been couple of good in labor And one of been pricing last the

you're is get of to a headed activity, this, I we think labor year the that harder into expansion, like net what obviously, be to your of curious we know years general think realized us inflation basis nice pressures. context of customers XXXX, with pricing entered the a up but the As stacking two where so market are and you this this I in within say, And update updated your all staff those offset give after pretty those on then getting you're in how two margin I'd was pricing very I both thoughts. opportunities might out expectation an good and on but am expecting if fronts, could the

SteveCutler

mean with me -- I start pricing, the Yes. certainly let yes.

You hit spot it on, much pretty Eric.

sort market-related a I increases -- the that dare good we've think on discussion. not of just level couple also but perhaps of but data talked is us about we customers this That of increases, past previous relatively customers into more, recalcitrant collaborative I been on, with a that's negotiations, say in inflation there's post-COVID some bit on working always we have terms it, of course, little go change years. discussions pricing starting a And of to calls, Our era. for as have with the are

data market do an stuff. so aspect we not salaries And environment. the we and inflationary probably become it's view. are good of understand customers pricing particular bit has paymarket-related challenging just provide that And but a increasingly of that point smart. They on forward, a our good I'd say discussion environment But to more challenging continue business going all the that from need probably that, to

but it bit probably probably not things it are it's as as more conversation, year it's constructive So it's easy, challenging two but not than wasn't a -- -- never but ago. a a or these easy was

been In -- again we X% inflation seen X% terms about that the challenging continues. know, to the of inflation, across around more a We've has level in well, bit as organization. it one wage we as all

Some course, more countries, others. than of are

And seen I months, the but attenuated been so XX, labor that's that six course, little but -- say continuously last over our bit pressure XX now. We've XX tick last retention up levels the months in last market -- level, of sort months a the over has of really few the the so. probably or would

of we're back pre-COVID -- levels, now, up above And ahead we're in in pre-COVID made levels good we've front. even so progress fact to some well getting of sort that well

we finding I or COVID, market, are it post finding, is of COVID of the sort little that market red so hot the labor sort labor think, and as to was them And that during a easing perhaps salary had opportunities. down bit retain increases now. and able give with our merit them have our well And bonuses employees gone we're we're and that been --

I the think so more overall, normal I both So managing, perhaps we're than environments pretty well. times, think, are but challenging,

Eric Coldwell

want be report to all just me. in That a steady on for choppy say pretty will I sea. congrats

keep up. guys. it Thanks So

SteveCutler

Thanks Eric.

Operator

you your question. Thank for

the next Please go taking The Sandy now are Partner. from We Draper standby. next from and Please Guggenheim ahead. question. question

line open. is Your

Sandy Draper

One, -- will what customer the so congrats sort and could potential my be to just answered, of sort of Eric nice for potentially In also there on things I And asked me been the some misunderstanding. think of two and said. you Thanks a have past. your questions me just quarter, out XXXX off you maybe by slides, of of what very echo much. lot head questions called segment. well, -- but for I revenue Yes, just

out but the is call -- small footnote You companies biopharma XX%, in XX -- or that that's below. are still greater

are still Could of, pre what for sense us people get revenue just your out producing. looking customer there don't so of funding they're revenue? Just remind XX% tomorrow. So oh, is base the biopharma you percentage wow,

Brendan Brennan

to would look call non-revenue-generating, companies talked at them, XXX And it's kind or the basis subsector revenue. as that emerging ilk, defined XX% than it's Brendan or of on non-funded way spend or for want biotechs less companies Yes, an have we small how that here. Sandy, that R&D about of represent total of about, whatever annual is of we've we million.

XX. of that So obviously, XX

just that an exposure idea So is. quantum give what of you of to

Sandy Draper

are if declining this, a trend? sort a stabilize follow-up, -- there burning it unless understand, That's it that you're about sort of longer And stayed of now stay level bit at on Or plus X.X-ish. appreciate that, such where as long-term thinking type Thanks. obviously, mix we like you that, my COVID seeing of minus, Certainly just Is of is a Or around And pass-throughs the here? unrelated are backlog but we burn. great. sort X.X in, see little Okay, depending stable I fast. term. level to the multiyear through, And or into of business term slightly going changes, come then step down? it's in you're okay, maybe would a back we're this clarification. say, I are just your down, comments longer step getting about

SteveCutler

then when one slower, vaccine, mean, some up. get portfolio I projects but our faster. we we answer. tough and the Sandy, we get depends -- of a into burn the Obviously about tends that's start a oncology work. is XX% sorts will That that in come burn to It Yes. really and to of can win upon bit

is looking we So X.X% about our anticipate number our expectation. around would burn certainly at and backlog mid-Xs. keeping the we're

do certainly can little bit has we post-COVID that. It and think period. I down since the a on ticked

in vaccine those because go that are other There We would a therapeutic burn as believe routine into the studies. and have sort back is tended well. oncology, we're little that of faster studies areas away; opportunities more slower to on of And of through. there positives. area are some so there coming sorts those the trials, some metabolic the And -- that And there's -- are negatives believe, always some with this. some can we inhibitors GLP

in as the think way term. mid-Xs it is longer the think best I to of

Sandy Draper

Thanks so much. Great. Okay.

Operator

for you question. your Thank

Please question. We go next David from standby. are The Jefferies. now taking Windley ahead. question next the Please from

open. Your line is

David Windley

you've comments of Hi, time talked issue. in That's cycle version much. Kind kind decision-making your much-asked Steve, prepared a building think question. been your first you is question. don't times, an of you about taking that. Thanks of which for very changes ongoing, burn my remarks, talked -- the thank I the in of about different kind

of start, funding? you risk deeper the trial forecast kind there? data, Would about. We your attribute part really in this challenges guys building guess the are to then move I and/or of about for your you Thanks. kind mostly of you that kind clinical question talking mostly is not forward? seeing, in are other X-part adjusting moving to and second Would what to bucket -- large, Or issues here. are clients of backlog about of want industry revenue what to biotech seem start that this thinking you're And trials which would how are there question square deliberation with small

SteveCutler

Brendan of Yes, have things. take forecasting on revenue I'll a the And part, the might side crack first David.

emerging to in certainly a the but I of course, would to as you and small a I have of I we backlog, mean proposals and careful, those think, funding area. us companies, the chunk want say budgets raised the in trials get to industry, component money. very of I haven't the like, not trials those that and plenty say But be tends must good think that that, not starting it's in as for would but I our fast in who -- be it's -- putting come tend about of are the biotechs that most. like exclusively. customers there's not there's who and to exclusively is of we'd their who as We're biotech the

across our came quarter, we look they pharma look and we from that, biotech. they cancellations, Interestingly, as for slightly across as elevated XX-XX our our about were but really larger the

on a sector. cancellation if the you it any at look So biotech predominance basis, wasn't particular of sort there towards

Maybe, from stuff, forecasting take you what that on Brendan? the will. So

Brendan Brennan

look in. to that of about get I obviously deliberating head And forecast. the first when project? at what Dave, constantly And thinking on patient course, basis, we're of Yes. quarterly about on suppose, the on our that's a constantly count one, the going actual we demand. When going course, are we

on over the be course in to organization fact, we'll revenue -- to to that of able our able to put to In the year. be need deliver

with our we So relationship basis, managers, project certainly, customers and of having with yes, are with on quarterly our projects. very a with our about managers, exact conversations indeed active sponsors our the their timing

come it's only have And good that really projects so into forecast. visibility that that

a and actually of go to we place And so informs process basis. those pieces funding they ahead, that very really course, guidance-setting sense we a in on go then all strong our that have through have of very, as quarterly

are what like and I So start feel going trials a going fairly have picture styles we are be tenuous. to and robust to idea of what

David Windley

haven't my last third talked billings AR. then to your on sneak point customer's addressed billings I the ability that in willingness the on in and hasn't you the it to on guess customer's I start said XX-, last the weighting thought little year fourth is, on of that, of second think, prior I I'm I your or is fair, question, of quarter, can be guess in, And And conversion. gotten simply pay to about I quarter third first time? XX-, fishing quarter. XXX-day getting to one are more -- for you the you quarter kind this gotten move appreciate and it. yet. this albeit Or one Got -- a term pushback the half. just I see having you we whatever from cash maybe a terms payment maybe but just term, bit impactful improved to thought that would to to that questions, I the on if before

Brendan Brennan

have conversations make points, QX. some billing well-funded bills and customers our pay their they Dave. kind with that we have always There's they're latter, the but predominantly to all uptick that as we It's to sure said, those going to you of and didn't be in

in collections QX we weren't the significantly cash in Our built QX. that of event

did uptick from the from QX area albeit of to see uptick, QX; to to a and an cash need we QX collections focus. likewise, still we QX, So nice so that continue

decent very think billing. but still should in, cash be focused. And still done the I we much we able get to have

David Windley

the Appreciate additional you. luck. Thank Good Great. detail.

Operator

Thank you your for question.

next We from Please Bank. are Bowers question Justin ahead. next now taking question. Deutsche the The from go

is line Your open.

Justin Bowers

afternoon. good Hi,

Just from remarks this expand on you demand of I that seeing sort in prepared an seeing was uptick hoping you upon there. and across you're demand could service. And mentioned the where

SteveCutler

uptick across I we talked Well, think an about demand in large pharma.

of full service -- that strong, within of terms market FSP the full but of is good pharma that, the but large really uptick well, as mid-sized Justin. of The service areas and in been so in And most in more demand. our the component market a in biotech chunk has uptick there's in decent

we've demand astray I think that I lead So on don't -- -- RFP-wise hope seen market one, it's to good, but don't anyone solid I mean one. really pharma, on large that

been there volatile. whereas, much biotech a the full that as in in market And a say, the FSP more service is of that mid-size of And -- that, has and I full course, it's service. and component both little predominantly bit more,

we think of see for we of be together. able accommodate well those and demand to all well. for And opportunities And ones. models positioned you it the and put both more you even if as hybrid really, ourselves three see think I So FSP good service, hybrid as either full to

Justin Bowers

over back about pass-throughs of see the and the taking to contracts? some respect And increasing now time, of And to it. step in Got respect quick we hybrid as just think that of a we like then starting about the how should to level are impact follow-up. some that and with pass-throughs? you level virtual one more of think these With sort of ECPs with

SteveCutler

of but pass-throughs them. sure sort I we not any through hybrid models DCTs. I mean that, of the so associated DCT of don't see fairly will a have proportion extent trials. full-service probably the have of of hybrids impacts, pass-throughs that, on DCT a that are perhaps it's on see the really lower sort proportion don't not pass-throughs towards said, material I'm is I this has of I proportions so seen too very say, with we a type trials as opportunity. are -- much point. those trials amount DCTs and full do significant pass-through And that on to pass-throughs, there of -- but shift we've the we'll Hybrid trials high service. think mean as the FSP number are DCT impact is any the lower traditionally pure component, But end, Most or to a the as, difference see between -- at towards limited. the few still -- I or probably impact

Justin Bowers

so Thanks Got it. much.

Operator

for your you Thank question.

question We Please are now taking Please for Barclays. Sergott Luke the standby. from next ahead. next the question. go And

is open. line Your

Luke Sergott

XQ, when and we're want timing I that about to and decision Steve, because, back the everybody. back Brendan I customers guess, you talked morning, in Good we go guys delays talking to Awesome. kind were bells of all rightsizing about now whistles And starts. that trial. ordering their R&D and they're a up go And in trial hearing budget. the actual delays maybe would into not

never even the or the actually as about so up what starts in history these trial you And will into industry, your delays of guys like through percentage think just it? turn starting

SteveCutler

to Luke, answer. to long See hard respond how to string, a That's the that one. is I that's is want piece -- mean, one

to And we it that seeing services they some and going it continue delays. delays. of of it's looking And are have decision-making insignificant. that the careful percentage impact. terms and And in seeing, we're want about said, we extent There's trials question impacts, fair say terms the the percentages to no some customers do. an will in are that. I to in it's think trial to very about at and not they are what -- of I that it's as want that what being the To

don't too make the perhaps that's or right that the big them do trial trials and sure of of that. And they do anything right with they're consulting small too opportunity and to or in terms doing they that's some all number

very who delays, really but some isn't at quantify on but to of are nothing. market. hard is way. it that the got And to It's to considered. leading say, this it being opportunity, drugs those that point, companies to our two they numbers So there's, one as smaller I or I'll get it have particularly with impact some the put

Luke Sergott

That's page helpful. the let's the business. here turn to to your And --

guys. (sic) are is [OneSearch] for be update One differentiator of backlog including Can that Source Source you -- (sic) many now assume includes service. So to for continues OneSearch us the wins the or And this how a on guys? you how premium much the you a of One I

SteveCutler

Yes. It's OneSearch, actually, Luke...

Luke Sergott

I'm sorry, something else. yes. of thinking was I

SteveCutler

recruit application importantly, as sites patient and proprietary patients as But than problematic sites I to fewer patients. at one you site that that or This recruits recruit the than the or more that faster faster site even much right our critical -- or is patient probably in that not sites number that five business, be have allows but that -- seeing, can identify up making or -- getting getting recruiting can us a of getting identification XX setup. imagine, our benefits is even to and that we're sure one trial all be most up faster a in a and -- has said, selection, doesn't zero obviously or recruits

only but of it's probably to efficiency been XX from the to tool there are the benefits an We applied now for do, the So that point routinely XX months. all apply studies we view. last

this measure there's to this Most year years starting while. so in It's through. take least recruiting, technology my just trial. as of at a working three, are I process. two we still benefits the are to of many a And been trials started what's zero the in trials trials -- benefits are flow sometimes alluded and of still really through. that end really the using whether at we comments, so to these take the and And these And X, the

in tangible work. benefits What I alluding to is our comments was to portfolio we're impact starting see of my really those

a the help to we've a recruiting We us more patient identify propensity And pleased sites really sources that That's be I'm with different need bring have patient diverse diverse as to regulatory in authorities data populations. so And which some issue with recruit been technology. to the greater able big to now. well populations.

that us help And so the that tool identify do well. us is as sites also to to allowing can

of number speed also a has just but quality. it So diversity and benefits, not

Luke Sergott

great. right, All Thanks.

Operator

question. your for you Thank

Casey We next the next from go Please the question question. Woodring from are ahead. JPMorgan. now taking And

open. Your line is

Casey Woodring

for questions. taking Thanks Great. my

improved we've customers the after from of but the So been difference getting read-through here today bioprocessing for on Can some of Those lot bearish companies commentary your SMID SMID seeing year late. first said the and level just spend so into those the bioprocessing largely versus year, trends there. biotech of took this down are the on three around of their that I'm a RFPs the SMID some explain sequentially reiterating of in SMID companies to their players? just kind visibility spend curious the guidance, of commentary you months biotech expectations CROs questions of from you've over

SteveCutler

Yes.

said, I -- Casey, see uptick. seen sequential we As we've

out time. taking an It's challenges we biotech pretty not in to say constructive are area. see volatility So there's some underlying the They there. reasonably market Funding not existence. in are more

all that. heard You've of

But is finding happening overall, industry. the innovation that these the where This producing in are our or are drugs. the companies is

really part we of partners. to so And want them become they our engage large often pharma because with

part bringing drugs, that. nature, the so in I We're companies. And really these are, the and There -- that happened. about are They for the no well question As have term. important or of are companies one the Seagen, market, have is think, acquisition, sometimes really really is it fantastic there Pfizer sometimes. improved very their being quarter, volatility They long during only and market, higher-risk some us. these for the two drugs as new that to by

working of underlying and solid, on the we area. an funding there's is the that so in And probably the believe, element biotech strong. biotech underlying space the overall nadir hit the but terms business, through, believe of we'd is I volatility all in and And we're market

can positive going positive some we some think and noises I forward. see funding moves

to months like next macroeconomic things We and won't can some but challenges the the be really with I'd hopefully, -- in rates and, environment, interest dissipate. the respect track see next funding in like of place. particularly XX on in to it X, be we'll I good think biotech a so, think, as in or a So back that, XX don't months stable solid we

So market market. is longer we we as short-term in I short-term this feel very say, the volatility, good the next feel so, And but XX we're challenges think I a place with in term months very solid. or

Casey Woodring

then Got as it. just a commentary. to follow-up that And

SMID Curious So weeks weeks of last customers trending few drop and significant are how crisis a the how kind all after spending Has the there down. occurred thinking of that to few went specifically the stuff of change in the over after that about last banking customers there as situation, been off the things is SVB? RFPs? SVB SMID to in from notable any Is quarter. the

Brendan Brennan

here. the with didn't any movement it's Obviously, the after I Casey, obviously it. time, out -- government federal at came bit We of and but concern pretty it Brendan come a substantial and see think it. was up definitively dealt

it significant at knock-on of so point. And a had kind hasn't this

Operator

you for Thank question. your

from Derik standby. next Bank question The for Please ahead. go question. the Bruin next We are of now De Please taking America.

Your line is open.

Derik De Bruin

great. Hi, Thanks squeezing for in. me

the some cell it? actually and been are like have lot So -- early-stage I particular of area for statement color. financial of therapeutic of but example, therapy biotechs has some about just Is lot that that's a some sort delaying, common any a or what And asked, Just on questions. wanted something is gene that? I then that anything there

SteveCutler

and The question around was gene cell therapy... Sorry.

Derik De Bruin

asking No, is therapeutic this area of I seeing biotechs, delayed, was if right. you're these early-stage that's basically in just therapeutic some one getting area any

just and for Or cash that any common are all delayed. ones curious they as themes therapy. For example, I'm just just issues? cell gene of sort and are to the stage have if early there's getting

SteveCutler

latter. the more Yes,

think now. I the oncology big particular particular I it's area any obviously there's that. therapeutic for on mean area no focus

by oncology any real no I there's And so of therapeutic area particularly slower, -- that's delay typically bit there's any helped but sort impacted. is no, don't anyway, study isn't being think a real

Derik De Bruin

other year the sort What income you Got numbers? for up adjustments. on stock-based it. looking of just then compensation on or rate shoot the -- for some and some restructuring for, just help to a questions for and costs for the run And are net adjusted of

Brendan Brennan

the tail integration like have we I we We probably numbers it Yes. number aren't the through dollars certainty go take bit -- a quarter, see costs the stock-based course miles that on the the nearly little terms that in expecting. might think bad I first be aren't some quarter that probably as of But and a of first four. think what a of comp will don't multiply off, off the we're proxy year. million something in by just to

our bit. And well, the an looking integration on we little run that the at costs, constantly year. We're we expect So to we'll to keep restructuring, office through eye cost see off the And That infrastructure. course go a as of will part be in keep that. quarter, to was that same think eye of we'll that's large restructuring a an so something ballpark. the in current the I

around So slightly. little the bit, but one, a might that other decreasing two, move

relatively be one would other The stable.

Derik De Bruin

you very much. Great. Thank

Operator

Thank you your for question.

We ahead. are Please Dale go from question from Fargo. The next Timothy now taking next the question. Wells

open. is line Your

Timothy Daley

Thank Great. you.

earlier to response wanted share follow just I to on Steve, So shift. an on

share motivated, after up about are going volatility, how lost over them, share last recovering be a on changes of or well-capitalized appetite increased with pick well-capitalized the thinking few near-term some defensibility the some years? players more for this we opportunities under share transition periods new mentioned backdrop players; thinking few a an behind at should that but around You peers those offer about to

SteveCutler

should quickly some of I our I'm play changes a relatively out. And And that's expected Tim, we overly don't point happen them. about our be mean partnerships our that all I relatively going I good as partners share sure shifts are see, all but mean have And industry some think we for we conservative say, changes. -- in from view. concerned long-term have customers business. and competitors -- and I not relatively you it and it's of through conservative.

years. agreements for these are place And in usually several

dramatic be nothing would my certainly So expectation.

share pickup on I smaller, -- we've -- from what I more point is competitors. what view, the in that, competitive seen of a some think mid-size I so of some large-scale more from recently think the

players. as in I'll into rescue mid-size we've or way. that been smaller so would the I several it business. some opportunities put of And about we've players, that our fortunate, trials smaller seen from come come -- think to I rescue And think

over opportunity The that's so any for to long short-term -- probably on competitors. I think, And the several make adjustments more it's more years, the gain. larger

Timothy Daley

I peek -- if follow-up us Appreciate we'd little out on on across introducing a if month-by-month a at least any I would just, there's the way. how the think All basis great right. in or the help Brendan, volatility by but appreciate that provide all the bit you're willing order if you a more is thank And recalcitrance me you commentary, into tell April, through within XQ. No, quarter. My could be term months trends us the varied appreciate that. to for by visibility

Brendan Brennan

In business Tim, is development, it?

Timothy Daley

Yes, yes. Thanks.

Brendan Brennan

where the at mean start I finding quarter last quarters of quarters you're it the are it, Yes. strong to every has also till all And there in out some come the look there's honesty, minute. where quarter. you in

we off this quarter solid started any had there's throughout. think don't I a quarter, So -- We well.

we cancellations As performance. liked, still Steve have solid that the mentioned, were but such overall would very

Yes, think a I said, trend more And I trend. from that well. of the particular this quarter, started it there's we was So as don't but changes quarter-to-quarter.

Timothy Daley

right. Thank it. Appreciate All you.

Operator

will for your I Steven back question. questions. remarks. closing conference no you for Thank the hand There to are further Cutler

Steve Cutler

look and all, we the development. And in results Well, progress our our day. everyone, through year on have forward mission you, for to joining call accelerating on deliver you, operator. you good. Thanks today. and updating the We Thank good thank as a clinical further

Operator

you participating. conference for concludes today. Thank the That for

ICON Public Limited (ICLR) 27 Apr 232023 Q1 Earnings call transcript