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 at quarter-end was $2.93 billion, up 8.8% year-over-year.

• Net new business awards for Q3 2024 were $533.7 million, down 12.7% year-over-year, resulting in a book-to-bill ratio of 1.00x; backlog conversion rate was 18.2%.

• Elevated cancellations persisted for the third consecutive quarter, mainly due to clients funded during the COVID period running out of capital, not performance issues.

• The business environment remains stable outside of cancellations, with RFP flow and bookings pressured but win rates and pricing stable.

• Cash and cash equivalents stood at $656.9 million as of September 30, 2024, with no outstanding debt.

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 a margin of 22.3% (up from 18.3%); year-to-date EBITDA was $346.7 million (22.0% margin).

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

• Operating cash flow for 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 between $2.09 billion and $2.13 billion, representing 10.8%–12.9% growth over 2023.

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

• Net income guidance for 2024 is $376–$388 million; EPS expected at $11.71–$12.09.

• Book-to-bill ratio is expected to remain below normal in Q4 and Q1 2025, with a return to above 1.15 in the second half of 2025 if cancellations normalize.

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