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Operator: Good day, ladies and gentlemen, and welcome to the Medpace First Quarter 2026 Earnings Conference Call. [Operator Instructions] As a reminder, this call is being recorded. I would now like to introduce your host for today’s conference call, Lauren Morris, Medpace’s Director of Investor Relations. You may begin.

Lauren Morris: Good morning, and thank you for joining Medpace’s First Quarter 2026 Earnings Conference Call. Also on the call today is our CEO, August Troendle; our President, Jesse Geiger; and our CFO, Kevin Brady. Before we begin, I would like to remind you that our remarks and responses to your questions during this teleconference may include forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These statements involve inherent assumptions with known and unknown risks and uncertainties as well as other important factors that could cause actual results to differ materially from our current expectations. These factors are discussed in our Form 10-K and other filings with the SEC.

[ Please note that we assume no obligation to ] update forward-looking statements even if estimates change. Accordingly, you should not rely on any of today’s forward-looking statements as representing our views as of any date after today. During this call, we will also be referring to certain non-GAAP financial measures. These non-GAAP measures are not superior to or a replacement for the comparable GAAP measures, but we believe these measures help investors gain a more complete understanding of results. A reconciliation of such non-GAAP financial measures to the most directly comparable GAAP measures is available in our earnings press release and earnings call presentation slides provided in connection with today’s call. The slides are available in the Investor Relations section of our website at investor.medpace.com.

With that, I would now like to turn the call over to August Troendle.

August Troendle: Good day, everyone. Before reviewing Q1 results, I would like to acknowledge that this will be our last earnings call with Jesse Geiger, our President. I would like to thank Jesse for his 18.5 years of service. Thank you, Jesse. Quarter 1 of 2026 saw cancellations rise again with backlog cancels reaching their highest point in over a year. Net bookings were below the level of — seen in Q4, but well above those in Q1 2025 with a net book-to-bill ratio of 0.88. [indiscernible] RFPs were down in the quarter sequentially and year-over-year. Initial award notifications and win rate were strong. We continue to view the quality of opportunity flow as good. While there is nothing we can do to alter our cancellation rate, we are focused on expanding our pipeline of opportunities and have implemented a number of initiatives to improve our win rate. Jesse will now comment on Q1.

Jesse Geiger: Good morning, everyone. Revenue for the first quarter of 2026 was $706.6 million, which represents a year-over-year increase of 26.5%. Net new business awards entering backlog in the first quarter increased 23.7% from the prior year to $618.4 million, resulting in a 0.88 net book-to-bill. Ending backlog as of March 31, 2026, was approximately $2.9 billion, an increase of 2.9% from the prior year. We project that approximately $1.94 billion of backlog will convert to revenue in the next 12 months, and backlog conversion in the first quarter was 23.3% of beginning backlog. Now before I turn the call over to Kevin, I want to add that it has been a true honor to serve the company all of these years. I wish all of my Medpace colleagues well and I’m so proud of what we’ve accomplished together. And with that, I’ll turn the call over to Kevin. Kevin?

Kevin Brady: Thank you, Jesse, and good morning to everyone listening in. As Jesse mentioned, revenue was $706.6 million in the first quarter of 2026. This represented a year-over-year increase of 26.5% on a reported basis and 25.8% on a constant currency basis. EBITDA of $149.4 million increased 25.9% compared to $118.6 million in the first quarter of 2025. On a constant currency basis, first quarter EBITDA increased 28.6% compared to the prior year. EBITDA margin for the first quarter was 21.1% compared to 21.2% in the prior year period as the impact of higher reimbursable costs were offset primarily by lower employee-related costs. In the first quarter of 2026, net income of $123.9 million increased 8.1% compared to net income of $114.6 million in the prior year period.

Net income growth below EBITDA growth was primarily driven by a higher effective tax rate in the quarter. Net income per diluted share for the quarter was $4.28 compared to $3.67 in the prior year period. Regarding customer concentration, our top 5 and top 10 customers represent roughly 28% and 37%, respectively, of our last 12 months revenue. In the first quarter, we generated $151.8 million in cash flow from operating activities, and our net days sales outstanding was negative 58.8 days. As of March 31, 2026, we had $652.7 million in cash. Our 2026 guidance ranges for revenue, EBITDA, net income and EPS are unchanged from our prior quarter based on an effective tax rate of 19% to 20% and interest income of $27.5 million. There are no additional share repurchases in our guidance.

With that, I will turn the call back over to the operator so we can take your questions.

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Operator: [Operator Instructions] Our first question comes from Max Smock with William Blair.

Max Smock: Maybe just following up on the cancellations point. Obviously, I know you mentioned the highest that you’ve seen about in a year. Just wondering if you could dive into the dynamics behind those cancellations. I know last quarter, you called out not really macro-related, more project-specific. I’m wondering if that was the case here. in the first quarter? And then any detail you can provide around how cancellations have trended so far in the second quarter? And just any other drivers in terms of therapeutic modality indication, any sort of themes behind outsized cancellations that you saw here in the first quarter.

August Troendle: Yes. Sure. Yes. So cancellations were, again, just the kind of random stuff you’d expect product performance, re-prioritizations, etc. It wasn’t particularly informed by acute financial shortages or anything like that. So it was just kind of a usual thing, but higher than historically, we’ve kind of averaged and gave pressure on our book-to-bill. Cancellations in the quarter were, I think, the largest therapeutic areas kind of where oncology and cardiovascular, which is kind of usual anyway. So really nothing to call out there. And second quarter, it’s really, I think, too early to get any kind of read on cancellation rate and whether it’s going to be high again in Q2. I just have — I think it’s too early to make any kind of assessment of that.

Max Smock: Yes. Understood. Maybe following up on and sticking on the cancellation theme. I think last quarter, you also mentioned cancellations were both in terms of your backlog, but also in that initial awards bucket. I know a couple of quarters ago, you called out I think the initial awards bucket, you had about $4 billion worth of signed work in there. Just wondering if you can provide any update around cancellations out of that bucket in particular and where in that bucket — the size of that bucket today relative to maybe that $4 billion that we were at a couple of quarters ago. Just trying to get a sense for your visibility and level of confidence into that initial awards bucket converting into backlog moving forward here?

August Troendle: Yes. Look, we’re not going to get into kind of our pipeline size, et cetera. We’ve never quantified that really. Cancellations in that bucket, though, were not particularly elevated in the quarter in Q1. So it was more backlog-related cancellations that were problematic for us. So I don’t think that impairs our future — things rolling into backlog. But I think the last couple of quarters of high cancellations overall and across everything, including that bucket before our pipeline of opportunities in prior quarters does influence it, but that was not a particular factor this quarter. Obviously, the higher cancellations take away from the total revenue opportunities in the year. But future conversion, hopefully, with a reduction in cancellations, if we hopefully see that can proceed at a kind of more normalized rate.

Operator: Our next question comes from David Windley with Jefferies.

David Windley: I wanted to clarify on the cancellations comment to Max’s question, August. You said oncology and cardiovascular. I believe you all would treat cardiovascular independent of metabolic, and I just want to make sure I heard that right and that we’re interpreting that correctly. So metabolic cancellations were actually not part of your call-out. Is that correct?

August Troendle: That’s correct. And we break out our therapeutic areas and our earnings release in our …

David Windley: In the deck, yes.

August Troendle: Our presentation, yes, the deck that comes with it. And cardiovascular, yes, is separate from metabolic. I mean obviously, there are programs that are sometimes very — one product if it’s cardiovascular-focused versus metabolic sometimes there’s a little bit of overlap, but we do break it.

David Windley: Yes. So I think a concern, market concern is metabolic has been a significant revenue growth driver as evidenced by the pie chart that you included in the deck as you referenced, and I think the call-out on the fairly sizable cancellation that shaded down bookings, net bookings last quarter was metabolic. And so maybe you could speak to — I think I asked you this last quarter, but is there a — do you have a GLP-1 concentration that is becoming more volatile, perhaps because of changes in price in the market dominance by a couple of players that would cause biotech to think twice about whether pursuing GLP-1s. That’s, I think, a thesis that is out there. And I wondered if you could provide some color as to whether you have that exposure or not.

August Troendle: Yes. I mean certainly, we have — I think we’ve talked about that 50% of our — I think we talked about 50% of our obesity work was GLP-1 directly related, et cetera and gave a few metrics on that last quarter. But yes, I mean, there’s — we got a fair amount of work there, but I don’t really see that as more volatile. I think in terms of new opportunities, there may be some truth to what you say in terms of the market becoming a bit saturated and competitive and pricing sensitive. But it has not resulted in higher cancellations and even in our — even in pre-backlog. We’ve not — and you have to realize metabolic actually — if you look at — historically, quarter-to-quarter, look at cancellations as a percent of opening backlog just like we do for our total backlog percentage cancellation.

Of all the therapeutic areas we break out, metabolic has the lowest historically cancellation rate. Metabolic is actually — last quarter because metabolic is large, and it happened to be a little bit of an uptick and oncology had a little bit of a downtick in percentage, metabolic happened to be higher. But generally, oncology is a riskier field and has more cancellations. So — and I just do not see the — I do see the disruption that you’ve kind of described and maybe others are seeing. GLP-1, there’s a lot of work. There’s a lot of stuff. It’s actually a pretty safe therapeutic area for us and things are very are going fine.

David Windley: Okay. That’s helpful. Last one for me. On kind of the revenue guidance and cadence, given the immediacy of your bookings recognition to revenue. I mean your project — when you recognize the booking, the project is kind of already going and you’re highlighting higher cancellations of sub-1 book-to-bill, you’re maintaining the revenue guidance, perhaps you or Kevin could speak to the kind of the durability or the ability to hold the revenue where it is despite backlog not really growing?

August Troendle: Yes. I got Kevin talk in a minute. But just on service of it, under 606, revenue is a tough one. We’ve not been really great at predicting just when pass-through investigator costs are going to hit, and they are a larger portion of things lately. And so that’s — look, that’s always a risk, but our current modeling is we’re going to be within our guidance range on revenue despite [indiscernible]. But certainly, we have to worry about future cancellations.

Kevin Brady: Dave, August is exactly right. Despite the headwind from cancellations that we saw in the first quarter, we feel very good about the range that we have out there, which is why we reconfirmed guidance. Certainly, future cancellations could potentially impact that because cancellations have a more near-term impact on that. But right now, we feel good about the guidance ranges that we have out there.

Operator: Our next question comes from Ann Hynes with Mizuho.

Ann Hynes: Great. And good luck, Jesse. Was nice working with you. On the gross booking side, can you give us what the gross bookings grew and if it was in line with your internal expectations?

August Troendle: With gross bookings — we don’t break out gross bookings from — we just report on net bookings.

Ann Hynes: But directionally, was it in line?

August Troendle: So was it overwhelmingly cancellations that drove us down from what would have been a great book-to-bill? No, new gross awards were also on the low end, and that’s why — so it was a combination of the two, both cancellations and weak gross bookings, obviously, impacted by prior pre-backlog cancellations in the past.

Ann Hynes: Okay. And then I get the question a lot. There’s a lot of biopharma M&A buying biotech, do you have any — like how should we view your exposure to that going forward? And if a big pharma purchased one of your biotech companies, what happens in that scenario to current trials?

August Troendle: Well, that’s frustrating, and it happens all the time. It’s not — and it’s happened in the recent past, and it continues to happen. Clients of ours get acquired. Generally speaking, we are cut out on future work. It’s a loss for us. Usually, the ongoing work we continue with, although there’s even cases where based on times decide they’re going to fold that into their current provider or internal resources. So acquisitions are not good for us? No, but it happens all the time, and we have a very broad portfolio of clients. And so it’s something we work around.

Operator: Our next question comes from Charles Rhyee with TD Cowen.

Charles Rhyee: Maybe if I could first follow up on Ann’s question. Would you attribute any sort of the heightened level of cancellations as a result of past M&A?

August Troendle: No, I don’t think any of the cancellations we had in the quarter were related to any M&A activity, no. Maybe I’m wrong on some little smaller part, but that was not a driver of anything, no.

David Windley: Okay. And then maybe just 2 more things around that. You talked about sort of what normally drives cancellations, other re-prioritization or drug failed, could you give us a sense for the mix in the cancellations perhaps between drugs that were canceled sort of in flight or because of futility or kind of canceled ahead of start because of sort of a change in direction by the sponsors?

August Troendle: Yes. No, we don’t even track that because even categorize it is difficult because they’re overlapping buckets. So no, I just don’t have any real [indiscernible] just nothing struck us as specifically funding related, which we are sensitive to and try to get a feel for the overall funding levels in the market. But funding is always one of the factors, if everyone had unlimited resources, a lot of stuff would move forward that they’re canceling because of product performance. But they’re just so overlapping. We don’t even try to break that out.

Charles Rhyee: Got it. And one last quick one for me. In the bookings that you did for the — in the net bookings, the level of pass-through revenues expected in the future work is that at the same current rate that you’re seeing today? Or is it lower? So in other words, maybe there’s a mix difference. And therefore, obviously, we have a higher level of pass-through revenues reported this quarter, but maybe as pass-through is expected in the new work a lot less, which could skew the metric.

August Troendle: Kevin?

Kevin Brady: Yes. Charles, I would say that in terms of the current bookings, I would say there’s still somewhat of an influence in the higher pass-throughs. But as I had mentioned last quarter, I do expect pass-throughs as a percentage of revenue to end the year lower than what we started this year at. So we were pretty high this quarter, I don’t know, 44% or so. I do expect that to come down as some of these metabolic studies wind down a little bit. But it all depends on kind of future work and future bookings as well.

Operator: Our next question comes from Eric Coldwell with Baird.

Eric Coldwell: I’ll hit this canceled topic a different way, bear with me. If you’re — so you have — historically, you have an average cancellation rate, and I know there’s lots of volatility around that, but you have an average. And I’m just curious, if cancels were averaged this quarter, understanding the gross awards were lower than you would like. But if the cancels were average, what kind of ZIP code book-to-bill would we have been looking at? Would it have been a [ 1.0 or 1.1 ]? Where would you have been if the cancels were just normal and all else constant.

August Troendle: Yes. And what normal was just kind of picked the middle of the range or something. I really haven’t done that math, but Eric, I think directionally, yes, it would have been still a weak book-to-bill somewhere around 1, I would assume. So it wasn’t just massive cancellations that knocked us down from a great 1.15 to 0.88. It was a mixture of the two.

Eric Coldwell: And then if I could play off that a bit. Sometimes these rates are impacted by 1 larger, 2 larger, 3 larger cancels. What would be the quantum? If your largest cancel hadn’t happened, would you have been normal? Was it 3, just trying to get a sense for it.

August Troendle: No. Yes, you’re talking about several 2, 3, I mean to drive you over. But because there was no very large one or something like that, that drove it. But there are always — some of them are meaningful in size. But no, there was no 1 or 2 that were outsized that drove it.

Eric Coldwell: Okay. And then last one for…

August Troendle: Let me make one more comment. I say it was weak bookings and cancels kind of both were factors here. In fact cancels have been much better range. We would have had a better book-to-bill, but it would have been weak anyway. Even if cancels were relatively low, it would have been or book-to-bill. That low book-to-bill, I’d say, was something of just what’s progressed and what’s in pre-backlog and what’s canceled there and never as matter moving forward, but also some things were just timing of things that move forward. And some of that you hope will eventually make it to backlog in future quarters.

Eric Coldwell: Yes. No, that’s understood. One last thing. The backlog that you showed to The Street, you have a next 12-month revenue visibility figure and a total backlog figure. You subtract the next 12-month visibility figure from the total over time. We’ve seen a deterioration in the backlog coverage that is beyond 1 year. So years 2 and years 3 and you’ve had 6 consecutive quarters of that number come down. And I’m just walk us through why there isn’t — I think you and I spoke a quarter or 2 ago about this view of this effectively being like a drug patent cliff for a big pharma or something that there’s something looming a year plus away that’s going to completely upend the revenue growth profile in the past, I sense that you weren’t concerned about that, but The Street is.

And I’m just hoping you can talk us through the mindset of wising this plus 1-year backlog decline. Maybe it is now a concern for you, but I’d love it if you could talk through that thesis, that thought process, of why we shouldn’t be so focused on this or maybe we should and what it would take to get that number going back in the right direction if you are concerned, but I think this is sort of the elephant in the room that a lot of people are looking at, and that would be helpful if you could really dig into that for us.

August Troendle: Yes. Sure. No. And I guess there is area for concern. I mean several quarters back, it wasn’t a concern because our pre-backlog was growing so fast and I thought cancellations were coming down and going to be in a good place. That really frankly hasn’t happened. Cancellations have continued to go on at a much higher rate, both in backlog and pre-backlog and it does now result in us facing a revenue. Just look at the Q1 versus the remainder of the year. We don’t have revenue growth. We will, on a year-over-year basis, but not on a quarter sequential quarter basis. And ’27 is, I don’t know yet. I mean that’s too far out at this point to really get a handle on. But yes, no, our growth profile both now and 6 months from now in terms of sequential growth is a real question.

We need either cancellations to abate or gross awards, new notifications and a bigger pipeline going forward. And that’s why I talked about us trying to expand our pipeline and really kind of accommodate what could be a much higher cancellation rate than we’re sort of used to in historical periods. But no, I mean, I can’t dodge it and say, “Oh, yes, no, there’s no issue there.” Certainly, what we consider a reasonable growth rate is not projected on a sequential basis going forward.

Operator: Our next question comes from Jailendra Singh with Truist Securities.

Jailendra Singh: I want to follow up on your comments earlier about RFP trends. I think you said that they were down year-over-year. Can you elaborate on that? Any particular areas you’re seeing weakness? I mean, with biotech funding remaining stable over the past 8, 9 months, surprising to see RFP weakness. Just can you put — give some more color on that?

August Troendle: Yes. It’s hard to categorize what we’re aware what sector, what therapeutic areas — or what’s weak, et cetera, I really don’t have those kind of metrics. I don’t even, frankly, pay a lot of attention to it. Now it is a focus of the industry overall and everybody talks about RFPs. And so I feel compelled to do it. But as I said many times in the past, I don’t really pay a lot of attention to the numerical. Certainly, a long-term trend of decreasing RFPs is obviously not viable. But the bouncing around of RFPs is overwhelmed by the quality of the RFPs. And there’s always the question of is more RFPs means that they’re just inviting more CROs to the same RFPs? Or are there really more RFPs out there? And just measuring it is very difficult and I tend to just ignore the numerical value on a sequential basis or single time points and focus on the quality of the opportunities we have.

And I believe we have very high-quality opportunities, and I haven’t seen a deterioration of that. But I don’t feel like we have talked about that sometimes in the past of real funding problems and a lot of just scenario planning and fundraising and all the rest of it that they’re just looking for bids so that they can go out and then try to get it funded. That has happened in the past, and I do not see that in the present to a large extent. I mean, obviously, that’s something that happens all the time, but the trend is actually pretty good. So I don’t put a lot of stock in just the numerical value of RFPs that we see in a given quarter.

Jailendra Singh: Just a quick clarification, but you don’t see that the biotech CRO market has got more comparative in last, say, 6 months or so. I mean, we’ve heard about some of the large peers investing in biotech venture firms to help secure some early-stage biotic work. Just curious if that is having any impact? How do you think about the just industry competitive landscape, in particular for the last 6 or so months.

August Troendle: I don’t know how to — I mean I just don’t know what the impact of that. I mean, how would I know? I don’t even know what funds or where they might be doing — they talk about being more active. And certainly, we have — it’s a very competitive market. I haven’t seen a large change there. Certainly, what our biggest factor over the last 18 months has been cancellations, but we think we do have to work on our win rate. And is that due to increasing competitiveness? I don’t know. It’s just how do you measure that? I just don’t have a way. But certainly, we would like to win more.

Jailendra Singh: Fair point. And one last one. Last quarter, you mentioned that in 2026, you don’t expect net productivity benefit from AI as investments would largely offset the gains. I mean given the continued advancements and growing interest in AI over the last few months, has there been any impact or any change in your thinking, how should we think about the potential impact, positive or negative of AI on your business internally?

August Troendle: Yes. I mean I just reiterate what I said before. I think that AI would either have to be so transformative as to just be ending our industry in the short term or just total hype for us to have savings in the next year or two. If AI is really something of value, which I believe it is, it’s going to take a lot of investment to achieve that saving. And there is lots of opportunity because it’s such a attractive area for improving overall process and efficiency, it’s going to take a lot of investment. And if — and the only reason we wouldn’t do that investment is if we thought there was — there’s just some low-hanging fruit, we’ll grab that, but it really is just a lot of hype then you’d see some efficiency. But no, I think the next 2 years at least, we’re going to be investing more dollars in trying to achieve future benefit then we will gain in terms of efficiency.

And I stand by that. I still think it’s a few years out before we see any actual net benefit. Not that we won’t see efficiencies even currently, we are. But I think the net benefit on it all, I think you’re talking about for us, I think it’s a few years out.

Operator: Our next question comes from Luke Sergott with Barclays.

Unknown Analyst: This is Jake on for Luke. Thanks for the question. So I know large pharma isn’t a big focus for you, but if they spend ahead of patent clicks and scoop up more of these biotechs and assuming the demand is less volatile, when would it make sense to take on more of this work? Or will it always make sense to prioritize biotech?

August Troendle: Yes. Look, we’ve made a strategic decision not to play in large pharma. To be there, you need to have very flexible model of delivery involving staffing and quite a bit of functional outsourcing. And that’s pretty uniform across large pharma. They — it’s not to say that they don’t do some full service outsourcing, but it’s in a very different environment, and they expect their partners if you’re going to be one to have all of those services. We’ve chosen not to do that. We chose not to do that, not because it’s — it’s not an attractive area. It’s because we think it does detract from some of our focus on full-service internal expertise and driving our own efficient process of clinical development that I think is a value to many virtual and smaller companies as opposed to a very large pharma that have a lot of systems and are more focused on how to incorporate their CROs into their system.

So it is a different model in many ways. It’s not unachievable, but it’s something we’ve decided is not for us.

Operator: Our next question comes from Sean Dodge with BMO Capital Markets.

Sean Dodge: August, you mentioned in your prepared remarks some initiatives you’re putting into place to improve your win rate. Maybe if you could just tell us a little bit more about what you’re doing there and how quick kind of the pull-through on those could be in impacting gross wins?

August Troendle: Yes. I’m not going to get into individual things we’re doing. I think that’s just a little bit too much to push out to our competitors. But I just wanted to really express that we are focused on this, and we do see opportunities. So I wanted to just point out that we do believe there’s opportunities to expand our — both the pipeline and the win rate on our opportunities to really combat to higher cancellations should they continue on to get back to a growth rate that we want. So it was more to really focus on that. In terms of timing, I’m hoping this — over the next few quarters, we’re going to see a real improvement. I think we already have, even in Q1, we had a good win rate. And so I’m hoping it’s sustainable. And the things we’ve done and put in place and the enhancements we’re making, improve our win rate meaningfully over the immediate term.

Sean Dodge: Okay. And then maybe taking that, just going back to the comments on the revenue outlook. You continue to hire in the quarter despite the cancellations and the softer gross wins. Just any more context you can share there, that seems to be signaling confidence that you will continue to grow revenue. But I guess maybe just some help squaring kind of the declining net wins with the increase in headcount.

August Troendle: I think you have it right there. That’s the confidence. We’re still hiring. I don’t know how you get any more confident than that.

Operator: Our next question comes from Michael Cherny with Leerink Partners.

Michael Cherny: Maybe to flip the AI question a different way, August. As you engage with clients, do you see any commercial usage of AI being done by your clients right now? We see day by day, it seems like Anthropic and OpenAI continue to release modules designed to address clinical trial work, drug discovery. Is any of that factoring into the dynamics on what you think could be in play relative to the bookings performance and the challenges you noted relative to some of the slowdown in the quarter?

August Troendle: No, no. I don’t think there’s real applications that our clients are using, how they’re impacting our interaction with them like everybody using AI in places many times embedded in other systems, et cetera. But I don’t think it’s anything that’s affecting our provision of services or interaction with clients at the current time, no.

Michael Cherny: Got it. And I know you said, Kevin, no buyback in the guidance now, but given the way the stock has reacted to the earnings, any thoughts on just capacity and capability, not just from the authorization, but cash flow availability given clearly what’s a [ decent amount ] of cash on the balance sheet?

Kevin Brady: Yes. I mean, certainly, we’ve got authorization in place. I think we’ve got a little bit over $800 million in authorization, and we’ll continue to execute as we always have and look for opportunities to do that. So no, we will continue to execute on our planning strategy that we always have.

Operator: [Operator Instructions] Our next question comes from Ryan Halsted with RBC.

Ryan Halsted: Maybe just going back to SG&A. It looked like there was a pretty nice improvement sequentially. Can you talk a little bit about what drove the improvement? And then just how should we think about SG&A going forward, especially in light of the comments earlier that you’re continuing to hire what are sort of the efficiencies? And how should we think about that going forward?

Kevin Brady: I mean SG&A was up slightly sequentially right?

Ryan Halsted: Okay. So do you expect, though, that, again, with sort of the cancellations going forward and maybe in the past, you’ve talked about having some pretty strong retention of your professionals. Do you envision more operating efficiencies going forward?

Kevin Brady: Yes. I mean, certainly, because of the improved retention rates that we’ve seen that we continue to [indiscernible] efficiencies probably at a slower pace than we have if you look at guidance and the midpoint of guidance, margins to remain in a very good spot. But no, we continue to see some business because of that is reflected in our guidance.

Ryan Halsted: Got it. Okay. And then maybe just trying to take another angle at the cancellations. I’m not sure if if you’ve commented on this in the past. But do you see within cancellations any trials that are suspended and maybe are outside of your bookings time horizon but have the potential to restart in the future?

August Troendle: Sure. Both with things in backlog and things in — they haven’t reached backlog. That’s always one of the biggest risks, like there’s always total cancellation risk, but one of the biggest risks is timing of it making it to backlog when it starts proceeding. Sometimes they award something, [ heck ], even before they’ve raised money to do the trial before well before they’re ready to move forward on it or awarded it as part of series of studies that are based on each other. And so it’s sequential. And so there’s always a question whether things get pushed out or sometimes they can accelerate and come in quicker than we expected. But generally, if something happens, they get pushed out or canceled.

Ryan Halsted: Got it. Okay. So sorry, just to follow up on that. So do you feel there’s, I guess, confidence in your outlook in that perhaps some of those cancellations could resume within the year?

August Troendle: Yes. So to cancel, it’s probably dead. I mean, look, things don’t generally come back in the cancel bucket. But I’m just saying that there are things that didn’t make it into backlog in a given quarter that might come in, in future quarters. We might have expected them to come in one quarter and they get delayed and get pushed into other quarters. And some of the stuff that’s in backlog that gets put on hold. Yes, it could cancel — I mean, we don’t necessarily — we don’t cancel it because of that. We just hold it in backlog. It remains in backlog. You don’t cancel it. It’s just on hold for a period of time and then hopefully get started or maybe it does cancel in the future.

Operator: Our next question comes from Eric Coldwell with Baird.

Eric Coldwell: I’m definitely expecting the snarky response on this because it’s probably a bad question. But I’m curious what level of net book-to-bill you are using internally to help guide the revenue outlook that you do have? I know calling quarters is incredibly unreasonable, particularly at this point in April. You don’t know what the cancels will be at this point. I get that. But you do have a forecast internally, and I’m just trying to level set what you’re thinking and where you would be directionally steering those of us on the outside, so we don’t get ahead of our skates here over the next quarter, next 3 quarters.

August Troendle: Yes. So first off, just book-to-bill. I mean, it’s just a horrible measure. I mean, I get it, it’s useful to see that the buckets filling at a rate that’s commensurate with what’s pouring out in the revenue that that you’re either growth or nongrowth and future revenue opportunity. But under — particularly under 606, and it — you don’t model things based on a book-to-bill. It’s — do we miss book-to-bill because revenue ran up so fast that it made our book-to-bill lower even though we exceeded on bookings in our expectation. I mean you miss on things that are good. We — you missed that book-to-bill target because our revenue was so high. Is that a bad thing? It’s a flawed measure of performance. It’s a great measure to see if the buck is filling versus emptying.

But there are different buckets, unfortunately, under 606. And you don’t even know whether the good buckets actually filling while another buckets draining. So I don’t want to talk about book-to-bill. And I’m not going to give guide future book-to-bill for us. But we certainly do hope to have improving bookings over time. And I would assume that the book-to-bill, certainly 0.88, where things are contracting is not anything we would expect going forward. But the cancellations can drive you to lower levels occasionally.

Eric Coldwell: Yes. I completely agree with you on the book-to-bill. I wish you could see my correspondence with investors on this topic. I’m 100% on board, but bookings dollars are important, and I was really hoping more for direction on that. You just did [ $618 million ] in the quarter. Are you internally, are you modeling [ $650 million, $700 million]. I’m just trying to get a sense on what your thinking the dollars will be, forget the ratio, what you need to do to be within this revenue guidance range for the year?

August Troendle: So we do anticipate that it will increase. But I don’t want to quantify anything there. It’s just not — we’re not going to guide with bookings in given quarters, and it’s just too variable. I do anticipate it increase, but there’s no guarantees on anything.

Eric Coldwell: Yes. Fair enough. And then on the pre-backlog in the past, you’ve given some ballparks on that. And I think it wondered…

August Troendle: The only back quantify in terms of cancellations in there? Or do you mean in terms of magnitude?

Eric Coldwell: The size of the free backlog, okay, [indiscernible] it hasn’t moved into the 3-year window yet.

August Troendle: All right. So in response to kind of the moving parts and how we could have growth and I said that it was a comparable size to backlog itself and actually somewhat larger at the time. I think as I’ve said, but we’ve never tried to quantify that. And again, it’s because it’s so variable, but it’s a size that is generally comparable to backlog.

Operator: Our next question comes from Justin Bowers with Deutsche Bank.

Kevin Caliendo: August, I’m just trying to understand some of the moving parts here on the gross versus net. And I think folks are a little confused on what we’re seeing in like the broader macro environment and biotech funding and that’s largely your customer base. And then in terms of like the bookings that we see now, it seems like realistically, if you take a step back, you guys have grown net bookings 25% year-over-year. You could say you might be a little bit of a victim of your own success because of the outsized growth that you’ve had over the last year plus versus the rest of the industry. So is this [indiscernible] and you’re calling out cancellations as well. But what about the overall gross environment? Was this an RFP sort of dynamic that you saw a win rate dynamic? It seems like your win rates were okay or actually stepping up. So is — was it just the opportunities weren’t there in the quarter or something else? Can you help us understand that?

August Troendle: Yes, sure. maybe there’s a little confusion over where things happen. So in the current quarter, as I said, our wins, our awards were good, and our win rate was good, okay? So if we had a backlog policy that shows anything that we get awarded in a quarter as going into backlog as some CROs have done in the past. We would had a good book-to-bill. I don’t know what it would have been, but it would have been — I think people would be happy with it. But we don’t — because those awards are often just based upon future plans, and there’s a lot to be done. And like I said, they might not even have money. In our client base, it’s not like a large pharma that hands over to one of their partners protocol on a study for a compound that they’re ready to run with.

Sometimes there’s a lot of moving parts in — with our clients and they award us something and it’s going to be quite a while before it starts and there’s quite a bit of risk that it never gets there, that never gets to start. So we don’t recognize that into a backlog, which are things that are ongoing, okay? So that’s stuff that we start up. And that’s our backlog. It’s the future opportunity for projects that have started. But we have a lot of projects that are not started and may never start in this kind of pre-backlog. And so the quarter was good in terms of clients telling us that they’ve now got money, they’ve got plans or they’re going to have money and they want to use us. But what is actually starting in the quarter is based on stuff that was awarded to us in prior quarters.

I don’t know, it could have been some of them 2 years ago. I mean some of it last quarter or the quarter before or whatever. And so there is a little bit of a disconnect between current environment and our bookings. And so what current environment is a better reflector on our bookings, I don’t know, 2, 3 quarters out or so. I mean there’s a lag. So does that close the — does that answer the question?

Justin Bowers: Yes, that’s helpful. And then maybe to just bridge that a little bit. It does sound like sort of awards or wins were good, but that’s not starting any time soon. So then is it if we sort of zoom back to what Eric asked, the pre-backlog then, is that growing? Or has that been sort of like…

August Troendle: Yes. so pre-backlog did grow. We’re just not going to give metrics on the size of the growth. I just 1 time said because there was this huge cliff people thought was happening, which like I said, I can’t — at this point, it’s a greater risk than it was back then because cancellations have been so large. But I’ve said, I think that pre-backlog had grown by 30% or something. But we’re not going to give percentage growth in pre-backlog. But yes, we had — like I said, we had a good quarter in terms of new authorizations, not in the backlog, but just they’re telling us they plan to use it in the future. If you add up all those into the pool group in the quarter.

Justin Bowers: Okay. That’s helpful. And then just last one for me. In terms of those authorizations, is there a way — or how do you sort of risk assess or risk adjust quality of those rewards. And is there any change in the trend that you’re seeing, like between now and over the last few months or a few quarters.

August Troendle: Yes. So you’re asking how we assess like for modeling backlog conversion — conversion into backlog and future revenue? How do we assess that risk is what your risk cost asking about?

Justin Bowers: That end, like, let’s say, how well capitalized or funded these programs are?

August Troendle: Well, that’s part of the assessment of the likelihood of moving forward. So we do make an assessment of when we think something will progress based on a number of factors, but I don’t have a — we don’t track like how many are in this bucket versus how many in that bucket and which ones are high risk versus low risk. I don’t have any of those kind of metrics, but we do, on a project-by-project basis, estimate risk adjust, probability adjust opportunities and things in pre-backlog schedule when we think they’re going to make it to backlog and when we realize revenue from them. So we do have the planning tools for making a model around our bookings and our revenue. So that is true. But I don’t have a whether there’s been an increase in the number of projects that are in this category of very high risk and don’t even think about it kind of stuff. I don’t have any of that.

Operator: Our next question comes from David Windley with Jefferies.

David Windley: At the risk of belaboring I was going to come back for one more. August, we’ve talked in some detail around the cadence — your bookings policy and the cadence of award, and I just — I still struggle to, I think, evangelize some of those things. So I want — I’m going to say some things, and I’m hoping you’ll confirm them. So number one, you’ve talked about on this call an award to a booking could be as short as 1 to 2 quarters or as long as a couple of years. You said to me in the past, the average is — the inside range is maybe 3 to 5 quarters, so call it about a 4-quarter average from award to booking recognition. Do you agree with that?

August Troendle: Yes. I don’t have in front of me the metrics, but that’s kind of in the ballpark, yes.

David Windley: Yes. Okay. And then for clarity, when you recognize a booking, I think we’ve talked in the past and you kind of alluded to this on public calls in the past that a booking for you is basically happening coincident with first patient in. Is that also consistent with your — do you agree with that?

August Troendle: Yes, that’s true.

David Windley: Okay. So the audience understands then at that point, you have already not you, you, but the company, Medpace, has already done a fairly significant amount of setup work on the trial that is revrecable, correct at the time you’re recognizing the booking.

August Troendle: That’s frequently the case, yes.

David Windley: Yes. Okay. So in the case of — yes, sorry, is that somebody who wants to chime in? Or is that me? I’m hearing an echo — sorry. So in the case of a cancellation where the client decides not to move forward. I mean, I guess I would interpret that, that doesn’t really happen because they already have. Is that right?

August Troendle: No, it’s not infrequent that somebody pulled the plug before we get the first patient in. It’s very — the costs are very small compared to launching the trial. So things do cancel at any stage right up to once patients are in, then it’s usually — it has to be something. I mean, it big. The toxicity, some failure of the compound. But once you invested that, it’s generally you don’t pull patients off of the drug. Just before patients in, it’s much higher risk. But you’re right, we generally have, though, a very limited LOI, some start-up task order that is covering the costs that might be going before the study fully launches. And sometimes, we have a contract. But very often, we have something covering us and limits their amount of liability to some X number of dollars and they could pull the plug, yes, sure.

David Windley: Okay. But in that case, where the client is deciding to pull the plug before first patient in, more times than not, that’s a pre-backlog cancellation, not a backlog cancellation like you haven’t got…

August Troendle: Yes. No, I’m sorry. If you’re talking about just backlog, yes, that’s — we they expanded quite a bit of resources. And when it gets to the point where the quarter in which it goes into backlog, they’ve expanded a lot of resources, and that’s highly unlikely to cancel. But I’m just saying that 3 quarters before first patient in, the amount of work we might have done, so work in terms of some regulatory work and other things, but the investment is relatively small, and they could cancel that.

David Windley: Right, and I understand I’m belaboring the point. But so the — in the case like this quarter where cancellations of backlog were relatively high, and you answered to Eric, it’s not just one, it’s several. Those are trials that have patients in the study that the client has chosen to cancel and those can happen because of futility of the drug or things like that. But more often — I guess I’m asking in this quarter, in this particular case, what does drive the higher cancellation because those study — asking in the context of those studies having advanced as far as they have in order for them to have already gotten into backlog.

August Troendle: Yes, generally, product failure. I mean look, oncology happens all the time. They got — it’s not working. And it’s got multiple phases possibly of it. And it’s in there rolling on into the next, et cetera, or just — it just get canceled because there’s unexpected toxicity. But it’s also sometimes go really well. And you finish early. You recruit faster. And there’s a cancellation because the budget was for a 2-year study, because — or 2 years of recruitment. And you recruit it in one year, actually, your client gets money back. The contract amount is reduced. So there’s lots of ways in which the total budget might wind up being less than what you bid it at and put in backlog.

David Windley: Got it. My last question for you on a completely different subject, and congrats to Jesse on the retirement. But August, what is — I mean, I know this has been a lot of your life for a very long period of time, but what is your commitment to the company? How do you view your own longevity in your current role?

August Troendle: I was — I don’t view my longevity. Look, I don’t know, look, I’m committed to the company. Obviously, very passionately interested in Medpace and its success. So I’m going to be here for quite a while. And I will retake duties as President as I had in the past. And I don’t think there should be any kind of disruption or problem. We do have a very strong and deep management team and we will eventually have someone move to that spot, but it’s not in the near term, but we do have plenty of management strength to continue to move Medpace forward.

David Windley: Got it. Thank you for enduring my many additional questions.

August Troendle: Yes. No, thanks. Yes, I think our hour is up. I don’t know where we are in the queue.

Operator: None left in queue.

August Troendle: Good.

Operator: I would like to turn the call back over to Lauren Morris for any closing remarks.

Lauren Morris: Thank you for joining us on today’s call and for your interest in Medpace. We look forward to speaking with you again on our second quarter 2026 earnings call.

Operator: Thank you. This concludes the conference. Thank you for your participation. You may now disconnect.

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