Large Pharma Demand Weakness
Q: How is large pharma demand affecting your business, especially with two key customers?
A: Steven Cutler explained that issues with two large pharma customers are isolated to them, as they are changing their development models and cutting budgets, leading to decreased revenues. Growth outside of these top two customers is around 6% , and they expect to work through the challenges over the next 2 to 3 quarters.

Biotech Demand Uncertainty
Q: What is the outlook for biotech demand given recent delays and cancellations?
A: Steven Cutler acknowledged continued challenges in the biotech segment, with delays in decision-making, awards, and some project cancellations. They are not ready to call the end of the biotech slowdown yet and expect uncertainty to persist for the next 2 to 3 quarters.

2025 Growth Expectations
Q: Can you provide guidance on revenue and margin expectations for 2025?
A: While not providing specific guidance, Steven Cutler indicated they expect to grow next year, probably in the low to mid-single digits. They anticipate revenue growth and are evaluating margins, with puts and calls due to changes in the business mix.

Cost Reduction Measures
Q: What actions are you taking on costs to address margin pressures?
A: Brendan Brennan stated they are realigning their cost base, focusing on spans of control and adjusting headcount where necessary. These actions will have some impact in Q4, with more significant effects in 2025.

Long-Term Targets
Q: Are you still confident in achieving your 2027 long-term goals?
A: Steven Cutler believes they can achieve their goals by 2027, perhaps toward the lower end of the range and by the end of that year. They are prepared to utilize their balance sheet for share buybacks and are active in M&A to supplement growth.

Bookings Shortfall Drivers
Q: What caused the miss on net bookings this quarter?
A: The primary reason for the bookings shortfall was delays in decision-making among small biotechs, often due to funding uncertainties. Despite solid RFP flow, converting opportunities into bookings has been challenging.

Impact of Development Model Changes
Q: How are changes in pharma development models affecting your business?
A: Changes in development models, such as a shift towards functional outsourcing, are impacting revenue with certain large customers. ICON is well-positioned to work effectively in both functional and full-service models.

Pass-Through Revenues and Margins
Q: How will the increase in pass-through revenues from vaccines affect margins in 2025?
A: Steven Cutler noted that pass-through revenues from vaccine studies will increase, which can pressure margins in the first half of the year. However, this work burns quickly and should modestly improve the overall burn rate.

Acquisition Strategy and Capital Deployment
Q: How are you approaching acquisitions and capital allocation?
A: Steven Cutler stated they are actively looking at M&A opportunities to enhance operations, such as labs, patient sites, and real-world evidence. They believe they can pursue both acquisitions and share buybacks due to their strong balance sheet.

Unbilled Revenues Increase
Q: Why did unbilled revenues increase significantly year-over-year?
A: Brendan Brennan explained that changes in large pharma contracting procedures, with fewer milestones and less upfront pass-through payments, have increased unbilled revenues. They are managing their debtor book appropriately and maintaining good cash receipts.