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Medpace Holdings, Inc. (MEDP)·Q2 2025 Earnings Summary

Executive Summary

  • Q2 2025 delivered strong top-line growth and a broad beat vs consensus: revenue $603.3M (+14.2% y/y), diluted EPS $3.10, and EBITDA $130.5M; all above S&P Global consensus for revenue ($538.8M*), EPS ($2.97*), and EBITDA ($117.0M*) .
  • Management raised FY 2025 guidance materially: revenue to $2.420–$2.520B (from $2.140–$2.240B), GAAP net income to $405–$428M (from $378–$402M), EBITDA to $515–$545M (from $462–$492M), and diluted EPS to $13.76–$14.53 (from $12.26–$13.04) .
  • Operational drivers: fewer cancellations, accelerated client decisions, mix shift toward faster-burning metabolic studies, and elevated reimbursable investigator costs (expected to run 200–300 bps higher in 2H) .
  • Capital allocation remained aggressive: $518.5M buybacks in Q2 (1.75M shares), $908.4M YTD, with $826.3M remaining authorization—an ongoing EPS accretion lever and potential stock catalyst .

What Went Well and What Went Wrong

What Went Well

  • Raised full-year outlook after stronger-than-expected revenue conversion and improved funding/cancellation backdrop; CEO: “we now anticipate accelerating revenue in the second half of the year” driven by “better funding than anticipated… fewer cancellations… shifting mix… higher investigator costs” .
  • Healthy demand indicators: Q2 net new awards $620.5M (+12.6% y/y), book-to-bill 1.03x, backlog conversion rate 21.2%, pointing to robust execution and faster study progression .
  • Clear operational narrative: CFO signposted elevated pass-throughs with direct-fee productivity intact; “EBITDA margin… benefited from direct service activities and productivity, offset by higher reimbursable costs” .

What Went Wrong

  • Margin compression on GAAP: net income margin fell to 15.0% (vs 16.7% y/y and 20.5% in Q1), reflecting higher tax rate and lower interest income despite EBITDA growth .
  • Competitive pressure: management acknowledged a “lower-end win rate” in Q2, losing two very large programs; bookings quality dependent on cancellation trends and funding stability .
  • FX headwinds in Q2 and elevated reimbursable mix damped margin leverage; management guided reimbursables 200–300 bps higher in 2H, which can dilute reported margins even as revenue accelerates .

Financial Results

Core P&L and Margins (oldest → newest)

MetricQ4 2024Q1 2025Q2 2025
Revenue ($USD Millions)$536.6 $558.6 $603.3
Net Income ($USD Millions)$117.0 $114.6 $90.3
Diluted EPS ($USD)$3.67 $3.67 $3.10
EBITDA ($USD Millions, Non-GAAP)$133.5 $118.6 $130.5
EBITDA Margin % (Non-GAAP)24.9% 21.2% 21.6%
Net Income Margin % (GAAP)21.8% 20.5% 15.0%

Q2 2025 Actual vs S&P Global Consensus

MetricConsensus (Q2 2025)Actual (Q2 2025)
Revenue ($USD Millions)$538.8*$603.3
Diluted EPS ($USD)$2.97*$3.10
EBITDA ($USD Millions)$117.0*$130.5

Values retrieved from S&P Global.*

KPIs and Cash/Capital (Q2 2025 unless noted)

KPIValue
Backlog ($USD Millions, 6/30/25)$2,873.6 (−1.8% y/y)
Net New Business Awards ($USD Millions)$620.5
Book-to-Bill (x)1.03x
Backlog Conversion Rate (%)21.2%
Backlog to Convert Next 12 Months ($USD Billions)~$1.75
Cash from Operations ($USD Millions)$148.5
Cash & Cash Equivalents ($USD Millions)$46.3
Share Repurchases (Q2)1,754,264 shares; $518.5M
Share Repurchases (YTD)2,947,275 shares; $908.4M
Remaining Buyback Authorization ($USD Millions)$826.3
Net DSO (days)−65 days
Customer Concentration (YTD)Top 5 ~21%; Top 10 ~31%

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Revenue ($USD Billions)FY 2025$2.140–$2.240 $2.420–$2.520 Raised
GAAP Net Income ($USD Millions)FY 2025$378–$402 $405–$428 Raised
EBITDA (Non-GAAP, $USD Millions)FY 2025$462–$492 $515–$545 Raised
Diluted EPS (GAAP, $USD)FY 2025$12.26–$13.04 $13.76–$14.53 Raised
Effective Tax Rate (%)FY 202515.5–16.5 18.5–19.0 Raised
Interest Income ($USD Millions)FY 2025$15.8 $11.6 Lowered
Diluted Shares (Millions)FY 202530.8 29.4 Lowered

Earnings Call Themes & Trends

TopicPrevious Mentions (Q4’24 and Q1’25)Current Period (Q2’25)Trend
Funding & cancellationsQ4: cancellations back to normal range; environment softened . Q1: elevated cancellations (esp. pre-backlog) pressured bookings .Q2: cancellations “very well-behaved”; improved funding; faster decisions .Improving sequentially; key swing factor for bookings.
Reimbursable mix/pass-throughsQ4: indirects as % revenue down; margin tailwind . Q1: pass-throughs unexpectedly high; revenue upside .Q2: pass-throughs elevated; guide +200–300 bps in 2H .Elevated in near term; supports revenue, dilutes margins.
Therapeutic mix (metabolic/obesity)Q4/Q1: mix effects discussed; faster-burning studies highlighted .Shift toward metabolic driving faster burn and higher pass-throughs .Sustained emphasis; supports backlog conversion.
Hiring & productivityQ4: high productivity; 2025 hiring to mid/upper single-digit; margin headwinds . Q1: mid-single-digit 2025 hiring plan .Q2: accelerated hiring in 2H; full-year ~5–6% headcount growth .Hiring re-accelerates; productivity remains strong.
Competition & win ratesQ1: broader CRO participation; pricing pressure .Q2: “lower-end win rate”; lost two large programs; awards breadth intact .Competitive intensity persists; quarter-specific volatility.
FXQ4: ~$4M EBITDA tailwind .Q2: FX losses vs weaker USD impacted margin .FX swing from tailwind to headwind in Q2.
Capital allocationQ4/Q1: buyback authorizations expanded .Q2: $518.5M repurchases; $826.3M remaining; opportunistic stance .Continued EPS accretion lever.

Management Commentary

  • CEO August Troendle: “RFP flow in Q2 continued to be strong… cancellations were down… awards recognized in the backlog were the highest in the past five quarters… we now anticipate accelerating revenue in the second half of the year” .
  • CFO Kevin Brady: “We now expect reimbursable costs as a percentage of revenue to increase by 200-300 basis points over the balance of the year” and raised FY revenue, EBITDA, EPS guidance accordingly .
  • President Jesse Geiger: “Ending backlog… was approximately $2.9 billion… we projected approximately $1.75 billion of backlog will convert to revenue in the next 12 months” .

Q&A Highlights

  • Bookings outlook: Management sees a “reasonable chance” to get book-to-bill >1.15 in 2H if cancellations remain low; otherwise expect ~1.0 near-term .
  • Drivers of the guide raise: Revenue upside heavily influenced by accelerated reimbursables; direct-fee productivity also contributing to EBITDA .
  • Win rate dynamics: Lower in Q2 due to losing two very large programs; breadth of awards remained solid; quarter-to-quarter volatility expected .
  • Hiring and margins: Accelerated hiring in 2H; full-year headcount +5–6%; margins face headwinds from mix and hiring .
  • Capital returns: Ongoing opportunistic buybacks; sizable authorization remains .

Estimates Context

  • Q2 2025 beat vs S&P Global consensus: Revenue $603.3M vs $538.8M*, EPS $3.10 vs $2.97*, EBITDA $130.5M vs $117.0M* .
  • Street models will need to reflect: elevated reimbursables (+200–300 bps in 2H), faster backlog burn from metabolic studies, and raised FY 2025 guidance across revenue, EBITDA, EPS .

Values retrieved from S&P Global.*

Key Takeaways for Investors

  • The quarter’s broad beat and materially raised FY guidance are driven by fewer cancellations, faster study progression, and elevated pass-throughs—expect continued top-line acceleration in 2H under these conditions .
  • Mix toward metabolic/obesity is lifting backlog conversion and reimbursables; monitor margin dilution from pass-throughs even as EBITDA grows .
  • Bookings quality and sustainability hinge on cancellation behavior; management targets >1.15 book-to-bill in 2H if the improved trend persists—key for 2026 trajectory .
  • Aggressive buybacks (Q2: $518.5M; YTD: $908.4M) and lower projected diluted shares (29.4M) amplify EPS growth—an ongoing stock catalyst .
  • Watch FX and tax rate: Q2 saw FX losses and a higher effective tax rate; FY tax guided to 18.5–19.0% (up from prior) .
  • Competitive intensity remains high with quarter-specific win rate volatility; breadth of awards intact, but large program outcomes can swing bookings .
  • Execution remains strong (negative DSO, backlog conversion, direct-fee productivity); hiring will re-accelerate to support 2H ramp .