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Medpace Holdings, Inc. (MEDP)·Q3 2025 Earnings Summary

Executive Summary

  • MEDP delivered a strong Q3: revenue $659.9M (+23.7% y/y), GAAP EPS $3.86, and EBITDA $148.4M with margin 22.5% amid elevated pass-through costs; book-to-bill rose to 1.20x and backlog reached ~$3.00B .
  • Results materially beat Wall Street: Revenue +2.95%, EPS +9.80%, EBITDA +12.31% versus S&P Global consensus; management raised FY25 guidance across revenue, EPS, net income, and EBITDA and provided a preliminary 2026 outlook for low double-digit revenue growth and high single-digit+ EBITDA growth .
  • Mix shift to faster-burning studies and higher reimbursable (investigator site) costs drove revenue upside; margins benefited from productivity and lower employee-related costs, partly offset by higher pass-throughs and higher tax rate/lower interest income .
  • Key catalysts: broad-based strength, bookings acceleration, pre-backlog up ~30% y/y, raised FY25 outlook, and preliminary FY26 view; potential overhangs include pass-through cost mix (41–42% of revenue) and cancellation risk trajectory .

What Went Well and What Went Wrong

What Went Well

  • Record net bookings and improved win-rate dynamics: “Cancellations were well-behaved in Q3, permitting record net bookings and a net book-to-bill of 1.20” .
  • Revenue and EBITDA beat with margin expansion y/y: Q3 revenue $659.9M (+23.7% y/y), EBITDA $148.4M (+24.9% y/y), EBITDA margin 22.5% vs 22.3% in Q3’24 .
  • Pipeline refilling: Awarded pre-backlog grew ~30% y/y and is larger than the reported backlog, positioning the company to avoid an “air pocket” in 2026 revenue generation .

What Went Wrong

  • Net income margin down y/y: 16.8% vs 18.1% in Q3’24, primarily due to higher effective tax rate and lower interest income .
  • Elevated pass-through mix: Management highlighted pass-through costs at ~41–42% of revenue, challenging margin leverage; expected to peak around Q4 and trend down in 2026 .
  • Backlog growth modest: Ending backlog up 2.5% y/y to $3,000.6M; while healthy, growth was constrained by unusual cancellations earlier in the year .

Financial Results

MetricQ3 2024Q2 2025Q3 2025
Revenue ($USD Millions)$533.3 $603.3 $659.9
GAAP Diluted EPS ($)$3.01 $3.10 $3.86
Net Income ($USD Millions)$96.4 $90.3 $111.1
EBITDA ($USD Millions)$118.8 $130.5 $148.4
Net Income Margin (%)18.1% 15.0% 16.8%
EBITDA Margin (%)22.3% 21.6% 22.5%
Total Direct Costs ($USD Millions)$364.3 $423.3 $463.0
SG&A ($USD Millions)$49.2 $46.7 $48.1
KPIsQ1 2025Q2 2025Q3 2025
Backlog Conversion Rate (%)19.2% 21.2% 23.0%
Net New Business Awards ($USD Millions)$500.0 $620.5 $789.6
Book-to-Bill (x)0.90x 1.03x 1.20x
Ending Backlog ($USD Millions)$2,846.0 $2,873.6 $3,000.6
12-Month Backlog to Revenue ($USD Millions)——~$1,840.0
Cash from Operations ($USD Millions)$125.8 $148.5 $246.2
Cash & Equivalents ($USD Millions)$441.4 $46.3 $285.4
DSOs (Days)——-64.3
Share Repurchases (Quarter)1,193,011 shrs; $389.8M 1,754,264 shrs; $518.5M 14,649 shrs; $4.5M
Share Repurchases (YTD)—2,947,275 shrs; $908.4M 2,961,924 shrs; $912.9M
Remaining Authorization ($USD Millions)$344.8 $826.3 $821.7
Actual vs S&P Global Consensus (Q3 2025)ActualConsensus*Surprise (%)
Revenue ($USD Millions)$659.903 $640.976*+2.95%*
GAAP Diluted EPS ($)$3.86 $3.515*+9.80%*
EBITDA ($USD Millions)$148.857 $132.545*+12.31%*

Values marked with * retrieved from S&P Global.

Note: EBITDA is non-GAAP; definition and reconciliation provided by the company .

Guidance Changes

MetricPeriodPrevious Guidance (as of Q2 2025)Current Guidance (as of Q3 2025)Change
Revenue ($USD Billions)FY 2025$2.420–$2.520 $2.480–$2.530 Raised
EBITDA ($USD Millions)FY 2025$515–$545 $545–$555 Raised
Net Income ($USD Millions)FY 2025$405–$428 $431–$439 Raised
GAAP Diluted EPS ($)FY 2025$13.76–$14.53 $14.60–$14.86 Raised
Effective Tax Rate (%)FY 202518.5–19.0 18.25–18.75 Slightly Lower
Interest Income ($USD Millions)FY 2025$11.6 $12.2 Raised
Diluted Shares (Millions)FY 202529.4 29.5 Slightly Higher
Share Repurchases AssumedFY 2025Excludes post-6/30 buys Excludes post-9/30 buys Maintained methodology

Preliminary 2026 view: revenue growth low double digits off updated FY25 base; EBITDA growth high single digits or greater; pass-through costs to remain ~41–42% of revenue .

Earnings Call Themes & Trends

TopicPrevious Mentions (Q-2 and Q-1)Current Period (Q3 2025)Trend
Bookings/Book-to-BillQ1: net awards $500M; B2B 0.90x; backlog down y/y . Q2: net awards $620.5M; B2B 1.03x; backlog down slightly y/y .Q3: net awards $789.6M; B2B 1.20x; backlog $3,000.6M (+2.5% y/y) .Improving bookings momentum; backlog stabilizing/growing.
Backlog ConversionQ1: 19.2% . Q2: 21.2% .Q3: 23.0% (23% of beginning backlog); ~$1.84B to convert in next 12 months .Accelerating conversion.
Pass-through Costs MixNot highlighted in Q1/Q2 releases.Pass-through ~41–42% of revenue; expected to peak around Q4 and moderate in 2026 .Elevated but moderating ahead.
Pricing EnvironmentNot detailed prior.Competitive intensity acknowledged; pricing focus increased but not expected to meaningfully change margins .Stable pricing impact on margins.
CancellationsQ1/Q2 pressured pre-backlog and backlog growth (management commentary) .“Cancellations were well-behaved in Q3”; pre-backlog up ~30% y/y .Improving cancellation dynamics.
Therapeutic Mix (Metabolic/GLP-1)Not quantified prior.Metabolic over-indexed in pre-backlog; GLP-1 likely ~two-thirds of obesity programs; broad client base .Metabolic remains a growth driver.
Hiring/Attrition/OffshoringNot detailed prior.Low attrition; hiring led by U.S., followed by APAC (notably India); Europe/China flat .Headcount to accelerate in 2026 .
Competitive LandscapeNot detailed prior.Large CROs often compete; more bidders per RFP (often 6+), win-rate normalized in Q3; position remains strong .Competitive but stable share.

Management Commentary

  • “Cancellations were well-behaved in Q3, permitting record net bookings and a net book-to-bill of 1.20.”
  • “We anticipate 2026 revenue to grow in a low double-digit range… We expect EBITDA to grow at a high single-digit pace or greater.”
  • “Pass-through costs will remain high compared to historical levels and represent between 41% and 42% of revenue.”
  • “Revenue… was favorably impacted by higher reimbursable cost activity, particularly investigator sites, driven by a therapeutic mix shift to faster-burning studies… EBITDA margins benefited from productivity and lower employee-related costs, offset by higher reimbursable costs.”
  • “We project that approximately $1.84 billion of backlog will convert to revenue in the next 12 months.”
  • “The pre-backlog bucket of awarded, firm award work is larger than our backlog itself and is up 30% over the year.”

Q&A Highlights

  • Pass-through dynamics: Mix around 41–42% likely peaks near Q4; expected to moderate in 2026; backloaded nature of site/payments explained the timing .
  • Pricing: Competitive pressure acknowledged, especially with large pharma, but not expected to drive meaningful margin changes .
  • Pipeline and pre-backlog: Awarded work not yet in backlog up ~30% y/y and larger than backlog; helps mitigate perceived 2026 “air pocket” risk .
  • Hiring: Headcount expected to accelerate; recent growth concentrated in the U.S., followed by APAC (India), with Europe/China flat; attrition remains low .
  • Metabolic/GLP-1: Metabolic over-indexed in pre-backlog; GLP-1 roughly two-thirds of obesity portfolio and diversified across multiple clients .

Estimates Context

  • Q3 2025 beat on all major metrics: revenue $659.9M vs $641.0M consensus (+2.95%), EPS $3.86 vs $3.52 consensus (+9.80%), EBITDA $148.9M vs $132.5M consensus (+12.31%)* .
  • Implications: Street models likely revise upward for FY25 revenue/EPS/EBITDA after guidance raise and better bookings/BL conversion; preliminary FY26 outlook anchors expectations while acknowledging pass-through/cancellation sensitivities .
    Values retrieved from S&P Global.

Key Takeaways for Investors

  • Broad-based beat and raised FY25 guide with strengthening bookings and conversion metrics support near-term estimate revisions higher .
  • Elevated pass-through costs are a mix headwind to margin leverage, but management expects moderation in 2026; productivity and low attrition underpin margin stability .
  • Pre-backlog awarded work up ~30% y/y and larger than backlog reduces risk of a 2026 “air pocket” and supports the preliminary low double-digit revenue growth outlook .
  • Cash generation robust (Q3 CFFO $246.2M) and DSOs deeply negative; buyback capacity remains large ($821.7M authorization) for continued capital returns .
  • Competitive intensity is manageable; win-rate normalized and management sees stable pricing impact on margins .
  • Watch Q4: potential peak in pass-through mix and bookings trajectory (management referenced aiming for ~1.15 B2B in H2) as key signals for 2026 setup .
  • Risk monitors: cancellation rates, pass-through mix persistence, FX, and funding conditions at smaller clients could affect backlog growth and margin mix .