Medpace’s second quarter was marked by a strong positive market reaction, driven by a combination of higher-than-expected revenue growth and operational execution. Management credited the quarter’s outperformance to a significant decline in project cancellations, improved funding across key clients, and an increased mix of faster-executing clinical research projects, particularly in metabolic therapeutic areas. CEO August Troendle noted that the increase in award notifications and lower cancellations led to backlog conversion rates that were the highest in the past five quarters. He added, “Cancellations were down across the pipeline and awards recognized in the backlog were the highest in the past 5 quarters.”
Is now the time to buy MEDP? Find out in our full research report (it’s free).
Medpace (MEDP) Q2 CY2025 Highlights:
- Revenue: $603.3 million vs analyst estimates of $542 million (14.2% year-on-year growth, 11.3% beat)
- EPS (GAAP): $3.10 vs analyst estimates of $3.00 (3.5% beat)
- Adjusted EBITDA: $130.5 million vs analyst estimates of $117 million (21.6% margin, 11.5% beat)
- The company lifted its revenue guidance for the full year to $2.47 billion at the midpoint from $2.19 billion, a 12.8% increase
- EPS (GAAP) guidance for the full year is $14.15 at the midpoint, beating analyst estimates by 11%
- EBITDA guidance for the full year is $530 million at the midpoint, above analyst estimates of $473.7 million
- Operating Margin: 20.9%, up from 19.9% in the same quarter last year
- Organic Revenue rose 13.9% year on year, in line with the same quarter last year
- Market Capitalization: $12.57 billion
While we enjoy listening to the management's commentary, our favorite part of earnings calls are the analyst questions. Those are unscripted and can often highlight topics that management teams would rather avoid or topics where the answer is complicated. Here is what has caught our attention.
Our Top 5 Analyst Questions Medpace’s Q2 Earnings Call
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Ann Hynes (Mizuho): Asked about the sustainability of improved bookings and lower cancellations for future growth. CEO August Troendle explained that while the current trend is encouraging, ongoing low cancellations are critical to maintaining momentum and there remains some uncertainty for next year.
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David Windley (Jefferies): Inquired about the relative impact of pass-through (reimbursable) revenue versus direct revenue growth. CFO Kevin Brady clarified that most of the revenue increase comes from higher reimbursable activity, but improved staff productivity is also contributing to margin expansion.
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Max Smock (William Blair): Probed whether the company’s higher booking expectations require a better macro environment or simply sustained low cancellations. Troendle responded that further improvement in funding and low cancellations are both important, emphasizing that increased cancellations could quickly alter the outlook.
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Eric Coldwell (Baird): Sought clarification on the sustainability of backlog conversion rates and revenue growth into 2026. Troendle stated that continued growth is possible if the current therapeutic mix and backlog replenishment trends hold, but acknowledged the risk if reimbursable work declines.
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Luke Sergott (Barclays): Asked what specifically drove the step-up in revenue and backlog conversion, given stable hiring and SG&A. Troendle pointed to the decline in cancellations and the shift toward faster-burning projects as the main drivers.
Catalysts in Upcoming Quarters
In the coming quarters, our analysts will be focused on (1) whether the trend of reduced project cancellations persists, supporting stable backlog replenishment; (2) the ongoing mix of faster-burning versus slower-burning clinical trial projects and its effect on revenue recognition; and (3) Medpace’s ability to scale operations and hiring to match increased project activity. We are also monitoring how changes in client funding and industry dynamics could influence future bookings.
Medpace currently trades at $443.00, up from $308.94 just before the earnings. At this price, is it a buy or sell? The answer lies in our full research report (it’s free).
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