ICON plc

Good day and thank you for standing by. Welcome to the ICOM PLC Q1 2026 earnings conference call. At this time, all participants are in the listen-only mode. After the speaker's presentation, there'll be a question and answer session. To ask a question during the session, you will need to press star 1 and 1 on your telephone. You will then hear an automated message advising your hand is raised. To withdraw your question, please press star 1 and 1 again. Please be advised that today's conference is being recorded. I would now like to hand the conference over to your first speaker today, Kate Haven, VP of Investor Relations. Please go ahead.

Hello, and thank you for joining us today. I'm joined on the call by our CEO, Barry Balfe, and our CFO, Nigel Clerkin. I would like to note that this call is webcast and that there are slides available to download on our website to accompany today's call. Certain statements in today's call will be forward-looking statements. These statements are based on management's current expectations and information currently available, including current economic and industry conditions. Actual results may differ materially from those stated or implied by forward-looking statements due to risks and uncertainties associated with the company's business, and listeners are cautioned that forward-looking statements are not guarantees of future performance. Forward-looking statements are only as of the date they are made, and we do not undertake any obligation to update publicly any forward-looking statement either as a result of new information, future events, or otherwise. More information about the risks and uncertainties relating to these forward-looking statements may be found in the most recently filed annual report on Form 20F. This presentation includes selected non-GAAP financial measures, which Barry and Nigel will be referencing in their prepared remarks. For a presentation of the most directly comparable GAAP financial measures, please refer to the section of the press release dated June 23, 2026, titled Consolidated Statements of Operations While non-GAAP financial measures are not superior to or substitute for the comparable GAAP measures, we believe certain non-GAAP information is more useful to investors for historical comparison purposes. Included in the press release and the earnings slides, you will note a reconciliation of the non-GAAP measures. Adjusted EBITDA, adjusted net income, and adjusted diluted earnings per share exclude amortization, stock-based compensation, foreign currency gains and losses, Restructuring Transaction, Integration Related and Other Adjustments, Transaction Related Financing Costs, Fair Value Movement on Investments and Equity, Goodwill Impairment, Impairment of Non-Financial Assets, and the Related Taxation Effect. In the interest of time, we ask participants to keep their questions to one each. I would now like to hand over the call to our CEO, Barry Balfe.

Thank you, Kate. ICON's results in quarter one were in line with our expectations and reflected sustained progress in commercial performance, alongside the expected impacts of previous demand and conversion dynamics on financial results for the quarter. Commercial excellence has been a central priority for me and for the team, so I'm encouraged by the progress that we've seen over multiple quarters now. We prioritized diversification of sales channels in large pharma, expanding our footprint in the mid-size segment, and increasing RFP flow and win rate in biotech. So it's gratifying to see significant progress in these areas, reflecting our strategy in action and its resonance with our customers. Quarter one gross bookings were $3.3 billion, matching the strong performance in quarter four 2025 and up 22% year over year. Cancellations were also in line with the improved levels seen in quarter four, A total of $383 million for the quarter. For transparency, we have also provided cancellations under our old methodology, although notably there was very little impact of the methodology change on reported cancels in the quarter. With that being said, cancellations are inherently volatile on a quarterly basis, and we consider it likely that the future cancellation run rate may be somewhat higher than these levels as intra-quarter cancellations in quarter four and quarter one were lower than historical averages. Strength of gross bookings and cancels resulted in net business wins of $2.88 billion in the quarter, an increase of 42% year-over-year, and a net book-to-bill of 1.42 times. Encouragingly, we again saw a solid contribution of direct fee versus pass-through awards, with our book-to-bill on a direct fee basis in excess of 1.3 times for the quarter. This strong bookings performance was broad based and supported by particularly strong RFP flow in both our pharma full service and our development solutions businesses. RFP flow also increased low double digits sequentially in the biotech full service business. Win rates remained strong in both large pharma and biotech full service, sustaining the step up seen in quarter four. Therapeutic Mix continues to favor oncology and cardiometabolic areas of the portfolio. Importantly, within cardiometabolic, we've seen good diversification in awards in the last two quarters in terms both of the number of customers that we're supporting and the distribution of indications, including areas such as MASH, obesity, and kidney disease. In large pharma, ICON is positioned as a scaled, integrated partner. with leading capabilities across full service and FSP models as well as a broad range of adjacent functions. Our capacity to hybridize FSO and FSP models remains central to our value proposition as customers increasingly require the best of both solutions while ensuring seamless interoperability with their internal functions. As I mentioned earlier, we continue to see meaningful opportunity to deepen established partnerships by increasing the range of services we provide to large pharma customers. One strong example of this in quarter one was the award of a central labs partnership from a top five pharma customer where we had limited labs business in the past. Flexibility, strong project management, our kit operation strategy, and long-standing delivery in other functions were cited by the sponsor as key factors in that award. Moving on to mid-size pharma, I previously emphasized the importance of increasing our relatively low level of penetration in this important market. While win rates remained flat in that sector in the quarter, opportunity flow is improving, up high teens on a year-over-year basis, with several strategic partnership discussions underway. In quarter one, ICON's global execution capabilities, commitment to strategic collaboration, and focus on digital innovation were central to securing a new mid-size partnership and displacing the incumbent large CRO provider. In biotech, the market environment remained generally positive as ICON sustained the improved win rate seen in Q4 with a good balance of repeat business and new customers contributing to awards in the period. Commercial performance continued to be aided by our evolved biotech strategy with consulting engagements and early development projects continuing to drive demand into phases two and three, supported by enhanced therapeutic and medical expertise. Now, turning to our financial results for the first quarter, performance in the quarter was in line with the expectations we detailed on our most recent earnings call in May. Revenue of $2 billion was up approximately 1% year over year on a reported basis, but down 1.9% on a constant currency basis. reflecting challenging prior demand dynamics including elevated cancellations in earlier periods. Quarter 1 adjusted EBITDA margin of 15.6% increased 10 basis points sequentially consistent with our prior indications. While margin performance was primarily impacted by organic revenue decline, we also saw pressure for mixed shifts in favor of functional versus full service revenue, Foreign Exchange, and to a lesser degree, the flow-through of pricing dynamics from previous periods. We continue to anticipate that we will see modest sequential margin improvement throughout the year, as our commercial strategy delivers increased full-service direct fee revenue as a proportion of the overall mix, and as we continue to drive disciplined cost management in the business, with incremental benefits throughout the year. Importantly, this margin trajectory is driven by actions that are already in flight, Not by future assumptions. As such, our financial guidance for the full year 2026 remains unchanged, with revenue expected in the range of $7.85 billion to $8.15 billion and adjusted diluted earnings per share in the range of $10 to $11. In terms of the macro demand environment, we continue to see things broadly as we outlined on our May call. Biotech funding remains constructive with ongoing activity and larger follow-on capital raises supporting late-stage clinical programs. In large pharma, customers continue to invest in their clinical pipelines with encouraging deal flow suggestive of incremental opportunity for ICON. We remain encouraged by the quality of opportunities in our pipeline in key areas we've identified for further expansion as we focus on converting demand into high-quality, profitable revenues. Against this backdrop, we continue to make targeted investments that support our growth ambitions, including talent and capabilities in key functional and therapeutic areas. We are expanding our central laboratory facility in Singapore to support two strategic objectives, a focused effort to expand our laboratory offering in addition to accelerating our growth in Asia. In addition, oncology remains a core therapeutic area, and our innovative solutions are strengthened We recently expanded its oncology research capabilities through our partnership with the Brian Moran Cancer Institute in the U.S. By establishing this flagship oncology site, we're working to address persistent industry challenges, particularly in patient recruitment. Historical industry data suggests that the overall number of clinical trial sites conducting oncology research in the U.S. is declining. Access to trials highly concentrated as nearly 70% of U.S. counties lack active oncology trials for patients. At the same time, regulators and sponsors continue to target 20% of global patient enrollment from U.S. sites. Our expanded AccelaCare footprint across the U.S., including community-based cancer centers, along with our partnership with Advara to support research-naive sites, will help to expand patient access to cancer therapies ensuring that more individuals benefit from innovative treatment options. Separately, we continue to execute on our innovation strategy as we evolve ICON's digital architecture to an intelligence-led platform. Through our recently announced partnership with Microsoft, we are building on the strong foundations already in place to deliver on three key strategic priorities in this area. Firstly, we are developing the intelligence layer that powers Orbis. This is Icon's agentic AI platform, connecting our expertise, data, and AI across the trial lifecycle to enable seamless navigation and facilitate teams to make better decisions faster for our customers. Secondly, our focus on driving incremental efficiency is supported by an enterprise-wide deployment of co-pilot embedded in key workflows, allowing our employees to automate repetitive activity and shift their focus to higher value work. and finally, perhaps most importantly, by combining Microsoft tools with access to frontier models from other leading providers, ICON will continue to develop and deploy best-in-class domain-specific agents embedded directly into clinical development workflows powered by our deep expertise and execution capabilities. In summary, while 2026 will require us to navigate the near-term headwinds we've discussed, we are executing well on our strategy and the underlying momentum in our business gives me confidence in our trajectory. Before I close out my comments, I want to extend my thanks to our dedicated team at ICON for their continued efforts in delivering for our company, for our customers and for patients in need. Now, I'll hand you over to Nigel to take you through our results in further detail.