ICON plc

Good day and thank you for standing by. Welcome to the ICON PLC Q2 2026 earnings conference call. At this time, all participants are in a 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. 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 July 29, 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 in the earnings slides, you will note a reconciliation of 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, loss on disposal of subsidiary undertakings, impairment of non-financial assets and their related taxation effect. In the interest of time, we ask participants to keep their questions to one each. I would like to now hand over the call to our CEO, Barry Balfe.

Thanks, Kate. Thanks, everybody, for joining. ICON delivered solid second quarter results characterized by a positive demand environment, strong bookings, and disciplined cost management as we navigated the business mix headwinds discussed on our last call. While pass-through activity continued to benefit reported revenue and net bookings, underlying business performance delivered further sequential earnings progression during the quarter. Direct fee bookings also remained strong, resulting in a direct fee net booked bill ratio of 1.2 times. Overall, our second quarter results were consistent with the trends we have highlighted in recent quarters, measured progress supported by sustained evidence of an improving demand environment. We remain focused on delivering for our customers, executing with discipline, and investing in capabilities that strengthen our competitive positions. Turning to bookings performance, Q2 gross business wins were $3.7 billion, an increase of 24% year-over-year and 13% sequentially, with strong performance across the portfolio. Cancellations totaled $562 million, broadly in line with expectations, resulting in net bookings of $3.1 billion and a net book-to-bill ratio of 1.51 times. Awards were broad-based across customer groups and were supported by further improvement of win rates in large pharma, where we also saw the addition of some meaningful FSP programs to existing relationships. But we also saw strong performance elsewhere. Midsize and biotech companies representing 8 of our top 10 customers by awards in the quarter. I was also encouraged by the scale and diversity of awards secured during quarter two with our largest 13 individual business wins each exceeding 50 million dollars in value sourced from 11 different customers spanning large mid-sized and biotech sectors against this backdrop the overall customer demand environment remains generally constructive notwithstanding expected seasonal impact over the summer months In Q2, RFP flow increased 22% sequentially and 16% on a trailing 12-month basis. Following two quarters of particularly strong activity, large pharma RFP flow moderated somewhat in the second quarter, but we saw a marked increase in biotech during the same period. This is consistent with our strategic objective of addressing more of this important market albeit that came with a higher proportion of ballpark proposals and a reversion to historical win rates in biotech as we engaged with certain customers for the first time. Staying with pipeline quality, average proposal values continue to increase across the full service portfolio while phase three opportunities represented approximately 50% of total opportunity volume in the quarter compared with an average of roughly 40% a year ago, a sign that customers are increasingly bringing assets and the later phases of development. Taken together, these data provide further evidence that our focused commercial strategy is delivering results. We continue to focus on three clear priorities. Expanding opportunity flow in biotech, diversifying our sales channels within large pharma and increasing our market share with mid-sized pharmaceutical customers. While these efforts will take time to impact the P&L directly, we are seeing tangible progress across all three areas Our scale, capabilities, and differentiated innovation strategies continue to resonate with customers. Turning to financial results for the quarter, revenue increased 1.2% year over year and 1.4% sequentially to $2.1 billion, benefiting from higher pass-through activity. adjusted EBITDA of $327 million with adjusted EPS of $2.56 were in line with our expectations for modest sequential progression and reflected strong cost control across the business. Elevated pass-through contribution impacted margins during the quarter and may continue to do so in the back half of the year as therapeutic mix and site location dynamics increase the volume of pass-through dollars that we expect to burn on certain studies. Based on our year-to-date performance, we are reaffirming our full year 2026 financial guidance, reflecting both the results delivered in the first half of the year and a balanced view of the opportunities and risks that remain in the second half. While our near-term focus remains on execution, on margin progression, and on delivery against our financial commitments, we continue to invest in strategic initiatives that support our long-term growth, differentiation, and competitive position. AI has become a foundational element of how we operate, how we deliver clinical trials, and how we create value for customers. Our investment strategy is different to others. We don't see value in going all in on chips or on enterprise licensing of generic applications. Rather, we are focused on advancing domain expertise through targeted investments in architecture and frontier models that enhance our capabilities, accelerate our trials, and help us to monetize our existing data assets. In that respect, the multi-year collaboration with Anthropic announced this week represents an important milestone for iConn. Combined with our partnership with Microsoft, this collaboration strengthens the technology architecture underpinning our clinical trial delivery platform and supports three core priorities. Enhancing the intelligence layer powering Orbis, our agentic AI platform. Deploying advanced AI capabilities to improve productivity. and developing domain-specific agents embedded directly within ICON's clinical trial management workflows. For customers, these capabilities have the potential to streamline study design and planning, to accelerate protocol development and trial execution, enhance patient and site engagement and reduce administrative burden throughout the clinical development process. These development projects are increasingly moving from the planning to the execution phase, One example being Meridian, our multi-agent clinical monitoring platform, which brings AI-enabled tools directly into the day-to-day workflows of our global monitoring organization. Leveraging icons, proprietary data assets, domain expertise, and delivery experience, these purpose-built agents make us better, giving teams greater insight into trial status and enabling rapid decision-making in the field. Standing back from the detail, These initiatives reflect our core approach to AI. That is to say, we're combining leading technology partnerships with ICON's domain expertise, proprietary assets, and clinical delivery capabilities to create meaningful value for customers, strengthen our competitive position over time, and recognize values accordingly. Alongside AI, we continue to invest in targeted growth opportunities across the business with an emphasis on expanded capabilities and accelerated growth. In China, for example, we've seen notable improvement in demand over the last 12 months, and we continue to expand our capabilities there, including significant laboratory expansion that adds specialty biomarker testing and pathology. This builds on the investment in Singapore highlighted last quarter and reflects our commitment to further strengthening our lab footprint across the Asia-Pacific region. These investments were rewarded during the quarter with the addition of a new partnership with a leading Chinese biotech company supporting global development programs across a broad range of full-service capabilities, including laboratories and imaging. And these outcomes reinforce the value of continuing to invest in attractive growth opportunities while maintaining a disciplined approach to capital deployment. Our strong cash generation in the quarter further strengthened our financial position and supports our balanced capital allocation framework. We remain focused on investing in the business, pursuing strategic growth opportunities, and particularly returning capital to shareholders. In closing, I'm satisfied with the steady progress that we're making across the business. Strong bookings, a constructive demand environment, and disciplined execution provide a solid base as we move through and beyond some underlying challenges in business mix and navigate the dynamic pharma sourcing trends of recent times. We remain focused on what we can control, delivering for customers, executing with discipline, and investing in the capabilities that will strengthen our competitive position and support sustainable long-term growth. These factors underpin our confidence in ICON's ability to continue taking share, deepening customer partnerships, and capturing the significant opportunities that lie in front of us. Finally, I would like to thank all of my ICON colleagues for their continued commitment, energy and focus on delivering for customers as we partner with them to bring forward new options for the millions of patients who need them. Now I'll hand over to Nigel to take a more detailed look at the financials.