The record bookings come as the company has seen a higher proportion of its quarterly business come from the new customer relationships developed over the past three quarters. And about 50% of its year-to-date awards have come from outside the company’s large pharma customer base, CEO Ciaran Murray told investors.
The customer base expansion is good news for the company, which previously earned nearly a third of its revenue from one client – Pfizer. The concentration of Pfizer’s work reduced to 30% in Q2 from 34% last quarter, the company noted.
Murray said that between the end of Q3 through Q4, Icon has “probably added about 10 significant new customers to our bench, which is very gratifying, I think validates a lot of the things that we do,” according to a transcript from Seeking Alpha.
But Murray also noted that Q2’s backlog conversion has “been a little bit lower than expected” due to a higher proportion of larger more therapeutically difficult trials “and the fact that projects tend to be awarded earlier under our partnership model than they were in the past. These awards will start to convert to revenue in the second half of the year.”
The company also reported a record quarterly operating margin of 17.5%, and looking ahead at the rest of the year, Icon has raised its guidance by 8% from a range of $3.60 to $3.70, to a range of $3.90 to $4.
But as a result of a slower revenue conversion, Murray said he expects the company’s 2015 revenue to be in the range of $1.57bn to $1.6bn, compared with a previous range of $1.6bn to $1.65bn.
Market Outlook
As far as the market is concerned, Murray said that overall biopharma R&D spending “is growing in the low to mid single-digit range and this has been driven by significant increases in biotech funding and the adoption of more partnership type model by mid-sized biopharma companies.”
And in terms of the industry-wide push to increase risk-based monitoring of clinical trials, CFO Brendan Brennan said: “We’re certainly seeing benefits not just in terms of the efficiency and the cost of doing those trials but in terms of the quality of the information, the quality of the management and reporting and actions that we can take on those trials. So we’re able to identify areas of concern and challenges earlier than we’d normally got to do in a traditional way and our customers are being able to see that.”