Eric Coldwell: Yes, that’s fair. And I understand the lumpiness and difficult prediction model there. On awards, this is maybe a bit — conceptually a bit hard to communicate. But Medpace has historically talked about a somewhat unique award recognition profile where you don’t go out six, 12 months on taking an award in the street facing bookings. You wait till it gets closer to revenue generation. I’m curious, and maybe my theory is wrong on this, but I’ve always thought of Medpace as a company that the bookings we see when you report a quarter might be awards that were given a quarter or two ago and are just getting to revenue generation phase. So I thought perhaps some of the bookings this quarter could be the aftermath of maybe a little bit softer awards a quarter or two ago or less of gross awards.
And of course, you mentioned the higher cancels. I’m just curious, based on the bookings or the — whether it’s initial award notifications or awards that you have but aren’t close to revenue generation, are you seeing an uplift in that performance based on the stronger biotech funding in the first quarter or is this theory that there’s a bit of a delay from when you get the award to when you actually take it into bookings? Is the theory off base relative to your peers that would take an award 12 months in advance in some cases?
August Troendle: Yes, I think everyone has a lag there, because I think a number of the other reporting companies do it based on contract. And of course, contract lags when you first hear of an award. So there’s always some lag no matter who’s reporting. So that is definitely true. There is — some things go through the same quarter. I mean, some things are right there ready to run. Sometimes it’s a change in a program and that award is recognized rather rapidly. But there is in general new studies awarded that do have a lag before they reach backlog recognition. I don’t — and then you asked about, is the change in our bookings here. I mean, our miss was — missing our expectations in our bookings that did not increase and were kind of flat quarter-over-quarter.
It was really driven by cancellations. But on the other side of it, we did have a relatively weaker win rate in the quarter. So that was true too. And that’s something that bounces around. We came off of a couple of quarters of very strong, I think we talked about strong win rates. So that was down a little bit in the quarter too, but I do think that that just bounces around and I don’t make any long-term projections based upon that.
Eric Coldwell: If I could do one more with Kevin, just the tax rate. I missed the driver of the lower tax rate in the quarter and the lowering for the year.
Kevin Brady: It’s option exercises again in the first quarter. As you know, they are discrete items in the quarter.
Eric Coldwell: That was it, just the option exercises on the stock setting new highs in the quarter.
Kevin Brady: That’s right, Eric.
Eric Coldwell: Okay. Thanks guys.
Operator: Thank you. And one moment as we move on to our next question. And our next question is going to come from the line of Jack Wallace with Guggenheim Securities. Your line is open. Please go ahead.
Jack Wallace: Hi, thanks for taking my questions. Just wanted to ask about the hiring, slower headcount growth this year. Is any of that related to your — to lower expectations of growth rate acceleration next year or is there any change in regrettable churn versus, say, prior quarters in the first quarter?
August Troendle: [Multiple Speakers] I just wanted to say, I don’t think our hiring is at this point directed or reflective of changed optimism about 2025. I think that our hiring is influenced by productivity and where we need staff and things like that, which is, I think has improved quite a bit. And I addressed that, but Jesse, go ahead.
Jesse Geiger: No, I was just going to echo some of those same comments. Q1 traditionally is sometimes a lower net headcount quarter for us, but we feel very comfortable and in line with the staffing we have to handle current projects, to handle future projects. We will continue to hire, although as August mentioned in his opening comments, at a slightly lower rate of headcount growth projection and retention has continued to be very, very good.
Jack Wallace: Got it. That’s helpful. And then just to ask you the pass through question a different way. The mix of pass-throughs in the backlog relative to your expectations of revenue this year, is there any material change there? And maybe if you could also comment on some of the near-term awards you’re looking at. And again, the point we’re trying to get here is, you’re thinking about the direct revenue progression and if there is some noise in bookings over the next couple of quarters, if it’s going to be partially explained by changes in the pass-throughs relative to, say, prior periods where pass-throughs may have been more elevated. Thank you.
Kevin Brady: No. I mean, Jack, this is Kevin. I mean, as August had mentioned, we’re not seeing any big mix shifts in terms of bookings and backlog. It’s more just a progression of how things are burning across our portfolio of programs. And so, just in terms of kind of direct revenue, we’re seeing some continued good progress in direct activities and expect that to continue throughout 2024. As August had mentioned, kind of the guide is to expect something around a 15% direct revenue growth for 2024.
August Troendle: Yes, I think one thing we can say is, I think we feel more comfortable in our direct revenue projections than the pass-through costs, which drive the pass-through revenue. So, I think it is — I think we’re more confident in the one than the other, but so if we did have a miss, it would more likely be on the indirect.
Jack Wallace: Got it. That’s helpful. Thank you so much.
Operator: Thank you. And one moment as we move on to our next question. And our next question is going to come from the line of Dan Leonard with UBS. Your line is open. Please go ahead.
Dan Leonard: Thank you very much. You made a comment in the prepared that RFPs were stable in Q1 compared to Q4. How does that compare to what you might have expected given the improvement in the funding environment?
