Kevin Brady: Yeah. As we said kind of in the last quarter, it’s really driven by a couple of things. One is just the inflationary costs that we’re seeing at investigator sites. Just the activity in investigator sites is picking up, and really just the mix of projects that we have in place and some large Phase III studies are really driving that acceleration. And we do expect those elevated costs to continue into 2024. Now when or if we’ll see a retraction back to more normal levels, it remains to be seen but we do expect it to remain elevated here through 2024.
Lucas Baranowski: Okay. Great. That was all I had.
Operator: Thank you. One moment for our next question. Our next question comes from Max Smock with William Blair. Your line is now open.
Max Smock: Hey, good morning guys. Thanks for taking my questions. So just following up on Dave’s question on headcount earlier. August, you mentioned about 10% growth in ’24 but in the past, I think you’ve talked about headcount growth being more in line with the mid-teens revenue growth that you’re expecting this year. So I know you talked about it some already but just wondering if there’s anything else that’s enabled you to pull back some on those hiring plans a little bit? Is it due to a lower outlook for direct revenue next year or this year? Or is it more just due to maybe some of the efficiencies you’ve been able to drive more recently as you scale the business?
August Troendle: Yeah. I think a lot of it compared to our first look is turnover. Turnover has really come down to a very, very tight level. And the amount you have to hire in advance, kind of ahead of the curve, depends upon keeping staff. I mean if there’s a lot of churn, there’s a lot of hiring and you’ve got to go in with a much higher number in terms of staff to beginning of the year. So I think the big driver is that productivity increase. I think that we were thinking that turnover might still be high so we have to continue to hire at a fast rate. But turnover has dropped very nicely. And that is the biggest driver. I think our expectations on direct revenue is the same as it was along with our revenue. We expected it to be about that 15%, both on the top line and total and direct.
And if anything, we see an improvement in the business environment, which would imply greater growth in the Q4 next year kind of time frame. These things do take quite a bit of time but things are looking very good for that. And that’s why I say I think we’re looking at our low in terms of a growth year of 15%. So I think that will take off but I think we have time to do that, hiring as things ramp late in the year.
Max Smock: Makes sense. And maybe just segueing off that. So I wanted to drill in a little bit on some of the drivers behind the increased outlook for EBITDA next year given you didn’t change your outlook for revenue. And it sounds like your expectations for direct fee versus pass-throughs are consistent from that initial guide. And so beyond maybe a pullback in hiring relative to your initial expectations, is there anything to call out in terms of what’s driving that increased outlook for EBITDA in 2024?
August Troendle: Yeah. And of course, we’re not giving guidance on ’24 but things look good in terms — we had a very choppy period and quite a bit of cancellations and funding difficulties. And that’s moving away. Like I said, I think we see a clear direction in the last three, four months in terms of projects starting to install, and that makes us very optimistic. These — again, these things take quite a while to get to start up and to get to revenue burned. I mean, these are multiple quarters for things to move forward but that does make us feel more optimistic on the go-forward next year, et cetera.
Max Smock: Got it. And then maybe just sneaking a final one in here for me. Competition and just thinking about share gains here. August, when we talked at the end of last year, you mentioned seeing higher-quality opportunities maybe than you have in the past and winning a greater share of those than maybe you would have expected historically. Just wondering if that has continued here given maybe some potential disruptions from one of your competitors recently? And just any thoughts on how your win rate has trended over the last couple of quarters in particular?
August Troendle: Yeah, our win rate was — has been very good the last two quarters, above the kind of the long-term trend. So that looks good. I don’t — these things do bounce around though. And I look at — you want to look at share, I look at revenue. And that’s the only way I know how to look at it. People have backlog different ways and conversion is a major factor. And I don’t know what it means to be share gain to put up a book-to-bill. So I just look at revenue and revenue trend over time. And look, we’re growing at — organically at multiples of the average of the rest of the industry. So I just — we’re clearly doing a good job in terms of taking share. Where it’s coming from, I don’t know but we’re growing at a rate considerably above the peers, and we will continue to. And this may be a low year of 15% but long term, we’ve grown well above the industry.
Max Smock: Got it. Thank you for taking our questions.
Operator: Thank you. One moment for our next question. Our next question comes from Jack Wallace with Guggenheim Partners. Your line is now open.
Jack Wallace: Hey, thanks for taking my questions and congrats on another great quarter. It sounds like things are getting better on the demand front. I was wondering if you could also just touch on cancellations, how those tracks in the quarter? And I guess depending on the funding environment, sounds like those should be in a pretty good shape as well. Is that fair to say that it’s baked into the outlook, kind of a more normalized reduced level of cancellations in the last couple of years?
