Parexel sees modest quarterly growth as backlog rises by nearly $1bn
CEO Josef von Rickenbach told investors Thursday: “We continue to be excited about the market opportunities that are in front of us, driven both by strategic partnerships and mid and small client companies, and we believe that we are well positioned to capitalize on them.”
Generally, von Rickenbach added, that the company saw “good RFP flow and bookings,” though they were “tilted more to large companies and strategic partners – so far that seems to be the path in this calendar year.”
On the more negative side, the company’s consulting segment experienced some client delays on a couple of large projects which negatively impacted quarterly revenue. The company also reported a slightly elevated level of cancellations of $289.7m, though von Rickenbach noted that they “were not performance-based” and only related to two clients.
As far as employees added, von Rickenbach noted the “significant increases” continue from the recent acquisition of Quantum Solutions India, which will add 900 employees, and other GlaxoSmithKline employees, which are “in anticipation of work moving through various stages of study startup and full production.”
Analysts seemed lukewarm on the results and the stock price fell by about 7% Thursday. Still, Citi’s Garen Sarafian noted that the current quarter’s book to bill of 1.3 is the third highest over the last 11 quarters, and through the first three quarters of this FY, the company’s net book-to-bill is now 1.24, which is “well above its 1.14x average in Fiscal 2014 and particularly poor F1Q15’s 0.88x.”
“We expect that revenue growth in our Parexel Consulting business will be back on track in the fourth quarter on a sequential basis,” von Rickenbach noted. “Revenue in our Clinical Research Services and Parexel Informatics businesses came in as we expected.”
Moving forward, Parexel lowered its yearly revenue range expectations slightly, from $2.04 - $2.07bn to $2.012bn - $2.032bn.
