Science 37 (SNCE) 15 Aug 222022 Q2 Earnings call transcript

Hello, thank you for standing by and welcome to the Science 37 Second Quarter 2022 Earnings Conference Call. At this time, all participants are in a listen-only mode. After the speaker presentation, there will be a question-and-answer session. [Operator Instructions] I would now like to hand the conference over to your speaker today, Caroline Paul, Investor Relations. Please go ahead.

you participating thank today’s and you all in for call. Thank

results Executive are today, Mike financial press ended release David company’s of me on A Officer; XX, Science the XXXX. June Coman, released is Earlier Joining the Officer. Chief and copy quarter Financial Zaranek, XX the available for website. Chief

results which forward-looking Reform management our are Private those our federal during factors, differ this statements various to Commission forward-looking was and we for I like would make which the actual the or for of our quarter by assumptions to to these Securities begin, pursuant and Securities based and discussion and events XXXX. anticipated meaning risk to on filed that We made will forward-looking implied made of uncertainties statements include Safe Before securities June from of upon today. the statements including XXXX are estimates encourage laws, remind you Form XX, Act you filings that provisions These Exchange earlier within ended call material involve XX-Q current quarterly a statements. report Harbor review could of materially Litigation or risks the that with cause these

ongoing the of David measures disclaims performance. filings now be in measures comparable the would to that website forecasting You believe referenced, evaluating to We in statements to on any earnings and We over company Investor purposes. and SEC reliance non-GAAP metrics GAAP of obligation planning Information Relations are operational statements portion measures which the our update new including undue our a Coman. and non-GAAP non-GAAP cautioned information. forward-looking today call to use I not on at measures the our of available to financial investors.scienceXX.com. are we reconciliation like the our those materials internal turn for these can to place and found evaluate as most speak about only certain for these useful operations such

morning, Thanks, us. everyone joining for Caroline. you Good and thank

progress investments enhancing During the second through operating to line significant profitability, positioning quarter, strategic in system, position priorities we extending made focus XX commercial profitability, long-term market growth. our able our we efforts leadership significantly were for on and Science path for intentional quarter-over-quarter. gains our than With our achieve top to our meaningful

enabled almost second than from excluding the Second margins quarter, revenues million quarter, us XX%. the strong in With gross in with remained and drive containment XX% toward first also grow in as on our cash to by noted we profitability XX% plan, reducing end our focus, while this of of at more call, to to continue quarter our earnings sequentially existing committed adjusted compensation $XX.X SG&A the hand. cost to first stock-based quarter XXXX to remain by level

highest our priority has order we position. our have market will path our in to leadership to While continue in to system pave invest and our operating extend been to profitability,

nurse, in generation Quantitatively, each second technology and that next release opportunities medicine levels. across the quarter. activity platform’s pleased a living quarter eConsent, was all of patient, greater tracking, and flexibility in across in all visit mobile consistency telemedicine the will positive, our of along to remote capability very workflow breadth we been pipeline to and platform. vertical. Xx medical eSource, all significant and platform And care addition deliver to Events components feedback the record tracking terms with the patient’s Adverse receptivity. the customer market are investments tech-only the of both the than is in extraordinarily recall, to cost eCOA, as the This sales comfort the to in triangulate telemedicine for enable concomitant first investigator one such room decentralized patient the coordinator quarter made from As unifying in you each new Qualitatively, enable the has we second with retrieval,

our award pharma with first of release new competitor platform tech top underwent new already has its generated exhaustive where that addition, we company RFP, In become its XX to displaced an a DCT choice. a provider

to and will workflow and continue quality. in cost to we we capability and reduce market reduce automating improve leading to invest are interaction also adoption, continue As platform our subjectivity, the which drive in investing to compliance market human

capabilities center core enrollment upcoming technology streamline technology process, in has in the to excited with study new every the These we call the maximize patient to investments and we efficiently who coupled on-time happy our from to our continue CRM our enhancements of Beyond we will recruitment about contact platform, system that XXX% mix the juxtaposed XX% report of have in interest traditional active enrollment. our more above ensure time. seamless which participating expresses recruitment delivering are a can targets than studies. launch clinical to patient are which order trial we patient of timelines, laid where course, to consent in well patient reportedly our are invest to with build the of success rate, across be blended upon current This, are experience

volume time are pharma, of our large to area across accelerate to produce to commercial save and burn, deal and pharma to continues reduce looking to both midsize larger time, sizes biotech, enhancing focus, commercialization. and Our efforts, final who

the as here second of highs. the today, sit of end our we to continues quarter sales pipeline As new and set

DCT continues of Metasite we the for I market announced our than new of pipeline ability The much greater repeat of XX% are many to technology of up that quarter-over-quarter, pipeline million, the existing and growth lean is Metasite we our testament which result a effectively the talked to the and customers. the and our Rescue Metasite is deals about Lite In believe speed ago, toward from moment addition second our customers, our offerings that which quarter. composition productivity pipeline maturation offering, to to product of for $XX which are which is enhance in

our of now dollar million pipeline plus up $XX almost volume And dollar the XXX% For year-over-year. pipeline larger on nearly sales represent qualified opportunities a in our perspective, XX% basis. opportunities of these is

opportunities are cycles often who are in involved size to sales rapid bookings in supporting larger quarter. are are see of excited criticality pipeline, are pipeline, and is sales of our sales on elongated reflected we also to The the which growth decision-making the the net the studies our particularly for we studies While seeing million in longer people our second the of correlated in of $XX.X cycles the given the number directly the we process.

provide optimistic our While others are how ability growing that timelines decision-making convert bookings our Chief strong unclear in Mike Regardless, the to Financial reporting to about to Officer much run. our the of Zaranek, us. industry longer it’s over amongst detail into pipeline financial impacting With we long remain that, over call performance. our will regarding the I maybe turn sponsors, additional now

David for I the the three plan and us second outlook through XXXX year everyone. June then full hello Thank to months our XXXX. quarter and XX, the take you, ended results for

the report to $XX.X which prior million, the revenues pleased from a are $XX.X increase year. the XX% represents We of same quarter period million of in the for

composition, pipeline net the note It’s comprised short-term XX% larger second larger that we which and growing take million, size sales conversions. deals overall important to finished has contract, significantly million impacted of than of in nearly quarter As these booking in $XX.X with to of million the with David of our while is compared quarter that $XX.X opportunities $XX XXXX. longer noted, pipeline bookings negatively to

reverted we close last had quarter As in call. to experienced the earnings during back our with what expected, two our which cancellations, average the rate COVID versus our large discussed first historical the cancellation quarter in we

Our the which was what XX%, in cancellation we and XX% we rate industry, which to to saw see believe be than quarter second XXXX we line was roughly XX%. across with lower what in under

turning Now for the our XX.X% $X.X the margin period compared same $X.X gross million for compared second year. adjusted period Adjusted to to in was prior same prior was the to the for gross XX.X% million quarter of the profit profit, year. gross

significantly year, of quarter you the the pricing old may absorb gross in XX.X% to some recall, was and the two we margin based came in our our to largest of our studies this excess XX.X% first model second we were quarter. have able up compared quarter conclusion, on As to of as adjusted capacity for first the effectively the

significant shedding our our to In the take third-party need adjusted the resources, on gains automation and able improving reliance addition for reduce deploying significant by were processes excess margin, out we hiring. cost to to business in of gross

fair quarter second amortization, from of a $XX.X expenses transaction calculate earn-out million. interest, compensation in the for million and adjusting a and quarter, $X.X million by value of $XX.X taxes, $XX.X decrease in selling, XX% change in stock-based first loss Adjusted the expenses, million back a first of the sequential of depreciation, a which administrative general $XX.X quarter, the impact improvement of EBITDA, million As of adding the liability, loss the from and inclusive stock-based representing we were quarter XXXX. the with compensation result, of in

gain earn-out liability, our transaction $XX.X the of of the million note million fair original GAAP with the reflects to of the related which SPAC. part will change $X.X of net in You loss value the was

entity of the reevaluate cash respect million XX-month in burn equity transaction price million the arrangement on quarter, the approximately holders thresholds down a to required the burn $XX $XXX.X from million the imply As that the Science the of within XX value shares. are upon cash of the cash and first U.S. under would of potential receive And quarterly would additional basis. cash, GAAP, quarter. a the stock ended This quarter former equivalents. we reminder meeting $XX certain a period to in closing, With of with cash we

July for biotechs the of small However, who due large million of were normalized customers if the the week are number time-off vacation been two last payout second approximately totaling as one-time a and $X.X came have to first well accrued quarter. as quarterly burn not our in which account cash week flexible in, have a the pharma, from June million switched you a approximately including receivables, couple items, would of we of hours or in $XX of as policy,

the XXXX. outlook for let’s of to remainder Now, the turn

our full longer growth. of $XX of in the million result timelines we associated to $XX XX% year opportunities revenues in XXXX XX% are to pipeline, representing larger the year-over-year adjusting a are range conversion million, the we projected seeing to As a be our with booking

close be with We XX%. similar to quarter, quarter second margins expect performance, quarter third margin fourth expansion to to gross gross the in our additional

$XX We expect continue negative to to full year between negative XXXX million. million $XX to the EBITDA be adjusted for

expect we quarterly expect And to both plan, Looking based by breakeven XXXX, flow existing to and of with our reach able end to our beyond cash on be XXXX. EBITDA as positivity cash noted, hand. neutral be current on David we cash the operating

like As to level and shares which call a cash of regards June remain reduction the recent to million profitability we GAAP anticipate qualified would plus committed XX, and summary, XXX% In at in particularly loss to million with SG&A long-term diluted basis, expansion, reduced half point, we quarter sequential pleased the and any optimistic pipeline, in XXXX, an in year, and representing larger nearly outstanding we as closing on to would XXX.X pipeline with growth about gross deemed therefore, of I up expect remain back nearly our share turn is upcoming $XX and be sales trajectory, to burn. the David converted be options a are same. and adjusted margin approximately the anti-dilutive year-over-year. a for that strides had continued we comments. over basic net delivering At record this having counts our that currently We direction, opportunities

Mike. you, Thank

priorities for very now to questions. and toward continue pleased our With the this a open on over positive We progress with remain execution trial focused maximizing to decentralizing pioneer are turn value strategic industry. shareholders. to in I as that, eye momentum our our will the it objective of the and our operator continued it keen for clinical building both We by up long-term strong profitability on achieved with we team

you. Charles Rhyee Thank first comes Instructions] with [Operator Cowen. Our question from

may You proceed.

talk that’s good both and longer you to really that. timelines Yes, you shift and for $XX about wanted the talk the after deals sort shift And can to million internally you Obviously, your on what norm to same little time? become because in expect, taking continue about about guys. a just deals. seeing term, bit to why the you how ask would thanks been just then the more question, go now greater – sign Mike, a of as go we David, focusing the long larger be bit at little the resources what deals over sort smaller and of about expectations deals secondly, you cycle to larger of historically? to a able for time, what I I the imagine will relative sales converting, is have be start want know, than for after would

Charles. the too. Thanks so for us Yes, for today question, thanks joining

gain a really happening for larger as have exactly what Regarding as to continue – deals, provide more pushing trials, larger And always the been is to and trials. a sponsors, it’s a we company more be been what’s continue to to to pivotal utility result. that’s

think able I to the the model positivity of think for of terms I DCT what the customers general. been we in acceptance our of a So, reflection and have achieve that’s in good really of

So think for the in pipeline I Difficulty] terms [Technical what about that of the think future. we building

of closing determined. terms I think the for a timelines, to these trials, bit of little In it’s be

So the be of even deals XXX have, close or can deals more. we larger in days, definitely longer can but smaller some XX like

many we been about, the talking have so of time. for we details quite some larger all them through on are And opportunities these working

opportunity you are who is decision-making are or the of there because expect, in might people itself. involved process, talking more criticality the trial trial, larger pivotal when As you a about the of more a

think a that we I reflection. so seeing And are as

larger add opportunities are by terms from number in I existing a could those fact larger opportunities, one coming encouraged of If that thing are of we those really customers. the more

And as that for cohort so demonstrated customers coming plus in deliver the back have $XX past, that opportunities to opportunities. they well larger for of customers we ability and that’s it’s and are by our million more in new supplemented

bigger timelines of you this in these become the particularly deals on would still companies, model? the of for for over these relatively Appreciate in and you is timeline trials? for these part in Would get to time because clients some as that, as confident just future that. And is expect shorten follow-up these perhaps novel expect comfortable you extended more the to part

it’s I too little to bit think early tell. a

we that tell more to you come I well. think I well, that. buyers that. to think I think a But will on time little of as those – much hope we think on get And as would more that get as expect see I in repeat as more to you bit quickly the some transactions

over expect I guess would time a bit. So it, but time, tell little I will

million Great. And for you run-rate Mike, some of the for we rest good year? a just that one what expect the is follow-up – on that cash, is – of would items the for is sort $XX adjust if third

of cash that that think see will through our we expectation year. the burn is we as improvements I in the rest sequential move

Appreciate it. a lot. Thanks Great.

Thanks, Charles.

Thank question next William you. Justin from with [Operator Instructions] Our Lin comes Blair.

You may proceed.

the something Does what’s morning. driving reduction on that at good – guidance, just is the implied being better midpoint? with question of of guidance have certain cancelled sort the or guide legacy projects a that unchanged EBITDA a might guess margins controls? pulled the explain truly revenue higher do your to in matter forward or help million Hi, I implied $XX which cost with

talking about revenue are You guidance?

Right.

I bit I lower expected. think mean, quarter million than had ended Yes. we $XX what we little to at the

we what to bit I strong. are little a we take guidance you if think our at backlog, variability But a want providing. it’s very think the de-risk is do that look our I to on

end the add low on we have now, of we of the end guidance Difficulty] as think in substantially quarter. de-risk in that the all [Technical of of are providing on And to second backlog the the David then just I said, terms that. the side

I obviously be regarding follow-up I these are how to larger another any That’s on here, offering? Metasite a opportunities just towards and Plus, or about talked these way question guess Okay. helpful. notable would can give you one am you bookings any of and Tech sort trending shift, referring DCT color helpful. certain a

Well, rapid a noted, technology Yes. as of we about platform had result the pipeline the excited are mean new I as expansion that. super and I

area, think have Metasite the area think area that, one to to I Light DCT But I our faster that’s solutions. well. growing strong Metasite safe only. the the as for I announcement Rescue think other it’s got say I that lot growth continues in and a well. of bit as probably is And Metasite are grow little think than DCT and on you for of the tech a Metasite DCT heels And so

it. much. you Got Thank very

No problem. question. Thanks for the

Thank questions. you. One moment for

Hewitt question next with Our from Craig-Hallum. Matt comes

You may proceed.

on for sales you thank the shift. follow-up questions. the Maybe taking and morning strategy Good one

today, opportunities that’s the you talking changes in kind just as of that position at put shift what kind were the to it became customers seeing market? change or market-driven you function kind in was yourself and those now, their look of your a it make was where a win is to you prompted you you to As awards? it the existing in of something to some a of what’s are seeing apparent needed pipelines, And that

Yes.

I we our be very while to a the have think trials to are about been ago, our a critical happened work sponsors running. the of and shift larger part opportunities that that more intentional desire

on of progression more ability think the that from customers. mature And I into it’s natural clinical a behalf really lot or our expanding proof-of-concept a so, for focus has deliver our organization a on has more utility, our quick being of to us research a been fix, a sometimes

you maybe of like PPD, from have terms you coming those are pretty what relationships? then some CROs got seeing shifting big business in that And gears Okay. with partnerships

with public pipeline of that and they for nice PPD think Yes. cynic. And trials partnerships, a we we like in us. Syneos. offer are We and additional think opportunity clinical terms been the And I have – I

importantly, even that think that the site we a the I extend having traditional lot base offering to think more their of to outside maybe offer terms on add utility top portfolio. to of to virtual ability just them, site in I of to think of their network

order well solution that in the are deliver they be to to marketplace. solutions In to as to some might in to addition, they execute use trying that point the tech-only able able of be

on future. be with partnerships. we portfolio. relationships our that important they And as excited are in come of more So, the continue and And to our about continue extend to to well CROs part other those

Great. Thank you.

Thank you, the question. Matt. Really appreciate

next Lake Frank from [Operator Street. Instructions] question Takkinen Our with comes

proceed. may You

taking Thanks million pieces was Wanted the try just seem than think on one backlog, and the is midpoint my to more like over large there quarter right obviously, lying, down moving this I sure $XXX questions. and at came Hey. for the million. now. guidance guidance It about $XX understand make I play a here

Just impactful half, the down. come guide it trying guide But triangulate of the a for sounds what really be is to like commentary to bookings XXXX down second that we saw obviously, likely lot to XXXX. more the drove

So, to with exactly just guidance triangulate on revision? trying the what’s going

add I at quarter we will – in the bit came on, start a frankly. you bookings the for $XX want were million, little but disappointing to if

it’s has safe bit. And we we as risky little is And us for that a a $XX a think to and low that for the the range trying with everybody What play with end there decisions have are those be of so larger couple a ton coming a of currently confidence in. opportunities issue pipeline I guidance in the result. wanted to sitting that in to that that do we to plus million length have,

strong of second evidenced would for in I to second conversion as point, some see longer absolutely, this some year demand timelines the And the then yes, provide, the that David’s with the larger to standpoint, year. to from well. of revenue we half of the that would as convert But that bookings level of that. opportunities. ability encouraging impact pipe, second I quarter in decision revenue impacted making offerings these of the that here half still record And those very by Yes. say echo I

end the really cross significant these helpful. can your share But I outperformance have the then you sense Obviously, more bookings the well, maybe sword of specifically, Okay. bookings, That’s goal. contracts, thoughts of time. we as of bookings around got a could lumpiness bigger projects this these on have kind the you with factor? some wrong And when of some just larger

kind some factor And with so, walk customers. of through of of these lumpiness maybe just sides bigger both the

mean hit and and do that’s more I just stack higher the over think you too. bookings. more opportunities overall more in time, you and up of pipeline, close I these will deliver

thesis, exactly that’s so on the hit it. right And frankly,

down are shareholder also terms deliver greater utility not only so going think pathway. and I to long-term, sponsor but And go the customers, to do in And bookings ultimately, to we this over we more of we continue provide our value.

then margins this a trending rate Okay. you the should towards one Mike, reasonable jump that around just is go thinking last we that for level And margins to XX% on on of maybe a about quarter the with one, year, or last etcetera? touched gross run expect different basis, seasonality factors, gross forward

the at that, door. go that, again, But to our are I are third margin As forward out But nearly of quarter we minor a would of beginning be we the we expect think our to projects issuing high with to what this we of prepared I with remarks, our expansion and in adjusted gross – the margins we I quarter in to the basis, second said guidance. strategy goes And the the have front. On as minimum quarter official end line the the changes fourth than don’t what out approximate then we to go into level. margin updated XXXX. levels see XX% the say thresholds door, gross and roughly year pricing is in having of can made fidelity

Yes.

building perspective. us that from I upward aim Correct. on margin the for gross trajectory a that here on So, is continue think to

Got it.

will Thanks my questions. for helpful. that’s I Okay, taking stop there.

much so thanks Frank, Alright. joining. Thanks for question. for the

to to back any any remarks. over further showing this turn Coman further I would the questions I you David now am Thank like not at for and call time.

Have everybody great like and to we future look for a participating thanks conversations. would to I forward day. say just

Thank you. concludes This you participating. Thank conference for today’s call.

disconnect. now may You