Jonathan Curtain - IR Steven Cutler - CEO Brendan Brennan - CFO.

Robert Jones - Goldman Sachs David Windley - Jefferies Jack Meehan - Barclays Donald Hooker - KeyBanc Capital Markets Inc. Erin Wright - Credit Suisse Tycho Peterson - JPMorgan Chase & Co John Kreger - William Blair & Company Tim Evans - Wells Fargo Securities Juan Avendano - BofA Merrill Lynch.

Good day, ladies and gentlemen, and welcome to the ICON Plc Third Quarter 2017 Results Call. For your information, today's conference is being recorded. At this time, I would like to turn the conference over to Jonathan Curtain. Please go ahead, sir..

Thank you, Alex. Good day, ladies and gentlemen. Thank you for joining us on this call covering the quarter ended September 30, 2017. Also on the call today, we have our CEO, Dr. Steve Cutler; and our CFO, Mr. Brendan Brennan.

I would like to ask -- like to note that this call is webcast and there are slides available to download on our website to accompany today's call. Certain statements in today's call will be forward-looking statements.

Actual results may differ materially from those stated or implied by forward-looking statements due to risks and uncertainties associated with the company's business, and listeners are cautioned that forward-looking statements are not guarantees of future performance.

The company's filings with the Securities and Exchange Commission discusses the risks and uncertainties associated with the company's business. This presentation includes selected non-GAAP financial measures.

For a presentation of the most directly comparable GAAP financial measures, please refer to the press release statements headed Consolidated Income Statements Unaudited U.S. GAAP.

While non-GAAP financial measures are not superior to or a substitute for the comparable GAAP measures, we believe certain non-GAAP information is more useful to investors for historical comparison purposes.

We'll be limiting the call today to one hour and will therefore ask participants to keep their questions to one each with an opportunity to ask one related follow-up question. I would now like to hand over the call to our CFO, Mr. Brendan Brennan..

Thank you, Jonathan. In quarter three, we achieved a new high for gross business awards of $691 million and incurred a $110 million of cancellations. As a result, net awards in the quarter were a record $581 million and net book to bill of 1.32. During the quarter, we grew our backlog year-over-year by 13% to $4.78 billion.

This includes a $190 million worth backlog from our recent acquisition of the Mapi Group. Net revenue in quarter three was $440 million. This represents year-on-year growth of 4.8% or 3.2% on a constant currency basis.

On a constant dollar organic basis, year-on-year revenue was 2.6% lower, a direct result of the bococizumab cancellation we booked during quarter four last year. Our customer concentration continued to improve in the quarter with our top customer representing 16.6% of revenue compared to 25.2% last year.

Our top five customers represented 38.8% compared to 44.1% last year. Our top 10 represented 52.3% compared to 56.8% last year, while our top 25 customers represented 70.1% compared to 76.4% last year. The continued diversification of our customer base meant that outside our top account, revenue grew nearly 17% year-on-year.

The acquisition of Mapi brought close to 700 new staff into ICON, which meant we ended the quarter with approximately 13,100 staff. Group gross margin for the quarter was 41% compared to 42.1% for the comparable quarter last year. We continued to deliver further cost base efficiencies, and as a result, SG&A was 18% of revenue in the quarter.

This compared to 18.8% last quarter and 19.3% in the comparable period last year. Operating income for the quarter was $84.9 million and operating margin of 19.3%. This compared to 19.9% last quarter and 19.3% in the comparable quarter last year. The net interest expense for the quarter was $2.5 million and the effective tax rate was 10%.

Net income for the quarter was $74.2 million, a margin of 16.8%, equating to diluted earnings per share of $1.25. This compares to earnings per share of $1.31 last quarter and $1.19 in the comparable quarter last year, an increase of 13.4%.

DSOs in the quarter were 50 days, which compared to 53 days last quarter and 50 days in the comparable quarter last year. Cash generated from operating activities for the quarter was $108.8 million and capital expenditures were $8.5 million.

At September 30, 2017, the company had net debt of $56 million, compared to net debt of $98 million at September 30, 2016 and net debt of $34 million at the end of June 2017. With all that said, I'd like to hand the call over to Steve..

Thank you, Brendan. Quarter three was another very strong quarter of progress for ICON. We booked record levels of gross and net awards of $691 million and $581 million, respectively. This represented respective book to bills of 1.57 and 1.5 -- and 1.32 and was our second successive quarter of net book to bills over 1.3.

We grew our backlog year-over-year by 13% to nearly $5 billion and increased revenue by 4.8% to $440 million. In addition to this growth, while continuing to focus on margin efficiencies, we increased our earnings per share by 13.4% from $1.19 last year to $1.35. All of this has created significant value for our shareholders.

Development of new relationships is an important part of our strategy to grow revenue and reduce customer concentration. We continued to successfully diversify our business by adding new sponsors and partnerships across all customer segments.

Consequently, concentration levels from our largest customer decreased from 25.2% of revenue last year to 16.6% this quarter. And now represents 11% of our backlog from 18% a year ago. In becoming the industry's trusted partner of choice, we differentiate our services by listening to, understanding and anticipating our customers' needs.

We build and enhance these customer relationships by delivering to our customers a flexible organizational and solutions-orientated approach that is specific to their operational requirements. We also focused on delivering innovative solutions that improve trial outcomes and performance.

Through our market-leading technologies and service platforms, ICONIK, ADDPLAN and FIRECREST, we are reducing trial times and costs through the use of techniques, such as risk-based monitoring and adapted trials. Leveraging our digital FIRECREST platform, we are also enhancing real-time site and patient engagement.

During quarter three, FIRECREST reached a landmark milestone of 500,000 registered site and study users. FIRECREST is reducing site training costs, enhancing compliance, reducing preventable errors and increasing patient screening rates, thereby enhancing overall site performance and efficiency.

ICON is driving our patient-centricity efforts by changing the way sites engage with patients through our Firecrest eConsent solution, which enhances patient understanding, satisfaction and retention as well as reducing errors and audit findings.

We also continue to focus strongly on our data-driven strategies that can improve site identification, study placement and patient recruitment, all of which remain key industry challenges.

Through our partnership with TriNetX, IBM Watson and EHR4CR and through our own PMG network, we are accessing patient data from a growing health care provider network.

This combination of ICON's data analytics, entities and patient data are helping us to address complex clinical development challenges in the planning and implementation stages of trials. Alongside our organic growth strategy, we continue to look for value-creating M&A opportunities.

In July, we added the Mapi Group to our late-stage service portfolio. This acquisition will significantly enhance our service offerings in real-world evidence, health economics, linguistic validation, health care communications and market access.

Our integration plans are moving ahead well, and we are encouraged by both the response from customers and the enhanced expertise that has become available through the Mapi team. Much of the work we are winning centers on complex oncology studies, often a longer duration than traditional trials.

And this, alongside the impact of the bococizumab cancellation in quarter four last year, has reduced our backlog conversion this quarter. We expect this trend to continue in the short term. Notwithstanding this, however, we have seen revenue outside of our top customer increase by 17% in the past year.

And we are confident that our new business momentum will drive overall top line growth as we move into 2018 and beyond. As we continue to manage through the ramp down of the boco program, we have remained focused on delivering margin excellence. By leveraging our global business service model, we were able to reduce SG&A to 18% of revenue.

This improved performance compares favorably to both the prior quarter and last year when we recorded SG&A of 18.8% and 19.3% of revenue, respectively. As we continue to grow our business both organically and through M&A, our expect is to create further leverage in this area.

This strong performance helped us achieve an operating margin of 19.3%, which along with an effective tax rate of 10%, allowed us to grow our earnings per share by 13.4% year-on-year to $1.35.

As we look to the end of the year, I would like to update our full year guidance with earnings increase from the current range of $5.18 to $5.38 to $5.30 to $5.40, and revenue reaffirmed to be in the range of $1.74 billion to $1.77 billion.

Before moving to Q&A, I'd like to thank the entire ICON team for all their hard work and commitment to our customers during the quarter. Thank you, everyone. And we're now ready for questions..

Thank you. [Operator instructions] We'll take an opening question from Robert Jones of Goldman Sachs. Please go ahead. Your line is open..

Great. thanks for the question. You and your public peers have put up really strong bookings in the last few quarters now. So, I'm curious if maybe, Steve, you could weigh in, just on the backdrop and what you see as the drivers of this really healthy environment.

Is it really more just good funding, good outsourcing? Or you're actually seeing a more pronounced shift to the larger CROs gaining more market share?.

Well hi Robert, I think there are a number of factors there. And you've mentioned a couple of them. I think, certainly, the biotech funding environment has been strong and continues to be strong.

I think we're seeing our larger customers continue to drive down the alliance path and allocate increasing proportion of their development dollars to outsourcing. I think the outsourcing discussion -- the outsourcing industry is maturing. I think, we're, as an industry, performing better. And I think that's being recognized by our customers.

And I think that's a trend that's going to continue. So, I see continued penetration into those outsourcing dollars. And I see the larger CROs taking more of that share as well. That's pressing on those midsized company. So, I do see a positive business environment for the industry at the moment..

No, that makes sense. And I guess, just, Brendan, as we sit here with only a quarter left to go, looking out to next year, you guys have had really strong bookings this year.

Any early read on how you are thinking about the business shaping up for next year? I know we got official guidance next quarter, but just curious if there is any thoughts just given the momentum in the business right now..

Hi Bob, we're deep up to our knees in our budgeting season right now. So, we're certainly giving all of this a lot of thought. We're going to probably have to think about going out with our guidance in early January. As Steve said, we've had a positive business environment.

As you know, this has been a year of transition for us with the Pfizer relationship. And as we see and we look forward to next year, we do see it being less constrained by those factors that we've seen this year, in particular, relations with bococizumab cancellation. So, we do see a positive outlook.

But at this stage, I think it's just a little early to say in total terms.

Steve, you want to chime in, maybe?.

No. I think, that's right. We'll give guidance early next year, Bob. And I think that's our plan. It's been..

Great. Appreciate the questions. Thanks guys..

We'll take our next question from David Windley of Jefferies. Please go ahead. Your line is open..

Hi. Good afternoon, gentlemen. Thank you for taking my questions. I wanted to ask my first question on the Pfizer progression. The revenue from Pfizer in the quarter appeared to be higher than you had indicated we should expect.

I wondered if that was a slower wind down of boco? Or if that was revenue beginning to gin up from other programs that you might be working on for them?.

Hi Dave, it's Steve. It was a little bit of both. We were a little bit ahead of where we expected to be in terms of our revenues with that top customer. And we also have a number of other programs from them that are also starting to move. But generally, we continue through that transition that we talked about over the last few calls.

And that transition will continue till the end of the year. As we get into next year, we'll see, I think, a solid growth pattern going forward. But we're modeling that top customer revenue, and we see that moving in the right direction in terms of coming to a more steady state function for us over the medium term..

And is your -- Steve, is your steady-state expectation still in that kind of, I don't know, 10% to 12% of revenue range? Or how should we think about that in light of the result in the third quarter?.

I think that's a reasonable assumption. Now that you can -- that's an assorted number we're expecting to be at. And I think that's the right number for us..

All right. Thanks. I'll yield the floor..

Dave sorry, just before you go, I might add that we talked at the beginning of the year that concentration from our number one customer being in the region of 15% to 17%. As you -- some of you smart folks have realized we're probably going to be a little bit higher than that for full year. So, it'll be probably closer to about 18% at this stage..

Yeah. Okay. Thank you. .

We will take our next question from Jack Meehan of Barclays. Please go ahead. Your line is open..

Hi. Thanks.

I wonder just ask about as you look at the book of business you have in backlog, how we should be thinking about conversion and the revenue burn from here? And when do you think we start to hit the inflection point where revenue can actually start to accelerate?.

Well, I think, Jack, as I explained on the -- in my comments, a lot of the work we won is in the oncology space, but the majority of the large projects we have in the portfolio are in oncology. And they tend to be large, complex and fairly long-term projects. So that, as we've spoken about before, tends to reduce the conversion on the backlog.

On the other hand, we've been successful in winning new business outside of that as well in terms of some of that new backlog projects. And that will counter that. But I think the trend of backlog burns sort of coming down a little bit is not going to go away in the short term anyway.

I think we see some short term that our backlog burn will -- perhaps be even be a little lower in the next quarter or so. But I think as we go forward, we'll -- that will stabilize and probably start to pick up a little bit as we get well into next year. That's the expectation that I would have through our business at the moment.

But it certainly these longer-term complex oncology projects are weighing on it. That's for sure..

Great. And then I just wanted to follow up on margins. The gross margin was a little bit lower than we would expect.

I was just curious, how the acquisitions might be impact to that? And then maybe conversely, SG&A really impressed the result just -- what do you think the right steady state is for that?.

All of it. I'll comment and then Brendan might want to jump in on this one. Certainly, on the gross margin we were down 1%. I think on basically -- on the gross. And that was a combination of -- there was a little bit on the acquisition there and a little bit on the boco. So, both those two factors weighed into that a little bit.

On the other hand, as you quite rightly noted, we made some very good progress on our SG&A leverage. And we do see those two things sort of countering each other going forward. And so, I think it's -- I think our expectation's that we certainly maintain our overall operating margin through continued leverage of our SG&A.

And I think we have one of the best global business services groups in the industry. We're very -- we're a strong and a disciplined group and those -- and they're doing an extremely good job in that, and that's really helping us to counter any sort of headwinds we get on the gross margin level.

So, my expectation is we can certainly maintain where we're at..

Great. Thanks Steve..

We will take our next question from Donald Hooker of KeyBanc. Please go ahead. Your line is open..

Great.

So, I guess, maybe -- so with the Mapi Group now under your belt, I guess when we think about that real world late-phase group now, which I assume has been growing nicely and kind of -- can you maybe size that for us and talk about the sort of profile of that business as it gets bigger going forward? As it -- how growth rates and margins maybe compared to the traditional Phase III business?.

Yes, Don, we -- certainly, we see ourselves as being one of the top-sized providers of the late-stage business in that area now. And that business is certainly growing at a decent clip. That's not far -- as fast as it was maybe a year or two ago. But we certainly see plenty of uptick from a growth point. We're certainly faster than the two, three area.

So, I would characterize it in the low double digits in terms of market growth. We've -- the integration of the Mapi Group is going very well. We've been able to bring on some really top-class individuals and real leaders in that late-stage world and combine with our ICON Group. I think we really have a very strong team in that area.

So, we see us being able to grow that business nicely across the organization and across the industry. And it will be, I think, at high of an average growth rate. But I'm characterizing it in the low double digits at this stage..

And I guess, sort of last one and one follow-up in terms of thinking about sort of the Asia Pac area, particularly, China. Obviously, a lot of changes going on there around regulations and clinical trials.

I was wondering if you could update us on your sort of China, Asia Pac strategy? Are there incremental investments that you might need to make there, perhaps an acquisition? Can you talk to us about your exposure to that market?.

Yes, China specifically is, certainly, going through some changes in the -- on the regulatory front. And we have a strong group out there that has been growing. The regulatory changes -- I suppose, they've been talking about the regulatory changes in China for some time.

And we do expect that it will be faster and easier to get trials initiated out there and started out there. But the proof of the pudding will be in eating. And it hasn't -- that hasn't really happened yet. But our expectation is that, that will be the case. We have -- we made an acquisition, as you know, out there several years ago.

And that's proved to be successful. We've got a new leader of our business out there. And we just hired from one of the major organizations out there. So, we feel like we're doing most of our investing around the resources and people in terms of training and bringing on good hires, rather than doing any further acquisitions.

And I think China, we have, as I say, a strong base to build from. Other parts of the Asia, we're looking at on a country-by-country basis. We do see significant growth out there. We do see the industry itself growing out there in terms of business opportunities.

And as that plays in, we certainly have a focus out there in terms of investment, and our M&A strategies, to some extent, focused out there. Although having said that, we're looking to solve the major problems of the industry face that our pharmaceutical customers face, and that is around finding the right sites and getting patients into trials.

Whether that be in Asia or in North America or in Europe. That's the problem we're trying to solve through technology and the applications report. So, while Asia is an important focus, it's certainly not the only focus that we have as an organization..

Thank you so much..

We will take our next question from Erin Wright of Credit Suisse. Please go ahead. Your line is open..

Great. I just wanted to get the general sense on sort of the industry right now in your view.

What are some of the trends you're seeing from a biotech funding perspective based on the conversations with maybe smaller biotech customers you have? And then how would you characterize kind of customer mix of the new business wins and just general RFP flow that you're seeing right now?.

Okay. In terms of industry trends, Erin, I'm not sure there's anything terribly new to call out. As we said, the biotech companies we're dealing with are generally well funded, they're ambitious. Perhaps, certainly, much more ambitious, perhaps, than they were 5 to 10 years ago in terms of taking their compounds right through to the market.

They don't feel they have to partner up or sell out to large pharma these days, even though there is a plenty of opportunity for them to do so. So, we feel we have a good -- the business we won over the last quarter or so has been across the segments, really. We feel equally spread.

Although, our backlog and our revenue tends to be dominated by larger pharma, tend to be about half larger pharma group, we are increasingly making progress within that well-funded biotechs and small and midsized companies. They have -- as I said, they're ambitious, and they're motivated, and they have money to spend.

So we feel we're in a good place with those. In terms of RFP trends, we've seen some modest uptick in terms of opportunity and RFP is certainly a lot of MR coming out of this small to midsize companies. So, we feel that the market as a whole is in a good place and is moving forward solidly..

That's excellent. And can you discuss some of the dynamics you're seeing in working capital account.

Are you seeing longer payment time from customers? Or any sort of shorter payment times from -- to investigators? And curious if anything that we should be thinking about, I guess, going forward, especially as kind of the Pfizer business rolls off?.

Erin, it's Brendan here. I think in working capital, especially on day sales outstanding, we are seeing, I think we've been pretty good at our collections and keeping within terms.

I think where we have seen elongation is in some of the milestones that we'd have seen maybe as you say sooner in the contract being more spread out in some of the new or more recent terms that we've seen over the last number of years.

And those you can see probably from our balance sheet or you will see, it's up in, that has increased our own on-build revenue on the balance sheet there. So, there is -- that is certainly an element. We are big, well-funded company.

So especially the smaller players look for more leverage of our balance sheet to help us in terms of -- help them in terms of getting their drugs developed. So, it is an element that is -- has been putting pressure on in the last while.

We've been kind of stubbornly in that kind of 50 days' range for the last little while, speaking about ICON specifically. And our goal is very much to get back into the 40-day territory. So, we think that's still a doable goal. But certainly, if you look at over a number of years, yes, there has been.

I would say, the biggest piece has been not really around the number of days, credit terms, but rather the placing of milestones in the contracts..

Great. Thank you so much for the color..

We will take our next question from Tycho Peterson of JPMorgan. Please go ahead. Your line is open..

Hey thanks. Want to go back to the margin question earlier. I appreciate the M&A dynamic in there.

Just curious as to whether there is anything to note on the pricing front? As we think about the industry maybe moving a little bit more towards fixed price contracts and FSP work, and maybe some of the competitors going private and getting more aggressive on price.

Anything you're seeing in the market around pricing? And can you maybe talk to your willingness to move potentially towards fixed price contracts to the extent that the industry is headed there?.

So Tycho, it's Steve. I -- we're not seeing any increased competition in the pricing space, and I mean, any more than it usually is. We work as, you all know, in a very competitive market. We need to be efficient, and we're very focused on that. But we're not seeing any rouge companies out there who're doing anything untoward in the pricing area.

So, I don't think that's changed in any -- to any great extent, certainly, over the last three to six months. In terms of fixed pricing or what we call outcome based pricing, we believe that our technology and our feasibility process is robust enough now to be able to enter into these sorts of contracts.

And we believe there is some differential advantage for us and probably for all of the larger CROs versus some of the smaller and the midsized companies on the fixed and outcome based pricing.

Because we do have not just the financial stability, but the processes, the applications, the systems to do our feasibility really well and to make sure we know exactly what we're getting ourselves in for, when we're budgeting this. So, we are open to that sort of approach.

And as long as we take it very close, obviously, look at the particular program, particular project where we work with an alliance partner, we're certainly open to it because of the portfolio approach that we take. And that's a very important part of it.

So, it's harder to do these things in sort of one-off -- on a one-off basis, much easier across the portfolio of projects, where you have a -- almost a commitment from your sponsor or from your partner of where this is coming in. So, we're open to it. We believe we can do them effectively.

We believe there's an opportunity if we do them well, to improve our margins on those sorts of projects. So, I think, there can be positives for both sides of the equation there, although you really need to know what you're doing. And so, I'd say as a significant player in the industry, we feel like we're in a good position to do that sort of work..

And then you guys have done a great job diversifying away from your one big strategic relationship.

Can you just talk within the industry more broadly, is the era of kind of these bigger strategic partnerships over? Or are you still seeing interest from some of the larger pharma companies to engage in bigger strategic longer-term deals?.

No. Well, I'd say, no. I don't think the -- there is a movement away from these. I don't think the industry is moving away from these larger strategic partnerships. We've certainly been successful even in the last quarter with bringing on a number of new partnerships.

And we're currently engaged in discussions with a number of large pharma and midsize pharma in -- on these partnerships and alliances.

So, I think the -- I think, quite to the contrary, the larger sponsors, particularly being the larger part of the industry are seeing the benefits of these sorts of alliances, saying that organizations like ourselves can really bring some significant value to them and to their portfolios in terms of efficiencies, in terms of speed.

And that if anything, we're seeing more opportunities in these sort of partnerships than in the more tactical side of the business. So, we're very positive about the role we can play and about the proposition that we put forward to our potential partners in these areas..

Okay. Thank you..

We will take our next question from John Kreger of William Blair. Please go ahead. Your line is open..

Hey thanks very much.

Steve, question, if you look at the awards that you got in the third quarter, did you see an increasing portion coming from the FSPs, staffing type work or a smaller portion?.

For the third quarter, John, it was probably smaller than we've had sort of year-to-date or over the last 12 months. So -- and we don't -- I don't know, I'd necessarily call out that as a trend, but more of that, well, came in through sort of full-service work in the third quarter..

Got it. Interesting. Okay. And then you mentioned in your remarks about some of the more data-centric approach you're taking around site ID and patient enrollment and the like.

Should we think about that as an efficiency driver now or more of kind of an experiment that's going to take some additional investment over the next year or 2?.

I think it's been both, John, to be honest. There's certainly further investment and there's certainly further work to do to find out which of the techniques and which of the applications and which of the data bases and algorithms that we're developing actually prove to be the most effective.

We're taking a view that we're working with a number of different partners, as I outlined, to work out, which is the best approach and which combination of approach is the best. We have outside network with PMG. We're working with the TriNetX and the IBM Watson at the big data side of things.

We have our own -- we're developing our own internal capability around our own integrated data to identify such. There's certainly further investment. No question about that. This race is a marathon. And I think, it's going to be some time before we've also worked out which way to go.

We're, as I say, taking -- we don't believe that owning the data is the -- is necessary that what you need to do. But you do need to have good applications, good algorithms, and of course, you need to have access to the right data to make those decisions.

Ultimately, you need to make -- take actions and make decisions around what to do on the basis of the information that you have and the algorithms that you've developed. But as I said, there is a -- there's -- we're seeing some sort of short-term benefit. We're seeing some improvement in performance. But it's more incremental than transformational.

And I think, there's, as I said, more to do in that area, and that's going to -- this is going to play out over the next few years..

Great. And then one last quick one.

Can you just give us an update on your thinking around site management and the PMG business? What do you -- what are you trying to accomplish with that asset over the next few years?.

Well, we're trying to accomplish more involvement and more control of what's happening at the site in terms of patients who arrive at the site and their participation and eligibility for clinical trials. So, what we're trying to achieve is a greater consistency, a greater speed of enrollment.

Greater consistency and a greater speed of startup of getting these sites ready to enroll. And that's in our business these days increasingly a very significant part of these projects. How long it takes us to get them up to a point where they can actually recruit patients. In terms of where we're trying to go with it, we're trying to margin it.

We -- and we have been expanding it. Expanding our site relationships and expanding a number of sites that we have in this network. We also, of course, try to increase and try to broaden the type of sites that we have been involved in these sort of partnerships.

Certainly, for us, oncology is an area, as I mentioned, it's a very important part of our portfolio. And accessing sites that have oncology patients is a very important part of how we're developing that whole strategy. So, it's an -- and then, as I said, we have the sites, we have a number of sites looked after.

We now then need to drive patients into those sites. And I think that's where we try to go with our data approach through TriNetX and Watson and rest of the institutes identifying patients in those areas and getting them to go to the sites that we have in our network. So, we're trying to bottom-up in a top-down sort of approach.

Others are doing it a little differently, going perhaps more down the data route. We want to try and do it both ways, because, ultimately, I found in my experience that we can identify patients. That's not the problem. The problem is getting them to the sites and into the trials.

And that's what -- that's the problem that I think the pharma sponsors have. And that's what we're trying to help them solve..

Very helpful. Thank you..

[Operator instructions] Our next question comes from Tim Evans of Wells Fargo Securities. Please go ahead. Your line is open..

Just a question on capital deployment really quickly. So, there's been a lot of deals executed in this space. Mapi is one of them.

Can you talk about your deal funnel? What types of things are in that funnel in terms of service areas, geographic areas, things you like to acquire? What kind of challenges or lack thereof are you seeing in terms of valuations and negotiations? And then lastly, if you don't acquire anything in the next couple of quarters, are you willing to revisit the share repurchases?.

Sure, Tim. So, we have -- we had strength in our M&A team. Simon Holmes, who used to be our Investor Relations Manager and has now been replaced by Jonathan, is now focused entirely in the M&A space. And we recruited a couple of people -- technical people in that area to help him with doing that.

So, we have a pretty rigorous process around looking at the various segments in the market in which we're interested, identifying what the opportunities are out there and assessing those. I'm not going to be specific in terms of which areas or which geographies we're looking at. There are some.

But we believe the FSP space has some uptick and some opportunity irrespective of a relatively quiet quarter this quarter. We believe some areas in geography could do us some strengthening out as we've been cleared before.

We do tend to focus towards a string of pulls approach, where we're looking to improve various segments, geographic, functional, therapeutic, parts of our business and supplement them to move ourselves up. Mapi was a classic example. We brought the Mapi guys on.

That really has given us some horsepower in Europe, where we have a very strong global late-stage group. And that's a good example of the way we're approaching. However, of course, we do what used to be opportunistic in terms of considering all opportunities that come along. And we'll continue to do that.

And if we don't find anything because sometimes the valuations are a little more than we like to pay and sometimes the capabilities that we're looking at don't always fit perfectly with what we have and what we need. We certainly would revisit the share buyback options.

But at the moment, I would say our priority are -- priority is identifying appropriate M&A opportunities. And that's where we're sort of focusing our attention at the moment. We'll, of course, revisit -- I'm going to revisit this on a regular basis.

And if we don't really -- if we don't find what we want, and we have capital we want to deploy, we'll certainly come back to the share buyback. But as I say, our priority at the moment is looking for good opportunities and bringing them into our organization..

Great. Thank you..

[Operator instructions] We will take our next question from Juan Avendano of Bank of America Merrill Lynch..

Hi. Thank you.

Can you please -- if you could clarify for us once again the break down of the constant currency growth in the quarter between organic and M&A?.

Yes, sure, I'll answer. Brendan here, Juan. And great to have you on the call. I may be out as well. So, in absolute terms, year-over-year we grew at 4.8%. Constant currency then was at 3.2%.

And as I mentioned in my opening remarks, because of the bococizumab cancellation, we were down a little bit year-over-year in CDO terms, constant dollar organic terms, that was down 2.6%..

2.6%. Got it. And -- got it. I appreciate it.

And I wanted to -- regarding your revenue growth outside of your top customers that 17%, does that include or exclude Mapi?.

That I think is....

Inclusive..

Inclusive. Yes..

It's inclusive of that. Got it.

And so, you reported a backlog might have been benefited marginally from a net book to bill from the Mapi as well?.

Just to be clear, again, Juan, we added to our -- separate to the business wins in the quarter, we added to our closing backlog a $190 million of Mapi backlog at the end of the quarter. So that was added in separately. So not really a material impact to the actual business wins quoted in the quarter..

Okay. Got it. And finally, a question, staying within the revenue outside of your top customer at a recent competitor sell-side conference you mentioned, those strategic partnerships that you've been able to gain and how they've grown from being top 20 to now even being top five and possibly -- top 10 and even possibly top five customers of yours.

Just wanted to know how maximized are those relationships? I'm trying to assess the sustainability of that mid- to high teens revenue growth outside of your top customer..

Well, it's Steve, Juan. I'd say, we certainly have benefited -- our business wins have benefited from the relationship and the partnerships we have with those partners, who have been partners for several years.

And those relationships have, I would say, mature, but certainly not -- we have a nice cadence of work and a nice cadence of new awards from those partnerships. I think the exciting thing is -- for us is, we've brought on several new ones over the last quarter. And that's what we're looking.

And there's nothing in the backlog from those new -- from those -- from three of those. There's nothing in the backlog at this stage because we haven't got down to bidding and work orders in all the rest of the year. So, we've been appropriately conservative on that front.

We see plenty of opportunity with those new partners as we bring them and bring them into the fold. And that's what, I think, is exciting for us..

All right. Thank you. I appreciate the color..

Thank you, Juan..

As we have no further questions in the queue, I would like to turn the conference over to Steve for any additional or closing remarks..

Thank you, operator. Q3 was a strong quarter for ICON, and we look forward to working hard for the remainder of the year as we build our position as the CRO partner of choice in drug development. Thank you very much, everyone..

Thank you. That will conclude today's conference call. Thank you for your participation, ladies and gentlemen. You may now disconnect..