IQVIA Holdings, Inc.

Stand by, we're about to begin. Ladies and gentlemen, thank you for standing by. At this time, I would like to welcome everyone to the IQVIA second quarter 2023 earnings conference call. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question and answer session. If you would like to ask a question during this time, simply press star followed by the number one on your telephone keypad. And if you would like to withdraw your question, simply press star one again. And just as a reminder, this call is being recorded. I would now like to turn the call over to Mr. Nick Childs, Senior Vice President, Investor Relations and Treasury.

Mr. Childs, please begin. Good morning, everyone.

Thank you for joining our second quarter 2023 earnings call. With me today are Ari Boosby, Chairman and Chief Executive Officer, Ron Brooman, Executive Vice President and Chief Financial Officer, Eric Sherbet, Executive Vice President and General Counsel, Mike Fedock, Senior Vice President, Financial Planning and Analysis, and Gustavo Peron, Senior Director, Investor Relations. Today we will be referencing a presentation that will be visible during this call for those of you on our webcast. This presentation will also be available following this call in the Events and Presentations section of our IQVIA investor relations website at ir.iqvia.com. Before we begin, I would like to caution listeners that certain information discussed by management during this conference call will include forward-looking statements. Actual results could differ materially from those stated or implied by forward-looking statements due to risks and uncertainties associated with the company's business. which are discussed in the company's filings with the Securities and Exchange Commission, including our annual report on Form 10-K and subsequent SEC filings. In addition, we will discuss certain non-GAAP financial measures on this call, which should be considered a supplement to and not a substitute for financial measures prepared in accordance with GAAP. A reconciliation of these non-GAAP measures to the comparable GAAP measures is included in the press release and conference call presentation. I would now like to turn the call over to our chairman and CEO.

Thank you, Nick, and good morning, everyone. Thank you for joining us today to discuss our second quarter results.

IQVIA delivered another quarter of strong operational results with 9% organic revenue growth, excluding the impact of foreign exchange and COVID-related work. The demand environment for the industry continues to be healthy, which supports our confidence in the long-term outlook for our businesses. Emerging biotech funding continued its healthy trend. According to BioWorld, second quarter EVP funding was $17.1 billion, up 33% versus prior year, and up 10% sequentially versus Q1. Clinical trial starts were up over 10% sequentially compared to Q1 2023. FDA approvals continued a strong momentum, which is a positive indicator for our commercial businesses going forward. There were 26 approvals in the first half of the year, and that's up 30% versus the average of the prior five years. M&A activity in the biopharma sector remains strong with over $90 billion spent in the first half. 2023 is on pace to be one of the largest years in the last decade in both value of transactions and number of deals, and that is with a high interest rate environment. Our Q2 demand metrics showed continued healthy growth. Net new bookings were just under $2.7 billion, which was our second largest quarter ever, and represented a quarterly book-to-bill of 1.28. By the way, before I move on, I know that some of you inquired last quarter about our services book-to-bill, and I think some of you were concerned about what that may have implied about our performance. So just to remove any concern, our services book-to-bill this quarter was, Nick, 134? Correct. And our trailing 12-month book-to-bill is 134 overall. And again, for those who asked, it's the same on a services basis. Once again, going forward, if there is any meaningful deviation between our total book-to-bill ratio and the services book-to-bill, Then we will let you know. Otherwise, you can assume they are roughly the same. Now, as a result of these bookings, our backlog reached $28.4 billion, growing 11% versus prior year on both reported and constant currency basis. Another metric we track is our quarterly RFP flow. And this past quarter, it was the largest ever. It was up 8% year over year and 6% sequentially. So the longer-term fundamentals of the industry are certainly very positive. Now, in the short term, our clients have continued to be cautious with their spending due to the uncertain macroeconomic conditions. And that's reflected primarily, I would say only, in some subsegments, of our commercial business segments, that is TAS and CSMS. In the second quarter, these businesses were stable, with the TAS segment growing in the second quarter at a rate consistent with the first quarter, as we had anticipated in our guidance. Of course, last time we spoke, we expected client spending in these commercial businesses to show signs of acceleration by now. But unfortunately, they have continued to delay decisions. A pipeline is still there. However, decisions keep being moved to the right. And as a result, we now expect these commercial businesses to perform for the balance of the year, similarly to what we saw in the first half. For the TAS segment, that represents approximately 6% growth organically. excluding the impact of FX and the COVID step down. And that 6% growth organically for the year is actually very strong in the current environment. With that, let's review the second quarter results. Revenue for the second quarter grew 5.3% on a reported basis and 5.5% at constant currency compared to last year, And again, excluding COVID-related work from both periods, we grew the top line 9% at constant currency on an organic basis. Second quarter adjusted EBITDA increased 8%, driven by the revenue growth and ongoing cost management disciplines. Second quarter adjusted diluted EPS of $2.43 as expected faced the headwind of the step up in interest expense and the UK corporate tax rate change. Excluding the impact of these non-operational items, our adjusted diluted EPS growth would have been 14%. A few highlights of business activity. IQVR has been awarded a significant contract with the top 10 pharma to implement a full commercial data and analytics solution suite. This suite of offerings will benefit our clients by utilizing insights powered by AI, such as personalized engagements with HCPs, leveraging our multi-channel capabilities, including digital, precise geographical sales targeting, and better cost efficiency by reducing the number of resources that are manually generating insights. This initiative positions IQVIA as a strategic partner with its large top 10 pharma client for AI powered data and analytics solutions. Another top 10 pharma extended and broadened an analytics project to track the sales performance of that top selling immunotherapy oncology drug in Europe. The project allows commercial teams to continuously track brand performance factor in AI generated insights, and improve as a result execution across seven cancer indications in over 25 countries. In another win, IQVIA was awarded a significant contract from another top 10 pharma client to deploy our OCE optimizer application globally. This is an AI-powered multi-channel sales management application that optimizes HCP engagement in real time. IQVIA was selected over two other competitor solutions because of the seamless integration that OCE offers with the client's current ecosystem, the superior AI capability, and our successful history with its clients in previous global system implementations. Also in the quarter, IQVIA was selected by multiple clients to deliver regulatory mandated post-approval safety studies in Europe. In each case, IQVIA was selected over preferred providers due to our deep expertise in sourcing data from the local health systems in Europe and our ability to bring multiple databases together in a harmonized manner for research. We were awarded a five-year pregnancy exposure study from an EBP customer to collect and analyze health information from women who take prescription medicines or vaccines during pregnancy and compare results with women who have not taken them. We won this award because of our rich experience in post-approval safety studies in pregnancy and deep experience in epidemiology.

In the quarter,

IQVIA has been recognized by the Artificial Intelligence Breakthrough Awards with the prestigious Best AI-Based Solution for Healthcare Award. IQVIA was recognized for its AI software, including natural language processing and proprietary large language models technology, which analyzes complex and unstructured patient data to provide unique insight into patient care and disease states. This technology is helping clinicians identify and screen at-risk patients, enabling targeted intervention to patients in need. IQVIA continues to differentiate in the application of AI analytics with two of the top 10 pharma companies designating their use of IQVIA AI as their innovation of the year. In addition, both Databricks and Snowflake separately named IQVIA their 2023 Health and Life Sciences Partner of the Year. These awards recognize AI and tech partners for their exceptional accomplishments and joint collaboration. There's a lot going on at IQVIA with generative AI, and we will likely be discussing this at the appropriate time at a future investor meeting. Let me now move to RMDS segment. which had another strong quarter, including several key wins. Our expertise in oncology continues to be a differentiator for us. In the quarter, a midsize pharma company awarded IQVIA two large phase three trials for gastric and prostate cancer, which are expected to last about six years. The client selected IQVIA due to our therapeutic expertise and infrastructure, to run global complex oncology studies as well as our global data assets. Also this quarter, a large FSP client renewed their partnership with IQVIA as a preferred provider this time without soliciting competing bids. This client was a historical lockout account for the historical Quintiles legacy company. We won here due to our FSP expertise, scale, and delivery capabilities. In our lab business, the top 10 pharma awarded us a large study in the quarter for a novel drug that improves the quality of life of patients suffering from a serious autoimmune disease that impacts one out of 50 people worldwide. This study is our client's top R&D program, and it has positioned IQVIA as the largest laboratory service provider for this client. Lastly, I'm proud to share that Chital Telang, Vice President of Therapeutic Strategy at IQVIA has been honored with the 2023 Rising Star Award by the Healthcare Business Women's Association. Sheetal earned the award for a strong and innovative leadership of critical industry initiatives, including by increasing diversity and inclusion levels among patients enrolled in clinical trials. I will now turn it over to Ron for more details on our financial performance.

Thanks, Ari, and good morning, everyone. Let's start by reviewing revenue. Second quarter revenue of $3,728,000,000 grew 5.3% on a reported basis and 5.5% at constant currency. In the quarter, COVID-related revenues were approximately $120 million, which is down about $140 million versus the second quarter of 2022. Excluding all COVID-related work from both this year and last, organic growth at constant currency was 9 percent. Technology and analytic solutions revenue was $1,456,000,000. That was up 3.4 percent on both the reported and constant currency basis. Excluding all COVID-related work, organic growth at constant currency in TAS was 6%. R&D solutions revenue of $2,096,000,000 was up 7.5% reported and 7.6% at constant currency. Excluding all COVID-related work, organic growth at constant currency in R&DF was 12%. Lastly, contract sales and medical solutions, or CSMS revenue of $176 million declined 3.8% reported and was flat as constant currency. Total company first half revenue was $7,380,000,000, which was up 3.8% on a reported basis and 5.1% of constant currency. Excluding all COVID-related work, organic growth of constant currency for the first half was 10%. Technology and analytics solutions revenue for the first half was $2,900,000,000. That's up 1.9% reported and 3.2% at constant currency. And excluding all COVID-related work, organic growth at constant currency and TAS was 6% for the first half. R&D solutions first half revenue of $4,122,000,000 was up 6.1% at actual FX rates and 7.1% at constant currency. Excluding all COVID-related work, organic growth at constant currency and R&DS was 14% in the first half. Contract sales and medical solutions or CSMS first half revenue of $358 million declined 5.3% reported and 0.5% constant currency. Let's move down to P&L now. Adjusted EBITDA was $864 million for the second quarter. which represented growth of 8%, while first half adjusted EBITDA was $1,715,000,000, which was up 6.4% year over year. Second quarter GAAP net income was $297,000,000, and GAAP diluted earnings per share was $1.59. For the first half, we had GAAP net income of $586,000,000, or $3.12 of earnings per diluted share. Adjusted net income was $454 million for the second quarter, and adjusted diluted earnings per share was $2.43. For the first half, adjusted net income was $916 million, or $4.88 per share. Now, excluding the year-over-year impact of the stuff-up in interest rates and the increase in the UK corporate tax rate, adjusted diluted earnings per share grew 14% in the second quarter and 11% for the first half. As already reviewed, R&D Solutions delivered another quarter of excellent bookings. Backlog at June 30th stood at a record $28.4 billion, which is up 11% year over year, and up approximately 40% in the last three years. Reviewing the balance sheet, as of June 30, cash and cash equivalents totaled $1,382,000,000, and gross debt was $13,000,000, $13,777,000,000, which resulted in net debt of $12,395,000,000. Our net leverage ratio ended the quarter at 3.59 times trailing 12-month adjusted EBITDA. Second quarter cash flow from operations was $402,000,000 and capital expenditures were $160,000,000, resulting in free cash flow of $242,000,000. As we previously announced, in May we issued $1,250,000,000 of senior secured and unsecured notes. The proceeds from these notes were used to pay down our revolving credit facility. We also took advantage during the quarter of our stock price multiples falling to 2017 levels and deployed $490,000,000 to repurchase 2.5 million shares at an average price of $194 per share. In the first half, share repurchases totaled $619 million. Now, we ended the quarter with $736 million of share repurchase authorization remaining under the program, but our board of directors just authorized a $2 billion increase to our share repurchase grant, which brings the authorization to $2,736,000,000 as of today. Let's turn to the guidance. We're updating our guidance to address the impact of the continued client cautiousness we've been experiencing in the commercial business. We now anticipate this cautiousness persisting for the balance of the year. And reflecting the reduced expectations for both TAS and CSMS, we currently expect revenue to be between $15 billion, $50 million, and $15 billion, $175 million. which represents year-over-year growth of 4.4 to 5.3 percent. Total company organic growth at constant currency excluding COVID-related work is now expected to be between 8 and 9 percent for the year. This revenue guidance continues to assume about 100 basis points of contribution from acquisitions and a step down in COVID-related revenue of approximately $600 million versus 2022. By segment, we now expect TAS to grow approximately 6% consistent with what we saw in the first half. Our expectations for the R&DS segment are unchanged and consistent with our previous guidance. And finally, we now expect CSMS revenue to decline approximately 3%. And all of these growth rates are organic at constant currency, excluding COVID-related work. Now, to reflect these changes in revenue, we're also updating our guidance for full-year adjusted EBITDA to $3,600,000,000 to $3,635,000,000, which represents year-over-year growth of 7.6% to 8.6%. And lastly, we're updating our guidance for adjusted diluted EPS to $10.20 to $10.45, representing year-over-year growth of 0.4% to 2.9%. This adjusted diluted earnings per share guidance includes the year-over-year impact of the step-up in interest rates and the increase in the U.K. corporate tax rate. And together, these non-operational items reduce the year-over-year growth rate by approximately 12 percentage points. So, excluding these items, adjusted diluted earnings per share is expected to grow well to 15%. Let's move to our third quarter guidance. In Q3, we expect revenue to be between $3,760,000,000 and $3,810,000,000 or growth of 3.9 to 5.3% on a constant currency basis and 5.6 to 7% on a reported basis. Adjusted EBITDA is expected to be between $880,000,000 and $895,000,000 up 8.1 to 10%. And adjusted diluted EPS is expected to be between $2.39 and $2.49, declining 3.6% to growing 0.4% year over year. Excluding the step up in interest expense and the increase in the UK tax rate, this translates into third quarter adjusted diluted EPS growth of between 11 and 15%. Now, I should note that all of this guidance assumes that foreign currency rates as of July 31 continue for the balance of the year. So, let me summarize. We delivered another strong quarter of financial performance, including organic revenue growth of 9%, excluding the impact of foreign exchange and COVID-related work. Quarterly net new bookings were the second highest ever at just under $2.7 billion, and our industry-leading backlog reached a new record of $28.4 billion, up 11% year over year. Underlying demand in the industry and our business remains healthy, with our RFP flow reaching a new record high in the quarter, up 6% sequentially versus Q1 2023. We took advantage of the stock price multiples falling to 2017 levels during the quarter and bought back almost a half a billion dollars worth of shares at an average of $194 per share. On top of this, our board of directors authorized a $2 billion increase to our share repurchase authorization. And finally, while client cautiousness in their discretionary spending has slightly reduced our short-term outlook, on the commercial side of the business, that is TAS and CSMS. The fundamentals of both the clinical and commercial markets continue to be healthy and support our confidence in the longer term outlook for our company. And with that, let me hand it back over to the operator to open the phones for Q&A. Thank you. Ladies and gentlemen, at this time, I would like to remind everyone in order to ask a question, press star then the number one on your telephone keypad. And we do request that you please limit yourself to just one question so that others in queue may participate as well. And we'll pause for just a moment to compile the Q&A roster.

We'll go first this morning to David Windley at Jefferies.

Hi, good morning. Thanks for taking my question. Ari, you talked about a pretty substantial increase in trial start activity, which is encouraging, certainly. and the bookings, as you highlighted, are also pretty strong. I'm wondering if, kind of on two points, if that is reflective of maybe pharma companies, pharma and biotech companies kind of getting about business after some period of evaluation of pipelines, and then two, if there's any improvement in the operational environment, you know, thinking about site staffing, labor turnover, things like that that would help throughput on the operational side. Thanks.

Yeah, thank you, Dave. Look, the environment from what we have been able to see over the past year and a half, two years, has not changed. I know there have been rumblings about EBP funding on one hand and, you know, concerns about the impacts of the IRA on the other hand. It's through large pharma, you know, evaluating the longer-term impact of the IRA, and, you know, in that context, taking another look at their portfolio of studies, both in-flight and to come, and some of them reprioritize some of the studies, but fundamentally, Our business has been sound, strong, growing sequentially every quarter. Our bookings have been beating record after record. So we really did not experience any tremor at all in the market on the R&DS side. And this quarter was just a continuation of what we had experienced. With respect to your second question about staffing and site startup, attrition rates are back to pre-pandemic levels, which is about 10% to 12%. So on our end, things are good. We continue to actively recruit and hire because we're growing organically at a very high rate. And therefore, we need the people to execute the work. So that recruiting is targeted at meeting the incremental demand. Obviously, there's always competition for talent. And, you know, right now we have about 87,000 employees. And we continue to recruit thousands of people a year. So that's on our end. with respect to the site staffing issues, frankly, we continue to see some staffing issues at some sites, but it's really to a lesser degree than, you know, in prior, let's say, prior half year or three quarters, and it's already dramatically reduced. So, really, we are It's actually getting back. I'm not going to sit to 100% staffing levels, because there still, again, are sporadic issues here and there. But it's not, you're correct, it's not the severe issues we experienced perhaps six months or nine months ago. So it's much improved.

Thank you, David. Yeah, thank you. We'll go next now to Anne Hines at Mizuho.

Hi, good morning. I just want to dig into TAS a little bit more. Within TAS, I know there's several sub-segments. Can you just give us growth rates or declines within the sub-segments like consulting technology and real-world evidence? And also, I think most of the pressure is coming from the consultant segment. Can you tell us just what the margin drop-through is that? So if consultant is maybe like 25% of revenue, I think it is, what's that margin, a negative margin drop-through? That'd be great. Thank you.

Okay. I don't think we disclose by sub-segment the margins, but it's very good margin. Let me put it this way. The consulting is good margin, and the analytics piece is also very strong margin. A lot of our analytics work is delivered out of offshore centers in Bangalore, in Manila. And we generate good margins. It's a lot of standardized work. We have workflows that we use and processes that over the years we've refined. And that work, you know, when we say consulting, don't think, you know, McKenzie-type consulting. Consulting is really... you know, again, a pricing market access study, a launch study, a Salesforce optimization study. So these are operationally geared consulting services that our clients utilize to support often the launch of new drugs or the reprioritization of geographic markets or you know, specific restructuring of their sales organization in certain geographies or in certain therapies, those types of projects. And it's not like they are not going to do them. You know, those must or must do projects, but the environment, the climate, the higher interest rates has you know, kind of put people on sort of on a whole pattern, if you will. You know, the pipeline is there. You know, no one is telling us, I am just not doing the project, and therefore, you know, we would say, well, the prospects are lower. No, we have the projects are still there, but the decision-making keeps being pushed to the right. We were hoping, frankly, up to, you know, two or three months ago, that things would recover by now in terms of the decision making and accelerate. And that's why we, frankly, we were hoping that we would get back to the, you know, 8% or so growth, higher single-digit growth for the TAS segment for the year. We were expecting a strong acceleration, but we haven't seen it materialize in the second quarter. And so, as of now, based on what we've seen, I think it's prudent to say that, you know, this, the type of growth rates we've seen for the segment as a whole, which is 6% organically at constant currency and not including the COVID impacts, it should be, you know, should continue the rest of the year.

Thank you. All right. Thanks. Thank you. We'll go next now to Eric Coldwell at Baird. Excuse me.

Thank you very much. I had the same question as Ann, and I just wanted to follow up on that. The way we think about TAS is force broadly defined subsegments, data, analytics, consulting, real-world evidence, and technology. I'm curious, did any of this, you know, cautiousness or sluggishness, did it expand beyond the analytics and consulting side? What are the growth trends in data, real-world evidence, tech, any nuances or changes there? And then I have one quick follow-up, if I might. Thank you.

All right. Sure. Of course, Eric. Thank you. So let's start with data, right, the core of the business. That has not changed. You know, I would say 90-plus percent of our business for the year on the data side is just locked in. you know, by the month of December for the following year. So there's no change there. That's recurring revenue and not much has happened there. The level of discretion in terms of data buys here from the clients is much less than the analytics and consulting segment that we were just discussing. For the faster growing businesses, real world and commercial tech, let's take the technology suites. It's not like the revenue is a reflection of the sales in the year. The revenue generated in technology is longer cycle, corresponds to technology awards from prior periods, from prior years. So nothing is changed there on the revenue side. There is cautiousness similar to consulting and analytics on the technology side in terms of new buys and new transitions. There's a number of dislocation in technology going on right now. By the way, both on the clinical side and on the commercial side, you know, the main CRM competitor decided to change their platform. So as a result, clients are kind of reviewing their technology decisions on the technology side we've got new innovations we've got the main competitors there medidata and others and oracle are launching a new suite so there is this location so because of that clients are kind of taking their time to review decisions but that's not impacting our revenue in years On the real-world side, again, you know, some of these are longer-term studies. There is a little bit, but again, I don't think that we've seen it affect our revenue in-year that much. A little bit of cautiousness and perhaps a little bit of delaying on the late-phase real-world studies that we've seen. Again, I'm just giving you a really high-level commentary here just to really scratch the business. But fundamentally, it is the 25% piece of the TAS segment that's consulting and analytics that is actually down year over year by, I think, about 5%, if I recall. And so everything else is, you know, pretty much stable as expected. What's your follow-up?

Yamai, thank you for the follow-up. I know you don't tend to get into details on M&A in the quarter with, you know, typically these are smaller companies, sometimes at higher revenue multiples. But I did notice $426 million, I believe, spent on acquisitions this quarter. I was hoping to get some sense of directionally what that might have been.

Yes. Yeah. And I think, you know, it was done towards the end of the quarter. I mean, I can tell you it's a company called Cognitive, for which we paid almost $300 million. So clinical site network. As you know, as part of our strategy overall, we've been acquiring certain assets that have strong patient enrollment capability in specific therapies, So Cognitive in particular is strong in internal medicine, in CNS, in vaccines as well, and has some large pharma customers. So the company is headquartered in Arizona. Obviously, it's a significant multiple of revenue, and we acquired that towards the end of the quarter. And we have a bunch of all smaller stuff over here, but that's the, what else do we have here? We have a $36 million investment in a small.

We've had one other site network. Right. That we've acquired. Benchmark research. Benchmark research. Right, right, right. That we acquired during.

Site management organization, yeah. That was in psychiatry and smoking cessation. So again, highly specialized site management organizations. We've done a couple of these past work.

So you are starting to follow the path of what PPD and ICON have done in prior years with moving into the opening up the marketplace for actually being a hybrid SMO, but probably still at a very small scale, I would assume.

Yeah, yeah, no, so we had already, we do have, we had a network that we had started ourselves, but we, you're correct, I don't think we have any, we bought maybe one other one last year, if I remember, Nick, and you're correct. Again, these are, it's not like we are buying dozens of these, but there happens to be that coincidentally, we bought two in the quarter, and that's basically the bulk

of the spend that you see there. Perfect. Thank you so much. Thank you. We'll go next now to Tejas Saban at Morgan Stanley.

Hey, guys. Good morning, and thanks for the time this morning. Ron, maybe one for you and a quick follow-up on the M&A side for Ari as well, if I may. So, Ron, first for you, I mean, margins in the midpoint look to be expanding nicely here into the fourth quarter as implied by our third quarter guide. Can you just walk us through sort of what drives your confidence in that sort of margin expansion into year end? And then on the M&A side, Ari, you know, we noticed that the Propel Media acquisition from earlier in the year is, you know, being blocked by the FTC at the moment. We had some new merger review guidelines, draft guidelines, admittedly, put out a couple of weeks ago as well. Does it concern you that you need to sort of rejig your M&A strategy here in light of some of these recent developments?

I'll take the margin question first, Tejas. Look, there were a couple of things here. Number one, we've had margin expansion all year, so it's a pretty good indicator that it's credible to say we're going to have it in the back half of the year. We have a number of productivity initiatives underway to reduce costs, and those tend to be, of course, more back-end loaded. You get more benefit as you go through the year, so that's certainly going to support margins in the back half of the year. I think another thing that's happening is some of the labor cost pressure that we've been feeling over time, on a year-over-year basis, you're starting to, you know, kind of lap that and get more pricing benefit in as well. So, it's a combination of factors, and all those factors overcome a little bit of drag from mix. You know, for instance, the info business, which tends to be a profitable business, never grows as fast as the rest of the business. So, you know, we're very confident in the margin outlook for the back half of the year, and those are the reasons.

Yeah, and the question on the acquisition that we're trying to do, really, it's I think about a year. You know that we have a strategy to continue to grow in the digital space. Our strategy remains intact. We've seen those merger guidelines. Look, I'm not going to comment on the pending litigation with the FTC because it's pending litigation. We continue to believe strongly that there is absolutely zero logic to blocking this transaction, but we are aware that there are a few novel theories that are being promoted by this administration of the FTC. And listen, administrations come and go, and we are not going to change our M&A strategy We believe that we are still a very small player in a hugely massive digital promotional market. I mean, you've got the Googles of this world, giants that also participate in this market, and we have a right to participate in this market. We are serving the life sciences industry and their needs, and our customers welcome that development and our ability to offer those services. We believe that this acquisition actually increases the degree of intensity of competition in this market and actually allows other participants to counter the essential strong behemoths that dominate the the digital space today. So we just simply do not understand the FTC's arguments, and I'll leave it at that.

Thanks, guys. Appreciate the color. Thank you. You're welcome. We'll go next now to Luke Sergat at Barclays.

Awesome. Good morning, guys. Thanks again for the questions. You were talking a little bit about decision-making getting elongated, and I know that that was on parts of the task business, but can you give us a sense of how much longer that has gotten? It typically takes you guys, let's say, two months or three months to close a certain deal, and now that that's six months, just give us some type of framework on how long that has gotten, and then As you guys think about things recovering, I assume that there's also some delayed decision-making on the big, you know, the RDS side. So when things start to turn around, is it safe to assume that the RDS side comes back before the TAS side when on this decision-making process?

Thanks for the question, Luke. I'm not sure what you mean by RDS coming back. I mean, it's very strong. The RMDS segment is not experiencing any delays in decision making that we can see, frankly. Again, we had another record quarter of bookings. Nothing's changed there. And our RFP flow, again, is at a record level. You know, I could spend time giving you stats on the on our leading indicator metrics on the R&DS side, you know, a qualified pipeline and the pipeline overall and so on are at a record high, and we continue our sales activities as before. Again, nothing, no sign of delaying decision making on the R&DS side. I want to be very clear on that. On the TAS segment and CSMS, and again, it's, largely affecting the consulting and analytics segment, and I would say almost exclusively, the issue is, you know, I can't quantify them in months. I mean, there's stuff that's in our pipe that we've had since the end of last year, and here we are, August 1, and the clients on that specific opportunity still haven't decided to, you know, everything is negotiated, and they know they have to do a study, but, you know, they could do the study next year. So whatever, you know, clients on that side of the business, clients are basically saying to themselves, well, do I need to do this now or can I keep the can another few months? But this stuff has been in our pipeline six months and we haven't taken it out because the client still is telling us that they want to do it. They just haven't signed yet. So, yeah, I mean, it's a bit in the timeframe that you're talking about, you know, it would have taken a month or two and it's taking six months or more.

Okay. And I guess I, sorry for, for implying that you guys were seeing the RDS weakness or delays there on decision-making. It's just going more of an overall pharma comment. And on that decision-making on the task, is that more due to them like your customers focusing more on where they're going to place their bets and deploy that capital for the clinical trials and then kind of the TAS stuff is like a secondary knock-on or secondary benefit that you guys offer?

You know, it's really all over. Every client has, you know, it's hard to, it weighs on everyone, you know. Is there going to be a recession? Is there going to be a recession? Maybe we should delay the launch in Portugal. Maybe we should, you know, not look at our sales force now. We should do this next year. Maybe that project that we were planning to do to evaluate whether we should adjust pricing, you know, in consideration of maybe IRA implications and so on, on this drug, in that market, in that therapy. you know, we push it back. So it's not like I can give you a blanket answer. It's just, you know, it's just the environment, the atmospherics are such that, look, I'm sure someone is going to ask me a question, and I'm assuming it's going to be Shlomo, but, you know, our cash flow wasn't too special this past quarter, and it's the same thing. You know, why are large pharma companies that are sitting on massive piles of cash not paying their bills on time? Collections are not where they should be, and it's just, you know, it's a high-interest environment, so people tend to just find all kinds of reasons why there was a comma missing in an invoice, and therefore we can't pay you, and Send me back the invoice in two weeks. It's just the environment. I don't have another answer.

Gotcha. That's helpful. Thank you. Thank you, Luke. And we'll go next now to Shlomo Rosenbaum at Stifle.

Here we go. Hey, Ari, I still get a question even though you asked that one, right? Yeah. All right. Thank you. Actually, I want to touch on one, just a metric, and then maybe follow up with another one, just a little more broad. Just tell us what the growth rate on real-world evidence was in the quarter. And then, Ari, maybe just if you could talk a little bit about, in terms of AI, you gave us a little bit of a teaser, but can you talk a little bit about just where you might have unique advantages Either because of the investments you've made in AI over the last bunch of years or, you know, just because of the uniqueness of the information that you've aggregated. Is there anything that's out there in market that's really unique right now? Or is this really stuff that's going to be on the come? Thank you.

Thank you. So quickly on the real world evidence, you know, it's been double digits for a while and it's still strong double digits. So nothing changed there. With respect to AI, we're obviously very excited by the opportunity. This is not new for us, right? I mean, we've been working on this for a long time. We've invested since 2015, 16, and we own a number of market leading and, you know, proprietary AI software engines. We've dedicated AI ML resources, you know, for a long time. um and we are extremely well positioned you know we we apply ai in drug development discovery clinical development safety market access medical affairs and of course in commercialization to inform you know promotional and sales and targeting activities We are using AI in NLP processes, in translations of medical documentations and protocols. That's for the offering part of the business, if you will. On the internal side, we've applied AI to many of our own internal processes. For example, lead to cash, um we really across a set of processes to to create efficiencies operationally so it is a great opportunity for us um and and has been for the past few years now uh you know how do you use ai to gain competitive advantages you know it helps optimize site identification based on the patient populations that we derive from our that we mine in our databases It helps optimize patient recruitment techniques based on data and analytical footprint. It helps optimize development, drug development protocols. We can, you know, it helps support, you know, it helps build predictive enrollment models based on all the protocol criteria thresholds. You're familiar with the next best application in our OCE suite, which leverages the know-how and the historical data to create predictive models of engagement with customers. We've also been developing a novel biomarker database with ICSIA's own natural language processing tools. um you know we've used it in alzheimer's studies to to to have an early identification requirement of patients with most likely to develop alzheimer's um a lot of um of activities frankly um to expand patient pathways so you know if you look into i'm sure it's somewhere in our in our websites or literature We have over 150 patent pending methodologies and algorithms, more than 30 predictive data disease models, more than 300 lifetime specific analytical libraries. I mean, I could go on and on. We've got a lot of stuff here of proprietary material in AI. Now, this whole, you know, buzz around generative AI, as people are finding out, it's not so easy to apply and actually derive precise and relevant insights. And I'm looking forward to presenting why even using, and by the way, we are working with, everyone was announced significant generative AI you know, applications and models because, you know, it's really, as always, it's, you know, if you don't have access to the business rules and to the relevant content, you're going to come up with what they call hallucinations. And we've tried it, and we are working with partners, with technology partners, and it's very clear that, you know, we have the source internally here that would enable those, you know, large language model tools to be a lot more effective and accurate and precise than what they are today. in the world of life sciences, where they basically only have access to what's available on the internet or on public sources. That's all I can say now, but again, it's a very exciting development. Obviously, we are very busy leveraging internally, and there was a question earlier on margins and margin expansion, and it's one of the several initiatives that is helping us generate margin expansion.

Thank you. Thank you. We'll go next now to Jilinder Singh at Truist.

Yeah, thank you, and thanks for taking my questions. I just want to ask about data and information offerings business for you guys. One of your competitors recently talked about coming up with competitive solutions in that space for pharma companies. I understand this is a more stable and high margin, very sticky business for you guys, but just remind us about your positioning there and what makes the barriers to entry high in that business.

You are asking about the data business?

Yeah. Yeah.

Okay. And the comments that we've made in terms of entering into the data. Okay.

Okay. Yeah. I mean, Luke, I don't know what to say here. It's just not the same planet, the only way I can put it. You know, the scale, the global presence in over 100 countries, the level of granularity, the infrastructure, the IT infrastructure to process, cleanse, cure, connect all that data on a global basis. the business rules. I mean, look, in healthcare, data is chaos. It's, you know, you can have as much data as you want. If you don't understand it and connect it and cleanse it and know what you're dealing with, it's not really relevant. We have data on about a billion four, a billion two patients. And, you know, that I don't think there's anyone that has anything resembling what we have. I mean, I just don't know.

We've been at it since the early 1950s, Jalendra. That should tell you something. I mean, there's nothing that would stop somebody technically from recreating what we have in data if they have 70 years and all the expertise we have.

Got it. Thanks a lot. Thank you.

Okay. Well, thanks, everyone, for joining us today. We look forward to speaking to all of you again on our third quarter earnings call. The team and I will be available the rest of the day to take any other follow-up questions you may have. Thanks for joining.

Thank you. Again, ladies and gentlemen, I will conclude the IQVIA second quarter 2023 earnings conference call. Thank you all so much for joining us, and I wish you all a great day. Goodbye.