IQVIA Holdings, Inc.

to ask a question during this time, simply press star followed by the number one on your telephone keypad. If you would like to withdraw your question, press the pound key. As a reminder, this call is being recorded. Thank you. I would now like to turn the call over to Kerry Joseph, Senior Vice President, Investor Relations and Treasury. Mr. Joseph, please begin your conference.

Thank you, operator. Good morning, everyone. Thank you for joining our second quarter's Today, we will be representing a presentation that will be visible during this call for those of you on our webcast. This presentation will also be available following us on 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 companies' 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 I would now like to turn the call over to our chairman and CEO, Ari Busey. Thank you, Gary, and good morning, everyone.

Thank you for joining us today to discuss our second quarter results. As you have delivered another strong quarter, revenue exceeded the high end of our guidance range as we reported over $4 billion in quarterly revenue for the first time in our history. Adjusted EBITDA and adjusted EBITDA came in towards the high end of our guidance range. As expected, TAS continued to perform well in the second quarter, supported by clients' commercial roadmap strategies and new drug launches. TAS reported revenue growth above our expectations at 8.9%, led by double-digit growth in real-world evidence. On the clinical side, our net bookings in the quarter were approximately $2.5 billion, translating to a net book-to-bill of 1.12. Our booking performance improved in the quarter, even as the overall market environment remains essentially unsettled and there is still uncertainty persisting regarding future administration policies affecting the biopharmaceutical industry. Of course, this continues to cause some delays in decision making on new programs, but the R&DS team has reacted to this new environment by intensifying our see more, win more, go to market strategy aimed at expanding market gains. This strategy is helping the business navigate this period, and in fact, the R&DS team is seeing good traction from these efforts. Our qualified pipeline was up high single digits sequentially and year over year, driven mostly by the EBP segment. Importantly, we saw a meaningful uptick in RRSP flow. Second quarter RRSP flow grew low teams year-over-year and high single-digit sequences with growth in all customer segments. Our win rate improved significantly, most notably in the EBP segment. As a result, our backlog reached a new record of over $32 billion at the end of the quarter, growing over 5% compared to the prior year. Let's look at the results of the poll. We delivered strong revenue and profit results. Total revenue for the second quarter came in above the high end of our guidance range, representing year-over-year growth of 5.3% on a reported basis and 6.3% if you exclude the COVID-related work from both periods. At constant currency, revenue grew 3.6% and 4.6% excluding COVID. Second quarter adjusted EBITDA increased 2.6%. Second quarter adjusted derogatory BPS of $2.81 increased 6.4% year over year. Now, let's review a few highlights of business activities. As you know, AI is a big deal for us. We are all in in this transformation. And as we've discussed before, a lot of work here is done with NVIDIA support. IQVIA is developing AI agents that simplify operations across life sciences. In fact, NVIDIA showcased these agents in June at their flagship conference in Europe, where our platform was highlighted as a leading example of smart AI agentification. This collaboration develops custom-built AI agents using NVIDIA technology designed to streamline processes enhance workflows, and accelerate insights across the life sciences ecosystem. Use cases for these agentic offerings include target identification, clinical data review, literature review, market assessment, and HCP engagement. This format has not gone unnoticed. Reflecting the strength of our AI strategy and execution, Everest Group recently named IQVIA a front-runner generative AI leader for the life sciences industry in its recent report, AI Ideas to Action, Operationalizing Generative AI in Life Sciences. IHUDIA was the only CRO to receive the highest ranking of front runner in this report, which measures the value impact of end-to-end generative AI capabilities for 15 carefully selected broad-based AI companies CROs, and life sciences specialists and niche firms. Let me now give you some color on TAP's business activity. A top 10 pharma client selected IQVL to advance their market access strategy for a breakthrough type 1 diabetes therapy entering Europe. By leveraging AI-driven insights and pricing expertise, IQVL will help shape this value proposition, pricing, and contracting approach to support successful adoption. A European biotech client selected IQVIA to support the global launch of a novel oncology therapy. IQVIA is delivering a GenAI-powered assistant and HCP for Sona Insights. This solution will enable simulation of HCP behavior and precise targeting, showcasing IQVIA's unique blend of data, AI-enabled technology, as well as our expertise in product launch and the specific oncology therapeutic areas. A top 10 pharma client awarded IQDIA a strategic engagement to support the launch of a novel oncology therapy in the U.S., delivering insights and technology infrastructure to ensure commercial success. A top 10 pharma client selected IQDIA to lead a global real-world safety and effectiveness study for a new dermatology treatment, spanning eight countries and 3,000 patients, which will support product adoption and long-term evidence generation. The European Biotech Company awarded IQVIA a global observational study to assess the real-world safety and effectiveness of a rare disease therapy in kidney disorders. The win highlights IQVIA's rare disease expertise, strong client partnership, and use of AI-enabled tools to optimize study design and delivery. Moving now to RMDF. We continue to win a significant portion of oncology-related trials. Our leadership in oncology research is exemplified by our recently announced strategic collaboration with Sarah Cannon Research Institute, one of the nation's leading oncology research hospital network. This strategic collaboration aims to transform oncology trials globally. By uniting a QVS global scale and connected intelligence with SCRI deep community oncology expertise, we are aiming to accelerate trial activation, boost recruitment, and streamline data capture of electronic health records, ultimately removing operational barriers and speeding the delivery of breakthrough therapies to part two patients. A few examples of significant wins the RNDS team had in the oncology space. A biotech client selected IQVIA to lead the complex global phase 3 colorectal cancer program. IQVIA was selected due to our oncology therapeutic expertise, proven track records, knowledge of the regulatory landscape, and our analytics capabilities. A rapidly scaling biotech selected IQVIA to lead two phase three global pancreatic oncology trials, continuing a high-performing partnership with this client. A large pharma client selected IQVIA to lead a global phase 3 MTS oncology trial, continuing our successful collaboration with this client on this asset. Obesity is another therapeutic area where our performance has been particularly strong. The biotech clients selected IQVIA to lead two global phase three obesity trials, leveraging our vast footprint and deep expertise in chronic weight management. The top 10 pharma clients selected IQVIA laboratories to support expansion of their next generation GMP1 development program, building on an existing partnership to investigate the drug's efficacy in treating obesity and type 2 diabetes. I also want to highlight our growing strength. in cell and gene therapy trials. Akilia was selected to manage a significant gene editing program for Wilson disease spanning both observational and interventional studies. The project deploys AI-enabled solutions that drive speed and precision in rare disease research. Finally, we were honored to be recently recognized for our innovation in facilitating decentralized trials. IQVIA was named winner of the Best Mobile App for Patient Engagement at the 2025 MedTech Breakthrough Awards. IQVIA's app empowers patients and caregivers to participate in decentralized trials from anywhere while ensuring strong privacy and security. The app has multilingual support and is available across many geographic regions, increasing patient access, engagements, and retention, and outrun world sales on our financial performance.

Thanks, Ari, and good morning, everyone. Let's start by reviewing revenue. Second quarter revenue of $4,017,000,000 was up 5.3% on a reported basis and 3.6% of constant currency. Now, excluding COVID-related work from this year and last, revenue grew 6.3% of the national currency and 4.6% of constant currency. Technology and analytic solutions revenue for the second quarter was $1,628,000,000. That's up 8.9% on a reported basis and 6.8% of constant currency. R&D Solutions' second quarter revenue was $2,201,000,000, up 2.5% reported and 1.3% of constant currency. Excluding the step-down in COVID-related revenues, R&DF's revenue growth was 4.2% of actual currency and 3% of constant currency. Lastly, Contract Sales and Medical Solutions' second quarter revenue was $188 million, and that was up 9.3% reported, 6.4% of constant currency. For the first half, total company revenue was $7,846,000,000, up 3.9% reported, and 3.5% of constant currency. And excluding COVID-related work, revenue grew 4.8% of actual currency, and approximately 4.5% of constant currency. Technology and analytics solutions revenue for the first half was $3,174,000,000 of 7.7% reported and 7.2% in constant currency. R&D solutions first half revenue of $4,303,000,000 was up 1.4% reported and 1.2% in constant currency. And excluding COVID-related work from both periods, revenue went on to be up through 3.1% in actual currency and approximately 3% in constant currency for the half. Lastly, our CSMS in the first half had revenue of $369 million, up 2.2% reported, and 1.9% of constant currency. Okay, moving down to P&L, adjusted EBITDA was $910 million for the second quarter, while first half adjusted EBITDA was $1,793,000,000. Second quarter GAAP net income was $266 million, and GAAP diluted earnings per share was $1.54. For the first half, GAAP net income was $515 million, or $2.94 of earnings per diluted share. Adjusted net income was $486 million for the second quarter, and adjusted diluted earnings per share was $2.81, up 6.4%. For the first half, adjusted net income was $965 million, or $5.50 per diluted share, that being up 6.2% year over year. RMDS backlog at June 30th was $32.1 billion, an increase of 5.1% year-over-year. Next 12-month revenue from backlog was $8.1 billion, going 4.8% year-over-year. Let's review balance sheet metrics now. As of June 30th, cash and cash equivalents totaled $2 billion. $39 million in gross debt was $15,490,000,000, and that resulted in net debt of $13,451,000,000. Our net leverage ratio ended the quarter at 3.61 times friendly 12-month adjusted EBITDA. Second quarter cash flow from operations was $443 million, and capital expenditures were $151 million. Now you saw in the quarter that we repurchased $607 million of our shares, which brought our first half share repurchase activity to above $1 billion. This leaves us with approximately $2 billion of repurchase authorization remaining under our current program. Also in the quarter, we issued $2 billion in senior notes maturing in 2032. Now let's turn to the guidance. We're narrowing our guidance ranges for revenue, adjusted EBITDA, and adjusted diluted earnings per share as follows. We expect revenue to be between $16,100,000,000 and $16,300,000,000, representing year-over-year growth of 4.5% to 5.8%. We're just over 5% at the midpoint. This guidance includes year-over-year FX tailwind of approximately 100 basis points, We continue to assume about $100 million step down in COVID-related work and approximately 150 basis points of contribution from M&A activity for the full year. We expect adjusted EBITDA to be between $3,750,000,000 and $3,825,000,000. We expect adjusted EBITDA to be between $11.75 and $12.05 That's up 5.6 to 8.3% versus prior year, or about 7% at the midpoint. Okay, for the third quarter, we expect revenue to be between $4,025,000,000 and $4,100,000,000. Adjusted EBITDA is expected to be between $935,000,000 and $955,000,000. And adjusted deleted EPS is expected to be between $2.92, and $3.02. Both this quarterly guidance and our full year guidance assume that foreign currency rates as of yesterday, July 21, continue for the balance of the year. To summarize, in Q2, we delivered strong revenue and profits, results towards or above the high end of our expectation. The TAS business unit, in particular, reported revenue above target. In R&DS, despite the effects of continued uncertainty on the industry, the team here has responded well, improving win rates and expanding shares, which together contributed to stronger bookings and a record backlog in the quarter. Forward-looking metrics for R&DS offerings remain positive, including a significant uptick that we saw in RFP flow. We saw strong demand in the quarter for our senior notes issuance, And finally, we ramped up our share repurchase activity in the quarter, which brought our first half repurchases to above $1 billion. And with that, let me hand it back to the operator, Tina, for Q&A.

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. We request that you please limit yourself to just one question so that others in the queue may participate as well. We'll pause for just a moment to compile the Q&A roster. Your first question comes from the line of Luke Sergott with Barclays. Please go ahead.

This is Sam Montefiore. Thanks for taking our questions here. Just the first one on TAGS. That's continued to kind of defy the overall environment of, you know, MFN fears, tariff fears. And that seems to be hitting RMDS a little bit, along with your peers on the clinical research side. Being that at least a portion of it is short cycle, how does TAS continue to earn through this environment? Is the real-world evidence strength and other areas of strength within TAS offsetting any weakness in any of the other subsegments? And how does the current environment differ from a year or two ago where TAS was seeing headwinds and the R&DS side of the business was kind of humming along? So change that to diversification story is shining through here.

Yeah, good morning, Luke, and thanks for your question. I'm not sure. I guess you're asking more of a general overall environment and what happened in each of the segments. Again, I can also say that in TAS, We delivered better than expected revenue growth in the quarter, above the high end of our expectation range, just under 9%, 7% of constant currency. We've been on a strong recovery in TAS since really the third quarter of last year. We expected that. It's a little bit better than expected. Again, We've said this many times, our clients continue launching new drugs despite the uncertainty or short-term uncertainty over the environment. The molecules that were approved need to be launched, and you can only delay so much. And so at some point in time, we knew this was going to happen and it is happening. Clients are continuing to execute. the regular way. They have commercial roadmaps, and those require services. We really saw an improvement in the general environment. You know, when things slowed down and there was sort of a lot of things put on hold and TAS growth deteriorated to low single digits, end of 23 and the first part of 24, we saw decision timelines extend considerably. And they've now gone back to normal, actually even better than that. And, you know, it's sort of business as usual. In terms of the segments, yeah, real world was the strongest, double digit. Remember, real world is about a third. of the task business. And the rest of the business, you know, data, consulting and tech, you know, depending on the segment, was, you know, between low and mid single digits, I see here for the segments. But you're correct, the driver, main driver of superior growth was the real world business, and the rest was, again, flat to mid single. We feel good, by the way, but leading indicators and continued strength in 2025. The opportunities created in the quarter grew, I think very strongly, both in volume and dollars. The heat rate, the wind rates in TAS improved a couple of points year over year. As I mentioned before, the average time to close improved further. I think it's 15% or so shorter than prior year. So we continue to be confident in the fundamentals of the business and the recovery. And then, you know, you asked about RDS. You said humming along. I wouldn't call what the team did for humming along. I think there was a very high level of activity and intensification. book on a net base is $2.5 billion in the current army versus the $2.1 billion we booked in the first world. And we generated a lot of opportunities and forward demand indicators as we share in our introductory remarks are very strong. Thank you. Absolutely.

Our next question is from the line of Shlomo Rosenbaum.

with people please go ahead hi thank you very much um ari i want to focus a little bit more on that rds and what you're talking about it sounds like what you're saying is the environment did not really improve uh but you're gaining more ground in that and if you could double click a little bit is it really the client confidence is is really the same or is there anything that's improving i'm just asking also because not just uh you know med pace also reported with some better numbers And usually if you have a few, uh, you know, competitors there that are moving the same direction, it seems to indicate some kind of improvement because not everybody's always doing better at the time. Uh, you know, they gotta be taken share from somebody. Maybe you could just double click a little bit in terms of the change sequentially of what you saw on the ground.

Yeah. Um, it just put things aside here. You know, the competitor you mentioned that you called the competitor, but I just want to say we never meet in any of these defenses. So we're not planning, it's such a different business as the numbers show. But moving to your question on RDS. We, you know, the environment I said remains unsettled in terms of the administration policies and the level of uncertainty that that's out there. But whereas In prior periods, we saw clients sort of on hold. We noted that clients essentially, not necessarily returning to business as usual, but are getting on with their programs. If you have in front of you a phase three program that's very important for the company and that is going to last four years, It's important you be in market ASAP if you have good data and good results and good promise for the program. And you can't really afford to wait another six months. So at some point in time, you've got to get on with life. So to that degree, I would say the environment possibly has improved slightly. And we see some of those green shoots in the demand metrics. it has remained the same with respect to the administration policies and the uncertainty around exactly what may or may not happen. And that time window is relatively short, limited, and narrowing. And therefore, I guess the client base is moving on to a degree. And in that sense, the environment is improving. And then separately, to use your expression, which I think is a good one, we leaned on or leaned in to the market a little bit more forcefully than usual. We call this see more, win more. That is, we're expanding our net. We are responding to more RFPs, generating more flow of opportunities. And we are going in to win. And our win rate has increased. And I think all of that is essentially what's led to the good results. We've had this quarter better than what we would have expected. And by the way, this is across segments, large, mid, and EBP. But I would note that the EBP segment was particularly strong.

Thank you.

Your next question comes from the line of Elizabeth Anderson with Evercore ISI. Please go ahead.

Hi, guys. Thanks so much for the question. I was wondering two things. One, if you could comment on sort of the cadence in the back half of the year. Obviously, you gave the revenue assumptions for the third quarter. Is anything to think about in terms of timing aspects? I know you guys have previously started talking about the restarting of a trial that had previously gotten delayed, just so we can think about the cadence of that into 26. And then secondly, anything to call out on the gross margin side? You know, it looks like maybe it would have some just mixed impact from TAS, but just anything to think about there in terms of the cadence for the back half of the year? Thank you so much.

Yeah. so on the cadence i mean first of all generally uh and that's there is a certain level of seasonality to our business which you're familiar with um first quarter being the sort of weakest a lot of our business in europe essentially stops from 15th of july to 15th of september um but and the fourth quarter is much stronger that's true in rnds and it's true uh in gas so that's the first general And that's always true year in, year out. With respect to R&DF and the specifics of your question regarding that large delay trial that we said before was going to resume in the latter part of 25, and that's still on. And in fact, we're having, you know, initiation discussions with the client, and that is still on as forecasted and that obviously will be responsible for some of the larger than usual uptick in the fourth quarter of this year. That's for the RDS. You have other questions of tiles. Again, you know, tougher to compare second half versus last year. Last year, you remember, we generated even I think 9% Over 9% in the fourth quarter. So obviously, you know, the comparison there is a bit more difficult when we get to the back half of the year in TAS. But again, you know, we're trying to be still early in the year and we don't want to, you know, move the needle too much at this point. And let's see what happens. Everything looks good. for now on TAS and RDS as you suggest the cadence is looks for a gradual improvement of the growth rate and especially in the fourth quarter because of that resumption of that last trial as well as of course compares versus last year and generally stronger business activity than we would have expected otherwise. You then ask about growth margin.

Yeah, look, you did see some compression in our gross margin in the quarter, and about a third of that is due to the FX tailwind. As you know, FX tends to move our revenue line without moving our EBITDA line very much, and about two-thirds of it was due to product mix. We had the higher revenue growth in real world and TAS, which tends to be a lower margin portion of that business. And RDS, we had increased pass-through revenues and also an increased proportion of FSP revenues. So those were the drivers of what you saw. Now, of course, on the SG&A side, we had strong cost control and offset quite a bit of that gross margin. Right.

That's exactly right. It's a mix. Basically, the short answer is the pressure on gross margin is mixed-driven for two-thirds and FX-driven for one-third. And then, of course, below the line, at the SG&A level, we offset by our strong cost reductions and so on. We offset about of that margin compression.

Thank you.

Your next question comes from the line of Michael Churney with Learing Partners. Please go ahead.

Great. Thank you. This is Dan Clark on for Mike. Just had a question as you've been getting involved in more opportunities. One, are you seeing more CROs on average in an RFP, and are there any changes in pricing worth calling out? Thank you.

When you say more CROs, you mean more people invited to the table, to the party? Yes, exactly. Yes. Well, I mean, look, once again, it depends on the clients and on the segments. With respect to the large segments, over the course of last year, virtually every large pharma company essentially re-invited the top five or six CROs, that is the three largest ones and the three smaller ones, and re-bid their preferred partnerships. And as we mentioned, we were I'm very happy that we won and expanded all of those relationships further. I would say the three largest ones essentially are the main providers and the small ones are invited essentially to keep pricing in line from the point of view of the large pharma customers. With respect to the other segments, its relationships, its go-to-market, and generally the EDP segments, you may have two or three bids, and we don't see much of a difference versus what was the case before. Now, some of the competitors are forcing a little bit of price reductions, and I would say that, look, our strategy to see more and win more means that we are at the table every time and we whereas in the past the competitor may have reduced pricing and we might have walked away um because we would not have wanted to align at that price level uh you know now we we you know more often than not we will not walk away and um and grab business we will always prefer to have an additional point of top-line growth and then work later on our costs and margins and accept some short, medium-term margin pressure in order to ensure that we continue to build our backlog. So, yes, your question about pricing, is there pricing pressure? Yes, because of all the reasons I mentioned. Plus, the market environment, as I said, continues to be tighter, and therefore you have more people at the table for a relatively smaller pie, and that inevitably leads to pricing pressures. But in that environment, we are the largest player. We have the global scale player, and we intend to win.

Your next question comes from the line of Jeff Garra with Stevens Incorporated. Please go ahead.

Yeah, good morning and thanks for taking the question. I was hoping we could dig in a little further on AI. Any updates you have on development progress of additional AI solutions and expanding use cases? And I know it's early, but curious what you're seeing in terms of demand from customers and And then lastly, any further comments about how you guys are using AI internally to drive efficiencies in the business? Thanks. Thank you.

Well, yeah, look, AI, especially agentification of our processes, is extremely important. We keep hiring resources, building up teams, and scaling up our efforts. We are progressing as planned to deploy highly specialized industry-focused AI agents, both on the clinical side and on the commercial side. So far, we've developed over 20 agents into production that cover three use cases in each of commercial, real-world, and R&DS. We're seeing positive results. We're experiencing significant client interest. Some are already being used. For example, we have one multi-agentic system for literature review with expanded capacity. It has expanded the capacity to review by 10x. Another agent allows us to reduce delivery time by two-thirds, from 12 weeks to four weeks. with some significant cost reductions in our patient journeys for our clients. We are currently developing over 50 agents to be deployed in the third quarter to production and covering 15 use cases. What this means for, look, there's an enormous amount of interest from clients. Obviously every large organization wants to be on this AI train And initially, especially large pharma wants to develop their own solutions. Over time, it's becoming apparent that speed here is extremely important because it all depends on your ability to train your AI models. And we've got the goods, so to speak. We've got the materials, the data, the expertise. which is why we're collaborating with NVIDIA on training these AI agents and trying to move as fast as we can. It's hard to see the impact in the short term, but it will make a difference in terms of our ability to execute a much larger backlog faster on the RNDS and our ability to execute commercial strategies for our clients on the commercial side a lot faster, real world studies a lot faster. So speed, efficiency, over the long term, obviously we expect internally that those efficiencies will enable us to resume margin expansion and go back to and continue to mitigate those pricing pressures we are seeing in the short term.

Your next question comes from the line of Michael Riskin with BOFA. Please go ahead.

Michael Riskin Great. Thanks for taking the question, guys. Ari, I want to come back to the win rates you called out in EBP. You touched on that a couple of times. I'm just wondering if you could expand on sort of what steps you've taken internally with the organization to achieve those higher win rates. and whether you think that's sustainable going forward. Is that a sustainable change, or is that something more effective of the dynamic and the near-term market environment?

Thanks. Well, look, the success in the marketplace is a function, A, of generating as many opportunities as possible, where we have the opportunity to be. And as I said, that's part of the first part of our strategy, which is see more. So we're much more aggressive in going to market, in responding to RFPs, in generating the RFPs. The RFP flow grew low teams year over year and high single digit sequentially. And again, the growth was across all customer segments. I might say EBP was up Very, very strong. Very strong. You know, CRP flow was up low teams year over year. Large pharma was low to mid single digits. And EPP was much higher than that. Now, it's great to generate the flow. Now you have to win. And there, our directive is to win more and to win as much as we can. Now, back to the real question that sometimes requires us to align to a lower price than we would have been willing to tolerate in the past. But we've sort of adjusted and finding that strategy and now are actually winning a lot more than we were before. Now, you're asking, is this sustainable? The answer is, I don't see why not. The flow of opportunity is there. If we look at the qualified pipeline, which is an earlier indicator, an earlier leading indicator versus RFP flow, the qualified pipeline is up year over year and sequentially high single digits. And again, in EBP, it's there in the double digits. growth year over year. So we see that the demand we are able to participate in is increasing. Our win rate depends on our strategy, on our capabilities. We believe strongly that we are uniquely positioned and we will continue to push to win. So the win rate is up significantly. I don't think we disclosed those numbers. I have them in front of me and they are very, very good. All right. Thanks, Amy.

Your next question comes from the line of Dan Leonard with UBS. Please go ahead.

Thank you. I was hoping to talk a bit more about the margin. The two-thirds of gross margin compression you attributed to mix How do we think about that going forward, especially in the context of that flat to 30 basis point margin expansion framework that you've previously discussed?

Yeah, I mean, look, this is the mix is what it is. Real world is growing faster and that's lower margins. We have more FSP to execute in the short term. And that's also lower margins on the RDS side. So I think in the short term, I would say that is going to continue. And by short term, I mean the next couple of quarters. Having said that, I might mention that this pendulum move towards FSP, I've said this before and I will repeat it, I do not believe is. In fact, and it's fluctuates by the way, but in fact in this quarter. The proportion of net bookings that FSP is in the very, very low single digits. And I mean very, very low. Everything else was FSP so for service. I'm sorry, everything else was full service, right, FSO. So I think overall we saw FSP as a proportional backlog tick up one or two points from the historic 14, 15% to more 16, 16%, 17%. But we see it coming down back to the same level. So I think RDS, yeah, in the short term, some mixed, unfavorable mix, but I think, you know, after that, we should be back to a more favorable mix.

But all that's reflected for the next couple of quarters in the guidance. Yes, that's right. And you just also have to remember about the FX dynamic. We have that tailwind, and that's compressing margins as well. Right.

Thank you. Thank you.

Your next question comes from the line of Jalinda Singh with Truist Securities. Please go ahead.

Thank you and thanks for taking my questions. So I want to go back to TAS business. Thanks for the color by business lines. I actually want to double click on business and consulting piece. It seems trends there still remain below historical trends. What are your expectations there in terms of business returning to high single double digit growth? What are some of the key leading indicators you're watching for that business to start bouncing back?

Yeah, look, the pipeline is there. We track pipeline versus prior years and pipeline coverage. And I think we are confident that certainly in the future we'll return to, you know, high single digits as it was in the past. The mix of projects is different. We spoke about AI before, and that's part of the equation as well. So as we are transitioning the different offerings, we think that that's part of that transition. But yeah, we are expecting that to happen just basically based on our pipeline reviews.

Thank you. you're not expect you're not expecting to return this year right it's more like most likely next year or beyond i just want to clarify that yeah probably end of the year next year yes okay thank you the next question comes from the line of ann heinz with mizuho please go ahead good morning thank you

You referenced some of your clients have some short-term uncertainty. What do you think they need the most clarity on to accelerate projects? Is it MFN pricing? Is it clarity on maybe tariffs? And I know it's still early for 2026, but when I look at consensus estimates for R&D, revenue is up 4%. Do you think the current bookings environment supports that type of growth, or do we need an acceleration to support that?

And you saw the next 12-month revenue in backlogs that we've reported out of REGF. So you can, now that doesn't cover you all the way to 2026, but the numbers give you some indication there. And our pipeline and RFP flow has been strong. So we're not going to be giving 2026 guidance at this point, but you can kind of piece it together from all of that.

Yeah. And you are the question on the clients concerns and the policies. Well, yeah, I mean, it's all of the above. You know, it's the all the changes in the agencies and policies and so on. This seems to be. Stabilizing and some very good appointments and and and we feel good about that. You know, try the MSN pricing. We just wait, you know, discussions and thoughts,

Yeah.

And then tariffs. You saw a lot of, you know, non-U.S. large pharma companies announce massive investments. And I think this will help.

Great. Thank you.

Your next question comes from the line of Jack Meehan with Nephron Research. Please go ahead.

Thank you. Good morning, everyone. Was wondering if you could just share latest thoughts on what you're seeing related to cancellation trends. Have you seen that continue to moderate at all? And just thoughts on, you know, kind of a path to normalization there. Thanks.

Yeah. I mean, look, we mentioned the first quarter that cancellations were in the normal historical range. And I'd say the second quarter, same thing. trend and overall first half really nothing unusual, no mega cancellation, and the average basically is the same as it was historically before we had the disruptions that we had last year.

Thank you.

Our next question comes from the line of Max Smock with William Blair. Please go ahead. Max, your line is open.

Hi, sorry about that. It's Christine Raines on for Max Smock. So hoping you can give some quantification about the delays you are seeing on new clinical projects I know that you gave the 10% figure last quarter, so curious if delays for new programs got better or worse in the second quarter. Thank you.

You're talking about which delays?

You're talking about RFP to decision-making timeline?

Yeah, correct.

Yeah, I mean, that remains. Longer. Yeah.

You know, again, the environment is more or less similar in terms of client of the uncertainty and positive decision making. I mentioned that, you know, in many cases, some of these programs are being launched because clients just can't wait. So, you know, some of what has been delayed decisions were made to launch. But If you look at the totality of the decision timelines, they remain more elongated than usual. So really, I think our better performance in bookings and sales and generating opportunities is only partially related to a slight improvement in the environment. Because if you look at, for example, EVP funding, it wasn't particularly special since the beginning of the year has been relatively tame. It's just that we've been a lot more proactive and we've been extremely, extremely successful in the marketplace in terms of our win rates versus history and in generating both the the opportunities and in winning those opportunities. So I wouldn't necessarily derive an implication and assume that all of a sudden the market has returned to normal.

Thank you.

There are no further questions at this time. Mr. Joseph, I turn the call back over to you.

Thanks, operator. Thank you, everyone, for taking the time to join us today, and we look forward to speaking with you again on our third quarter of 2025. The team will be available for the rest of the day to take any follow-up questions you might have. Have a good day.

This concludes today's conference call. You may now disconnect.