IQVIA Holdings, Inc.

2025 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. 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 third quarter of 2025 earnings call. With me today are Ari Busby, Chairman and Chief Executive Officer, Ron Bruin, Executive Vice President and Chief Financial Officer, Eric Sherbert, Executive Vice President and General Counsel, Mike Fedot, Senior Vice President of Management Planning and Analysis, and Gustavo Peroni, 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 presentation 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 risk 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, Ari Guthik.

Thank you, Kerry, and good morning, everyone. Thank you for joining us today to discuss our third quarter results. we delivered another strong quarter rather than when profits were towards the high end of our guidance, reflecting solid operational performance. Free cash flow was particularly impressive this quarter. It was actually the highest quarterly free cash flow ever, even when you consider the large advances we got during the COVID era for vaccine trials. This strong free cash flow, of course, reflects a good and disciplined working capital management by the team, but also an improved overall industry backdrop. On the clinical side, net bookings in the quarter totaled exactly $2.6 billion, which resulted in a net book-to-bill ratio of 115, also reflecting the improving trends in customer demand that we started seeing in the second quarter, as well as, of course, solid execution from our sales teams. In fact, our third quarter net bookings were 5% higher sequentially, 13% higher than a year ago, and 21% higher than the trough that we experienced in Q1 this year. Key demand metrics were also strong in the quarter. The EBP funding momentum is building this year, with each quarter delivering steady sequential growth, reaching $18 billion in Q3, according to BioWorld. Our qualified pipeline was up 6% year over year, driven by large pharma and EBP segments. You will recall that in the second quarter, we had high single-digit sequential RFP flow growth and low-teens growth year-over-year. This quarter, we saw again high single-digit RFP flow growth sequentially and 20% growth year-over-year with growth across all segments. Importantly, client decision-making timelines have been improving sequentially. Finally, our backlog reached a new record of $32.4 billion at the end of the quarter, showing growth of 4.1% compared to the prior year. On the commercial side, Tiles continued to perform well in the third quarter and delivered strong results despite tougher year-over-year comparisons. In fact, If you look historically at sequential revenue growth, Q3 is generally flat to down versus Q2, and we were slightly up this quarter. This was driven by ongoing momentum from drug launches and the strength of our broader commercial portfolio. I do want to mention the good growth we had this quarter in CSMS. about a third of which was from an acquisition. We decided to increase our capabilities in this segment as we are seeing a developing trend of large pharma clients increasingly looking to outsource commercial operations for established brands in specific markets. These tend to be large multi-year engagements typically spanning across therapies and geographies. And Acuvia is uniquely positioned to capitalize on this trend by combining our information and analytics and domain knowledge with a local sales force footprint. Let me turn to the results of the quarter. Again, strong revenue and profit results. Revenue for the third quarter came in at the high end of our guidance range, representing year-over-year growth of 5.2% on a reported basis and just under 4% at constant currency. Third quarter adjusted EBITDA was up 1.1%. Third quarter adjusted diluted EPS of $3 increased 5.6% year-over-year. Let me just Now, as I usually do, share a few highlights of business activity. Let me start with TAS. New drug launches continue to be a key area of strength for IQVIA. A few examples. A biotech client awarded us a multi-year integrated partnership to support faster product launches. This will include a full suite of information assets and analytics capabilities. A top 10 pharma clients awarded IQVL program to support the launch of a novel oncology therapy. Top 20 pharma clients awarded IQVL contract to support the launch of a dual indication metabolic therapy utilizing AI capabilities to integrate advanced patient insights into product utilization and patient response. Top 10 pharma clients selected IQVL to provide launch support for a new autoimmune disorder therapy. The engagement includes advanced AI-enabled patient-level solutions that enable performance tracking and analytics near real-time and integrate specialty pharmacy data and payer insights. A good example of the commercial outsourcing trend I mentioned earlier was a very large award from the top five pharma clients to manage end-to-end commercialization and promotion of an established brand portfolio in a very large overseas market. We're progressing as planned to deploy highly specialized industry AI agents. So far, we have approximately 90 agents in development covering 25 use cases across commercial, real world, and our MBS. We are now seeing growing demand to help our clients accelerate AI adoption. We are increasingly helping our clients build data infrastructures that are robust and AI-ready by leveraging IQVS healthcare-grade AI ecosystem, combining advanced information management, integrated platforms, security, safety, and privacy, along with domain expertise. Let me share a few examples of key wins in the poll. The top 20 pharma clients selected IQVIA to deliver a next-generation information management solution that streamlines hundreds of sales data feeds into an AI-enabled, centralized, simplified global warehouse. Another top 10 pharma clients awarded IQVIA a contract to deploy a next-generation AI-enabled SaaS platform to optimize global compliance reporting. A biotech client chose IQVIA to deploy a new global master data management program to enhance AI-enabled omni-channel marketing and analytics operations. Our real-world business continues to perform well. Here are some examples. Top 10 pharma clients selected IQVIA to lead a post-market commitment study evaluating treatment outcomes in African-American patients with lung cancer. A biotech client selected IQVIA to lead a prospective real-world study supporting a regulatory commitment to a rare oncology disease. Biotech client selected IQVIA to deliver a retrospective real-world study supporting post-marketing commitment for their newly approved drugs to fulfill regulatory requirements. Turning to R&D solutions, the positive momentum that we saw in Q2 continued to build through Q3. A few standout wins with our biotech customers first. In oncology, a first-time sponsor selected IQVIA to lead a Phase I trial for a novel leukemia treatment. Another biotech client selected IQVIA to lead a complex Phase I and Phase II trial in hematologic oncology targeting multiple cohorts, across two indications. We were also selected as the exclusive CRO partner for the biotech's entire cardiovascular program. And of course, this recognizes our leadership in cell and gene therapy and cardiovascular research, as well as our ability to execute globally. Large Pharma was also strong in the quarter. We were, for example, selected to lead a phase two study in stroke therapy, demonstrating our deep neuroscience expertise and global trial capabilities. Another top 10 large pharma client selected IQVIA to manage a global phase 3 MASH program, leveraging AI-enabled pathology tools and a robust site network to accelerate execution. We were also selected to lead a phase 3 ovarian cancer study, highlighting our deep therapeutic expertise and the strength of the integrated delivery model we built in partnership with this client. Now, before I turn it to Ron for details on our financial performance in the quarter, I want to say a word about the CFO transition we've announced some time ago. As you know, Mike Fedok will step into the CFO role on February 28, 2026, succeeding Ron Grooven, who will retire after a remarkable tenure. Ron, and that's the good news, Ron will stay on as a senior advisor to continue to help us on specific projects and to help ensure a smooth transition. Ron has been a highly valued leader of this company for many years. In fact, Ron and I have been working together for over a quarter century. Ron has been instrumental in shaping IQVIA's financial strategy, driving its transformation into a leading global organization. He was here for managing the IMS Health IPO in 2014, through the Queen's House merger in 2016, and of course, he returns in 2020 to help us navigate the pandemic. His steady leadership and strategic long-term vision have been essential in building a high-performance global finance organization, and in helping Acuvia remain resilient during unprecedented times over the past few years. Mike brings deep industry experience, and he has helped key financial leadership roles across IQVIA, including as CFO of our R&D solutions business, and prior to that, as CFO of our IQVIA laboratory business. He's worked closely with me and the senior team for years now, and he's very well positioned to lead our finance function into IQVIA's next phase of growth.

Maybe I'll go to Ron for more details on our financial performance. Thanks, Ari, and good morning to everyone. Let's start by reviewing revenue. Third quarter revenue of $4,100,000,000 grew 5.2% on a reported basis and 3.9% of constant currency. Excluding COVID-related work from this year and last, revenue grew 4.5% of constant currency, and this included about a point and a half of contribution from acquisitions. Technology and analytics solutions revenue for the third quarter was $1,631,000,000. That was up 5% reported and 3.3% of constant currency. R&D solutions third quarter revenue was $2,260,000,000, growing 4.5% reported and 3.4% of constant currency. Now, excluding the step-down COVID-related revenues, RMDS revenues grew 4.5% of constant currency. And lastly, our contract sales and medical solution business, or CSMS, grew revenue of $209 million, and that was up 16.1% reported and 13.9% at constant currency. Year-to-date revenue for the company was $11,946,000,000. That's up 4.4% reported and 3.7% of constant currency. And excluding all COVID-related work, year-to-date growth was approximately 4.5% of constant currency. Tech and analytics solutions revenue was $4,805,000,000 year-to-date. That's up 6.7% reported and 5.8% of constant currency. R&D Solutions year-to-date revenue of $6,563,000,000 was up 2.5% at actual FX rates and 1.9% at constant currency. Excluding COVID-related work from both periods, revenue grew approximately 3.5% at constant currency. And lastly, CSMS year-to-date revenue of $578,000,000 was up 6.8% reported and 5.9% at constant currency. Let's move down to P&L now. Adjusted EBITDA for the quarter was $949 billion, representing growth of 1.1%, while year-to-date adjusted EBITDA was $2,742,000,000. That's up an even 2% year over year. A third quarter GAAP net income was $331 million, and GAAP diluted earnings per share was $1.93. Year-to-date GAAP net income was $846 million, or $4.86. of diluted earnings per share. Adjusted net income was $515 million for the third quarter, and adjusted diluted earnings per share was even $3. Year-to-date adjusted net income was $1,480,000, or $8.50 per share. Now, as already noted, we had strong net new bookings this quarter, confirming the improved demand environment we started to see in the second quarter. The RMDS backlog at September 30th was $32.4 billion, up 4.1% year-over-year. And next 12-month revenue from backlog was $8.1 billion, that up 4.0% year-over-year. Reviewing the balance sheet, as of September 30th, cash and cash equivalents totaled $1,814,000,000 in gross debt, was $14,957,000,000. That resulted in net debt of $13,143,000,000. Our net leverage ratio ended the quarter at 3.52 times trailing 12 month adjusted EBITDA. And third quarter cash flow from operations was $908,000,000 and capital expenditures were $136,000,000, which resulted in record free cash flow for the quarter of $772 million. Now I'll turn it over to Mike Biak, who will share details on our guidance. Mike? Thanks, Ron, and good morning, everyone.

Let's start with our full-year guidance. We are confirming our full-year 2025 guidance and are narrowing the ranges for revenue, adjusted EBITDA, and adjusted diluted earnings per share, and are maintaining the midpoint of our prior guidance. We expect revenue to be between $16,150,000,000 and $16,250,000,000 representing year over year growth of 4.8 to 5.5% or 5.2% at the midpoint. This revenue guidance includes approximately 100 million of COVID related revenue step down entirely in RDS. Approximately 100 basis points of tailwind from foreign exchange and approximately 150 basis points of contribution from acquisitions. These assumptions are unchanged from the prior guide. We expect adjusted EBITDA to be between $3,775,000,000 and $3,800,000,000, growing 2.5 to 3.1% year over year, or 2.8% at the midpoint. and $11.95 of 6.5 to 7.4% versus prior year, or about 7% at the midpoint. Now turning to the fourth quarter. We're expecting revenue to be between $4,204,000,000 and $4,304,000,000, which represents year over year growth of 6.2 to 8.7%. Adjusted EBITDA is expected to be between $1,033,000,000 and $1,058,000,000, representing growth of 3.7% to 6.2% versus prior year. And adjusted alluded EPS is expected to be between $3.35 and $3.45, which represents year-over-year growth of 7.4% to 10.6%. And this guidance assumes that foreign currency rates as of October 27th continue for the balance of the year. So to summarize, in the third quarter, we delivered strong top and bottom line results, as well as record high free cash flow. RMDS net bookings were $2.6 billion, growing 13% year over year, and resulting in a net book-to-bill ratio of 1.15 times. Forward-looking demand metrics in the clinical business continue to trend in the right direction, with 20% of our lead flow growth year-over-year and sequential improvements in client decision-making timelines. TAS performed well and delivered solid results, driven by ongoing momentum from drug launches and the strength of our broader commercial portfolio. And we reaffirmed our full-year 2025 guidance. With that, let me hand it back to the operator 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 David Windley from Jefferies. Your line is now open.

Hi, good morning. Thanks for taking my question. Ari, I wanted to ask you about what I think you call your see more, win more strategy and how that has played out through the middle of the year or through this year in terms of contributing to the RFP flows improvement that you're highlighting as well as your win rate and how we should think about, you know, an amount, if any, you know, price competitiveness you're applying in that strategy and how that plays out through the P&L as that business converts to revenue. Thank you.

Okay. Well, you know, usually we keep the best for the last, but you start with the big strategic questions. So let's start with that. Okay. Well, look, the strength in Booking's momentum and RFP flow I think we have to say, and we can see it in the industry in general, I think reflects a reduction in the level of uncertainty in the market environment and the macro political environment. I think there have been a few developments that have sort of helped tilt decision making at large pharma on certain programs favorably. And the climate overall has improved. That's undeniable in our sector. So that certainly is a big driver of our growth. The specifics of our see more, win more strategy, which we started earlier this year, which as you know now has a lot of imitators, has a borne fruit as well, in the sense that we've been looking at markets that we previously hadn't been touching and had left some more marginal players essentially in a quasi-monopoly situation in those segments. And we've decided to go after that. The pricing conversation is a little bit overdone, in my opinion. You know, in a climate where market dynamics were unfavorable with a lot of uncertainty and less deals to be had, there was more competition on pricing. And all we did, you know, in the first part of the year was to align to those pricing discounts that were being offered as opposed to walk away in order to continue to build our book of business. We don't see that trend continuing. It hasn't been an issue at all. Certainly this past quarter, the opposite. We've walked away from deals. And we think that the sector in general is a lot healthier in terms of market dynamics. The level of uncertainty has gone down and pricing has returned to normal levels. You have a question, a follow-up on P&L implications. Look, we have a $32-plus billion backlog, and only a tiny portion of that was subject to a few discounts that we did earlier in the year. The revenues associated with those things are going to bleed over our P&L over the next five years, and we do not expect that to have any impact whatsoever. Great.

Thanks, Ari. I'll stick to the one question. Thank you.

Thank you.

Your next question comes from the line of Justin Bowers from Deutsche Bank. Your line is now open.

Hi. Good morning, everyone. So, Ari, it sounds like the business environment is improving, funding's up, consumer confidence improving. And both of the segments, TAS and RDS, are strengthening, at least on a two-year stack basis. Is this momentum that we should expect to continue over the next few quarters and into 2026? And maybe if you just give us a glimpse of how you're thinking about those two.

Yeah, well, look, you know, I can't tell how to twist the ball here, and I'm not going to give you 2026. This was a A clever way of asking me about 2026 guidance, we're not going to do that here. As you know, we usually provide guidance for the year concurrent with the release of our fourth quarter and full year earnings early in the year. So end of January or early February, we'll provide that. We are in the midst of our planning process and still early, we're still in October. But look, what I can tell you is we are going to deliver this year over 5% in top-line revenue growth, which frankly, given what we've been through and the environment we've been in in the past year and a half, two years, I think is very, very strong performance and you can see that compared to our larger, certainly the larger CRO peers, we are doing very, very well. So I cannot tell you yet what 26 will be in the next few quarters, but I mean, look, I would be surprised if revenue growth in 26 is not at least the same or better than than the growth that we are seeing this year. So I see that with a certain amount of confidence.

Thank you.

Your next question comes from the line of Elizabeth Anderson from Evercore ISI. Your line is open.

Hi, guys. Good morning. Thanks for the question, and congrats, Ron, on your retirement. I was wondering if you could talk a little bit, Ari, about some of the differences between what you're seeing on the pharma side versus the biotech side. I think you covered the biotech side nicely in the Seymour-Winmore answer, but just sort of wanted to peel back the onion a little bit on the pharma side as well.

You mean the large pharma side? Yes. Look, you know, large pharma went through a lot of transformation internally in terms of their investment programs. Going back to the IRA, there was this whole phase of reprioritization of programs and reviews of their pipelines, which led to an elevated level of cancellations due to this reprioritization activity. That lasted for a year, year and a half, beginning mid of 23 and certainly continuing through 24. We see that activity as having essentially been completed and we haven't seen any further cancellations as a result of that type of activity. So we think that the pipelines are now fully sanitized Of course, there continue to be cancellations. But they are all like more business as usual due to futility or other reasons and nothing unusual. You know, large pharma actually, you know, the RFP flow for our pharma is very strong. You know, I mentioned that our RFP flow growth year over year is 20%. And that applies to large pharma and to EBP equally. I mean, there's strong, strong momentum. And again, that's helped by the more calming environment and perhaps more certainty around what's coming. And it's also helped by the fact that these re-prioritizations have been largely completed. And the programs that are now on the table are programs that our clients want to engage in and want to go forward with. Our cancellations, I always say, you know, in recent years were about half a billion dollars a quarter, plus or minus a couple hundred million dollars. So they could range between 300 and 700 million dollars, you know, in a given quarter. So a couple of billion dollars plus, you know, year in, year out. In 24, we had more than 50% higher cancellation than that, right? Over $3 billion in 24. Because of these reprioritizations from large pharma. That essentially is behind us. And year to date, our cancellations follow the regular trend. I think it's actually somewhere between 500, around on average, about $550 million a quarter, I saw the numbers yesterday. I think, you know, nothing much to talk about. This quarter, I think we're a little bit towards the higher end of our range, but again, not because of reforestation, it's simply normal force of business. bookings were very strong, very, very strong this year, and you could see that also in our 2.6 billion dollars of net bookings, which were up 13% year-over-year, up sequentially, missing your digits, and the trough we experienced Q1 probably was the trough. We don't see that Again, large pharma dynamics returning to normal business conditions, trending towards normal business conditions. And biotech funding improving, which as you is the driver of EBP growth. And that, again, is reflected in our bookings and in our RFP flow as well.

Very helpful. Thank you.

Your next question comes from the line of Michael Czerny from Learing Partners. Your line is open.

Good morning and thanks for taking the question. Maybe if I can ask a little bit about TAS. Nice growth against obviously a tough comp. As you think about the pathway forward, what do you see as the contributions you're getting from some of your inorganic advancements and where do you see the best opportunities to continue to expand that business above and beyond your own R&D talk AI, talk anything along that vein. That'd be great.

Thanks. Thank you, Michael. Well, you spoke about inorganic. I think, you know, we said the one and a half points of the contribution to the company as a whole. As you know, as always has been the case, the bulk of that is in PaaS. although I think in this past quarter, we did a large acquisition that was in R&D as an SMO. I think that we spent 485 million dollars that we spent in total, and most of that is one acquisition called Next Oncology, which is an SMO especially in oncology, very attractive business. We acquired this, you know, end of Q3, so not much contribution in Q3. And the inorganic contribution to RNDS will be a few million dollars, I guess, in the double digits, like $50 million of their amounts of revenue to RNDS in Q4. With respect to ties, we didn't do much in Q3. And so I guess the acquisitions is contribution for the year. Well, we did a CSMS deal as well, right? Which is, it's small obviously, but since CSMS is a small segment, it was a large piece of it. So not much impact in Q3. In general, we try to buy technology companies, companies that can add capabilities to our suite of products. analytics companies. There's a lot of innovation, as you know, in the AI space. Medical affairs. Yeah, medical affairs, real world. Real world is a very strong, real world evidence was really very, very strong in the whole. And we expect that to continue into the future. So, yeah, I mean, yeah, I mean, for the year, you know, Again, a point and a half, I would say 50, 60% of that would be TAS and REM. And the rest, for the year, right, so 25. And then the rest, RMDS and then a little bit CSMS.

Your next question comes from the line of Shlomo Rosenbaum, Stifel. Your line is open.

All right, thank you. Ari, before I ask you a question, I just want to also commend Ron. So, Ron, I've seen you retire before, and I'm not fully convinced you're gone right now. Why not? It won't work to a plus, Ron.

No retiring.

Yeah, you've dragged him out of retirement in the past, Ari, so I don't know. Ari... I want to ask you to talk a little bit about the sub components that in TAS and how they're growing in terms of real world evidence and consulting and analytics and just some of the trends that you're seeing there. I know consulting often kind of leads the trend in terms of you see that picking up. That means that the environment is getting better and maybe you could just talk a little bit about each of the components and what you're seeing and maybe what that says about the market.

yeah so look the growth rate in q3 is hard to uh derive big trends because as you know q3 um in general is the weakest quarter in the year but specifically this year we had a tough compare with last year what was the growth of that q3 last year was like 8.6 percent i want to say i don't know if on six percent growth last year So we knew we had a tough compare this quarter. But as I mentioned in my introductory remarks, sequentially we were slightly up and usually because Q3 is the toughest quarter given nothing happens for six weeks in Europe. It used to be three weeks then in four and now it's six and it's going to eight and where nobody is working. So, I think that the performance this quarter was very strong. It was largely by the real world evidence, which was very, very strong. And everything else was obviously data is usually low single digits. And everything else was between low to kind of mid single digit growth. Again, very tough compares. Same for consultancy.

Are you seeing a pickup in that consulting?

You will recall that I know when you're asking consulting because it's kind of the most discreet and it's positive, you know, in terms of being indicator, you know, when things were trending negative territory, consulting went down very rapidly, you know, in the 24, you know, end of 23, the first part of 24 timeframe. consulting was down, actually negative. One of the boards was negative double digits. But it's positive this quarter. And again, everything outside real-world evidence in aggregate was, you know, in single digits or thereabouts.

Thank you.

Thank you. Your next question comes from the line of Eric Caldwell from Baird. Your line is open.

I mean, I'll stick on the TAS question here just to make sure we're all level set for the fourth quarter. Back in February, you guided to 6.3 to 6.5 billion. That was quite a while ago. A lot of things changed. But if I use that original range and I take out what you've done year to date, that would put the implied fourth quarter revenue guidance about 100 to 300 million below the street on TAS. That's a big range and obviously a lower number than where consensus lies today. So I'm just hoping you can give us a little specificity on what you're thinking for TAS in the fourth quarter. We aren't ahead of our skates.

Yeah, I'm not sure you're talking about our targets. And then you talked about the street.

Yeah, you guided in February to $6.3 to $6.5 billion. And the year-to-date number through three quarters is 4.8, a little over 4.8. So that leaves less than 1.5 to less than 1.7 to get to the full year, if I've done the math.

Yeah, I'm going to talk to the finance team here asking. I hope I have the numbers in front of me. But what you were suggesting that that times would be lower than our guidance. I don't see that.

Well, I'm not really suggesting anything. I'm hoping you'll tell us that things have changed since the February numbers, but it is possible that maybe the street's just a little high on this segment. I mean, it looks like you'll cover it with RDS and CSMS, but...

I just want to make sure we're... Eric, I think we are delivering on guidance.

Eric, we'll help you with some of the key forward details. But on a full year basis, there's been no change all year with TAS. The full year CFX growth rate is between 5% and 6%. So there's no change there.

We always said 5% to 6% growth year over year, correct? CFX. CFX, correct.

Yeah, I think you said 5 to 7 constant currency, and I believe it was 5 to 7 on February 6th was the range.

We narrowed our guides in the last call there, so we're still sticking with the 5 to 6. There's no change from the prior guides and no change where TAS is going to land in the full year.

Okay. Yeah, I don't see any changes there.

Well, there's no change, Eric. Yeah, we'll help you with that with the Q4, but there's been no change.

Yeah, perfect. Thanks. Just want to make sure we're not ahead of our skates. I appreciate that very much.

Anything else you had other than this verification?

I had 42 questions, but you told us to stick to one.

Let me... I am going to give you a special discount because that wasn't really a question, so...

Well, look, I mean, you know... That was like a commentary.

You were trying to... I appreciate it.

So I appreciate it. So I'll sneak two in. I'll take advantage and, you know, give an inch. I'll take a mile. Two things just quickly. One, do get some ongoing questions on those couple of mega trials that you mentioned earlier this year. I'm just curious if you can tell us what the status is. I think one was... definitely ramping back up here in the back half. And I believe the other was still pushed out till next year, if it's happening at all. So maybe just an update on the mega trials. And then secondarily, Ari, in your prepared commentary, you highlighted some interesting wins. And you mentioned phase one a couple of times. And my historic interpretation of past conversations was that you weren't really a big phase one shot. Maybe you partnered with some others. But I'm I'm curious on what your involvement is these days in actually managing or even having Phase 1 CPU units. Maybe give us a little more color on what you're doing there.

Thanks so much. Yeah, it's a very good observation, Eric. We are seeing a lot of demands for Phase 1 work, and we are the network partners. You know, we don't have any significant presence in that segment, but we are expanding. And this is why I chose to highlight a couple of examples. It's also, by the way, part of our see more, win more strategy. And it happens to be that there is more demand. Things are getting sort of, quote-unquote, restarted again, and the pipelines are strong. And so we are seeing more demand And we also see more presence in the segments.

Yeah. And phase one oncology is a little bit different because you're not dealing with healthy volunteers. So it tends to feed your later phase next than other phase one trials. So there is some distinction there. And that's what next oncology was. Phase one oncology. Yeah.

Perfect. That's super helpful. Thanks. Yeah, and then the two trials.

Yeah, the two trials, no change there. We don't have anything factored into our fourth quarter guidance for revenue burned from either of them. So I suppose that's a slight change from what we said.

Right, right.

It's basically all pushed out of the year. And it's not contemplated in the guidance, right? Not contemplated. Yeah, bear in mind, We mentioned this a year ago at this time because it caused us at the time to change our guidance for RDS. These were fast burning and had already gotten started and they were interrupted. And so that caused us to change our guide for RDS for the fourth quarter of last year. And so we have to mention it. We only mention specific trials to the extent we can, and we try to be very careful because we are mindful of confidentiality for our clients and so on, so we cannot say very much. But we do mention it when there is a significant event attached to one trial, in this case it was two, and that caused us uh, to change anything in our, in our numbers, but bear in mind, we, you know, at any point in time, we're working on a couple of thousand trials and, you know, and we keep building backlog as you saw. And, uh, and thankfully we have had very positive momentum in our bookings and it's, it's continuing. So we feel good about that. And, and, um, and he continued to stagger, uh, on our book of this, which have then enabled us to continue to deliver and do even better on RDS, even without those trials resuming this year. Thank you, Eric. Thank you. Do you have one more question? Yes.

One more. Next question, Operator.

This will be our last question. Your last question comes from the line of Jeff Garrow from Stevens. Your line is open.

Yeah, good morning. Thanks for taking the question. I want to ask more about AI and maybe try and make it a two-parter. First part being, if you have any insights how AI is changing your customers' business models and specifically their appetite for outsourcing. And then the second part would be, how is IQVIA using AI internally to deliver results for clients that may be a little bit more efficiently and whether you have any visibility into potential gross margin improvements from those internal use cases. Thank you.

Yeah, so thank you Jeff. You know we've spoken about this in the past and so far we have about 90 AI agents in development that cover 25 use cases and we continue to progress that by you know by early 27 we plan to develop 500 highly specialized agents and what this is they essentially eliminate a lot of physical labor from the tasks that we perform for our clients. So in currently, in the second part of your question first, certainly that will help improve our margins longer term. Now it takes time to degrow, obviously, and it takes time to, to translate that into marketing improvements. We've had great examples on the commercial side. We use, for example, AI tools to compare patient cohorts to each other and highlight differences with natural language output. which leads to improvements in cycle times from several weeks to a couple of weeks. We really have a lot of examples and it takes a long time to recite those, but we see significant value in continuing to do more with less through deploying agents within our internal processes. For our clients, I give a number of examples in my introductory remarks. Our clients are very interested, of course, in using AI. So, early on, before we get involved in discovery, there's a lot of focus from our clients in the discovery space to try to use AI to sort out molecules and try to identify you know, the most like quote unquote, the most likely to succeed trials to tackle a specific disease. We participate a little bit with some models and some tools that we have. But you know, later on, you know, look, the issue on the clinical side is that it's highly regulated. And you get to go through standard processes that are defined by regulations and you have to use the intermediary spaces between those regulatory interactions to utilize and deploy AI. At the site, it's very helpful and our clients are using, of course, AI in the form of technology tools that some of which are our tools that they use commercially. They use AI. I gave a few examples to manage their promotion campaigns, marketing campaigns. They use AI to get patient insights in the real world. Real world, I mean, is a big area for us. And one of the reasons we experience such great growth is we've got very advanced capabilities given our vast information assets in real world patient data. You know, using AI tools and try to evaluate how a drug behaves in the real world using AI, you know, becomes a great, great opportunity. So these are the areas. Now, with respect to the margin, as you know, we've had a lot of, we have some margin headwinds certainly this year because of more past tools, largely. because of the FX tailwind, all of which comes without profits, and a little bit of the mix. For example, in Q3, CSMS was stronger, and CSMS is lower margin. So, when you have market headwinds like that, certainly we're counting on usual cost reduction programs, offshoring, and so on, but longer-term AI, Certainly, AI enablement will help mitigate those headwinds and help us long-term improve margins. Thank you. And I think the team will be available for questions as always. Thank you.

Thank you for taking the time today. Yeah. Mr. Joseph, I turned the phone back over to you. Thank you. Thanks for taking the time to join us today, and we look forward to speaking with you again on the 2025 fourth quarter four-year earnings fall. The team will be available the rest of the day to take any follow-up questions you might have. Thank you.

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