Ladies and gentlemen, thank you for standing by. At this time, I would like to welcome everyone to the IQVIA first quarter 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 star one again. As a reminder, this call is being recorded. I would now like to turn the call over to Kerry Joseph, Senior Vice President of Investor Relations and Treasury. Mr. Joseph, please begin your conference.

Thank you, Operator. Good morning, everyone. Thank you for joining our first quarter of the 2025 earnings call. With me today are Ari Boosby, Chairman and Chief Executive Officer. Ron Broman, Executive Vice President and Chief Financial Officer. Eric Sherbert, Executive Vice President and General Counsel, Mike Fedok, Senior Vice President, Financial Planning and Analysis, and Gustavo Peroni, Senior Director of 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 also will be available following the presentation section of our IQVIA Investor Relations website at ir.iqvia.com. Before we begin, I'd 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 with risk and uncertainty associated with the company's business, which are discussed in the company's filings with the Securities and Exchange Commission, including our AMRO report on Form 10-K and subsequent tests. 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 Ducey. Thank you, Gary, and good morning, everyone.

Thank you for joining us today to discuss our first quarter results. I'm going to start with a usual update on financial performance for the quarter. I'll then provide perspectives on the market, including our understanding of the possible effects of recent U.S. government initiatives, how we are well positioned to navigate these near-term challenges, and finally why we remain confident about the industry's resilience and prospects. i'll close by highlighting a few important wins in the first quarter so let's get started we delivered strong revenue and profit results at the high end of our expectations despite a continued challenging environment in rnds total revenue for the first quarter came in above the high end of our guidance range representing year-year growth of 2.5 percent on a reported basis and 3.5% at constant currency. And compared to last year and excluding COVID-related work from both periods, we grew the top line about 4.5% on a constant currency basis, including about a couple of points of contribution from acquisitions. First quarter adjusted EBITDA increased 2.4%. First quarter adjusted diluted EPS of $2.70 cents increased 6.3 percent year over year let me share some details on the market landscape and the demand metrics we're seeing for each segment starting with us the business continued the strong recovery trend we saw exiting last year as our clients are launching new drugs and are executing on their commercial roadmaps it is in times like these where there is some uncertainty in the biopharmaceutical sector that we clearly see the value of the scale diversification and differentiation of IQVS portfolio of offerings. It's great that TAS is contributing over 40 percent of our revenue. TAS revenue growth actually came in above our expectations at 6.4 percent reported and 7.6 percent at constant currency led by double-digit growth in real-world evidence on the clinical side as we expected the near-term market environment continues to be bumpy we experience delayed decision making by customers on new programs reflecting the heightened macroeconomic and industry sector caution. In fact, our average time from RSP issuance to award in the quarter increased by approximately 10% both year-over-year and sequentially. We believe that this is the result of the sector uncertainty caused by the pronouncements of the new administration. the precise effects of which are unknowable at this point. Several of our clients are slowing or re-evaluating programmatic decisions until there is better visibility. Also reflecting these same concerns, the funding environment for EBPs, especially for early stage, has deteriorated. While the RMDS business is experiencing some turbulence, our demand metrics remain positive. Our backlog reached a new record of $31.5 billion at the end of the quarter, growing 4.8% compared to the prior year. Our first quarter RST flow improved mid-single digits year-over-year and high-single-digits sequentially. Our qualified pipeline is up low single digits year-over-year, driven mostly by good growth in large pharma. Now, obviously, the demand environment is impacted by the proposed changes that have been signaled by the new U.S. administration. The White House's initiatives relative to our industry sector can be grouped into three categories. Tariffs, agency actions, particularly HHS and FDA related, and drug pricing. Starting with tariffs, when the president announced plans to initiate the reciprocal tariff program, the pharmaceutical industry received certain exemptions. However, following the announcement, the Department of Commerce began a national security investigation of the life sciences industry, which may result in tariffs specific to the pharma sector. Now, IQVL's direct exposure to tariffs is limited primarily to certain supplies in our laboratory business and is immaterial financially. We understand that industry-specific victories, if implemented, may have a more direct impact on our customers. However, it is too early to assess what that impact may be. With respect to agency actions, HHS announced a number of initiatives, including NIS delays and cancellations of government contracts, along with establishing a 15% cap on indirect costs. Now, to be clear, IQVIA has no clinical trial contracts with BARDA and no COVID-19 contract sponsored by the government. So our exposure there is zero. That said, we have excellent relationships with these agencies, including BARDA. TAS does have a minimal amount of business with the government, and we do not expect any of this to have any impact at all. The NIH funding cap relates to indirect administrative and overhead costs. It aims at aligning those indirect costs to the same levels as private foundations. This has no impact on direct costs for research funding and, therefore, zero impact on us. Regarding the FDA, there have been numerous restructuring actions announced which have impacted a significant portion of the workforce. These reductions enforce primarily targeted overhead and support functions such as planning, training, travel, communications, and records management. Importantly, core product review teams responsible for evaluating new drugs, vaccines, and medical devices, which are primarily funded by the industry, were largely preserved to maintain the FDA's essential regulatory functions. Today, we have no evidence of any trial or approval delays. whatever anecdotal disruptions there may be in non-approval related interactions with sda staff we expect this to normalize sda commissioner mccary has announced his intention to reduce animal testing in favor of ai-based models and enhance usage of real-world evidence in the approval process. We applaud this and we see these actions proposed by Commissioner McCary as benefiting our industry. They will enable clients to move prospects faster into clinical trials. The increased use of real-world evidence not only in pre-clinical work but also in phase two and phase three trials plays to IQVF strengths. Ultimately, this is positive news for EVP companies which develop over 50 of the drugs in clinical trials finally on drug pricing the u.s administration recently issued an executive order regarding the role of pbms pricing transparency and medicare costs these initiatives are still in their early stages and some provisions may require congressional approval the impact of these potential actions is difficult to ascertain at this point, because the specifics have not been determined. But there are two aspects that could actually be very positive for the industry. First, the proposal to do away with the so-called pill penalty provision in the IRA, which subjects small molecule drugs to CMS pricing review after only nine years versus 13 years for large molecule drugs. This is key for pharma clients as 50% of the drug's value is realized in years 9 to 13. Second, the focus on drug pricing, treatment value, and comparative effectiveness drives the need for earlier clinical results and more real-world evidence so in summary some of our customers have slowed down their decision-making processes as you would expect and we experienced delays in rsps moving to contracts in the first quarter an unusually high number of EBP awards that were contracted in the quarter were not included in our bookings because funding had not been secured yet. Now we are confident that our industry will successfully manage this period of uncertainty and will find ways to adapt. The life sciences industry has consistently demonstrated its resilience, overcoming macroeconomic obstacles, and thriving in changing environments and IQVIA is particularly well positioned to navigate this marketplace. We believe when everything is said and done key decision makers will recognize the industry is a strategic sector for the U.S. that deserves to be strongly supported. U.S. companies in the biopharmaceutical sector have maintained strong global leadership in biomedical discovery and clinical research. Our sector serves as an extraordinary engine of innovation. It was responsible for 46% of the 634 novel drugs approved globally over the past decade, confirming strong U.S. leadership. The U.S. is responsible for 61% of global pharmaceutical sales of branded drugs, which is up from 56% a decade ago. The sector invests almost $200 billion annually in research and development and drives economic growth, contributing $1.65 trillion of economic output annually. It supports direct and indirect employment of highly skilled, highly educated workers employing nearly 5 million people at an average of 157 000 annually which is double the national average in fact many non-us large pharma companies have moved their primary r d centers to the u.s to take advantage of the talent pool and of course the bio-pharmaceutical industry provides substantial societal benefits by improving health outcomes and extending life expectancy now before i turn it over to ron let me give you a little bit of color on business activity in the quarter and i'll be brief here and just mention a few salient examples as the revenue numbers show taz did quite well in the quarter we want a number of partnerships with clients that are launching new products for example a large project for an important ebp client that's launching their first product and the first ever treatment for low-grade serous ovarian carcinoma we also won a launch partnership with another ebp leveraging our ai-powered patient relationship manager platform for a groundbreaking treatment for a rare condition in an underserved patient community we were selected to support a mid-sized pharma client with an omnichannel campaign that includes kpi designed to improve patient engagement our commercial technology suite continues to be successful successful in the marketplace our world-winning smart solve offering which is a proprietary quality management system displays the incumbent at an ebp client in the medtech space we secured a significant contract to deploy an integrated information solution to help our clients streamline operations and decision-making. Let me skip a few more of these and move to R&DF. We achieved notable wins across customer segments. As you recall, last year, we renewed all 22 of our strategic partnerships with large pharma clients, and we expanded the scope in half a dozen of them. We are being awarded significant contracts from these partnerships. For example, in the quarter, a top five pharma client that had selected IQVIA as a preferred partner awarded us four early-stage studies under the new model. IQVIA was selected by a top 20 pharma client to support a phase three obesity program across eight studies. Our best-in-class clinical trial technology solutions and industry-leading expertise were key factors in securing this deal. A top 10 pharma client selected IQVIA's pharmacovigilance offerings to achieve a significant reduction in case processing time, enable efficiency, and manage the increasing volume. We secured a contract with an EDP client to run a Phase 2 trial for an innovative treatment for patients with pulmonary hypertension associated with interstitial lung disease. The customers selected IQVIA due to our deep technology expertise, delivery model, and partnership-focused approach. Lastly, Mike mentioned our progress with AI. You may recall we announced our collaboration with NVIDIA earlier in the call. We are progressing as planned to deploy highly specialized industry AI agents. So far, we moved over 20 agents into production, covering three use cases in each of the commercial, real-world, and R&Ds settings. We are seeing positive results and productivity gains in areas where these AI agents have been deployed. For example, one agentic system in commercial allows us to reduce delivery time by two-thirds, from 12 weeks to four weeks, with a net 30% cost reduction. We plan to scale up from these three use cases to 12 by the end of the second quarter, and 40 use cases by the end of the year. And now to Ron for more details on our financial performance.

Thanks, Ari, and good morning, everyone. Let's start by revealing revenue. First quarter revenue of $3,829,000,000 grew 2.5% on a reported basis and 3.5% at constant currency. In the quarter, we had virtually no COVID-related revenue versus over $40 million in last year's first quarter. Adjusting for this COVID step down, constant currency growth was about 4.5%. As already mentioned, acquisitions contributed approximately two points of this growth, the majority of this in the TAS segment. Technology and analytics solutions revenue for the first quarter was $1,546,000,000. That was up 6.4% reported and 7.6% of constant currency. R&D Solutions' first quarter revenue was $2,102,000,000, up 0.3% reported and 1.1% constant currency. Excluding COVID-related work, R&D's revenue grew approximately 3% of constant currency. Finally, Contract Sales and Medical Solutions' first quarter revenue of $181 million declined 4.2% reported and 2.1% of constant currency. Moving down to P&L, adjusted EBITDA was $883 million for the quarter. That was growth at 2.4% year-over-year. First quarter GAAP net income was $249 million, and GAAP diluted earnings per share was $1.40. Adjusted net income was $479 million for the first quarter, up 2.4% year-over-year, and adjusted diluted's earnings per share grew 6.3% to $2.70. R&DF's backlog at March 31 was $31.5 billion, an increase of 4.8% year-over-year and 4.6% of constant currency. Next 12 months, revenue from this backlog is $7.9 billion. Reviewing the balance sheet, as of March 31, cash-in-cash equivalent of $1,740,000 in gross debt was $14,330,000, resulting in net debt of $12,590,000. Our net leverage ratio ended the quarter at 3.40 times trailing 12-month adjusted EBITDA. First quarter cash flow from operations with 568 million dollars in capex with 142 million dollars resulting in strong free cash flow of 426 million dollars in the quarter we repurchase 425 million dollars of our shares this leaves us with approximately 2.6 billion dollars remaining under the current program okay let's turn to guidance Now, you saw we're raising our full-year revenue guidance by $275 million, this to reflect more favorable foreign currency exchange rates since we last guided. We now expect revenue to be between $16 billion and $16,400,000,000, which represents year-over-year growth to 3.9% to 6.5% on a reported basis, or 5.2% growth at the midpoint. This guidance now includes a year-over-year FX tailwind of approximately 50 basis points compared to about 150 basis points of headwind in our previous guidance. We continue to assume approximately $100 million of step-down in COVID-related work and about 150 basis points of contribution from M&A activity for the full year. We are reaffirming our adjusted EBITDA guidance of $3,765,000,000 to $3,885,000,000, as Fx changes had a negligible impact on EBITDA. This represents year-over-year growth of 2.2% to 5.5%. We're also reaffirming our adjusted diluted EPS guidance, which continues to be $11. and seventy cents to twelve dollars and ten cents that's up five point one to eight point seven percent versus the prior year or six point nine percent growth at the midpoint now let's go through the second quarter guidance for the second quarter we expect revenue to be between three billion nine hundred twenty five million dollars and four billion dollars adjusting EBITDA is expected to be between 895 million dollars and 915 million dollars and adjusted diluted dps to be between two dollars and 72 cents and two dollars and 83 cents both this guidance for the second quarter and our four-year guidance assume that foreign currency rates as of may 5 continue for the balance So, to summarize, in Q1, we delivered strong revenue and profit results at the high end of our expectations. We had a very solid free cash flow of 89% of adjusted net income. The cash business continued to achieve above target performance with revenue growth at 7.6% at constant currency, and RDS of bookings were affected. by delayed decision-making by customers on new programs and lower EDP funding, reflecting incremental macroeconomics in the industry sector uncertainty. That said, forward-looking indicators for R&DF offerings such as qualified pipeline, RFP flow, and backlogs continue to grow. We're progressing as planned to deploy new highly specialized industry AI agents, and we've identified over 40 use cases and scaled up deploying it across the portfolio in 2025. In the quarter we repurchased 425 million dollars of our shares and lastly we raised our full year revenue guidance by 275 million dollars to reflect changes in FX and of course we reaffirmed our product guidance. So with that let me hand it back over to the operator to open the session for questions and answers. Operator?

I apologize. I was muted. Yes. 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. And we'll take our first question from Justin Bowers at Deutsche to bake.

Thank you, and good morning, everyone. Ari, could you discuss some of the drivers behind the strength in RWE in the quarter, how the order book looks for the balance of the year, and whether or not this outperformance is durable?

Thank you, Justin. Look, tasks deliver better than expected revenue growth, which is what helped the company deliver above the high end of our guidance with 7.6 percent of cost and currency and as i mentioned uh this was driven largely by the strong growth in real world which was um you know strong double digits um this basically uh you really recall that real world uh had declined um the part of real world that's discretionary uh had essentially uh shut down and in the end of 23 beginning of 24 time frame and the rest of the real world business which is more mission critical had been you know delayed and pushed to the right in terms of when to do it and so on so both the discretionary piece and the um the required work that's necessary to support safety or pricing uh demonstrating the effectiveness of treatments etc both have returned uh there's bent up demand and we expect this based on the book of business to continue uh the rest of uh taz uh was also good basically low to mid single digits for the different other aspects of the business. Thank you, Justin. Thank you.

We'll move next to Matt Sykes at Goldman Sachs.

Thanks for taking my question. Ron, just maybe on the margin side, I know you guys have called out in Q4 a 20 basis point potential margin expansion. Looks like as you kind of rearrange the guide, maybe not expecting that.

Could you just maybe talk about the opportunities for any potential margin expansion and kind of what you could do on the cost side to help achieve that yeah well one thing i would point out uh matt when you're you're looking at the margin versus our previous guide is obviously the impact of fx because fx affects our top line but doesn't have much impact on the bottom line and if you're looking at first margins or either dot margins as the dollar is weak and revenue has gone up, profit hasn't followed. So that really explains all the change in our implied margins versus what we guided to previously. Now, you know, if you're looking towards what can help drive margins going forward, it's always cost reduction. AI would be one example that we're looking at. We're always looking at taking crossed out across the organization that's an ongoing effort you'll see that in our restructuring expense you know of course uh against that you know we do have pressures on on things but not just fx but mix has gone against us to a certain extent you'll see that in the gross margin um and you know that mix includes for instance the shift towards fsp which hurts margins a little bit But in that net, the margin picture really hasn't changed that much. What you're seeing is mostly just the impact of FX, almost entirely.

Got it. Thank you.

And just for a follow-up, Ari, could you just maybe talk a little bit about, on a longer-term basis, you made a comment in Q3 regarding sort of the competitiveness of RFPs going from sort of 1 of 13 to 1 of 4, if I've got the numbers correctly. And just in this environment, given sort of lower levels of demand, how do you feel about your position? And do you think that vendor consolidation trend, which has already been in place, will accelerate in this environment?

Are you talking about the RDS business and RDS?

Yeah, RDS specifically, yep, and vendor consolidation. Yeah.

Yeah. Look, you know, the RFP flow is actually pretty good given the environment. So the underlying demand is still there. We're not seeing customers decide to no longer do certain programs. You know, we went through a period of reviews and reprioritization of pipelines, which led to very elevated cancellations during the course of 24, maybe 50 percent higher cancellation levels in 24 than the historic norm. um in the order just i might mention we had the cancellations that were just in a normal historic range um so what happened in the course with respect to our booking is mostly again programs that clients decided to pause and wait to see what the actual consequences are of some of the administration's pronouncements before they decided to go ahead and separately as you might have noted there was a deterioration in the funding for ebps so you know we had an unusually high number of ebp awards in the first quarter that were actually not only awards but they were also contrasted but our policy is not to include uh those in bookings um if the we're not confident in the fund, or as long as we're not 100% sure that the funding has been secured. Respect the RFP flow, though, it's still very, very good. I mean, we've seen consistent numbers in terms of whether it's dollar value or volume, you know, when our green rates and heat rates are stable, So we're not seeing any changes really in the flow of RFPs, whether, you know, the large pharma RFPs are up stronger than EBPs at this point. But it's pretty good, actually, and sequentially it's high single digits, higher. So from that standpoint, I feel better at this point in the quarter than I did at the same point last week.

And as we've mentioned previously, we did very well last year with renewing and expanding all the large pharma providerships that they went through, and we're starting to see the benefits of those new RFPs from those relationships coming through.

Thank you.

We'll go next to Shlomo Rosenbaum at Stiefel.

Hi, thank you for taking my question. Yeah, Ari, I want to ask a little bit more just probing on the operating environment. Given the uncertainty, what you saw in RDS, I'm just surprised that you didn't see that in more of the short cycle business in TAS. Like you kept the guidance and I guess the assumption is things are going to continue, but do you think that there's risk that that could spill over into some of the uncertainty into some of those areas in TAS, like consulting or some of the analytics or, you know, some of the areas like that? And could it potentially result in further reprioritizations even in the R&D-S business? If you could give us your thoughts on those things.

Yeah, I mean, you kind of said what you're asking the question, there's considerable uncertainty out there. And whenever you have uncertainty, then obviously people are hesitant to spend money. That's just, you know, that's a general rule. And that's the concern out there. But so far, we haven't seen that in time. All of our indicators, leading indicators, pipeline, decision timelines, and so on, continue to be strong. I believe that the reason we haven't seen that is because there were pent-up demand. we had already gone through the period of holding back on spend in TAS, starting from the middle of 23 through the middle of 24. And so at that point, drugs that had been approved needed to be launched, and that's what's happening now. So what we do in TAS is support the launch of the drugs, market access pricing of drugs supporting commercial commercialization efforts etc and you know that's the day in and day out day-to-day business of of our clients and you know they don't stop doing that so we haven't seen that i understand the question but in the ties business we are seeing continued good growth as expected and again i i i believe that the span has been held back for a while and there is a there is standard demand and necessary things to do um now the discretionary stuff the absolute discretionary stuff consulting and so on yeah i mean it's not spectacular it's just like you know you know flat to meet single digits kind level so it's not not that we are looking at the spectacular thing so what is being done now is the stuff that was necessary um to operate i mentioned the real world before as well of the peta demand on on other things and then that's what's driving time so i don't i don't see the environment influencing this much on the rnds side yeah again because of uncertainty so you hold back on decisions. The type of reprioritization we saw before were due to the IRA, and I think as we mentioned prior calls, we see that to be largely over. The reprioritization of pipelines which led to elevated levels of cancellations that were triggered by certain provisions of the IRA, And I remind you, the IRA was, I guess, at late 2022. And this process started in 2023. So we are now a couple of good two years after that process started. And we believe that that re-prioritization process of R&D pipelines at large pharma, due to the IRA, is largely complete. Now could there be other cancellations? cancellations we haven't seen that yet due to new developments we don't know again no one really knows the exact impact of what has been seen on by the new administration the uncertainty has caused delays in decision making i mentioned in my introductory remarks that that the time from receiving the RFP to the actual award has expanded by about 10%, some cases more than that, both year-over-year and sequential. So that's an indication, if you will, a high-level metric, but we know this directly from clients who told us, well, you know, we're planning on making the decision this quarter, but we're just going to wait a little bit to understand the implications. No one has signal that they are not going to do the program, but it's just natural that in an environment of uncertainty you hold off on making the decision on large capital investment.

Thank you.

We'll take our next question from Michael Reiskin at Bank of America.

Great. Thanks for taking the question, guys. I'm going to follow up on Matt's earlier question talked about cancellations in the quarter already being kind of normal. Maybe I could hone in on book-to-bill trends. I know you don't like talking about this number quarterly, but just 1.02 in the quarter. Last year, you called out a few major cancellations that caused 3Q to be lower. This year, this quarter doesn't seem to be the case. So what do you attribute that number to? Is it really the emerging bioset that you talked about, how some of the RFPs aren't quite in bookings yet because the funding is not there? Is that the major swing in the air?

And so do you expect to be closer to that 1.15, 1.2 number for rest of the year okay so i love this question on the quarterly hit to be on um we i mentioned before that um awards that should have been contracted in the quarter the contract wasn't signed and was delayed so that happened at large pharma um a number of times in the quarter and that's due to this uncertainty, general uncertainty in the biopsychological sector. That's one reason for software movements. The second reason, as you mentioned, is EBP funding. I think you noticed that there are many sources for what was the EBP funding in the given quarter, but we follow consistently by the world stats. And I think the funding in the first quarter went down to $13 billion. dollars now 13 million dollars is fine but it's way lower than what we had seen before and that's an indication i think whatever source you look at you'll see an image again it's due to the same reasons people are hesitant to commit the funds um it does happen that the ebp signs a contract with us and we decide not to include it in the bookings um because we're not sure about the funding but that happens like once or twice in a given quarter here we had a much larger number of such cases in the court so again the two reasons all deriving from the same underlying factor which is the macro uncertainty you know large trauma up taking down the signature of the contract to a later period, and EVPs not confirming that the funding is secure for a contract they've already signed. And as a result, we do not include that in our bookings. That's what caused the software bookings in this particular program, not the cancellations. Now, again, I mean, I want to, since you bring it up and it's my kind of, you know, it's like agitating the red flag in front of a board, I typically react to mentions of quarterly booktobills. Look, we are projecting for our company 5% growth, or thereabouts, 5.2% for this year. If you focus on the CRO business, you know, we, our guide for the year was 4% to 6% for the year but we see that we have softer bookings um even if it's at the lower end of that range the four percent kind of range for rmds um and that's you know excluding the step down of covid business which is about 100 million dollars year over year um and effects you know it's still somewhere around four percent now you look at our sector there aren't that many benchmarks out there but we do have you know a large competitor that's publicly traded and publishes numbers and i looked at the numbers this morning and it happens to be coincidental it's the exact same book to bid ratios or trading 12 months and yet they are projecting negative growth on a comparable basis i think that negative growth is five percent so you've got the same exact book to bid ratio the same exact and we're projecting about mid single digit growth positive growth for that segment and they're projecting missing a digit decline it's a eight or nine point swing in revenue growth so if there ever was a proof point that this quarterly book to bid ratio doesn't mean anything with respect to predicting growth and performance i think that's a very strong one this said very it's an interesting it's an interesting snapshot picture of what's going on at one given point in time uh given circumstances in the world it's like you know we're taking a picture of uh of a particular horse in the kentucky derby in the mud running and you took at the picture and it looks like all its muscles extended and doing extremely well. But then when you see the full movie, you see that the horse lost the race. So it really doesn't mean very much. It's a snapshot. It's interesting, but it doesn't affect the whole story. Sorry for that, once again.

No, not at all. Very fair point, Ari. Thank you for that color. Appreciate the context. If I could squeeze in a quick follow-up, just any commentary on pricing environment. I'm just wondering if there's any change in the quarter, given all the macro uncertainty. And again, this is more specific to R&DS.

Thanks. No, no, no, no change. Look, I mean, you know, pricing is, is not, it's not a level, you know, has not been a level for some time. So So we are, you know, the pricing negotiations always are tough. But, again, as Mike mentioned earlier, we've secured these strategic partnerships with our large-former clients last year. That was the time at which all the rates were negotiated and so on. And so I think we are comfortable operating in the current environment. No changes. Thank you. Thanks so much. Thank you.

And we'll move next to Jalindra Singh at Truist Securities.

Yeah, thank you, and thanks for taking my question. So just given all the recent macro development and uncertainty you flagged, and thanks for all the color you gave, Ari, are you guys seeing any change in the RFP or new bookings mix in terms of FSO versus FSP?

And another follow-up quickly, if I can ask, what's the latest on two mega trials that were delayed? are they expected to resume in second half sorry for two-parter those three questions it's not fine thank you very much for the questions um number one i think you're talking about the the mix um full service versus uh fsp and look um we had signals over the course of the prior year that large pharma was sort of doing a little bit more FSP. And I think we saw this reflected in the RST flow and in the awards and in the bookings, okay, where FSP as a percentage of total was increasing okay um we said that in our bookings in the year it was um reaching in 24 close to 20 whereas in our revenue of course it's lower than that since we're burning revenue related to prior period bookings in our revenue um fsp represented in 24 more about 15 15 to 16 So obviously, we'll try and do the 20%. However, again, I said before, many times, that these are pendulum swings. We've seen it before in this industry where large pharma reverts to FSP, decides to insource more of the activity, but then they swing back. And you might find it interesting to know that in the quarter, we actually started seeing some signs of this reversal. Actually, in the quarter, SSP bookings represented less than 10% of the total. And we look at our qualified pipeline. It's in the mid single digits, low single digits. And in the RFP flow, it's about 5%. We actually have a very, very strong and exciting pipeline and RFP flow in full service work for Archfabra. And the reasons are the same as the reasons that I've always led our clients to do more outsourcing, which are basically that they cannot possibly have all the expertise in-house. Sometimes they buy an asset in a different therapeutic indication and they need resources that they don't have in-house. And thirdly, after they've been doing the FSP work and taking more oversight in-house, they realize that it can become prohibitively costly to do so over a large number of studies. And invariably, they revert back for any of these reasons to full service. And we're starting to see some signals of that. It's not just a snapshot in this case. It was true in the bookings. It's true in the RST flow. And it's true in the qualified pipeline where we see FSP as a percentage of total decline. I think you have another question. Oh, the two Vegas wilds? So the two Vegas wilds we said had been postponed and taken out of the end of last year and pushed back to the back of this year. We received confirmation from one of them. that's the good news that it's expected to uh get started in the towards the the second half towards the end of the year as planned so that's confirmed the second one though for reasons that are um inherent to the client itself the same logistics reasons they were facing before was pushed out of the period and won't start this year and again all of that was contemplated in our guidance and so nothing's changed with respect to our numbers okay thanks buddy yeah just add a

little bit more color on that so you know we are reaffirming our range you know with that mega trial but pushed out of the period as already said you know plus let's see what happens with the focusing environment for the balance in the year you can conceivably see sort of already asked how we shading for towards the lower end of our guidance range but we'll have to see our BD teams are out there actively working to secure new business, but that's kind of the current view. Got it. Thanks, guys.

We'll move to our next question from Eric Coldwell at Baird.

Thanks. I have two, if you don't mind. You might have just partially answered the first one. So, I was going to ask about the impact on guidance from FX, and the question was, was there any other change to the guidance or directionality of the guidance excluding FX? What I'm getting to is during the prepared remarks or maybe the Q&A, Ron said that the year-over-year gross margin reduction in Q1 was primarily FX, but FX has now turned from a big headwind to a moderate tailwind. So I'm questioning how much EBITDA and EPS were protected by the FX shift, i.e. would you have needed to maybe reduce the range on EBITDA and EPS if it weren't for FX?

No, no, no. I mean, EBITDA is, you can think of it as being largely independent from the FX ranges. The impact of FX on EBITDA is very muted. The impact on revenue obviously isn't. You saw a big increase in our guidance for the year on revenue, and the combination of those two to reduce our margin, our implied margin values, but, yeah, that's, you know, No, no, no, no notable impact on EPS, then, for the year, for the fact.

And then my, if I can have one more quickly, and apologize, toggling, like everyone, I guess, toggling multiple calls today, so I might have missed this. I have received a couple of inbound questions from investors during the call about TAS M&A and the M&A impact overall from the firm. So if you address this, I'm sorry, but I am getting some questions on it. I thought I'd throw it out there.

There's about 200 basis points for the quarter, Eric, and about 150 basis points for the year, the majority, but not entirely in TAS.

So if TAS, so the question, ron was if taz was the majority and i don't know if that's you know 60 or 90 but if it was the majority then mathematically i believe you could have picked up as much as five points of growth in taz no that much organic organic growth in taz was from mid single digits okay perfect thanks very much yeah we'll move next to david wenderly at jeffries hi good morning thanks for taking my question um i wanted to focus on margin and ask if you could talk about uh margin performance by segment and then on the restructuring activities the uh the expense that you took in the quarter

the add back was a little bigger i wondered if you could comment um related to cost takeout what some of the targets are is it still kind of right sizing head count or facility consolidation or is it something else and how how we should think about those cost takeouts again going back to margin by segment thanks yeah yeah well look um what we're doing in terms of uh margins and is essentially to work on our cost structure the same way we've been working on it forever that is you know address um the overhead structure as we continue to scale up our business uh address um you know labor arbitrage we offshore we have offshore centers all over the world for different centers of excellence for different types of activities both on the commercial and the R&J side and we continue to shift work different places where it's optimal and finally we use technology automation and our AI agents to bring more efficiencies to our processes uh those activities result in the restructuring of uh headcounts um you know literally all over the world and in both in all segments so that's what you see reflected in the whole and the structural numbers but that's the do we talk about margins by segments i mean we do we have disclosure of we disclose We have a segment disclosure on a gap basis.

There's a little bit more pressure on overall margins in the R&DF segment than there is in the TAS segment. Both had good SG&A performance, a little bit more gross margin pressure in the R&DF segment. Some of that is related to FSP and also increases higher growth in the lab business, it tends to be a little bit lower.

The mix influences margins in the segments, right? So, you know, real world, for example, is somewhat lower margin than the rest of the business, than the analytics or the data or the technology. And so as a result, when real world grows faster, you do have a mixed impact on margins. That's for the commercial side. and then on the rnds as ron mentioned fsp and lab do have lower margin profile and full service and as i mentioned in our revenues fsp is a little bit higher maybe the point in the order uh in the revenue side i mentioned earlier that in my commentary on bookings and and pipeline rfps that it seems to be going the other way now but on the on the revenue side fsp was a little larger in the quarter and lab was a solidly larger and those two have somewhat lower margin profiles than than for service so yes we did have the quarter um adverse

mixed impact on margins but again that can fluctuate a quarter to four all right quickly yes i was just saying any any pass-through movement as part of that conversation that should be aware of, pass-through change in the revenue composition?

Nothing to open at all.

Not the area of significance, no. Okay. Great. Thank you.

All right. We have time for one more operator.

And we'll go to Tejas Sivan at Morgan Stanley.

Hey, guys. Thank you for the time here. So I'll ask a quick two-parter. Ron, any comments on the stranded costs associated with the mega trial that you said is now pushed to 26. And is there any risks that the second trial, which you just got confirmation on, could slip again in that sort of 4Q timeframe into 26 as well? And then, Ari, one for you on real-world evidence, you called out some of the unique sort of policy-driven opportunities for that business over the medium term.

Is there anything you're doing either organically or perhaps from an M&A standpoint that could position you to fully capitalize on some of these opportunities that are coming up i'll start okay this would be uh the stranded cost a little bit of impact but not a not a huge impact obviously on the trial that got further delayed uh you know we're going to free up those resources and use them for other purposes we're not going to keep them there indefinitely but there is for the one that's going forward there is a little bit of impact not terribly significant and well we can only react to what our customer tells us on the trial that was further delayed and we're assuming that it will go forward. The customer still wants to do it and you know we'll see.

Yeah and the one that's that started as planned we got recent confirmation that that's the plan so there's no further news on that or notification of any changes as of today so that's for that what was the other question real world yeah well no look real world i think we are the industry will tell you that we are recognized as the leader in in the area uh in this segment and we intend to fully capitalize on the opportunities that may emerge uh from um you know any new initiatives from the from the administration as i mentioned in my remarks so i think again we are very well positioned here um to navigate this sort of turbulent times and very very confident based on our conversations with clients that you know the world is not coming to an end and the industry will find ways to adapt in fact there are many reasons to feel very optimistic um as i said before and i repeat again i feel better at this point in the quarter than I did at the same point last quarter when I look at the metrics whether it's on the commercial side or on the R&DF side and um you know and based on on our conversation with clients so with that um okay yeah okay thank you everyone for taking the

time to join us today quarter 2025 earnings crop the team will be available the rest of take any follow-up questions that you might have. Thank you very much. Have a good day.

And this concludes today's conference call. Thank you for your participation. You may now disconnect.