Ladies and gentlemen, thank you for standing by. At this time, I would like to welcome everyone to the IQVIA Second Quarter 2025 Earnings Conference Call. As a reminder, this call is being recorded. Thank you. I would now like to turn the call over to Kerri 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 2025 earnings call. With me today are Ari Bousbib, Chairman and Chief Executive Officer; Ron Bruehlman, Executive Vice President and Chief Financial Officer; Eric Sherbet, Executive Vice President and General Counsel; Mike Fedock, Senior Vice President of Financial Planning and Analysis; and Gustavo Perrone, 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 will also be available following this call 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 discussed by management during this conference call will include forward-looking statements. Actual results could differ materially from those stated or implied by forward-looking statements due to risks and uncertainties associated with the company's business, which are discussed in the company's filings with the Securities and Exchange Commission including our annual report on Form 10-K and subsequent SEC filings. In addition, we will discuss certain non-GAAP financial measures on this call, which should be considered as 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 Bousbib.

Thank you, Kerri, and good morning, everyone. Thank you for joining us today to discuss our second quarter results. IQVIA 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 diluted EPS 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 road map 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 1.12x. 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&D 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. In fact, the R&D 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 RFP flow. Second quarter RFP flow grew low teens year-over-year and high single-digit sequentially 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. Now let's look at the results of the quarter. 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%, and the adjusted diluted EPS of $2.81 increased 6.4% year-over-year. Now let's review a few highlights of business activities. As you know, AI is significant for us. We are all in on this transformation. And as we've discussed before, a lot of work here is done with NVIDIA's 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 AI 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 agentification, clinical data review, literature review, market assessment, and HCP engagement. This momentum 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 reports, AI-deas to Action: Operationalizing Generative AI in Life Sciences. IQVIA 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 science specialists and niche firms. Let me now give you some color on TAS business activity. A top 10 pharma client selected IQVIA to advance their market access strategy for a breakthrough type 1 diabetes therapy entering Europe. By leveraging AI-driven insights and pricing expertise, IQVIA will help shape this value proposition, pricing, and contracting approach to support successful adoption. The European biotech client selected IQVIA to support the global launch of a novel oncology therapy. IQVIA is delivering a GenAI-powered assistant and HCP persona insights that 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 area. The top 10 pharma client awarded IQVIA 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. The top 10 pharma client selected IQVIA 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 R&DS. 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 networks. This strategic collaboration aims to transform oncology trials globally. By uniting IQVIA's global scale and connected intelligence with SCRI's deep community oncology expertise, we aim 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 patients. A few examples of significant wins the R&DS team had in the oncology space include a biotech client who selected IQVIA to lead the complex global Phase III colorectal cancer program. IQVIA was selected due to our oncology therapeutic expertise, proven track record, knowledge of the regulatory landscape, and our analytics capabilities. A rapidly scaling biotech selected IQVIA to lead two Phase III global pancreatic oncology trials, continuing a high-performing partnership with this client. A large pharma client selected IQVIA to lead a global Phase III MTS oncology trial, considering our successful collaboration with this client on this asset. Obesity is another therapeutic area where our performance has been particularly strong. A biotech client selected IQVIA to lead two global Phase III obesity trials leveraging our vast footprint and deep expertise in chronic weight management. The top 10 pharma clients selected IQVIA laboratories to support the expansion of their next-generation GLP-1 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. IQVIA 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 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 Award. 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, engagement, and retention. And now to Ron for more details on our financial performance.

Thanks, Ari, and good morning, everyone. We'll start by reviewing revenue. Second quarter revenue of $4,017 million was up 5.3% on a reported basis and 3.6% in constant currency. Excluding COVID-related work from this year and last, revenue grew 6.3% at actual currency and 4.6% constant currency. Technology & Analytics Solutions revenue for the second quarter was $1.628 billion, which is up 8.9% on a reported basis and 6.8% in constant currency. R&D Solutions reported revenue was $2.201 billion, up 2.5% reported and 1.3% at constant currency. Excluding the step-down in COVID-related revenues, R&DS revenue growth was 4.2% at actual currency and 3% at constant currency. Lastly, Contract Sales & Medical Solutions second quarter revenue was $188 million, which was up 9.3% reported and 6.4% at constant currency. For the first half, total company revenue was $7,846 million, up 3.9% reported and 3.5% at constant currency. Excluding COVID-related work, revenue grew 4.8% at actual currency and approximately 4.5% in constant currency. Technology & Analytics Solutions revenue for the first half was $3.174 billion, up 7.7% reported and 7.2% at constant currency. R&D Solutions first half revenue of $4.303 billion was up 1.4% reported and 1.2% at constant currency; excluding COVID-related work from both periods, revenue in R&DS grew 3.1% at actual currency and approximately 3% at constant currency for the half. Lastly, CSMS in the first half had revenue of $369 million, up 2.2% reported and 1.9% at constant currency. Now moving down to P&L, adjusted EBITDA was $910 million for the second quarter, while first half adjusted EBITDA was $1.793 billion. 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, which is up 6.2% year-over-year. R&DS backlog at June 30 was $32.1 billion, an increase of 5.1% year-over-year. Next 12 months revenue from backlog was $8.1 billion, growing 4.8% year-over-year. Let's review the balance sheet metrics now. As of June 30, cash and cash equivalents totaled $2.039 billion, gross debt was $15.490 billion, resulting in net debt of $13.451 billion. Our net leverage ratio ended the quarter at 3.61x trailing 12-month adjusted EBITDA. Second quarter cash flow from operations was $443 million, and capital expenditure was $151 million, resulting in free cash flow of $292 million. Additionally, we repurchased $607 million of our shares this quarter, bringing our first half share repurchase activity to above $1 billion, leaving us with approximately $2 billion of repurchase authorization remaining under our current program. Also, in the quarter, we issued $2 billion of senior notes maturing in 2032. Now let's turn to the guidance. We are narrowing our guidance ranges for revenue, adjusted EBITDA, and adjusted diluted earnings per share as follows: we expect revenue to be between $16.100 billion and $16.300 billion, representing year-over-year growth of 4.5% to 5.8%. We're just over 5% at the midpoint. This guidance includes a year-over-year FX tailwind of approximately 100 basis points. We continue to assume about a $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 billion to $3.825 billion. We expect adjusted diluted EPS to be between $11.75 and $12.05, that's up 5.6% to 8.3% versus the prior year or about 7% at the midpoint. For the third quarter, we expect revenue to be between $4.025 billion and $4.100 billion. Adjusted EBITDA is expected to be between $935 million to $955 million, and adjusted diluted 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 profit results towards or above the high end of our expectations. The TAS business unit, in particular, reported revenue above target, and R&DS despite the effect of continued uncertainty on the industry, the team here has responded well, improving win rates and expanding share, which together contributed to stronger bookings and a record backlog in the quarter. Forward-looking metrics for our 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.

Your first question comes from the line of Luke Sergott with Barclays.

This is Sam on for Luke. Just first one on TAS, that's continued to kind of defy the overall environment, MFN fears, tariff fears, and that seems to be hitting R&DS 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 humming along? So I think that’s a diversification story is shining through here.

Thanks for your question. I'm not sure; I guess you're asking more about the 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% at 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. At some point in time, we knew this was going to happen, and it is happening. Clients are continuing to execute in a regular way. They have commercial road maps, and those require services. We saw an improvement in the general environment when things slowed down, and there were a lot of things put on hold, and TAS growth deteriorated to low single digits at the end of '23 and the first part of '24. We saw decision timelines extend considerably, and they've now gone back to normal—it’s actually even better than that. It's sort of business as usual. In terms of the segment, yes, real world was the strongest, double-digit. Remember, real world is about one-third of the TAS business. The rest of the business, data consulting and tech, depending on the segment, was between low and mid-single digits. But you're correct; the 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, about leading indicators and continued strength in 2025. The opportunities created in the quarter grew, I think, very strongly, both in volume and dollars. The hit rate—win rate in TAS has 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 the prior year. So we continue to be confident in the fundamentals of the business and the recovery. You asked about R&DS. We said humming along. I wouldn't call what the team did humming along. I think there was a very high level of activity and intensification of our go-to-market activities, which enabled us to book on a net basis $2.5 billion in the current quarter versus the $2.1 billion we booked in the first quarter. We've generated a lot of opportunities and forward demand indicators, as we shared in our introductory remarks, are very strong. Thank you.

The next question is from the line of Shlomo Rosenbaum with Stifel.

Ari, I want to focus a little bit more on R&DS and what you're talking about. It sounds like from what you're saying is that the environment did not really improve, but you're gaining more ground in that. And if you could double-click a little bit, is it really the client confidence that is really the same? Or is there anything that's improving? I'm just asking also because not just Medpace also reported with some better numbers. Usually, if you have a few competitors that are moving in the same direction, it seems to indicate some kind of improvement because not everybody is always doing better at the same time; they got to be taking 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?

Yes. To clarify, regarding the competitor you mentioned, we generally don’t compete directly in large defenses with them. We view it as a different business, as reflected in the numbers. Now, addressing your question about R&DS, the current environment remains uncertain due to administration policies. In the past, clients were somewhat hesitant, but now they seem to be moving forward with their programs. For instance, if a company has a critical Phase III program expected to last four years, it's vital to enter the market as soon as possible if they have promising data. Delaying for another six months is not feasible. Thus, at some point, they have to proceed with their plans. In that regard, I would say the environment has slightly improved, showing some initial signs of increased demand. However, the level of uncertainty regarding administration policies has not changed significantly. The time frame for action is limited and shrinking, prompting clients to advance in their efforts. In that sense, the environment is getting better. Additionally, we have been more proactive in the market than usual through our initiative called See More, Win More. This approach involves broadening our outreach, responding to more requests for proposals, and generating a higher volume of opportunities, which has led to an improved win rate. All these factors have contributed to our results this quarter, which exceeded our expectations across all segments, particularly in the EBP segment, which performed exceptionally well.

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

I was wondering about two things. One, if you could comment on the cadence in the back half of the year. Obviously, you gave the revenue assumptions for the third quarter. Is there anything to think about in terms of timing aspects? I know you guys, I think, 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? It looks like maybe it had some just mix impact from TAS, but just anything to think about there in terms of the cadence for the back half of the year?

Yes. On cadence, I mean, first of all, generally, there is a certain level of seasonality to our business, which you're familiar with. The first quarter being the weakest; a lot of our business in Europe essentially stops from July 15 to September 15. The fourth quarter is much stronger. That's true in R&DS, and it's true in TAS. So that's the first general element, and that's always true year-in, year-out. With respect to R&DS and the specifics of your question regarding that large trial that we said before was going to resume in the latter part of '25, and that's still on. In fact, we're having initiation discussions with the clients, and that is still on as forecasted. That obviously will be responsible for some of the larger than usual uptick in the fourth quarter of this year. As for the R&DS, you have other questions on TAS. Again, tougher compares second half versus last year. Last year, you remember, we generated, I think, 9% if I recall, over 9% in the fourth quarter. So obviously, the comparison there is a bit more difficult when we get to the back half. Again, we're trying to be it's still early in the year, and we don't want to move the needle too much at this point. Let's see what happens. Everything looks good for now in TAS and R&DS. As you suggest, the cadence looks for a gradual improvement of the growth rate, especially in the fourth quarter because of the resumption of that large trial as well as, of course, compares versus last year and generally stronger business activity than we would have expected otherwise. You then asked about gross margin.

Yes. Look, you did see some compression in our gross margin in the quarter, and about one-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. About two-thirds of it was due to product mix. We had higher revenue growth in real-world and TAS, which tends to be a lower margin portion of that business. R&DS, 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 compression.

The short answer is that the pressure on gross margin is mix-driven for two-thirds and FX-driven for one-third. And of course, below the line, at the SG&A level, we offset by our strong cost reductions and so on. We offset about one-third of that margin compression.

Your next question comes from the line of Michael Cherny with Leerink Partners.

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?

When you say more CROs, you mean more people invited to the table, to the party? Yes. Well, I mean, look, 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 reinvited the top five or six CROs—those are the three longest ones and the three smaller ones—and rebid their preferred partnerships. We were 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 smaller ones are invited to keep pricing in line from the point of view of the large pharma customers. With respect to the other segments, it's relationships; it's go to market. Generally, in the EBP segment, you may have two or three bids, and we don't see much of a difference versus what was the case before. Some of the competitors are forcing a little bit of price reductions. I would say that our strategy to See More and Win More means that we are at the table every time. Whereas in the past, the competitor may have reduced pricing, and we might have walked away because we would not have wanted to align at that price level, now we more often than not will not walk away and grab the business. We will always prefer to have an additional point of top-line growth, and then we'll work later on our costs and margins and accept some short- to 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 are the global scaled player, and we intend to win.

Your next question comes from the line of Jeff Garro with Stephens Incorporated.

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

Well, yes, look, AI, especially agentification of our process, 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 are seeing positive results. We're experiencing significant client interest, and some are already being used. For example, we have one multi-agent system for literature review with expanded capacity that has expanded by 10x. Another agent allows us to reduce delivery time by two-thirds from 12 weeks to 4 weeks, bringing some significant cost reduction in our patient journeys for our clients. We are currently developing over 50 agents to be deployed in the third quarter covering 15 use cases. This means there's an enormous amount of interest from clients. Obviously, every large organization wants to be on this AI train. Initially, especially large pharma wants to develop their own solutions. Over time, it's becoming apparent that speed is extremely important because it all depends on your ability to train your AI models. We've got the goods, so to speak. We have the materials, the data, the expertise, which is why we are collaborating with NVIDIA on training in 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 our ability to execute a much larger backlog faster on the R&DS and our ability to execute commercial strategies for our clients on the commercial side a lot faster. Real-world studies will also be much faster. So speed and efficiency over the long term, obviously, we expect internally that those efficiencies will enable us to resume margin expansion and continue to mitigate those pricing pressures we are seeing in the short...

Your next question comes from the line of Michael Ryskin with BofA.

Great. Ari, I want to come back to the win rates you called out in EBP, touched on it a couple of times. Just wondering if you could expand on the sort of 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 sort of a sustainable change? Or is that something more effective of the dynamic in the near-term market environment?

Our success in the marketplace relies on creating as many opportunities as possible and strategically bidding for them. This approach is a key part of our strategy, referred to as See More. We are significantly more proactive in the market, responding to and generating RFPs. Year-over-year, RFP flow increased in the low teens and saw high single-digit growth sequentially, with this growth observed across all customer segments. EBP showed particularly strong performance, growing low teens year-over-year, while large pharma was in the low to mid-single digits, with EBP exceeding that. It's crucial to generate these opportunities and then secure the wins. Our focus is on winning more contracts. Sometimes, that means we need to be flexible with pricing compared to what we may have accepted previously. However, we've refined our approach and are now successfully winning more than ever. Regarding sustainability, I believe it is achievable; the flow of opportunities is stable. Our qualified pipeline, which serves as an early indicator, has shown year-over-year growth and high single-digit sequential growth, with EBP also in double-digit growth annually. This indicates that the demand we can engage with is on the rise. Our win rate is influenced by our strategy and capabilities. We are confident that our unique positioning will allow us to continue excelling. The win rate has seen significant improvement, and while we don’t publicly disclose the exact numbers, they are very promising.

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

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?

Yes. 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 R&DS side. So I think in the short term, I would say that is going to continue; and by short term, I mean in the next couple of quarters. Having said that, I might mention that this pendulum moves towards FSP. I've said this before, and I will repeat it. I do not believe it is permanent. In fact, in this quarter, the proportion of net bookings that was FSP is in the very, very low single digits, and I mean very, very low. Everything else was full service, right, FSO. Overall, we saw FSP as a proportion of backlog pick up 1 or 2 points from historic 14%, 15% to 16%, 17%. But we see it coming down back to the same level. So I think R&DS, in the short term, some mix, unfavorable mix, but I think 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.

Your next question comes from the line of Jailendra Singh with Truist Securities.

So I want to go back to TAS business. Thanks for the color by business lines. I actually want to double-click on the 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-digit, double-digit growth? What are some of the key leading indicators you're watching for that business to start bouncing back?

Yes. Look, the pipeline is there. We track pipeline versus prior years and pipeline coverage. I think we are confident that certainly in the future, we'll return indeed to 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. As we transition the different offerings, we think that that's part of that transition. We are expecting that to happen just based basically on our pipeline reviews.

But you're not expecting to return this year, right? It's most likely next year or beyond? I just want to clarify that.

Yes, probably end of the year next year, yes.

Our next question comes from the line of Ann Hynes with Mizuho.

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 early for 2026, but when I look at consensus estimates for R&DS, 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?

Ann, you saw the next 12 months of revenue in backlog that we reported out of R&DS. So you can—now that doesn't cover you all the way to 2026, but the numbers give you some indication there. Our pipeline and RFP flow has been strong, so we're not going to be giving 2026 guidance at this point, but you can piece it together from all of that.

Yes. And you had a question on the clients' concerns and the policies. Yes, it's all of the above. It's the changes in the agencies and policies, FDA and so on. This seems to be stabilizing, and we feel good about that. For the MFN pricing, we're just waiting. There's been discussions and there have been thoughts. But let me just say, I don't want to comment more, but I would just say it's extremely complicated. And then tariffs, you saw a lot of non-U.S. large pharma companies announce massive investments, and I think this will help.

Your next question comes from the line of Jack Meehan, Nephron Research.

I was wondering if you could just share your latest thoughts on what you're seeing related to cancellation trends. Have you seen that continue to moderate at all? And just thoughts on kind of a path to normalization there.

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

Your next question comes from the line of Max Smock with William Blair.

It's Christine Rains on for Max Smock. I was hoping you could 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?

You're talking about which delays?

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

Yes, correct.

Yes. I mean that remains longer.

Yes. Again, the environment is more or less similar in terms of client—or the uncertainty on the decision-making. I mentioned that in many cases some of these areas are being launched because clients just can't wait. Some of what has been delayed, the 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, EBP funding, it wasn't particularly special since the beginning of the year; it 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 opportunities and winning those opportunities. So I wouldn't necessarily derive an implication and assume that all of a sudden the market has returned to normal.

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 to you again on our third quarter 2025 earnings call. 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.