Operator
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. 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 second quarter of the 2035 earnings call. With me today are Ari Boosky, Chairman and Chief Executive Officer, Ron Broman, Executive Vice President and Chief Financial Officer, Eric Scherber, Executive Vice President and General Counsel, Mike Fedok, Senior Vice President, Financial Planning Analysis, and Gustavo Ferroni, Senior Director, Investor Relations. Today, we will be representing a presentation that will be visible during this call for those of you on our webcasts. This presentation will also be available following us on the Events and Presentation section of our IQVIA Investor Relations website at IR.IQVIA. Before we begin, I would like to caution listeners that certain information discussed by management during this conference call will include forward-looking statements. Action results could differ materially from those state or company's business, which are discussed in the company's filings with the Securities and Exchange Commission, including our annual report on Form 10K and subsequent and SEC finalists. In addition, we will discuss certain non-GAAP financial measures on this call, which should be considered a supplement two and not a substitute core 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 the CEO, Ari Boosby. Thank you, Gary, and good morning, everyone.
Thank you for joining us today to discuss our second quarter results. As GIA delivered another strong quarter, revenue exceeded the high end of our guidance range as we reported over $4 billion in quarterly revenue for the first time in our history. Adjusted EBITDA and adjusted EBITDA came in towards the high end of our guidance range. As expected, TAS continued to perform well in the second quarter, supported by clients' commercial roadmap strategies and new drug launches. TAS reported revenue growth above our expectations at 8.9%, led by double-digit growth in real-world evidence. On the clinical side, our net bookings in the quarter were approximately $2.5 billion, translating to a net book-to-bill of 1.12. Our booking performance improved in the quarter, even as the overall market environment remains essentially unsettled, and there is still uncertainty persisting regarding future administration policies affecting the biopharmaceutical industry. Of course, this continues to cause some delays in decision-making on new programs, but the R&DF team has reacted to this new environment by intensifying our see-more, win-more, go-to-market strategy aimed at expanding market gains. This strategy is helping the business navigate this period, and in fact, the R&D S 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 haptick in RSP flow. Second quarter RSP flow grew low teams 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%. Second quarter, adjusted EBITDA of $2.81 increased 6.4% year over year. Now, let's review a few highlights of business activities. As you know, AI is a big deal for us. we are all in in this transformation and as we've discussed before a lot of work here is done with nvidia's support iqd 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 trial 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 accelerates insights across the life sciences ecosystem. Use cases for these agentic offerings include target identification, clinical data review, literature review, market assessment, and HTTP engagement. This for matter has not gone unnoticed, reflecting the strength of our AI strategy and execution. Everest Group recently named IQVIA a front-runner generative AI leader for the life sciences industry in its recent report, AI ideas to action operationalizing generative AI in life sciences. 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 growth-based AI companies, CROs, and life sciences specialists and niche workers. Let me now give you some color on TAP's business activity. A top 10 former client selected IQVIA to advance their market access strategy for a breakthrough type one 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 a european biotech client selected IQVIA to support the global launch of a novel oncology therapy. IQVIA is delivering a Gen.AI power assistant and HCP persona insights. This solution will enable simulation of HCP behavior and precise targeting, showcasing IQVIA's unique blend of data, AI-enabled technology, as well as our expertise in product launch and the specific oncology therapeutic areas. The top 10 pharma client awarded IQVIA a strategic engagement to support the launch of a novel oncology therapy in the US, delivering insights and technology infrastructure to ensure commercial success. A 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 RMDS. We continue to win a significant portion of oncology-related trials. Our leadership in oncology research is exemplified by our recently announced strategic collaboration with Sarah Cannon Research Institute, one of the nation's leading oncology research hospital network. This strategic collaboration aims to transform oncology trials globally by denising a QVS global scale and connected intelligence with SCRI, Deep Community Oncology Expertise, were aiming to accelerate trial activation, boost recruitment, and streamline data capture of electronic health records, ultimately removing operational barriers and speeding the delivery of breakthrough therapies to patients. A few examples of significant wins the RNDS team had in the oncology space. A biotech client selected IQVIA to lead the complex global phase three colorectal cancer program. IQVIA was selected due to our oncology therapeutic expertise, proven track records, knowledge of the regulatory landscape, and our analytics capabilities. A rapidly scaling biotech selected IQVIA to lead two phase three global pancreatic oncology trials continuing a high-performing partnership with this client. A large pharma client selected IQVIA to lead a global phase 3 MDS oncology trial continuing 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 3 obesity trials leveraging our vast footprints and deep expertise in chronic weight management. The top 10 pharma clients selected IQVIA laboratories to support expansion of their next generation GMP1 development programs, 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, ACUEL was selected to manage a significant gene editing program for Wilson disease spanning both observational and interventional studies. The project deploys AI-enabled solutions that drive speed and precision in rare disease research. Finally, we were honored to be recently recognized for our innovation in facilitating decentralized trials. IQVL was named winner of the Best Mobile Apps for Patient Engagements at the 2025 MedTech Breakthrough Awards. IQVL's app empowers patients and caregivers to participate in decentralized trials from anywhere while ensuring strong privacy and security. The app has multilingual support and is available across many geographic regions, increasing patient access, engagements, and retention.
And I'll turn on more details on our financial performance. Thanks, Ari, and good morning, everyone. Let's start by reviewing revenue. Second quarter revenue of $4,017,000,000 was up 5.3% on a reported basis and 3.6% of constant currency. Now, excluding COVID-related work from this year and last, revenue grew 6.3% of the actual currency and 4.6% of constant currency. Technology and analytic solutions revenue for the second quarter was $1,628,000,000 that's up 8.9 percent on a reported basis is 6.8 percent of constant currency R&D solution second quarter revenue was 2 billion 201 million dollars up 2.5 percent reported and 1.3 percent of constant currency excluding the step down in COVID related revenues R&D's revenue growth was 4.2 percent of actual currency and three percent of constant currency lastly contract sales and medical solutions second quarter revenue was 188 million dollars and that was up nine point three percent reported six point four percent of constant currency for the first half total company revenue was seven billion eight hundred forty six million dollars up three point nine percent reported and 3.5% of constant currency, and excluding COVID-related work, revenue grew 4.8% of actual currency and approximately 4.5% of constant currency. Technology and analytics solutions revenue for the first half was $3,174,000,000, up 7.7% reported and 7.2% in constant currency. r d solutions first half revenue of 4 billion 303 million dollars was up 1.4 percent reported and 1.2 percent of constant courtesy and excluding code related work from both period revenue and r ds grew 3.1 percent at actual currency and approximately 3 percent at constant currency for the half. Lastly, a CSMS in the first half had revenue of $369 million, up 2.2% reported, and 1.9% of constant currency. Okay, moving down to P&L, adjusted EBITDA was $910 million for the second quarter, while first half adjusted EBITDA was $1,793 million. Second quarter gap 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 for 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 for diluted shares, that being up 6.2% year-over-year. R&DF's backlog at June 30th was $32.1 billion, an increase to 5.1% year-over-year. Next 12-month revenue from backlog with $8.1 billion going 4.8% year-over-year. Let's review balance sheet metrics now. As of June 30th, cash and cash equivalents total of $2 billion, $39 million in gross debt was $15 billion, $490 million, and that resulted in net debt of $13 billion, $451 million. dollars our net leverage ratio ended the quarter at 3.61 times friendly 12-month just even down second quarter cash flow from operations was 443 million dollars in capital expenditures about 151 million dollars resulting in free cash flow of 292 million dollars now you saw in the quarter that we repurchased 607 million dollars of our shares which brought first half share repurchase activity to above one billion dollars this leaves us with approximately two billion dollars of repurchase authorization remaining under our current program also in the quarter we issued two billion dollars in senior notes maturing in 2032. now let's turn to the guidance we're narrowing our guidance ranges for revenue adjusted evita adjusted diluted earnings per share as follows uh we expect revenue to be between 16 billion 100 million dollars and 16 billion 300 million dollars representing year-over-year growth of 4.5 to 5.8 percent we're just over five percent at the midpoint this guidance includes year-over-year fx tailwind of approximately 100 basis points we continue to assume about 100 million dollars step down in COVID-related work, and approximately 150 basis points of contribution from M&A activity for the full year. We expect adjusted EBITDA to be between $3,750,000,000 and $3,825,000,000. We expect adjusted diluted EPS to be between $11.75 and $12.05, that's up 5.6 to 8.3% versus prior view or about seven percent at the midpoint okay for the third quarter uh we expect revenue to be between four billion twenty five million dollars and four billion one hundred million dollars adjustment evita is expected to be between 935 million dollars and 955 million dollars and adjusted deleted eps expected to be between two dollars and ninety two cents and three dollars and two cents 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 uh in q2 we delivered strong revenue and profits results towards or above the high end of our expectation are the tas business unit uh in particular reported revenue above target and R&DS despite the effects of continued uncertainty on the industry the team there has responded well improving wind rates and expanding shares together contributed to stronger bookings and a record backlog in the quarter forward-looking metrics for R&DS offerings remain positive including a significant offset 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 a first-half repurchase to above $1 billion. And with that, let me hand it back to the operator, Tina, for Q&A.
Operator
At this time, I would like to remind everyone, in order to ask a question, press star, then the number one on your telephone keypad. We request that you please limit yourself to just one question so that others in the queue may participate as well. We'll pause for just a moment to compile the Q&A roster. Your first question comes from the line of Luke Sergat with Barclays. Please go ahead.
This is Sam Lantzalew. Thanks for taking our questions here. Just the first one on TAS, that's continued to kind of defy the overall environment of MFN fears, tariff fears, and that seems to be hitting RMBS 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 sub-segments? And how does the current environment differ from a year or two ago where TAS was seeing headwinds and the R&DF side of the business was kind of humming along? So it seems that the diversification story is shining through here.
Yeah, good morning, Luke, and thanks for your question. I'm not sure, I guess you're more of a general overall environment and what happened in each of the segments. Again, I can also say that in TAZ we delivered better than expected revenue growth in the quarter, above the high end of our expectation range, just down to 9%, 7% of constant currency. We've been on a strong recovery 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. You know, the molecules that were approved need to be launched and you can only delay so much. And so at some point in time, we knew this was going to happen and is happening. Clients are continuing to execute, you know, in a regular way, their commercial roadmaps and those require services. we really saw an improvement in the general environment you know when when things slowed down and and there was sort of a lot of things put on hold um and ties growth deteriorated to low single digits um and of and of 23 and this part of the 24 um we uh we saw decision timelines extend considerably and they've now gone back to normal actually even better than that and you know it's sort of business as usual in terms of the segments yeah real world was the strongest double digit remember real world is about a third of the task business and the rest of the business Because data consulting and tech, depending on the segment, was between low and mid-single digits I see here for the segments. 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 heat rate, the win rate in TAS improved a couple of points year over year. As I mentioned before, the average time to close improved further. I think it's 15% or so shorter than prior year. So we continue to be confident in the fundamentals of the business and the recovery. And then, you know, you asked about RDS. We said humming along. I wouldn't call what the team did for humming along. I think there was a very high level of activity and intensification of our go-to-market activities, which enabled us to book on a net basis two and a half billion dollars in the current army versus the 2.1 billion dollars we put in the first world um and we generated a lot of opportunities and forward demand indicators as we shared in our introductory remarks are very strong thank you absolutely our next question is from the line of shlomo rosenbaum with people please go ahead
hi thank you very much um aria i want to focus a little bit more on that rnds and what you're talking about it sounds like what you're saying is 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 is really the same? Or is there anything that's improving? I'm just asking also because not just, you know, MedPace also reported with some better numbers. And usually if you have a few, you know, competitors there that are moving in the same direction, it seems to indicate some kind of improvement because not everybody's always doing better at the same time. You know, they got to be taking share from somebody.
Maybe you could just double click a little bit in terms the change sequentially of what you saw on the ground yeah um just put things aside here you know the competitor you mentioned that you called the competitor but i just want to say we never meet in any of these defenses with this competition so we're not planning it's such a different business as the numbers show but moving to your question on rds um uh we the you know the environment i said remains unsettled in terms of the administration policies and the level of uncertainty that that's out there but um whereas in prior periods we saw clients sort of on hold we noted that clients essentially not necessarily returning to business as usual but are getting on with their programs. You know, if you have in front of you a phase three program that's very important for the company and that is going to last four years, you know, it's important you be in market ASAP if you have good data and good results and good promise for the program. And you can't really afford to wait another six months. So at some point in time, you got to get on with life. So to that degree, I would say the environment possibly has improved slightly, and we see some of those green shoots in the demand metrics. It has remained the same with respect to the administration policies and the uncertainty around exactly what may or may not happen. And that time window is relatively short, limited, and narrowing. And therefore, I guess the client base is moving on to a degree. And in that sense, the environment is improving. And then separately, to use your expression, which I think is a good one, we lean on or lean in to the market a little bit more forcefully than usual. We call this see more, win more. That is, we expand our net, we are responding to more RFPs, generating more flow of opportunities, and we are going to win. And our win rate has increased. And I think all of that is essentially what's led to the good results we've had this quarter better than what uh we would have expected and by the way this is across segments large links and ebp but i would note that um the ebp segment was particularly strong thank you your next question comes from the line of Elizabeth Anderson with Evercore ISI.
Operator
Please go ahead.
Hi, guys. Thanks so much for the question. I was wondering two things. One, if you could comment on sort of the cadence in the back half of the year. Obviously, you gave the revenue assumptions for the third quarter. You know, is anything to think about in terms of timing aspects? I know you guys have I think have previously started talking about the restarting of a trial that had previously gotten delayed, just so we can think about the cadence of that into 26. And then secondly, anything to call out on the gross margin side? You know, it looks like maybe it would have some just mixed impact from TAS, but just anything to think about there in terms of the cadence for the back half of the year. Thank you so much.
So on the cadence, I mean, first of all, generally, and that's it, there is a sort of level of seasonality to our business which you're familiar with um the first quarter being the sort of weakest a lot of our business in europe essentially stops from 15th of dry to 15th of september um but and the fourth quarter is is much stronger that's true in rnds and it's true uh it does so that's the first general element and that's always true year in year out um with respect to R&DF and the specifics of your question regarding that large delay trial that we said before was going to resume in the latter part of 25 and that's still on and in fact we're having you know initiation discussions with the client and that is still on as forecasted and that That obviously will be responsible for some of the larger-than-usual haptics in the fourth quarter of this year. So that's for the RDS. You have other questions of ties, again, you know, tougher compared second half versus last year. Last year, you remember we generated, I think, 9% per recall, over 9% in the fourth quarter. So obviously, you know, the comparison there is a bit more difficult when we get to the back half of the year in TAS. But again, you know, we're trying to be still early in the year and we don't want to, you know, move the needle too much at this point. And let's see what happens. everything looks good for now on TAS and in RDS as you suggest the cadence is looks for a gradual improvement of the growth rate and especially in the fourth quarter because of that resumption of that last trial as well as of course compares versus last year and generally stronger business activity than we would have expected otherwise you did ask about gross margin um yeah look uh
you you did see some compression in our gross margin in the quarter and about a third of that is due to the fx tailwind as you know fx tends to move our revenue line without moving our even done mine very much. And about two-thirds of it was due to product mix. We had the higher revenue growth in real world and TAS, which tends to be a lower margin portion of that business. And R&DF, 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 right right that's that's exactly right it's a mix basically the short answer is the pressure on gross margin is mixed driven for two-thirds and an FX driven for one-third and then of course below the line we At the SG&A level, we offset by our strong cost reductions and so on. We offset about a third of that margin compression.
Operator
Your next question comes from the line of Michael Cherney with Lyrinc Partners. Please go ahead.
Great, thank you. This is Dan Clark on for Mike. Just had a question as you've been getting involved in more opportunities. One, are you seeing more CROs on average in an RFP, and are there any changes in pricing worth calling out? Thank you.
When you say more CROs, you mean more people invited to the table, to the party? Yes, exactly.
Well, I mean, look, once again, it depends on the clients and on the segments. With respect to the large segments, um over the course of last year virtually every large pharma company essentially re-invited um the top you know five or six uh cro's that is the three largest ones and the three smaller ones and rebid um their preferred uh partnerships and as we mentioned we were um very happy that we on and expanded all of those relationships further. I would say the three largest ones essentially are the main providers and the small ones are invited essentially to keep pricing in line from the point of view of the large Bama customers. And with respect to the other segments, it's relationships, it's go-to market, um and generally the mdp segments you may have two or three uh bits and we don't see much of a difference versus um what was the case before now some of the competitors are you know forcing a little bit of a of a price reductions and i would say that that look our strategy to see more and win more means that we are at the table every time and we whereas in the past the competitor may have reduced pricing and we might have walked away um because we would not have wanted to align at that price level uh you know now we we you know more often than not we will not walk away and grab 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, medium-term margin pressure in order to ensure that we continue to build our backlog. so yes the 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 uh pricing pressures But in that environment, we are the largest player. We have the global scale player, and we intend to win.
Operator
Your next question comes from the line of Jeff Garro with Stevens Incorporated. Please go ahead.
Yeah, good morning, and thanks for taking the question. I was hoping we could dig in a little further on AI. Any updates you have on development progress of additional AI solutions and expanding use cases? And I know it's early, but curious what you're seeing in terms of demand from customers. And then lastly, any further comments about how you guys are using AI internally to drive efficiencies in the business?
Thank you. Well, yeah, look, AI, especially gentrification of our processes, is extremely important. We keep hiring resources, building up teams, and scaling up our efforts. We are progressing as planned to deploy highly specialized industry-focused AI agents, both on the clinical side and on the commercial side so far we've developed over 20 agents into production that cover three use cases in each of commercial real world and rnds we're seeing positive results we're experiencing significant um you know client interest um some are already being used you know for example we have one multi-agentic system for literature review with expanded capacity to you know it has expanded the capacity to review by 10x another agent allows us to reduce delivery time by two-thirds from 12 weeks to four weeks with some significant cost reductions in our patient journeys for our clients. We are currently developing over 50 agents to be deployed in the third quarter to production and covering 15 use cases. What this means for, you know, look, there's an enormous amount of interest from clients. Obviously, every large organization, you know, wants to be on this AI train. and initially especially large pharma wants to develop their own solutions over time it's becoming apparent that you know speed here is extremely important because it all depends on your ability to train um your ai models um and you know we've got the the goods so to speak we've got the materials, the data, the expertise, which is why we're collaborating with NVIDIA on trading these AI agents and trying to move as fast as we can. It's hard to see, you know, the impact in the short term, but it will make a difference in terms of our ability to execute a much larger backlog faster on the RNDS. and our ability to execute commercial strategies for our clients on the commercial side a lot faster, real-world studies a lot faster, so speed, efficiency. Over the long term, obviously, we expect internally that those efficiencies will enable us to resume margin expansion and go back and continue to mitigate those pricing pressures we're seeing in the shorts.
Operator
Your next question comes from the line of Michael Ryskin with BOFA. Please go ahead.
Great. Thanks for taking the question, guys. Ari, I want to come back to the win rates you called out in EBP. I touched on that a couple of times. I'm just wondering if you could expand on what steps you've taken internally with the organization to achieve those higher wind rates and whether you think that's sustainable going forward. Is that a sort of a sustainable change or is that something more effective of the dynamic and the near-term market environment?
Well, look, the success in the marketplace is a function, A, of generating as many opportunities as possible, where we have the opportunity to be and as i said that's part of was the first part of our strategy which is see more so we're much more aggressive in going to market in responding to rfps in generating the rfps the rfp flow grew low teams year over year and high single digit sequentially And again, the growth was across all customer segments. I might say EBP was up very, very strong. Very strong. You know, CRP was up low teams year over year. Large pharma was low to mid single digits. and EVP was was much higher than that. Now it's great to generate the flow now you have to win and there our directive is to win more and to win as much as we can. Now back to an earlier question that sometimes requires us to align to a lower price than we would have been willing to tolerate in the past but we've sort of adjusted and finding that strategy and now are actually winning a lot more than we were before now you are asking is this sustainable the answer is i don't see why not the floor of opportunity is there if we look at the qualified pipeline which is an earlier indicator, an earlier leading indicator versus RFP flow, the qualified pipeline is up year-over-year and sequentially high single digits. And again, in EBT, it's there in the double digits growth year-over-year. So, we see that the demand we are able to participate in is increasing. Our win rate depends on our strategy, on our capabilities. We believe strongly that we are uniquely positioned, and we will continue to push to win. So, the win rate is up significantly. I don't think we disclose those numbers. I have them in front of me, and they are very, very good. All right.
Operator
Your next question comes from the line of Dan Leonard with UBS. Please go ahead.
Thank you. I was hoping to talk a bit more about the margin, the two-thirds of gross margin compression you attributed to MIX.
How do we think about that going forward, especially in the context of that flat to 30 basis point margin expansion framework that you've previously discussed uh yeah i mean look this is uh the mix is what it is real world is growing faster uh and that's lower margins um So we have more FSP to execute in the short term, and that's also lower margins on the RDS side. So I think in the short term, I would say that is going to continue. And by short term, I mean in the next couple of quarters. having said that um i might mention that this uh pendulum move towards fsp i've said this before and i will repeat it i do not believe in um it's pretty in fact and it fluctuates by the way but in fact in this quarter the proportion of net bookings that fsp is in the very very low single digits and i mean very very low everything else was fsp so first um i'm sorry everything else was full service right uh fso so so i i think overall uh we saw fsp as a as a proportional backlog tick up uh one or two points from the historic 14 15 percent to more 16 16 17 but we see it coming down back to the same level. So I think RDS, yeah, in the short term, some mix, unfavorable mix. But I think, you know, after that, we should be back to a more favorable mix.
But all that's reflected for the next couple of quarters in the guidance. That's right. And you just also have to remember about the FX dynamic.
Operator
We have that tailwind, and that's compressing margin. as well right thank you thank you your next question comes from the line of jolinda sing with truest securities please go ahead thank you and thanks for taking my questions so i want to go back to task business uh thanks for the color by business lines i actually want to double click on business and consulting piece it seems trends there still remain below historical trends what are your expectations there in terms of business returning to high single double digit growth what are some of the key leading indicators you're watching for that business to start bouncing back
yeah look the pipeline is there we track uh pipeline versus prior years and prior and and pipeline coverage and i think we we're confident that um certainly in the future we'll return to meet to you know high single digits as it was in the past um the mix of projects is different we spoke about ai before and you know that's part of the equation as well so as we are transitioning to different offerings um we think that that's part of um of the of that transition but yeah we we we are expecting that to happen just basically based on our on our pipeline uh reviews thank you
Operator
but you're not expect you're not expecting to return this year right it's more like most likely next year or beyond just want to clarify that yeah probably end of the year next year yes okay thank you the next question comes online of ann heinz with mizuho please go ahead.
Good morning. Thank you. You referenced some of your clients have some short-term uncertainty. What do you think they need the most clarity on to accelerate projects? Is it MFN pricing? Is it clarity on maybe tariffs? And I know it's still early for 2026, but when I look at consensus estimates for R&D, revenue is up 4%. Do you think the current bookings environment and support that type of growth, or do we need an acceleration to support that?
And you saw the next 12-month revenue in backlogs that we've reported out of RADF. And now that doesn't cover you all the way to 2026, but the numbers give you some indication there. And our pipeline and RFP flow has been strong.
So we're not going to be giving 2026 guidance at this point, but you can kind of piece it together from all of that yeah and you had the question on the client's concerns and the policies well yeah i mean it's all of the above you know it's the the changes in the agencies and policies and so on this seems to be um stabilizing and some very good appointments and and and we feel good about that um you know mfn pricing we're just waiting you know there's been discussions and there's been thoughts but let me just say it's it i don't want to comment more but it's mostly it's extremely complicated yeah um and then tariffs You saw a lot of non-U.S. large pharma companies announce massive investments, and I think this will help.
Operator
Your next question comes on the line of Jack Mijan with Nephron Research. Please go ahead.
Thank you. Good morning, everyone. 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 all and just thoughts on, you know, kind of a path to normalization there? Thanks.
Yeah, I mean, look, we mentioned the first quarter that cancellations were in the normal historical range and I'd say the second quarter, same thing, same trend and overall first half, really nothing unusual, no mega cancellation. and the average basically is the same as it was historically before we had the disruptions that we had last year.
Operator
Our next question comes from the line of Max Smock with William Blair. Please go ahead. Max, your line is open.
Hi, sorry about that. It's Christine Reins on for Max Smock. So, hoping you can give some quantification about the delays you are seeing on new clinical projects. I know that you gave the 10% figure last quarter, so curious if delays for new programs got better or worse in the second quarter. Thank you.
You're talking about which delays?
You're talking about RFP to decision-making timeline?
Yeah, I mean, that remains longer.
You know, again, the environment is more or less singular in terms of the uncertainty and positive decision-making. I mentioned that, you know, in many cases, some of these art programs are being launched because clients just can't wait. So, you know, some of what has been delayed, decisions were made to launch. But if you look at the totality of the decision timelines, they remain more elongated than usual. So really, I think our better performance in bookings and sales and generating opportunities is only partially related to a slight improvement in the environment. Because if you look at, for example, EVP funding, it wasn't particularly special, you know, since the beginning of the year has been relatively tame. It's just that we've been a lot more proactive and we've been extremely, extremely successful in the marketplace in terms of our win rates versus history. and in generating both the opportunities and in winning those opportunities. So I wouldn't necessarily derive an implication and assume that all of a sudden the market has returned to normal.
Operator
There are no further questions at this time. Mr. Joseph, I turn the call back over to you.
Thanks, operator. Thank you everyone for taking the time to join us today and we look forward to speaking with you again on the third quarter of 2025. The team will be available for the rest of the day to take any follow-up questions you Have a good day.
Operator
This concludes today's conference call. You may now disconnect.
