IQVIA Hldgs delivers impressive Q3 results with record free cash flow and $2.6 billion in net bookings, reaffirming full-year guidance and positive market outlook.

OPERATOR - (00:01:08)

Ladies and gentlemen, thank you for standing by. At this time, I would like to welcome everyone to the IQVIA third 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 STAR key again. 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.

UNKNOWN - (00:01:53)

Thank you. Operator.

Kerry Joseph - Senior Vice President, Investor Relations and Treasury - (00:01:54)

Good morning everyone. Thank you for joining our third quarter 2025 earnings call. With me today are Ari Boosby, Chairman and Chief Executive Officer Ron Brumman, Executive Vice President, Chief Financial Officer Eric Scherbert, Executive Vice President and General Counsel Mike Vida, Senior Vice President, Master Planning and Analysis and Gustavo Peroni, Senior Director, Investor Relations. Today we will be referencing a presentation that will be visible during this call. For those of you on our webcast, this presentation will also be available following this call in the Events and Presentation section of our IQVIA Investor Relations website at ir.iqvia.com before we begin, I would like to caution listeners that certain information discussed by management during this conference call will include forward looking statements. Actual results could differ materially from those stated or implied by forward looking statements due to 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 10K and subsequent SEC filings. In addition, we will discuss certain non GAAP financial measures on this call which should be considered supplement to and not 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.

Ari Boosby - Chairman and Chief Executive Officer - (00:03:31)

Thank you Kerry and good morning everyone. Thank you for joining us today to discuss our third quarter results. We delivered another strong quarter with profits towards the high end of our guidance reflecting solid operational performance. Free cash flow was particularly impressive this quarter. It was actually the highest quarterly free cash flow ever, even when you consider the large advances we got during the COVID 19 era for vaccine trials. This strong free cash flow of course reflects a good and disciplined working capital management by the team, but also an improved overall industry backdrop on the clinical side. Net bookings in the quarter totaled exactly $2,600,000,000 which resulted in a net book to bill ratio of 115, also reflecting the improving trends in customer demand that we started seeing in the second quarter as well as of course solid execution from our sales teams. In fact, our third quarter net bookings were 5% higher sequentially, 13% higher than a year ago and 21% higher than the trough that we experienced in Q1 this year. Key demand metrics were also strong in the quarter. The EBP funding momentum is building this year with each quarter delivering steady sequential growth reaching $18 billion in Q3. According to BioWorld, our qualified pipeline was up 6% year over year driven by large pharma and EBP segments. You will recall that in the second quarter we had high single digit sequential RFP flow growth and low teens growth year over year. This quarter we saw again high single digit RFP flow growth sequentially and 20% growth year over year with growth across all segments. Importantly, client decision making timelines have been improving sequentially. Finally, our backlog reached a new record of $32.4 billion at the end of the quarter showing growth of 4.1% compared to the prior year. On the commercial side, Taz continued to perform well in the third quarter and delivered strong results despite tougher year over year comparisons. In fact, if you look historically at sequential revenue growth, Q3 is generally flat to down versus Q2 and we were slightly up this quarter. This was driven by ongoing momentum from drug launches and the strength of our broader commercial portfolio. I do want to mention the good growth we had this quarter in csms, about a third of which was from an acquisition. We decided to increase our capabilities in this segment as we are seeing a developing trend of large pharma clients increasingly looking to outsource commercial operations for established brands in specific markets. These tend to be large multi year engagements typically spanning across therapies and geographies and IQVIA is uniquely positioned to capitalize on this trend by combining our information analytics and domain knowledge with a local sales force footprint. Let me turn to the result of the quarter again strong revenue and profit results. Revenue for the third quarter came in at the high end of our guidance range representing year over year growth of 5.2% on a reported basis and just under 4% at constant currency. First quarter adjusted EBITDA was up 1.1%. Third quarter adjusted diluted EPS of $3 increased 5.6% year over year. Let me just now, as I usually do, share a few highlights of business activity. Let me start with Taz New drug launches continue to be a key area of strength for iqvia. A few examples A biotech client awarded us a multi year integrated partnership to support faster product launches. This win includes a full suite of information assets and analytics capabilities. A top 10 pharma clients awarded IQVIA program to support the launch of a novel Oncology therapy top 20 pharma clients awarded IQVIA contract to support the launch of the dual indication metabolic therapy utilizing AI capabilities to integrate advanced patient insights into product utilization and patient Response. The top 10 pharma clients selected IQVIA to provide launch support for new autoimmune disorder therapy. The engagement includes advanced AI enabled patient level solutions that enable performance tracking and analytics near real time and integrate special key pharmacy data and payer insights. A good example of the commercial outsourcing trend I mentioned earlier was a very large award from the top five pharma clients to manage end to end commercialization and promotion of an established brand portfolio in a very large overseas market. We're progressing as planned to deploy highly specialized industry AI agents. So far we have approximately 90 agents in development covering 25 use cases across commercial, real world and RMBS. We are seeing growing demand to help our clients accelerate AI adoption. We are increasingly helping our clients build data infrastructures that are robust and AI ready by leveraging IQVIA's healthcare grade AI ecosystem combining advanced information management, integrated platforms, security, safety and privacy along with domain expertise. Let me share a few examples of key wins in the poll. A top 20 pharma clients selected IQVIA to deliver a next generation information management solution that streamlines hundreds of sales data feeds into an AI enabled centralized simplified global warehouse. Now the top 10 pharmacies awarded IQVIA a contract to deploy a next generation AI enabled SAS platform to optimize global compliance reporting. Biotech client chose iqvia to deploy a new global master data management program to enhance AI enabled omnichannel marketing and analytics operations. Our real world business continues to perform well. Here are some examples. Top 10 pharma clients selected IQVIA to lead a post market commitment study evaluating treatment outcomes in African American patients with long cancer. A biotech client selected iqvia to lead a prospective real world study supporting a regulatory commitment to a rare oncology disease. Biotech clients selected iqvia to deliver a retrospective real world study supporting post marketing commitments for their newly approved drugs to fulfill regulatory requirements. Turning to R and D solutions, the positive momentum that we saw in Q2 continued to build through Q3 a few standout wins with our biotech customers. First in oncology, a first time sponsor selected IQVIA to lead a phase one trial for a novel leukemia treatment. Another biotech client selected IQVIA to lead a complex phase one and phase two trial in hematologic oncology targeting multiple cohorts across two indications. We were also selected as the exclusive CRO partner for the biotech's entire cardiovascular program and of course this recognized our leadership in cell and gene therapy and cardiovascular research as well as our ability to execute globally. Large pharma was also strong in the quarter. We were, for example, selected to lead a phase two study in stroke therapy demonstrating our deep neuroscience expertise and global trial capabilities. Another top 10 large pharma clients selected IQVIA to manage a global phase 3 MASH program, leveraging AI enabled pathology tools and a robust site network to accelerate execution. We were also selected to lead a phase 3 ovarian cancer study highlighting our deep therapeutic expertise and the strength of the integrated delivery model we built in partnership with his clients now, before I turn it to Ron for details on our financial performance in the quarter, I want to say a word about the CFO transition we've announced some time ago. As you know, Mike Fidoc will step into the CFO role on February 28, 2026 succeeding Ron Bruman who will retire after remarkable tenure. Ron and that's the good news. Ron will stay on as a senior advisor to continue to help us on specific projects and to help ensure a smooth transition. Ron has been a highly valued leader of this company for many years. In fact, Ron and I have been working together for over a quarter century. Ron has been instrumental in shaping IQVS financial strategy, driving its transformation into a leading global organization. He was here for managing the IMS health IPO in 2014 through the Quintiles merger in 2016 and of course he returns in 2020 to help us navigate the pandemic. His steady leadership and strategic long term vision have been essential in building a high performance global finance organ and in helping iqvia remain resilient during unprecedented times over the past few years. Mike brings deep industry experience and he has held key financial leadership roles across iqvia, including as CFO of our R and D Solutions business and prior to that as CFO of our IQVIA Laboratory business. He's worked closely with me and the senior team for years now and he's very well positioned to lead our finance function into IQVIA's next phase of growth. Let me now turn to Ron for more details on our financial performance.

Ron Brumman - Executive Vice President, Chief Financial Officer - (00:15:29)

Thanks Ari and good morning to everyone. Let's start by reviewing revenue third quarter revenue of $4,100,000,000 grew 5.32% on a reported basis and 3.9% constant currency. Now excluding Covid related work from this year and last, revenue grew 4.5% of constant currency and this included about a point and a half of contribution from Acquisitions Technology and Analytics Solutions. Revenue for the third quarter was $1,631,000,000. That was up 5% reported reported in 3.3% constant currency. R&D Solutions third quarter revenue was $2,260,000,000 growing 4.5% reported and 3.4% of constant currency. Now excluding the step down in Covid related revenues, R&D's revenues grew 4.5% of constant currency. And lastly our contract sales and medical Solutions business or CSMS grew revenue of 209 million had revenue of $209 million and that was up 16.1% reported and 13.9% at constant currency. Year to date revenue for the company was $11,946,000,000. That's up 4.4% reported, 3.7% at constant currency and excluding all Covid related work year to date growth was approximately 4.5% of constant currency. Second analytics solutions revenue was $4,805,000,000 year to date, that's up 6.7% reported in 5.8% of constant currency R&D Solutions Year to date revenue of $6,563,000,000 was up 2.5% at actual FX rates and 1.9% of constant currency. Excluding Covid related work from both periods, revenue grew approximately 3 1/2% at constant currency. And lastly CSMs year to date revenue of $578 million was up 6.8% reported and 5.9% of constant currency. Let's move down the P and L now. Adjusted EBITDA for The quarter was $949 million representing growth of 1.1%, while year to date adjusted EBITDA was $2,742,000,000. That's up an even 2% year over year. A third quarter GAAP net income was $331,000,000 and GAAP diluted earnings per share was $1.93. Year to date, GAAP net income was $846,000,000 or $4.86 of diluted earnings per share. Adjusted net income was $515,000,000 for the third quarter and adjusted diluted earnings per share was even $3.00. Year to date adjusted net income was $1,480,000,000 or $8, $0.50 per share. Now as already noted, we had strong net new bookings this quarter, confirming the improved demand environment we started to see in the second quarter. The R&D's backlog September 30th was $32.4 billion up 4.1% year over year and next 12 month revenue from backlog was $8.1 billion that up 4.0% year over year. Reviewing the balance sheet, as of September 30th cash and cash equivalents totaled $1,814,000,000 in gross debt was $14,957,000,000. That resulted in net debt of $13,143,000,000. Our net leverage ratio ended the quarter at 3.52 times trailing 12 month adjusted EBITDA and third quarter cash flow from operations was $908,000,000 and capital expenditures were $136,000,000,000, which resulted in record free cash flow for the quarter of $772 million. Now I'll turn it over to Mike Biot who will share details on our guidance.

Mike Biot - (00:19:57)

Mike thanks Ron and good morning everyone. Let's start with our full year guidance. We are confirming our full year 2025 guidance and are narrowing the ranges for revenue adjusted EBITDA and adjusted diluted earnings per share and are maintaining the midpoint of our prior guide. We expect revenue to be between $16,150,000,000 and $16,250,000,000 representing year over year growth of 4.8 to 5.5% or 5.2% at the midpoint. This revenue guidance includes approximately 100 million of COVID related revenue step down entirely in R&D Solutions, approximately 100 basis points of tailwind from foreign exchange and approximately one hundred and fifty basis points of contribution from acquisitions. These assumptions are unchanged from the prior guide. We expect adjusted EBITDA to be between $3,775,000,000 and $3,800,000,000, growing 2.5 to 3.1% year over year or 2.8% at the midpoint. We expect adjusted diluted EPS to be between $11.85 and $11.95 of 6.5 to 7.4% versus prior year or about 7% at the midpoint. Now turning to the fourth quarter, we're expecting revenue to be between $4,204,000,000 and and $4,304,000,000, which represents year over year growth of 6.2 to 8.7%. Adjusted EBITDA is expected to be between $1,033,000,000 and $1,058,000,000 representing growth of 3.7% to 6.2% versus prior year and adjusted diluted EPS is expected to be between $3.35 and $3.45, which represents year over year growth of 7.4% to 10.6%. And this guidance assumes that foreign currency rates as of October 27th continue for the balance of the year. So to summarize, in the third quarter we delivered strong top and bottom line results as well as record high free cash flow. RNDS net bookings were $2.6 billion, growing 13% year over year and resulting in a net book to bill ratio of 1.15 times the forward looking demand metrics in the clinical business continue to trend in the right direction with 20% ARP flow growth year over year and sequential improvements in client decision making timelines. TAS performed well and delivered solid results driven by ongoing momentum from drug launches and the strength of our broader commercial portfolio. And we reaffirmed our full year 2025 guidance with that. Let me hand it back to the operator for Q and A.

OPERATOR - (00:23:13)

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 and A roster. Your first question comes from the line of David Windley from Jeffries. Your line is now open.

David Windley - Equity Analyst at Jeffries - (00:23:38)

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

Ari Boosby - Chairman and Chief Executive Officer - (00:24:15)

Okay, well no, usually we keep the best for the last, but you start with the A big strategic question. So let's, let's start with that. Okay, well look, the strength in bookings momentum and RFP flow, I think we have to say, and we can see it in the industry in general, I think reflects a reduction in the level of uncertainty in the market environment and macro political environment. I think there have been a few developments that have sort of helped tilt decision making at large pharma on certain programs favorably and the climate overall has improved. That's undeniable in our sector. So that certainly is a big driver of our growth. The specifics of our see more, win more strategy, which we started earlier this year, which as, as you know, now has, has a lot of im imitators, has borne fruits as well in the sense that we've been looking at markets that we previously had, you know, hadn't been touching and had left some more marginal players essentially, you know, in a quasi monopoly situation in those segments. And we've decided to go after that. The pricing conversation is a little bit overdone in my opinion. You know, it's in a climate where market dynamics were unfavorable, with a lot of uncertainty and less deals to be had. There was more competition on pricing and all we did, you know, in the first part of the year was to align to those pricing discounts that, that were being offered as opposed to walk away in order to continue to build a book of business. We don't see that trend continuing. It hasn't been an issue at all. Certainly this past quarter the opposite. We've walked away from deals and we think that the sector in general is a lot healthier in terms of market dynamics. The level of uncertainty has gone down and pricing has returned to normal levels. You have a question, a follow up on PNL implications. Look, we, we have a 32 plus billion dollar backlog and only a tiny portion of that was subject to, you know, a few, you know, discounts that we did earlier in the year. Those, the revenues associated with those things are going to bleed over our PNL over the next five years and we do not expect that to have any impact whatsoever on our P and L going forward.

David Windley - Equity Analyst at Jeffries - (00:27:39)

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

Ari Boosby - Chairman and Chief Executive Officer - (00:27:41)

Thank you.

OPERATOR - (00:27:43)

Thank you. Your next question comes from the line of Justin Bauers from Deutsche Bank. Your line is now open. Hi.

Justin Bauers - Equity Analyst at Deutsche Bank - (00:27:54)

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

Ari Boosby - Chairman and Chief Executive Officer - (00:28:22)

Yeah, well, look, you know, I can't, I don't have a crystal ball here and I'm not going to give you 2026. This was a, a clever way of asking me about 2026 guidance. We're not going to do that here. As you know, we usually provide guidance for the year concurrent with the release of our fourth quarter and full year earnings early in the year. So end of January or early February will provide that. We're in the midst of our planning process and still early. We're still in October.

Justin Bauers - Equity Analyst at Deutsche Bank - (00:28:59)

And.

Ari Boosby - Chairman and Chief Executive Officer - (00:29:00)

But look, what I can tell you is we are going to deliver this year over 5% in top line revenue growth, which frankly given what we've been through and the environment we've been in in the past year and a half, two years, I think is a very, very strong performance. And you can see that compared to our larger, certainly the larger CRO peers, we are doing very, very well. So I cannot tell you yet what 26 will be in the next few quarters. But I mean, look, I would be surprised if revenue in growth in 26 is not at least the same or better than, than the growth that we are seeing this year. So I, I see that with a certain amount of confidence. Thank you.

OPERATOR - (00:30:07)

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

Elizabeth Anderson - Equity Analyst at Evercore ISI - (00:30:15)

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

Ari Boosby - Chairman and Chief Executive Officer - (00:30:42)

You mean the large pharma side? Yes, look, you know, large pharma went through a lot of transformation internally in terms of their investment programs. You going back to the IRA there was decent, this whole phase of reprioritization of programs and reviews of their pipelines which led to a elevated level of cancellations due to this reprioritization activity that lasted, you know, for a year, year and a half beginning mid of 23 and certainly continuing through 24. We see that activity as having essentially been completed and we haven't seen any further cancellations as a result of that type of activity. So we think that the pipelines are now fully sanitized. Of course they'll continue to be cancellations. You know that's kind of. But they are, they are all like more business as usual due to futility or other reasons and nothing unusual. You know, large pharma actually, you know, the RFP flow for our pharma is very strong. You know, I mentioned that our RSP flow growth year over year is 20% and that applies to large pharma and to EBP equally. I mean there's strong, strong momentum. And again, that's helped by the more calming environment and perhaps more certainty around what's coming. And it's also helped by the fact that these reprioritizations have been largely compared to completed and the programs are now on the table are programs that our clients want to, to engage in and, and want to go forward with our cancellations. I always say, you know, in recent years, worth about half a billion dollars a quarter, plus or minus a couple of hundred million dollars. So they could range between 350, $700 million, you know, in a given quarter. So a couple of billion dollars plus, you know, year in, year out. In 24 we had more than 50% higher cancellation than that.

Elizabeth Anderson - Equity Analyst at Evercore ISI - (00:33:31)

Right.

Ari Boosby - Chairman and Chief Executive Officer - (00:33:32)

Over $3 billion in 24. As because of these reprioritizations from large pharma that essentially is behind us. And year to date our cancellations follow the regular pattern. I think stretches somewhere between 500 around on average about $550 million according I saw the numbers yesterday. I think, you know, nothing much to talk about this quarter. I think we were a little bit towards the higher end of our range. But again not, not because of referral stations or simply normal also business. Our grosso bookings were very strong, very, very strong this year. And you know, and you can see that Also in our $2.6 billion of. Net. Net bookings which are up 13% year over year, up sequentially mid single digits. And you know, the trough we experienced, Q1, you know, probably was the trough we don't see that, you know, in the details. Again, large pharma dynamics returning to normal business conditions, to trending towards normal business conditions and, and biotech funding improving, which as you is the driver of EBP growth. And that again is reflected in our bookings and in our RFP flow as well.

Elizabeth Anderson - Equity Analyst at Evercore ISI - (00:35:09)

Very helpful, thank you.

OPERATOR - (00:35:14)

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

Michael Czerny - Equity Analyst at Learning Partners - (00:35:21)

Good morning and thanks for taking the question. Maybe if I can ask a little bit about TAs. Nice growth against obviously a tough comp. As you think about the pathway forward, what do you see as the contributions you're getting from some of your inorganic advancements? And where do you see the best opportunities to continue expand that business above and beyond your own R and D talk, AI talk, anything along that vein, that'd be great, thanks. Thank you, Michael. Well, you spoke about inorganic. I think, you know, we said the one and a half points of contribution to micro Reason to the company as a whole, as you know, as always has been the case. The bulk of that is in paas, although I think in this past quarter we did a large acquisition that was in RNDS and SMO. I think that what we spent $485 million that we spent in total. And most of that is one acquisition called Dext Oncology, which is an SMO specialized in oncology. Very attractive business. We acquired this, you know, end of Q3, so not much contribution in Q3. And the inorganic contribution to RNDS will be a few million dollars, I guess in the double digits, like $50 million or thereabouts of revenue to R and D s in Q4. With respect to ties, we didn't do much in Q3 and so I guess the acquisition is contribution for the year. Well, we did a CSMS deal as well. Right. Which is. It's small, obviously, but since CSMS is a small segment, it was a large. Piece of it.

Ari Boosby - Chairman and Chief Executive Officer - (00:37:25)

So not much in tight in Q3. In general, we try to buy technology companies, companies that can add capabilities to our suite of products, analytics companies. There's a lot of innovation, as you know, in the AI space. Medical affairs. Yeah, medical affairs. Real world. Real world is a very strong. Real world evidence was really very, very strong in the quarter and we expect that to continue into the future. So, yeah, I mean, yeah, I mean, for the year, you know, again, a point and a half, I would say 50, 60 of that would be ties and rep and the rest before the year. Right. 25. And then the rest RNDS and then a little bit CSMS.

OPERATOR - (00:38:34)

Your next question comes from the line of Shlomo Rosenbohm Stifle. Your line is open.

Shlomo Rosenbohm - (00:38:40)

All right, thank you, Ari. Before I ask you a question, I just want to also commend Ron for. So, Ron, I've seen you retire before and I'm not fully convinced you're gone right now. It won't work to apply to Ron. You're not retiring. Yeah. You've dragged him out of retirement in the past, Ari. So I don't know. Ari, I want to ask you to talk a little bit about the subcomponents that in TAs and how they're growing in terms of real world evidence and consulting and analytics and just, you know, some of, some of the trends that you're seeing there. I know consulting often kind of leads the trend in terms of, you see that picking up. That means that, you know, the environment is getting better and maybe you could just talk a little bit about each of the components and what you're seeing and maybe what that says about the market. Yeah. So look, the growth rate in Q3, it's hard to derive big trends because as you know, Q3 in general is the weakest quarter in the year. But specifically this year, we had a tough compare with last year. What was the growth of task Q3 last year was like 8.6%, I want to say. I was not mentioned yet. 8.6% growth last year. So we knew we had a tough compare this quarter. But as I mentioned in my introductory remarks, sequentially we're slightly up and usually because Q3 is the toughest quarter given nothing happens for six weeks in Europe. It used to be three weeks, then it's four and now it's six and it's going to eight is working. So.

Ari Boosby - Chairman and Chief Executive Officer - (00:40:25)

You know, I think that the performance this quarter was very strong. It was detected largely by the real world evidence, which was very, very strong. And everything else was obviously data is usually low single digits and everything else was between low to kind of mid single digits growth, again against very fast compares. Same for consulting. Are you seeing a pickup in that consultant? You will recall that I know when you asking consulting, because it's kind of a, the most discreet and it's, it's positive, you know, in terms of leading indicator. You know, when things were trending negative territory, consulting went down very rapidly. You know, in the 24, you know, end of 23, the first part of 24 time frame consulting was down actually negative. One of the boards, I think it was almost negative double digits, but it's positive this quarter. And again, everything outside real world evidence in aggregate was, you know, in single digits or thereabouts.

Shlomo Rosenbohm - (00:41:44)

Thank you.

Ari Boosby - Chairman and Chief Executive Officer - (00:41:47)

Thank you.

OPERATOR - (00:41:49)

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

Eric Caldwell - Equity Analyst at Baird - (00:41:58)

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

Ari Boosby - Chairman and Chief Executive Officer - (00:42:41)

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

Eric Caldwell - Equity Analyst at Baird - (00:42:50)

Yeah. You guided in February to 6.3 to 6.5 billion and the, the year to date number through three quarters is 4.8. A little over 4.8. So that leaves less than 1.5 to less than 1.7 to get to the, to the full year. If I've done the math. Yeah.

Ari Boosby - Chairman and Chief Executive Officer - (00:43:10)

I'm gonna talk to the finance team here. Ask him. I don't have the numbers in front of me, but what you were suggesting that that ties would be lower than our guidance. I don't see that.

Eric Caldwell - Equity Analyst at Baird - (00:43:25)

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

Ari Boosby - Chairman and Chief Executive Officer - (00:43:46)

Eric, I think we are delivering on guidance.

Eric Caldwell - Equity Analyst at Baird - (00:43:53)

Eric.

Ari Boosby - Chairman and Chief Executive Officer - (00:43:53)

We'll help you with some of the key forward details, but on a full year basis there's been no change all year which has that the full year CFX growth rates are between sort of 5 and 6%. So there's no change there. So we can help you. We always said 5 to 6% growth year over year. Correct.

Eric Caldwell - Equity Analyst at Baird - (00:44:10)

CFX. CFX. Correct. And that's, yeah, I think you said. 5 to 7 constant currency and I think I believe it was 5 to 7 on February 6th. Was the, the range.

Ari Boosby - Chairman and Chief Executive Officer - (00:44:24)

Well, we, we narrowed, we narrowed our. Guide in the, in the last call there. So, so we're still sticking with the five to six. There's no change from the prior guide and no change where Taz is going. To land in the.

Eric Caldwell - Equity Analyst at Baird - (00:44:36)

Okay.

Ari Boosby - Chairman and Chief Executive Officer - (00:44:36)

Yeah, we don't, I don't see any. I, there's no change, Eric. Yeah, we'll help you with that with the Q4, but there's been no change.

Eric Caldwell - Equity Analyst at Baird - (00:44:45)

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

Ari Boosby - Chairman and Chief Executive Officer - (00:44:52)

Any, Anything else you had other than this verification?

Eric Caldwell - Equity Analyst at Baird - (00:44:56)

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

Ari Boosby - Chairman and Chief Executive Officer - (00:45:00)

Let, let me know.

Eric Caldwell - Equity Analyst at Baird - (00:45:02)

I, I, I am going to, I'm.

Ari Boosby - Chairman and Chief Executive Officer - (00:45:04)

Gonna give you a, only a special discount because that wasn't really a question, so.

Eric Caldwell - Equity Analyst at Baird - (00:45:08)

Well, look, I, I mean, you know.

Ari Boosby - Chairman and Chief Executive Officer - (00:45:10)

That was like a commentary. You know, you were trying to.

Eric Caldwell - Equity Analyst at Baird - (00:45:14)

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

Ari Boosby - Chairman and Chief Executive Officer - (00:46:15)

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

Eric Caldwell - Equity Analyst at Baird - (00:47:05)

Yeah.

Ari Boosby - Chairman and Chief Executive Officer - (00:47:06)

And phase one in oncology is a little bit different because you're not dealing with healthy volunteers here. Right. So it tends to feed your later business. Another phase one trial. So there is some distinction there. And that's what next oncology was Phase one Oncology.

Eric Caldwell - Equity Analyst at Baird - (00:47:22)

Yeah, perfect. That's super helpful, thanks. Yeah. And then the two trials. Yeah, the two trials.

Ari Boosby - Chairman and Chief Executive Officer - (00:47:30)

No change there. We don't have anything factored into our fourth quarter guidance for revenue burned from either of them. So I suppose that's a slight change from. From what we said. It's basically all pushed out of the. Year. And it's not contemplated in the. In the diamonds. Right. Yeah. Bear in mind that, you know, we mentioned these. What is it like a year ago at this time? Because it caused us at the time to change our guidance for all the. These were fast burning and it had already gotten started and they were interrupted. And so that caused us to change our guide for RDS in the fourth quarter for the fourth quarter of last year. And so we had to mention it. We only mention specific trials to the extent we can and we try to be very careful because we are mindful of confidentiality for our clients and so on. So we cannot say very much but we do mention it when there is a significant event attached to one trial in this case was two and that caused us to change anything in our, in our members. But bear in mind we, you know, at any point in time we're working on a couple of thousand trials and you know, and we keep building backlog as you saw and, and thankfully we have had very positive momentum on our bookings and it's, it's continuing so we feel good about that and, and, and it continue to stagger on our book of business. So. Yeah, but which, which again enabled us to continue to deliver and do even better on RDS even without the, those trials resuming this year. Thank you, Eric. I'll give you one more question. Yes, one more.

OPERATOR - (00:49:38)

Next question. Operator, this will be our last question. Your last question comes from the line of Jeff Garo from Stevens. Your line is open.

Jeff Garo - Equity Analyst at Stevens - (00:49:50)

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

Ari Boosby - Chairman and Chief Executive Officer - (00:50:24)

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

OPERATOR - (00:55:25)

Yeah, Mr. Joseph, I turned the phone. Call back over to you.

Kerry Joseph - Senior Vice President, Investor Relations and Treasury - (00:55:30)

Thank you. Thanks for taking the time to join us today and we look forward to speaking with you again on the 2025 quarter and full year earnings call. The team will be available directly to take any follow up questions you might have. Thank you.

OPERATOR - (00:55:46)

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