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. [Operator Instructions] 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. Kerri Jo

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 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. And in fact, the R&DS 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 grow 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 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 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. 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 [indiscernible] 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 reserve 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 clients 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. 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 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 8 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 network. This strategic collaboration aims to transform oncology trials globally. By uniting IQVIA's global scale and connected intelligence with SCRI, deep community oncology expertise, we are 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 R&DS team had in the oncology space. A biotech client 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 2 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 2 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 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 recently 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 with up 5.3% on a reported basis and 3.6% in constant currency. And 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. That's up 8.9% on a reported basis and 6.8% in constant currency. R&D Solutions set 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, and that 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. And 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 and 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. Okay. 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 that being 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 balance sheet metrics now. As of June 30, cash and cash equivalents totaled $2.039 billion in gross debt was $15.490 billion, and that resulted 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 of $151 million, resulting in a free cash flow of $292 million. And you saw in the quarter that we repurchased $607 million of our shares, which brought our first half share repurchase activity to above $1 billion. This leaves 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're 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 year-over-year FX tailwind of approximately 100 basis points. We continue to assume about $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 prior year or about 7% at the midpoint. Okay. 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 expectation. 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 the operator, Tina, for Q&A.

[Operator Instructions] 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 than 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 kind of humming along. So I think that's a diversification story is shining through here.

Thanks for your question. Not sure, I guess you're asking more of a general 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. And so 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 really saw an improvement in the general environment when things slowed down and there was sort of a lot of things put on hold and TAS growth deteriorated to low single digits end of '23 and first part of '24, we saw decision time lines extend considerably. And they've now gone back to normal actually even better than that. And 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 1/3 of the TAS business. And the rest of the business, 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 driver -- 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 prior year. So we continue to be confident in the fundamentals of the business and the recovery. And you asked about R&DS. We said humming along. I wouldn't call what the team did for humming along. I think there was 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 [ army ] versus the $2.1 billion we booked in the first quarter. And we 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 the R&DS and what you're talking about. It sounds like from 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 Medpace also reported with some better numbers. And usually, if you have a few competitors there 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. Just to put things aside here, the competitor you mentioned that you call it the competitor, but I just want to say, we never meet in any big defenses with this competitor. So we're not planning -- it's sort of a different business as the numbers show. But moving to your question on R&DS, we -- the environment, I said, remains unsettled in terms of the administration policies and the level of uncertainty that's out there. But whereas in prior periods, we saw clients sort of on hold. We noted that clients essentially not necessarily returning to business as usual, but getting on with their programs. If you have in front of you a Phase III program that's very important for the company, and that is going to last 4 years, it's important to 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 6 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, we -- to use your expression, which I think is a good one, we leaned on or lean in to the market a little bit more forcefully than usual. We call this, See More, Win More, that's we're expanding 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 we would have expected. And by the way, this is across segments, large, mid and EBP. But I would note that the EBP segment was particularly strong.

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

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. 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. So on the cadence, I mean, first of all, generally, and that there is a certain level of seasonality to our business, which you're familiar with. First quarter being the sort of weakest, a lot of our business in Europe essentially stops from 15th of July to 15th of September. But -- and 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 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 initiation discussions with the clients, and that is still on as forecasted. And that obviously will be responsible for some of the larger than usual uptick in the fourth quarter of this year. That's for the R&DS. You have other questions on TAS. Again, tougher compare 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 of the year in TAS. But 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. And 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 and especially in the fourth quarter because of that resumption of that 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 1/3 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. And about 2/3 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&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.

It's a mix. Basically, the short answer is the pressure on gross margin is mix driven for 2/3 and FX driven for 1/3. 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 1/3 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, exactly.

Yes. Well, I mean, look, again, once 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 5 or 6 CROs, that is the 3 longest ones and the 3 smaller ones. And rebid their preferred partnerships. And as we mentioned, we were very happy that we won and expanded all of those relationships further. I would say the 3 largest ones essentially are the main providers and the smaller ones are invited essentially to keep pricing in line from the point of view of the large pharma customers. And with respect to the other segments, it's relationships, it's go-to-market. And generally, the EBP segment, you may have 2 or 3 bids, and we don't see much of a difference versus what was the case before. Now some of the competitors are forcing a little bit of price reductions. And I would say 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 because we would not have wanted to align at that price level. Now we -- 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 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. So -- 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 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?

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 a 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 3 use cases in each of commercial, real-world and R&DS. We are seeing positive results. We're experiencing significant client interest. Some are already being used. For example, we have one multi-agentic system for literature review with expanded capacity to -- that has expanded capacity to review by 10x. Another agent allows us to reduce delivery time by 2/3 from 12 weeks to 4 weeks with 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 production and covering 15 use cases. What this means -- look, there's an enormous amount of interest from clients. Obviously, every large organization 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 speed here is extremely important because it all depends on your ability to train your AI models. And we've got the goods, so to speak. We've got 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 terms of 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 study is 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 to 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 sort of what 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?

Well, look, the success in the marketplace is a function of generating as many opportunities as possible but we have the opportunity to bid. And as I said, that's part of 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 teens year-over-year and high single digits sequentially. And again, the growth was across all customer segments. I might say EBP was up very, very strong -- very strong. [indiscernible] was at low teens year-over-year. Large pharma was low to mid-single digits, and EBP was much higher than that. Now it's great to generate the flow, then 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 fine-tuned 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 flow 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, EBP is there in the double-digit growth year-over-year. So we don't -- 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 through it. 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.

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

I was hoping to talk a bit more about the margin. The 2/3 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, and this 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. Sorry, everything else was full service, right, FSO. So I think 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.

And you just also have to remember about the FX dynamic, we have that tailwind and that's compressing margins as well.

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 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?

Yes. Look, the pipeline is there. We track pipeline versus prior years and pipeline coverage. And 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. So as we are transitioning the different offerings, we think that, that's part of that transition. We are expecting that to happen just basically based 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 like bookings environment supports that type of growth? Or do we need an acceleration to support that?

Ann, you saw the next 12 months 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 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.

Yes. And you had a question on the clients' concerns and the policies. Well, yes, I mean it's all of the above. It's the changes in the agencies and policies, FDA and so on. This seems to be sort of stabilizing and some very good [ improvements ] and we feel good about that. For the [ MFN ] pricing, we're just waiting. There's been discussions and there's 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 company announced 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 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. 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.

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

It's Christine Rains 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?

You're talking about which delays?

You're talking about RFP to decision-making time line?

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 [indiscernible] are being launched because clients just can't wait. So some of what has been delayed, the decisions were made to launch. But if you look at the totality of the decision time lines, 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 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.