IQVIA Holdings Inc. Q2 FY2025 earnings call

Management Statement and Operational Highlights

• IQVIA delivered strong revenue and profit results in the second quarter, with revenue exceeding the high end of guidance. TAS reported revenue growth above expectations at 8.9%, led by real-world evidence. R&DS had net bookings of approximately $2.5 billion and a record backlog of over $32 billion.
• AI is a key focus, with IQVIA developing AI agents in collaboration with NVIDIA, recognized as a front-runner generative AI leader. Use cases include target agentification, clinical data review, etc.
• Business activities included TAS winning client engagements for market access strategies and product launches, R&DS winning oncology and obesity trials, a collaboration with Sarah Cannon Research Institute, and a decentralized trial app recognized for patient engagement.

Segment Performance

• Technology & Analytics Solutions (TAS): Second quarter revenue was $1.628 billion, up 8.9% on a reported basis and 6.8% in constant currency. For the first half, TAS revenue was $3.174 billion, up 7.7% reported and 7.2% constant currency.
• R&D Solutions (R&DS): Second quarter reported revenue was $2.201 billion, up 2.5% reported and 1.3% at constant currency. Excluding COVID-related revenues, R&DS revenue growth was 4.2% at actual currency and 3% at constant currency. First half R&DS revenue was $4.303 billion, up 1.4% reported and 1.2% constant currency. Excluding COVID-related work from both periods, R&DS revenue grew 3.1% at actual currency and approximately 3% constant currency for the half. R&DS backlog at June 30 was $32.1 billion, an increase of 5.1% year-over-year.
• Contract Sales & Medical Solutions (CSMS): Second quarter CSMS revenue was $188 million, up 9.3% reported and 6.4% constant currency. First half CSMS revenue was $369 million, up 2.2% reported and 1.9% constant currency.

Guidance

• Full year revenue is expected to be between $16.100 billion and $16.300 billion, representing year-over-year growth of 4.5% to 5.8%. Adjusted EBITDA is expected to be between $3.750 billion and $3.825 billion. Adjusted diluted EPS is expected to be between $11.75 and $12.05.
• Third quarter revenue is expected to be between $4.025 billion and $4.100 billion. Adjusted EBITDA is expected to be between $935 million and $955 million. Adjusted diluted EPS is expected to be between $2.92 and $3.02.

Risks

• Uncertainty regarding administration policies affecting the biopharmaceutical industry causes delays in decision-making on new programs.
• Pricing pressures due to more competitors at the table in a potentially tighter market environment.

Question and Answer

Q: On TAS defying the overall environment, how does it continue?

A: TAS delivered better-than-expected revenue growth, with real-world evidence being a strong driver. Win rates have improved, and leading indicators for continued strength in 2025 are positive.

Q: On R&DS environment, any improvement?

A: The environment remains unsettled, but clients are moving on with their programs to some degree. The See More, Win More strategy has improved win rates and generated strong RFP flow.

Q: Cadence in the back half of the year?

A: There is seasonality, with R&DS expecting a resumption of a large trial in the fourth quarter contributing to stronger activity. TAS faces tougher year-over-year comparisons in the back half.

Q: AI development and demand?

A: IQVIA is progressing with AI agent development, having over 20 agents in production and developing over 50 more. There is strong client interest in these AI solutions.

Q: Cancellations and normalization?

A: Cancellations have moderated and are back to historical ranges, with no mega cancellations and average levels normalized.