IQVIA HOLDINGS INC.(IQV)Q2 2026 法說會逐字稿

Good morning, everyone. Thank you for joining our second quarter 2026 earnings call. With me today are Ari Bousbib, Chairman and Chief Executive Officer; Michael J. Fedock, Executive Vice President and Chief Financial Officer; Eric Sherbet, Executive Vice President and General Counsel; Clarissa Willett, Senior Vice President, Financial Planning and Analysis; and Kerri Joseph, Vice President, Investor Relations. Today, we will be referencing a presentation that will be visible during the call for those of you on our webcast. This presentation will also be available following this call in 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 a supplement to, 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. As previously disclosed, we implemented a new segment reporting structure effective January 1, 2026. In conjunction with this change, prior period segment amounts have been recast to conform to this reporting structure. I would now like to turn the call over to our chairman and CEO, Ari Bousbib.

Thank you, and good morning, everyone. Thank you for joining us today to discuss our second quarter results. IQVIA delivered an outstanding second quarter with revenue, adjusted EBITDA, and adjusted diluted earnings per share all exceeding the high end of our guidance. Importantly, the momentum we saw in the first quarter continued with improving market conditions and strong operational execution. Organic growth for the company as a whole accelerated to 6% year-over-year, which is three times the rate we delivered a year ago. Adjusted EBITDA margin began improving earlier than we had anticipated due to better operational performance. Let's look at the results for the quarter. Total revenue for the second quarter exceeded the high end of our guidance range, representing year-over-year growth of 8.7% on a reported basis with foreign exchange much less of a tailwind than we had anticipated.

At constant currency, growth was very strong at 8.5%. Second quarter adjusted EBITDA was above the high end of our guidance as well, representing year-over-year growth of 9.2%. Second quarter adjusted diluted EPS of $3.15 also exceeded the high end of our guidance range and increased 12.1% year-over-year. The beat was driven entirely by strong operational performance. Let's discuss the results by segment. On the clinical side, R&D has delivered great results with revenue growth of nearly 9% and organically 7%. We had $3.15 billion in net new bookings, representing 19% growth year-over-year and 27% growth sequentially, with notable strength in full-service bookings translating into a quarterly book-to-bill ratio of 1.22. This 1.22 was in a quarter where our revenue was up almost 9% year-over-year, stronger than anticipated. I want to point out that the improvement in bookings is not just from this quarter alone.

I always remind you that we are a long-cycle business, and it is more meaningful to look at trends over longer time periods. If you look at our last 12-month net new bookings, they have increased in each of the past four quarters. With $11.3 billion of last 12-month net new bookings as of June 30, they are up 13% year-over-year. What these metrics point to is a consistently improving demand environment as well as improving win rates for our R&D Solutions business. On the commercial side, organic revenue growth accelerated year-over-year to 5%, which is more than four points higher organic growth than a year ago. This was driven by clients launching newly approved products and expanding the breadth of services they utilize from IQVIA. Notably, analytics and consulting grew organically high-single digits year-over-year, the highest growth rate since 2022. Commercial engagement services and patient solutions both continued to grow double-digits year-over-year and our AI offerings gained further traction with increased customer adoption.

With three consecutive quarters of strong, sustained, and improving results, and pipelines that remain at record levels, there is clear momentum in commercial solutions. Let me now give you a little more color on what we are seeing in the market environment and let's start with forward-looking demand metrics in the clinical environment. RFP flow growth remains strong with double-digit growth both year-over-year and sequentially with improvements across all client segments. Decision timelines continue to shorten and EBP funding continues to be very strong, with the second quarter at $35 billion according to BioWorld, which is more than double the Q2 2025 number. I want to elaborate on this EBP segment. In response to investor feedback, and in reviewing publicly available information, we are taking the opportunity to update our own classification of customer segments to help you better benchmark IQVIA to our CRO peers.

From now on, we are going to define large pharma by the top 20 companies by Rx sales. Midsize companies will be the next 60 pharma companies by Rx sales, and EBPs will be everyone else. I want to give you the breakdown of R&D Solutions revenue by customer segment, as I just defined them. Large pharma represents approximately 50% of our R&D Solutions revenue. Midsize companies represent approximately 15% of our R&D Solutions revenue. And EBPs represent 35% of our R&D Solutions revenue. It is apparent based on publicly available information that we have more revenue in the EBP segment than any of our CRO peers. This is extremely important because emerging biopharma continues to be where much of the industry's innovation is coming from. A decade ago, EBPs represented about 45% of all clinical trial starts globally. Today, EBPs represent about 70% of all clinical trial starts globally. EBP R&D spend is also expected to grow at two to three times the rate of large pharma R&D spend.

And, of course, EBP trials are full-service outsourcing. All of this creates a meaningful opportunity for IQVIA given we are the largest EBP provider. At the same time, large pharma continues to be a significant segment for us. In fact, we are benefiting from the strategic outsourcing partnership renewals by large pharma over the past two years, which we have discussed previously. We have significantly expanded the number and scope of our preferred partnerships. As a result, we have seen our win rate with large pharma improve materially, leading to an expansion of our share of wallet with those partnerships and, in several cases, replacing large CRO incumbent providers. Shifting now to commercial solutions, the market environment continues to improve, supported by a nearly 45% increase in new drug launches in the first half of 2026 versus the first half of 2025. This is important because launch activity is a significant driver of demand across our commercial portfolio, with roughly half of launch-related spending typically occurring in the first two years post approval.

In addition, there is an increasing trend from our large pharma customers seeking to outsource the full commercialization of certain therapies in select geographies. Given our global footprint and spectrum of capabilities across information, insights, and engagement, we have been winning a fair share of these opportunities. I want to take a moment to again remind you how to think about our commercial solutions business, especially in the era of AI. We help our clients in three main areas: one, understand their market; two, plan their commercial strategies; and three, engage with their own customers. One: we help clients understand the landscape primarily through our information offering. Our information business represents about 30% of our commercial solutions segment and revenue typically grows at low-single digits. Two: we help our customers plan their commercial strategies primarily through insights from our analytics and consulting business.

This business represents about 20% of our commercial solutions business, and it grows mid- to high-single digits. And three: we help our customers engage with their own customers — that is healthcare providers, distribution channels, patients, and payers — through our patient solutions, technology, and commercial engagement services. That in aggregate is about 50% of our commercial solutions business and grows at high-single digit to low-double digit rates. We have continued to see increased demand for these services across the board, as is evident in our commercial demand indicators. The pipeline continues to grow strong double-digits year to date. Decision timelines continue to reduce double-digits. And we are also winning more with win rates up double-digits. When we think about future trends across both of our segments, clinical and commercial, we see the outsourcing market continuing to grow in 2027 and the years ahead.

In fact, with AI, we continue to contribute to this market expansion and will continue to fuel a strong tailwind for IQVIA. On the clinical side, clients are already telling us that AI in discovery will only increase demand for CRO services, as more molecules with higher predicted success enter development. Additionally, IQVIA's leading AI solutions are further differentiating our clinical offerings and deepening our partnerships across all customer segments — large, mid, and EBP. Our AI-enabled capabilities, which we have been working on, training on, and refining for at least two years, are already improving study design, accelerating timelines, and reducing operational risk across complex global trials. Let me give you an example of how this is playing out with large pharma. One of our longstanding customers recently expanded its partnership with IQVIA to include our full-service clinical capabilities.

That expansion led to an end-to-end award for a large complex Phase III stroke outcomes study. This client specifically told us that our AI-enabled capabilities in site startup and enrollment, along with our therapeutic expertise and global execution model, clinched the deal because it will help manage risk and run these studies with greater predictability. In another example, an EBP awarded IQVIA a complex global Phase III oncology study across multiple treatment arms. We won here because AI-enabled patient recruitment will help keep a complex study moving at higher speed with much better predictability. Another EBP selected IQVIA for a series of global autoimmune programs that bring together clinical laboratory and technology-enabled patient and home solutions. Our AI-enabled patient-reported outcome capabilities made the difference because they help support patient retention, protocol compliance, and higher-quality outcomes.

In commercial, we are seeing AI begin to contribute more directly to top-line growth as clients move beyond pilots and data foundation work and start to deploy IQVIA AI agents more broadly. Let me give you an example of what that looks like in practice. A midsized pharma client is expanding its use of an IQVIA AI immunology franchise in 95 countries. We are combining our global syndicated pharmaceutical market data with our launch planning conversational AI agent to give the client an integrated view of market dynamics and help teams get to actionable insights in near real-time. The benefit here is speed, precision, and accuracy. Another example in commercial: we are working with a top-five large pharma to deliver a complete AI-enabled enterprise analytics solution that seamlessly brings together data, technology, and advisory support. This will deliver customized workflows that accelerate decision-making and improve quality and accuracy.

Beyond these broad and deep relationships with our customers, governments and regulatory authorities around the world look to IQVIA's trusted healthcare expertise and insights. Recently, IQVIA was the only CRO invited to provide our perspective on clinical trial innovation at the Clinical Trials Roundtable with the U.S. Department of Health and Human Services as part of their Trailblazer initiative. We were subsequently invited to testify at the hearing of the House Energy and Commerce Subcommittee on Health regarding the FDA's role in creating a more efficient and accelerated path for early clinical development in the United States. We were the only CRO and also the only representative from the biopharma industry to testify. We are proud of the trust policymakers placed in our leading expertise as they consider reforms to accelerate development timelines, modernize trials using AI, and strengthen U.S. competitiveness in biomedical innovation. Finally, I would like you all to mark your calendars for the upcoming IQVIA Investor Day, which we are planning for December 2, 2026. And now to Mike for more details on our financial performance.

Thanks, Ari. Good morning, everyone. As a reminder, we implemented a new segment reporting structure effective January 1, 2026. In conjunction with this change, prior period segment amounts have been recast to conform to this reporting structure. Now let's start by reviewing revenue. Second quarter revenue of $4.368 billion grew 8.7% on a reported basis and 8.5% at constant currency. Revenue growth within the quarter includes about 250 basis points of contribution from acquisitions. Commercial Solutions revenue for the second quarter was $1.793 billion, up 8.6% on a reported basis and 8.4% at constant currency. R&D Solutions second quarter revenue was $2.575 billion, up 8.8% on a reported basis and 8.6% at constant currency. For the first half of the year, total company revenue was $8.519 billion, up 8.6% on a reported basis and 7.3% at constant currency. Commercial Solutions revenue was $3.547 billion, up 10.1% reported and 8.5% at constant currency.

R&D Solutions revenue was $4.972 billion, up 7.5% on a reported basis and 6.4% at constant currency. Then moving down the P&L. Second quarter adjusted EBITDA was $994 million, representing growth of 9.2% year-over-year while first half adjusted EBITDA was $1.926 billion. Second quarter GAAP net income was $256 million and GAAP diluted earnings per share was $1.53. For the first half, GAAP net income was $530 million or $3.14 of earnings per diluted share. Second quarter adjusted net income was $527 million and adjusted diluted earnings per share was $3.15, representing growth of 12.1% year-over-year. And for the first half, adjusted net income was $1.019 billion or $6.04 per diluted share, up 9.8%. Now turning to R&D Solutions bookings. The R&D Solutions net new bookings in the quarter were $3.15 billion, a 19.3% increase year-over-year resulting in a 1.22 book-to-bill which, as already mentioned, is all the more impressive given revenue grew 9%.

I should also note that cancellations remained within the historical range. As of June 30, our R&D Solutions backlog was $34.2 billion and the next 12-month revenue from this backlog was $9.23 billion, which is up 7.5% versus last year. Given the long-cycle nature of our business, it is more important to focus on the longer term booking trends. In the quarter, the last 12-month net new bookings were $11.25 billion, an increase of 12.9% year-over-year. Importantly, this metric has been steadily increasing in each of the past four quarters and clearly points to momentum in our business. So let's turn to the balance sheet. As of June 30, cash and cash equivalents were $1.909 billion. Gross debt was $15.999 billion, resulting in net debt of $14.09 billion. Our net leverage ratio ended the quarter at 3.59x trailing 12-month adjusted EBITDA. Second quarter cash flow from operations was $558 million and capital expenditures were $198 million, resulting in free cash flow of $360 million, representing growth of 23% year-over-year.

In the quarter, we repurchased $398 million of our shares, resulting in first half share repurchases of $950 million. This leaves us with approximately $2.8 billion of share repurchase authorization remaining under the current program. Now let's turn to guidance. To reflect stronger organic revenue growth and changes in M&A and foreign exchange impacts, we are raising our full-year 2026 guidance for revenue, adjusted EBITDA, and adjusted diluted earnings per share. We now expect revenue to be between $17.275 billion and $17.475 billion representing year-over-year growth of 5.9% to 7.1%. The new midpoint of the revenue growth guidance is 6.5% versus the prior guidance midpoint of 5.8%. This new guidance includes approximately 100 basis points higher organic revenue growth and approximately 50 basis points higher contribution from M&A, offset by a foreign exchange impact that is 80 basis points less of a tailwind than in the former guidance.

This revenue guidance now assumes approximately 200 basis points of contribution from acquisitions and only approximately 20 basis points of a tailwind from foreign exchange. We are also raising our adjusted EBITDA to be between $4 billion and $4.05 billion, growing 5.6% to 6.9% year-over-year, reconfirming flat margins year-over-year at approximately 23.2%. And finally, we are also raising adjusted diluted EPS to be between $12.80 and $13.00, up 7.4% to 9.1% versus prior year, or 8.2% at the midpoint. Let me provide our third quarter guidance. For the third quarter, we expect revenues to be between $4.15 billion and $4.39 billion, which represents year-over-year growth of 5.2% to 7.1%. Adjusted EBITDA is expected to be between $1 billion and $1.02 billion representing growth of 5.4% to 7.5% versus prior year. And adjusted diluted EPS is expected to be between $3.19 and $3.29 which represents year-over-year growth of 6.3% to 9.7%.

Both this guidance and the full year guidance assume that foreign currency rates as of July 27, 2026 continue for the balance of the year. To summarize, IQVIA delivered outstanding financial results. Second quarter revenue, adjusted EBITDA and adjusted diluted EPS exceeded the high end of our guidance. We accelerated organic revenue growth across both commercial and clinical segments, delivered strong adjusted EBITDA margins in the quarter, and had strong free cash flow performance, up 23% year-over-year. The R&D Solutions net new bookings were the highest since 2022 at $3.15 billion, growing double-digits year-over-year and sequentially with very strong full-service bookings. As Ari mentioned, the demand environment for both clinical and commercial has significantly improved, as reflected in our forward-looking demand indicators. We have raised our full year guidance for revenue, adjusted EBITDA, and adjusted diluted earnings per share, and we are planning a December 2 Investor Day where we look forward to seeing you. With that said, let me hand it back to the operator for Q&A.

Thank you. 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 will pause for a moment to compile the Q&A roster. Your first question comes from the line of Eric Coldwell with Baird. Your line is open. Please go ahead.

Thanks very much. Almost feel like you are ending the call now. That was a pretty positive update. We can only go south, I think. So last quarter, you had some added disclosures around the bookings profile that helped people understand the dynamics and what was optically a lower net book-to-bill. This quarter, you are obviously putting up a bigger book-to-bill against a strong revenue growth rate. But I do have to ask, were there any chunky awards or other callouts within those bookings? And you did mention full-service outsourcing was very strong. What about functional service provider awards? What about pass-through mix in the awards? Any other notable callouts that you would like to share with us? Thanks very much.

Well, good morning, Eric, and thanks again for your kind words. You had a good call in your note a few weeks ago. We had indeed a great quarter. In over 25 years of reporting earnings in these or other companies, I have never had as clean a quarter as this one — all around. There is absolutely nothing salient, unusual, abnormal, odd, or untoward in our numbers anywhere. With respect to your question on the bookings per se, there was strength literally across the board. Nothing unusual. Pass-throughs were in the normal range. Cancellations were in the normal range. Good mix of large, mid, and EBP — really, full-service outsourcing was very strong and we also saw good EBP bookings. Functional service provider bookings were also strong, roughly low- to mid-double-digit as usual, as a percentage of the total. I'm not going to call out a specific percentage. There is nothing to call out. It is a fair question because the numbers are so good everywhere. We looked for anything we could point to and there was nothing unusual — all very strong.

I was just going to add that the therapeutic mix and all that stuff is associated with the trends.

Great job, guys. I will leave it there. Thanks again.

Thank you. Your next question comes from the line of Justin Bowers with Deutsche Bank. Your line is open. Please go ahead.

Hi. Good morning, everyone. Ari, in your prepared remarks, you talked about outsourcing penetration potentially increasing over the interim. Is that comment broad-based or more focused on some of the conversations you have been having with your large and midsized pharma customers? Any more color there would be helpful.

Sure. As you know, the EBP segment is 100% outsourced by definition. Again, we are the largest broad CRO provider to the EBP segment. That clearly is all outsourcing. Midsized is pretty much similar except for some of the larger ones that insource some work. In large pharma, there has historically been more debate on sourcing. Large pharma clients are already telling us that because of the increasing use of AI — and the use of AI in large pharma has been developing for more than two or three years — the use of AI in discovery will only increase demand for CRO services. Our clients are asking us to gear up capacity as additional molecules enter development. Some of our large pharma clients are predicting they will double their study portfolio and are asking us to scale, literally asking for thousands of FTEs in anticipation of those studies. The additional demand for CROs is driven by several dynamics: some new molecules identified through AI are in adjacent therapies where the client may not have all the therapeutic expertise; additional capacity is needed; and it is more cost effective to use a CRO than to add permanent headcount for specific trials.

Our global footprint, domain expertise, regulatory and local knowledge for study design, site relationships and network, broad therapeutic coverage, and expansive data all help design the best trials and recruit specialized patient populations, which lends itself to more outsourcing. So current outsourcing for large pharma is likely to continue to increase based on our conversations and modeling.

Thank you. That is it for me.

Your next question comes from the line of Michael Ryskin with Bank of America. Your line is open. Please go ahead.

Great. Thanks for taking the question. I kind of want to follow up on just the last one. Thinking about your future investment and your future AI development, you have talked about the benefits you are seeing from solutions you developed internally. There is clearly opportunity to partner externally or maybe do some M&A. Could you talk about how you see the development of those solutions over time and where you are putting the incremental dollars? Thanks.

We have been doing this for some time. The idea of inserting intelligence in the design and performance of clinical trials to accelerate outcomes and improve results is what prompted our merger 10 years ago. With the advantage of frontier models, the acceleration has been significant over the past two to three years. In terms of investments and where we continue to focus at IQVIA, there are at least three necessary requirements to effectively deploy AI models in our industry. Number one, you need proprietary expert content that is globally sourced, de-identified, curated, fit-for-purpose, integrated, interoperable, and ready for extraction — proprietary healthcare data — and we have that. It has to meet interoperability, relevance, completeness, traceability, reliability, and linkability standards under countless ontologies at a scale that has no comparison to other industries. This is why our clients trust us on their AI journey.

There is a growing recognition that acquiring training data is difficult, expensive, and legally complex. The public web is increasingly exhausted by frontier models, so you must turn to proprietary data. We have that and continue to invest in it. Number two, you need deep domain knowledge to read and interpret these highly complex datasets in proper context — we have that as well. Number three, you need to operate within significant regulatory compliance and privacy frameworks that healthcare requires across geographies — we have that expertise too. Our agentic roadmap has continued to make great progress. We now have 294 agents deployed across 90 use cases. An agent is not a single model; it is built of multiple tasks powered by different models. We work with every major AI company domestically and overseas, and we have been building this capability with partners like NVIDIA very successfully.

Many of our large pharma clients are recognizing the limits of public frontier models and are coordinating with us to develop their AI roadmaps. Four of the top 10 pharma companies have contracted with us to co-develop AI solutions, and 19 of the top 20 pharma companies have already deployed solutions in their workflows. This is a priority area for investment and it is clearly differentiating us in win rates, where we have been displacing incumbents, including large CROs.

Thank you. Your next question comes from the line of Michael Cherny with Leerink Partners. Your line is open. Please go ahead.

Hey, guys. Thanks for taking the question. Maybe to build on that last comment Ari had regarding displacing other CROs and competitive processes: can you give us a little flavor of what that looks like? When you go into these competitive RFPs or competitive displacements, what is the discussion looking like on price versus capabilities versus technology and AI functionality? If you can break those down into those three buckets, that would be helpful. Thanks.

Thanks for your question, Michael. Large pharma, literally every single one of the top 20, went through a significant process to renegotiate their partnerships around the 2024–2025 timeframe. We were very happy with the outcome of those renegotiations: we increased both the number and the scope of those relationships. When there is a specific RFP within the context of those partnerships, a large pharma typically invites the two or three partners that they have selected in that partner process. Rates have typically been negotiated during those relationships, so the RFP discussion is less about price and more about delivery timelines, capabilities, technologies, site networks, relationships, experience in the particular therapeutic area, the skill sets of the individuals involved, and, of course, our AI capabilities.

Thank you. Your next question comes from the line of David Windley with Jefferies. Your line is open. Please go ahead.

Hi, good morning. Thanks for taking my question. I wanted to ask a clarification and then a more substantive question. For the clarification, I think Mike, you quantified about 2.5% of acquisition contribution — I was wondering if you could break that out between segments. Then Ari, on the strategic side, the company has started to build some discovery capabilities. You are talking a lot about AI. I wondered if you might expand the discussion to talk about what your thoughts are in investing in and building out capabilities in the early part of development, how you see that folding into your broader clinical capabilities, and whether there is an AI angle there as well. Thank you.

David, yes, we are working on those things. You would expect us to do that because we have great relationships with our clients and we are expanding the set of capabilities up and down the value chain. We have acquired discovery assets; in fact, we completed the acquisition of the Charles River assets in the quarter.

So, with normal acquisitions we had guided to roughly 1.5% for the year, but given the Charles River transaction, it will add about $75 million to $80 million of revenue this year. Normally, our acquisition impact is usually about two-thirds commercial, one-third R&D Solutions, and it is about the same for this quarter as well.

Thank you. Your next question comes from the line of Jailendra Singh with Truist Securities. Your line is open. Please go ahead.

Thank you, and congrats on a strong quarter. I want to follow up on your comments around EBITDA margin improving faster than you had expected. Can you elaborate on the key operational drivers there? And related to that, have you started to see any benefits from productivity-related investments from AI?

Sure, Jailendra. Let me give you some color on our EBITDA margins. Yes, they expanded, as we noted, about 10 basis points. Our operational productivity programs are going exceptionally well, and AI is another lever in that toolkit. Operational productivity drove about 90 basis points of operational margin expansion in the quarter. Nonoperational items like foreign exchange and pass-throughs were about an 80 basis point drag combined. The pass-throughs had a zero profit impact as they pass through revenue. So operational productivity programs are delivering value.

For context, in the first quarter we reported that we generated 60 basis points of operational productivity improvements in our margins, but that was offset by a 120 basis point negative impact from stronger pass-through growth and FX. In this quarter, FX was virtually negligible but pass-through growth created a headwind of 80 basis points. We generated 90 basis points of operational underlying margin improvement, which led to a small net improvement of about 10 basis points.

Got it. Thanks.

Your next question comes from the line of Sean Dodge with BMO Capital Markets. Your line is open. Please go ahead.

Yes. Thanks. Good morning. Maybe just adding a little more dimension to what you just talked about with the margins and the guidance. Mike, I think you said 80 basis points of nonoperational headwinds to EBITDA margins in the second quarter. If you could help us understand how FX and pass-throughs are going to progress in terms of nonoperational margin headwinds in Q3 and Q4, that would be helpful. Thanks.

In the full year, you really have to look at all the moving parts. The FX tailwind is reducing and helps reported margins. We added in M&A, primarily Charles River, which has lower margins. Our strong productivity programs are delivering incremental EBITDA margin and offsetting these factors. When we put it all together, that is why we are maintaining flat margins for the year in our guidance.

To be clear, FX is not helping margins; the fact that there is less of an FX tailwind eliminates some headwind compared to earlier in the year. The main nonoperational headwind to margins is the pass-throughs, which come with no profit.

Thank you. One more question. Your last question will be from the line of Shlomo Rosenbaum with Stifel. Your line is open. Please go ahead.

Hi. Thank you for squeezing me in. Hey, Ari. I wanted to ask you something I am not sure how you can answer, but maybe qualitatively you can. You talked about 100 basis points of better organic revenue growth in the guidance, and I am trying to understand how much of that is a rising tide lifting all boats versus better execution and improved win rates. Can you give some color on how we should be thinking about that?

You need a good market to perform. We faced headwinds the past few years, but the forward-looking demand indicators have improved. Our RFP flows were up double-digits in the quarter, which bodes well for the future. It is not enough to get an RFP; you also have to win. Our win rate has been picking up significantly on the back of our capabilities, and the strong funding growth in the EBP segment usually translates into awards over time. Given our strong position in the segment, we are winning a fair share, and that has contributed to the improvement.

Your next question comes from the line of Elizabeth Anderson with Evercore ISI. Your line is open. Please go ahead.

Hi, guys. Congrats on the nice quarter, and thanks so much for the question. If we think about the guidance, particularly the revenue increase, how would you allocate that between the improving demand environment that you are seeing in R&D Solutions and Commercial Solutions, and anything to call out either like interest expense or tax rate or anything that changed versus what you were saying last quarter? Thank you.

I am not seeing significant changes on the below-the-line assumptions. Clearly, when you talk about R&D Solutions, it is a long-cycle business, so the great bookings we have had are more of a 2027 and beyond indicator. We have been getting a lot of questions about clinical trends.

We answered earlier about bookings being broad-based and contracted. I also want to address inquiries we received recently about backlog quality in light of some other companies' changes to their bookings policies. We continue to record contracted bookings that require a signature, which we believe is an objective criterion and removes judgment. Regarding inactive trials in our backlog, some asked whether 15% to 16% of our backlog was inactive. We asked the R&D team to review the backlog to identify so-called inactive trials. They have preliminary results and if there is an adjustment to our backlog for inactive trials, it is in the ballpark of 5%, not the 15% metric that was mentioned by a competitor. If we do make an adjustment, it will have zero impact on historical financial results, guidance, or next 12-month revenue from backlog as reported. We are looking into it and, if we do something, we will talk about it on our third quarter call. I also want to draw your attention to the next 12-month revenue from backlog, which is at a record level — over $9.1 billion, up 7.5% year-over-year. The last 12-month net new bookings metric has been increasing quarter after quarter, up 12.9% year-over-year, which bodes well for revenue going forward.

Specifically this year, we are seeing acceleration of growth in both Commercial Solutions and R&D Solutions segments, Elizabeth. So we feel good about the guidance.

Thank you. At this time, I would like to turn the call back to Ms. Joseph.

Thank you, operator. Thank you, everyone, for taking the time to join us today. We look forward to speaking with you again on our third quarter 2026 earnings call. The team will be available for the rest of the day to take any follow-up questions you might have. Thank you. Have a good day.

This concludes today's call. Thank you for attending. You may now disconnect.