IQVIA Holdings Inc. (IQV) Earnings Call Transcript & Summary

Ladies and gentlemen, thank you for standing by. At this time, I would like to welcome everyone to the IQVIA Fourth Quarter 2022 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 Nick Childs, Senior Vice President, Investor Relations and Treasury. Mr. Childs, please begin your conference.

Thank you. Good morning, everyone. Thank you for joining our Fourth Quarter 2022 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, Financial Planning and Analysis; and Gustavo Param, 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 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. The 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 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.

Thank you, Nick, and good morning, everyone. Thanks for joining us today to discuss our fourth quarter and full year results. As we close 2022, we are very proud of what we've achieved at IQVIA. It was a record year for our R&DS business. We achieved bookings of $10.8 billion, which was the highest ever. Our backlog stands now at a record $27.2 billion, and the business added over 275 new customers in the year. We improved access to clinical research. We've expanded our decentralized clinical trial capabilities by launching the first self-collection safety lab panel for U.S. clinical trial participants in collaboration with Tasso. Our DCT program achieved GDPR validation in Europe, marking the first time a DCT offering received this data privacy validation. And our connected devices business added 50 new customers, including wins with 2 top 10 pharma companies. We made significant advancements as well in our real-world business. We increased the number of our active data sources by more than 30% across more than 50 countries, and we enhanced access to real-world data for European and U.S. regulators through our partnerships with the European Medicines Agency and the Real-World Alliance. We expanded our digital marketing capabilities with the acquisition of Lasso Marketing, which offers a technology purpose-built for health care marketers to execute digital campaigns. We deployed capital of $3.7 billion during the year. This included $1.3 billion in acquisitions, $1.2 billion in share repurchase, $0.7 billion in CapEx and repayment of $510 million of debt. At the same time, we were able to reduce our net leverage ratio to 3.45x adjusted EBITDA. 2022 also marked the end of our Vision 22 3-year strategic plan. No one could have predicted the volatile macro environment we would have to operate in during this period. Despite the many headwinds we have faced since 2019, when we set these goals, we in fact exceeded our Vision 2022 goals. I am proud of the resilience, resourcefulness and creativity that our employees around the world demonstrate every day in support of IQVIA's mission. And it is these attributes that allowed our company to deliver on comment the commitments we made to you in 2019. Now as you know, since the beginning of '22, the industry has been reporting a slowdown in demand for clinical and commercial services caused by reductions in biotech funding as well as the higher interest rate environment and macroeconomic uncertainty. As we've discussed before, while we've of course seen anecdotal evidence of these concerns, we at IQVIA remain confident that the fundamentals of our industry and the demand from our clients remain healthy. And in fact, we remain confident in our ability to deliver on our 2025 goals. As we begin 2023, there are more molecules in development than at any other time in history. Our RFP flow was up 13% for the full year. We in fact saw acceleration in Q4 to 22%, with double-digit growth in all 3 segments: Large, midsized and EBP segments. Our net new business reached a record $3.1 billion in Q4, which is up 29% versus prior year. For the full year, we achieved bookings of $10.8 billion despite the large COVID bookings we had in 2021 that didn't repeat in 2022. And yes, in our commercial business, while we are seeing some short-term fluctuations in discretionary spend categories, such as for example consulting, demand for our commercial services nonetheless remains on a favorable growth trend. Finally, let me just acknowledge and congratulate our employees around the world for the nice recognition the company received last week. IQVIA was named to Fortune's list of the World's Most Admired Companies for the sixth consecutive year. Importantly, once again, we earned the first place ranking within our industry group. We also ranked #1 in 7 out of 9 categories, including innovation, people management, use of corporate assets, social responsibility, quality of products and services, global competitiveness and long-term investment value. Turning now to the results for the quarter. Revenue for the fourth quarter grew 2.8% on a reported basis, 7% at constant currency compared to last year. And excluding COVID-related work from both periods, we grew the top line 10% at constant currency on an organic basis. Fourth quarter adjusted EBITDA increased 11.1%, reflecting our strong revenue growth and ongoing cost management discipline. Fourth quarter adjusted diluted EPS of $2.78 grew 9%, driven by our adjusted EBITDA growth. A few highlights of business activity this quarter. In our technology business, IQVIA recently entered into a milestone agreement with Alibaba Cloud to collaborate in China. Through this collaboration, IQVIA will be the first company to make its Salesforce-based products available on Alibaba Cloud and the only life sciences provider to have a full Salesforce-based ecosystem of products hosted locally and designed to be compliant with China's data residency and privacy regulations. Through our partnership with Alibaba Cloud and Salesforce, IQVIA will continue to extend the OCE suite, delivering innovative capabilities tailored to meet China's specific market needs. As you know, IQVIA Human Data Science Cloud offers clients a combination of extensive data networks, data integration and embedded intelligence, all of which help our clients deal with the challenge of increased data complexity and volume. A top 10 pharma awarded IQVIA our largest-ever commercial managed services deal, where we will take responsibility for managing the end-to-end commercial analytics for all their commercial brands globally. Personalization of care is becoming a focus of our customers' commercial strategies. This quarter, IQVIA was awarded a major patient support program by a top 10 pharma for their [ kit ] cardiology product, displacing the incumbent vendor and once again validating IQVIA's uniquely differentiated, integrated domain expertise, services and technology platform. As I previously highlighted, demand for our -- from our EBP customers has remained high despite the funding levels returning essentially to pre-pandemic levels. As an example, a U.S.-based emerging biopharma company recently selected IQVIA to be their end-to-end clinical-to-commercial partner. IQVIA was selected due to the breadth of capabilities, our domain expertise, strong resources and technologies, such as OCE. IQVIA will support all aspects of their first commercial launch as well as provide clinical trial services for their future indications. In another example, Biostage, which is a biotech company developing regenerative medicine treatments, selected IQVIA to manage its first clinical trial of their esophageal implant product. Current treatment options for patients diagnosed with esophageal cancer result in only 20% survival at 5 years. In the first use of the implant, the trial demonstrated that the product was able to successfully regenerate tissue to restore the functionality of the esophagus. IQVIA was selected due to our dedicated gastrointestinal team and our ability and expertise running the most complex, cutting-edge cell and gene therapy trials. Within R&DS, we also signed a long-term collaboration with Clalit, the largest health services provider in Israel, to launch the first Prime Site in the region. The collaboration combines IQVIA and Clalit's capabilities in clinical trial delivery, real-world research, data and genomics. Clalit operates a network of 14 hospitals and more than 1,600 primary care clinics with special expertise in oncology, pediatric rare disease and genomics. In oncology, which remains the largest therapeutic area for R&D outsourcing, we continue to experience strong double-digit year-over-year growth in bookings. As an example, we expanded one of our preferred partnerships with a top global pharma, which awarded IQVIA a large early and late-stage trial in multiple oncology indications. We were selected because of our analytics to optimize protocol development, site selection and operational planning, including our ability to recruit patients meeting their diversity targets. So overall, the R&DS business continues its strong momentum. You saw we achieved new bookings of $3.1 billion in the quarter, the highest in our history. This translated into a quarterly book-to-bill of 1.51, including pass-throughs. And excluding pass-throughs, the business delivered almost $2 billion of total net new business in the quarter with a book-to-bill of -- a ratio of 1.30. For the full year, our contracted book-to-bill ratio was 1.36 including pass-throughs and 1.33 excluding pass-throughs. I will now turn it over to Ron for more details on our financial performance.

Thanks, Ari, and good morning, everyone. Let's start by reviewing revenue. Fourth quarter revenue of $3.739 billion grew 2.8% on a reported basis and 7% at constant currency. In the quarter, COVID-related revenues were approximately $190 million, which was down about $150 million versus the fourth quarter of 2021. In our base business, that is, excluding all COVID-related work from both this year and last, organic growth at constant currency was 10%. Technology & Analytics Solutions revenue for the fourth quarter was $1.499 billion, up 0.2% reported and 4.7% at constant currency. Excluding all COVID-related work, organic growth at constant currency in TAS was 7%. R&D Solutions fourth quarter revenue of $2.058 billion was up 5.9% reported and 9.3% at constant currency. Excluding all COVID-related work, organic growth at constant currency in R&DS was 14%. Finally, Contract Sales & Medical Solutions, or CSMS, fourth quarter revenue of $182 million declined 7.1% reported but grew 2% at constant currency. Excluding all COVID-related work, organic growth at constant currency in CSMS was also 2%. For the full year, revenue was $14.410 billion, growing at 3.9% on a reported basis and 7.8% at constant currency. COVID-related revenues totaled approximately $1 billion for the year. In our base business, again, that's excluding all COVID-related work, organic growth at constant currency was 13%. For the full year, Technology & Analytics Solutions revenue was $5.746 billion, up 3.8% reported and 8.7% at constant currency. Excluding all COVID-related work, organic growth at constant currency in TAS was 10% for the year. Full year revenue in R&D Solutions was $7.921 billion, growing 4.8% reported and 7.7% at constant currency. Excluding all COVID-related work, organic growth at constant currency in R&DS was 17%. Full year CSMS revenue was $743 million, which was down 5.2% reported but grew 2.7% at constant currency. Excluding all COVID-related work, organic growth at constant currency in CSMS was 4% for the year. Now let's move down the P&L. Adjusted EBITDA was $920 million for the fourth quarter, representing growth of 11.1%, while full year adjusted EBITDA was $3.346 billion, which was up 10.7% year-over-year. Fourth quarter GAAP net income was $227 million, and GAAP diluted earnings per share was $1.20. Full year GAAP net income was $1.091 billion or $5.72 of earnings per diluted share. Adjusted net income was $524 million in the fourth quarter, and adjusted diluted earnings per share grew 9% to $2.78. For the full year, adjusted net income was $1.937 billion and adjusted diluted earnings per share was $10.16, up 12.5% year-over-year. Now as Ari reviewed, R&D Solutions delivered another outstanding quarter of bookings. Our backlog at December 31 stood at a record $27.2 billion, which was up 9.6% year-over-year on a reported basis and 11.6% adjusting for the impact of foreign exchange. Without that impact of foreign exchange year-over-year, backlog would have been about $500 million higher. Full year net new business increased $10.8 billion, growing 6.2% year-over-year on a reported basis -- it increased to $10.8 billion, I should say, growing 6.2% year-over-year on a reported basis despite the significant amount of COVID bookings we had in 2021 that didn't repeat in 2022. Okay. Reviewing the balance sheet. As of December 31, cash and cash equivalents totaled $1.216 billion and gross debt was $12.747 billion, and that resulted in net debt of $11.531 billion. Our net leverage ratio ended the year at 3.45x trailing 12-month adjusted EBITDA. Fourth quarter cash flow from operations was $560 million and CapEx was $171 million, which resulted in free cash flow of $389 million for the quarter. Now as we shared on the last earnings call, early in the fourth quarter, we retired $510 million of variable rate U.S. dollar term loan that was scheduled to mature in early 2024. At the end of the year, we entered into a $1 billion -- or $1 billion of floating fixed -- floating to fixed interest rate swaps to further limit our exposure to changes in interest rates. And with these changes, our debt structure at year-end was 66% fixed. And we expect this to drop to about 58% fixed at the end of Q1, when as you know, we have a $1 billion swap expiring. December 31 marked the end of our Vision 2022 3-year plan. And as Ari mentioned, we exceeded our commitments, and here are a few highlights. We achieved a compound average growth rate for revenue of 9.1% reported and 10.2% adjusted for the impact of foreign exchange. This achievement exceeded the high end of our goal range of 7% to 10%. Our 3-year CAGR for adjusted EBITDA was 11.7%, exceeding our goal of 8% to 11%. And for adjusted diluted earnings per share, the average growth rate was 16.7%, consistent with our goal of double-digit growth. Finally, our net leverage ratio exiting 2022 of 3.4x trailing 12-month adjusted EBITDA compared favorably to our goal of 3.5 to 4x. Okay. Let's turn now to 2023 guidance. For the full year 2023, we expect total revenue to be between $15.150 billion and $15.400 billion, representing year-over-year growth of 5.1% to 6.9%. This revenue growth includes about 100 basis points of contribution from M&A activity and a very slight FX tailwind of approximately 10 basis points versus the prior year. Adjusting for the COVID-related work step-down, which we anticipate to be approximately $600 million, the contribution of acquisitions and the FX tailwind, our guidance implies 9% to 11% underlying organic revenue growth at constant currency. Our adjusted EBITDA guidance is $3.625 billion to $3.695 billion, a growth of 8.3% to 10.4%. Our adjusted diluted EPS guidance is $10.26 to $10.56, representing year-over-year growth of 1% to 3.9%. Our EPS guidance includes about $615 million of interest expense; just under $550 million of operational D&A; an effective income tax rate of approximately 21%, which is about 1 point higher than it otherwise would have been because of the increase in the U.K. corporate tax rate from 19% to 25%. And finally, our EPS guidance assumes an average diluted share count slightly above 190 million shares. Adjusting for the year-over-year impact of the onetime step-up in interest rates and the higher U.K. tax rate, our guidance implies adjusted EPS growth of 11% to 14%. This guidance assumes about $2 billion of cash deployment split evenly between acquisitions and debt retirement. Regarding the latter, we expect to retire remaining term debt maturing in March 2024 towards the end of the year, that is, the end of '23. Based on these assumptions and our guidance, our net leverage ratio should drop to below 3x adjusted EBITDA by the end of 2023. Finally, our guidance assumes that foreign currency rates as of February 8 continue for the balance of the year. Now I know there are a lot of moving pieces in our guidance, so let me share some additional color on the revenue and adjusted EPS dynamics in 2023. As I mentioned earlier, we anticipate that COVID-related revenue will step down by approximately $600 million versus 2022. And I should highlight that about 40% of this step-down will occur in the first quarter. Now we'll more than compensate for this headwind during the course of the year as we project revenue to grow between 9% and 11% organically at constant currency, excluding COVID-related work. As I also mentioned previously, our full year guidance includes about 100 basis points of M&A contribution and a very slight tailwind from foreign exchange of 10 basis points. Now that said, it's important to point out that we will actually experience a headwind from FX in the first half. Now at the segment level, we expect TAS revenue growth to be 6% to 8% reported. This includes a year-over-year step-down in COVID-related work. Underlying organic growth for TAS, that is, adjusting for the step-down in COVID work, FX and acquisition impacts, will be 7% to 9%. R&DS revenue will grow 5% to 7% reported. This reflects an even more significant year-over-year step-down in COVID-related work. Underlying organic growth for R&DS, again, adjusting for COVID-related work, FX and acquisition impacts, will be 10% to 12%. And finally, in CSMS, revenue growth is expected to be flat reported and approximately 2 percentage points organic excluding COVID-related work and FX impacts. On adjusted EPS, we will experience the year-over-year impact of the step-up in interest rates and an increase in the U.K. corporate tax rate that I mentioned. Together, these nonoperational items are expected to impact growth by approximately 10 percentage points year-over-year. Excluding these items, we expect to deliver strong results with 11% to 14% adjusted EPS growth. It's important to note that the year-over-year increase in interest expense step-up will be most pronounced in the first half, while the operational tailwind from our cost-cutting and productivity initiatives will be skewed towards the second half of the year. And these timing issues are relevant to our first quarter guidance. The first quarter will be the toughest comparison versus the prior year primarily due to 4 factors: Number one, the largest headwind from FX despite FX being a tailwind for the year; number two, the largest year-over-year COVID-related step-down; third, the toughest interest expense comparison; and finally, fourth, the phase-in during the year of the benefits of our productivity initiatives, which will increase as we progress through the year. So as a result, in Q1, we expect revenues to be between $3.570 billion and $3.640 billion or growth of 2.4% to 4.3% on a constant currency basis and 0.1% to 2% on a reported basis. Excluding COVID-related work, we expect organic revenue growth at constant currency to be between 9% and 11%. Adjusted EBITDA is expected to be between $835 million and $860 million, which is up 2.8% to 5.9%. And finally, adjusted diluted EPS is expected to be between $2.35 and $2.46, declining 4.9% to 0.4%. Excluding the step-up of interest expense and the tax rate in the U.K., we expect adjusted diluted EPS to grow between 6% and 10% in the first quarter. Again, our guidance assumes that foreign currency rates as of February 8 continue for the balance of the year. So to summarize. Q4 was another strong quarter, capping a successful year. For the full year, revenue grew 13% organic at constant currency, excluding COVID-related work. And adjusted EPS was up 13%. Underlying demand in the industry and our business remain healthy with RFP growth accelerating in Q4 and record bookings in R&DS. During 2022, we repurchased almost $1.2 billion of our shares and retired $500 million of variable rate term debt while reducing our net debt leverage ratio to 3.4x. We exceeded our Vision 2022 commitments despite the volatile macro environment. And lastly, we're projecting strong operating performance again in 2023 with 9% to 11% organic revenue growth at constant currency, excluding COVID-related work; and 11% to 14% adjusted EPS growth, excluding nonoperational headwinds. And with that, let me hand it back over to the operator for Q&A.

[Operator Instructions] Your first question comes from the line of Dan Leonard with Credit Suisse.

So I'll just start off. Ari, you mentioned continued confidence in the 2025 goals. You're guiding 5% to 7% revenue growth in '23. I think the CAGR through '25 was a double-digit number. So could you bridge from the 2023 result to the acceleration anticipated thereafter?

Yes. Thank you very much, Dan. Look, when we say we are on the same trajectory we were on when we set our '25 goals, it continues to be true. Operationally, obviously, we assumed foreign currency rates that were different. I think we lost -- I don't know the exact number any longer, but we probably lost $0.5 billion in revenue just in 2022 so -- to FX. So look, I don't know about revenue. It will be close, maybe not 20%, but it will be close. On EBITDA and on earnings per share, we're very confident that we will achieve those goals. Again, the -- what we are facing -- first of all, you see that EBITDA is certainly clearly on that trajectory, unchanged despite everything else. And EPS is, just as we said in our introductory remarks, a onetime step-up that probably won't replicate. If anything, I think the world expects rates to either stabilize or start declining afterwards in '24 and '25. So that would be even a tailwind. But certainly, the step-up is onetime. And after that, we expect to resume very strong double-digit as we experienced. I remind you, we delivered over 16% compound earnings per share rate -- growth rate over the 2022 3-year period.

Your next question is from the line of Eric Coldwell with Baird.

So I wanted to hit on R&DS bookings first. Difficult to ask the question in a way that's easy to answer. But I'd like you to step back and think about your fourth quarter strong bookings, your '22 bookings. Do you have a sense how much was, if you will, normal opportunities? Versus, say, competitive takeaways, rescue wins or incremental share capture that you might have gained through higher hit rates through the year? Just trying to get a sense of where the market was versus what IQVIA did additionally on top of that, if that makes sense.

Yes. Yes. Well, it's really hard because we don't have the perspective of time and clear data from competitors yet. We will know a little bit more after we read your report on how CROs did when everyone has reported. So I'm looking forward to that read. But look, we've been on a momentum, certainly since the merger, to gain market share. And I think it's clear that we have been gaining market share. We know we are gaining market share because we are displacing competitors. I don't think rescue studies played a role. Of course, we have the anecdotal here and there, but not more or less than in history. And things happen, and the study doesn't go well with a certain approach. And at some point in time, the sponsor decides that they want to switch CROs. It's a very difficult and cumbersome exercise, and no one wants to do that. But it does happen. I don't think it happened more than in the past, unless you're including rescue studies that were at the beginning, and that for a reason or another, the sponsor decided to switch CROs. That, I would include in the category of market share gains. The market continues to be strong. The underlying demand, all the indicators that we see, and we kept repeating it ad nauseam during 2022 despite everyone else being on the other side and suggesting that the world was falling apart because of biotech funding levels returning to what I consider to be very strong levels, but nevertheless lower levels than they were during the pandemic. We haven't seen any delays in decision-making. We haven't seen any signs that demand was slowing down, quite the opposite. I mentioned that RFP flow is very strong. I can give you even more -- I've got some more data here on me if you'd like.

The answer would always be yes. Yes, I would like more data.

So I kind of -- I get that. The -- again, overall RFP flow was very strong. We said 13% for the full year and over 20% in the fourth quarter. So if anything, accelerating. Our qualified pipeline at the end of the year was up over 20%. But that is really the pipeline that we consider real. The awards, by the way, which is kind of an early indicator of what will happen in the future, I'll also remind you, is stuff that we have essentially won but we have not yet contracted for and not booked for. The awards were up. Actually, the absolute number in Q4 was the highest ever, and it was up 9% year-over-year. So we mentioned the book-to-bill ratios, the backlog, which itself is up just under 10% year-over-year and 11.6% excluding FX. So I mean, I don't know what else to share. We've got hard solid numbers here that support healthy, healthy demand for clinical trial services. And then on top of that, you can add our market share gains, and I think that explains it.

And Ron, if I could just have one quick technical item here. Can you confirm that there are no share repurchases built into the guidance? And I know you've talked about the $2 billion capital deployment and the split between debt and M&A. But is there any current thinking on taking some advantage of that authorization that you have on the repurchase side?

I can confirm that there is no share repurchase baked into our guidance. We're right now assuming $2 billion of capital deployment split evenly between M&A and debt reduction. Look, might we repurchase some shares during the year? Sure. That's our -- our assumption going in, and the guidance that we gave is that we're not, and we'll devote the capital to debt reduction instead. But that could always change with circumstances.

Your next question is from the line of Anne Samuel with JPMorgan. Anne Samuel, your line is open.

Okay. Next question, please.

Your next question is from Justin Bowers with Deutsche Bank.

Just pivoting from RDS, Ari, you talked a lot about some strong momentum in commercial managed services. Just wondering if you could expand about some of the strength there. And also, is that isolated just in TAS? Or is that also in the CTMS (sic) [ CSMS ] business?

You mean CSMS, right?

Sorry, CSMS. That's right.

Yes. Yes. No. I mean, CSMS is a relatively slow grower. So I mean, I'll put that aside. The TAS growth has been consistent. We're pleased, obviously, to see that it continues to grow. You saw that, excluding the COVID step-down, and we had a fair -- I would say, a large share of COVID work during the pandemic. So that's stepping down. And excluding that, we had growth of 7% in Q4 and 10% for the full year. Quarter-to-quarter, it could vary. I think the first half was more or less around 10% growth. Third quarter was 12%. We had the activity that was -- that came in earlier than we thought. And the fourth quarter was 7%. So overall, very good growth in Q4. We guided 7% to 9% for next year. Again, this is consistent -- again, excluding COVID, acquisitions and FX, it is consistent with the underlying operating momentum that we've had in TAS and that we've guided to, which is high single digits. So the real -- the fast growers in this business are technology and real world. And that's where I mentioned a few very significant achievements and a few significant awards with clients. Both continue to be strong drivers of growth as we continue to find innovative ways to utilize real-world evidence for clients and deploy more of our technology solutions. The piece of the business that is perhaps more exposed to the economic wins and budget expansions or restrictions by clients is the more discretionary spend, like analytics and consulting work. We saw -- usually, at the end, I must -- just to share a little bit more color, we usually have at the end of the year an acceleration in this business, and we didn't see that in December. And the reason for that is, historically, clients like to spend more towards the end of the year, and they do kind of last-minute purchases, and they kind of utilize their budgets, if you will. And we didn't see that so much this year. And again, I don't know whether people are kind of being more cautious or anything. But -- and mostly, again, it was in the consulting area and analytics, which tends to be short cycle, short term and more discretionary. But the underlying growth is driven by real world and technology, both of which are longer-term decisions and are not so subject to cyclical economic changes. And then of course the last piece is the data business, which is flat and continues -- or flat to low single digits, 1-ish percent. And that continues where it is. And when you do the math, basically, that's what yields you high single-digit growth for the segment. Thank you for your questions.

Your next question is from the line of Jack Meehan with Nephron.

Ari, so I know you sound bullish around the funding trends that you've seen over the last year. I wanted to ask about funding in a different way. Just what were you seeing in terms of cancellations around year-end? Was there anything notable about that relative to kind of the last couple of years?