IQVIA Holdings Inc. ($IQV)

Ladies and gentlemen, thank you for standing by. At this time, I would like to welcome everyone to the IQVIA First Quarter 2026 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.

Thank you, operator. Good morning, everyone. Thank you for joining our first quarter 2026 earnings call. With me today are Ari Bousbib, Chairman and Chief Executive Officer; Mike Fedock, Executive Vice President and Chief Financial Officer; [indiscernible], Executive Vice President and General Counsel; Kate Ward, Vice President, Investor Relations; and [indiscernible], 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 in the Events and Presentations section of our IQVIA Investor Relations website at ir.iqvia.om. Before we begin, I would like to caution listeners that certain information discussed by management during this conference call will include forward-looking statements. Absolute results could differ materially from those stated or implied by forward-looking statements into risks and uncertainties associated with the company's business, which are discussed in [indiscernible] 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 and presentation. As previously disclosed, we implemented a new segment reporting structure effective January 1, 2026. In conjunction with this change, [indiscernible] segment amounts have been recast to conform to this net report instruction. 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 first quarter results. IQVIA delivered outstanding financial results, achieving record first quarter revenue and adjusted diluted earnings per share that exceeded the high end of our guidance. reflecting solid top and bottom line performance. We are seeing continued positive year-over-year momentum across the portfolio. with strong acceleration of organic revenue growth. In fact, year-over-year, our organic revenue growth rate in Commercial Solutions doubled and our organic revenue growth rate in R&DS triple. On the commercial side, revenue growth accelerated as clients continue to launch new products and increase the breadth of services they utilize from IQVIA. We saw particular strength in patient solutions, which is the part of real world that remained in the commercial segment. Also, particular strength in analytics and consulting, which had the highest growth we've seen in 3 years and strength as well in our commercial engagement services which includes the former CSMS segment. We feel good about demand on the commercial side with pipelines growing to record levels, and we think AI has something to do with it. AI is causing our clients to have more questions. It's causing them to increase their demand for IQVIA's differentiated AI capabilities and for the innovation we are embedding across our commercial offerings. On the clinical side, we also delivered very strong performance in the first quarter with better-than-expected reported and organic revenue growth. We had solid bookings with double-digit growth year-over-year, both as reported and as recast. In particular, we have solid growth in net service fee bookings that is excluding pass-throughs. Net service bookings growth in the quarter were solid year-over-year as well as sequential, both as reported and as recast. And I should note, cancellations in the call were within the normal range. While our book-to-bill ratio 1.04 in the quarter despite solid service fee bookings growth and normal cancellations. Now, AI has nothing to do with it. What happened was that pass-through bookings were unusually low in the quarter, simply due to the particular mix of indications of the clinical trials we booked in the quarter, which included more full-service trials with lower pass-throughs than usual. And I want to note that the proportion of FSP in our bookings this quarter was consistent with historic levels. Now regarding the overall demand environment, forward-looking demand metrics continue to point in the right direction. Our backlog reached a new record of $34.2 billion at the end of the quarter. And noteworthy is the amount of dollars from our backlog that will convert to revenue in the next 12 months. We have $8.9 billion out of our backlog representing nearly 8% growth year-over-year versus the recast numbers last year. Our qualified pipeline grew mid-single digits year-over-year with notable strength in RFP flow grew high single digits year-over-year, driven by growth both in large pharma and in EP. All of these comparisons are, of course, apples-to-apples, that is versus prior year numbers that have been recast to reflect the new segment reported. Finally, you may have noticed evenly funding was very strong in the first quarter, reaching $25 billion according to [indiscernible], which is almost double the funding in Q1 2025. Now let's turn to the results in the quarter. We delivered outstanding revenue and profit results. Total revenue for the first quarter exceeded the high end of our guidance range. representing year-over-year of 8.4% on a reported basis, 6% at constant currency. First quarter adjusted EBITDA was up 5.5%. First quarter adjusted diluted EPS of $2.90 also exceeded the high end of our guidance range, and it increased 7.4% year-over-year. Let's now review a few highlights of business activity. Let me begin with an update on AI. As a quick reminder, IQVIA's AI solutions are built on our unparalleled proprietary data foundation best-in-class compliance with the privacy, regulatory and interlude standards, health care grade AI demands and are connected to our deep life sciences and health care expertise. We've been integrating AI into our operations and solutions at scale for nearly a decade. It's part of who we are and what we do. we already function as an AI-native company in life sciences. A few weeks ago, we unveiled IQVIA AI at NVIDIA's GTC Conference. This is our agentic AI portal and marketplace, purpose built for life sciences. It provides clients a single access point to their purchase IQVIA AI solutions, enabling centralized control with their internal user base while also enabling visibility to a broader AI portfolio to support future solution adoption. Our deployment of highly specialized life science industry AI agents is progressing as planned. To date, we have 192 agents deployed in the field, covering 64 use cases across both our Commercial Solutions and R&D businesses. 19 of the top 20 pharma companies are already using IQVIA agents in some of their workflows, underscoring broad industry trust in IQVIA's AI capabilities. Let's now switch to client activity first in Commercial Solutions. This quarter, we saw clients increasingly selecting IQVIA to build AI-ready data foundations, which facilitates the incorporation of AI agents, including via agents into their workflows. These new services expand the scope of our partnerships with clients. A few examples of wins in the port. The top 10 pharma clients awarded IQVIA contract to modernize performance reporting on markets and therapeutic areas using an AI-driven analytics platform. The engagement replaces hundreds of disconnected reports and dashboards from multiple vendors with a centralized managed AI powered IQVIA Insight solution. IQVIA secured a multiyear partnership with a midsize client to provide a scalable AI ready data foundation. [indiscernible] demonstrate IQVIA's plug-and-play capabilities within a client's multi-provider technology ecosystem. Pfizer and IQVIA entered into a strategic regional promotion agreement covering selected Pfizer products across 23 countries in Europe. This collaboration brings together Pfizer scientific leadership. With IQVIA's promotional expertise, market intelligence and AI-supported technology to support long-term impact. We entered into a strategic long-term collaboration with Boehringer [indiscernible] to transform the global commercial intelligence Foundation. [indiscernible] selected IQVIA's Data as a Service DAS platform as the core accelerator to harmonize and upgrade global commercial operations, enabling more scalable analytics and a single version of the truth across therapeutic areas and geography. This collaboration will support upcoming product launches and market reporting across 59 countries. IQVIA was awarded a multiyear agreement to serve as the primary patient information and analytics partner across [indiscernible] full portfolio, including our Data as a Service platform. This partnership is designed to drive strong visibility into existing brands step change improvements in analytics, insights and pipeline assets and more intelligent commercial and portfolio decisions. Let me now turn to R&D solutions. Our strategy in R&D has been to leverage our AI solutions to optimize trial design and execution to reduce time lines for our clients. Of course, we've been doing this for years through protocol optimization, site identification and operational risk mitigation. We're taking this to the next level with AI agents, which leads to much faster study execution and increases quality by reducing errors and rework. For example, the AI identification of the complex database setup process in a study start-up or the AI densification of tasks involved in finding multiple documents in the [indiscernible]. We are increasingly embedding these AI agents in our delivery model. Let me share a few examples of recent wins on the back of these capabilities. The top 5 pharma companies selected IQVIA to provide AI-enabled global medical safety and pharmacovigilance services, building on a decade-long relationship and strong performance across both FSP and clinical delivery models. The deal consolidates safety operations under a single scalable model to improve efficiency and reliability while enabling ongoing innovations. The top 10 pharma clients awarded IQVIA a multiyear agreement to serve as the primary partner for delivering full-service global clinical trials. We differentiated ourselves through AI-enabled innovation that accelerates development and improve execution quality. IQVIA awarded contract of a global midsize pharma to deliver a Phase III clinical study supporting a high-profile oncology assets. In this case, we were selected based on our experience running similar studies as well as our ability to deliver AI-enabled trial design, protocol optimization and site identification. The top 20 pharma company selected IQVIA to support a late-stage clinical program in asthma in overweight patients. [indiscernible] win highlighted AI-enabled clinical solutions, including a protocol and design strategy optimization, regulatory compliance and study document filings. For we are delivering a global late-stage clinical program that integrates clinical and laboratory services within a single operating model with a [indiscernible] analytics embedded across site feasibility and selection performance and performance forecasting. Lastly, in the quarter, we announced a strategic collaboration with the Duke Clinical Research Institute to advance clinical research in obesity and related cardiometabolic conditions. The collaboration brings together IQVIA's global operational scale and execution capabilities with Duke's academic rigor and scientific leadership, creating an integrated end-to-end model for large complex clinical trials. The partnership is designed to accelerate trial start-up improve execution efficiency and support regulatory submissions and commercialization. IQVIA contributes deep expertise in obesity and metabolic disease having supported more than 120 obesity trials and enroll more than 90,000 patients, including work across all FDA-approved GLP-1 therapies to date providing sponsors with a proven operational foundation. This partnership with Duke has already resulted in a significant pipeline of opportunities and a few wins in the second quarter. Now to Mike for more details on our financial performance.

Thank you, Ari, and good morning, everyone. As Barry noted earlier, 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 new reporting structure. Now let's start by reviewing revenue. First quarter revenue was $4.11 billion grew 8.4% on a reported basis and 6.0% in constant currency. Revenue growth includes about 2 points of contribution from acquisitions. Commercial Solutions revenue for the first quarter was $1.75 billion up 11.6% on a reported basis and 8.5% at constant currency. R&D Solutions first quarter revenue was $2.397 billion, up 6.2% on a reported basis and 4.2% at constant currency. Now moving down the P&L. Adjusted EBITDA was $932 million for the first quarter, representing growth of 5.5% year-over-year. First quarter GAAP net income was $274 million, the GAAP diluted earnings per share was $1.61. Adjusted net income was $492 million for the first quarter, and adjusted diluted earnings per share was $2.90 and representing growth of 7.4% year-over-year. Now turning to RDS bookings. To provide an apples-to-apples comparison the numbers on this chart from last year's Q1 2025 net new bookings and backlog have been recast to reflect the real-world late phase and certain other real-world offerings that are closely related to the clinical trial business, which we moved from pads to RDS. On this new basis, R&D Solutions net new bookings in Q1 2026 was $2.5 billion, a double-digit increase year-over-year. RDS backlog at March 31 was $34.2 billion, which is an increase of mid-single digit year-over-year. And additionally, the next 12-month revenue from this backlog was $8.9 billion at March 31, which is up high single digits versus last year on a recast basis. Now reviewing the balance sheet. As of March 31, cash and cash equivalents totaled $1,947 billion and gross debt was $15.83 million resulting in net debt of $13,886 billion. Our net leverage ratio ended the quarter at 3.62x trailing 12 months adjusted EBITDA. First quarter cash flow from operations was $618 million and capital expenditures were $127 million resulting in strong free cash flow of $491 million, which represents 100% of adjusted net [indiscernible] 15% increase year-over-year. And in the quarter, we repurchased $562 million of our shares, which leaves us approximately $1.2 billion of repo authorization remaining under the current program. Now turning to guidance. We are reaffirming our full year 2026 guidance for revenue and adjusted EBITDA, and we are raising the guidance for adjusted diluted [indiscernible] per share. We continue to expect revenue to be between $17,150 billion and $17,350 billion, representing growth of 5.2% to 6.4% or 5.8% at the midpoint. This revenue guidance continues to assume approximately 150 basis point contribution from acquisitions and approximately 100 basis points of tailwind from foreign exchange. These assumptions are unchanged from the prior guidance. We continue to expect adjusted EBITDA to be between $3,975 billion and $4, 025 billion, growing 4.9% to 6.3% year-over-year or 5.6% at the midpoint, and we are raising our adjusted diluted EPS to be between $12.65 and $12.95, up 6.1% to 8.6% versus prior year or 7.4% at the midpoint. Now turning to the second quarter. For Q2, we expect revenue to exceed between $4,280 billion and $4,340 billion, which represents year-over-year growth of 6.5% to 8.0%. Adjusted EBITDA is expected to be between $955 million to $975 million, representing growth of 4.9% to 7.1% versus prior year. and adjusted diluted EPS is expected to be between $2.98 and $3.08, which represents year-over-year growth of 6.0% to 9.6%. Both this guidance and our full year guidance assumes that foreign currency rates as of May 4 continue to the balance of the year. So to summarize, I see to deliver outstanding financial results with first quarter revenue and adjusted diluted EPS exceeding the high end of our guidance. We delivered strong acceleration of organic revenue growth in both Commercial Solutions and R&D R&DS net new bookings grew double digits year-over-year with solid year-over-year and sequential growth in net service [indiscernible]. We continue to make very strong progress in the deployment of highly specialized life science industry AI agents with more than 190 agents deployed covering over 50 use cases across Commercial Solutions and RDS businesses. that 19 out of the top 20 pharma companies already using our agents in some of their workflows. And the forward-looking indicators continue to point in the right direction for both commercial [indiscernible] and R&DS, repurchased $552 million of our shares in the first quarter, and we reaffirmed our full year '26 guidance for revenue and adjusted EBITDA and raised the guidance for adjusted diluted earnings per share. Now with that, let me hand it back to the operator for Q&A.

[Operator Instructions] Your first question comes from the line of Michael Cherny with Leerink Partners.

Maybe if I can just dive in a little bit more on the services versus pass-through bookings that you saw in the quarter. As you think about the demand dynamic, how should we think about that conversion of what you're winning a lot of the contract subs you went through against the margin progression RE. I just want to make sure I understand we all understand the push and pull on what's coming through across the -- into the backlog versus how profitable it is relative to the core business, especially if these are a lot more full-service-oriented wins within the R&DS segment?

Okay. I hope I understood your question well. But just the service fees versus pass-throughs, you understand that pass has 0 profitability drop through, right? I mean that's clear. So pass-throughs are irrelevant to profitability. We have to report them because that's an accounting requirement. We have solid execution in the quarter. We booked $2.5 billion of trials in the quarter. It just happens to be that the mix of indications was such that we had trials that have full-service trials are less pass-through, not FSP, just full service trials, they had less pass-through. In fact, if you look at the pass-throughs, I think -- I don't know if we disclose this generally, but the first quarter was -- pass-throughs was like about 1/3 lower than the historic average. It's always within a range, but it was significantly lower. I guess had we had a regular mix our projects consistent with the long-term history and a consistent level of pass-throughs, then we would not be having this conversation the infamous quarterly book-to-bill ratio would have been quite significantly high. So there is no impact on margins, on expected margins has no impact whatsoever. I want to point out that on the pure service fee bookings year-over-year and sequentially, we were up very significantly. Now the ignoring the fast- issue, generally, Q1 N&B is always lower than Q4 sequentially. And if you look at our history, it's usually lower 16%, 17% Q4 to Q1. And this quarter, it was lower, less than that. I think it was 13% down. So it was lower as always, but a little bit less than usual. Frankly, we also have the most conservative bookings policy in the industry, you only book business when it's contracted. So if we are awarded a couple of trials at the end of the quarter, and the client Board is only meeting on April 2, and that's when the cars are designed, then that's when we book it. It's not the first quarter win. So their this can have on the reported book-to-bill is very, very significant. Again, I said this when we reported book-to-bill ratios of 1.3 I said it when we reported book-to-bill ratio of 0.9. And I say again today, the quarterly book-to-bill metric is really a bad metric to predict future growth. I can point easily to many of our competitors who reported great book-to-bill ratios and are going to have very negative growth going forward. I'll point to [indiscernible] last year at this time, we reported a book-to-bill of 1.02. And if this were predictive of growth, this quarter we would be showing really poor limit growth in our NPS. And yet, we are reporting very strong 3% organic growth, over 6% reported. So restrict a couple of points from FX and [indiscernible] point from acquisitions, our organic growth in RIS was 3%. [indiscernible] have predicted that from reported book to be last year. The answer is no. So again -- and again, this 0 impact from AI in our bookings. I just don't want to an wrong or questions, I can report that the number of trials that we lost to anyone using Jean-Paul or any other AI tool, the number of trials that we lost to any of the AI solutions is exactly 0. And again, those impact on margins whatsoever from the unusually low pass-throughs in the bookings this quarter. I hope that gives you enough color.

Your next question comes from the line of Justin Bowers with Deutsche Bank.

Two-parter maybe, one for Ari and one for Mike. So just in terms of the wins you saw here, it's interesting to hear FSO the FSO dynamics and that having less pass-throughs, but is that more of a function of how customers are the clinical strategy that you're deploying? And/or are you seeing any shift there from large pharma either in the quarter or what's in the funnel. That's number one. And then part 2 of that would just be on the margins. Is that something that we would see this year? Or is that more of like a 2027 and beyond dynamic?

Thank you again. Look, again, I want to repeat again. One quarter doesn't make a trend. And 1 quarter of bookings, $2.5 billion of bookings that are going to bid to revenue over the next 4 to 7 years, is not going to affect our margins on bit. Now it's not indicative of any change whatsoever. It just happens to be that trials that we won this quarter had lower price had nothing to do with a change in customer dynamic. Not just happens to be, that's the deck as we were served and that we went after some trials, like, for example, your record vaccine trials has enormous amount of passes. There are certain types of long cardiovascular studies that require a lot of patients and a lot of procedures to perform the protocol of the trial may require more reimbursed expenses. That just wasn't the case this quarter. It's unusual. Here we would have lower pass, but that's what happened. Nothing more to it and I wouldn't read anything about changing plan dynamics or anything like that. Not at all. just you're trying to understand the demand, which I think is the right question. And frankly, we see no change at all in the fundamental drivers of outsourced clinical development the try or the level of complexity in trials is rising. They need to execute trials globally is rising. The growing use of data and analytics, all of these point to the need to outsource more, not less. So in our conversations with pharma, we see a constructive demand environment. Yes, in the near term, we see that the environment has stabilized. And we see also that large sponsors are still taking a more deliberate approach to capital deployment that recall that coming out of 3 to 4 years of policy-driven macro headwinds and all kinds of disruptions. So we still see perhaps a slower then we haven't returned to the decision-making speed that we saw before all of these period started. It's then there, we're seeing things going back to in the right direction. That's a ton on the DP side, financial funding, which is growing at a very nice pace, which points to renewed confidence in the assets in the pipeline in general in the industry. And as you know, we take a year, 1.5 years before funding drives an award and certainly into the [indiscernible] but the main indicators are quite strong. Do you want to address that other question?

Sure. Yes, I'm happy. So firstly, just to reemphasize Ari's point about do not draw sort of margin inclusions from 1 quarter booking. You have to remember that every dollar we book now burns over like 5 years. But I'll give you some more color on our margins and [indiscernible] as an example. So when we reported 60 basis points of EBITDA margin contractions, all of that was due to nonoperational headwinds, which are really sort of the FX and pass-throughs driving that. And we're -- we have a very, very strong productivity programs. So when you look what happened operationally, right, obviously, we're dealing with adverse mix in sort of our portfolio, but our productivity programs more than offset that mix. So operationally, we expanded margins actually quite significantly in the quarter. So it just further highlights the point to say, when you look at sort of a quarter sort of bookings or even several quarters of bookings you can make no correlation to future sort of margin.

Yes. I want to add that we just take the opportunity to once again retire, we reported because you wanted this ratio -- but it's really -- and we give you a lot of color on work in our bookings more cover than anyone else in the industry. And by your way, our #2 competitor is part of a larger conglomerate, and we know nothing about their numbers. And our competitor, we have no clue what their numbers are now or in the past 3 years, not yet at least and another 4 and 5 competitors are private. We have no through what their bookings are [indiscernible] and that's it. There's no one else out there. We can't be compared to anyone else. And then you have 2 marginal competitors. So we are disclosing an enormous amount of information, and it's not comparable to anyone else. So even from a competitive standpoint, frankly, there's very little rationale for us to give you so much core bookings, a, because we derive conclusions that are really forced and is leading; and b, because it's competitive information that we give the competitors don't disclose anything.

Your next question comes from the line of Luke Sergott with Barclays.

This is [indiscernible] on for Luke. I wanted to talk more about the upside in Commercial Solutions. And I know you called out a few of those businesses that were really strong during the quarter. But it would be great to hear more about maybe which areas were the most surprising versus your internal expectations? And then also, if you could remind us on the mix of the more recurring revenue offerings within this business versus what's more discretionary?

Thank you very much for your question. And our Commercial Solutions business is way, way underappreciated and I'm thanking you for highlighting the business. We performed very well in the first quarter you will recall that when the industry went through difficulties over the past 3 years, the headwinds caused our large pharma clients to pause discretionary spending. As a result, our growth rates never went negative, but they slowed down to low single digits organic growth. We then started to rebound. And a year ago in the first quarter, our organic growth rate was well, about 2%, 2.5% thereabouts. Our organic growth rate in Commercial Solutions this quarter was 5%, we reported, I think, always the growth rate 11.6% at actual effect, as you know, we have a strong tailwind from currency this quarter. If you take that out, the constant currency growth rate is 8.5%, and we had acquisitions. And when you strip that out, the benefit of acquisitions last year, when you strip that out, it's 5% organic growth. So it's double the underlying organic growth year-over-year. What's driving this -- you heard me say in my remarks that customers have more questions than they had before because of the -- if I can speak generally, our work on AI on the clinical side is focused on creating efficiency and improved execution and reduce time lines. So we are embedding agents within also existing processes and workloads clients accelerate timelines, which is simply an evolution of what we've been doing over the 7 years since the merger, which was predicated on utilizing data insights and intelligence to reduce time lines. On the commercial side, we are focused on innovation that is creating new offerings and those are gaining traction with our customers. customers are dealing with a massive amount of data from us, from third parties and generated by their own operations. They are also dealing with a legacy of disparate systems that has been built over the years. AI identification processes enable our clients to sort of bypass and leapfrog all of these systems and multiple vendors and data sources and have the ability to analyze information much faster to derive insights and to make decisions informed by AI agents at much higher speed. And we have been focused on developing agents that enable our clients to do precisely that. Our agents control with the regulatory requirements of the health care industry. They are not generic solutions. They are tailor-made what we call [indiscernible] AR agents. And we found that our clients are very interested in those solutions. We have pipelines that have reached record levels in part in France by the operates that we put into the market that we continue to put out. A lot of concern was voiced by investors and analysts in the past few quarters consequent on an article about how AI will replace services industries. Nothing on the sort is going to happen. Quite the opposite, it creates new demand for our service. The part of our commercial business that theoretically would be most vulnerable to AI disruption is what we call analytics and consulting. And yet, we have a record pipeline in analytics and consulting. We had very strong growth, the best we've had in 3 years in the quarter, and we see this continuing in the balance of the year. The underlying demand in Commercial Solutions is simply fueled by the amount of new drug launches. For example, in Q1, there were new drug launches. A drug launch is the brand and butter of our commercial solutions business. So I think last year, at this time, we got 6 or 7 launches. And it's increasing because of the number of molecules that have been approved by the FDA over the past couple of years. Our win rates in the business continue to be strong. I think you asked about the balance of -- nothing changing in terms of our outlook for the different parts of the business. If I can just summarize the interest of time, our info business is about 30% of the total and we continue to grow low single digits, a little bit stronger than that because it's more demand for data that our own AI agents create -- the fact -- that's the slowest growth business. The fastest growth business within Commercial Solutions is what we call patient solutions, which is the pieces of real world that were left with commercial solutions, and those have very strong double-digit growth. And then everything else, analytics and consulting, commercial tech and cultural engagement services, which is -- includes the former CSMS business. By the way, now also supplemented with AI agents. Those will grow mid- to high single digits going forward. But I hope that gives you more color.

Your next question comes from the line of Shlomo Rosenbaum with Stifel.

I wanted to get just a view on the market in general. The commentary that you've had is that it's stabilizing. What we're seeing things like talking about analytics and consulting that you say is the highest growth in 3 years that very often is a leading indicator that things are actually improving, and we're seeing things get better. I wanted to ask you where you could point to us where you're seeing things actually growth accelerating versus just stabilizing or getting less negative if there's anything like that? And do you think that the performance that you have is indicative of market growth? Or are you noticing an improvement in the win rates of the business. I asked me that in light of the fact that there is not a lot of data from other public companies, but just whatever you can see and comment on that.

Yes. Well, look, I completely understand the question. I mean, it's a question we just had a moment ago, again, on the demand environment. And it's not while coming out of period, really 3 to 4 years of significant turmoil in the industry largely driven by an the post coding deflationary environment, the post bottle decline, which was strained budgets, the IRA on the mining administration and see all the announced for inactive policies on the travel administration, the fans, [indiscernible] the FDA changes, et cetera, et cetera, and all of that creates constraining the demand environment, both on the clinical and the commercial side. And so it's always when we come out of a period like this is always difficult to evaluate. Well, are we out there are these real green shoots or not? So I understand the construct. And frankly, we ourselves are surprised by how well we performed in the quarter. And I mean around every single measure, I think we believe and we strongly it was an extremely clean quarter. We beat on every one of our financial metrics pretty much, we surpassed our own expectations on both businesses. And the AI disruption concern that actually, as we said, a tailwind for our business, as we are seeing it already, we feel confident that this structure will continue. So that's the overall kind of 40,000 foot perspective. Now in our conversations with clients, large pharma, as I mentioned before, is much more constructive both on R&D and commercial. I would say a little bit more on commercial because large vehicle trials, large capital programs always take more time to get started. And again, coming out of a long 3-, 4-year period of more deliberate, slower decision-making, we have not returned to business as usual cruising altitude, if you will, before all of this started. But we are much improved versus where we were. So the environment is more constructive in large pharma, not quite back to where we were on pharma, but we're getting there. On the EV front, EBITDA funding is reaching record levels, $205 million in the first quarter is almost than what it was last year. Again, it takes time, but the fact that people commit very significant capital to specific programs in [indiscernible] is indicative of renewed confidence and comfort levels, higher comfort level going forward. I think that we're going to continue to see this environment. Your question is, are we going back to where we were before. Next quarter, I don't think so. I think the balance of the continue to be on the large pharma side, a little slow than it has been much better than it was last year, much better than it was 2 years ago, but more deliberate thinking. A large [indiscernible] clients told us actually, if I can share that anecdotes, that they plan to double the number of molecules in their pipeline because they are using AI to identify more targets, meaning most of what [indiscernible] has been doing so far, on the AI front is at the discovery stage. And that -- and maybe that may be counterintuitive to some, but to us, it's pretty obvious that will increase the number of trials because that will increase the number of molecules that are selected and farm are telling us directly that it will increase, and they are even asking us questions about capacity how do we increase capacity to be able to handle a much larger number of stock back. Bear in mind, there are a number of LOEs coming up in the 4- to 5-year time frame. And pharma has to replenish their pipeline. AI [indiscernible] used today, which, again, 90% plus of the clinical side, we had the discovery stage is increasing the number of assets that are going to be pursued. When you feel you have a higher chance of success and you are going to launch the program, and AI discovery stage enables you to identify more targets for such development. That, in my mind, increases demand for CRO services and not the opposite going forward and our conversation with [indiscernible] clearly indicated. And that is the case. They been asking us what would it take to ramp up capacity. We're not talking next fall, obviously, but in the mean term. So that's for clinical and commercial, I already commented on it.

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

I was wondering if you could comment on sort of the drivers of the margin, particularly on EBITDA as we move through the year. Obviously, I think the second quarter guide implies a little bit lower EBITDA margin versus consensus. I'm wondering if that's sort of rightsizing of some of the mix impact? And then how do we think about that perhaps as you're thinking about the back half of the year?

I'll take that one. So if you look at our EBITDA progression that's implied in our guidance is pretty consistent with history. So I think there's nothing noteworthy to call out there. I think just to add a little color on the margin side. As we mentioned when we gave our Q1 sort of guidance, Q1 has the largest FX teens and you'll see that start to moderate as we go through the back end of the year. So given the previously mentioned strength in our productivity programs, we're very confident that we'll see the reported margins sort of flip to positive as we progress through the year.

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

So I'm going to start going back to the bookings, maybe look at it a little differently. You exited 25 with about $10 billion of total net awards I don't know what the normal exact pass-through mix is. But if I use a, I don't know, a swag of 30%, that would be about $3 billion a year of pass-through bookings about $750 million a quarter, 1/3 below would be about $250 million. And if we add $250 million back to reported awards as if pass-throughs were normal, that would get us to about a 1.15 book-to-bill. I just want to make sure that, that logic and thought process is somewhat consistent with what you're trying to express today and maybe that will [indiscernible]

Eric, you're amazing. The answer to your question is yes. By the way, if we -- if in addition to that, our revenue in R&DS would have been what we planned as opposed to the strong bid because we converted faster, we burn faster in the quarter than it would have north of that. I'll let you figure it as you do well at math.

Yes. So I guess I won't insert my joke of what is the book-to-bill in Q2. I do have 1 other serious follow-up. Can we get the constant dollar organic growth in both segments? I know you did give some approximate details on commercial maybe you could solidify can solidify those comments for us and then give us the R&DS numbers on a recast basis.

Yes, absolutely. Absolutely. Okay, I'm going to say from memory, but you [indiscernible] the growth on R&DS reported is 6.2%. Is that the number?

Correct.

Right. Two points of that is FX, 1 point is acquisitions, right, across the earnings. And so therefore, organic growth for R&DS in the quarter was 3%. A year ago, it was 1%. On the commercial side, reported is 11.5 of then the FX impact is 3 reports and the acquisition impact is another 3 points or a little bit more than 3 points, right? So organic on the commercial side is 5% which is really was last year. So again, 3% organic for R&DS, 5% organic for commercial, 4% for the enterprise.

At this time, Mr. Joseph, I turn the call back over to you.

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

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