Yahoo Finance IQVIA Holdings Inc (IQV) Q1 2024 Earnings Call Transcript Highlights: Navigating Challenges ...
Revenue: Q1 grew 2.3% on a reported basis and 2.9% at constant currency. Excluding COVID-related work, growth was approximately 6% at constant currency.
Net Income: GAAP net income was $288 million, down 0.3% year-over-year.
Earnings Per Share (EPS): Adjusted diluted EPS was $2.54, up 3.7% year-over-year.
Free Cash Flow: $377 million, calculated from $522 million cash flow from operations minus $145 million capital expenditures.
Book-to-Bill Ratio: 1.23 for the quarter, would have been approximately 1.35 excluding a large cancellation.
Backlog: Reached a record $30.1 billion, up 7.9% year-over-year.
Adjusted EBITDA: $862 million, growth of 1.3%.
Guidance: Full-year revenue expected between $15.325 billion and $15.575 billion, adjusted EBITDA between $3.7 billion and $3.8 billion, and adjusted diluted EPS between $10.95 and $11.25.
Release Date: May 02, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
IQVIA Holdings Inc (NYSE:IQV) reported a strong start to the year with top and bottom line numbers meeting or slightly exceeding expectations.
Revenue growth excluding foreign exchange and COVID-related work was 6%, demonstrating solid underlying business performance.
The company achieved a record backlog, growing almost 8% compared to the previous year, indicating strong future revenue potential.
Net new bookings for the quarter were approximately $2.6 billion, with a quarterly book-to-bill ratio of 1.23, highlighting strong demand for IQVIA's services.
First quarter EBP funding was exceptionally strong at $47.1 billion, more than triple the funding of Q1 last year, reflecting robust biotech sector funding and potential for future business.
Negative Points
A substantial cancellation in the CNS area impacted the quarter's bookings, although the company was able to absorb this within its guidance.
The uncertain macroeconomic environment continues to pose challenges, with clients remaining cautious in their spending decisions.
Foreign exchange headwinds led to a downward adjustment of revenue guidance by $75 million, reflecting the impact of a stronger U.S. dollar.
While the TAS segment is seeing demand for technology-enabled analytics solutions, the overall growth in this segment was modest, with revenue growing as expected but not exceeding expectations.
The company noted a shift in HCP engagement from in-person to digital interactions, requiring adjustments in service offerings and potentially impacting client relationships and revenue streams.
Q & A Highlights
Q: Can you provide more details on the large cancellation mentioned, specifically its impact on revenue and bookings? A: Ari Bousbib, CEO & Chairman - The cancellation was unusually large, about $0.25 billion, which is significantly higher than the typical range of $15 million to $20 million. Despite its size, we are able to absorb this impact due to our scale and the breadth of our ongoing projects. The adjustment in our guidance is solely due to FX, not this cancellation.
Q: How did RFP flows in the quarter compare to your expectations, and how should we think about the book-to-bill ratio moving forward? A: Ari Bousbib, CEO & Chairman - RFP flow was up mid- to high single digits across all customer groups, aligning with our expectations. The variation in RFP flow is normal quarter-to-quarter. We continue to see strong growth in our qualified pipeline, which supports a positive outlook for our book-to-bill ratio.
Q: Are you seeing the expected conversion rates in your TAS business pipeline, and how might the macro environment influence this moving forward? A: Ari Bousbib, CEO & Chairman - The TAS business is performing as expected, with no significant changes in conversion rates. While the macro environment remains uncertain, particularly with no imminent rate cuts, we anticipate improvements in the latter part of the year based on current client interactions and budget clarity.
Q: Could you update us on the balance between FSP and full-service models in R&DS, and how this impacts margins? A: Ari Bousbib, CEO & Chairman - FSP accounts for about 15% of total R&DS revenue and 20-25% excluding pass-throughs. While FSP contracts typically have lower margins, we offset this through efficiency and cost management. The mix may shift slightly each year, but significant changes are not anticipated in the near term.
Q: What has been the initial reaction from OCE customers regarding the partnership with Salesforce, and what led to this decision? A: Ari Bousbib, CEO & Chairman - The reaction has been very positive. The decision was driven by a competitor's shift away from Salesforce, prompting us to develop a next-generation product with Salesforce's advanced Life Sciences Cloud. This partnership ensures we continue to offer a leading-edge solution.
Q: What surprised you most in the quarter, either positively or negatively? A: Ari Bousbib, CEO & Chairman - There were no significant surprises this quarter; everything progressed as expected. The large cancellation was anticipated, and its impact was managed within our existing guidance, which was adjusted only for FX changes.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
This article first appeared on GuruFocus.
