IQV Q1 Earnings Call: Real-World Evidence Drives Outperformance Amid Sector Uncertainty

Clinical research company IQVIA (NYSE: IQV) reported Q1 CY2025 results beating Wall Street’s revenue expectations, with sales up 2.5% year on year to $3.83 billion. The company’s full-year revenue guidance of $16.2 billion at the midpoint came in 2.1% above analysts’ estimates. Its non-GAAP profit of $2.70 per share was 2.6% above analysts’ consensus estimates.

Is now the time to buy IQV? Find out in our full research report (it’s free).

StockStory’s Take

IQVIA began 2025 with a quarter that saw revenue and profits exceed Wall Street’s expectations, as management emphasized the strong performance of its Technology & Analytics Solutions (TAS) segment—especially in real-world evidence offerings. CEO Ari Bousbib highlighted that pent-up demand and the launch of new drugs were central to TAS growth, while noting delayed decision-making in Research & Development Solutions (R&DS) due to ongoing sector uncertainty. Bousbib explained, “Our clients are launching new drugs and are executing on their commercial roadmaps,” attributing above-expected TAS revenue growth to both discretionary and mission-critical projects resuming momentum.

Looking ahead, management lifted its revenue guidance for the year, citing favorable foreign currency movements but maintained a cautious tone regarding R&DS activity. Bousbib acknowledged that uncertainty from new U.S. government policies and a weaker funding environment for emerging biopharma (EBP) clients has led to longer decision cycles on new programs. Still, he reiterated confidence in the industry’s resilience, stating, “The life sciences industry has consistently demonstrated its resilience, overcoming macroeconomic obstacles, and thriving in changing environments.” He also pointed to an expanding AI initiative as a potential future driver of efficiency.

Key Insights from Management’s Remarks

IQVIA’s management attributed the quarter’s revenue outperformance to robust activity in its real-world evidence and commercial technology businesses, while acknowledging external headwinds in the clinical research landscape. The company’s updated guidance reflected improved currency conditions rather than a change in underlying demand.

• TAS Segment Momentum: The Technology & Analytics Solutions segment led growth, with management citing double-digit gains in real-world evidence projects. This growth was supported by drug launches and resumed activity in both discretionary and essential client projects.
• Delayed Clinical Decisions: In the R&DS segment, management noted that customer decision-making on new clinical programs slowed due to macroeconomic and industry policy uncertainty. The average time from client proposal to award increased by about 10% year over year, as clients reassessed investment timing.
• AI Deployment and Efficiency: Management highlighted the rollout of over 20 specialized AI agents across commercial and clinical operations, which have started to deliver measurable productivity improvements, such as reducing delivery times and costs. The company plans to scale AI applications further throughout 2025.
• Shifting Mix in Clinical Services: While full-service clinical work saw early signs of recovery, the proportion of functional service provider (FSP) contracts—which typically carry lower margins—declined in the latest quarter. Management attributed this shift to large pharma companies reverting to more outsourcing after experimenting with increased in-house activity.
• Policy and Regulatory Developments: Bousbib discussed recent U.S. government actions, including potential tariffs and changes to National Institutes of Health (NIH) funding caps. He stated that direct exposure for IQVIA is minimal, but acknowledged broader sector uncertainty could influence client activity and timelines.

Drivers of Future Performance

Management’s outlook for the rest of the year is shaped by ongoing strength in TAS, growing AI-driven efficiencies, and gradual recovery in clinical research demand, offset by persistent sector uncertainty and cautious client spending.

• Continued TAS and AI Expansion: The company expects its commercial technology and real-world evidence solutions to remain growth drivers, with further AI deployment anticipated to improve operational efficiency and reduce costs.
• Macroeconomic and Regulatory Uncertainty: Ongoing policy developments in the U.S.—such as potential industry-specific tariffs and drug pricing reforms—could influence biopharmaceutical decision-making and delay program starts, especially for emerging biopharma clients.
• R&DS Pipeline and Client Mix: Management believes that recent strategic partnerships with large pharma clients and a growing backlog position IQVIA for recovery in clinical research bookings, provided sector uncertainty stabilizes and funding for EBP clients rebounds.

Top Analyst Questions

• Justin Bowers (Deutsche Bank): Asked about the durability of real-world evidence project growth; management responded that pent-up demand and resumed mission-critical work should sustain momentum through the year.
• Matthew Sykes (Goldman Sachs): Questioned margin expansion opportunities; CFO Ron Bruehlman attributed limited margin changes to currency effects and ongoing cost reduction initiatives, including AI-driven efficiencies.
• Shlomo Rosenbaum (Stifel): Probed whether uncertainty in R&DS could impact short-cycle TAS business; CEO Ari Bousbib explained that pent-up demand and necessary commercial launches are currently supporting TAS, with discretionary consulting remaining stable.
• Michael Ryskin (Bank of America): Inquired about the significance of quarterly book-to-bill ratios; Bousbib emphasized that quarterly book-to-bill is not predictive of long-term growth, citing sector comparisons and the impact of delayed client decision-making and funding uncertainty.
• Jailendra Singh (Truist Securities): Sought clarity on shifts between full-service and FSP clinical contracts; Bousbib noted a reversal back toward full-service work among large pharma clients, reducing the proportion of lower-margin FSP bookings.

Catalysts in Upcoming Quarters

In future quarters, the StockStory team will be watching (1) whether real-world evidence and commercial technology solutions sustain their growth trajectory, (2) signs of improvement in clinical research bookings as sector uncertainty potentially abates, and (3) measurable impacts of AI-driven efficiencies on both revenue mix and margins. Updates on key regulatory and funding environments, as well as the timing of delayed clinical programs, will also be important indicators of execution.

IQVIA currently trades at a forward P/E ratio of 11.7×. At this valuation, is it a buy or sell post earnings? See for yourself in our free research report.

Our Favorite Stocks Right Now

Market indices reached historic highs following Donald Trump’s presidential victory in November 2024, but the outlook for 2025 is clouded by new trade policies that could impact business confidence and growth.

While this has caused many investors to adopt a "fearful" wait-and-see approach, we’re leaning into our best ideas that can grow regardless of the political or macroeconomic climate. Take advantage of Mr. Market by checking out our Top 6 Stocks for this week. This is a curated list of our High Quality stocks that have generated a market-beating return of 176% over the last five years.

Stocks that made our list in 2020 include now familiar names such as Nvidia (+1,545% between March 2020 and March 2025) as well as under-the-radar businesses like the once-micro-cap company Tecnoglass (+1,754% five-year return). Find your next big winner with StockStory today.