Financial Data and Key Metrics Changes - Elevance Health reported second quarter GAAP diluted earnings per share of $7.72 and adjusted diluted earnings per share of $8.84, with a revised full year 2025 adjusted EPS guidance of approximately $30 [14][19] - Operating revenue was $49.4 billion, an increase of 14% year over year, driven by higher premium yields and recent acquisitions [14][15] - The consolidated benefit expense ratio increased to 88.9%, up 260 basis points year over year, primarily due to pressures in the ACA and Medicaid businesses [15][17] Business Line Data and Key Metrics Changes - The Medicare Advantage portfolio showed continued strength, with cost trends in line with expectations [6][17] - CarillonRx experienced over 20% growth in operating revenue, while Carillon services delivered more than 50% growth in revenue [18][19] - Membership decreased to 45.6 million, down approximately 200,000 sequentially, attributed to a reduction in Medicaid membership and lower effectuation rates in the ACA business [14][15] Market Data and Key Metrics Changes - The ACA market is experiencing elevated morbidity due to shifts from Medicaid, with approximately 70% of the total impact attributed to risk pool acuity [26][36] - Medicaid cost trends decelerated in the second quarter but at a slower pace than expected, with higher acuity and increased member utilization [16][17] - The company anticipates a broader market reset in 2026 due to the expiration of enhanced subsidies, which may lead to further risk pool changes [12][20] Company Strategy and Development Direction - The company is focused on executing a clear strategy to strengthen structural performance across the enterprise, with an emphasis on managing costs and deploying targeted investments [5][8] - Efforts are being made to stabilize trends in high-cost areas, including specialty services and post-acute care, while enhancing care delivery through streamlined prior authorization processes [9][10] - The company aims to improve visibility and consistency in operations while preparing for potential policy changes affecting Medicaid and ACA markets [20][62] Management's Comments on Operating Environment and Future Outlook - Management acknowledged the disappointment in revising guidance for the second consecutive year but emphasized the commitment to transparency and strong execution [13][19] - The company is taking proactive steps to address elevated medical cost trends and is not relying on near-term recovery assumptions [7][12] - Management remains confident in the strength of the enterprise and the ability to create long-term value through operational discipline and innovation [13][19] Other Important Information - The company is utilizing AI-enabled tools to streamline clinical workflows and identify fraud, waste, and abuse [10][69] - Approximately one-third of benefit expenses are now in downside risk arrangements, supporting improved care coordination [10][12] - The company has returned approximately $2 billion to investors year-to-date, with a focus on maintaining flexibility for strategic investments [19][72] Q&A Session Summary Question: Can you help delineate the pressure you're seeing in the ACA business? - Management identified three principal factors: increased risk pool acuity, higher utilization in several cost categories, and inappropriate coding tactics contributing to inflated costs [22][25] Question: Can you size the relative impact of ACA and Medicaid in the guidance revision? - The reduction in guidance is slightly more weighted towards ACA, with ongoing enrollment losses in Medicaid contributing to elevated morbidity [29][35] Question: How do you think about the dynamic of Medicaid margins? - Management expects Medicaid margins to show year-over-year improvement in the back half of the year, despite ongoing challenges [42][100] Question: Can you talk about Medicare Advantage trends and bid strategy? - Medicare Advantage trends remain elevated and consistent with expectations, with a disciplined approach to bids for 2026 focused on margin recovery [46][48] Question: What are you doing differently in terms of cost structure initiatives? - The company is transforming processes using technology and AI to manage costs and identify trends earlier, with a focus on responsible innovation [66][69] Question: How is the current environment affecting capital allocation strategy? - The company is maintaining a flexible capital allocation strategy, focusing on opportunistic share repurchases while integrating recent acquisitions [72][73]

Financial Data and Key Metrics Changes - Consolidated revenue increased by 12% to $7 billion, with underlying revenue growth of 4% [15][19] - Adjusted operating income rose by 14% year-over-year, with an adjusted operating margin increase of 50 basis points to 29.5% [6][19] - Adjusted EPS grew by 11% to $2.72, while GAAP EPS was $2.45 [19][20] Business Line Data and Key Metrics Changes - Risk and Insurance Services (RIS) revenue was $4.6 billion, up 15% year-over-year, with 4% underlying growth [20][22] - Marsh's revenue increased by 18% to $3.8 billion, with 5% underlying growth [21][22] - Guy Carpenter's revenue was $677 million, up 7% year-over-year, with 5% underlying growth [22] - Consulting segment revenue was $2.4 billion, up 7% or 3% on an underlying basis [23][24] - Mercer reported revenue of $1.5 billion, up 9% or 3% on an underlying basis [24][25] - Oliver Wyman's revenue was $873 million, up 5% or 3% on an underlying basis [26] Market Data and Key Metrics Changes - Commercial insurance rates decreased by 4% in Q2, driven by property insurance [11][12] - Global casualty rates increased by 4%, with US excess casualty up 18% [12][13] - Workers' compensation rates decreased by 4%, while global property rates decreased by 7% year-over-year [13][14] Company Strategy and Development Direction - The company aims for mid-single-digit underlying revenue growth and solid growth in adjusted EPS for 2025 [16][32] - Focus on advising clients on strategies to navigate geopolitical instability and supply chain risks [7][8] - Commitment to addressing the challenges posed by the litigation environment in the US [9][10] Management's Comments on Operating Environment and Future Outlook - The global economic outlook remains uncertain, with various geopolitical and economic challenges impacting clients [6][7] - Management expressed confidence in the company's resilience and ability to support clients during complex conditions [16][32] - The company anticipates continued pressure on pricing in the insurance market, particularly in property and casualty [37][41] Other Important Information - The company announced a 10% increase in its quarterly dividend to $0.90 and completed $300 million in share repurchases [15][32] - Total debt at the end of the quarter was $19.7 billion, with a cash position of $1.7 billion [31][32] Q&A Session Questions and Answers Question: Are you seeing upward pressure on pricing in the insurance market? - Management indicated that the insurance and reinsurance markets continue to soften, particularly in property, but noted rising costs in excess casualty due to the litigation environment [37][38] Question: Can you provide more detail on the wealth and career components of Mercer? - Management explained that the wealth business is diverse, with growth driven by investment advisory services, while the career segment faced challenges due to economic uncertainty affecting project demand [43][45] Question: How does the current macro environment affect the RIS segment? - Management acknowledged that the macro environment, including declining P&C pricing and slowing economic growth, impacts project work and hiring, but expressed confidence in their execution [59][61] Question: What is the outlook for M&A and IPO activity? - Management noted that while M&A and IPOs are components of the macro picture, uncertainty remains, and it is too early to predict a meaningful uptick in these activities [67][69] Question: How is the company addressing rising medical costs? - Management highlighted that rising healthcare costs are a stress point for clients, but much of their business operates on a fee basis, which mitigates direct impacts from medical inflation [99][100] Question: What are the implications of AI technology on the business? - Management expressed excitement about AI's potential to create efficiencies and improve insights, indicating ongoing efforts to integrate these technologies into their operations [102][104]

Financial Data and Key Metrics Changes - System-wide revenue for the quarter was $4.9 billion, with reported revenue at $4.5 billion, down 3% year over year in constant currency [6][10] - Reported EBITDA for the quarter was $72 million, while adjusted EBITDA was $89 million, representing a decrease of 25% in constant currency year over year [6][11] - Adjusted earnings per share decreased 43% year over year in constant currency, with reported losses per share at $1.44 and adjusted EPS at $0.78 [7][12] Business Line Data and Key Metrics Changes - The Manpower brand had growth of 1% year over year in organic constant currency, while the Experis brand declined by 9% [12][14] - Talent Solutions brand experienced growth of 1%, with the MSP business recording strong revenue increases compared to the prior year [12][14] - Consolidated gross profit decreased by 5% on an organic constant currency basis year over year, with the Manpower brand comprising 62% of gross profit [14][15] Market Data and Key Metrics Changes - Revenue in the Americas segment was $1.1 billion, representing a 2% year-over-year increase in constant currency [17] - Southern Europe revenue was $2.1 billion, reflecting a 2% decrease in organic constant currency [21] - Revenue in Northern Europe was $794 million, representing a 10% decline in constant currency [23][24] - Asia Pacific Middle East segment revenues increased by 8% in organic constant currency, with Japan growing by 7% [25][26] Company Strategy and Development Direction - The company is focused on market share gains, utilizing AI to enhance sales targeting and identify high-revenue leads [40][41] - There is an ongoing strategy to transition certain businesses to a franchise model to better serve local markets [43][44] - The company continues to invest in digital transformation and AI capabilities to support evolving client needs and drive productivity [34][36] Management's Comments on Operating Environment and Future Outlook - Management noted that while macroeconomic conditions remain challenging, there are signs of stabilization in the US and parts of Europe [6][30] - The company anticipates ongoing stability in most markets, with a forecast for third-quarter earnings per share in the range of $0.77 to $0.87 [30][31] - Management highlighted the importance of geopolitical factors and economic conditions in Northern Europe, which are impacting performance [56][58] Other Important Information - Free cash flow represented an outflow of $7 million compared to an outflow of $150 million in the prior year [28] - The company ended the quarter with cash of $290 million and total debt of $1.29 billion, with net debt levels peaking at June 30 [29][30] - The company received multiple accolades, including being named Forbes America's number one temp staffing firm [37] Q&A Session Summary Question: Who is the company gaining market share from and what is the strategy? - The company is targeting faster-growing industry verticals using data to identify growth opportunities and deploying AI to enhance sales targeting [40][41] Question: Are there plans to move more businesses to a franchise model? - The company is continuously evaluating markets for potential franchise opportunities to better serve clients [43][44] Question: What are the underlying organic growth trends in the US? - The US business saw a decline of 3% for the quarter, with the Manpower brand performing strongly at a 9% increase [46][47] Question: What is the outlook for Northern Europe? - Northern Europe is facing economic challenges, but management believes demand will eventually return as geopolitical uncertainties subside [56][58] Question: How is the company addressing cost structures in Northern Europe? - The company has taken significant restructuring actions to align costs with current demand and is preparing for future growth [58][60] Question: What is the impact of defense spending in Europe? - Increased defense and infrastructure spending in Europe is expected to positively impact the broader economy and manufacturing sectors [90][92] Question: How is the company positioned for reshoring in the US? - Clients are increasingly considering expanding manufacturing in the US, which could benefit the company's operations [94][96]

Financial Data and Key Metrics Changes - The company expects to deliver about 70% more productivity in the second half of the year compared to the first half, indicating a significant improvement in operational efficiency [12] - The North America market integration is anticipated to create both efficiency and cost reduction opportunities, enhancing overall performance [10] Business Line Data and Key Metrics Changes - The food business is focusing on stabilizing the category and improving competitiveness within subsegments, with notable performance in brands like Cheetos and Doritos [21][22] - The away-from-home business is highlighted as a growth area, with high single-digit growth reported in the PBNA segment [28] Market Data and Key Metrics Changes - International markets are performing well, with mid-single-digit growth expected to continue, particularly in LATAM and parts of Europe, while China shows some weakness [50][51] - The beverage segment is gaining share globally, driven by successful platforms such as no sugar colas and energy drinks [76] Company Strategy and Development Direction - The company is investing in technology and productivity initiatives to optimize cost structures and drive growth, with a focus on integrating operations in North America [9][10] - There is a strong emphasis on permissible snacks and healthier options, with plans for innovation in protein and fiber offerings [46][47] Management's Comments on Operating Environment and Future Outlook - Management expresses confidence in returning to the low end of the long-term growth algorithm, supported by sustained international growth and improvements in North America [55] - The company is committed to following consumer trends towards healthier ingredients and eliminating artificial components from products [86] Other Important Information - The company is actively working on portfolio transformation, particularly in the permissible snacks category, which has grown to over $2 billion [43] - Investments in away-from-home capabilities are expected to enhance growth opportunities and profitability [29] Q&A Session Summary Question: Insights on productivity initiatives and asset footprint - Management discussed multi-year productivity strategies, emphasizing technology investments and cost structure optimization across various business lines [9][10] Question: Key initiatives for North America top line improvement - Management highlighted stabilizing the food category and improving competitiveness as critical initiatives for the second half of the year [21][25] Question: Growth in the away-from-home segment - The away-from-home business is seen as a significant growth opportunity, with margin accretion noted for both beverages and snacks [28][29] Question: Visibility on full-year earnings and productivity acceleration - Management expressed high confidence in productivity initiatives, with identified actions expected to drive results in the second half of the year [35][36] Question: Portfolio transformation and consumer engagement - The company is focusing on increasing availability and affordability of permissible snacks to drive consumer trial and engagement [44][45] Question: International business performance and growth drivers - International markets are performing well, with a focus on developing and emerging markets driving growth [50][51] Question: Energy drink strategy and future outlook - Management remains optimistic about the energy drink category, with plans to leverage partnerships and distribution capabilities [92]

Financial Data and Key Metrics Changes - The company expects to deliver about 70% more productivity in the second half of the year compared to the first half, with a focus on optimizing cost structures across all business segments [12][14][36] - The North America market integration is anticipated to create significant efficiency and cost reduction opportunities, leveraging technology and data investments [10][11] Business Line Data and Key Metrics Changes - The food business is focusing on stabilizing the category and improving competitiveness within subsegments, with successful initiatives in brands like Cheetos and Doritos [20][21] - The away-from-home business is highlighted as a growth area, with high single-digit growth reported in the beverage segment [26][28] Market Data and Key Metrics Changes - International business is performing well, with mid-single-digit growth expected to continue, particularly in LATAM and parts of Europe, while China shows some weakness [49][50] - The company is seeing strong performance in no-sugar colas and energy drinks, with a focus on expanding these categories globally [74][75] Company Strategy and Development Direction - The company is investing in technology and innovation to enhance productivity and drive growth, particularly in the away-from-home segment [36][37] - There is a strategic focus on permissible snacks and healthier offerings, with a goal to increase market share in these categories [41][58] Management's Comments on Operating Environment and Future Outlook - Management expresses confidence in returning to the low end of the long-term growth algorithm, driven by sustained international growth and improvements in North America [54][56] - The company acknowledges challenges in the external environment but remains optimistic about productivity initiatives and market positioning [34][35] Other Important Information - The company is actively working on portfolio transformation, particularly in the permissible snacks category, which has grown to over $2 billion [41][42] - There is a commitment to eliminating artificial ingredients across both food and beverage segments, aligning with consumer preferences for cleaner labels [82] Q&A Session Summary Question: Insights on productivity initiatives and asset footprint - Management discussed multi-year productivity strategies, emphasizing technology investments and cost structure optimization across all business lines [9][10][12] Question: Key initiatives for North America top line improvement - The focus is on stabilizing the food category and improving competitiveness, with specific brand relaunches planned for Lay's and Tostitos [20][21][22] Question: Growth potential of the away-from-home business - Away-from-home is a significant growth opportunity, with higher margins compared to retail, and the company plans to invest more resources in this channel [28][29] Question: Visibility on full-year earnings and reinvestment strategy - Management expressed high confidence in productivity acceleration and outlined plans for reinvestment in technology and value initiatives [34][36] Question: Drivers of international beverage success - The beverage segment is performing well due to strong platforms in no-sugar colas and energy drinks, with a focus on leveraging partnerships and distribution [74][75] Question: Evolution of cleaner ingredients in beverages - The company is committed to following consumer trends towards natural ingredients and is actively working on eliminating artificial components from its products [82] Question: Satisfaction with energy drink strategy - Management sees energy drinks as a growing category and is participating through ownership and distribution strategies, with plans for future innovations [88]

Financial Data and Key Metrics Changes - The company reported earnings per share of $1.11 and net income of $1.8 billion, reflecting a year-over-year EPS growth of approximately 13% [5][14] - Total fee revenue grew by 4.6% year-over-year, driven by broad-based strength across various businesses [5][20] - The return on tangible common equity was 18%, and the return on average assets improved to 1.08% [6][15] - The efficiency ratio improved to the high 50s, indicating better expense management [6][15] Business Line Data and Key Metrics Changes - Fee income now represents approximately 42% of total net revenue, with significant growth in payment services [7][10] - Merchant payment services revenue grew 4.4% year-over-year, supported by a tech-led strategy [10] - The capital markets business is focused on introducing new product capabilities, contributing to growth in commercial and industrial (C&I) loans [9][10] Market Data and Key Metrics Changes - The company divested approximately $6 billion in mortgage and auto loans to strategically reposition its balance sheet [13] - C&I and credit card portfolios represented 47% of the balance sheet, up from 43% at the end of 2023, with average loans growing 6.6% year-over-year [12][13] - Average consumer deposit balances increased by $2.4 billion or 1.1% linked quarter, while the percentage of non-interest-bearing deposits remained stable at approximately 16% [17] Company Strategy and Development Direction - The company is focused on three key priorities: expense discipline, organic growth, and transformation of the payments business [26] - There is an intentional evolution of the business mix to be more fee-intensive and diversified, with a shift towards multi-service clients [26][27] - The company aims to deliver sustainable EPS growth while maintaining a focus on operational efficiency and productivity [26][27] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the ability to navigate the current higher interest rate environment and position the balance sheet for near-term margin expansion [6][14] - The company expects net interest income for the third quarter to be in the range of $4.1 billion to $4.2 billion, with total fee revenue expected to be approximately $3 billion [23] - Management remains optimistic about achieving medium-term profitability and efficiency targets, despite some headwinds in net interest income [15][25] Other Important Information - The company reported stable asset quality trends and credit metrics, with a modest reserve release of $53 million this quarter [15][21] - The CET1 capital ratio was 10.7%, well above regulatory minimums, reflecting strong capital levels [21][22] - The company is strategically evolving both sides of the balance sheet to support a higher net interest income trajectory [75] Q&A Session Summary Question: NII dynamics and margin outlook - Management indicated that part of the linked quarter decline in net interest margin was transitory and expects sequential net interest income growth in the upcoming quarters [31][32] Question: Expense management and operating leverage - Management reassured that cost-cutting measures do not hinder necessary investments, emphasizing self-funding initiatives and operational efficiencies [36][39] Question: C&I loan growth drivers - Management highlighted strong growth in C&I loans, driven by increased utilization rates and strength in various sectors, including healthcare [60][61] Question: RWA increase and deposit competition - Management explained that the increase in risk-weighted assets was due to credit risk transfers and commercial loan growth, while deposit competition remains a consistent challenge [70][72] Question: Future loan growth outlook - Management expressed optimism about loan growth, particularly in C&I and credit card segments, indicating better growth opportunities than at the beginning of the year [85][86]

Financial Data and Key Metrics Changes - Novartis reported an 11% increase in sales in constant currency for Q2 2025, with core operating income rising by 21% [5][43] - Core margin improved to 42.2%, reflecting a 340 basis point increase, and core EPS was $2.42, up 24% [43] - Free cash flow reached $6.3 billion, a 37% increase, while for the first half of the year, sales grew by 13% and core operating income by 24% [43][44] Business Line Data and Key Metrics Changes - Priority brands saw robust growth, with sales up 30% in constant currencies, and excluding Entresto, the portfolio grew by 33% [7] - Kisqali grew by 64% in Q2, achieving TRx leadership in metastatic breast cancer, with a 100% increase in the US [8][9] - Semblix experienced 79% growth, and Lexio grew by 61%, both on track to exceed $1 billion in sales [19][23] Market Data and Key Metrics Changes - In the US, Kisqali's NBRx share reached 61% in early breast cancer, while outside the US, it grew by 25% [9][10] - Cosentyx growth moderated to 6% in Q2, impacted by higher rebates and competitive pressures, particularly in China [25][27] - The company anticipates continued growth in China, albeit at a lower rate than the previous year, due to tightened healthcare spending [69] Company Strategy and Development Direction - Novartis is focused on maintaining strong growth momentum through key launches and pipeline advancements, with an emphasis on innovative therapies [57] - The company announced a new $10 billion share buyback program, reflecting confidence in its long-term growth outlook [45][58] - Ongoing investments in R&D and strategic acquisitions, such as Regulus Therapeutics, are aimed at strengthening the renal pipeline [46] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in mid- to long-term growth despite current market challenges, including pricing pressures and competition [57][76] - The company is actively engaging with the US administration regarding drug pricing policies, aiming to balance innovation rewards with patient access [76] - Novartis expects to maintain mid-single-digit growth for Cosentyx, factoring in potential impacts from the Inflation Reduction Act [92] Other Important Information - The company is preparing for the potential entry of generics for Entresto in mid-2025, which is included in financial forecasts [48][49] - Management highlighted the importance of educating policymakers about the US drug pricing system and its effectiveness in promoting innovation [76] Q&A Session Summary Question: Update on Sjogren's Phase III data confidence - Management acknowledged the challenges in demonstrating statistically significant benefits in Sjogren's but remains optimistic based on strong Phase II data [63] Question: Impact of healthcare spending tightening in China - Management noted a slowdown in growth in China but expects to stabilize and maintain high single-digit to low teens growth moving forward [69] Question: Competitive environment for Cosentyx - Management indicated that while there is an initial impact from new competitors, the market typically stabilizes, and they remain confident in Cosentyx's long-term potential [85] Question: Direct negotiation impacts from the IRA - Management confirmed that the IRA has been factored into guidance, estimating that about 30% of Cosentyx sales are exposed to Medicare pricing [91]

Financial Data and Key Metrics Changes - The company reported earnings per share (EPS) of $1.11 and net income of $1.8 billion, reflecting a year-over-year EPS growth of approximately 13% [4][14] - Total fee revenue grew by 4.6% year-over-year, driven by broad-based strength across various businesses [4][21] - The return on tangible common equity was 18%, and the return on average assets improved to 1.08% [5][15] - The efficiency ratio improved to the high 50s, indicating better expense management [5][15] Business Line Data and Key Metrics Changes - Fee income now represents approximately 42% of total net revenue, with significant growth in payment services [6][10] - The capital markets business is focusing on new product capabilities, contributing to growth in commercial and industrial (C&I) loans [8][9] - Merchant payment services revenue grew 4.4% year-over-year, supported by a tech-led strategy [10] Market Data and Key Metrics Changes - The company divested approximately $6 billion in mortgage and auto loans to strategically reposition its balance sheet [13] - Average loans totaled $379 billion, with a decrease of 0.1% linked quarter, impacted by the sale of residential mortgages and auto loans [17][18] - The investment securities portfolio increased to $174 billion, reflecting a strategic shift in asset allocation [19] Company Strategy and Development Direction - The company is focused on three key priorities: expense discipline, organic growth, and transformation of the payments business [27] - There is an intentional evolution towards a more fee-intensive business model, with a focus on multi-service clients [26][27] - The company aims to achieve a net interest margin (NIM) of 3% in the medium term, supported by strategic actions and loan growth [33][80] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the ability to navigate the current higher interest rate environment and expects sequential net interest income growth in the upcoming quarters [31][32] - The company anticipates continued growth in C&I and credit card portfolios, with strong pipelines [32][88] - Management acknowledged the competitive deposit environment but remains optimistic about the trajectory of net interest income [74][78] Other Important Information - The company reported a modest reserve release of $53 million, reflecting favorable loan portfolio sales [15][22] - The CET1 capital ratio was 10.7%, indicating strong capital levels above regulatory minimums [22][23] - The company is preparing for potential regulatory changes regarding stablecoins, although immediate revenue impact is not anticipated [116] Q&A Session Summary Question: NII dynamics and margin outlook - Management indicated that part of the NIM decline was transitory and expects sequential growth in NII in the upcoming quarters [31][32] Question: Expense management and operating leverage - Management reassured that expense management does not hinder necessary investments and highlighted ongoing investments in technology and productivity [36][39] Question: C&I loan growth drivers - Management noted strong growth in C&I loans, driven by various sectors including healthcare and small businesses [62][63] Question: RWA increase and deposit competition - Management explained the increase in RWA was due to credit risk transfers and commercial loan growth, while deposit competition remains a consistent challenge [72][74] Question: Future loan growth outlook - Management expressed optimism about loan growth, particularly in C&I and credit card segments, indicating better growth opportunities than earlier in the year [88] Question: Fee revenue growth expectations - Management remains confident in mid-single-digit growth for overall fees and payments businesses [95]

Financial Data and Key Metrics Changes - Novartis reported an 11% increase in sales in constant currency for Q2 2025, with core operating income rising by 21% [5][44] - Core margin improved to 42.2%, reflecting a 340 basis point increase, and core EPS was $2.42, up 24% [44] - Free cash flow reached $6.3 billion, a 37% increase, while for the first half of the year, sales grew by 13% and core operating income by 24% [44][45] Business Line Data and Key Metrics Changes - Priority brands saw a 30% increase in sales in constant currencies, with notable growth from Kisqali (up 64%), Kisimta (up 33%), and Pluvicto (up 30%) [7][8][14] - Kisqali achieved TRx leadership in metastatic breast cancer, with a 100% increase in the US for Q2 [8][9] - Lexio grew by 61% in the quarter, with a 47% increase in the US, and Semblix saw a 79% growth [18][22] Market Data and Key Metrics Changes - In the US, Kisqali's NBRx share reached 61% in early breast cancer, while outside the US, it grew by 25% [9] - Cosentyx growth moderated to 6% in Q2, impacted by higher rebates and competitive pressures, particularly in China [24][26] - The company expects continued growth in China, albeit at a lower rate than the previous year, due to tightened healthcare spending [68] Company Strategy and Development Direction - Novartis is focused on maintaining strong growth momentum through key launches and pipeline advancements, including the acquisition of Regulus Therapeutics to enhance its renal portfolio [46][57] - The company has initiated a new $10 billion share buyback program, reflecting confidence in its long-term growth outlook [46][57] - Novartis aims to expand the use of B cell therapies and strengthen its position in the market, particularly for Kisqali and Kisimta [12][13] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the mid to long-term growth outlook, despite facing challenges such as potential generic competition for Entresto [57][49] - The company anticipates a strong performance in Q3 based on continued momentum in priority brands, while Q4 may see a step down in growth due to the full impact of potential generics [52][53] - Management acknowledged the ongoing discussions with the administration regarding drug pricing and emphasized the importance of maintaining US leadership in biopharmaceutical innovation [76] Other Important Information - Novartis is advancing its pipeline with significant readouts expected, including for Plavicto and remibrutinib [57] - The company is committed to a balanced capital allocation strategy, including dividends and share buybacks, while continuing to invest in R&D [46][57] Q&A Session Summary Question: Update on Sjogren's Phase III data confidence - Management acknowledged the excitement around Sjogren's but noted the risks involved, emphasizing the importance of robust data from both studies for the filing process [62] Question: Impact of healthcare spending tightening in China on Cosentyx - Management confirmed a notable slowdown in China, with expectations of high single-digit to low teens growth moving forward, while acknowledging the impact on the broader portfolio [68] Question: Competitive environment for Cosentyx - Management indicated that while there is an initial impact from new competitors, the market typically stabilizes, and they remain confident in Cosentyx's long-term growth potential [84] Question: Direct negotiation impacts from IRA on Cosentyx - Management confirmed that the IRA has been factored into guidance, estimating that about 30% of Cosentyx sales are exposed to Medicare pricing, which is manageable [90] Question: Performance expectations for ramibutinib in food allergy - Management expressed confidence in the compelling data for ramibutinib compared to existing treatments and highlighted the potential for a significant commercial launch [104]

Financial Data and Key Metrics Changes - The IT services revenue for Q1 was $2,590 million, reflecting a 2% decline in constant currency terms, which is within the guidance range [7][20] - Operating margin for Q1 was 17.3%, an expansion of 80 basis points year on year [21] - Net income grew by 10.9% year on year, with earnings per share (EPS) at INR 3.2, a growth of 10.8% year on year [24][25] - Free cash flow as a percentage of net income was robust at 115% for the quarter [25] - The effective tax rate was 21.6% for Q1, down from 24.5% in Q1 2024 [26] Business Line Data and Key Metrics Changes - BFSI sector saw a decline of 3.8% sequentially and 3.5% year on year [23] - Healthcare grew by 0.5% sequentially and 3.5% year on year [23] - Consumer sector declined by 4% sequentially and 5% year on year [23] - Technology and communications grew by 0.4% sequentially but declined by 3% year on year [23] - Capco continued to perform well, growing by 6.1% year on year [24] Market Data and Key Metrics Changes - Americas market grew by 1.5% year on year in constant terms, with strong deal momentum [7] - Europe faced a decline of 6.4% sequentially and 11.6% year on year [22] - Digital spending in India, the Middle East, and Southeast Asia remained resilient [8] Company Strategy and Development Direction - The company is focusing on AI, data, and modernization programs, aligning with client priorities [5][6] - Emphasis on vendor consolidation and cost optimization as key drivers for deal wins [12][45] - The company aims to build an AI-first enterprise, integrating AI capabilities into industry solutions [16][17] Management's Comments on Operating Environment and Future Outlook - Management expressed caution regarding the macro environment, citing ongoing geopolitical uncertainties and tariff impacts [36][100] - Despite uncertainties, there is strong deal momentum in BFSI and technology sectors, with clients focusing on cost optimization and AI investments [37][102] - The outlook for the second half of the year appears positive due to a strong order book and healthy pipeline [18][71] Other Important Information - The board declared an interim dividend of INR 5 per share, distributing over $1,300 million in the last six months [26] - The company revised its capital allocation policy to pay out a minimum of 70% of net income over three years [27] Q&A Session Summary Question: What is the macro outlook right now? - Management acknowledged ongoing uncertainty in the macro environment, with geopolitical issues and tariffs affecting various industries [36] Question: What powered the Americas One performance despite sector declines? - Strong performance in health and communications sectors contributed to the growth in the Americas market unit [39] Question: Is discretionary demand returning? - Discretionary spending is returning in certain areas, particularly around AI and modernization projects [45] Question: How are large deal wins impacting financials? - Large deal wins will take time to ramp up, typically around six to eight quarters, but are expected to positively impact revenues [70] Question: What is the outlook for margins going forward? - Margins may face pressure due to upfront investments required for large deals, but management remains optimistic about maintaining profitability through operational excellence [98]