10-QPeriod: Q2 FY2025

Zoetis Inc. Quarterly Report for Q2 Ended Jun 30, 2025

Filed August 5, 2025For Securities:ZTS

Summary

Zoetis Inc. reported solid financial results for the second quarter and first half of 2025. Revenue increased by 4% to $2.46 billion for the quarter and 3% to $4.68 billion for the first half, demonstrating continued growth driven by price increases and strong performance in key franchises, particularly in companion animal products. Diluted earnings per share also saw a significant increase, rising to $1.61 for the quarter and $3.02 for the half, up from $1.37 and $2.68 respectively in the prior year periods. This growth reflects effective cost management, including a reduction in the cost of sales as a percentage of revenue, and a strategic focus on higher-margin products. The company continues to navigate a dynamic global environment, with operational revenue growth outpacing reported growth due to unfavorable foreign exchange rates. Despite these headwinds, Zoetis maintains a strong financial position, evidenced by healthy operating cash flow and a robust balance sheet. The company also highlighted ongoing investments in research and development to fuel future innovation and maintain its leadership position in the animal health sector. Shareholder returns remain a priority, with continued share repurchases under its authorized program.

Financial Highlights

50 data points
Beta

Revenue

$2.46B

73.6% Gross Margin

Net Income

$718.00M

29.2% Net Margin

EPS (Diluted)

$1.61

Total Assets

$14.48B

Cash & Equivalents

$1.44B

Free Cash Flow

$409.00M

Financial Statements
Beta
Revenue$2.46B
Cost of Revenue$649.00M
Gross Profit$1.81B
SG&A Expenses$617.00M
Interest Expense$53.00M
Net Income$718.00M
EPS (Basic)$1.61
EPS (Diluted)$1.61
Shares Outstanding (Basic)445.10M
Shares Outstanding (Diluted)445.50M

Key Highlights

  • 1Total revenue for the second quarter of 2025 increased by 4% to $2.46 billion, with operational revenue growth of 5%.
  • 2Diluted earnings per share for the second quarter of 2025 rose to $1.61, a 18% increase compared to $1.37 in the prior year period.
  • 3For the first six months of 2025, revenue grew by 3% to $4.68 billion, and diluted EPS increased by 13% to $3.02.
  • 4Companion animal products showed robust growth, with revenue up 8% for the quarter and 9% for the first six months, driven by key franchises like Simparica Trio and dermatology products.
  • 5Cost of sales as a percentage of revenue improved to 26.4% in Q2 2025 from 28.3% in Q2 2024, benefiting from favorable impacts of divestitures, foreign exchange, and price increases.
  • 6The company continued its share repurchase program, repurchasing approximately 2.14 million shares for $337 million during the quarter, with $4.9 billion remaining under its authorized program.
  • 7Zoetis continues to invest in R&D, with R&D expenses remaining stable at $172 million for the quarter and decreasing slightly by 1% to $329 million for the first six months, supporting innovation and portfolio progression.

Frequently Asked Questions

Revenue growth in the second quarter of 2025 was primarily driven by a 4% increase in price and a combined 5% volume growth from key franchises and other in-line products. This was partially offset by a 4% decrease related to the divestiture of the medicated feed additive product portfolio. Foreign exchange rates unfavorably impacted reported revenue growth by 1%.

Zoetis demonstrated improved profitability in the second quarter of 2025. Net income attributable to Zoetis increased by 15% to $718 million. The gross margin improved to 84.7% in the U.S. segment and 70.7% in the International segment, supported by a lower cost of sales as a percentage of revenue (26.4% vs. 28.3% in the prior year quarter).

The divestiture of the medicated feed additive product portfolio (MFA divestiture) had a notable impact. While it reduced revenue by approximately 4% due to the loss of those product lines, it also contributed to a favorable impact on the cost of sales as a percentage of revenue in both the second quarter and first six months of 2025. The company incurred a net loss of $3 million related to final post-closing adjustments for this divestiture in the first half of 2025.

Zoetis is exposed to foreign exchange rate fluctuations, with approximately 41% of its revenue denominated in foreign currencies for the first six months of 2025. The company manages this risk through operational means, such as aligning same-currency revenues with costs and assets with liabilities. Despite these efforts, foreign exchange unfavorably impacted reported revenue growth by approximately 2% for the first six months of 2025 and by 1% for the second quarter.