01—Abstract
Summary
Summary of the 10-Q filed August 5, 2025. Cited figures are marked; the original filing is the authoritative source.
Zoetis Inc. reported solid financial results for the second quarter and first half of 2025.
Revenue increased by 4% to $2.46 billiona 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.
02—Key points
Key Highlights
- Total revenue for the second quarter of 2025 increased by 4% to $2.46 billion, with operational revenue growth of 5%.
- Diluted 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.
- For the first six months of 2025, revenue grew by 3% to $4.68 billion, and diluted EPS increased by 13% to $3.02.
- Companion 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.
- Cost 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.
- The 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.
- Zoetis 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.
03—One dollar
04—Financials
Financial Highlights
Figures from 10-QQ2 FY2025filed August 5, 2025Financial Statements
Q2 FY2025 against Q2 FY2024
| Line item | Q2 FY2025Q2 FY2024 | Change |
|---|---|---|
| Revenue | $2.46B$2.36B | +4.2% |
| Cost of Revenue | $649.00M$668.00M | −2.8% |
| Gross Profit | $1.81B$1.69B | +7.0% |
| SG&A Expenses | $617.00M$581.00M | +6.2% |
| Interest Expense | $53.00M$59.00M | −10.2% |
| Net Income | $718.00M$624.00M | +15.1% |
| EPS (Basic) | $1.61$1.37 | +17.5% |
| EPS (Diluted) | $1.61$1.37 | +17.5% |
| Shares Outstanding (Basic) | 445.10M455.50M | −2.3% |
| Shares Outstanding (Diluted) | 445.50M456.00M | −2.3% |
05—Questions
Frequently Asked Questions
What drove the revenue growth in the second quarter of 2025?
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%.
How did the company's profitability perform in the quarter?
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).
What is the impact of the MFA divestiture on the company's financial performance?
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.
How is Zoetis managing foreign exchange rate fluctuations?
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.
06—Continue