Zoetis (ZTS) Q1 2025 earnings summary

Executive summary

• Q1 2025 revenue reached $2.2 billion, up 1% reported and 9% organic operational year-over-year, driven by strong companion animal product demand, price increases, and international segment growth.

• Adjusted net income was $662 million, up 4% reported and 6% organic operational; net income was $631 million, up 5% year-over-year.

• Adjusted diluted EPS was $1.48, up 7–8% year-over-year; reported diluted EPS was $1.41, up 8%.

• Growth was led by Simparica, dermatology, and OA pain franchises, with continued investment in innovation and new product approvals.

• Maintained resilience amid macroeconomic, regulatory, and geopolitical uncertainty, leveraging a diverse portfolio and global footprint.

Financial highlights

• Gross margin improved to 72.1% (up from 70.7%); adjusted cost of sales as a percent of revenue decreased to 27.9%.

• Adjusted SG&A expenses increased 2–4% year-over-year; adjusted R&D expenses decreased 2–3%.

• Operating cash flow was $587 million; net cash used in financing activities was $677 million, mainly for share repurchases and dividends.

• Effective tax rate on adjusted income increased to approximately 21.9%.

• Weighted-average diluted shares outstanding: 448.0 million for Q1 2025.

Outlook and guidance

• Full-year 2025 revenue guidance: $9.425–$9.575 billion; organic operational growth maintained at 6–8%.

• Adjusted net income guidance: $2.775–$2.825 billion; adjusted diluted EPS: $6.20–$6.30, reflecting FX and tariffs.

• Guidance reflects enacted tariffs and FX impacts; excludes potential future tariffs or further macroeconomic deterioration.

• Double-digit growth outlook reaffirmed for Simparica, dermatology, and OA pain franchises.