Zoetis (ZTS) Q2 2026 earnings summary

Executive summary

• Q2 2026 revenue was $2.5 billion, nearly flat year-over-year, with adjusted net income of $781 million, down 1–2% organically, and net income of $691 million, down 5% reported; U.S. Companion Animal faced pressure from lower clinic visits, price sensitivity, and increased competition, while International, Livestock, and Diagnostics segments grew.

• Leadership changes included appointments of Jay Saccaro as EVP, CFO, and COO, and Abhay Nayak as EVP and President of U.S. Commercial Operations to drive execution.

• Commercial strategy was adapted, with investments focused on innovation and high-return opportunities.

• Portfolio advanced with new product launches and acquisitions, including VitalRADS and launches of Lenivia and Portela in the EU, Canada, and Great Britain.

• FY 2026 guidance revised downward due to persistent market headwinds and competitive pressures.

Financial highlights

• Q2 global revenue was $2.5 billion, flat reported and down 1% organically; adjusted net income was $781 million, down 2% organically; adjusted diluted EPS was $1.87, up 4–5% year-over-year.

• U.S. segment revenue was $1.3 billion, down 7% year-over-year; International segment revenue was $1.2 billion, up 6–8%.

• Adjusted gross margin was 72.9%, down 40 bps reported; U.S. gross margin was 83.1%, international 71.0%.

• Adjusted SG&A expenses were $586 million, down 3–4% year-over-year; adjusted R&D expenses increased 4–5%.

• Restructuring and acquisition/divestiture-related costs rose to $77 million in Q2, mainly from employee termination costs.

Outlook and guidance

• Full-year 2026 revenue guidance revised to $9.12–$9.32 billion, representing a 3% to 1% organic operational decline.

• Adjusted net income expected at $2.57–$2.62 billion, down 9% to 5% organically; adjusted diluted EPS guided to $6.15–$6.25.

• Guidance reflects persistent competitive and pricing pressures, especially in U.S. Companion Animal, and assumes no near-term market stabilization.

• Reported diluted EPS expected at $5.55–$5.65.