Zoetis (ZTS) Q3 2024 earnings summary

Executive summary

• Q3 2024 revenue reached $2.4 billion, up 11% reported and 14% operationally, with net income of $682 million, up 14%, and adjusted net income of $716 million, up 15% operationally; growth was driven by both price and volume increases, and strong performance in companion animal, livestock, and dermatology portfolios.

• Key franchises Librela, Solensia, Simparica, and dermatology products delivered robust growth, with Librela achieving $55 million in U.S. quarterly sales and 1 million dogs treated in 11 months.

• Completed divestiture of the medicated feed additive portfolio, with proceeds to be reinvested in high-growth areas aligned with core capabilities.

• Strategic focus on innovation, customer partnerships, and expanding market categories through science-driven products and digital transformation.

• Raised full-year 2024 revenue guidance to $9.2–$9.3 billion, with adjusted diluted EPS of $5.86–$5.92 and operational revenue growth of 10–11%.

Financial highlights

• Q3 2024 revenue: $2.388–$2.4 billion (+11% reported, +14% operational); net income: $682 million (+14%); adjusted net income: $716 million (+14–15%); adjusted diluted EPS: $1.58 (+16–17%).

• Gross margin for Q3 2024: 70.6–70.7%; adjusted cost of sales as a percent of revenue: 29.3%.

• Adjusted SG&A expenses: $560 million (+7–9%); adjusted R&D expenses: $166 million (+10%).

• Operating margin improved to 37% from 33% year-over-year.

• Operating cash flow for the nine months ended September 2024 was $2.05 billion, up from $1.46 billion in the prior year period.

Outlook and guidance

• Full-year 2024 revenue guidance: $9.2–$9.3 billion (operational growth 10–11%); adjusted net income guidance: $2.67–$2.695 billion (operational growth 13.5–14.5%); adjusted diluted EPS: $5.86–$5.92.

• Q4 revenue growth expected to normalize due to divestiture and prior year stocking effects; foreign exchange remains a headwind.

• 2025 outlook remains positive, with continued strong demand in OA, dermatology, and Simparica franchises, and normalization of China headwinds and inflation-driven pricing.

• Company believes cash, cash flows, and credit facilities are sufficient for liquidity needs.