Skip to content
    ZTS
    Earnings call· Dec 2025(Q4 FY25)

    Zoetis Q4 FY25 earnings call ZTS

    Feb 12, 2026 Source

    Executive summary

    Zoetis Q4 FY25 — Strong Operational Growth Driven by International Markets and Diverse Portfolio

    Zoetis delivered solid Q4 FY25 results, achieving 6% full-year organic operational revenue growth, driven by strong international performance and a diversified portfolio. Despite U.S. macroeconomic and competitive pressures impacting companion animal therapeutic visits and OA pain product sales, the company maintained its growth trajectory. Management is focused on disciplined execution, leveraging its robust pipeline, and optimizing channel strategies to navigate evolving market dynamics and sustain long-term value creation.

    Highlights

    5

    • Full-year organic operational revenue grew 6%, finishing at the high end of guidance.

    • International markets delivered 8% organic operational revenue growth for the full year.

    • Simparica franchise grew 12% operationally for the year, with U.S. sales of Trio surpassing $1 billion.

    • Companion animal diagnostics delivered 13% operational revenue growth for the year.

    • Livestock delivered 8% organic operational revenue growth for the full year, with strong international contributions.

    Concerns

    4

    • U.S. companion animal OA pain mAbs declined 12% for the full year to $238 million in annual sales.

    • Librela sales in the U.S. declined 16% versus 2024, reaching $169 million for the full year.

    • U.S. companion animal portfolio faced headwinds from economic pressure on Gen Z and Millennial pet owners, contributing to a decline in therapeutic visits and doses.

    • Key dermatology saw moderation to 1% operational growth in Q4 due to competitive promotional activity and slower periodic visits.

    Guidance & targets

    13
    CategoryTargetConfidence
    Organic operational revenue growth
    3% to 5%
    high materiality
    High
    Organic operational adjusted net income growth
    3% to 6%
    high materiality
    High
    Reported revenue
    $9.825 billion to $10.025 billion
    high materiality
    High
    Adjusted cost of sales as % of revenue
    approximately 28%
    medium materiality
    High
    Adjusted SG&A expenses
    $2.43 billion to $2.49 billion
    medium materiality
    High
    Adjusted R&D expenses
    $715 million to $725 million
    medium materiality
    High
    Adjusted interest expense and other income deductions
    approximately $200 million
    medium materiality
    High
    Adjusted effective tax rate
    approximately 20.5%
    medium materiality
    High
    Adjusted net income
    $2.975 billion to $3.025 billion
    high materiality
    High
    Adjusted diluted EPS
    $7 to $7.10
    high materiality
    High
    Reported diluted EPS
    $6.65 to $6.75
    high materiality
    High
    Share repurchase EPS impact
    $0.22
    medium materiality
    High
    Lenivia U.S. approval
    Approval
    high materiality
    High

    Segment performance

    16
    SegmentRevenueYoYQoQMargin
    Global Companion Animal
    Full year 2025 operational growth.
    		—5% operational——
    Global Livestock
    Full year 2025 organic operational growth, driven by broad-based growth across species and geographies.
    		$2.8 billion8% organic operational——
    U.S. Segment
    Full year 2025 performance, with growth balanced across companion animal and livestock.
    		$5.1 billionflat reported, 4% organic operational——
    U.S. Companion Animal
    Full year 2025 growth driven by Simparica and key dermatology franchises.
    		—4% organic operational——
    U.S. Livestock
    Full year 2025 organic operational growth, driven by vaccine portfolio and focus on prevention.
    		—4% organic operational——
    International Segment
    Full year 2025 performance, with strong contributions from companion animal and livestock.
    		—4% reported, 8% organic operational——
    International Companion Animal
    Full year 2025 operational growth, driven by Simparica, key dermatology, and OA pain mAbs.
    		—7% operational——
    International Livestock
    Full year 2025 organic operational growth, offsetting MFA divestiture impact.
    		$1.9 billion10% organic operational——
    Global Companion Animal (Q4)
    Q4 2025 operational growth, primarily from Simparica and ProHeart franchises.
    		$1.6 billion—1% operational—
    Global Livestock (Q4)
    Q4 2025 organic operational growth across U.S. and International, all species.
    		$756 million—9% organic operational—
    U.S. Segment (Q4)
    Q4 2025 revenue performance.
    		——flat—
    U.S. Companion Animal (Q4)
    Q4 2025 operational decline driven by OA pain franchises.
    		——-1% operational—
    U.S. Livestock (Q4)
    Q4 2025 organic operational growth, driven by poultry vaccines and cattle.
    		$234 million—3% organic operational—
    International Segment (Q4)
    Q4 2025 performance, positively impacted by operational changes for fiscal year alignment.
    		$1.1 billion—8% reported, 7% organic operational—
    International Companion Animal (Q4)
    Q4 2025 operational growth driven by Simparica, key dermatology, and OA pain franchises.
    		——4% operational—
    International Livestock (Q4)
    Q4 2025 organic operational growth, with broad-based growth across core species.
    		——12% organic operational—

    Operational metrics

    5
    Adjusted gross margin
    71.9%+120 bps reported
    FY25

    Full year adjusted gross margin.

    Adjusted operating expenses growth
    2%
    FY25

    Operational growth, reflecting cost discipline.

    Share buybacks
    $3.2 billion
    FY25

    Total capital returned to shareholders through share buybacks.

    Dividends
    $800 million
    FY25

    Capital returned to shareholders through dividends.

    International segment sales acceleration
    2.5% to 3.5%
    Q4 FY25

    Increase in sales due to acceleration of timing of sales into Q4 2025, not expected to recur in FY26.

    Industry KPIs

    8
    MetricValueDetails
    Prescription volume50%%
    EPS revenue guidance—
    Product franchise net sales—
    Therapeutic drug market share—
    Price volume mix decomposition4% price, 2% volume%
    Geographic regional revenue growth—
    Clinical trial efficacy safety data—
    Patent expiry loe biosimilar erosion—

    Product announcements

    3
    ProductTypeDetails
    Vetscan OptiCelllaunch
    AI Masseslaunch
    Next-generation chemistry innovationroadmap

    Deals & partnerships

    1
    Veterinary Pathology Groupacquisition

    Acquisition in November 2025, broadening laboratory footprint across the U.K. and Ireland.

    Risks & headwinds

    5
    Economic pressure on pet ownersQ4 FY25, continuing into 2026

    Decline in therapeutic visits and doses

    Mitigation: Clinics reacting by taking a more measured approach to overall cost of care; optimizing channel mix, increasing reach and frequency with veterinarians, expanding medical education.

    Competitive landscape and promotional activityOngoing

    Elevated promotional launch activity

    Mitigation: Optimizing channel mix, increasing reach and frequency with veterinarians, reinforcing scientific leadership through expanded medical education.

    Decline in OA pain products (U.S.)FY25, continuing into 2026

    12% decline in U.S. OA pain products to $238 million in annual sales (FY25); Librela U.S. declined 16% to $169 million (FY25); Librela U.S. declined 32% to $36 million (Q4 FY25); Solensia U.S. declined 7% to $17 million (Q4 FY25)

    Mitigation: Multipronged strategy anchored in education, ensuring veterinarians and pet owners understand benefit-risk profile; confident in long-term strength.

    Softer macroeconomic conditions in BrazilQ4 FY25

    Simparica international declined 9% operationally on $49 million in sales (Q4 FY25)

    Impact on Apoquel share due to competitionOngoing

    Some impact on Apoquel share

    Mitigation: Driving market expansion with differentiated offerings, increasing compliance, maximizing lifetime value of patient; focused on driving conversion to Apoquel Chewable and Cytopoint.

    Q&A highlights

    6

    How is competition factored into 2026 guidance, especially for key derm given Q4 moderation? What are the price vs. volume assumptions for next year?

    Management expects competition, including aggressive promotional activity, to continue and is factored into the guidance. They anticipate returning to a normal price range of 2-3%, with the balance from volume.

    “On price, we've said we would return to our normal rate range, which is 2% to 3%, which is what you can assume in this guidance with the balance, of course, being volume.”

    asked by Michael Ryskin · answered by Wetteny Joseph

    2 min read6 chapters

    Detailed Narrative

    01

    U.S. Pet Owner Dynamics and Clinic Adaptation

    Kristin Peck noted continued deceleration in U.S. pet owner traffic for therapeutic and wellness visits in Q4, particularly among Gen Z and Millennial owners, due to economic pressure and price sensitivity. However, emergency and urgent care remain strong, suggesting underlying demand for care persists, but with greater sensitivity to routine care costs. Clinics are beginning to adapt by focusing on value, with some re-engaging in acquisitions and de novo clinic development, and large corporates offering special programs to encourage visits.

    02

    Competitive Landscape and Strategic Response

    The company is operating in a more competitive environment with elevated promotional launch activity, which historically has not been sustainable. In response, Zoetis is optimizing its channel mix, increasing veterinarian engagement, and reinforcing scientific leadership through expanded medical education. This strategy aims to offset near-term pressure📎s and sustain growth, with management expecting macroeconomic and competitive pressures to moderate as 2026 progresses.

    03

    ERP System Transition and Fiscal Year Alignment

    Zoetis is advancing a multi-year, multi-phase ERP system transition to enhance speed, productivity, and insights. This initiative includes eliminating the 1-month reporting lag for international subsidiaries, aligning the fiscal year globally with the calendar year 2026, starting in Q1. This will involve recasting prior financial statements for comparability, and certain operational changes in Q4 2025 (e.g., sales acceleration, timing of📎 price increases) were made in anticipation of this shift.

    04

    Capital Allocation Strategy

    In 2025, Zoetis deployed capital in a disciplined manner, balancing ongoing investments with returning capital to shareholders. This included completing a $1.75 billion common stock buyback in December, funded by a convertible bond offering, and returning an additional $800 million in dividends. In total, the company returned over $3.2 billion to shareholders through share buybacks in 2025, consistent with its long-term approach to capital deployment.

    05

    Livestock Segment Performance and Outlook

    The livestock portfolio delivered 8% organic operational revenue growth for the full year, with especially strong double-digit contributions internationally. Growth was broad-based across species and geographies, driven by consistent demand and solid execution. The company expects continued momentum in 2026, supported by global protein demand increases, favorable producer economics, and the industry's shift towards disease prevention.

    06

    Innovation and Pipeline Strength

    Zoetis highlighted its robust pipeline, with 12 potential blockbuster products (defined as at least $100 million in annual revenue) in development, including innovations pioneering new categories of care. In 2025, the company expanded its diagnostics portfolio with the launch of Vetscan OptiCell and AI Masses, and anticipates a next-generation chemistry innovation launch in 2026, further strengthening its platform.

    AI-generated summary of the company’s earnings call. Not investment advice.