Zoetis Inc. Q4 FY2025 earnings call

• In 2025, organic revenue growth was 6% and adjusted net income grew 7%. International markets contributed 8% organic revenue growth, U.S. 4%. Livestock had 8% organic growth, Companion Animal 5%.
• Innovation was central, with near-term pipeline offering growth catalysts. OA pain franchise declined but feline opportunity with Solensia grew 7%. Companion Animal Diagnostics grew 13%, expanded with Vetscan Optocell.
• In the U.S., economic pressure on pet owners affected routine care visits, but emergency/urgent care was strong. Clinics adjusted cost of care, and there was a competitive landscape with elevated promotions.
• Zoetis took targeted actions to offset pressures, optimizing channel mix, increasing vet reach/frequency, and enhancing scientific leadership through medical education.

For the full year 2025, Zoetis Inc. had global revenue of $9,500,000,000, growing 2% on a reported basis and 6% on an organic operational basis. Companion Animal portfolio grew 5% operationally, with Simparica franchise at $1,500,000,000 revenue growing 12% operationally. Dermatology portfolio grew 6% operationally to $1,700,000,000. OA pain monoclonal antibodies declined 3% operationally. Companion Animal Diagnostics grew 13% operationally. Livestock portfolio had $2,800,000,000 in revenue, 8% organic operational growth. U.S. segment had $5,100,000,000 in revenue, flat on reported basis but 4% organic operational growth. International segment grew 4% on reported basis and 8% organic operational basis. Q4 2025 had $2,400,000,000 in revenue, 3% reported growth and 4% organic operational growth. Companion Animal portfolio grew 1% operationally, Livestock grew 3% organic operational basis.

For 2026, Zoetis guides to organic operational revenue growth of 3%-5% and organic operational adjusted net income growth of 3%-6%. Companion Animal is expected to be a key growth driver despite competition. Livestock is aided by global protein demand. Adjusted cost of sales is expected to be ~28%, SG&A expenses between $2,430,000,000 - $2,490,000,000, R&D expenses between $715,000,000 - $725,000,000, and adjusted diluted EPS in range of $7.00 - $7.10.

• Macro-economic pressures impacting pet owner spending on routine care.
• Competitive landscape with elevated promotional activity, especially in certain product segments.
• Economic pressure on Gen Z and millennial pet owners leading to decline in therapeutic visits and doses.

Q: Explicitly on competition for 2026 and what you are factoring in.

A: Mike, we expected certain launches and promotions, factored into guidance. Price range 2%-3%, balance volume.

Q: 3% to 5% operational guidance, does it incorporate U.S. Companion Animal operational growth?

A: Erin, we take into account current market conditions and our portfolio strength. Animal health remains resilient, and we factor in macro conditions and competitive dynamics.