ZTS | Q1 2025

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Overview

• Non-GAAP EPS of $1.48 beats by $0.08.

• Revenue of $2.2B (flat Y/Y) beats by $10M.

Takeaways

Zoetis (ZTS) started 2025 on a good note, posting $2.2 billion in revenue—up 9% on an organic operational basis.

Adjusted net income came in at $662 million, up 6% organically, and the company slightly raised its full-year EPS outlook thanks to favorable foreign exchange and ongoing share buybacks.

The core companion animal segment drove much of the growth for the quarter, and management continues to express confidence in their ability to navigate what they called a “fluid” macro environment.

With that, international markets were even better, growing 11% organically, with solid strength across both livestock and pet products. And U.S. revenue grew 6% (excluding the MFA divestiture), with companion animal up 8%.

Simparica continued to be a major growth engine, with sales up 19% to $367 million globally, as more pet owners adopt triple-combination treatments like Simparica Trio.

Dermatology—mainly Apoquel and Cytopoint—also had a solid quarter, growing 10% to $387 million.

The OA pain franchise (Librela and Solensia) brought in $147 million, up 15%, although U.S. adoption is growing more slowly than originally expected.

Management acknowledged that pet owners are being a little more cautious with how they spend—especially on chronic treatments like Librela. But they made it clear they’re playing the long game.

Librela has reached 86% vet clinic penetration in the U.S., satisfaction among vets remains high, and a new long-acting version of the treatment is expected later this year. It’ll be a different molecule and will carry a new brand name, but they see it as a key growth driver for the future—especially with 27 million dogs in the U.S. suffering from OA and only a fraction currently being treated.

Livestock grew 7% organically, led by poultry and cattle demand in international markets. U.S. livestock sales were down 2%, weighed down by pricing pressure and timing issues on certain products.

Still, Zoetis says it’s committed to the segment and pointed to their recent USDA approval for an avian flu vaccine as evidence of continued investment.

Tariffs were another focus. Zoetis accounted for a $20 million tariff-related headwind in their updated net income guidance but emphasized that this reflects only the tariffs currently in place—not anything that could come down the road.

Most of the impact is from imported active ingredients and a few diagnostics and accessories, mainly tied to China. With that said, 60% of Zoetis’ manufacturing is U.S.-based, and they export more from the U.S. than they import.

Management believes this gives them some flexibility if trade tensions get worse, and they’re already looking at mitigation strategies to manage costs and supply.

Retail and alternative channels continued to gain traction. Retail sales jumped 40% this quarter, now making up 21% of the U.S. business.

Autoship programs, especially for products like Simparica Trio and Apoquel, are helping boost compliance and drive steady recurring revenue. Management sees this shift as a positive—not a threat to vet clinics, but a sign that pet owners want convenience and flexibility.

Despite some near-term uncertainty—tariffs, regulatory changes, cautious consumer behavior—Zoetis reiterated its full-year organic revenue growth target of 6% to 8% and expects adjusted net income to grow 5% to 7%. They continue to expect double-digit growth from their three biggest franchises: Simparica, dermatology, and OA pain.

Overall, Zoetis isn’t immune to market headwinds, but its diverse product portfolio, global reach, and focus on the long-term put it in a strong position to keep growing—even if there are bumps in the road along the way.

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