Zoetis Q2 2025 Earnings: Pet Care Drives 15% Profit Jump

Zoetis Inc., a global leader in animal health medicines and vaccines, recently published its financial results for the second quarter of 2025. This post delves into the company's latest 10-Q filing to unpack its performance, examine the key drivers of its growth, and understand its strategic navigation of the dynamic animal health market.

Overall, Zoetis reported a solid quarter, with both revenue and profit showing healthy increases. The performance was largely powered by its booming companion animal business, which successfully compensated for a planned downturn in its livestock segment following a strategic divestiture.

Companion Animals Drive Revenue Growth

Zoetis's revenue for the second quarter of 2025 climbed to $2.46 billion, a 4% increase from the same period last year. For the first six months, revenue grew 3% to $4.68 billion. This top-line growth was driven by a significant divergence between its two main business segments:

• Companion Animal Health: This segment, which provides products for pets like dogs, cats, and horses, was the standout performer. Revenue surged 8% to $1,788 million for the quarter. This growth was fueled by strong sales in key product lines such as parasiticides (flea, tick, and worm prevention) and dermatology. The companion animal business now accounts for over 72% of Zoetis's total revenue, highlighting its strategic importance.
• Livestock Health: In contrast, the livestock segment—serving cattle, swine, poultry, and fish—saw an 8% decline in revenue to $638 million. This decrease was expected and is primarily attributed to the company's strategic divestiture of its medicated feed additive (MFA) portfolio in late 2024. MFAs are products added to animal feed to prevent disease and promote growth.

This strategic pivot underscores Zoetis's increasing focus on the higher-growth, higher-margin companion animal market, capitalizing on the powerful and enduring trend of pets being treated as integral family members.

A Closer Look at Profitability

A company's ability to convert revenue into profit is a core measure of its financial health. For the second quarter, Zoetis's net income attributable to shareholders jumped an impressive 15% to $718 million.

The following flow diagram visualizes how Zoetis translated its sales into profit for the quarter, breaking down its income statement.

A few key expense lines from the report stand out:

• Cost of Sales: This expense decreased by 3% to $649 million. More importantly, as a percentage of revenue, it improved significantly, falling from 28.3% to 26.4%. The filing notes this was largely due to the favorable impact of divesting the lower-margin MFA products, as well as positive currency effects and price increases. This is a strong sign of increasing operational efficiency.
• SG&A (Selling, General & Administrative) Expenses: These costs rose 6% to $617 million, driven by higher spending on advertising and promotions, indicating Zoetis is actively investing to support its key brands and drive future sales.
• R&D (Research & Development) Expenses: R&D spending remained stable at $172 million, reflecting a continued commitment to innovation and maintaining a robust product pipeline, which is the lifeblood of any pharmaceutical company.

Capital Strategy and Shareholder Returns

Beyond its operational performance, Zoetis has been actively managing its portfolio and returning value to shareholders. The divestiture of the MFA business is proving to be a successful strategic move, streamlining the company and enhancing its overall gross margin.

The company also continued its share repurchase program, buying back over 2.1 million shares for approximately $341 million during the quarter. This, combined with a declared quarterly dividend of $0.50 per share—a 16% increase from the prior year—demonstrates strong confidence in its financial stability and cash flow generation.

Final Thoughts

Zoetis's second-quarter results showcase a company executing a clear and effective strategy. By leaning into the high-growth companion animal segment and strategically shedding lower-margin assets, the company is delivering steady revenue and impressive profit growth.

While Zoetis operates in a competitive environment with inherent risks related to product pipelines, regulatory approvals, and global supply chains, its current trajectory is strong. The focus on pet health positions the company to continue benefiting from powerful secular trends, even as it navigates the more cyclical nature of the global livestock market.