Zoetis Inc.
For the period ended Mar 31, 2026. Filed May 7, 2026.
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A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Mar 31, 2026 · Filed May 7, 2026
ZTS$79.40-3.3%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-Q
Period ended 2025-09-30; filed 2025-11-04.
0001555280-25-000274
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2026-03-31; filed 2026-05-07.
0001555280-26-000024
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 246 previous paragraphs and 206 current paragraphs.
120 unchanged; 57 reworded; 28 added; 60 removed; 9 previous and 1 current paragraphs rearranged.
Tables are not compared: 23 previous and 21 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (28)
Current report
Fiscal year alignment of international subsidiaries
Current report
Our consolidated financial statements are prepared in accordance with accounting principles generally accepted in the United States of America (U.S. GAAP). Historically our consolidated financial statements, which have a year-end of December 31, have reflected financial information of subsidiaries operating outside the U.S. (the “International Subsidiaries”) on a one-month financial reporting lag with a year-end of November 30. In connection with our multi-year process to transition our enterprise resource planning (ERP) system, effective January 1, 2026, we eliminated the one-month financial reporting lag by our International Subsidiaries and adjusted their year-end to December 31 (the “Fiscal Year Alignment”).
Current report
The elimination of this financial reporting lag represented a change in accounting principle which the Company considers preferable because it provides investors more timely access to financial information about these subsidiaries. This change in accounting principle was applied retrospectively to all periods since January 1, 2024. The condensed consolidated financial statements as of and for the three months ended March 31, 2025, the Condensed Consolidated Balance Sheet as of December 31, 2025 and the related Notes to Condensed Consolidated Financial Statements have been recast to reflect this change in accounting principle. In addition, we plan to recast the condensed consolidated financial statements as of and for the three and six months ended June 30, 2025 and three and nine months ended September 30, 2025 and the consolidated financial statements as of and for the twelve months ended December 31, 2025 and 2024 when they are presented as comparatives in future financial statements.
Current report
As a result of the Fiscal Year Alignment, the results of operations of our International Subsidiaries for the month of December 2025 will not be included in our consolidated results of operations for fiscal year 2026 but will be included in the retrospective application of the new accounting principle to prior financial statement periods. This alignment is an important preliminary step in the process to transition our ERP system because it contributes to more seamless financial consolidation, regulatory compliance and consistent reporting.
Current report
In connection with the Fiscal Year Alignment, revenue in the International segment for the reported fourth quarter of 2025 benefited from operational changes resulting in the acceleration of the timing of sales into the reported fourth quarter of 2025, which led to an approximate 2.5% to 3.5% increase in sales in the International segment in the reported fourth quarter of 2025, a trend that we do not expect to recur at the end of fiscal year 2026.
Current report
The operational changes in connection with the Fiscal Year Alignment to date also included a shift implemented in the first quarter of 2026 to the timing of annual price increases in certain International Subsidiaries so that the price increase and anticipated customer buying preceding the price increase would occur in the same calendar year. In addition, processing of certain customer orders from December 2025 was delayed to the first quarter of 2026.
Current report
•unfavorable product mix; and
Current report
•unfavorable foreign exchange; and
Current report
•lower advertising and promotion expense.
Current report
•higher spend in project investments;
Current report
•unfavorable foreign exchange.
Current report
•Companion animal revenue declined primarily due to softer end-market demand and an increasingly competitive landscape. The company's key dermatology franchise and Simparica Trio faced heightened competitive pressure and persistent macroeconomic-driven price sensitivity. Also contributing to the decline was the impact of generic competition on Convenia and Cerenia, as well as lower sales of Librela.
Current report
•Livestock revenue growth was primarily due to increased demand for our cattle, poultry and swine products. Cattle products grew due to improved supply availability and strong results from our seasonal promotion. Poultry products grew due to price and increased demand for vaccines. Sales of our swine products grew due to improved supply, as well as increased demand for anti-infective products.
Current report
U.S. segment earnings decreased by $82 million, or 11%, in the three months ended March 31, 2026, compared with the three months ended March 31, 2025, primarily due to lower gross profit, partially offset by lower operating expenses.
Current report
(b) For the three months ended March 31, 2026, primarily related to employee termination costs due to organizational structure refinements.
Current report
Accrued expenses decreased primarily as a result of a decrease in accrued contract rebates and the timing of interest payments.
Current report
Other current liabilities increased primarily due to the mark-to-market adjustments of derivative instruments and an increase in deferred revenue.
Current report
Convertible Senior Notes
Current report
On December 18, 2025, we completed a private offering (the “offering”) of 0.250% convertible senior notes (the “convertible senior notes”) with a maturity date of June 15, 2029, unless earlier repurchased, redeemed or converted. The aggregate principal amount of the convertible senior notes sold in the offering was $2.0 billion, which includes $250 million in aggregate principal amount of convertible senior notes issued pursuant to the initial purchasers’ option to purchase additional convertible senior notes on the same terms and conditions, which the initial purchasers exercised in full for settlement on December 18, 2025.
Current report
The convertible senior notes were issued pursuant to an indenture, dated as of December 18, 2025, between us and Deutsche Bank Trust Company Americas, as trustee. If we call any convertible senior notes for redemption, a "make-whole fundamental change" will occur under the indenture with respect to those convertible senior notes, in which case the conversion rate applicable to the conversion of those convertible senior notes will be increased if they are converted during a specified period of time after they are called for redemption. The convertible senior notes are convertible at an initial conversion price of approximately $148.20 per share of common stock. Prior to March 15, 2029, the convertible senior notes are convertible during certain periods only: (i) if the trading price of our common stock is greater than or equal to 130% of the conversion price for at least 20 trading days (whether or not consecutive) during the 30 consecutive trading days prior to the end of a calendar quarter, (ii) the trading price per $1,000 principal amount of convertible senior notes for each trading day of the specified measurement period was less than 98% of the product of the last reported sale price of our common stock and the conversion rate on each such trading day, (iii) if we call the notes for redemption and (iv) upon the occurrence of certain corporate events, as set forth in the indenture. On or after March 15, 2029, holders may convert all or any portion of their notes, regardless of the foregoing conditions. Upon any conversion of the convertible senior notes, we will pay cash up to the aggregate principal amount of the notes to be converted and pay or deliver, as the case may be, cash, shares of our common stock or a combination thereof, at our election, in respect of the remainder, if any, of our conversion obligation in excess of the aggregate principal amount of the notes being converted.
Current report
The net proceeds from the offering were $1,970 million, after deducting the initial purchasers’ discounts and expenses of $30 million. We used the net proceeds from the offering as follows: (i) $187 million to fund the cost of entering into the capped call transactions described below, (ii) $248 million to purchase approximately 2.1 million shares of Zoetis’ common stock, par value $0.01 per share (the “common stock”), in privately negotiated transactions entered into concurrently with the pricing of the offering effected with or through one of the initial purchasers or its affiliate and (iii) the remaining $1,535 million for additional repurchases of common stock following the date of the offering, which repurchases were substantially completed as of December 31, 2025.
Current report
In connection with the issuance of the convertible senior notes, we also entered into privately negotiated capped call transactions with certain counterparties (the “capped calls”). The capped calls each have a strike price of approximately $148.20 per share, subject to certain adjustments, which correspond to the initial conversion price of the convertible senior notes. The capped calls have initial cap prices of approximately $211.72 per share, subject to certain adjustments. The capped calls cover, subject to anti-dilution adjustments, approximately 13.5 million shares of our common stock. We have the option to settle the capped calls in either shares, cash or a combination thereof. The capped calls are generally intended to reduce or offset the potential dilution to our common stock upon any conversion of the convertible senior notes with such reduction or offset, as the case may be, subject to a cap based on the cap price. However, if the market price per share of our common stock, as measured under the terms of the capped calls, exceeds the cap prices of the capped calls, there would nevertheless be dilution and/or there would not be an offset of such cash payments, in each case, to the extent that such market price exceeds the cap price of the capped calls. The capped calls are separate transactions, and not part of the terms of the convertible senior notes. We analyzed the transactions under ASC 815, Derivatives and Hedging, and determined that the
Current report
33 | capped calls met the criteria for classification as an equity transaction with no subsequent remeasurement, as long as they continue to meet the conditions for equity classification. These capped calls are recorded in stockholders’ equity on our balance sheet and are not accounted for as a bifurcated derivative. The cost of the capped calls of $187 million, net of $42 million in deferred tax assets, was recorded as a decrease to Additional paid-in capital on our Consolidated Balance Sheets as of December 31, 2025.
Current report
On December 17, 2025, we and the lenders under the credit facility entered into the First Waiver to the Revolving Credit Agreement, dated as of December 17, 2025 (the “waiver”), among us, the lenders party thereto, the issuing banks party thereto and JPMorgan Chase Bank, N.A., as administrative agent. The waiver waived a technical provision in the credit facility and explicitly permits early conversions of the convertible senior notes pursuant to their terms.
Current report
Senior Notes and Other Long-Term Debt
Current report
On August 18, 2025, we issued $850 million aggregate principal amount of 4.150% senior notes due 2028 and $1.00 billion aggregate principal amount of 5.000% senior notes due 2035 (collectively, 2025 senior notes), with an original issue discount of $2 million. The net proceeds were used to redeem in full the $600 million aggregate principal amount of our 5.400% 2022 senior notes due 2025 and the $750 million aggregate principal amount of our 4.500% 2015 senior notes due 2025 on August 28, 2025 and September 17, 2025, respectively, and the remainder is being used for general corporate purposes.
Current report
In August 2024, our Board of Directors authorized a multi-year share repurchase program of up to $6 billion of our outstanding common stock. In connection with the December 18, 2025 private offering of 0.250% convertible senior notes, we purchased approximately 2.1 million shares of Zoetis’ common stock, par value $0.01 per share, in privately negotiated transactions entered into concurrently with the pricing of the convertible senior notes offering effected with or through one of the initial purchasers or its affiliate. Following the date of the offering, we used $1,535 million of the remaining proceeds from the offering for additional repurchases of common stock which repurchases were completed as of March 31, 2026. As of March 31, 2026, there was $1.8 billion remaining under this authorization. Purchases of Zoetis shares may be made at the discretion of
Current report
•governmental laws and regulations affecting domestic and foreign operations, including without limitation, tax obligations and changes affecting the tax treatment by the U.S. of income earned outside the U.S. that may result from pending or possible future proposals;
Removed paragraphs (60)
Previous report
Total revenue increased by $12 million, or 1%, in the three months ended September 30, 2025, compared with the three months ended September 30, 2024. Operational revenue was relatively flat primarily due to the following:
Previous report
offset by:
Previous report
•price growth of approximately 4%;
Previous report
•favorable impact of the MFA divestiture; and
Previous report
•favorable foreign exchange,
Previous report
•price increases;
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•favorable impact of the MFA divestiture; and
Previous report
•favorable foreign exchange,
Previous report
•unfavorable manufacturing and other costs.
Previous report
•an increase in certain significant items;
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•higher other general and administrative costs,
Previous report
•lower advertising and promotion expenses.
Previous report
SG&A expenses increased by $66 million, or 4%, in the nine months ended September 30, 2025, compared with the nine months ended September 30, 2024, primarily as a result of:
Previous report
•an increase in certain significant items;
Previous report
•higher advertising and promotion expenses;
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•higher travel and entertainment costs; and
Previous report
•higher other general and administrative costs,
Previous report
•lower depreciation expense;
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•favorable foreign exchange; and
Previous report
•lower logistics and freight costs.
Previous report
•higher depreciation expense,
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•lower expenses due to timing of spend related to projects and other strategic investments.
Previous report
R&D expenses were relatively flat in the nine months ended September 30, 2025, compared with the nine months ended September 30, 2024, primarily as a result of:
Previous report
•lower expenses due to timing of spend related to projects and other strategic investments,
Previous report
•higher depreciation expense; and
Previous report
Restructuring charges and certain acquisition and divestiture-related costs in the three months ended September 30, 2025 primarily related to a transition from internal to external innovation and manufacturing of certain products and the closure of a related site. Restructuring charges and certain acquisition and divestiture-related costs in the three months ended September 30, 2024 primarily consisted of costs related to the MFA divestiture.
Previous report
Interest expense, net of capitalized interest, decreased in the nine months ended September 30, 2025 versus the comparable prior year period primarily as a result of higher capitalized interest in the current period associated with capital projects to support our future growth, partially offset by a higher average debt balance in the current period.
Previous report
The change in Other (income)/deductions—net in the nine months ended September 30, 2025 versus the comparable prior year period was primarily as a result of the net loss on the sale of our medicated feed additive product portfolio, certain water soluble products and related assets in 2024 and lower foreign currency losses in the current period, partially offset by lower interest income in the current period.
Previous report
Our effective tax rate was 20.4% and 20.2% for the nine months ended September 30, 2025 and 2024, respectively. The higher effective tax rate for the nine months ended September 30, 2025, compared with the nine months ended September 30, 2024, was primarily attributable to a lower benefit in the U.S. related to foreign-derived intangible income, partially offset by higher net discrete tax benefits and a more favorable jurisdictional mix of earnings (which includes the impact of the location of pre-tax earnings, tax impact of permanent differences and repatriation decisions).
Previous report
•Companion animal revenue increased primarily due to increased sales of our parasiticides portfolio, including Simparica® and Revolution® franchises, diagnostics and key dermatology products, partially offset by lower sales of our mAb products for OA pain, Librela® and Solensia®.
Previous report
•Livestock revenue decreased primarily due to the impact of the MFA divestiture across cattle, swine and poultry products.
Previous report
U.S. segment earnings increased by $10 million, or 1%, in the three months ended September 30, 2025, compared with the three months ended September 30, 2024, primarily due to higher gross profit, partially offset by the impact of the MFA divestiture.
Previous report
•Companion animal operational revenue growth was driven primarily by increased sales of our parasiticide portfolio, including both Simparica and Revolution/Stronghold® franchises, and our key dermatology products.
Previous report
•Livestock operational revenue decreased primarily due to lower sales of poultry and swine products, partially offset by increased sales in our cattle, fish and sheep products. Excluding the impact of the MFA divestiture, livestock revenue increased across all species. Sales of cattle products grew largely due to price. Sales of poultry products grew due to key account penetration and price.
Previous report
U.S. operating segment
Previous report
U.S. segment revenue increased by $44 million, or 1%, in the nine months ended September 30, 2025, compared with the nine months ended September 30, 2024, reflecting an increase of $172 million in companion animal products, partially offset by a $128 million reduction in livestock products.
Previous report
•Livestock revenue declined primarily due to the impact of the MFA divestiture across cattle, poultry and swine products.
Previous report
U.S. segment earnings increased by $91 million, or 4%, in the nine months ended September 30, 2025, compared with the nine months ended September 30, 2024, primarily due to higher gross profit, partially offset by the impact of the MFA divestiture and higher operating expenses.
Previous report
International operating segment
Previous report
International segment revenue increased by $70 million in the nine months ended September 30, 2025 compared with the nine months ended September 30, 2024. Operational revenue increased by $134 million, or 4%, driven by growth of $125 million in companion animal products and $9 million in livestock products.
Showing the first 40 of 60 passages. Open the source sections for the rest.
Reworded paragraphs (57)
Previous wording
Zoetis is a global leader in the animal health industry, focused on the discovery, development, manufacture and commercialization of medicines, vaccines, diagnostic products and services, biodevices, genetic tests and precision animal health. For over 70 years, we have been innovating ways to predict, prevent, detect, and treat animal illness, and continue to stand by those raising and caring for animals worldwide - from veterinarians and pet owners to livestock producers.
Current wording
Zoetis is a global leader in the animal health industry, focused on the discovery, development, manufacture and commercialization of medicines, vaccines, diagnostic products and services, biodevices, genetic tests and precision animal health. With a legacy of nearly 75 years, we continue to pioneer ways to predict, prevent, detect, and treat animal illness, supporting those raising and caring for animals worldwide - from veterinarians and pet owners to livestock producers.
Previous wording
We manage our operations through two geographic operating segments: the United States (U.S.) and International. Within each of these operating segments, we offer a diversified product portfolio for both companion animal and livestock customers in order to capitalize on local and regional trends and customer needs. See Notes to Condensed Consolidated Financial Statements —Note 16. Segment Information.
Current wording
We manage our operations through two geographic operating segments: the United States (U.S.) and International. Within each of these operating segments, we offer diverse products for both companion animals and livestock customers in order to capitalize on local and regional trends and customer needs. See Notes to Condensed Consolidated Financial Statements —Note 16. Segment Information.
Previous wording
We directly market our products to veterinarians and livestock producers located in approximately 45 countries across North America, Europe, Africa, Asia, Australia and South America, and are a market leader in nearly all of the major regions in which we operate. Through our efforts to establish an early and direct presence in many emerging markets, such as Brazil, Chile, China and Mexico, we believe we are one of the largest animal health medicines and vaccines businesses as measured by revenue across emerging markets as a whole. In markets where we do not have a direct commercial presence, we generally contract with distributors that provide logistics and sales and marketing support for our products.
Current wording
We directly market our products to veterinarians and livestock producers located in approximately 45 countries across North America, Europe, Africa, Asia, Australia and South America, and are a market leader in nearly all of the major regions in which we operate. In markets where we do not have a direct commercial presence, we generally contract with distributors that provide logistics and sales and marketing support for our products.
Previous wording
A summary of our 2025 performance compared with the comparable 2024 periods follows:
Current wording
A summary of our 2026 performance compared with the comparable 2025 period follows:
Previous wording
(a) Operational results and adjusted net income are non-GAAP financial measures. See the Non-GAAP financial measures section of this Management’s Discussion and Analysis of Financial Condition and Results of Operations (MD&A) for more information.
Current wording
(b) Operational results and adjusted net income are non-GAAP financial measures. See Non-GAAP financial measures section of this MD&A for more information.
Previous wording
For a description of our operating environment, including factors which could materially affect our business, financial condition, or future results, see "Our Operating Environment" in the MD&A of our 2024 Annual Report on Form 10-K. Set forth below are updates to certain of the factors disclosed in our 2024 Annual Report on Form 10-K.
Current wording
For a description of our operating environment, including factors that could materially affect our business, financial condition, or future results, see "Our Operating Environment" in the MD&A of our 2025 Annual Report on Form 10-K. Set forth below are updates to certain of the factors disclosed in our 2025 Annual Report on Form 10-K.
Previous wording
Our quarterly financial results are subject to variability related to a number of factors including, but not limited to: tariffs and other trade protection measures, the decline in global macroeconomic conditions, competitive dynamics, geopolitical tensions with and economic uncertainty in certain markets, inflation, global supply chain disruption, variability in distributor inventory stocking levels as a result of expected demand and promotional activities, weather patterns, herd management decisions, regulatory actions, disease outbreaks, product and geographic mix, timing of price increases and timing of investment decisions.
Current wording
Our quarterly financial results are subject to variability related to a number of factors including, but not limited to: tariffs and other trade protection measures, the decline in global macroeconomic conditions, competitive dynamics, geopolitical tensions with and economic uncertainty in certain markets, inflation, global supply chain disruption and supply availability, variability in distributor inventory stocking levels including as a result of expected demand and promotional activities, weather patterns, herd management decisions, regulatory actions, disease outbreaks, product and geographic mix, timing of price increases and customer expectations related to the same, timing of investment decisions and operational and other changes made in connection with the change in accounting principle to eliminate the one-month financial reporting lag in 2026 for our subsidiaries operating outside the U.S.
Previous wording
United States government announced additional tariffs on certain goods imported into the U.S. from numerous countries and multiple nations countered with reciprocal tariffs and other actions in response. While the final tariffs and other measures to be imposed, and their applicability to our business, remain uncertain, such actions may negatively impact demand and result in an increase in some product costs. We will continue to actively monitor the situation and evaluate actions that can be taken to moderate and/or minimize its effects. For further information regarding the impact of potential additional tariffs and trade protection measures on the Company, see Part II., Item 1A, Risk Factors in this Quarterly Report on Form 10-Q.
Current wording
Our business is subject to risks related to, among other factors, tariffs and other trade protection measures put in the place by the United States or other countries, as well as U.S. international trade relations, including those with China, Canada and the European Union. Starting in early 2025, the United States government announced additional tariffs on certain goods imported into the U.S. from numerous countries and multiple nations countered with reciprocal tariffs and other actions in response. While the final tariffs and other measures to be imposed, and their applicability to our business, remain uncertain, such actions may negatively impact demand and result in an increase in some product costs. We will continue to actively monitor the situation and evaluate actions that can be taken to moderate and/or minimize its effects. For further information regarding the impact of potential additional tariffs and trade protection measures on the Company, see Part I., Item 1A, Risk Factors in our 2025 Annual Report on Form 10-K.
Previous wording
Significant portions of our revenue and costs are exposed to changes in foreign exchange rates. Our products are sold in more than 100 countries and, as a result, our revenue is influenced by changes in foreign exchange rates. For the nine months ended September 30, 2025, approximately 41% of our revenue was denominated in foreign currencies. We seek to manage our foreign exchange risk, in part, through operational means, including managing same-currency revenue in relation to same-currency costs and same-currency assets in relation to same-currency liabilities. As we operate in multiple foreign currencies, including the Australian dollar, Brazilian real, British pound, Canadian dollar, Chinese renminbi, euro and other currencies, changes in those currencies relative to the U.S. dollar will impact our revenue, cost of goods and expenses, and consequently, net income. Exchange rate fluctuations may also have an impact beyond our reported financial results and directly impact operations. These fluctuations may affect the ability to buy and sell our goods and services between markets impacted by significant exchange rate variances. For the nine months ended September 30, 2025, approximately 59% of our total revenue was in U.S. dollars. Our year-over-year total revenue growth was unfavorably impacted by approximately 1% from changes in foreign currency values relative to the U.S. dollar. For operations in highly inflationary economies, we translate monetary items at rates in effect at the balance sheet date, with translation adjustments recorded in Other (income)/deductions––net, and we translate non-monetary items at historical rates.
Current wording
Significant portions of our revenue and costs are exposed to changes in foreign exchange rates. Our products are sold in more than 100 countries and, as a result, our revenue is influenced by changes in foreign exchange rates. For the three months ended March 31, 2026, approximately 47% of our revenue was denominated in foreign currencies. We seek to manage our foreign exchange risk, in part, through operational means, including managing same-currency revenue in relation to same-currency costs and same-currency assets in relation to same-currency liabilities. As we operate in multiple foreign currencies, including the Australian dollar, Brazilian real, British pound, Canadian dollar, Chinese renminbi, euro and other currencies, changes in those currencies relative to the U.S. dollar will impact our revenue, cost of goods and expenses, and consequently, net income. Exchange rate fluctuations may also have an impact beyond our reported financial results and directly impact operations. These fluctuations may affect the ability to buy and sell our goods and services between markets impacted by significant exchange rate variances. For the three months ended March 31, 2026, approximately 53% of our total revenue was in U.S. dollars. Our year-over-year total revenue growth was favorably impacted by approximately 4% from changes in foreign currency values relative to the U.S. dollar. For operations in highly inflationary economies, we translate monetary items at rates in effect at the balance sheet date, with translation adjustments recorded in Other (income)/deductions––net, and we translate non-monetary items at historical rates.
Previous wording
We believe that it is important to not only understand overall revenue and earnings results, but also “operational” results. Operational results is a non-GAAP financial measure defined as revenue or earnings results excluding the impact of foreign exchange. This measure provide information on the change in revenue and earnings as if foreign currency exchange rates had not changed between the current and prior periods to facilitate a period-to-period comparison. We believe this non-GAAP measure provides a useful comparison to previous periods for the company and investors, but should not be viewed as a substitute for U.S. GAAP reported results.
Current wording
We believe that it is important to not only understand overall revenue and earnings results, but also “operational” results. Operational results is a non-GAAP financial measure defined as revenue or earnings results excluding the impact of foreign exchange. This measure provides information on the change in revenue and earnings as if foreign currency exchange rates had not changed between the current and prior periods to facilitate a period-to-period comparison. We believe this non-GAAP measure provides a useful comparison to previous periods for the company and investors, but should not be viewed as a substitute for U.S. GAAP reported results.
Previous wording
We recognize that, as an internal measure of performance, the adjusted net income and adjusted EPS measures have limitations, and we do not restrict our performance management process solely to these metrics. A limitation of the adjusted net income and adjusted EPS measures is that they provide a view of our operations without including all events during a period, such as the effects of an acquisition, divestiture or amortization of purchased intangibles, and do not provide a comparable view of our performance to other companies. The adjusted net income and adjusted EPS measures are not, and should not be viewed as, a substitute for U.S. GAAP reported net income attributable to Zoetis and reported EPS. See the Adjusted Net Income section below for more information.
Current wording
We recognize that, as an internal measure of performance, the adjusted net income and adjusted EPS measures have limitations, and we do not restrict our performance management process solely to these metrics. A limitation of the adjusted net income and adjusted EPS measures is that they provide a view of our operations without including all events during a period, such as the effects of an acquisition, divestiture or amortization of purchased intangibles, and do not provide a comparable view of our performance to other companies. The adjusted net income and adjusted EPS measures are not, and should not be viewed as, a substitute for U.S. GAAP reported net income attributable to Zoetis and reported EPS. See Adjusted Net Income section below for more information.
Previous wording
Total revenue increased by $141 million, or 2%, in the nine months ended September 30, 2025, compared with the nine months ended September 30, 2024, an increase of $206 million, or 3%, on an operational basis. Operational revenue growth was primarily due to the following:
Current wording
Total revenue increased by $64 million, or 3%, in the three months ended March 31, 2026, compared with the three months ended March 31, 2025, a decrease of $12 million, or 1%, on an operational basis. The decrease in operational revenue was primarily due to the following:
Previous wording
•volume decrease from key franchises of approximately 1%.
Current wording
•volume decrease from key franchises of approximately 3%; and
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•volume decrease related to the impact of the divestiture of our medicated feed additive product portfolio, certain water soluble products and related assets (MFA divestiture) of approximately 4%; and
Current wording
•volume decrease related to the impact of the divestiture of our medicated feed additive portfolio, certain water soluble products and related assets (MFA divestiture) of approximately 1%,
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•price growth of approximately 4%; and
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•price growth of approximately 2%; and
Previous wording
Foreign exchange increased reported revenue growth by approximately 1%.
Current wording
Foreign exchange increased reported revenue growth by approximately $76 million, or 4%.
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Cost of sales as a percentage of revenue was 28.5% in the three months ended September 30, 2025, compared with 29.4% in the three months ended September 30, 2024. The decrease was primarily a result of:
Current wording
Cost of sales as a percentage of revenue was 28.3% in the three months ended March 31, 2026, compared with 28.1% in the three months ended March 31, 2025. The increase was primarily a result of:
Previous wording
R&D expenses increased by $3 million, or 2%, in the three months ended September 30, 2025, compared with the three months ended September 30, 2024, primarily as a result of:
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R&D expenses increased by $18 million, or 11%, in the three months ended March 31, 2026, compared with the three months ended March 31, 2025, primarily as a result of:
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•an increase in certain compensation-related costs to support innovation and portfolio progression.
Current wording
•an increase in certain compensation-related costs to support innovation and portfolio progression; and
Previous wording
Amortization of intangible assets decreased in the three and nine months ended September 30, 2025 versus the comparable prior year periods primarily due to assets that became fully amortized in the prior year.
Current wording
Amortization of intangible assets decreased in the three months ended March 31, 2026 versus the comparable prior year period.
Previous wording
Restructuring charges and certain acquisition and divestiture-related costs in the nine months ended September 30, 2025 primarily related to a transition from internal to external innovation and manufacturing of certain products and the closure of a related site. Restructuring charges and certain acquisition and divestiture-related costs in the nine months ended September 30, 2024 primarily related to organizational structure refinements and costs related to the MFA divestiture, partially offset by a reversal of costs as a result of a change in strategy from our 2015 operational efficiency initiative.
Current wording
Restructuring charges and certain acquisition and divestiture-related costs in the three months ended March 31, 2026 primarily related to employee termination costs due to organizational structure refinements.
Previous wording
Interest expense, net of capitalized interest, increased in the three months ended September 30, 2025 versus the comparable prior year period primarily as a result of a higher average debt balance in the current period, partially offset by higher capitalized interest in the current period associated with capital projects to support our future growth.
Current wording
Interest expense, net of capitalized interest, increased in the three months ended March 31, 2026 versus the comparable prior year period primarily as a result of a higher average debt balance in the current period.
Previous wording
The change in Other (income)/deductions—net in the three months ended September 30, 2025 versus the comparable prior year period was primarily as a result of higher foreign currency losses in the current period, partially offset by higher interest income in the current period.
Current wording
The change in Other (income)/deductions—net in the three months ended March 31, 2026 versus the comparable prior year period was primarily as a result of the gain on sale of a distribution facility in the current period.
Previous wording
Our effective tax rate was 18.7% and 20.8% for the three months ended September 30, 2025 and 2024, respectively. The lower effective tax rate for the three months ended September 30, 2025, compared with the three months ended September 30, 2024, was primarily attributable to higher net discrete tax benefits, partially offset by a lower benefit in the U.S. related to foreign-derived intangible income and a less favorable jurisdictional mix of earnings (which includes the impact of the location of pre-tax earnings, tax impact of permanent differences and repatriation decisions).
Current wording
Our effective tax rate was 20.7% and 22.1% for the three months ended March 31, 2026 and 2025, respectively. The lower effective tax rate for the three months ended March 31, 2026, compared with the three months ended March 31, 2025, was primarily attributable to a more favorable jurisdictional mix of earnings (which includes the impact of the location of pre-tax earnings, tax impact of permanent differences and repatriation decisions).
Previous wording
U.S. segment revenue decreased by $24 million, or 2%, in the three months ended September 30, 2025, compared with the three months ended September 30, 2024, reflecting a $25 million reduction in livestock products, partially offset by an increase of $1 million in companion animal products.
Current wording
U.S. segment revenue decreased by $93 million, or 8%, in the three months ended March 31, 2026, compared with the three months ended March 31, 2025, reflecting a decrease of $108 million in companion animal products, partially offset by an increase of $15 million in livestock products.
Previous wording
International segment revenue increased by $34 million in the three months ended September 30, 2025 compared with the three months ended September 30, 2024. Operational revenue increased by $12 million, or 1%, driven by growth of $25 million in companion animal products, partially offset by a decrease of $13 million in livestock products.
Current wording
International segment revenue increased by $164 million in the three months ended March 31, 2026 compared with the three months ended March 31, 2025. Operational revenue increased by $88 million, or 9%, driven by growth of $39 million in companion animal products and $49 million in livestock products. Growth in the current period was positively impacted by operational changes made in connection with the Fiscal Year Alignment.
Previous wording
•Companion animal revenue growth was primarily due to increased sales of Simparica Trio, key dermatology products and small animal diagnostics, partially offset by lower sales of Librela.
Current wording
•Companion animal operational revenue growth was driven primarily by increased sales of Simparica Trio, as well as an increase in demand for vaccines and small animal diagnostics, partially offset by decreased sales of key dermatology products and Librela.
Previous wording
•Livestock operational revenue growth was due to increased sales in our cattle and fish products, partially offset by lower sales of poultry products. Excluding the impact of the MFA divestiture, livestock revenue increased across all species. Sales of cattle products grew largely due to price and sales of poultry products grew due to higher demand for vaccines in key poultry markets and price. Sales of our fish products grew due to increased vaccine sales in Norway and Chile. Sales of swine products increased due to timing of the expected impact of macroenvironment conditions, primarily in China, and higher demand for vaccines.
Current wording
•Livestock operational revenue growth was due to increased sales in our cattle, swine, poultry and fish products. Sales of cattle products grew largely due to a mix of volume and price. Sales of swine products were volume driven due to momentum across our key brands. Sales of poultry products grew due to increased demand, key account penetration, geographic expansion and price. Sales of our fish products grew due to increased vaccine sales and pricing.
Previous wording
•Additionally, International segment revenue was favorably impacted by foreign exchange which increased revenue by $22 million, or 2%, primarily driven by the euro and UK pound.
Current wording
•Additionally, International segment revenue was favorably impacted by foreign exchange which increased revenue by $76 million, or 8%, primarily driven by the euro, Brazilian real, Australian dollar, Mexican peso, and British pound.
Previous wording
International segment earnings increased by $14 million, or 3%, in the three months ended September 30, 2025, compared with the three months ended September 30, 2024. Operational earnings growth was primarily due to higher gross profit, partially offset by the impact of the MFA divestiture and higher operating expenses.
Current wording
International segment earnings increased by $112 million, or 21%, in the three months ended March 31, 2026, compared with the three months ended March 31, 2025. Operational earnings growth was $79 million, or 15%, primarily due to higher gross profit, partially offset by higher operating expenses.
Previous wording
Other business activities net loss increased by $3 million in the three months ended September 30, 2025, compared with the three months ended September 30, 2024, reflecting an increase in certain compensation-related costs and depreciation expense, partially offset by a decrease in R&D costs primarily due to timing of spend related to projects and other strategic investments.
Current wording
Other business activities net loss increased by $8 million in the three months ended March 31, 2026, compared with the three months ended March 31, 2025, reflecting an increase in R&D costs related to projects and other strategic investments.
Previous wording
Corporate expenses increased by $5 million, or 1%, in the nine months ended September 30, 2025, compared with the nine months ended September 30, 2024, primarily due to an increase in compensation-related costs, partially offset by favorable foreign exchange.
Current wording
Corporate expenses increased by $37 million, or 13%, in the three months ended March 31, 2026, compared with the three months ended March 31, 2025, primarily due to an increase in compensation-related costs, unfavorable foreign exchange and higher expenses in global diagnostics.
Previous wording
Other unallocated expenses increased by $29 million, or 14%, in the nine months ended September 30, 2025, compared with the nine months ended September 30, 2024, primarily due to higher manufacturing costs and other charges, partially offset by lower inventory obsolescence, freight charges and favorable foreign exchange.
Current wording
Other unallocated expenses decreased by $19 million, or 23%, in the three months ended March 31, 2026, compared with the three months ended March 31, 2025, primarily due to lower manufacturing costs and other charges, as well as lower inventory obsolescence, partially offset by unfavorable foreign exchange and freight charges.
Previous wording
Adjusted net income is calculated prior to considering certain significant purchase accounting impacts that result from business combinations and net asset acquisitions. These impacts, primarily associated with certain acquisitions, include amortization related to the increase in fair value of the acquired finite-lived intangible assets and depreciation related to the increase/decrease to fair value of the acquired fixed assets. Therefore, the adjusted net income measure includes the revenue earned upon the sale of the acquired products without considering the aforementioned significant charges.
Current wording
Adjusted net income is calculated prior to considering certain purchase accounting impacts that result from business combinations and net asset acquisitions. These impacts, primarily associated with acquisitions, include amortization related to the increase in fair value of the acquired finite-lived intangible assets and depreciation related to the increase/decrease to fair value of the acquired fixed assets. Therefore, the adjusted net income measure includes the revenue earned upon the sale of the acquired products without considering the aforementioned significant charges.
Previous wording
Adjusted net income is calculated prior to considering transaction, integration and disintegration costs associated with significant business combinations, net asset acquisitions and divestitures. These incremental costs are excluded as they are incurred to acquire and integrate, or dispose and disintegrate, certain businesses as a result of the acquisition or disposal decision and are unique to each transaction. We have made no adjustments for the resulting synergies from these transactions.
Current wording
Adjusted net income is calculated prior to considering transaction, integration and disintegration costs associated with business combinations, net asset acquisitions and divestitures. These incremental costs are excluded as they are incurred to acquire and integrate, or dispose and disintegrate, certain businesses as a result of the acquisition or disposal decision and are unique to each transaction. We have made no adjustments for the resulting synergies from these transactions.
Previous wording
32 | inclusive, examples of items that could be included as certain significant items would be costs related to a major non-acquisition or divestiture-related restructuring charge and associated implementation costs for a program that is specific in nature with a defined term, such as those related to our non-acquisition or divestiture-related cost-reduction and productivity initiatives; costs related to our business process transformation program; amounts related to disposals of products or facilities that do not qualify as discontinued operations as defined by U.S. GAAP; certain asset impa irment charges; adjustments related to the resolution of certain tax positions; significant currency devaluation; the impact of adopting certain significant, event-driven tax legislation; or charges related to legal matters. See Notes to Condensed Consolidated Financial Statements—Note 15. Commitments and Contingencies. Our normal, ongoing defense costs or settlements of and accruals on legal matters made in the normal course of our business would not be considered certain significant items.
Current wording
Adjusted net income is calculated excluding certain significant items. Certain significant items represent substantive, unusual items that are evaluated on an individual basis. Such evaluation considers both the quantitative and the qualitative aspect of their unusual nature. Unusual, in this context, may represent items that are not part of our ongoing business; items that, either as a result of their nature or size, we would not expect to occur as part of our normal business on a regular basis; items that would be nonrecurring; or items that relate to products that we no longer sell. While not all-inclusive, examples of items that could be included as certain significant items would be costs related to a major non-acquisition or divestiture-related restructuring charge and associated implementation costs for a program that is specific in nature with a defined term, such as those related to our non-acquisition or divestiture-related cost-reduction and productivity initiatives; costs related to our business process transformation program; amounts related to disposals of products or facilities that do not qualify as discontinued operations as defined by U.S. GAAP; certain asset impa irment charges; adjustments related to the resolution of certain tax positions; significant currency devaluation; the impact of adopting certain significant, event-driven tax legislation; or charges related to legal matters. See Notes to Condensed Consolidated Financial Statements—Note 15. Commitments and Contingencies. Our normal, ongoing defense costs or settlements of and accruals on legal matters made in the normal course of our business would not be considered certain significant items.
Previous wording
(a)The effective tax rate on adjusted pre-tax income was 18.6% and 20.8% for the three months ended September 30, 2025 and 2024, respectively, and 20.2% and 20.3% for the nine months ended September 30, 2025 and 2024, respectively.
Current wording
(a)The effective tax rate on adjusted pre-tax income was 20.7% and 21.9% for the three months ended March 31, 2026 and 2025, respectively.
Previous wording
The lower effective tax rate for the three and nine months ended September 30, 2025, compared with the three and nine months ended September 30, 2024, was primarily attributable to higher net discrete tax benefits, partially offset by a lower benefit in the U.S related to foreign-derived intangible income and a less favorable jurisdictional mix of earnings (which includes the impact of the location of pre-tax earnings, tax impact of permanent differences and repatriation decisions).
Current wording
The lower effective tax rate for the three months ended March 31, 2026, compared with the three months ended March 31, 2025, was primarily attributable to a more favorable jurisdictional mix of earnings (which includes the impact of the location of pre-tax earnings, tax impact of permanent differences and repatriation decisions).
Previous wording
(d)Represents costs related to our multi-year business process transformation program, which includes the implementation of a new enterprise resource planning (ERP) system, related digital technology solutions and other related costs. This comprehensive program is a major global and cross-functional company-wide effort that we believe will transform how we work across our business and contribute to all of our strategic priorities. Due to the nature, scope and magnitude of this investment, these costs are incremental transformational costs that are far in excess of the historical normal level of spending to support operations and are not expected to recur in the foreseeable future.
Current wording
(c)Represents costs related to our multi-year business process transformation program, which includes the implementation of a new ERP system, related digital technology solutions and other related costs. This comprehensive program is a major global and cross-functional company-wide effort, of which the Fiscal Year Alignment is a part, that we believe will transform how we work across our business and contribute to all of our strategic priorities. Due to the nature, scope and magnitude of this investment, these costs are incremental transformational costs that are far in excess of the historical normal level of spending to support operations and are not expected to recur in the foreseeable future.
Previous wording
Accounts receivable, less allowance for doubtful accounts increased primarily as a result of higher net sales in the period.
Current wording
Accounts receivable, less allowance for doubtful accounts increased primarily as a result of the timing of net sales in the period, partially offset by the timing of customer payments.
Showing the first 40 of 57 pairs. Open the source sections for the rest.
Rearranged current paragraphs (1)
Current report — wording carried from elsewhere
(a) See Fiscal year alignment of international subsidiaries section of this Management’s Discussion and Analysis of Financial Condition and Results of Operations (MD&A) for further detail regarding the Fiscal Year Alignment.
Rearranged previous paragraphs (9)
Previous report — wording carried elsewhere
Our business is subject to risks related to, among other factors, tariffs and other trade protection measures put in the place by the United States or other countries, as well as U.S. international trade relations, including those with China, Canada and the European Union. Starting in early 2025, the
Previous report — wording carried elsewhere
•volume growth from key franchises of approximately 2%; and
Previous report — wording carried elsewhere
•volume growth from other in-line products of approximately 1%,
Previous report — wording carried elsewhere
•volume decrease related to the impact of the MFA divestiture of approximately 4%.
Previous report — wording carried elsewhere
Foreign exchange decreased reported revenue growth by approximately 1%.
Previous report — wording carried elsewhere
Cost of sales as a percentage of revenue was 27.6% in the nine months ended September 30, 2025, compared with 29.0% in the nine months ended September 30, 2024. The decrease was primarily a result of:
Previous report — wording carried elsewhere
•an increase in certain compensation-related costs; and
Previous report — wording carried elsewhere
Adjusted net income is calculated excluding certain significant items. Certain significant items represent substantive, unusual items that are evaluated on an individual basis. Such evaluation considers both the quantitative and the qualitative aspect of their unusual nature. Unusual, in this context, may represent items that are not part of our ongoing business; items that, either as a result of their nature or size, we would not expect to occur as part of our normal business on a regular basis; items that would be nonrecurring; or items that relate to products that we no longer sell. While not all-
Previous report — wording carried elsewhere
38 | subject to risks and uncertainties, many of which are beyond our control, and are based on assumptions that could prove to be inaccurate. Among the factors that could cause actual results to differ materially from past results and future plans and projected future results are the following: