Key financial results

  • Zoetis reported third quarter 2026 revenue of $2.4 billion, declining 1% on both reported and organic operational bases.We delivered revenue of $2.4 billion, declining 1% on both the reported and organic operational basis
  • Adjusted net income was $720 million, down 7% on an organic operational basis.Adjusted net income was $720 million, down 7% on an organic operational basis.
  • Adjusted diluted EPS was $1.75, up 1% driven by a lower share count.We delivered adjusted EPS of $1.75 in the quarter, up 1%, driven by the lower share count
  • Adjusted gross margin was 71%, down 60 basis points operationally due to pricing initiatives, product mix, and inventory charges.On an operational basis, gross margin was down 60 basis points driven by the impact of our strategic pricing initiatives, product mix and certain inventory-related charges
  • Adjusted operating expenses were $749 million, flat operationally.Adjusted operating expenses were $749 million, flat operationally

Business segment results

  • U.S.: U.S. segment revenue was $1.2 billion, down 6%, driven by declines in companion animal dermatology and generics impact.Our U.S. segment revenue was $1.2 billion, down 6%, driven by declines in companion animal from our key dermatology portfolio as well as the impact of generics on certain brands.
  • International: International segment revenue was $1.1 billion, up 4%, with growth in livestock, parasiticide, and OA pain.While our International segment was $1.1 billion, up 4%, with growth across livestock, parasiticide and OA pain more than offsetting dermatology headwinds.
  • Companion Animal: Global companion animal revenue declined 5% to $1.6 billion.companion animal, where globally, we declined 5% on $1.6 billion in revenue
  • Dermatology: Global key dermatology revenue declined 16% to $396 million due to competitive headwinds and pricing actions.key dermatology, which declined 16% globally on $396 million in sales
  • Parasiticides: Global Simparica franchise revenue grew 1% to $358 million.our Simparica franchise grew 1% on global revenue of $358 million.
  • OA Pain: Global OA pain medications revenue increased 2% to $137 million.Our OA pain meds generated $137 million in sales, increasing 2% globally.
  • Diagnostics: Global Companion Animal Diagnostics revenue grew 13% to $122 million.Companion Animal Diagnostics delivered $122 million in revenue, up 13% globally
  • Livestock: Global livestock revenue increased 7% to $797 million.moving on to livestock, which delivered $797 million, up 7%

Capital allocation

  • The company distributed $2.4 billion in 2026 through the third quarter via buybacks and dividends.demonstrated by the $2.4 billion distributed in 2026 through the third quarter in the form of both buybacks and dividends.
  • Capital allocation priorities remain focused on R&D, internal innovation, and disciplined business development.
  • U.S. veterinary service costs have risen 50% since 2022 alongside softer consumer confidence.veterinary service costs have risen 50% since 2022, well ahead of general inflation, alongside softer consumer confidence
  • U.S. clinic visits are down 3% year-to-date across categories, with pyrite visits down 3% and canine visits down approximately 5% in the quarter.weakness in U.S. clinic visits, which are down 3% year-to-date across categories.
  • Livestock is benefiting from growing global demand for quality protein and improved productivity.livestock is benefiting from growing demand for quality protein sources.

Competitive landscape

  • Competition remains intense in key companion animal franchises, particularly in dermatology and parasiticides.intense competition in key franchises continued to weigh on our companion animal revenue this quarter.
  • Simparica Trio maintained a 22.5% market share in the U.S.we held share in the quarter with Simparica Trio at a 22.5% share
  • Generic competition for Cerenia and Convenia continued to pressure U.S. results, though volume declines moderated.generic competition in Cerenia and Convenia, continued to pressure U.S. results. And while volume declines moderated

Macroeconomic environment

  • Economic factors and affordability pressures continue to affect pet owner spending and veterinary visit frequency.broader affordability pressures on pet owner spending.
  • Emerging markets are expected to remain the fastest-growing part of animal health.emerging markets are expected to remain the fastest-growing part of Animal Health

Growth opportunities and strategies

  • Zoetis is focusing on three key priorities: leveraging portfolio diversity, expanding access to established franchises, and advancing innovation.today, I'll focus on 3 priorities: leveraging the diversity of our portfolio, expanding access to established franchises and advancing innovation.
  • The company expects U.S. approval of long-acting Cytopoint in the fourth quarter.we expect U.S. approval of long-acting Cytopoint in the fourth quarter
  • Management expects approval of Simparica Duo by year-end.

Financial guidance and outlook

  • Management narrowed full-year 2026 revenue guidance to $9.22 billion to $9.32 billion.We're narrowing our full year revenue guidance to $9.22 billion to $9.32 billion
  • Full-year organic operational revenue decline is projected at negative 2% to negative 1%.representing an organic operational decline of negative 2% to negative 1% year-over-year.
  • Full-year adjusted net income guidance was raised to $2.6 billion to $2.64 billion.We're raising our adjusted net income guidance to $2.6 billion to $2.64 billion
  • Adjusted diluted EPS guidance was raised to $6.25 to $6.35.We are also raising adjusted diluted EPS to $6.25 to $6.35.

Q3 2026 results

MetricResultChange
Revenue$2.4 billion-1%
U.S. Revenue$1.2 billion-6%
International Revenue$1.1 billion+4%
Adjusted Diluted EPS$1.75+1%
Adjusted Gross Margin71%down 60 basis points operationally
Adjusted Net Income$720 million-7% organically

How management sounded

Cautious (+10 on our -100 to +100 scale). Management acknowledged macroeconomic and competitive pressures in companion animals while highlighting growth in livestock and strong performance in diagnostics. Management sounded more upbeat than on 2% of the 302 calls we cover; most companies sound positive on their own calls, so the comparison says more than the label.

Read the analyst Q&A summary and guidance and outlook for this call.

What to watch before the next call

  • Stabilization of market share in the key dermatology franchise following new competitive entrants.
  • U.S. approval and commercial rollout of long-acting Cytopoint and Simparica Duo.
  • Evolution of pet owner affordability pressures and U.S. veterinary clinic visit trends.

Earlier calls

  • Q2 2026 (Aug 6, 2026), tone Cautious: Zoetis reported Q2 2026 revenue down 1% and adjusted net income down 2% organically, and lowered full year guidance due to clinic visit declines and competitive pressures.