DEXCOM INC (DXCM)·Q2 2025 Earnings Summary

Executive Summary

• Q2 2025 delivered 15% YoY revenue growth to $1.157B, with U.S. +15% and International +16%; non-GAAP EPS came in at $0.48, above Street consensus, and revenue beat as well .
• Guidance raised: FY25 revenue to $4.600–$4.625B (14–15% growth), with non-GAAP gross margin ~62%, non-GAAP operating margin ~21%, and adjusted EBITDA margin ~30% reaffirmed .
• Gross margin moderated YoY as Dexcom prioritized customer continuity and inventory rebuild; management flagged sequential margin improvement in 2H driven by scale and logistics normalization .
• Strategic catalysts: FDA clearance for 15-day G7, AI-based Smart Food Logging launch, and Ontario ODB coverage expansion for insulin users; CEO succession to Jake Leach effective Jan 1, 2026 .

What Went Well and What Went Wrong

• What Went Well

  • Strong top-line execution: Revenue +15% YoY to $1.157B; sensor revenue mix rose to 97% of total, reflecting category demand and access wins .
  • Access and product catalysts: 15-day G7 FDA clearance; Ontario ODB expanded coverage for insulin users; AI Smart Food Logging feature launched across G7/Stelo .
  • Management confidence in non-insulin opportunity and access momentum: “we now have reimbursement established for anyone with diabetes on the national formularies of the three largest commercial PBMs” with robust type 2 non-insulin growth and share gains .

• What Went Wrong

  • Gross margin compression YoY: GAAP GM 59.5% vs 62.4% in Q2’24 due to expedited freight and inventory rebuild; non-GAAP GM 60.1% vs 63.5% .
  • Hardware revenue decline: -31% YoY to $39.3M as mix continues to shift toward sensors/subscription .
  • Medicare competitive bidding overhang: management highlighted early stage proposal, ~15% FFS exposure, potential supplier consolidation, earliest start 2027 based on precedent .

Financial Results

Segment breakdown – Geography (Q2 2025 vs Q2 2024):

Revenue by component:

Estimates vs Actuals (S&P Global):

Values retrieved from S&P Global. *

Guidance Changes

Earnings Call Themes & Trends

Management Commentary

• “In the second half of 2025, we look forward to continuing our commercial momentum while advancing our product portfolio with the highly-anticipated launch of our Dexcom G7 15 Day System.” — Kevin Sayer .
• “With this coverage in place, we now have reimbursement established for anyone with diabetes on the national formularies of the three largest commercial PBMs in the U.S.” — Kevin Sayer .
• “We again invested in expedited shipping routes to ensure consistent customer supply while we stabilized our supply chain… we expect sequential gross margin improvement through the year.” — Jereme Sylvain .
• “We recently introduced a new feature across both Stelo and G7 that leverages AI to greatly simplify the process of meal logging for our customers.” — Kevin Sayer .
• “Ontario… approved coverage for Dexcom now for all insulin users, all the way down through basal.” — Jereme Sylvain .

Q&A Highlights

• Guidance confidence anchored in non-insulin coverage expansion and strong new starts; third PBM now online; raised FY revenue guide accordingly .
• Medicare competitive bidding proposal risk: ~15% FFS exposure; earliest 2027 start; pricing and supplier consolidation dynamics noted; priority to prevent beneficiary disruption .
• Margin trajectory: Q2 GM included ~100 bps receiver recall accrual; expect sequential GM improvement in Q3/Q4 as freight moderates and scale improves .
• G8 outlook: smaller wearable, multi-analyte-ready chipset; emphasis on safety features vs competitors’ dual-analyte narratives .
• Stelo scale and mix: >400k app downloads; FY25 guide contribution still ~2–3% of sales; growing health/wellness and prediabetes user base .
• 15-day reimbursement: negotiated on monthly service basis; annual revenue per patient framework continues .

Estimates Context

• Q2 2025 beat vs S&P Global consensus: Revenue $1.157B vs $1.125B*, Non-GAAP EPS $0.48 vs $0.44*, GM ~60% vs ~60%, Adjusted EBITDA $327.6M vs $314.6M .
• Forward quarters (from S&P Global): Q3 2025 consensus EPS $0.57*, revenue $1.178B*; Q4 2025 EPS $0.65*, revenue $1.242B*; trajectory implies continued growth normalization as 15-day rollout and access wins layer in*.
  Values retrieved from S&P Global. *

Key KPIs

Key Takeaways for Investors

• Revenue/Non-GAAP EPS beat and guidance raise signal durable demand and execution; watch 2H margin cadence as expedited logistics normalize .
• 15-day G7 clearance and 2H launch are major catalysts; reimbursement and pump-integration progress will drive adoption tempo .
• Non-insulin type 2 coverage across all three major PBMs meaningfully expands TAM; management cites strong new starts and share gains .
• OUS access continues to improve (Ontario ODB, Dexcom ONE+); expect international growth to contribute alongside U.S. momentum .
• Medicare competitive bidding is an overhang but earliest impact likely 2027; volume consolidation among suppliers may offset pricing pressure .
• Hardware revenue decline underscores subscription/sensor-centric model; mix shift supports scale benefits over time .
• CEO succession plan provides continuity; product and software cadence (AI features) suggest sustained innovation pace .

Earnings Call Themes & Trends – Additional Notes

• Management emphasized continuity-of-care and rebuilt inventories with expedited shipping; expect freight costs to ease as finished goods reach target levels .
• Clinical evidence remains a core lever for access expansion (gestational diabetes, type 2 NIT RCT readout targeted late ’25/early ’26) .
• Engagement/features: AI Smart Food Logging, customizable target ranges, Oura integration, Share/Follow with direct-to-watch—driving utilization and retention across cohorts .