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DEXCOM INC (DXCM)·Q3 2025 Earnings Summary

Executive Summary

  • Q3 2025 delivered a clean beat on both revenue and non-GAAP EPS, with revenue at $1,209.3M vs S&P Global consensus $1,178.4M* and non-GAAP diluted EPS $0.61 vs consensus $0.567* . This reflected 22% reported revenue growth and 20% organic growth YoY .
  • Guidance raised for FY2025 revenue to $4.630–$4.650B, while margins were updated lower on non-GAAP gross margin (~61%) and maintained/trimmed on non-GAAP operating margin (~20–21%) and adjusted EBITDA margin (~29–30%) as freight and scrap costs remain a near-term headwind .
  • International growth accelerated for the third straight quarter (France, Canada), Type 2 coverage and primary care presence strengthened, and Stelo surpassed $100M revenue in its first 12 months; G7 15-day is set for broad launch with payer contracts secured .
  • Stock-relevant catalysts: operational normalization (ocean freight resumption, scrap rates expected to improve), stronger capital deployment (plan to settle ~$1.2B convertible notes in cash and continue buybacks), and product upgrades (G7 15-day, Smart Basal, AI features) .

What Went Well and What Went Wrong

What Went Well

  • Broad-based growth: revenue up 22% YoY; U.S. +21%, International +22% (reported) with organic growth of 18% internationally; operating leverage delivered record quarterly non-GAAP EPS ($0.61) .
  • Product and platform advances: launched AI-powered meal logging in Stelo and G7; submitted Smart Basal (basal insulin titration) to FDA/CE; secured contracts enabling broad G7 15-day launch .
  • International access momentum: France and Canada outperformed following coverage expansions; Ontario coverage for anyone on insulin and broader RAMQ expansion in Québec post-quarter .

Quote: “I am excited to lead Dexcom forward as we finalize 2025 and capitalize on the incredible opportunity ahead of us.” — Jake Leach, President & Interim CEO .

What Went Wrong

  • Gross margin pressure: GAAP gross margin 60.5% (down vs full-year prior guidance) and non-GAAP GM 61.3%; headwinds from higher-than-expected manufacturing scrap and earlier expedited freight .
  • Sensor deployment issues earlier in the year modestly impacted new starts in Q3; management emphasized remediation and quality improvements, noting complaint rates largely stable and improving field feedback .
  • Hardware revenue decline continued (transmitter/receiver) as mix shifts toward sensors and pharmacy channels, reinforcing ongoing pricing/mix dynamics and requiring tight execution on channel strategy .

Financial Results

Performance vs prior periods

MetricQ1 2025Q2 2025Q3 2025
Revenue ($USD Millions)$1,036.0 $1,157.1 $1,209.3
GAAP Diluted EPS ($)$0.27 $0.45 $0.70
Non-GAAP Diluted EPS ($)$0.32 $0.48 $0.61
GAAP Gross Margin %56.9% 59.5% 60.5%
Non-GAAP Gross Margin %57.5% 60.1% 61.3%
GAAP Operating Margin %12.9% 18.4% 20.1%
Non-GAAP Operating Margin %13.8% 19.2% 22.6%

Note: Q3 YoY reference points: Revenue $994.2M, GAAP GM 59.7%, Non-GAAP GM 63.0%, GAAP OM 15.3%, Non-GAAP OM 21.3% .

Segment breakdown

MetricQ1 2025Q2 2025Q3 2025
U.S. Revenue ($USD Millions)$750.5 $841.0 $851.9
U.S. YoY Growth (%)15% 15% 21%
International Revenue ($USD Millions)$285.5 $316.1 $357.4
International YoY Growth (%)7% 16% 22%
Revenue ComponentQ1 2025Q2 2025Q3 2025
Sensor & Other ($USD Millions)$997.2 $1,117.8 $1,175.1
Hardware ($USD Millions)$38.8 $39.3 $34.2

KPIs and cash

KPIQ1 2025Q2 2025Q3 2025
Non-GAAP Operating Income ($USD Millions)$143.1 $221.8 $272.9
Adjusted EBITDA ($USD Millions)$230.4 $327.6 $368.4
Adjusted EBITDA Margin %——30.5%
Cash, Cash Equivalents & Marketable Securities ($USD Millions)$2,700.0 $2,930.0 $3,320.0

Estimate Comparison (S&P Global consensus)

MetricQ1 2025Q2 2025Q3 2025
Revenue – Actual ($USD Millions)$1,036.0 $1,157.1 $1,209.3
Revenue – Consensus ($USD Millions)$1,017.4*$1,124.6*$1,178.4*
Non-GAAP Diluted EPS – Actual ($)$0.32 $0.48 $0.61
Primary EPS – Consensus ($)$0.328*$0.443*$0.567*

Values retrieved from S&P Global.*

Context: Q3 beat revenue by $31M (+2.6%) and non-GAAP EPS by $0.04 (+7.6%)* vs consensus, Q2 beat both metrics, Q1 was modest revenue beat and EPS roughly in-line.*

Guidance Changes

MetricPeriodPrevious Guidance (as of Q2)Current Guidance (as of Q3)Change
RevenueFY 2025$4.600–$4.625B $4.630–$4.650B Raised
Non-GAAP Gross Profit MarginFY 2025~62% ~61% Lowered
Non-GAAP Operating MarginFY 2025~21% ~20–21% Maintained/Lower-end
Adjusted EBITDA MarginFY 2025~30% ~29–30% Maintained/Lower-end

Management reiterated intent to settle ~$1.2B convertible notes in cash and continue share repurchases near-term, supported by strong cash generation .

Earnings Call Themes & Trends

TopicPrevious Mentions (Q1 & Q2 2025)Current Period (Q3 2025)Trend
AI / TechnologyLaunched AI-based Smart Food Logging; FDA cleared G7 15-day AI-powered meal logging in Stelo & G7; Smart Basal submitted to FDA/CE Expanding feature set
Supply Chain & FreightLowered FY non-GAAP GM to ~62% due to near-term supply dynamics and inventory rebuild Scrap rates higher than expected; expedited freight tapering; ocean freight resumed; margin normalization expected Improving operational normalization
Product Performance & Quality—Complaint rates largely stable; resolved deployment challenges; improved Bluetooth/adhesive, quality emphasis Improving quality narrative
Regional TrendsIntl revenue +7% YoY; U.S. +15% Intl growth accelerated; France standout; Canada uptick post-Ontario coverage Accelerating OUS
Coverage / Market AccessBroader U.S. PBM Type 2 coverage (anyone with diabetes) Base case 2026 excludes new expansions; significant wins would be highlighted; Ontario coverage; Québec expanded (post-quarter) Building toward broader Type 2
R&D ExecutionOngoing R&D investment Increased R&D while managing OpEx; Smart Basal clinical work; GA multi-analytic platform discussion Balanced investment & leverage

Management Commentary

  • “The customer is and will always be the North Star for this company… our product continues to get better.” — Jake Leach on quality focus and improvements .
  • “Internationally… France continues to stand out… Canada also performed very well… coverage secured through basal insulin use.” — Jereme Sylvain on OUS strength .
  • “We plan to settle our upcoming $1.2 billion of convertible notes in cash… remain in the market this quarter, repurchasing additional shares.” — CFO on capital allocation .
  • “Stelo has surpassed $100 million in revenue in the first twelve months… make this feel like more of a consumer experience over time.” — Jake Leach on consumer expansion .
  • “Adjusted EBITDA was $368.4 million, or 30.5% of revenue, the highest quarterly EPS in our history.” — CFO highlighting profitability progress .

Q&A Highlights

  • 2026 framing: Base case assumes today’s coverage; top-end slightly below Street; upside from expanded access and share gains; seasonality normalization should be considered .
  • Quality/new starts: Slight Q3 impact; complaint rates consistent; field feedback improving; expectation to return to record new starts in Q4, record year in 2026 base case .
  • Margin mechanics: GM headwinds split ~50/50 between scrap and freight; freight shifting back to ocean; scrap rates expected to dissipate into Q4 and 2026 .
  • G7 15-day rollout: Nominal 2025 contribution; larger 2026 opportunity; margin uplift potential as wear extends from 10 to 15 days; payer and partner readiness in place .
  • Pricing/mix: Year-over-year price changes modest; mix (pharmacy vs DME) key driver; mix stabilizing; expect tighter alignment of unit volume and revenue .

Estimates Context

  • Q3 2025: Revenue $1,209.3M beat vs $1,178.4M consensus*; non-GAAP EPS $0.61 beat vs $0.567* .
  • Q2 2025: Revenue $1,157.1M beat vs $1,124.6M*; non-GAAP EPS $0.48 beat vs $0.443* .
  • Q1 2025: Revenue $1,036.0M beat vs $1,017.4M*; non-GAAP EPS $0.32 roughly in-line with $0.328* .

Values retrieved from S&P Global.*

Implications: Sell-side models likely revise FY revenue slightly higher and margin assumptions slightly lower (non-GAAP GM ~61%), with potential upward adjustments to Q4 revenue/EPS as operational normalization progresses and G7 15-day broad launch begins .

Key Takeaways for Investors

  • Strong Q3 beat with resilient demand across Type 2 segments and accelerating international — supports near-term positive estimate revisions on revenue *.
  • Margin headwinds are transitory: expedited freight tapering and scrap rates improving, implying sequential GM recovery into Q4 and 2026; watch execution pace .
  • Product cycle catalysts: G7 15-day broad launch, Smart Basal pending FDA/CE, AI-powered features — likely to bolster patient uptake and utilization, particularly in basal Type 2 .
  • Capital deployment supportive: plan to settle ~$1.2B convert in cash and continue buybacks given robust FCF — a tangible floor for equity if execution remains on track .
  • Coverage momentum: significant U.S. PBM coverage for Type 2 and OUS expansions (Ontario, France; Québec post-quarter) underpin multi-year runway; upside from broader non-insulin coverage .
  • Mix/pricing dynamics stabilizing: pharmacy/DME mix shifts moderating; expect unit-to-revenue alignment to tighten, aiding predictability .
  • Trading lens: Near term, focus on Q4 new starts recovery and GM trajectory; medium term, watch 2026 guide framing vs Street and adoption of 15-day plus Smart Basal to drive margin and growth leverage .

Additional Relevant Press Releases (Q3 context)

  • Dexcom Schedules Third Quarter 2025 Earnings Release and Conference Call (Oct 2) .
  • Québec expands CGM access under RAMQ (Nov 7; post-quarter but strategically relevant for OUS momentum) .

Notes on Non-GAAP and Adjustments

  • Q3 non-GAAP net income excludes amortization, business transition items, IP litigation costs, income from equity investments, and tax adjustments as itemized (e.g., equity investments income $82.7M) .
  • Management uses non-GAAP measures to evaluate core operations; reconciliations provided in press release tables .

Footnote: Values retrieved from S&P Global for consensus estimates.*