Sign in
IL

IDEXX LABORATORIES INC /DE (IDXX)·Q2 2025 Earnings Summary

Executive Summary

  • IDEXX delivered a strong Q2: revenue $1.109B (+10.6% y/y reported; +9.3% organic) and diluted EPS $3.63; operating margin expanded to 33.6%, with gross margin at 62.6% .
  • Results beat S&P Global consensus: revenue by ~$42M (~4%) and EPS by ~$0.33, driven by record instrument placements (6,070 premium units; ~2,400 InVue Dx) and double‑digit VetLab consumables growth; U.S. clinical visits fell ~2.5% but utilization and pricing offset .
  • FY25 guidance raised: revenue to $4.205–$4.280B, operating margin 31.3%–31.6%, EPS $12.40–$12.76; InVue Dx placements increased to 5,500 and >$60M instrument revenue outlook; free cash flow conversion maintained at 80%–85% .
  • Positive catalysts: rapid uptake of InVue Dx (AI‑assisted, slide‑free cytology), launch of Catalyst Cortisol, early traction of IDEXX CancerDx; international growth remains double‑digit; management highlighted continued execution despite visit headwinds and dynamic tariff backdrop .

What Went Well and What Went Wrong

What Went Well

  • Record instrument placements and strong innovation adoption: 6,070 premium placements (+23% y/y) including ~2,400 InVue Dx; VetLab consumables +14% organic with expanding utilization; global premium installed base +10% y/y .
  • Margin expansion and operating leverage: gross margin 62.6% (+110bps comparable) and operating margin 33.6% (+130bps comparable), aided by pricing, lab productivity, and mix; comparable EPS +17% .
  • International strength: CAG Diagnostics recurring revenue +15% reported/+11% organic internationally vs +6% U.S.; Water +8% organic; LPD +3% organic .

Management quotes

  • “IDEXX delivered a very strong quarter… rapid uptake of new innovations… record premium instrument placements globally” — Jay Mazelsky (CEO) .
  • “We’re increasing our full year revenue outlook by $90M… and EPS to $12.40 to $12.76” — Andrew Emerson (CFO) .

What Went Wrong

  • Sector headwinds in U.S. visits: U.S. clinical visits declined ~2.5% in Q2, pressuring CAG recurring revenue growth; U.S. growth mid‑single digit vs intl double‑digit .
  • Rapid assay softness: Rapid assay revenues −3% organically, with some testing shifting to the Catalyst Pancreatic Lipase test (modality shift) .
  • Free cash flow lighter q/q: Q2 FCF ~$152M vs Q1 $208M, partly reflecting working capital seasonality and investments; TTM FCF conversion ~80% including ~$80M litigation payment drag .

Financial Results

Headline Metrics (chronological: Q4’24 → Q1’25 → Q2’25)

MetricQ4 2024Q1 2025Q2 2025
Revenue ($)$954.3M $998.4M $1,109.5M
Gross Margin59.8% 62.4% 62.6%
Operating Margin27.4% 31.7% 33.6%
Diluted EPS ($)$2.62 $2.96 $3.63

Q2 2025 vs Q2 2024

MetricQ2 2024Q2 2025Change
Revenue ($)$1,003.6M $1,109.5M +10.6% reported
Gross Margin61.7% 62.6% +90 bps reported; +110 bps comparable
Operating Margin26.3% 33.6% +730 bps reported; +130 bps comparable
Diluted EPS ($)$2.44 $3.63 +49% reported; +17% comparable

Q2 2025 vs S&P Global Consensus

MetricConsensus*ActualBeat/(Miss)
Revenue ($)$1,067.3M*$1,109.5M +$42.2M (~+4.0%)
EPS ($)$3.30*$3.63 +$0.33 (~+10%)

Values marked with * retrieved from S&P Global.

Segment Revenue – Q2 2025 vs Q2 2024

SegmentQ2 2024 Revenue ($)Q2 2025 Revenue ($)Reported GrowthOrganic Growth
CAG$922.3M $1,022.4M 10.9% 9.7%
Water$46.7M $51.0M 9.1% 8.4%
LPD$30.3M $31.8M 4.8% 2.6%
Other$4.2M $4.3M 0.1% 0.1%

CAG Diagnostics Sub‑categories (Q2 2025 vs Q2 2024)

CategoryQ2 2024 ($)Q2 2025 ($)Reported GrowthOrganic Growth
CAG Diagnostics Recurring$808.5M $878.0M 8.6% 7.4%
VetLab Consumables$325.3M $375.1M 15.3% 13.6%
Rapid Assay$103.3M $100.2M (3.0%) (3.3%)
Reference Lab & Consulting$347.4M $367.7M 5.9% 4.8%
CAG Instruments (Capital)$35.3M $58.6M 66.0% 62.5%
Vet software/Imaging (Total)$78.6M $85.8M 9.3% 9.2%

KPIs and Operating Metrics (Q2 2025)

KPIQ2 2025
Premium instrument placements6,070 (+23% y/y)
InVue Dx placements~2,400 in Q2; FY25 target 5,500
Global premium installed base growth+10% y/y
U.S. clinical visit growth~−2.5% y/y
Diagnostic frequency+50 bps y/y in Q2
Free Cash Flow$151.6M Q2; $359.6M 1H
Leverage~0.8x gross debt, 0.6x net
Share repurchases$329M in Q2; $744M 1H

Non‑GAAP/one‑time items: Q2 EPS included ~$0.10 tax benefit from share‑based comp and ~$0.07 discrete tax reserve release; FX added ~$0.03 to EPS .

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Revenue ($)FY 2025$4,095–$4,210M $4,205–$4,280M Raised
Organic revenue growthFY 20256%–9% 7%–9% Raised at midpoint
CAG Recurring – reportedFY 20254%–7% 6.5%–8.7% Raised
CAG Recurring – organicFY 20255%–8% 5.8%–8.0% Narrowed/up modest
Operating marginFY 202531.1%–31.6% 31.3%–31.6% Raised low end
Comparable op margin expansionFY 202530–80 bps 50–80 bps Raised low end
EPS ($)FY 2025$11.93–$12.43 $12.40–$12.76 Raised
FX EPS impactFY 2025(~$0.10) +$0.12 Improved
Tax rateFY 2025~21.5% ~21.0% Lower
Share‑based comp tax benefitFY 2025~$8M ~$15M Higher
InVue Dx placementsFY 20254,500 (implied prior) 5,500 Raised
InVue Dx instrument revenueFY 2025~$50M (implied) >$60M Raised
Free cash flow conversionFY 202580%–85% 80%–85% Maintained
CapexFY 2025~$160M ~$160M Maintained

Notes: Management attributes the revenue/EPS raises to stronger InVue Dx momentum, solid Q2 performance, and more favorable FX; the tax and FX items were also updated in the bridge .

Earnings Call Themes & Trends

TopicQ4 2024 (Q‑2)Q1 2025 (Q‑1)Q2 2025 (Current)Trend
AI/Technology (InVue Dx)Began shipping InVue Dx; set stage for broader rollout ~300+ InVue Dx placements; early momentum ~2,400 placements in Q2; FY target 5,500; AI‑powered insights emphasized Accelerating adoption
New tests (Catalyst Pancreatic Lipase, Cortisol)Pancreatic Lipase launch cited; rapid assay volume shift noted Pancreatic Lipase continues to shift modality Cortisol launched in NA in late July; expected to support 2H growth Menu expansion boosts utilization
CancerDx (canine lymphoma)Planned availability late Mar‑25 Launched late Mar‑25 in NA >2,500 practices ordered; ~15% from competitors; meeting TAT and performance Early traction, cross‑sell potential
U.S. Clinical VisitsNot explicitly quantifiedU.S. recurring +3% reported; sector outperformance ~−2.5% visit decline; utilization per visit up; pricing +4% global Visit pressure persists; productivity offsets
International vs U.S.Intl strength in Q4 Intl CAG recurring +8.5% organic Intl +15% reported/+11% organic vs U.S. +6%; sustained outperformance Intl growth premium
Tariffs/MacroInitial 2025 outlook included tariff assumptions Maintained tariff assumptions “Well positioned” to navigate changing tariffs; costs embedded in outlook Managed headwind
Salesforce investments——Expanding in 3 intl markets + modest U.S. to raise coverage and ROI Investment for growth
Legal/one‑offsQ4’24 EPS impacted by 2024 litigation accrual; tax reserve release Reduced accrual in Q1; paid ~$80M in April Litigation concluded; discrete tax reserve release aided Q2 EPS Headwind resolved

Management Commentary

  • Strategy and execution: “Our focus on supporting our customers and our mission resulted in rapid uptake of new innovations… demand for diagnostics reflects its foundational role” — Jay Mazelsky (CEO) .
  • Innovation pipeline: “InVue Dx… demand has exceeded expectations… placed nearly 2,700 instruments globally this year through June… increased 2025 placement estimate to 5,500” — CEO .
  • Financial outlook calibration: “Updated overall organic revenue growth outlook of 7% to 9%… CAG Diagnostic recurring 5.8% to 8%… operating margin 31.3%–31.6%… EPS $12.40–$12.76” — CFO .
  • Sector dynamics: “U.S. clinical visits declined ~2.5%… diagnostic frequency and utilization per visit continued to expand” — CFO .
  • Commercial investments: “We are making commercial investments to expand three more international country organizations as well as modestly enhancing the U.S. commercial team” — CEO .

Q&A Highlights

  • InVue Dx adoption and cadence: Independents adopt faster than corporates (pilots take longer); consumable usage tracking in line; auto‑replenishment avoids large initial bolus; FNA “lumps and bumps” menu expected later this year to further drive usage .
  • Guidance drivers: Raised revenue by $90M with ~$70M FX and ~$20M operational; InVue revenue increased from ~$50M to >$60M; visits assumed ~−2.5% at midpoint; 2H growth consistent with Q2 trends and innovation ramp .
  • U.S. vs International: Intl recurring strong on tailored strategies and product‑market fit; U.S. improved sequentially on a days‑adjusted basis; specialty tests like pancreatic lipase and cortisol expected to see rapid intl uptake after U.S. launch .
  • Tariffs: No meaningful order pull‑forward observed; outlook embeds best tariff estimates with focus on continuity of supply and mitigation .
  • Salesforce expansion ROI: Increasing coverage density internationally and modestly in U.S.; historically yields faster diagnostic adoption and high‑return growth .

Estimates Context

  • Quarterly beats: Q2 revenue $1,109.5M vs $1,067.3M consensus*; EPS $3.63 vs $3.30 consensus* — broad‑based strength in instruments and consumables, margin expansion, and tax/FX tailwinds .
  • FY25 positioning: Company EPS guide $12.40–$12.76 (midpoint $12.58) vs FY25 EPS consensus $12.84*; implies modest downside to current consensus, though management raised top‑line and margin outlooks and highlighted continued innovation momentum .

Values marked with * retrieved from S&P Global.

Consensus vs Actuals (S&P Global)

MetricQ4 2024Q1 2025Q2 2025
Revenue Consensus*$936.7M*$996.5M*$1,067.3M*
Revenue Actual$954.3M $998.4M $1,109.5M
EPS Consensus*$2.399*$2.844*$3.301*
EPS Actual$2.62 $2.96 $3.63

Values marked with * retrieved from S&P Global.

Key Takeaways for Investors

  • Innovation‑led outperformance: InVue Dx and Catalyst menu additions are driving record placements and higher consumable pull‑through, underpinning revenue beats and gross margin expansion .
  • Structural resiliency: Despite ~−2.5% U.S. visit headwinds, diagnostic frequency/utilization and pricing delivered mid‑high single‑digit U.S. recurring growth and double‑digit international growth .
  • FY25 raised, but guide still below EPS consensus midpoint: Company lifted revenue/margins/EPS and increased InVue Dx targets; FY EPS midpoint remains modestly below consensus, suggesting limited room for estimate raises absent upside on visits or incremental operating leverage .
  • Watch 2H catalysts: Cortisol launch, FNA for InVue Dx, ongoing CancerDx uptake, and international expansions could support sequential acceleration in recurring revenues .
  • Cash deployment and balance sheet: Robust buybacks ($744M 1H), low leverage (~0.6x net), and 80%–85% FCF conversion maintain capital return capacity and strategic flexibility .