Executive Summary

Q2 FY25 delivered broad-based growth and margin expansion: revenue +10% YoY to $1.28B, non-GAAP gross margin +230 bps to 59.2%, and non-GAAP EPS +29% to $2.43, driven by double‑digit devices and masks growth and cost efficiencies .
Operating leverage remained strong: GAAP operating income +52% YoY (prior year included $64.2M restructuring charges), GAAP EPS +65% to $2.34, and operating cash flow of $309M; capital returns included $78M in dividends and $75M of buybacks (307k shares) .
Management reiterated margin and cost frameworks into 2H FY25 (gross margin 59–60%, SG&A 18–20% of revenue, R&D 6–7%, tax rate 19–21%); FX is a headwind (Q2 EPS −$0.02, Q3 revenue −$15–20M expected) .
Structural demand catalysts (GLP‑1 label expansion; sleep apnea detection in wearables) remain early but supportive; ResMed’s real‑world data now tracks 1.2M patients on GLP‑1 + PAP showing higher therapy starts and resupply over 1–2 years .

What Went Well and What Went Wrong

What Went Well

Double‑digit top-line and EPS growth with margin expansion: “We achieved 230 basis points of margin expansion in non‑GAAP gross margin… and a 29% increase in non‑GAAP EPS” . Q2 revenue +10% YoY to $1.282B; non‑GAAP EPS $2.43 (+29% YoY) .
Strong devices and masks performance across regions: devices +11% and masks +11% globally (constant currency); U.S./Canada/LatAm +12% in both categories; EMEA/APAC devices +9% and masks +7% (cc) .
Strategic positioning on tailwinds (GLP‑1s, wearables): “We are now tracking 1.2 million patients… more than 10% more likely to start PAP… >5% higher resupply at two years,” and Apple/Samsung sleep apnea detection to drive steady, durable patient flow .

What Went Wrong

FX pressure and near‑term headwinds: Q2 EPS impact −$0.02 from FX; management expects Q3 revenue headwind of $15–20M from currency .
Freight/logistics still a watch‑item; margin cadence bounded: gross margin guided to 59–60% in 2H FY25 with swing factors including product mix, freight normalization, FX, and pace of new product introductions .
Residential Care Software growth moderated to +8% (from +12% in Q1), with strength at MEDIFOX but slower parts elsewhere (portfolio shift toward higher‑return areas) .

Financial Results

Metric	Q4 FY24	Q1 FY25	Q2 FY25
Revenue ($B)	$1.223	$1.225	$1.282
GAAP Diluted EPS ($)	$1.98	$2.11	$2.34
Non-GAAP Diluted EPS ($)	$2.08	$2.20	$2.43
Gross Margin (%)	58.5%	58.6%	58.6%
Non-GAAP Gross Margin (%)	59.1%	59.2%	59.2%
Operating Income ($M, GAAP)	$381.2	$387.3	$417.2
Operating Income ($M, non-GAAP)	$400.5	$406.4	$435.9
Net Income ($M)	$292.2	$311.4	$344.6
Operating Cash Flow ($M)	$440.1	$325.5	$308.6

Notes: YoY Q2 growth: revenue +10%, GAAP EPS +65%, non‑GAAP EPS +29% . Prior-year GAAP comparisons reflect restructuring charges in the base period .

Segment/Product and Region – Q2 FY25 vs. prior year:

Region/Product	Q2 FY25 Revenue ($M)	YoY %
U.S., Canada & LatAm Devices	414.5	12%
U.S., Canada & LatAm Masks & Other	334.5	12%
Combined Europe, Asia & Other Devices	254.8	9% (cc)
Combined Europe, Asia & Other Masks & Other	121.8	7% (cc)
Total Sleep & Breathing Health	1,125.6	11% (cc)
Residential Care Software	156.5	8% (cc)
Total Company	1,282.1	10% (cc)

Selected KPIs and Capital Returns:

KPI	Q4 FY24	Q1 FY25	Q2 FY25
SG&A as % of Revenue	19.8%	19.5%	18.8%
R&D as % of Revenue	6.6% (Q4 call)	6.5%	6.3%
Dividend per Share ($)	0.53 declared	0.53 declared	0.53 declared
Dividends Paid ($M)	70.6	77.9	77.7
Share Repurchases ($M)	50.0	50.0	75.0 (307k shares)

Guidance Changes

Metric	Period	Previous Guidance	Current Guidance	Change
Gross Margin	FY25 (prior) → 2H FY25 (current)	59–60% FY25 (Q1)	59–60% in 2H FY25	Maintained (timing clarified)
SG&A as % of Revenue	FY25 → 2H FY25	18–20% FY25 (Q1)	18–20% in 2H FY25	Maintained
R&D as % of Revenue	FY25 → 2H FY25	6–7% FY25 (Q1)	6–7% in 2H FY25	Maintained
Tax Rate	FY25	19–21% FY25 (Q1)	19–21% FY25 (Q2)	Maintained
Interest (Net)	2H FY25	Net interest income expected 2H FY25 (Q1)	Net interest income expected 2H FY25 (Q2)	Maintained
FX Commentary	Q3 FY25	N/A	Q3 revenue headwind of $15–20M; Q2 EPS −$0.02 from FX	New near‑term headwind update
Share Repurchases	FY25	Plan ~$75M per quarter through FY25 (Q1)	Continue ~$75M per quarter (Q2)	Maintained
Dividend	Ongoing	Quarterly dividend $0.53 (Q1)	Quarterly dividend $0.53 (Q2)	Maintained

Earnings Call Themes & Trends

Topic	Previous Mentions (Q4 FY24, Q1 FY25)	Current Period (Q2 FY25)	Trend
GLP‑1 impact on OSA funnel	RWE cohort 811k; GLP‑1s seen as clear tailwind; combo therapy message	RWE cohort expanded to 1.2M; >10% higher PAP starts; >3% ↑ adherence/resupply at 12 months; >5% ↑ resupply at 24 months	Strengthening tailwind
Wearables (Apple/Samsung)	Samsung FDA de novo detection; Apple watch detection announced; early innings	Apple/Samsung integration highlighted; myAir scores on watches; steady, durable demand expected over years	Building awareness
Supply chain, freight & FX	Freight headwinds; GM outlook 59–60% FY25	GM 59–60% 2H; FX −$0.02 EPS; Q3 rev −$15–20M FX headwind; new Head of Supply Chain driving efficiencies	Mixed: execution strong; FX headwind
Product roadmap	AirFit F40 traction (Q4); AirTouch N30i preview (Q1)	AirTouch N30i launched in select markets; AirSense 11 expansion (India)	Advancing
Residential Care Software	+10% (Q4) with operating leverage	+12% (Q1); double‑digit net OP profit growth targeted	+8% (Q2); strength at MEDIFOX, portfolio focus
Regulatory/clinical guidance	—	—	AASM quick reference: PAP frontline; weight‑loss drugs adjunctive

Management Commentary

“We achieved 230 basis points of margin expansion in non‑GAAP gross margin year‑over‑year to 59.2%… and a 29% increase in non‑GAAP EPS” (CEO) .
“Looking forward, we expect gross margin will be in the range of 59% to 60% in the second half of fiscal year 2025… SG&A 18%–20%… R&D 6%–7%… tax rate 19%–21%” (CFO) .
“We are now tracking 1.2 million patients… more than 10% more likely to start PAP… >5% increased propensity for resupply at two years” (CEO) .
“No… onetime stocking [in Q2]… we do not believe ResMed will have any impact… on any tariffs… we manufacture in Sydney, Singapore, Atlanta and beyond” (CEO) .
“FX… net impact was negative $0.02 on EPS this quarter… expect Q3 revenue headwind… $15–$20 million” (CFO) .

Q&A Highlights

FX and outlook: Q2 EPS −$0.02 from FX; gross margin impact roughly neutral going forward; Q3 revenue headwind $15–20M expected from currency .
Devices growth drivers: Double‑digit devices growth led by patient flow and demand generation; rePAP opportunity remains; pricing a secondary contributor .
Supply chain/tariffs: No Q2 bulk purchases; minimal tariff exposure given manufacturing footprint; potential tariffs could impact competitors more .
Capacity and HST scaling: Plan to flex home sleep apnea testing and remote setup to accommodate increased patient flow from wearables/GLP‑1 awareness .
SaaS growth mix: Residential Care Software +8%; MEDIFOX strong; portfolio management to focus investment where returns/synergies are highest; double‑digit net operating profit growth targeted .

Estimates Context

S&P Global consensus estimates were unavailable at the time of analysis due to data access limits; therefore, we cannot quantify beats/misses versus Street expectations. Values were not retrievable from S&P Global in this session. As a result, comparisons vs. consensus are not presented here.
Modeling implications: maintain GM at 59–60% into 2H FY25; incorporate FX headwind (Q3 revenue −$15–20M), SG&A 18–20% and R&D 6–7% of revenue, tax 19–21%; Residential Care Software growth high‑single digits with stronger profitability; steady ~$75M/quarter buybacks and $0.53 dividend .

Key Takeaways for Investors

Margin framework intact with cost execution: non‑GAAP GM at 59.2% and 2H FY25 guide of 59–60% suggests durable unit economics despite FX/freight variability .
Demand tailwinds are real but gradual: GLP‑1 combo therapy and wearables should drive sustained, not step‑function, patient inflow; management’s RWE supports higher starts/resupply over time .
U.S. core strong; rePAP and resupply remain levers: U.S./Canada/LatAm devices and masks both +12% YoY; continued Brightree/Snap scale supports masks and adherence KPIs .
FX is the near‑term swing factor: Q3 revenue guide includes −$15–20M from currency, and FX shaved ~$0.02 off Q2 EPS; mix, freight, FX will influence progress toward 60% GM .
Software growth moderating but higher returns: Residential Care Software +8% with focus on MEDIFOX and profitability; expect portfolio discipline and synergy with resupply initiatives .
Capital returns steady: $0.53 quarterly dividend and a plan to repurchase ~$75M of stock per quarter in FY25 underpin TSR while funding R&D and tuck‑ins .

Additional Detail: Non‑GAAP adjustments in Q2 primarily exclude amortization of acquired intangibles; prior‑year GAAP comparisons are flattered by restructuring charges in Q2 FY24; reconciliations provided in the press release .

RESMED INC (RMD)·Q2 2025 Earnings Summary