Dexcom (DXCM) Q2 2025 Earnings Call July 30, 2025 04:30 PM ET Company ParticipantsSean Christensen - VP - Finance & IRKevin Sayer - President, CEO & Chairman of the Board of DirectorsJereme Sylvain - EVP & CFOJacob Leach - President & Chief Operating OfficerTravis Steed - MD - Equity ResearchJoanne Wuensch. - Managing DirectorMatt Taylor - Managing DirectorDavid Roman - Managing DirectorJayson Bedford - MD - Medical TechnologyIssie Kirby - VP - Equity Research, Medical Technology & Life SciencesJoshua Jenni ...

Financial Data and Key Metrics Changes - The company reported worldwide revenue of $1,160 million for Q2 2025, a 15% increase compared to $1,000 million in Q2 2024 [22] - U.S. revenue totaled $841 million for Q2 2025, up 15% from $732 million in Q2 2024 [23] - International revenue grew 16% to $316 million in Q2 2025, with organic revenue growth of 14% [24] - Gross profit was $695.9 million, representing 60.1% of revenue, compared to 63.5% in Q2 2024 [27] - Operating income was $221.8 million, or 19.2% of revenue, compared to $195.4 million, or 19.5% of revenue in Q2 2024 [28] - Adjusted EBITDA was $327.6 million, or 28.3% of revenue, consistent with the previous year [29] Business Line Data and Key Metrics Changes - Strong growth was observed in the type two non-insulin population, contributing to market share gains [11] - The Stello app, an over-the-counter glucose biosensor, has been downloaded over 400,000 times, indicating growing brand awareness [11] - The company introduced a new smart food logging feature across its apps, enhancing user experience [13] Market Data and Key Metrics Changes - The company established reimbursement for nearly six million type two non-insulin lives in the U.S. [9] - Coverage expansion in Canada for insulin users through the Ontario Drug Benefit Program represents a significant market opportunity [25] Company Strategy and Development Direction - The company aims to expand coverage for the entire type two non-insulin population in the U.S. [10] - Focus on long-term platform innovation while embracing rapid software development akin to consumer technology companies [14] - The upcoming launch of the 15-day G7 system is anticipated in the second half of the year [14] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's ability to capitalize on future opportunities and maintain momentum [30] - The transition of CEO responsibilities to Jake Leach is seen as a strategic move to ensure continued growth [30] - Management is closely monitoring macroeconomic conditions and capital market environments [29] Other Important Information - The company presented nearly 40 studies at the American Diabetes Association's Scientific Sessions, focusing on metabolic health management [19] - The company is working on a randomized controlled trial for type two non-insulin users, with results expected early next year [104] Q&A Session Summary Question: About the ability to raise guidance for the full year - Management noted strong performance in new starts and non-insulin opportunities, leading to increased confidence in revenue guidance [38][41] Question: Exposure to Medicare and potential risks - Management indicated that approximately 15% of the business is fee-for-service Medicare and emphasized the importance of ensuring no interruption to beneficiaries [44][49] Question: Margin progression through the year - Management expects sequential improvement in margins as inventory levels stabilize and operational efficiencies are realized [54][58] Question: Update on G8 and competitive dual analyte sensors - Management expressed excitement about G8's development and emphasized the importance of safety features in their offerings [62][65] Question: Update on FDA progress and 15-day launch - Management reported positive progress with the FDA and confirmed the 15-day product will be launched in the current quarter [71][72] Question: Competitive dynamics with insulin pump integration - Management highlighted their strong position in the market and ongoing innovation to maintain competitive advantages [75][78] Question: Utilization rates for type two non-insulin users - Management reported high utilization rates of 75-80% among covered users, driven by the value of the product [85][86] Question: Update on Stello app and user demographics - Management confirmed the guidance for Stello remains at 2-3% of sales, with a shift in user demographics towards health and wellness [90][92]

Financial Data and Key Metrics Changes - The company reported worldwide revenue of $1,036 million for Q1 2025, a 12% increase compared to $921 million in Q1 2024, with organic revenue growth of 14% [18] - U.S. revenue totaled $751 million, up 15% from $653 million in Q1 2024, driven by strong new customer demand [19] - International revenue grew 7% to $286 million, with organic growth of 12% [21] - Gross profit was $596.2 million, representing 57.5% of revenue, down from 61.8% in Q1 2024 [23] - Operating income was $143.1 million, or 13.8% of revenue, compared to $140.2 million in the same quarter of 2024 [24] - Adjusted EBITDA was $230.4 million, or 22.2% of revenue, compared to $220.9 million, or 24% of revenue in Q1 2024 [25] - Net income for Q1 was $127.7 million, or $0.32 per share [26] Business Line Data and Key Metrics Changes - The company experienced record levels of new customer demand, particularly from the Type 2 non-insulin using population [9][10] - The introduction of Stello, the first over-the-counter CGM, and broader access in the Type 2 market contributed to increased customer starts [10][12] - The company launched a 180-day data look-back feature for the Stello app, enhancing customer experience [13] Market Data and Key Metrics Changes - The company secured access at two of the three largest PBMs for diabetes patients, which is expected to cover nearly six million people with Type 2 diabetes by the end of the year [10][11] - International business showed strength in Japan and France, with continued growth in the Type 2 landscape [22] Company Strategy and Development Direction - The company is focused on expanding coverage for Type 2 diabetes patients and enhancing customer experience through technology and software updates [10][12] - The introduction of the 15-day G7 system is expected to set a new industry standard for sensor accuracy and wear time [16] - The company is committed to addressing FDA concerns following a warning letter and is working on corrective actions [15][102] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in navigating supply dynamics and maintaining customer care during the transition period [6][19] - The company reaffirmed its revenue guidance of $4.6 billion for the year, representing 14% growth, while adjusting gross margin guidance to approximately 62% [27][29] - Management is optimistic about the potential for broader Type 2 coverage and the positive reception of CGM technology in the healthcare landscape [10][110] Other Important Information - The company announced a $750 million share repurchase program, reflecting strong cash flow and financial position [26] - Management highlighted the importance of evidence-based data in driving changes to standards of care and expanding access globally [11] Q&A Session Summary Question: Did supply have any impact on the revenue growth? - Management indicated that supply dynamics were normalized by the end of the quarter, and strong new patient performance was observed despite previous challenges [35] Question: Why is full-year guidance unchanged despite strong Q1 growth? - Management stated that it is prudent to wait and see how the year unfolds before adjusting guidance, emphasizing the importance of a full-year perspective [42] Question: What are the trends in Type 2 patient utilization and reorder rates? - Management reported good retention and utilization rates among Type 2 patients, particularly those with reimbursement coverage [50] Question: How exposed is the company to a potential recession? - Management believes the company is well-positioned to weather economic downturns due to the cost-saving benefits of its products [58][60] Question: What is the status of the FDA warning letter? - Management confirmed that the warning letter does not restrict new submissions or approvals and that they are making progress in addressing FDA concerns [102] Question: What is the timeline for the RCT data readout for Type 2 non-insulin users? - Management anticipates finishing enrollment in the first half of the year, with initial data readout expected late this year or early next year [112]

Financial Data and Key Metrics Changes - The company reported worldwide revenue of $1,036 million for Q1 2025, a 12% increase compared to $921 million in Q1 2024, with organic revenue growth of 14% [20][21] - U.S. revenue totaled $751 million for Q1 2025, up 15% from $653 million in Q1 2024 [21] - International revenue grew 7% to $286 million, with international organic revenue growth at 12% for the first quarter [24] - Gross profit was $596.2 million, representing 57.5% of revenue, down from 61.8% in Q1 2024 [26] - Operating income was $143.1 million, or 13.8% of revenue, compared to $140.2 million in the same quarter of 2024 [27] - Net income for Q1 was $127.7 million, or $0.32 per share [28] Business Line Data and Key Metrics Changes - The company experienced record new customer demand, particularly from the Type 2 non-insulin using population, indicating strong growth in this segment [10][11] - The introduction of Stello, the first over-the-counter CGM, and the CELLo biosensor has attracted a wide range of new customers [14][15] - The company is focusing on expanding its commercial reach and enhancing customer experience through software updates and broader distribution [15][16] Market Data and Key Metrics Changes - The company secured access at two of the three largest PBMs for diabetes patients, which is expected to cover nearly six million people with Type 2 diabetes by the end of the year [12][13] - International business showed strength in Japan and France, with continued growth in the DexCom One platform [25] Company Strategy and Development Direction - The company aims to build on momentum through targeted awareness campaigns and advocating for broader Type 2 coverage [12] - The introduction of new technologies and broader access is a key focus, with plans to launch the fifteen-day G7 system in the second half of the year [18][19] - The company is committed to addressing FDA recommendations following a warning letter and is working on corrective actions [17][18] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in navigating supply dynamics and maintaining customer support during transitions [9][10] - The company is optimistic about future growth, reaffirming its revenue guidance of $4.6 billion for the year, representing 14% growth [29] - Management highlighted the importance of evidence in driving changes to standards of care and unlocking broader access globally [13] Other Important Information - The company announced a $750 million share repurchase program, reflecting confidence in its financial position [28] - Management emphasized the importance of operational efficiency and investments in technology to support growth [100][101] Q&A Session Summary Question: Did supply have any impact on the revenue growth? - Management indicated that they exited the quarter with normal supply levels, and the revenue figures reflect a normalized pattern [38] Question: Why is the full year guidance unchanged despite strong Q1 growth? - Management stated that it is early in the year, and they want to see how the rest of the year unfolds before making changes to guidance [45] Question: What are the trends in Type 2 patient utilization and reorder rates? - Management noted good retention rates in the Type 2 population, particularly with reimbursement, and strong utilization among Stellar users [53][54] Question: How exposed is the company to a potential recession? - Management believes they are well-positioned to weather economic downturns due to the cost-saving benefits of their products [62][64] Question: What is the status of the fifteen-day sensor rollout? - Management confirmed that they are working on compatibility with pump partners and securing coverage for the new product [92][93] Question: What is the path for Medicare coverage for non-insulin using Type 2 patients? - Management is actively working with CMS for approval and gathering evidence to support their case [116][119]