Cochlear Reports $1.17B HY25 Revenue, 7% Profit Rise, Flags Lower FY25 Earnings

Strong Implant Sales Drive Revenue Growth

Cochlear Limited has delivered a solid first half of FY25 with sales revenue rising 6% in constant currency to $1.17 billion. This growth was primarily fueled by a 13% increase in cochlear implant revenue and a 22% surge in acoustics revenue, reflecting robust demand across developed and emerging markets. The company’s cochlear implant unit volumes grew 6% in developed markets and 3% in emerging markets, supported by higher-priced private pay units in countries like China and India.

Acoustics revenue benefited from strong uptake of the Cochlear™ Osia® Implant, particularly in the US where unit sales grew over 50%, aided by new product introductions and market expansion into countries such as France and Italy.

Services Revenue Decline and Cloud Investment Weigh on Profit

Despite the top-line growth, Cochlear’s services revenue declined 12% in constant currency, reversing the 29% growth seen in the prior corresponding period. The slowdown is attributed to lower upgrade rates for sound processors, partly due to high satisfaction with existing devices and cost-of-living pressures delaying replacements, especially in the US market.

Underlying net profit rose 7% to $206 million, maintaining an 18% margin in line with the company’s long-term target. However, operating expenses increased 10%, reflecting heightened investment in research and development as well as market growth initiatives. Notably, cloud-related investments in upgrading core business systems and operating models rose, with $40 million expected in FY25 alone, up $6 million from prior guidance.

Financial Position and Dividend

Cochlear’s balance sheet remains strong with net cash of $383 million at December 2024, despite a $131 million decrease driven by increased working capital and share buybacks. The company declared an interim dividend of $2.15 per share, up 8%, representing a 68% payout ratio of underlying net profit.

Outlook and Strategic Focus

Looking ahead, Cochlear expects FY25 underlying net profit to be at the lower end of the $410-430 million guidance range. This outlook factors in the continued decline in services revenue and the ramp-up of cloud-related investments. The company remains optimistic about cochlear implant unit growth of around 10% for FY25, driven by strong adult referral rates and the anticipated mid-2025 commercial release of its next-generation cochlear implant, pending regulatory approvals.

Geographic expansion and product innovation remain key strategic pillars, with Cochlear targeting growth in emerging markets and the acoustic implant segment. The introduction of the off-the-ear Nucleus® Kanso® 3 Sound Processor from mid-2025 is expected to support services revenue growth from FY26 onwards.

Overall, Cochlear continues to invest heavily in R&D, approximately 12% of sales revenue annually, to maintain its market leadership and deliver lifetime hearing solutions, while also focusing on expanding access and awareness globally.