Dexcom Earnings: Rollout of G7 Fuels Strong Growth, With More To Come

No-moat Dexcom posted another quarter of impressive results in the second quarter. However, minor adjustments to our model didn’t materially shift our $92 fair value estimate. While we weren’t particularly surprised by quarterly revenue growth of 26% in constant currency, we were pleased to see Dexcom improve its operating margin to the tune of 360 basis points. Though the firm crossed into profitability in 2019, it is still ramping this up, which we project to reach 22% operating margin in 2027. This quarter was a big step in the right direction, and we anticipate further improvements through 2024 as the manufacturing of G7 reaches scale.