• Cochlear implant revenue up 12%, units up 5%
• Services revenue down 13% due to lower upgrade rates
• Acoustics revenue up 21% driven by strong Osia Implant uptake
• Underlying net profit up 7% to $205.5 million

Cochlear Limited reported a 7% increase in underlying net profit to $205.5 million for the half-year ended 31 December 2024. Sales revenue increased 5% (6% in constant currency) to $1,169.9 million, with strong growth in cochlear implant revenue (up 12%) and acoustic revenue (up 21%), partially offset by a 13% decline in Services revenue. Cochlear implant units grew 5%, with developed market units up 6% and emerging market units up 3%. Services revenue declined due to lower upgrade rates, partly driven by cost of living pressures in the US. The gross margin was 75%, in line with the company's longer-term target. Operating expenses increased 10% (10% in constant currency) due to growing investment in R&D and market growth activities. The balance sheet remains strong with net cash of $383 million. An interim dividend of $2.15 per share has been determined, an 8% increase on the prior year.

For FY25, Cochlear aims to help over 50,000 people hear with a cochlear or acoustic implant. The company expects underlying net profit to be at the lower end of the $410-430 million guidance range provided in August 2024, incorporating a lower contribution from Services revenue and higher cloud-related investment. Cochlear implant unit growth is expected to be around 10% in FY25, with the gross margin around 74.5%. R&D investment is anticipated to be around 12% of sales revenue.

Cochlear remains confident in the long-term growth opportunity, with a significant unmet and addressable clinical need for cochlear and acoustic implants. The company is preparing for the release of its next generation cochlear implant, expected to be commercially available from mid-2025, and the introduction of the new off-the-ear Nucleus Kanso 3 Sound Processor from mid-2025 is expected to contribute to Services revenue from FY26.