It has been about a month since the last earnings report for ResMed (RMD). Shares have lost about 1.7% in that time frame, underperforming the S&P 500.

Will the recent negative trend continue leading up to its next earnings release, or is ResMed due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important catalysts.

ResMed Q2 Earnings Beat Estimates, Margins Expand

ResMed adjusted earnings per share for the second quarter of fiscal 2024 were $1.88, up 13.3% year over year. The metric beat the Zacks Consensus Estimate by 3.9%.

The adjustments include certain non-recurring expenses/benefits like the amortization of acquired intangibles, restructuring and masks with magnets field safety notification expenses, among others.

GAAP EPS in the reported quarter was $1.42, down 7.2% from the year-ago quarter.

Revenues

On a reported basis, fiscal second-quarter revenues increased 12% year over year (up 11% at constant exchange rate or CER) to $1.16 billion. The figure matched the Zacks Consensus Estimate.

A Closer View of the Q2 Top Line

Total Sleep and Respiratory Care revenues improved 11% (up 10% at CER) from the prior-year period to $1.02 billion.

Total Sleep and Respiratory Care revenues in Europe, Asia and other markets rose 16% on a reported basis (up 12% at CER) to $348.5 million.

In the United States, Canada and Latin America, total Sleep and Respiratory Care revenues were $669.3 million, up 9% year over year.

Global Revenues comprised Total Devices revenues of $606 million, up 12% (11% at CER), and Total Masks and other revenues of $411.9 million, up 10% (up 9% at CER), all on a year-over-year basis.

Software-as-a-Service (SaaS) revenues grew 24% year over year to $144.9 million.

Margins

The adjusted gross profit in the quarter under review rose 12.7% to $661.5 million despite a 12.2% uptick in the adjusted cost of sales (excluding the amortization of acquired intangibles, masks with magnets field safety notification expenses and Astral field safety notification expenses).

Adjusted gross margin for the fiscal second quarter was 56.9%, reflecting an expansion of 11 basis points (bps) on lower freight costs, increase in average selling prices and favorable foreign currency movements.

SG&A expenses rose 4.9% year over year to $222.2 million. R&D expenses increased 5.7% to $73.9 million.

The adjusted operating income was $365.5 million in the quarter under discussion, up 19.7% from the year-ago quarter. The adjusted operating margin expanded 188 bps year over year to 31.4%.