Key Highlights
- PepsiCo surpassed Q1 earnings projections with adjusted EPS of $1.61 versus the $1.55 consensus.
- Quarterly revenue reached $19.44 billion, surpassing analyst expectations of $18.94 billion.
- North American snack food volumes increased 2% — marking the first positive quarter in more than 24 months — following strategic price reductions on key brands like Lay’s, Doritos, and Cheetos.
- The company reaffirmed its full-year organic revenue outlook of 2%–4% growth and core EPS expansion of 4%–6%.
- Management highlighted increased economic uncertainty stemming from Middle Eastern conflicts.
PepsiCo delivered first-quarter financial results on Thursday that exceeded analyst projections, with its North American snack food segment recording its first volume increase in over two years.
The company’s adjusted earnings per share reached $1.61, surpassing the analyst consensus of $1.55. Quarterly revenue totaled $19.44 billion, outpacing the $18.94 billion Wall Street forecast.
Net income attributable to PepsiCo increased to $2.33 billion from $1.83 billion in the prior-year period. Per-share net income rose to $1.70 from $1.33 a year earlier.
Net sales advanced 8.5% compared to the same quarter last year, boosted by the Poppi acquisition and expanded distribution of Alani Nu energy drinks. Organic revenue, which excludes acquisitions, divestitures, and foreign exchange impacts, increased 2.6%.
Shares ticked up approximately 0.8% in early premarket activity following the earnings release.
Frito-Lay and Quaker Volumes Turn Positive
For the first time since early 2022, Pepsi’s North American food operations — encompassing Frito-Lay snacks and Quaker products — registered positive volume growth. Volumes increased 2% during the quarter.
This represents a meaningful shift. The segment had faced headwinds as persistent inflation prompted aggressive pricing actions starting in 2022, which drove cost-conscious consumers toward private-label alternatives. In February, PepsiCo implemented price reductions of up to 15% on popular chips including Lay’s, Tostitos, Doritos, and Cheetos to recapture market share. Initial results suggest the strategy is gaining traction.
The North American beverage segment presented contrasting results, with volumes declining 2.5% during the quarter. This division encompasses Pepsi-Cola, Starry, and the recently acquired Poppi brand.
To reinvigorate Gatorade sales, management announced Thursday plans to expand marketing beyond athletic performance to emphasize broader hydration benefits, introduce reduced-sugar formulations, and eliminate artificial colorants from the product line.
The company is also capitalizing on consumer demand for protein and fiber-enriched products. Recent launches include Pepsi Prebiotic, Starbucks Coffee & Protein, Doritos Protein, and SunChips Fiber.
Annual Outlook Maintained Amid Growing Uncertainty
PepsiCo maintained its full-year financial guidance unchanged. The company continues to project organic revenue growth of 2% to 4%, with core constant currency earnings per share expected to increase 4% to 6%.
However, management acknowledged a more challenging operating environment. Company executives pointed to escalating geopolitical tensions — specifically the ongoing Middle Eastern conflict — as contributing to heightened economic volatility.
“The macroeconomic environment has become more volatile and uncertain because of ongoing geopolitical conflicts,” the company stated in its earnings materials.
Regarding input costs, management indicated that existing commodity hedging strategies should provide short-term insulation for certain raw materials. However, elevated energy and packaging expenses linked to supply chain disruptions remain areas of concern.
CEO Ramon Laguarta adopted a cautiously optimistic stance, noting the company was “encouraged with the resilience of the International business” while North American operations “continued to make progress.”
PEP shares have appreciated roughly 9% over the trailing twelve months — significantly lagging the S&P 500’s 29% gain during the comparable timeframe.
Get 3 Free Stock Ebooks
Discover top-performing stocks in AI, Crypto, and Technology with expert analysis.
- Top 10 AI Stocks - Leading AI companies
- Top 10 Crypto Stocks - Blockchain leaders
- Top 10 Tech Stocks - Tech giants
