Key Takeaways
- Revenue surpassed forecasts at $24.18B compared to $23.97B expected, representing a 6.4% increase year-over-year
- Adjusted earnings per share reached $2.20, falling just $0.01 short of the $2.21 analyst projection
- Worldwide food volumes rose 3% while beverage volumes increased 2%, primarily fueled by overseas operations
- Domestic performance lagged significantly — food volumes remained unchanged while beverage volumes dropped 4%
- Company maintained full-year outlook: 2%-4% organic revenue expansion and 4%-6% core EPS improvement
PepsiCo delivered a blend of positive and negative news in its Q2 results Thursday, surpassing revenue projections while narrowly falling short on profitability metrics. Shares climbed 1% in response to the report.
The beverage and snack giant reported quarterly revenue of $24.18 billion, exceeding Wall Street’s $23.97 billion estimate and marking a 6.4% jump from the prior-year figure of $22.73 billion. Adjusted earnings came to $2.20 per share, missing the analyst consensus of $2.21 by a single cent.
Organic revenue expansion reached 2.4% during the period. This metric excludes the impact of mergers, asset sales, and currency fluctuations, providing a more accurate picture of underlying business performance.
Net earnings attributable to the company totaled $2.98 billion, translating to $2.18 per share. This represented a substantial improvement from $1.26 billion, or 92 cents per share, recorded in the corresponding quarter last year.
Core operating earnings advanced 4% to reach $4.07 billion. Despite this growth, the core operating margin compressed by 40 basis points to settle at 16.8%.
Chief Executive Ramon Laguarta noted that worldwide organic volume growth has accelerated to its strongest pace since 2022 during this year’s opening half. He attributed the momentum to robust international operations and strategic portfolio adjustments — encompassing smaller package sizes, wellness-focused drinks, and sugar-free alternatives.
Domestic Market Challenges Persist
The narrative in the company’s home market presented a stark contrast. Domestic food volumes remained stagnant throughout the quarter. Beverage sales in North America contracted by 4%.
Chief Financial Officer Steve Schmitt acknowledged the underperformance, describing North American operations as “softer than we anticipated.” He indicated the organization now projects a “more gradual improvement” in performance metrics throughout the remainder of the fiscal year.
Laguarta highlighted stretched household budgets as a significant challenge. Gasoline costs surged to a four-year peak of $4.56 per gallon in late May amid volatility in international crude markets connected to the U.S.-Iran tensions, prompting consumers to reduce discretionary purchases.
Pepsi has been contending with sluggish demand in its domestic chip and snack portfolio. In February, the corporation reduced prices on popular brands including Lay’s, Tostitos, Doritos, and Cheetos by as much as 15% to recapture market share.
The company has simultaneously undertaken branding overhauls for flagship products such as Gatorade and Lay’s to stimulate sales recovery. The efforts have yielded modest results to date.
Overseas Markets Drive Growth
Beyond U.S. borders, performance proved robust throughout major regions. The Asia Pacific Foods division, International Beverages Franchise unit, and Europe, Middle East and Africa operations all posted organic volume increases.
The North American beverage division received some support from strategic acquisitions completed in 2025, which boosted headline revenue figures despite persistent weakness in core demand.
Vital Knowledge analysts characterized the quarterly report as “mostly an inline/boring report,” while observing that underlying details “skew net negative” due to margin compression and continued softness across both food and beverage categories in North America.
PepsiCo confirmed its full-year 2026 projections: organic revenue growth of 2% to 4% and core constant currency EPS advancement of 4% to 6%. Factoring in favorable currency movements, the midpoint suggests core EPS growth of 5% to 7%.
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