Sign in
CC

COCA COLA CO (KO)·Q2 2025 Earnings Summary

Executive Summary

  • Q2 2025 delivered resilient top-line and strong profitability: net revenues rose 1% to $12.535B, organic revenues +5%, and operating margin expanded to 34.1% (comparable 34.7% vs 32.8% YoY) while unit case volume declined 1% .
  • EPS beat consensus: comparable EPS was $0.87 vs Street $0.84*, while revenue was essentially in line to slightly below ($12.575B* vs $12.535B actual); EBITDA exceeded consensus* .
  • Guidance updated: FY25 comparable EPS growth now ~3% (from 2–3% prior), comparable currency-neutral EPS ~8%, and currency headwind to comparable net revenues trimmed to ~1–2%; Q3 set to face ~1% net revenue FX headwind and ~5–6% EPS FX headwind .
  • Cash flow optics: operating cash flow was -$1.391B due to the $6.1B fairlife contingent consideration payment; free cash flow (ex fairlife) was $3.927B in H1, underscoring underlying cash generation despite one-off outflows .
  • Stock narrative catalysts: multi-quarter margin expansion, value share gain, evidence of agile execution (Mexico/India pivots), and AI/RGM tool scaling; near-term FX and volume softness in select EMs remain watch points .

What Went Well and What Went Wrong

What Went Well

  • Margin expansion and earnings: comparable operating margin rose to 34.7% (vs 32.8% YoY) and comparable EPS grew 4% to $0.87 despite ~5% FX headwind; “robust margin expansion” driven by productivity timing, disciplined investment, and cost management .
  • Value share and brand performance: value share gained in total NARTD; Coca‑Cola Zero Sugar volume +14% globally, and Diet Coke logged a fourth consecutive quarter of volume growth in North America aided by tailored campaigns .
  • Execution agility: CEO highlighted “pivoting our plans” to address choppy conditions (e.g., weather/geopolitics in Mexico/India) while maintaining top-line growth; CFO reiterated confidence in delivering updated FY25 guidance .

What Went Wrong

  • Volume softness: unit case volume -1% in Q2, with declines in Mexico, India, Thailand, Indonesia, and Vietnam; Latin America unit cases -2%, Asia Pacific -3% .
  • FX headwinds: ~11-point headwind to reported EPS and ~5-point to comparable EPS; guidance embeds continuing FX drag on revenues/EPS in FY25 and Q3 .
  • Cash flow optics and one-offs: operating cash flow -$1.391B and FCF -$2.142B in H1 due to the $6.1B fairlife contingent consideration payment; reported other income volatility vs prior year comps .

Financial Results

Headline quarterly metrics

MetricQ4 2024Q1 2025Q2 2025
Net Operating Revenues ($USD Billions)$11.5 $11.1 $12.535
Diluted EPS ($USD)$0.51 $0.77 $0.88
Comparable EPS ($USD)$0.55 $0.73 $0.87
Operating Margin (Reported)23.5% 32.9% 34.1%
Comparable Operating Margin24.0% 33.8% 34.7%

Q2 2025 vs Wall Street consensus (S&P Global)

MetricConsensus*ActualSurprise
Primary EPS ($USD)$0.837*$0.87 +$0.03
Revenue ($USD Billions)$12.575*$12.535 -$0.04B
EBITDA ($USD Billions)$4.521*$4.624*+$0.10B

Consensus estimates marked with * retrieved from S&P Global.

Margin detail (Q2 YoY)

MetricQ2 2024Q2 2025
Gross Margin (Reported)61.1% 62.4%
Operating Margin (Reported)21.3% 34.1%
Comparable Operating Margin32.8% 34.7%

Segment breakdown (Q2 2025 vs Q2 2024)

SegmentRevenue Q2’24 ($MM)Revenue Q2’25 ($MM)YoY %Operating Income Q2’24 ($MM)Operating Income Q2’25 ($MM)YoY %
Europe, Middle East & Africa$3,028 $3,176 5% $1,282 $1,325 3%
Latin America$1,652 $1,587 (4%) $921 $957 4%
North America$4,874 $5,029 3% $1,376 $1,621 18%
Asia Pacific$1,522 $1,572 3% $646 $647 0%
Bottling Investments$1,539 $1,411 (8%) $98 $59 (39%)
Corporate$35 $39 10% $(1,691) $(329) 81%
Eliminations$(287) $(279) 3% ———
Consolidated$12,363 $12,535 1% $2,632 $4,280 63%

KPIs (Q2 2025 percent change vs prior year)

SegmentUnit Case VolumePrice/MixConcentrate SalesOrganic Revenues
Consolidated(1%) 6% (1%) 5%
Europe, Middle East & Africa3% 3% 2% 4%
Latin America(2%) 15% (1%) 13%
North America(1%) 3% 0% 3%
Asia Pacific(3%) 10% (5%) 5%
Bottling Investments(5%) 0% (2%) (2%)

Cash flow (H1 2025)

MetricH1 2024H1 2025
Net Cash from Operating Activities ($MM)$4,113 $(1,391)
Free Cash Flow ($MM)$3,321 $(2,142)
FCF ex fairlife contingent consideration ($MM)$3,321 $3,927

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Organic Revenue (non-GAAP) growthFY 20255%–6% 5%–6% Maintained
Comparable net revenues (non-GAAP) FX impactFY 2025~2%–3% headwind ~1%–2% headwind Improved (lower headwind)
Comparable currency-neutral EPS (non-GAAP) growthFY 20257%–9% ~8% Narrowed/Updated
Comparable EPS (non-GAAP) growthFY 20252%–3% ~3% Raised
Underlying effective tax rate (non-GAAP)FY 202520.8% 20.8% Maintained
FCF ex fairlife payment (non-GAAP)FY 2025~$9.5B ~$9.5B Maintained
Comparable net revenues (non-GAAP) FX headwindQ3 2025—~1% headwind New
Comparable EPS FX headwindQ3 2025—~5%–6% headwind New

Earnings Call Themes & Trends

TopicPrevious Mentions (Q4’24 and Q1’25)Current Period (Q2’25)Trend
AI/technology initiativesGenerative AI used in creative; Studio X scaled digital marketing AI-based pack-price/channel optimization piloted in Mexico, scaled to 8 markets across 4 OUs Scaling and operationalization
Supply chain continuityOngoing global continuity efforts; short-term U.S. disruptions around other categories highlighted Manageable impact; hedging and procurement agility reaffirmed Manageable, continued vigilance
Tariffs/macro/FXLocalized operations mitigate; aluminum/steel tariffs considered; FX headwinds heavy in FY25 FX headwinds persist but softening; FY25 EPS FX ~5%, Q3 EPS FX ~5–6% FX drag moderating
Product performance (fairlife)Growth moderating due to capacity; NY facility ramp planned Double-digit growth; moderation continues until capacity additions in early 2026 Strong but constrained near term
Regional trends (Mexico/India)Mexico softness; Hispanic consumer sentiment; India strong Q1 Sequential improvement; pivots on affordability, refillables; refranchising in India with Jubilant Mixed, with corrective actions
Regulatory/legal / taxIRS deposit in 2024; underlying ETR move to 20.8% Underlying ETR 20.8%; ongoing IRS litigation noted Stable parameters
Health features / innovationSimply Pop (prebiotic); category innovation; cane sugar trials U.S. cane sugar Coke offering planned; continued testing incl. fiber variants in JP Broadening choices

Management Commentary

  • CEO: “Amid a shifting external landscape…we are confident in our trajectory to deliver on our updated 2025 guidance and longer-term objectives.”
  • CFO: “We grew organic revenues 5%…comparable EPS of $0.87 increased 4% year over year, despite 5% currency headwinds and a higher effective tax rate.”
  • CEO on agility: “Rapid turns of events…required us to respond with greater agility and speed…we pivoted or adapted with some agility.”
  • CEO on AI/RGM: “AI-based pack price channel optimization tool in Mexico…scaled to eight markets across four operating units.”

Q&A Highlights

  • Pivot mechanics and near-term outlook: Management explained rapid pivots between developed (U.S./Europe) and EM (Mexico/India) markets, expecting improved trajectories aided by affordability and refillables .
  • fairlife capacity and growth: Double-digit growth continues; moderation until new U.S. capacity ramps in early 2026; international dairy opportunities assessed with local structures (e.g., Santa Clara in Mexico) .
  • North America margins and Hispanic consumer: NA margins strengthened via productivity and mix; targeted campaigns resolved much of the Q1 Hispanic consumer pullback by end of June .
  • FX hedging and margin leverage: Disciplined hedging softens G10 FX impacts; underlying margin expansion expected albeit at a lower rate in H2 vs H1 .
  • Category strategy (coffee): Costa stores performing, but broader RTD/express/at-home thesis has underdelivered; strategy under review while operating Costa effectively .

Estimates Context

  • Q2 2025: EPS beat, revenue slight miss, EBITDA beat vs consensus*. FY25 Street EPS ~$2.99*, with target price consensus ~$79.13* and 23 estimates contributing [GetEstimates].
  • Implications: Modest top-line miss offset by strong margins; FX headwind guidance reduced, and comparable EPS growth raised to ~3%—we expect minor upward revisions to EPS/EBITDA, with revenue estimates largely unchanged given mix-driven expansion and Q3 FX headwind framing .
    Consensus estimates marked with * retrieved from S&P Global.

Key Takeaways for Investors

  • Quality of earnings intact: Multi-quarter margin expansion amidst FX drag and choppy volumes shows disciplined productivity/timing; comparable operating margin +190 bps in Q2 .
  • Share gains continue: Value share gains across NARTD and marquee brand momentum (Coke Zero Sugar +14%) support durable mix-led profitability .
  • Guidance credibility improved: FX headwind trimmed and comparable EPS target raised; Q3 FX headwind clearly flagged—reduces uncertainty into H2 .
  • Near-term volume recovery watch: Mexico/India pivots underway; ASEAN softness flagged; expect sequential improvement but uneven cadence by market .
  • fairlife remains a secular growth driver: Capacity constraints cap near-term growth; NY facility starting early 2026 is a key medium-term unlock .
  • AI/RGM scaling to drive transactions and mix: Data-led segmentation and pack/price optimization tools are expanding and should sustain positive price/mix .
  • Cash flow optics temporarily noisy: One-off fairlife payment depressed reported CFO/FCF; ex-payment FCF remains strong, supporting capital return and strategic investment .

Sources Read (Step 1)

  • Q2 2025 press release and 8-K 2.02 (full): Coca-Cola Reports Q2 2025 Results and updates FY guidance .
  • Q2 2025 earnings call transcript (full): Prepared remarks and Q&A .
  • Prior two quarters: Q1 2025 press release and call ; Q4 2024 press release and call .
  • Additional press releases around Q2 2025 timing: Investor day/timing announcements, leadership updates (context, not materially financial) .