PEPSICO INC (PEP) Q2 2025 Earnings Summary

Executive Summary

Q2 2025 revenue rose 1.0% (FX -1.5 pp) to $22.73B with organic growth of 2.1%; Core EPS was $2.12 while GAAP EPS fell to $0.92 due to $1.86B of intangible asset impairments (Rockstar, Be & Cheery) and related charges .
Results beat S&P Global consensus: revenue $22.73B vs $22.30B* and Core EPS $2.12 vs $2.03*, while GAAP EPS was impacted by non-cash charges (see non-GAAP recon) .
Guidance maintained for FY25: low-single-digit organic revenue growth and core constant-currency EPS approximately flat y/y; FX headwind improved to ~1.5 pp from ~~3 pp, implying a smaller core EPS decline (~~-1.5% vs -3% prior) .
Management emphasized North America integration and stepped-up productivity (70% more 2H vs 1H) alongside margin-accretive away-from-home growth; international remains the primary growth engine .
Potential stock catalysts: continued sequential improvement in NA share and top line, FX moderation, and protein platform launches (Q4/Q1) communicated on the call .

What Went Well and What Went Wrong

What Went Well

Organic growth reaccelerated: +2.1% organic revenue in Q2 (vs +1.2% in Q1), with International momentum and improving execution in North America. CEO: “acceleration in our net revenue growth versus the previous quarter… international momentum continued” .
Estimate beat: Core EPS $2.12 vs $2.03* and revenue $22.73B vs $22.30B*; management highlighted improved USD FX headwinds, aiding USD Core EPS outlook .
Strategic/operational progress: North America integration and productivity step-up (70% higher 2H vs 1H); away-from-home is sizable and margin-accretive across beverages and snacks .

What Went Wrong

GAAP earnings compression from non-cash impairments: $1.86B impairment (Rockstar; Be & Cheery; plus TBG-related items) drove GAAP EPS down 59% y/y to $0.92; Core constant-currency EPS -5% .
PFNA organic revenue -2% in Q2 with foods convenience volume -1.5%; management still working to stabilize category and fix potato chips while relaunching Lay’s/Tostitos .
Asia Pacific Foods operating profit under pressure (reported OP -90% y/y; core constant-currency OP -13%) amid mix and cost dynamics; EMEA reported OP -36% (FX/items), though core const.-currency OP +6% .

Financial Results

Consolidated results vs prior periods and estimates

Metric	Q4 2024	Q1 2025	Q2 2025	Q2 2025 Consensus
Net Revenue ($B)	$27.78	$17.92	$22.73	$22.30*
GAAP Diluted EPS	$1.11	$1.33	$0.92	—
Core EPS (Non-GAAP)	$1.96	$1.48	$2.12	$2.03*
Gross Margin % (reported)	52.6% (calc from $14.60B/$27.78B)	55.8%	54.7%	—
Operating Margin % (reported)	8.1% (calc from $2.25B/$27.78B)	14.4%	7.9%	—
Core Operating Margin %	12.5% (calc from $3.46B/$27.78B)	15.6%	17.2%	—

Notes: Q4 margin percentages are calculated from cited figures. Estimates marked with * are from S&P Global.

Segment performance (Q2 2025)

Segment	Reported Revenue ($B)	Organic Revenue % (y/y)	Core Constant-Currency OP % (y/y)
PepsiCo Foods North America (PFNA)	$6.48	-2%	-13%
PepsiCo Beverages North America (PBNA)	$6.80	+1%	—
International Beverages Franchise (IB Franchise)	$1.37	+5%	+9%
Europe, Middle East & Africa (EMEA)	$4.54	+7%	+6%
Latin America Foods	$2.55	+6%	+16%
Asia Pacific Foods	$1.00	—	-13%

KPIs and other items

Organic revenue growth: +2.1% (Q2); Year-to-date +1.7% .
FX impact: ~-1.5 pp on net revenue and ~-2 pp on EPS in Q2 .
Core constant-currency EPS change: -5% (Q2); -4.5% YTD .
YTD operating cash flow: $0.996B (24 weeks) .

Guidance Changes

Metric	Period	Previous Guidance	Current Guidance	Change
Organic revenue growth	FY 2025	Low-single-digit (Q4’24)	Low-single-digit (Q2’25)	Maintained
Core constant-currency EPS growth	FY 2025	Mid-single-digit increase (Q4’24) → Approximately even (Q1’25)	Approximately even (Q2’25)	Lowered in Q1; maintained in Q2
FX translation headwind to reported revenue and Core EPS	FY 2025	~3 pp (Q4’24) and (Q1’25)	~1.5 pp (Q2’25)	Improved
Core effective tax rate	FY 2025	~20% (Q4’24)	~20% (Q2’25)	Maintained
Total cash returns	FY 2025	~$8.6B (Div $7.6B; Buybacks $1.0B) (Q4’24)	~$8.6B (Div $7.6B; Buybacks $1.0B) (Q2’25)	Maintained
Implied Core EPS y/y	FY 2025	Low-single-digit increase (Q4’24) → ~-3% (Q1’25)	~-1.5% (Q2’25)	Improved in Q2

Additionally, the Board declared a quarterly dividend of $1.4225 per share (payable Sep 30, 2025), consistent with the annualized dividend increase to $5.69 set earlier in 2025 .

Earnings Call Themes & Trends

Topic	Previous Mentions (Q4 2024, Q1 2025)	Current Period (Q2 2025)	Trend
North America integration & productivity	Q1: Guidance reduced to flat core CC EPS given tariffs, macro, Frito softness; productivity to fund investments .	2H productivity +70% vs 1H; right-sizing assets (plant closures, lines), procurement/ERP-enabled savings .	Execution ramping, higher 2H savings
Value/affordability & price-pack	Q1: More granular value, entry points, smaller packs, channel tactics .	Continued emphasis on value (by channel/pack/time-of-month) to stabilize category and improve share .	Ongoing; focused targeting
Away-from-home channel	Q1: Highlighted as a growth vector .	“Very sizable” and margin-accretive in both foods and beverages; up high-single-digits in PBNA .	Strengthening
International growth	Q1: Mid-single-digit growth engine; China softer; India/Brazil strong .	Continued momentum; beverages led by Pepsi No Sugar, energy (Sting), hydration (Gatorade) .	Sustained driver
Beverages portfolio (Pepsi Zero, Gatorade, Energy)	Q1: Pepsi share gains; Gatorade regaining share; energy via partnerships (Celsius), JV Starbucks .	Pepsi colas improving (no-sugar focus), sports regain; long-term energy strategy mix of ownership, JVs, distribution .	Positive
Permissible snacks/ingredient roadmap	Q1: >60% of foods w/o artificial colors; portfolio transformation ongoing .	Permissible snacks >$2B; relaunching Lay’s/Tostitos with no artificials; Simply restage traction .	Accelerating
Protein initiatives	Noted as a whitespace in Q1 (GLP-1 context) .	“Big launches” in liquid protein in Q4/Q1; expanding functional foods (protein/fiber) .	New growth vector
AI/technology enablement	Ongoing ERP/data investments .	Expanded Salesforce Agentforce collaboration to deploy AI agents for GTM, service, TPM .	Scaling AI ops
Tariffs/macro	Q1: Tariffs drove guidance cut; mitigation underway .	Tariff mitigations factored; confidence in back half .	Managed headwind

Management Commentary

CEO framing: “We’re encouraged by the acceleration in our net revenue growth… International business momentum continued, while our North America businesses improved their execution and competitiveness” .
North America strategy: Integration of ~$30B foods and ~$30B beverages value chains to lower cost-to-serve and unlock growth; “multi-year opportunity” .
Success definition: “Sequential improvement of our top line, sequential improvement of our share… goal to be back at the low end of our algorithm in top line over the next few quarters” .
Away-from-home: “Very sizable… margin accretive for both beverages and snacks… will put more resources against that channel” .
Protein launches: “We will be participating in the liquid protein space… superior propositions… no artificials… Q4 and Q1” .

Q&A Highlights

Productivity and asset footprint: Company targeting broader fixed cost deleverage and procurement/ERP-enabled savings; two plant closures, ability to flex workforce/lines as volume returns; high confidence in 2H ramp .
North America categories: Stabilize snacks category; relaunch Lay’s/Tostitos (no artificials), improve potato chips; strong momentum in Doritos/Cheetos; continue no-sugar colas, sports hydration (Gatorade), and away-from-home availability .
International beverages: Strategy anchored on Pepsi No Sugar, energy (Sting), and hydration (Gatorade) with improved bottler execution and global platforms (F1, Champions League) .
Value/affordability tactics: Highly granular by channel/pack/timing (beginning vs end-of-month); meal deals to lift convenience store incidence .
Guidance confidence: FX headwind moderating; back-half improvement supported by identified productivity actions and tariff mitigation .

Estimates Context

Period	Revenue Actual ($B)	Revenue Consensus ($B)	EPS Actual	EPS Consensus
Q2 2025	$22.73	$22.30*	$2.12 (Core)	$2.03*
Q1 2025	$17.92	$17.73*	$1.48 (Core)	$1.49*
Q4 2024	$27.78	$27.89*	$1.96 (Core)	$1.94*

Q2 2025: Beat on revenue and Core EPS. Q1 2025: slight Core EPS miss, revenue beat. Q4 2024: Core EPS beat, slight revenue miss. Values marked with * retrieved from S&P Global.

Key Takeaways for Investors

FX headwinds are easing (to ~1.5 pp), improving FY25 core EPS outlook to ~-1.5% y/y from ~-3%; sustained international momentum plus 2H productivity ramp are the key supports .
Watch NA execution: share/top-line sequential improvement with foods relaunches (Lay’s/Tostitos) and continued beverages strength (Pepsi Zero Sugar, Gatorade); away-from-home remains a high-ROI, margin-accretive channel .
Non-GAAP vs GAAP gap: large non-cash impairments drove GAAP EPS compression; Core margins held up (Core OP margin 17.2% in Q2) underscoring underlying profitability .
Near-term trading setup: beat/FX-improved guidance and visibility into 2H productivity could support sentiment; monitor tariff developments and PFNA stabilization pace .
Medium-term thesis: International beverages platforms (No Sugar, Energy, Hydration) and functional/protein launches broaden growth vectors; continued AI/ERP/data investments should compound productivity and commercial precision .
Capital returns intact: ~$8.6B planned for FY25; dividend increased (recent $1.4225/quarter declared) supports defensiveness .
Risk checks: Asia Pacific Foods and EMEA reported OP volatility; PFNA organic -2% remains a watch item; macro/tariffs still variables albeit better managed .

Citations: All company results and commentary are sourced from PepsiCo’s Q2 2025 Form 8-K and exhibits -, Q2 2025 earnings call transcript -, Q1 2025 8-K and transcript - -, Q4 2024 8-K -, and relevant press releases .
Estimates marked with * are retrieved from S&P Global.