Did Philip Morris beat earnings in Q4 2025?

Yes. Philip Morris reported Q4 2025 adjusted diluted EPS of $1.70, up 9.7% YoY from $1.55, continuing its streak of outperformance. Revenue grew 6.8% to $10.4B.

How is Philip Morris's smoke-free business performing?

The smoke-free business delivered exceptional growth—revenues up 15% for FY2025 to $16.9B, now representing 41.5% of total revenue and ~43% of gross profit. ZYN nicotine pouches grew 37% in the U.S.

What is Philip Morris's 2026 guidance?

PMI guided 2026 adjusted diluted EPS of $8.38-$8.53, representing 11-13% growth. They also announced 2026-2028 targets: 6-8% organic revenue growth, 8-10% organic operating income growth, and 9-11% adjusted EPS growth.

What is ZYN Ultra and when will it launch?

ZYN Ultra is PMI's pending higher-strength nicotine pouch product (9mg+) with adult-oriented flavors, designed to compete in the fastest-growing U.S. category segment. It's in the FDA pilot program and PMI has it ready to launch immediately upon authorization.

Philip Morris International (PM)·Q4 2025 Earnings Summary

Philip Morris Delivers Another Beat as Smoke-Free Business Hits 42% of Revenue

February 6, 2026 · by Fintool AI Agent

Philip Morris International reported Q4 2025 results that extended its remarkable transformation streak. Adjusted EPS of $1.70 grew 9.7% year-over-year, while net revenues increased 6.8% to $10.4 billion. The smoke-free business now generates 41.5% of total net revenues—up nearly 3 percentage points from last year—as IQOS and ZYN continue to capture share from combustible cigarettes.

Management also unveiled ambitious 2026-2028 growth targets and announced a new segment reporting structure that splits the business into International Smoke-Free, International Combustibles, and U.S. segments, reflecting the strategic importance of the U.S. nicotine pouch market.

Did Philip Morris Beat Earnings?

PMI delivered its fifth consecutive year of volume growth, beating on all major metrics:

Metric	Q4 2025	Q4 2024	YoY Change
Net Revenues	$10.4B	$9.7B	+6.8%
Adjusted Operating Income	$3.7B	$3.5B	+5.8%
Adjusted Diluted EPS	$1.70	$1.55	+9.7%
Smoke-Free Revenue	$4.4B	$3.9B	+12.0%

For the full year 2025, adjusted diluted EPS reached $7.54, up 14.8% from $6.57 in 2024, or 14.2% on a currency-neutral basis. This marks the second consecutive year of delivering the company's three-year CAGR targets in just two years.

8-Quarter Beat Streak: PMI has consistently exceeded expectations, with EPS growing from $1.36 in Q4 2023 to $1.70 in Q4 2025—a 25% cumulative increase.

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What Did Management Guide?

Management provided robust 2026 guidance and unveiled new three-year growth targets:

2026 Guidance

Metric	2026 Forecast	vs 2025
Adjusted Diluted EPS	$8.38 - $8.53	+11.1% to +13.1%
Organic Net Revenue Growth	5% - 7%	--
Organic Operating Income Growth	7% - 9%	--
Operating Cash Flow	~$13.5B	--
Capital Expenditures	$1.4B - $1.6B	--

Q1 2026 Preview: Adjusted diluted EPS of $1.80-$1.85, including an estimated favorable currency impact of 14 cents.

New 2026-2028 Growth Targets

With 2024-2026 targets set to be achieved ahead of schedule, PMI announced new compound annual growth targets for 2026-2028:

Net Revenues (Organic): 6% - 8% CAGR
Operating Income (Organic): 8% - 10% CAGR
Adjusted Diluted EPS (ex-currency): 9% - 11% CAGR

These targets assume current corporate income tax rates and no share repurchases, providing upside optionality if either changes.

What Changed From Last Quarter?

The Smoke-Free Transformation Accelerates

Smoke-Free Progress

The most significant development is the continued shift toward smoke-free products (SFP):

Smoke-Free Metric	FY 2025	FY 2024	Change
SFP Net Revenues	$16.9B	$14.7B	+15.0%
SFP Gross Profit	$11.7B	$9.7B	+20.3%
% of Total Revenue	41.5%	38.7%	+2.8pp
% of Total Gross Profit	~43%	~40%	+3.2pp
Estimated SFP Users	43M+	~38.5M	+4.5M

Key Product Highlights

IQOS (Heat-Not-Burn):

HTU shipments: 155B units (+11.0% YoY)
~76% global HTU category volume share
Japan: HTU category exceeded 50% of total nicotine offtake in December
IQOS now #1 volume share in 13 markets; #2 nicotine brand where present

ZYN (Nicotine Pouches):

U.S. shipments: 794M cans FY2025 (+37% YoY)
Q4 shipments: 196M cans (+19%), offtake +23%
~2/3 U.S. value share with premium positioning
Now available in 55 markets internationally

VEEV (E-Vapor):

Shipment volumes more than doubled FY YoY
Now in 47 markets, #1 volume share in closed pods in 8 markets

Combustibles: Managed Decline

Combustible cigarette volumes declined 1.5% for the year and 2.2% in Q4, but strong pricing drove revenue growth:

Combustibles	FY 2025	FY 2024	Change
Shipment Volume	607B units	617B units	-1.5%
Net Revenues	$23.8B	$23.2B	+2.5%
Gross Profit	$15.6B	$14.8B	+5.2%

Marlboro reached a record high 11.0% global cigarette category share in Q4.

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How Did the Stock React?

Metric	Value
Previous Close	$180.39
Intraday High	$184.40
Close	$182.00 (+0.9%)
Aftermarket	$179.00 (-1.6% from close)
52-Week Range	$142.11 - $186.69
Market Cap	$283B

The stock traded up during regular hours but drifted lower in the aftermarket, suggesting mixed investor sentiment. The muted reaction may reflect that much of the transformation story was already priced in—PM shares are up ~28% over the past 12 months and trading near all-time highs.

Regional Performance

Region	Q4 Revenue	YoY Change	Organic Growth	Key Driver
Europe	$4.6B	+11.0%	+5.1%	IQOS growth in Italy, Germany
SSEA, CIS & MEA	$3.1B	+8.4%	+6.5%	Strong combustible pricing
EA, AU & GTR	$1.4B	-0.6%	+1.0%	Japan IQOS share gains offset by volume decline
Americas	$1.2B	-2.5%	-4.4%	ZYN promo comp, higher investment spending

Americas Headwind: The organic revenue decline reflects an unfavorable comparison to low ZYN promotional activity in Q4 2024, plus higher marketing and R&D investments to build U.S. capabilities. Notably, U.S. nicotine pouches retain gross margins superior to international SFP.

New Segment Reporting

Effective January 1, 2026, PMI will report in three new segments:

International Smoke-Free — Global smoke-free products (ex-U.S.)
International Combustibles — Global combustible tobacco (ex-U.S.)
U.S. — All U.S. operations (primarily ZYN)

This replaces the previous four geographic segments and reflects the strategic importance of the U.S. nicotine pouch opportunity. Historical data for 2023-2025 will be restated before Q1 2026 reporting.

Capital Allocation

Item	2025	2024	Commentary
Operating Cash Flow	$12.2B	$12.2B	Flat YoY
Quarterly Dividend	$1.47/share	$1.30/share	+13%
Net Debt / Adj. EBITDA	2.53x	2.66x	Targeting ~2.0x by end of 2026
Share Repurchases	None	None	Not planned for 2026

Management is prioritizing debt reduction over buybacks, targeting a Net Debt/EBITDA ratio close to 2.0x by year-end 2026, down from 2.53x currently.

Key Quotes From Management

Jacek Olczak, Group CEO:

"We achieved another remarkable year of results in 2025, with a fifth consecutive year of volume growth, net revenues surpassing $40 billion, including close to $17 billion from our smoke-free business, and very good operating margin expansion."

"With excellent results in 2024 and 2025, we have delivered our three-year CAGR targets on operating income and EPS in just two years. With another strong performance expected in 2026, we are on track to outperform our 2024-2026 growth algorithm."

Q&A Highlights

ZYN Ultra FDA Catalyst

Management emphasized they have ZYN Ultra ready to launch immediately pending FDA authorization. ZYN Ultra includes higher nicotine strengths (9mg and higher) and adult-oriented flavors, addressing a portfolio gap versus competitors in the fastest-growing segment of the U.S. nicotine pouch market.

"We have developed and are preparing to launch innovation to address a broad spectrum of consumer preferences. We have a number of pending ZYN submissions before the FDA, including ZYN Ultra, which is included in the FDA's pilot program."

Ferrari/F1 Global Partnership

PMI announced a global partnership with Ferrari in Formula 1 for ZYN, leveraging F1's overwhelmingly adult audience to build premium brand equity responsibly.

"Formula 1's overwhelmingly adult audience provides a highly impactful platform to engage consumers responsibly and reinforce ZYN's premium equity."

Japan Excise Tax Impact

Management provided specifics on Japan's two-step excise increase for heat-not-burn products in 2026 (April and October):

Price impact: JPY 50-100 per pack increase (10-20% of current retail prices)
Lower-priced products face the greatest impact
Some volume volatility expected around April and October increases
Category growth expected to resume in 2027 when cigarettes face similar tax treatment

Cost Savings & AI

PMI has achieved $1.5B in gross cost savings since 2024, with $2B targeted by end of 2026. Approximately 60% comes from COGS and 40% from back-office/G&A. AI is expected to be "an engine for more efficiency and cost performance in the future."

Taiwan Launch Success

IQOS achieved approximately 4% offtake share in Taiwan in just a few weeks following launch, described as "quite an achievement" and a promising start for the market.

New York State Pouch Tax Risk

When asked about New York's proposed excise tax on nicotine pouches, management called it "counterproductive to the health benefit for nicotine or smokers these products provide" and noted state actions don't necessarily translate to other states.

Risks & Watchpoints

Regulatory Uncertainty: Marketing restrictions, flavor bans, or tax discrimination against smoke-free products could disrupt commercialization
U.S. Margin Pressure: The Americas segment saw operating income decline 43% organically in Q4 due to ZYN promotional investments—sustainable margin expansion in the U.S. remains unproven
Turkey & India Weakness: Lower industry volumes in Turkey and India are expected to continue impacting 2026 cigarette shipments
Currency Headwinds: While 2026 guidance assumes a favorable currency impact of $0.27, volatility remains a risk
Competition Intensifying: In Japan, IQOS faces "intensifying competition" despite maintaining ~70% HTU category share

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The Bottom Line

Philip Morris delivered another strong quarter that validates its smoke-free transformation thesis. With 41.5% of revenue now from reduced-risk products, ~43 million users, and a clear path to majority smoke-free revenue, PMI has successfully pivoted from a traditional tobacco company to a consumer nicotine platform.

The new 2026-2028 growth targets (9-11% EPS CAGR) are achievable if IQOS and ZYN maintain momentum. The key debate shifts to whether the premium valuation is justified and whether U.S. margins can improve as ZYN scales.

For the full earnings release and management commentary, see the Q4 2025 8-K filing.