Key Takeaways
- Revenue surpassed expectations at $24.18B compared to the $23.97B forecast, marking a 6.4% year-over-year increase
- Adjusted earnings per share reached $2.20, falling $0.01 short of the $2.21 analyst projection
- International markets fueled growth with food volumes rising 3% and beverage volumes climbing 2% worldwide
- Domestic performance disappointed with stagnant food volumes and a 4% decline in beverage volumes in North America
- Company maintained full-year outlook: 2%-4% organic revenue growth and 4%-6% core EPS expansion
PepsiCo delivered mixed second-quarter results Thursday, exceeding revenue projections while narrowly falling short on earnings. Shares climbed 1% in response to the announcement.
The beverage and snack giant reported quarterly revenue of $24.18 billion, exceeding Wall Street’s $23.97 billion estimate and representing a 6.4% jump from the prior year’s $22.73 billion. Adjusted earnings per share stood at $2.20, missing the consensus target of $2.21 by a single cent.
Organic revenue expansion reached 2.4% during the quarter. This metric excludes the effects of mergers, acquisitions, asset sales, and currency fluctuations, providing clearer insight into underlying business momentum.
The company’s net income attributable to shareholders totaled $2.98 billion, translating to $2.18 per share. This marked a significant improvement from $1.26 billion, or 92 cents per share, reported in the comparable quarter last year.
Core operating profit advanced 4% to $4.07 billion. Despite this growth, core operating margin compressed by 40 basis points to 16.8%.
Chief Executive Ramon Laguarta highlighted that global organic volume growth has accelerated to its strongest pace since 2022 year-to-date. He attributed this momentum to robust international performance and strategic portfolio enhancements, including expanded offerings in portion-controlled packages, functional beverage categories, and zero-sugar alternatives.
Domestic Market Weakness Weighs on Performance
The domestic picture proved considerably less promising. Food volumes in North America remained unchanged during the quarter, while beverage volumes contracted 4%.
Chief Financial Officer Steve Schmitt acknowledged the underperformance, noting that North American operations came in “softer than we anticipated.” He indicated the company now anticipates a “more gradual improvement” in domestic trends throughout the remainder of the fiscal year.
Laguarta cited squeezed consumer purchasing power as a significant headwind. Gasoline prices surged to a four-year peak of $4.56 per gallon in late May amid volatility in international oil markets connected to U.S.-Iran tensions, prompting shoppers to reduce discretionary spending.
Pepsi has been grappling with sustained weakness in its domestic snack portfolio. Earlier in February, the corporation implemented price reductions of up to 15% across major brands including Lay’s, Tostitos, Doritos, and Cheetos in an effort to recapture consumer interest.
The company has simultaneously undertaken brand revitalization initiatives for flagship products such as Gatorade and Lay’s to stimulate sales momentum. These efforts have yielded gradual results thus far.
Overseas Markets Compensate for Domestic Shortfall
Beyond American borders, performance demonstrated strength across all regions. The Asia Pacific Foods division, International Beverages Franchise operations, and the Europe, Middle East and Africa segment all registered positive organic volume growth.
The North American beverages division received some support from strategic acquisitions completed in 2025, which bolstered overall revenue expansion despite persistent softness in core demand.
Vital Knowledge analysts characterized the quarterly report as “mostly an inline/boring report,” though they observed that underlying details “skew net negative” given margin pressure and weakness across both food and beverage categories in North America.
PepsiCo confirmed its full-year 2026 guidance remains unchanged: organic revenue growth between 2% and 4%, with core constant currency earnings per share growth of 4% to 6%. Factoring in favorable foreign exchange impacts, the midpoint suggests core EPS growth of 5% to 7%.
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