Key Highlights
- The beverage and snack giant delivered adjusted earnings per share of $1.61, surpassing the Street’s $1.55 projection.
- Quarterly revenue reached $19.44 billion, exceeding analyst forecasts of $18.94 billion.
- Frito-Lay North America posted 2% volume expansion — marking the first positive growth in over 24 months — following strategic price reductions on popular chip brands.
- Management reaffirmed full-year organic revenue outlook of 2%–4% expansion, alongside EPS growth projections of 4%–6%.
- Executives cautioned about heightened economic volatility stemming from Middle East conflicts.
PepsiCo delivered first-quarter financial performance Thursday that exceeded analyst projections, with its struggling Frito-Lay North American division demonstrating meaningful improvement for the first time in years.
The company posted adjusted profit of $1.61 per share, comfortably above the Wall Street consensus of $1.55. Total revenue of $19.44 billion likewise topped the $18.94 billion expectation.
Net earnings attributable to shareholders increased to $2.33 billion from $1.83 billion in the prior-year period. That translates to $1.70 per share compared with $1.33 a year earlier.
Total net sales advanced 8.5% compared to the year-ago quarter, partially driven by the Poppi acquisition and expanded distribution of Alani Nu energy beverages. When excluding mergers, acquisitions, divestitures, and foreign exchange fluctuations, organic revenue expanded 2.6%.
Shares moved approximately 0.8% higher in pre-market activity following the earnings release.
Frito-Lay Division Returns to Positive Territory
In a significant milestone, Pepsi’s North American foods segment — encompassing Frito-Lay and Quaker Oats brands — recorded positive volume growth for the first time since early 2022. Unit volume increased 2% during the three-month period.
This represents a meaningful reversal. The business had faced persistent headwinds following the 2022 inflation surge, as aggressive price increases drove cost-conscious consumers toward value-oriented competitors. In response, the company implemented price rollbacks of up to 15% on flagship brands including Lay’s, Tostitos, Doritos, and Cheetos in February. Initial results indicate the strategy is gaining traction.
The North American beverage portfolio presented a contrasting picture, with volumes declining 2.5% in the quarter. This segment encompasses Pepsi-Cola, Starry, and the recently acquired Poppi brand.
Regarding the Gatorade franchise, management outlined Thursday a multi-pronged revitalization strategy: expanding marketing beyond traditional athletic demographics, introducing reduced-sugar formulations, and eliminating artificial colorings from products.
The company is also capitalizing on consumer demand for enhanced nutrition. Recent innovations include Pepsi Prebiotic, Starbucks Coffee & Protein beverages, Doritos Protein chips, and fiber-enriched SunChips varieties.
Full-Year Outlook Maintained Amid Uncertainty
Management maintained its fiscal year guidance without adjustment. The company continues to anticipate organic revenue growth of 2% to 4%, with core constant currency earnings per share expanding 4% to 6%.
However, executives emphasized mounting headwinds. Leadership specifically highlighted ongoing geopolitical tensions — particularly Middle Eastern conflicts — as contributing to heightened economic unpredictability.
“The macroeconomic environment has become more volatile and uncertain because of ongoing geopolitical conflicts,” the company said in prepared remarks.
Regarding input expenses, management indicated that existing commodity hedging arrangements should offer short-term insulation for select raw materials. Escalating energy and packaging expenses linked to supply chain disruptions remain areas of concern.
CEO Ramon Laguarta struck a measured tone, saying the company was “encouraged with the resilience of the International business” while North America “continued to make progress.”
PEP shares have appreciated approximately 9% over the trailing twelve months — substantially underperforming the S&P 500’s 29% gain during the comparable timeframe.
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