PepsiCo Delivers Revenue Beat in Second Quarter
PepsiCo (NASDAQ:PEP) reported second-quarter results that exceeded revenue expectations, although adjusted earnings per share came in just below Wall Street forecasts. Investors reacted positively, sending the stock around 1% higher following the announcement.
Adjusted earnings were $2.20 per share, narrowly missing analysts’ consensus estimate of $2.21 by one cent. Revenue rose to $24.18 billion, ahead of expectations for $23.97 billion and up 6.4% from $22.73 billion a year earlier.
Organic revenue increased 2.4%, supported by pricing actions and stronger sales volumes across both the company’s global snacks and beverages businesses.
International Operations Continue to Drive Growth
“Our second quarter results featured strong organic volume and net revenue growth for the global convenient foods and global beverages businesses,” said Chairman and CEO Ramon Laguarta. “Year-to-date, PepsiCo’s global organic volume has increased at the highest rate since 2022 – aided by the strength of the international business and the continued evolution of the portfolio to offer more choices through portion control varieties, diverse ingredients, functional benefits such as hydration, protein and fiber, energy and zero sugar beverage varieties.”
International markets remained a key growth engine during the quarter, with all major regions reporting healthy revenue expansion. Asia Pacific Foods, International Beverages Franchise, and Europe, Middle East and Africa all posted higher organic volumes.
In North America, the convenient foods division expanded its volume market share through product innovation and value-focused initiatives, while the beverages business benefited from acquisitions completed in 2025.
Margins Narrow Despite Profit Growth
Core operating profit increased 4% year over year to $4.07 billion. However, core operating margin slipped by 40 basis points to 16.8%, reflecting ongoing cost pressures.
Full-Year Outlook Unchanged
PepsiCo maintained its guidance for fiscal 2026, continuing to forecast organic revenue growth of between 2% and 4%, alongside core constant-currency earnings per share growth of 4% to 6%.
Including the expected benefit from foreign exchange, the midpoint of the company’s outlook implies core EPS growth of roughly 5% to 7%, broadly in line with market expectations.
Following the earnings release, analysts at Vital Knowledge described the update as “mostly an inline/boring report, although the details skew net negative, with the Y/Y drop in margins and softness in North America organic revenue (both food and beverages).”