Key Highlights
- PepsiCo surpassed Q1 earnings projections with adjusted EPS of $1.61 versus the $1.55 consensus.
- Quarterly revenue reached $19.44 billion, exceeding analyst forecasts of $18.94 billion.
- North American food volumes increased 2% — marking the first positive growth in more than two years — following strategic price reductions on brands like Doritos, Lay’s, and Cheetos.
- The company reaffirmed its full-year organic revenue growth outlook of 2%–4%, with EPS expected to rise 4%–6%.
- Management highlighted increased economic volatility stemming from ongoing Middle East conflicts.
PepsiCo delivered first-quarter financial results on Thursday that exceeded analyst expectations, with its North American food segment posting its first volume increase in over two years.
The beverage and snack giant reported adjusted earnings per share of $1.61, surpassing the Street consensus of $1.55. Quarterly revenue of $19.44 billion also came in above the anticipated $18.94 billion.
Net income attributable to PepsiCo reached $2.33 billion, compared to $1.83 billion in the year-ago period. On a per-share basis, earnings were $1.70, up from $1.33 last year.
Net sales increased 8.5% compared to the prior year, boosted by the Poppi acquisition and expanded distribution of Alani Nu energy drinks. When accounting for acquisitions, divestitures, and foreign exchange impacts, organic revenue growth came in at 2.6%.
Shares moved approximately 0.8% higher in premarket activity following the earnings release.
Food Division Shows Renewed Strength in North America
Pepsi’s North American food business — encompassing Frito-Lay and Quaker Oats products — recorded volume growth of 2% during the quarter. This represents the first time in more than two years that Pepsi’s domestic food segment has posted positive volume figures.
This marks a significant reversal for the division, which had faced headwinds since 2022 when inflation forced the company to implement successive price increases. Those hikes prompted cost-conscious consumers to shift toward lower-priced alternatives. In response, PepsiCo reduced prices on popular chips including Lay’s, Tostitos, Doritos, and Cheetos by as much as 15% this February. The strategy appears to be yielding results.
The North American beverage segment, however, experienced a 2.5% volume decline. This unit encompasses brands like Pepsi, Starry, and the recently acquired Poppi.
To reinvigorate Gatorade sales, the company announced plans Thursday to broaden marketing efforts beyond athletic consumers, introduce a reduced-sugar formula, and phase out artificial coloring.
PepsiCo is also capitalizing on consumer demand for protein and fiber-enriched products. Recent launches include Pepsi Prebiotic, Starbucks Coffee & Protein, Doritos Protein, and SunChips Fiber.
Annual Outlook Maintained Despite Economic Headwinds
The company kept its full-year projections intact, continuing to forecast organic revenue growth of 2% to 4% and core constant currency EPS growth of 4% to 6%.
However, executives acknowledged a more challenging operating environment. The company specifically pointed to ongoing geopolitical tensions — especially the Middle East conflict — as contributors to heightened economic uncertainty.
“The macroeconomic environment has become more volatile and uncertain because of ongoing geopolitical conflicts,” the company said in prepared remarks.
Regarding input costs, management indicated that commodity hedging strategies should offer near-term protection for certain materials. However, elevated energy and packaging expenses resulting from 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 stock has appreciated roughly 9% over the trailing 12-month period — significantly lagging the S&P 500’s 29% gain during the same timeframe.
