PepsiCo (PEP) Q1 2025 earnings summary

Executive summary

• Q1 2025 net revenue was $17.9B, down 1.8% year-over-year, with organic revenue growth of 1.2% and international business leading at 5% organic growth; foreign exchange reduced results by 3 percentage points.

• Net income attributable to PepsiCo was $1.83B, a 10% decrease year-over-year; diluted EPS was $1.33 (GAAP), down from $1.48, and core (non-GAAP) EPS was $1.48, down 4%.

• Results reflect ongoing execution of a multi-pillar strategy focused on value investments, portfolio transformation, and operational excellence, with international business as the primary growth engine.

• Guidance for 2025 was revised downward, with core constant currency EPS now expected to be flat year-over-year (previously mid-single-digit growth), mainly due to tariffs, supply chain costs, and macroeconomic uncertainty.

• Major acquisitions included Siete for $1.2B (closed) and a pending $1.95B deal for poppi, both expected to strengthen the portfolio.

Financial highlights

• Gross profit was $9.99B, nearly flat year-over-year; gross margin improved to 55.8% from 54.8% in Q1 2024.

• Operating profit for Q1 2025 was $2.58B, down from $2.72B in Q1 2024; operating margin declined to 14.4%.

• Free cash flow for the quarter was $(1.44)B, reflecting significant acquisition and capital spending; cash and cash equivalents at quarter-end were $8.3B.

• Dividend per share increased 5% to $5.69 annualized, with $1.88B in dividends and $183M in share repurchases returned to shareholders.

• Net cash used for operating activities in Q1 2025 was $318M; capital spending was $603M.

Outlook and guidance

• Fiscal 2025 outlook maintained for low-single-digit organic revenue growth; core constant currency EPS now expected to be flat year-over-year, with a projected 3% decline in core EPS versus 2024.

• Total cash returns to shareholders in 2025 expected at $8.6B ($7.6B dividends, $1.0B share repurchases); annualized dividend per share to increase 5% in June 2025.

• Foreign exchange expected to negatively impact reported net revenue and core EPS by about 3 percentage points.

• Ongoing productivity initiatives and cost management are expected to partially offset inflationary and FX pressures.