PepsiCo (PEP) Q1 2026 earnings summary

Executive summary

• Net revenue grew 8.5% to $19.4 billion, with organic revenue up 2.6% and strong gains in North America Foods, Beverages, and international markets; operating profit rose 24% to $3.2 billion, and diluted EPS increased 27% to $1.70, driven by productivity, FX, and acquisitions.

• Core EPS rose 9% to $1.61, with core constant currency EPS up 5%; free cash flow improved to $(393) million from $(1,444) million prior year.

• Growth was supported by effective net pricing, innovation, and robust supply chain execution, with no significant demand impact from geopolitical conflicts.

• Major acquisitions (poppi, Siete, Alani Nu) and productivity initiatives contributed to performance.

• Fiscal 2026 guidance affirmed, with a 4% dividend increase and a new $10 billion share repurchase program announced.

Financial highlights

• Gross profit increased to $10.7 billion, with gross margin at 55.6%; operating margin expanded to 16.5% from 14.4% year-over-year.

• Core operating profit rose 9% to $3.05 billion; core operating margin up 10 basis points to 15.7%.

• Net income attributable to shareholders rose to $2.33 billion; free cash flow conversion ratio targeted at 80%+.

• Capital spending was $447 million, down from $603 million year-over-year.

• Foreign exchange translation provided a 3.4 percentage point benefit to net revenue.

Outlook and guidance

• Fiscal 2026 guidance affirmed: organic revenue growth of 2–4%, core constant currency EPS growth of 4–6%, and net revenue growth of 4–6%.

• Total cash returns to shareholders projected at $8.9 billion, including a 4% dividend increase and $1 billion in share repurchases.

• Capital spending to remain below 5% of net revenue; free cash flow conversion ratio at least 80%.

• No material impact from geopolitical conflicts assumed in guidance.

• Sequential improvement expected in North America Foods, with continued volume and organic revenue growth anticipated.