PepsiCo (PEP) Q2 2025 earnings summary

Executive summary

• Net revenue for Q2 2025 was $22.7B, up 1% year-over-year, with organic revenue up 2.1% and core EPS at $2.12, down 5% in constant currency terms.

• Operating profit fell 56% due to $1.9B in impairment charges, higher costs, and restructuring expenses, with net income dropping 59% to $1.26B.

• International business delivered 6% organic revenue growth and 9% core constant currency operating profit growth, while North America improved execution and competitiveness.

• Major acquisitions of Siete ($1.2B) and poppi ($1.95B) expanded the PFNA and PBNA segments.

• Focus on multi-year productivity initiatives, automation, and digitalization to optimize cost structure and drive growth.

Financial highlights

• Q2 2025 net revenue: $22.7B (+1% year-over-year); YTD net revenue: $40.6B (down 0.3%).

• Operating profit: $1.8B for the quarter (-56% year-over-year); net income: $1.26B for the quarter (-59%).

• Gross margin for Q2 2025: 54.7%; operating margin: 7.9%.

• Free cash flow for 24 weeks was negative $342M, down from negative $259M a year ago.

• Propel exceeded $1B in annual retail sales; Sun Chips expected to surpass $700M in 2025.

Outlook and guidance

• Management reaffirms low-single-digit organic revenue growth and stable core constant currency EPS for 2025.

• Total cash returns to shareholders projected at $8.6B ($7.6B dividends, $1.0B share repurchases).

• Foreign exchange headwind for 2025 expected at 1.5 percentage points.

• Continued investment in technology, value, and away-from-home channels to support long-term growth.

• Core annual effective tax rate expected at ~20%.