PepsiCo (PEP) Q4 2025 earnings summary

Executive summary

• Accelerated affordability and innovation initiatives in North America are driving volume and sales growth, with a focus on low and middle-income consumers and brand restaging for Lay's, Tostitos, Gatorade, and Quaker.

• Fourth quarter 2025 saw sequential acceleration in reported and organic revenue growth, strong operating margin expansion, and double-digit EPS growth year-over-year.

• Productivity savings are being reinvested into commercial and brand investments, supporting competitiveness and financial trajectory.

• Management affirmed 2026 financial guidance and announced a 4% increase in the annualized dividend, marking the 54th consecutive annual increase.

• Double-digit shelf space gains for Frito-Lay are expected from March/April resets, supporting category and company growth.

Financial highlights

• Q4 2025 net revenue increased 5.6% year-over-year; full-year net revenue rose 2.3%.

• Q4 reported EPS was $1.85 (up 68% year-over-year); full-year reported EPS was $6.00 (down 14%).

• Q4 core EPS was $2.26 (up 11%); full-year core EPS was $8.14.

• International business delivered 4.5% organic revenue growth for 2025; Beverages up 7%, Foods up 3.5%.

• Productivity gains in Q4 2025 are expected to carry over and help fund commercial and innovation investments.

Outlook and guidance

• 2026 organic revenue expected to increase 2–4%; core constant currency EPS to rise 4–6%.

• Dividend to increase 4% in June 2026; $1B in share repurchases planned, total cash returns to shareholders ~$8.9B.

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

• Sales growth is projected to strengthen in the second half of 2026 as new initiatives and acquisitions gain traction.

• Foreign exchange translation expected to provide a 1 percentage point tailwind to reported net revenue and core EPS growth.