PepsiCo (PEP) Q2 2026 earnings summary

Executive summary

• Net revenue grew 7% in the first half of 2026 and 6.4% in Q2, driven by strong international performance, effective pricing, productivity savings, and favorable foreign exchange, with global convenient foods and beverages volumes up 3% and 2% respectively.

• EPS increased 6% in the first half and surged 137% in Q2, primarily due to prior-year impairment charges, productivity initiatives, and lower restructuring costs.

• U.S. foods business returned to volume growth and gained share, while North America convenient foods gained volume share but saw net revenue decline due to lower effective net pricing.

• International business remains a key growth driver, with 7% organic revenue growth, margin expansion, and share gains in snacks and beverages across multiple countries.

• Fiscal 2026 financial guidance reaffirmed.

Financial highlights

• Net revenue grew 7% in the first half and reached $43.6B year-to-date, with Q2 net revenue at $24.2B (up 6.4% year-over-year).

• Operating profit surged 125% in Q2 and 65% year-to-date, with gross margin improving to 54.2% in Q2 and 54.7% year-to-date.

• Core EPS increased 4% in Q2 and 6% year-to-date; core constant currency EPS up 1% in Q2 and 3% year-to-date.

• Free cash flow for the half-year was $1.17B, up from negative $342M in the prior year.

• Cash and cash equivalents at period end were $10.3B, up from $7.7B a year ago.

Outlook and guidance

• Fiscal 2026 guidance reaffirmed: organic revenue growth expected between 2–4%, core constant currency EPS growth 4–6%, and net revenue growth implied in the range of 4–6%.

• Total cash returns to shareholders projected at $8.9B, including $7.9B in dividends and $1B in share repurchases.

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

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

• Tariff refund claims to contribute about 1 point of EPS growth for the year, helping offset commodity inflation.