Mixed: PepsiCo beats Q3, but North America volumes fall and guidance stays flat
Verdict: Average (Mixed). PepsiCo beat Q3 estimates, but U.S. demand slipped and full‑year guidance stayed essentially flat.
Q3 revenue was $23.94 billion, up 2.6% year over year and a touch above expectations. Core (adjusted) EPS was $2.29, about 3 cents ahead of forecasts. GAAP net income fell 11% to $2.6 billion. Shares rose roughly 2% premarket after the release. (reuters.com)
| Metric | Q3 2025 | Change vs. last year | Context |
|---|---|---|---|
| Revenue | $23.94B | +2.6% | Slight beat vs. Street |
| Core EPS (adjusted) | $2.29 | ~-1% vs. $2.31 in Q3'24 | Beat by $0.03 |
| GAAP net income | $2.60B | -11% | Weighed by costs/one‑offs |
| Organic revenue growth | +1.3% | Low | Excludes currency and deals |
| North America volumes | Snacks -2%, Beverages -3% | Down | Pricing offset the declines |
| FY25 guidance | Low‑single‑digit organic sales; core EPS ~flat | Unchanged; FX headwind eased | EPS decline now ~0.5% vs. prior ~1.5% |
What drove it
Top line beat, but growth was modest. Organic revenue rose only 1.3%, with strength in Europe, the Middle East and Africa (reported +9%) and steady trends in Latin America and Asia. (investing.com)
U.S. volumes fell. Frito‑Lay North America snack volume declined 2% and North America beverage volume fell 3%. PepsiCo Beverages North America still grew revenue about 2% on price, not units. That mix is not ideal for sustained growth. (apnews.com)
Profit quality was softer. Total operating profit declined around 8% year over year, and GAAP net income fell 11%. The Financial Times also noted an impairment tied to Rockstar after PepsiCo transferred U.S./Canada rights as part of its Celsius partnership. (gurufocus.com)
Leadership change adds uncertainty. Walmart U.S. finance head Steve Schmitt will replace CFO Jamie Caulfield on November 10 (Caulfield will advise through May 2026). (apnews.com)
Context vs. expectations
The beats were narrow: revenue edged past forecasts and core EPS topped by $0.03. But core EPS was slightly below last year’s $2.31, and unit volumes in North America remain negative. (reuters.com)
Guidance held steady. Management still expects low‑single‑digit organic sales growth and core EPS roughly even with 2024 on a constant‑currency basis. One tweak: the FX drag eased, and PepsiCo now implies about a 0.5% full‑year decline in core EPS versus a prior ~1.5% decline. In short, no upgrade to the outlook. (investing.com)
Stock reaction was positive at the open, reflecting the small beat and stable outlook, but the underlying issue—soft U.S. volumes—has not yet turned. (reuters.com)
What to watch next
North America demand. Are snacks and beverages stabilizing in units, not just price? Watch holiday‑season promotions and any signs of volume improvement in Frito‑Lay and PBNA. (apnews.com)
Cost actions and pack sizes. Management flagged more value packs and smaller sizes to fit strained wallets; execution here will matter for volumes and margins. (reuters.com)
Portfolio moves. PepsiCo bought Poppi and deepened its Celsius partnership (including transferring Rockstar in the U.S./Canada while upping its Celsius stake to ~11%). Integration and any brand repositioning could shape 2026 growth. (pepsico.com)
CFO transition and activism. New CFO Steve Schmitt steps in amid pressure from Elliott to streamline and potentially consider bottling refranchising; any strategic shifts or targets could be catalysts—up or down. (apnews.com)