PepsiCo — Third Quarter 2026 Earnings Summary

Financial Performance

• Net revenue increased 5.6% year-over-year to $25,274 million for Q3 2026 and 6.7% to $68,898 million for the year-to-date period.
• Organic revenue growth was 3.1% for Q3 2026 and 2.7% for the year-to-date period.
• Earnings per share (EPS) increased 17% to $2.23 for Q3 2026 and 47% to $6.10 for the year-to-date period.
• Core EPS increased 2% for Q3 2026 and 5% for the year-to-date period.
• Core constant currency EPS increased 1.5% for Q3 2026 and 2% for the year-to-date period.
• Operating profit increased 19% to $4,260 million for Q3 2026 and 45% to $11,496 million for the year-to-date period.
• Operating margin expanded 195 basis points to 16.9% for Q3 2026 and 440 basis points to 16.7% for the year-to-date period.
• Core operating profit increased 3% for Q3 2026 and 5% for the year-to-date period.
• Core operating margin contracted 35 basis points to 16.9% for Q3 2026 and 25 basis points to 16.5% for the year-to-date period.
• Net cash provided by operating activities was $7,950 million for the 36 weeks ended September 5, 2026, compared to $5,468 million in the prior year period.
• Capital spending was $2,182 million for the 36 weeks ended September 5, 2026.
• Cash dividends paid were $5,935 million for the 36 weeks ended September 5, 2026.
• Share repurchases totaled $739 million for the 36 weeks ended September 5, 2026.
• Total assets were $111,976 million as of September 5, 2026, compared to $107,399 million as of December 27, 2025.
• Total liabilities were $89,489 million as of September 5, 2026.
• Short-term debt obligations were $9,223 million as of September 5, 2026.
• Long-term debt obligations were $42,658 million as of September 5, 2026.

Guidance and Future Outlook

• Fiscal 2026 organic revenue guidance was updated to approximately +3% (previously +2% to +4%).
• Fiscal 2026 foreign exchange translation guidance was updated to approximately +1.5% to net revenue and core EPS growth (previously +1%).
• Fiscal 2026 acquisitions, net of divestitures, guidance was updated to approximately +1.5% to net revenue growth (previously +1%).
• Fiscal 2026 net revenue guidance was updated to approximately +6% (previously +4% to +6%).
• Fiscal 2026 core annual effective tax rate guidance was updated to approximately 21% (previously 22%).
• Fiscal 2026 core constant currency EPS growth guidance was updated to +1% to +2% (previously low-end of +4% to +6%).
• Fiscal 2026 core EPS growth guidance was updated to +2.5% to +3.5% (previously low-end of +5% to +7%).
• Capital spending guidance remains below 5% of net revenue.
• Free cash flow conversion ratio guidance remains at least 80 percent.
• Cash returns to shareholders guidance remains at $8.9 billion.
• Management plans to implement additional structural cost reduction actions in the coming months to fund investments accelerating organic revenue growth and mitigating rising input cost inflation.

Business Segments and Product Lines

• North America: Convenient foods net revenue trends improved sequentially, driven by savory snacks volume growth and volume market share improvement, offset by lower effective net pricing. Beverages business delivered 5% net revenue growth in Q3, primarily from 2025 acquisitions.
• International: All segments delivered strong net revenue growth.
• Asia Pacific Foods: Delivered strong organic volume growth in Q3.
• International Beverages Franchise: Delivered strong organic volume growth in Q3.
• Latin America Foods: Delivered strong organic volume growth in Q3.
• EMEA: Delivered strong net revenue growth in Q3, aided by organic volume growth.
• Year-to-Date North America: Convenient foods saw organic volume and volume market share increases aided by innovation and affordability initiatives. Beverages delivered 7% net revenue growth with 1% organic revenue growth.

Market and Competitive Landscape

• North America convenient foods achieved volume market share improvement.
• The company noted an improved presence in underpenetrated channels and occasions.
• The results reflect the scale and resilience of the international business.

Risks and Challenges

• Rising input cost inflation is a challenge the company aims to mitigate through cost reduction actions.
• The company cannot predict the impact of foreign exchange translation or commodity mark-to-market net impacts on reported GAAP results.
• The company cannot predict the occurrence or impact of future acquisitions and divestitures.
• Prior-year impairment charges related to the Rockstar and Be & Cheery brands significantly impacted year-to-date operating profit comparability.

Management Commentary and Tone

• Chairman and CEO Ramon Laguarta described the results as featuring "strong net revenue growth" and an "acceleration in organic revenue growth."
• Laguarta stated the company remains focused on building upon the strength of the International business.
• Management expressed urgency to sustainably improve performance in North America through investments in innovation, brand building, and sharper marketplace execution.
• Management highlighted the ongoing evolution of the global portfolio.

Other Key Points

• The company updated its fiscal 2026 financial guidance.
• Acquisitions made in 2025 contributed to beverage net revenue growth in North America.
• A 4-percentage-point favorable impact of tariff refunds contributed to Q3 core operating profit performance.
• The company recognized impairment charges in the prior year related to the Rockstar and Be & Cheery brands.
• The company provides guidance on a non-GAAP basis as it cannot predict foreign exchange and commodity mark-to-market impacts included in GAAP results.
• Free cash flow is defined as net cash from operating activities less capital spending, plus sales of property, plant, and equipment.
• Cash returns to shareholders ($8.9 billion) are comprised of dividends of $7.9 billion and share repurchases of $1.0 billion.