KDP · Q2 2026 Earnings

Bullish

Keurig Dr Pepper

Reported August 6, 2026

30-second summary

Revenue of $7.31B (+75.6% YoY, largely JDE Peet's) beat consensus of $7.23B by 1.1% and non-GAAP EPS of $0.57 cleared the $0.54 estimate by 5.6%, clearing the Q1-issued "high single-digit EPS growth" bar ($0.49 → $0.57 is +16% YoY on the legacy base). U.S. Refreshment Beverages accelerated to +10% with a 29.9% adjusted operating margin, U.S. Coffee stayed negative at -3.2% with segment volume/mix down 8.2% (distorted by the reporting shift of Peet's K-Cup pods into JDE Peet's), and JDE Peet's contributed $2.80B in its first full quarter — clean line-of-sight to the reaffirmed $8.5–$8.7B FY contribution. Management reaffirmed the FY2026 net sales range ($25.9–$26.4B) and low-double-digit constant-currency EPS growth, added a new 4.1x year-end pro-forma leverage disclosure, and for the first time explicitly named "early 2027" separation prep as an in-quarter workstream.

Headline numbers

EPS

Q2 FY2026

$0.57

+5.6% vs est.

Revenue

Q2 FY2026

$7.31B

+75.6% YoY

+1.1% vs est.

Gross margin

Q2 FY2026

41.9%

Free cash flow

Q2 FY2026

$0.71B

Operating margin

Q2 FY2026

8.6%

Key financials

Q2 FY2026

Metric	Q2 FY2026	Q2 FY2025	YoY	Q1 FY2026	QoQ
Revenue	$7.31B	$4.16B	+75.6%	$3.98B	+83.8%
EPS	$0.57	$0.49	+16.3%	$0.39	+46.2%
Gross margin	41.9%	54.2%	-1230bps	52.8%	-1090bps
Operating margin	8.6%	21.6%	-1300bps	19.0%	-1040bps
Free cash flow	$0.71B	$0.33B	+119.7%	$0.18B	+288.0%

Guidance

KDP reaffirms full-year 2026 guidance on constant currency non-GAAP basis while Q2 actuals beat both EPS and revenue consensus; no material changes to forward outlooks for legacy business (4-6% growth) or JDE Peet's contribution despite strong acquisition integration momentum.

Guidance is issued for both next quarter and the full year. Both may appear below.

Actuals vs prior guidance

Metric	Period	Prior guide	Actual	Δ	Result
EPS growth	Q2 FY2026	high single-digit EPS growth in Q2	0.57	Beat on earnings; non-GAAP EPS of $0.57 vs. estimate of $0.54 (+5.6% surprise); prior guide characterized as 'high single-digit' growth trajectory	Beat
Revenue	Q2 FY2026	implied by FY guidance and qualitative statements	7.309	Beat revenue estimate; $7.309B actual vs. $7.23B estimate (+1.1% surprise); strong YoY growth of 75.6% driven by JDE Peet's acquisition contribution	Beat

New guidance

Metric	Period	Guide	YoY
Pro-forma management leverage ratio at year-end	FY2026	approximately 4.1x	—

Reaffirmed unchanged this quarter: Adjusted diluted EPS growth (low-double-digit range), Net sales ($25.9-$26.4 billion), Legacy KDP constant currency net sales growth (4-6%), Legacy KDP constant currency Adjusted diluted EPS growth (4-6%), Foreign currency translation impact (approximately one percentage point tailwind)

Segment performance

Q2 FY2026

Segment	Q2 FY2026	Q2 FY2025	YoY
U.S. Refreshment Beverages	$2.925B	$2.66B	+10.0%
U.S. Coffee	$0.918B	$0.948B	-3.2%
KDP International	$0.664B	—	+19.6%

Platform metrics

Q2 FY2026

Segment	Q2 FY2026	Q2 FY2025	YoY
Volume/Mix Growth (Legacy KDP)	3.1%	—	—

Profitability

Q2 FY2026

Segment	Q2 FY2026	Q2 FY2025	YoY
U.S. Refreshment Beverages Adjusted Operating Margin	29.9%	—	—
U.S. Coffee Adjusted Operating Margin	24.5%	—	—
JDE Peet's Adjusted Operating Margin	14.8%	—	—
KDP International Adjusted Operating Margin	23.3%	—	—
Adjusted Operating Income	$1,478M	1.028 bn	—
Adjusted Gross Margin	46.5%	—	—
Free Cash Flow	$714M	—	—

Management tone

Q3 FY2025 confident strategic offense → Q4 FY2025 separation as inevitability → Q1 FY2026 staged recovery with Q1 as the explicit trough → Q2 FY2026 separation prep operationalized, JDE Peet's attribution quietly retired.

No transcript was available this quarter; commentary is drawn from the press release language and the change in disclosure architecture vs. prior quarters.

Separation moved from Q1 FY2026's "we have begun to operationalize" to Q2 FY2026's explicit calendarization. Q3 FY2025 introduced separation as a milestone-based aspiration. Q4 FY2025 made it inevitable. Q1 FY2026 built the transformation management office. This quarter's qualitative statement now reads: "remains on track to achieve 2026 financial and transformation commitments while preparing for separation in early 2027." "Early 2027" is the first time the target has appeared in the FY guidance qualitative statements as an operating premise rather than a strategic slide. The company is now asking to be measured against a separation date, not just an integration.

JDE Peet's contribution disclosure was quietly retired. Last quarter's guide included discrete JDE Peet's net sales ($8.5–$8.7B) and EPS (6–7pts) contribution ranges alongside the legacy 4–6% algorithm. This quarter's guidance drops both, keeping only the consolidated top-line range and the two growth algorithms (consolidated low-double-digit, legacy 4–6%). The signal: management is moving away from letting the market grade JDE Peet's integration on its own attribution and toward being judged on the combined enterprise. That is normal post-integration behavior — but it removes a public accountability metric one quarter into the deal.

A new leverage anchor replaces the withdrawn financial parameters. Interest expense, tax rate, and share count all disappeared from the guide this quarter. In their place is a single new metric: year-end pro-forma management leverage of ~4.1x, down from the 4.6x post-close figure. The 0.5x annual deleveraging pace flagged at deal announcement is now on the scoreboard as a specific FY2026 number. This is the metric management wants investors watching between now and separation — deleveraging is the story, not quarterly cost line detail.

Constant-currency framing hardened. The Q1 FY2026 press release said the company "reaffirmed full year guidance." Q2 FY2026's language: "reaffirms 2026 guidance on a constant currency, non-GAAP basis." The added qualifier isn't decorative — with FX now a ~1pt tailwind (vs FY2025's ~0.5pt headwind), management is pre-positioning to be judged on the underlying algorithm rather than the FX-flattered reported number. This works both ways: it disciplines the bull case in strong-FX years and provides cover in weak-FX ones.

Answers to last quarter's watch list

Q2 FY2026 EPS landing at high single-digit YoY growth — $0.57 vs prior-year $0.49 is +16% YoY, materially above the "high single-digit" (~$0.52–$0.53) guide and also above consensus by 5.6%. The H2 acceleration math for the FY low-double-digit EPS guide is now on firmer footing — Q2 FY2026 delivered ahead of the ramp rather than just tracking to it.

Resolved positively

U.S. Coffee operating margin recovering from 23.2% — Margin printed 24.5%, up ~130bps QoQ but still below the 25% threshold flagged as the "back-half acceleration" test. Directionally consistent with the Q1 FY2026 trough framing on profitability; not yet decisive.

Continue monitoring

U.S. Coffee volume/mix improving from -8.2% — Q2 FY2026 volume/mix printed -8.2% (flat vs Q1 FY2026, per press release disclosure), with the caveat that the figure is materially distorted by the reporting shift of Peet's K-Cup pods into the JDE Peet's segment. Reported segment revenue of -3.2% is worse than Q1 FY2026's -2.3% on the top line. Underlying trend is obscured by the reclassification; a clean read requires the company to size the K-Cup shift. Status: Not resolved (with a distortion caveat)

Initial JDE Peet's consolidated segment disclosure and confirmation of the $8.5–$8.7B FY net sales contribution pace — JDE Peet's delivered $2.80B in its first full quarter, annualizing to ~$11.2B and implying three-quarter contribution of ~$8.4–$8.5B — the low end of the previously disclosed range, which itself was withdrawn from the guide this quarter. The pace is broadly consistent; the disclosure withdrawal complicates future comparison. Status: Resolved positively (with a yellow flag on disclosure withdrawal)

Interest expense tracking to the new $1.13–$1.16B FY range — The line was withdrawn from FY guidance this quarter without comment. Replaced by a pro-forma leverage target of ~4.1x at year-end. The specific interest expense number no longer has a public benchmark.

Not resolved

U.S. RefBev volume/mix sustaining above +5% — Segment revenue held +10.0% (vs Q1 FY2026 +11.9%), and disclosed segment volume/mix printed +6.5% — comfortably above the +5% threshold.

Resolved positively

What to watch into next quarter

U.S. Coffee returning to positive revenue growth — Two consecutive negative prints (-2.3% Q1 FY2026, -3.2% Q2 FY2026) with sequential deterioration means Q3 FY2026 needs to inflect positive to protect the "cyclical, not structural" framing that underpins the JDE Peet's deal logic. Q3 FY2025 U.S. Coffee revenue was $0.99B — anything below $0.99B is a third consecutive down quarter

U.S. Coffee operating margin crossing 25% — Q1 FY2026 23.2% → Q2 FY2026 24.5%; a Q3 FY2026 print above 25% confirms the trough narrative on profitability. Below 25% for a third quarter would extend the "back-half acceleration" story into 2027

U.S. Coffee volume/mix ex-K-Cup shift — The -8.2% Q2 FY2026 print is distorted by the Peet's K-Cup reclassification into JDE Peet's; a clean underlying trend disclosure would materially improve the read on whether the segment is stabilizing

Whether JDE Peet's contribution disclosure returns or stays withdrawn — If Q3 FY2026 continues to omit the $8.5–$8.7B tracking and 6–7pt EPS contribution attribution, the integration is being deliberately merged into the consolidated narrative ahead of separation. Watch whether the company provides any implied JDE Peet's growth rate

Consolidated FY2026 net sales tracking to the $25.9–$26.4B range — H1 FY2026 consolidated revenue was $11.29B. The FY range implies H2 revenue of $14.6–$15.1B (roughly $7.3–$7.5B per quarter), broadly consistent with the Q2 FY2026 pace holding — no meaningful H2 acceleration required on the top line

Year-end leverage tracking to ~4.1x — The new headline financial metric replacing interest expense; H2 deleveraging pace against the 4.6x close-date starting point is the primary balance-sheet story

Separation prep concrete milestones — With "early 2027" now in the FY qualitative statements, watch for operational-readiness proof points (organizational splits, service agreements, board composition) rather than aspirational language

Sources

KDP Q2 FY2026 press release (Form 8-K Ex. 99.1), filed 2026-08-06 — https://www.sec.gov/Archives/edgar/data/1418135/000141813526000048/ex991-keurigdrpepperreport.htm

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