tapebrief
KDP · Q3 2025
Preliminary brief— based on press release only. Full analysis including management tone and Q&A will be added when the transcript is available.

KDP · Q4 2025 Earnings

Keurig Dr Pepper

Reported February 24, 2026

30-second summary

SENTIMENT: Mixed Revenue grew 10.5% YoY to $4.5B with non-GAAP EPS of $0.60, capping a FY2025 of $16.6B (+8.2%) and $2.05 EPS. Management issued FY2026 guidance for the first time — $25.9–$26.4B in net sales and low-double-digit constant-currency EPS growth — but standalone KDP is guided to only 4–6% sales/EPS growth, a meaningful step down from FY2025's 8.6% constant-currency sales pace, and Q1 EPS of $0.36–$0.37 represents a 12–14% YoY decline. The headline is the FX swing (a ~1pt FY2026 tailwind vs FY2025's ~0.5pt headwind) masking organic deceleration in the standalone business.

Headline numbers

EPS

Q4 FY2025

$0.60

Revenue

Q4 FY2025

$4.50B

+10.5% YoY

Gross margin

Q4 FY2025

53.8%

Operating margin

Q4 FY2025

19.6%

Key financials

Q4 FY2025
MetricQ4 FY2025YoYQ3 FY2025QoQ
Revenue$4.50B+10.5%$4.31B+4.5%
EPS$0.60—$0.54+11.1%
Gross margin53.8%—54.3%-50bps
Operating margin19.6%—23.1%-350bps

Guidance

KDP issues FY2026 guidance incorporating JDE Peet's acquisition (4-6% KDP standalone growth, low-double-digit consolidated EPS growth, ~6–7 pt JDE EPS accretion); Q1 FY2026 EPS expected to decline 12–14% YoY due to timing of close and integration impacts.

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

New guidance

MetricPeriodGuideYoY
Net SalesFY2026$25.9–$26.4 billion—
Adjusted Diluted EPS GrowthFY2026low-double-digit range (constant currency)—
Standalone KDP Net Sales GrowthFY20264% to 6% (constant currency)—
Standalone KDP EPS GrowthFY20264% to 6% (constant currency)—
JDE Peet's Net Sales ContributionFY2026$8.5–$8.7 billion—
JDE Peet's EPS ContributionFY20266 to 7 percentage points—
Interest ExpenseFY2026$1.07–$1.12 billion—
Effective Tax RateFY202622% to 23%—
Diluted Weighted Average Shares OutstandingFY2026approximately 1.37 billion—
FX Translation ImpactFY2026approximately one percentage point tailwind—
Diluted EPSQ1 FY2026$0.36–$0.37-12 to -14% YoY

Segment performance

Q4 FY2025
SegmentQ4 FY2025YoY
U.S. Refreshment Beverages$2.721B+11.5%
U.S. Coffee$1.174B+3.9%
International$0.604B+21.0%

Platform metrics

Q4 FY2025
SegmentQ4 FY2025
Volume/Mix Growth (Constant Currency)3.9%
Net Price Realization (Constant Currency)6.0%
GHOST Acquisition Contribution to Volume/Mix3.6 percentage points

Profitability

Q4 FY2025
SegmentQ4 FY2025
U.S. Refreshment Beverages Adjusted Operating Margin30.9%
U.S. Coffee Adjusted Operating Margin31.0%
International Adjusted Operating Margin27.0%
Full Year Operating Cash Flow$1,991M

Other KPIs

Q4 FY2025
SegmentQ4 FY2025
Management Leverage Ratio (LTM)3.1x

Management tone

Q2 2025: tariff fluidity, "subdued" coffee → Q3 2025: cyclical recovery narrative, deal defense → Q4 2025: separation as inevitability, coffee cost pressure as "mechanical."

Coffee re-rated again — from "subdued" to "cyclical recovery" to "pricing-led growth is cyclical, but we're investing for sustainable volume growth." Two quarters ago coffee was a hold-the-line segment. Last quarter it was in the early innings of recovery, underpinning the JDE Peet's deal logic. This quarter the framing matured: "We recognize our current pricing-driven growth in coffee is more cyclical in nature, and we are actively investing to position our business for sustainable long-term volume and mix growth...we have chosen to protect these investments even as we navigate an inflationary period, which is creating some additional near-term profit pressure but should pay future dividends." This is the first explicit acknowledgment that current coffee growth quality is cyclical, not structural — a meaningful concession that the Q3 "cyclical recovery" framing was incomplete. It also gives management cover for the standalone 4–6% guide.

JDE Peet's shifted from "complex integration challenge" to "value creation catalyst with momentum building." Q3 had management explicitly defending the deal against shareholder pushback ("there is no alternative"). This quarter the language is operational and unguarded: "palpable excitement to build a global coffee leader." Regulatory approvals secured, tender offer launched, April close in sight, separation IPO scrapped in favor of full pure-play execution, and the convertible preferred raise upsized to $4.5B from $3B. The deal is no longer being sold — it's being executed.

Coffee cost inflation reframed from "headwind to manage" to "mechanical and quantifiable." "It's somewhat mechanical at this point because, obviously, we know the costs that are sitting in inventory." The 6-9 month price-to-P&L lag means current spot relief shows up in late 2H 2026. This is technical confidence — and it pre-positions investors to interpret Q1 EPS weakness as a known timing issue, not a structural problem.

Tariffs returned as a quantified-but-managed line. Q2 flagged tariffs as "fluid," Q3 went silent, Q4 brings them back as embedded in the Q1 EPS guide alongside green coffee inflation. "We have baked in some allowance into our 2026 plans, but I think the overall impact on the business is going to be manageable." The hedge ("manageable") is the tell — quantification was not offered.

Recurring themes management leaned on this quarter:

Separation into two pure-play companies (BeverageCo and Global CoffeeCo) as transformational value driverEnergy drinks as high-growth, multi-brand platform with structural tailwinds and share-gaining momentumCoffee segment shift from pricing-led to investment-led for sustainable volume growth via Keurig Alta and Coffee CollectiveInnovation and precision marketing driving U.S. refreshment beverage outperformance and share gainsJDEP acquisition integration on track with early synergy capture and optimized capital structureCoffee cost headwinds as mechanistic and easing in back half 2026, with Q1 as peak pressure

Risks management surfaced:

Retail inventory adjustments in U.S. coffee expected to impact Q1 top and bottom linePeak year-over-year cost headwinds in Q1 from green coffee inflation and tariff impactsSNAP eligibility restriction changes across states (Texas, Florida, others) could shift payment methods or purchasing powerBrewer shipments declining 16.8% reflecting higher price elasticity and retail inventory reductionsMexico beverage tax increase at beginning of 2026 expected to create softer Q1 segment start despite strong Q4 buying ahead

Answers to last quarter's watch list

The implied Q4 margin and EPS bridge — Q4 adjusted operating margin came in at 26.5%, down ~120bps YoY from prior-year Q4 27.7%. Margin compression was concentrated in U.S. Coffee (-430bps YoY) on green coffee and tariff pass-through, partially offset by U.S. Refreshment Beverages and International. EPS of $0.60 (+1.7% YoY) still hit the high-single-digit FY pace because of H1 banking. Status: Resolved — modest negative
Organic volume/mix ex-GHOST — Q4 organic ex-GHOST was approximately 0.3pts (3.9% total minus 3.6pts GHOST contribution). This is the underlying story that the standalone 4–6% FY2026 guide reflects. Status: Resolved negatively
U.S. Coffee revenue sustaining above +1% — Coffee accelerated to +3.9% from Q3's +1.5%, comfortably clearing the threshold. The cyclical recovery narrative survives Q4 — but brewer shipments fell 16.8%, a leading indicator that the underlying volume story is still fragile and pricing is doing the heavy lifting. Status: Resolved positively (with a yellow flag on brewer volume)
Concrete JDE Peet's milestones — Tender offer launched, regulatory approvals secured, April close in sight, $4.5B convertible preferred raise (up from $3B), $4B pod manufacturing JV financing closing, partial IPO of BevCo explicitly off the table. Every milestone management committed to in Q3 was hit or accelerated. Status: Resolved positively
Whether management quantifies a tariff or coffee commodity headwind — Both reappeared in the Q1 EPS guide commentary but neither was sized in isolation. The Q1 $0.36–$0.37 print bundles JDE Peet's timing, coffee cost peak, retail inventory destocking, and tariffs into one "temporary imbalance." The FY2026 standalone 4–6% EPS guide implicitly absorbs these — the deceleration vs FY2025's high-single-digit pace IS the answer. Status: Continue monitoring

What to watch into next quarter

Whether Q1 EPS lands in the $0.36–$0.37 range or below — A miss below $0.36 would suggest the "temporary imbalance" framing is incomplete, given how many discrete pressures are bundled into one quarter

Standalone KDP organic volume/mix ex-GHOST in Q1 — Q4 implied ~0.3pts; GHOST laps in mid-2026, so the underlying organic rate needs to inflect or the 4–6% standalone sales guide is at risk of a midyear trim

Brewer shipment trajectory — Q4 -16.8% is a leading indicator for K-Cup volumes 2-4 quarters out; a second consecutive double-digit decline would undercut the coffee recovery thesis regardless of segment revenue

JDE Peet's closing on the early-April timeline and initial synergy commentary — Any slippage past Q2 would compress the 6-7pt EPS contribution and require a guide refresh

U.S. Refreshment Beverages growth ex-GHOST — Q4 +11.5% headline is flattered by GHOST; watch whether organic Dr Pepper / Canada Dry / Snapple growth sustains as the DSD repatriation tailwinds normalize

Whether the FX ~1pt tailwind assumption holds — Roughly 150bps of the FY2026 consolidated optics depend on FX staying favorable; a reversal would expose the standalone deceleration more clearly

Sources

  1. KDP Q4 2025 press release (Form 8-K Ex. 99.1), filed 2026-02-24 — https://www.sec.gov/Archives/edgar/data/1418135/000141813526000011/ex991-keurigdrpepperreport.htm
  2. KDP Q4 2025 prepared remarks (management commentary cited from the call materials)

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