MO · Q3 2025 Earnings

Cautious

Altria

Reported October 30, 2025

30-second summary

Altria raised the low end of FY2025 adjusted EPS to $5.37–$5.45 (from $5.35–$5.45) on Q3 FY2025 non-GAAP EPS of $1.45 and revenue of $6.07B (-3.0% YoY), up 3.6% YoY from $1.40 in Q3 FY2024. The real news is in the qualifiers: management now explicitly says Q4 FY2025 EPS growth will moderate as the 2024 ASR and MSA legal fund benefits roll off; no ITC final determination on JUUL's new patent suit is expected before early 2027, which gates ACE re-entry; and the nicotine pouch category saw retail prices fall 7% nationally — and over 70% in one major chain — while on! held +1.5%. Importantly, on!'s share within the nicotine pouch category fell 410bps YoY to 15.6%, a materially worse read than the flat 8.7% total-oral-category share suggests. Buyback authorization was doubled to $2.0B, the cleanest bull signal on the print.

Headline numbers

EPS

Q3 FY2025

$1.45

Revenue

Q3 FY2025

$6.07B

-3.0% YoY

Gross margin

Q3 FY2025

62.8%

Operating margin

Q3 FY2025

53.2%

Key financials

Q3 FY2025

Metric	Q3 FY2025	YoY	Q2 FY2025	QoQ
Revenue	$6.07B	-3.0%	$6.10B	-0.5%
EPS	$1.45	—	$1.44	+0.7%
Gross margin	62.8%	—	63.0%	-20bps
Operating margin	53.2%	—	52.9%	+30bps

Guidance

Management raised the low end of FY2025 adjusted EPS guidance by $0.02 to $5.37–$5.45, reflecting tighter confidence in earnings trajectory as the year progresses.

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

Changes to prior guidance

Metric	Period	Prior guide	New guide	Δ	Result
Adjusted diluted EPS	FY 2025	$5.35 to $5.45	$5.37 to $5.45	+$0.02 at low end	Raised
Adjusted diluted EPS growth rate	FY 2025	3.0% to 5.0%	3.5% to 5.0%	+0.5pts at low end	Lowered

Reaffirmed unchanged this quarter: Adjusted effective tax rate (23% to 24%), Capital expenditures ($175 million to $225 million), Depreciation and amortization expenses (approximately $290 million)

Segment performance

Q3 FY2025

Segment	Q3 FY2025	YoY
Smokeable Products	$5.387B	-2.8%
Oral Tobacco Products	$0.689B	-4.6%

Platform metrics

Q3 FY2025

Segment	Q3 FY2025
Marlboro Retail Share	40.4%
on! Nicotine Pouch Category Share	8.7%
Domestic Cigarette Shipment Volume Decline (adjusted)	-9.0%
Oral Tobacco Shipment Volume Decline (adjusted)	-5.5%

Profitability

Q3 FY2025

Segment	Q3 FY2025
Adjusted OCI Margin - Smokeable Products	64.4%
Adjusted OCI Margin - Oral Tobacco Products	69.2%

Other KPIs

Q3 FY2025

Segment	Q3 FY2025
Annualized Dividend Rate	$4.24 per share
Share Repurchase Program Expansion	$2.0 billion authorized (from $1.0 billion)

Management tone

Q1 FY2025 (implied) consumer pressure flagged → Q2 FY2025 narrowed guide, illicit-vape stabilization called "too soon" → Q3 FY2025 raised low end but explicitly warned on Q4 FY2025 + pushed ACE timing to 2027.

The ACE timeline is now gated by a 2027 ITC ruling. Last quarter management was deflecting on Enjoy re-entry timing using illicit-disposable cleanup as the gating factor. This quarter the framing hardened around new JUUL patent litigation: "We believe we have completed the product design of a modified ENJOY ACE solution that addresses all four disputed patents. Our teams are evaluating the potential pathways to bring the modified ACE product to market... We do not expect a final determination from the ITC before early 2027." That is a >15-month gap with no clear path for MO's flagship e-vapor product. Anyone modeling NJOY contribution before 2027 should zero it out.

The nicotine pouch story flipped from share-gainer to pricing battlefield. Q2 FY2025 framed on! as gaining share in an "increasingly competitive" market. Q3 FY2025 quantified what "competitive" means: "In contrast to the balance of the nicotine pouch category, where average retail prices for the category declined 7% nationally and more than 70% in one major retail chain." on! held +1.5% on price, but its share of the nicotine pouch category fell 410bps YoY to 15.6% — meaning competitors are buying pouch-category share with promotion, and on! is ceding it. If this is structural rather than tactical, the 69.2% Oral Tobacco OCI margin is the next thing to watch.

Consumer language got more pointed. Q2 FY2025's posture was that volumes "have improved a bit." Q3 FY2025 is explicit: "We are also mindful of the challenged state of tobacco consumers and will continue to closely monitor their purchasing behaviors." Paired with Basic gaining 1.4 share points YoY off Marlboro's 50bps QoQ slip, this is management acknowledging trade-down is now visible in their own brand portfolio, not just at the industry level.

Q4 FY2025 growth gets a pre-warning. Both Q2 FY2025 and Q3 FY2025 used the "moderate" language, but Q3 added specifics: the ASR lap and MSA fund expiration are now named drivers. That is management coaching down sell-side Q4 models without formally cutting — the kind of qualitative hedge that would let them land at the $5.37 low end and still call it a "raise."

Buyback doubling is the real positive signal. Authorization went from $1.0B to $2.0B. That's the one unambiguous confidence vote on the print and would not have happened if management saw material downside to the $5.37 floor.

Recurring themes management leaned on this quarter:

Navigating intensifying competitive promotional activity in nicotine pouchesRegulatory momentum in oral nicotine pouch authorizations with FDA pilot programMargin expansion despite volume pressures in core tobacco businessesSmoke-free adjacency growth through international partnerships and innovationConsumer spending pressure driving trade-down to discount cigarette segmentLitigation and IP complexity delaying e-vapor market entry timelines

Risks management surfaced:

Illicit and unregulated vapor products saturating market (21 million units estimated, 60% flavored disposables)Intense promotional activity in nicotine pouch category depressing category pricing and influencing long-term brand adoptionE-vapor litigation with JUUL not expected to resolve before early 2027Consumer discretionary spending pressures from macroeconomic headwinds and inflationDependence on regulatory authorizations and enforcement for smoke-free product success

Q&A highlights

Matt Smith · Stifel

What are the key drivers of Q4 earnings deceleration beyond share repurchase and MSA legal fees, and what is the path to restoring smokable OCI growth?

Management cited monitoring consumer spending in a dynamic marketplace as the primary factor but expressed confidence in PMUSA's ability to expand margins and maintain Marlboro's premium positioning. Also noted moderation in underlying cigarette industry decline rates based on consumer consistency around gas prices and inflation, plus stepped-up eVapor enforcement.

Guidance raised by narrowing the low endStrong first nine-month financial performanceSmokable profitability feels strongIndustry decline moderating on sequential basis

Bonnie Herzog · Goldman Sachs

What is management seeing in the intensifying nicotine pouch competitive environment, performance of ON brand, promotional spend strategy, OnPlus early feedback, and KT&G partnership operational efficiencies including duty drawback opportunities?

ON maintained retail price growth of 1.5% while category declined 7% nationally (70% in major retail), demonstrating effective revenue growth management. Retail takeaway volume remained steady. OnPlus rollout is very early; decision to expand nationally will be made when appropriate. KT&G partnership provides three benefits: modern oral portfolio expansion internationally, non-nicotine opportunities (red ginseng), and operational efficiencies including duty drawback through manufacturing adaptation for international markets.

ON retail price up 1.5% while category down 7% nationally, down 70% in major retailRetail takeaway volume steady despite competitive pressureOnPlus being tested in three statesKT&G partnership includes manufacturing center adaptation for pack size and track-and-trace

Eric Sirota · Morgan Stanley

What is the pricing strategy for OnPlus relative to ON and competitors, and what drove the muted smokable OCI growth of less than 1% in the quarter—was it controllable costs or other factors?

OnPlus is positioned as a premium product with premium pricing supported by superior consumer satisfaction in research; introductory promotions will be offered as rollout expands. On controllable costs, management declined to analyze quarter-by-quarter due to timing issues and comparisons, instead emphasizing long-term cost management approach. Smokable OCI should be viewed over longer term; YTD smokable OCI is up 2.5% driven by Marlboro strength in premium segment and improved revenue growth management productivity.

OnPlus positioned as premium product with premium pricingIntroductory price promotions planned for expansionSmokable OCI up 2.5% year-to-dateOptimize and Accelerate program driving cost reductions and reinvestment

Faham Beg · UBS

Should the $3 billion in annual federal excise tax payments be the baseline for potential duty drawback benefits to drive high single-digit EPS growth? Will the FDA pilot program on nicotine pouches impact OnPlus national launch timing? Why can FDA accelerate nicotine pouch reviews but not vapor?

Management declined to jump to conclusions on duty drawback scope, emphasizing it as an additional benefit within a broader international production relationship. OnPlus launch decisions will be made based on long-term company interests and functioning regulatory system, not pilot program timing. FDA chose nicotine pouches to pilot because it's a fairly set category compared to the messy vapor marketplace; pilot learnings will hopefully be expanded to other categories. Mid-single-digit EPS CAGR goal remains unchanged.

Duty drawback is additional benefit within international relationship, not primary driverOnPlus decisions independent of FDA pilot program timingFDA selected nicotine pouches as pilot due to category maturity vs. vapor chaosCollaborative FDA engagement under current administration differs from prior experience

Matt Smith · Stifel

Can you detail the drivers of the sequential moderation in underlying cigarette industry decline rate beyond the 12-month bridge?

Sequential moderation is driven by consumer consistency around gas prices and inflation (consumers don't need improvement, just consistency), plus stepped-up enforcement in eVapor category which puts consumers back in play to consider other nicotine categories including cigarettes.

Consumer consistency on gas prices and inflation supporting stabilizationStepped-up eVapor enforcement driving consumer reconsideration of nicotine categories12-month bridge doesn't move as quickly on quarter-to-quarter basis

Answers to last quarter's watch list

H2 FY2025 EPS cadence vs. the "moderation" warning. Q3 FY2025 non-GAAP EPS of $1.45 was up 3.6% YoY from $1.40, leaving Q4 FY2025 needing roughly $0.92–$1.00 against $0.92 PY. The FY low end was raised $0.02, confirming H2 is tracking — but management's explicit Q4 deceleration warning means the low end of the band is the realistic outcome, not the high end. Status: Resolved positively

Cigarette shipment volume decline trajectory. Adjusted domestic cigarette shipment volume declined 9.0% in Q3 FY2025. Management characterized the enforcement and consumer-consistency tailwind as real but modest. Status: Resolved positively

Oral Tobacco segment retail share direction. Total Oral Tobacco segment retail share was 31.1% in Q3 FY2025 (down 6.1pp YoY); on! total-oral-category share held flat at 8.7% but on!'s share within the nicotine pouch category fell 410bps YoY to 15.6%. With Oral Tobacco revenue down 4.6% YoY (vs. +5.9% in Q2 FY2025), the OAN-offsets-MST math is breaking down in dollar terms. Status: Resolved negatively

Any Q3 FY2025 commentary that puts a date on Enjoy re-entry. Yes — management stated "no final determination from the ITC before early 2027" on JUUL's new patent suit, which gates ACE re-entry and effectively writes off 2026 contribution. Status: Resolved negatively

on! category share movement. Total-oral-category share flat at 8.7%, but pouch-category share down 410bps YoY to 15.6%. Holding total-category share while losing pouch-category share means on! is being diluted by category expansion, not gaining absolute strength. Status: Continue monitoring

Whether ACE returns to market in 2025. Confirmed: ACE will not return in 2025, and now likely not in 2026 either. FY guide assumption holds. Status: Resolved negatively (for the bull case on smoke-free contribution)

What to watch into next quarter

Q4 FY2025 non-GAAP EPS landing inside $0.92–$1.00. Below $0.92 breaks the FY $5.37 floor; above $1.00 means the Q4 "moderation" warning was over-coached. The likely outcome is $0.94–$0.97 — narrow band, low margin for error.

Oral Tobacco revenue YoY in Q4 FY2025. Q3 FY2025's -4.6% reversal from Q2 FY2025's +5.9% is the single biggest negative surprise on this print. If Q4 stays negative, the pouch promotional war is structural and the 69.2% segment OCI margin is at risk in FY2026.

on!'s share of the nicotine pouch category from 15.6%. Flat total-oral-category share masked a 410bps YoY drop in pouch-category share. Another step down would confirm on! cannot defend pouch-category position without joining the price war.

Marlboro retail share trajectory from 40.4%. Down 50bps QoQ while Basic gained 1.4 share points YoY. If Marlboro drops below 40% as Basic continues to grow, mix degradation reaches the smokeable OCI margin line — which has been the entire bull case.

Pace of $2.0B buyback execution. Doubled authorization is only a confidence signal if MO actually spends it. Q4 FY2025 repurchase pace will reveal whether management's conviction matches the size of the authorization.

Any update on duty drawback sizing. Management explicitly refused to quantify it in Q&A. A first dollar figure on the Q4 FY2025 call would be a meaningful EPS-trajectory signal.

Sources

Altria Q3 FY2025 Earnings Press Release (Exhibit 99.1), SEC filing: https://www.sec.gov/Archives/edgar/data/764180/000076418025000128/exhibit991erq32025.htm
Altria Q2 FY2025 Earnings Press Release (Exhibit 99.1), SEC filing: https://www.sec.gov/Archives/edgar/data/764180/000076418025000109/exhibit991erq22025.htm

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