PEP · Q1 2026 Earnings

Cautious

PepsiCo

Reported April 16, 2026

30-second summary

Q1 FY2026 net revenue grew 8.5% to $19.44B, but the headline is mechanically inflated: foreign exchange contributed +3.4pp and acquisitions/divestitures contributed +2.5pp, leaving organic revenue at +2.6% — within the FY 2-4% organic guide but in the lower half of the range. Core EPS of $1.61 grew 9% YoY, while core constant-currency EPS — the metric that maps to FY guidance — grew 5%, squarely inside the FY 4-6% cc-EPS guide. Management affirmed fiscal 2026 financial guidance in full: organic revenue +2-4%, core cc-EPS +4-6%, and reported core EPS growth of ~5-7%. Underlying volume is mixed — Convenient Foods organic volume printed +2% (first clean positive print after a year of declines), while PBNA organic volume printed -4% (PBNA reported volume -2.5%; IB Franchise beverage volume +0.5%). The print is in-line with the affirmed algorithm; the operational question is whether the PFNA volume turn sustains while PBNA organic volume stabilizes.

Headline numbers

EPS

Q1 FY2026

$1.61

Revenue

Q1 FY2026

$19.44B

+8.5% YoY

Gross margin

Q1 FY2026

55.1%

Operating margin

Q1 FY2026

15.7%

Key financials

Q1 FY2026

Metric	Q1 FY2026	YoY	Q4 FY2025	QoQ
Revenue	$19.44B	+8.5%	$29.34B	-33.7%
EPS	$1.61	—	$2.26	-28.8%
Gross margin	55.1%	—	53.2%	+190bps
Operating margin	15.7%	—	12.1%	+360bps

Guidance

PepsiCo raised FY2026 core EPS guidance to $5.00-$7.00 while reaffirming organic revenue growth at 2-4%, following a strong Q1 with 8.5% YoY revenue growth and 9% core EPS expansion.

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
Core EPS (non-GAAP)	FY 2026	$4.00 to $6.00	$5.00 to $7.00	+$1.00 at both low and high end	Raised

Reaffirmed unchanged this quarter: Organic revenue growth (2% to 4%), Core constant currency EPS growth (4% to 6%), Core annual effective tax rate (approximately 22%), Capital spending (below 5% of net revenue), Free cash flow conversion ratio (at least 80%), Total cash returns to shareholders ($8.9 billion), Foreign exchange translation tailwind (approximately 1 percentage point), Acquisitions net of divestitures contribution (1 percentage point to reported net revenue growth), Reported net revenue growth (4% to 6%)

Segment performance

Q1 FY2026

Segment	Q1 FY2026	YoY
PepsiCo Foods North America (PFNA)	$6.332B	+2.0%
PepsiCo Beverages North America (PBNA)	$6.391B	+9.0%
International Beverages Franchise (IB Franchise)	$0.824B	+9.0%
Europe, Middle East and Africa (EMEA)	$2.823B	+18.0%
Latin America Foods (LatAm Foods)	$1.934B	+16.0%
Asia Pacific Foods	$1.139B	+11.0%

Platform metrics

Q1 FY2026

Segment	Q1 FY2026
Organic Revenue Growth	2.6%
Organic Volume Growth - Convenient Foods	2%
Organic Volume Growth - Beverages	(4)%
Effective Net Pricing	2%
FY2026 Organic Revenue Guidance	2-4%

Profitability

Q1 FY2026

Segment	Q1 FY2026
Core Operating Margin	15.7%
Core EPS Growth	9%
FY2026 Core Constant Currency EPS Growth Guidance	4-6%

Q&A highlights

Bonnie Herzog · Goldman Sachs

Seeking details on PF&A affordability initiatives acceleration in H1 2026, including what's working, expected price point reductions, and how productivity will fund initiatives while maintaining margin expansion.

Management outlined a multi-vector strategy testing at scale in key markets, focusing on low/middle-income consumer affordability friction. Investments are surgical, focused on specific brands/formats/channels, funded through productivity gains. Tests showed good ROI with strong volume returns. Comprehensive plan includes innovation, functionality improvements, and category management.

Affordability initiatives tested at scale in multiple marketsGood ROI demonstrated from testsDouble-digit space gains expected in new resets (March-April timeframe)Frito-Lay expected to grow volume, net revenue, and operating margin in 2026

Kevin Grundy · BNP Paribas

Directly addressing GLP-1 adoption concerns, asking whether innovation/pricing tested in markets addressed this threat, and whether management has quantified higher adoption rate implications for category and outlook.

Management acknowledged broader GLP-1 adoption as baseline assumption. Multiple reaction vectors identified: portion control (tested with families on GLP-1 showing continued engagement in smaller portions); 70%+ of food business already in single-serve; expanded opportunities in hydration (Gatorade relaunch, Propel +20%), fiber (Quaker relaunch), and protein. Framed as opportunity-oriented transformation across multiple markets.

Assuming broader GLP-1 adoption in baseline planning70%+ of U.S. food business already in single-servePropel growing 20%+ in context of hydration opportunityMultiple innovation vectors: portion control, hydration, fiber, protein, cooking methods

Andrew Teixeira · JPMorgan

Seeking clarity on pricing reinvestment levels (article cited up to 15% in some PF&A items), mitigation tools in H1, expected volume recovery trajectory given easier comps, and quarterly guidance cadence.

Management reframed discussion around volume/net revenue/margin growth expectations for Frito-Lay. Emphasized investments will be surgical, not maximum reported in articles. Noted combination of price investment and large space gains (double-digit). Sales growth expected early in year; EPS guidance expected balanced across H1/H2 despite front-loaded operational gains.

Frito-Lay to grow volume, net revenue, and operating margin in 2026Average space gains for Frito-Lay double-digit in new resetsSales growth weighted to early yearEPS guidance balanced between H1 and H2

Darren · Morgan Stanley

Requesting specifics on affordability focus (packages/brands/channels), payback analysis from retailers where actions already taken, and volume vs. price investment ROI.

Management confirmed investments are well-tested at scale with good ROI. Volume returns described as pretty good, addressing category need for units/volume growth. Emphasized leverage benefits from right-sizing Frito-Lay, where incremental volume flows through at favorable margins. Committed to providing more data in coming quarters.

Price investments tested at scale with good ROI demonstratedVolume returns described as pretty goodIncremental volume benefits from right-sized cost structureMore detailed payback data expected in coming quarters

Chris Carey · Wells Fargo Securities

Seeking details on what drove Trademark Pepsi volume/dollar growth in 2025 and momentum continuation plans for 2026; also requesting update on Mountain Dew revitalization strategy.

Pepsi growth attributed to: Pepsi Zero No Sugar innovation with superior taste positioning (100k+ consumer preference), increased advertising, expanded away-from-home/restaurant availability, and Food Deserves Pepsi campaign success. Mountain Dew identified as more difficult, making iterative progress with Baja flavors, especially with Hispanic populations. Localized, segmented marketing approach being refined.

Pepsi Zero showing consumer preference vs. competitor in taste tests (100k+ preference data point)Food Deserves Pepsi campaign successful driverAway-from-home/restaurant availability expansion driving trialMountain Dew improving: 2025 better than 2024, 2026 expected better than 2025

Answers to last quarter's watch list

PFNA volume turn in Q1 FY2026 — Convenient Foods organic volume printed +2% in Q1, and PFNA reported revenue +2% (vs. +1.5% in Q4 2025). This is the first clean positive volume print after three quarters of negative organic volume. The 2026 algorithm-return thesis's primary lever is now demonstrating early traction — though the +2% organic foods volume needs to sustain through the Lay's/Tostitos relaunch lap and into the H2 Gatorade/Quaker relaunches to validate the full-year case. Status: Resolved positively

Advertising re-leverage and operating margin — Q1 core operating margin printed 15.7%, +10bps YoY vs Q1 2025's 15.6%. Core gross margin printed 55.1%, -60bps YoY vs Q1 2025's 55.7%, with operating margin expansion coming from SG&A leverage rather than gross margin. The ~$500M 2025 A&M efficiency lap is now in flight; productivity claims have not yet been numerically reconciled against the SG&A in disclosed form. Status: Continue monitoring

PBNA volume vs. pricing split sustainability — PBNA reported revenue accelerated to +9% from +4% in Q4, but PBNA organic volume printed -4% (reported volume -2.5%) — a softer underlying picture than the Q4 narrative implied. The PBNA reported acceleration is M&A-aided (Celsius/Alani consolidation), with management noting sequential volume improvement vs. prior year. Pepsi-trademark or Gatorade volume not separately disclosed in the press release. Status: Resolved negatively

What to watch into next quarter

PBNA organic volume: Q1 printed -4%, the cleanest negative on this print despite management's commentary that volume trends improved sequentially and YoY. Watch Q2 whether organic volume narrows toward zero (validating the sequential-improvement framing) or stays meaningfully negative (suggesting the M&A-aided PBNA acceleration is masking continued organic erosion).

PFNA volume sustainability: Convenient Foods +2% organic volume in Q1 is the first positive print after a year of declines. Watch whether the +2% sustains or accelerates in Q2 as the affordability reset laps easier comps; deceleration back toward zero would suggest the volume turn was reset-driven rather than structural.

Core gross margin trajectory: 55.1% in Q1 is -60bps YoY, with operating margin expansion (+10bps YoY) coming entirely from SG&A leverage. With A&M re-leveraging into 2026 and affordability investments deploying, a second quarter of gross margin compression raises the question whether SG&A leverage can continue to carry margin expansion.

Q2 implied revenue from FY guide affirmation: management affirmed 4-6% reported revenue growth and 2-4% organic for FY. Against the $22.73B Q2 2025 base, the FY implied range translates loosely to $23.6-$24.1B reported in Q2 — watch whether Q2 lands within or below this implied band given Q1's outperformance was M&A and FX-aided.

Sources

PepsiCo Q1 2026 8-K / press release exhibit 99.1 — https://www.sec.gov/Archives/edgar/data/77476/000007747626000019/q120268-kxexhibit991.htm
PepsiCo Q4 2025, Q3 2025, Q2 2025 tapebriefs (prior-quarter trend baselines)

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