PEP · Q2 2025 Earnings

Cautious

PepsiCo

Reported July 17, 2025

30-second summary

Revenue rose just 1% YoY to $22.73B with organic growth of 2.1% entirely priced (+4.0% net pricing, -1.5% volume), and core constant-currency EPS fell 5%. The headline news is on FY guide: management narrowed the implied 2025 core EPS decline to ~1.5% (from ~3% previously) as the FX headwind eased to ~1.5pts from ~3pts — this is an FX-driven improvement, not an operational one. North America remains the problem (PFNA +1%, PBNA flat, LatAm Foods -7%); international is doing the heavy lifting (EMEA +8%).

Headline numbers

EPS

Q2 FY2025

$2.12

Revenue

Q2 FY2025

$22.73B

+1.0% YoY

Gross margin

Q2 FY2025

54.7%

Operating margin

Q2 FY2025

7.9%

Key financials

Q2 FY2025

Metric	Q2 FY2025	YoY
Revenue	$22.73B	+1.0%
EPS	$2.12	—
Gross margin	54.7%	—
Operating margin	7.9%	—

Guidance

Prior quarter data unavailable — comparison not possible.

Segment performance

Q2 FY2025

Segment	Q2 FY2025	YoY
PepsiCo Foods North America (PFNA)	$6.476B	+1.0%
PepsiCo Beverages North America (PBNA)	$6.796B	—
International Beverages Franchise (IB Franchise)	$1.368B	+3.0%

Platform metrics

Q2 FY2025

Segment	Q2 FY2025
Organic Revenue Growth	2.1%
Organic Volume Change	-1.5%
Effective Net Pricing	+4.0%
Foreign Exchange Impact on Net Revenue	-1.5%

Profitability

Q2 FY2025

Segment	Q2 FY2025
Core EPS	$2.12
Core Constant Currency EPS Change	-5%
Gross Margin	54.7%
Core Operating Margin	17.2%

Other KPIs

Q2 FY2025

Segment	Q2 FY2025	YoY
Europe, Middle East and Africa (EMEA)	$4.536B	+8.0%
Latin America Foods (LatAm Foods)	$2.548B	-7.0%
Asia Pacific Foods	$1.002B	+0.5%

Management tone

Without prior-quarter transcripts to triangulate against, the tone read here is anchored to the current Q&A. Management's confidence in Q&A registered as moderate-to-high (4/5), driven almost entirely by the H2 productivity story rather than demand re-acceleration.

The productivity narrative is doing a lot of work. Jamie Caulfield's claim of "70% more productivity in H2 vs H1" — funded by plant closures, line shuttering, and workforce right-sizing — is the load-bearing assumption behind the FY EPS guide. That this is an internal lever (rather than a demand call) signals management does not expect the top line to bail them out in H2.

Ramon LaGuarta's framing of North America recovery — "sequential top-line improvement and return to low end of long-term algorithm over next few quarters" — is notably hedged. On UBS's question about confidence, he conceded "I don't have the magic ball" on the 3-4 quarter timeline. That's an honest admission that the inflection isn't visible yet.

Reinvestment language was deliberate: productivity is being routed to value (entry price points, everyday low price), away-from-home expansion, and A&M maintenance — not dropped to the bottom line. Read straight, this means the EPS guide assumes the savings get spent, leaving margin expansion contingent on volume recovery that hasn't shown up.

Q&A highlights

Bonnie Herzog · Goldman Sachs

Quantify productivity savings target for 2025 above the typical $1 billion run rate, and explain how PepsiCo is balancing reduced asset footprint with medium-to-long-term growth and realistic category growth expectations.

Jamie Caulfield indicated 70% more productivity in H2 vs H1, with stepped-up delivery from Frito driven by plant closures, line shuttering, and workforce right-sizing. Management emphasized multi-year productivity opportunity across North America integration, global capability centers, and other cost levers (procurement, operating model, travel/expense). Long-term algorithm targeting low single-digit growth remains unchanged.

70% productivity increase in H2 vs H1Two plants closed; excess manufacturing capacity addressedOver 60% of U.S. food volume in smaller formatsPermissible portfolio over $2 billion

Steve Powers · Deutsche Bank

Identify the top 1-3 critical initiatives to drive North America improvement in PFNA and PBNA in H2, and define what success looks like in terms of run-rate exit targets.

Ramon LaGuarta outlined three priorities for food: stabilizing the category through granular value investments, improving competitiveness in sub-segments (Cheetos, Doritos, permissibles), and accelerating away-from-home. For beverages: improving colas (Pepsi no-sugar focus) and recovering Gatorade share in sports. Success defined as sequential top-line improvement and return to low end of long-term algorithm over next few quarters.

Permissible portfolio over $2 billion with SunChips, Popcorners, Siete, SimplyLay's and Tostitos relaunch planned for Q4-Q1 (removing artificials)Away-from-home margin accretive; higher margin than retailPepsi no-sugar gaining share; Gatorade gaining share in sports in H1

Darryl Moschini · Morgan Stanley

Explain visibility and assumptions behind H2 productivity acceleration, how tariffs impact guidance, and the rationale for dropping productivity gains to bottom line vs. reinvesting in growth.

Jamie Caulfield cited high confidence in productivity acceleration, driven by initiatives identified in Q1-Q2 that will accrue in H2. Tariffs factored into guidance with mitigating actions already taken. Ramon LaGuarta clarified reinvestment priorities: technology, value (entry points and everyday low price), away-from-home, and A&M levels maintained; productivity funds long-term investment, not purely bottom-line accretion.

High confidence level in H2 productivity phasingTariffs factored into guidance; mitigants under considerationReinvestment in technology, data, and AI to drive efficiencyValue investments surgical and return-on-investment tracked

Filippo Filorni · Citi

Quantify away-from-home business size for beverages vs. foods, expected continuation of high single-digit growth in PB&A, and long-term opportunity.

Ramon LaGuarta characterized away-from-home as sizable, larger in beverages than foods, margin accretive for both, and a physical availability effort expanding into mini-meals and ready-to-eat innovation. Growth expected to continue; described as very incremental and a focus area.

Away-from-home higher margin than retail for both beverages and snacksBigger part of beverage business than food businessPhysical availability layer expanding into innovation and ready-to-eat solutionsExpected to receive more resources and visibility going forward

Peter Grom · UBS

Assess confidence level and visibility into returning to low end of long-term algorithm; compare current confidence vs. last 12 months and identify key drivers of improved confidence.

Ramon LaGuarta attributed improved confidence to sustained international growth combined with sequential North America improvement, enabling return to low-end algorithm in 3-4 quarters. Drivers include competitive gains in category subsegments, productivity-funded reinvestment in value/innovation, and away-from-home returns.

Sustained international growth confirmedSequential North America improvement underwayTimeline: 3-4 quarters to low-end algorithm (uncertain: 'I don't have the magic ball')Granular investment approach and increased productivity driving confidence

What to watch into next quarter

PFNA organic volume: track whether Q3 volume turns positive. Q2 organic volume was -1.5% with growth entirely priced; another quarter of volume-negative/price-positive mix raises the risk that the Lay's/Tostitos relaunch (Q4-Q1) is too late to rescue the FY trajectory.

LatAm Foods stabilization: -7% in Q2 with no recovery timeline given. Watch whether Q3 revenue decline narrows or worsens — this is the weakest geography by a wide margin and management didn't address it substantively.

Implied H2 EPS bridge: with H1 core cc-EPS down 5% YoY and FY guided to ~flat, H2 must grow ~5% in cc-EPS terms. Watch Q3 cc-EPS specifically — if it's down again, the FY guide is at risk and the FX-driven USD EPS improvement will be the only buffer.

Away-from-home channel disclosure: management called this margin-accretive and "very incremental" but declined to size it. Watch whether Q3 brings a disclosed number or growth rate — opacity on a stated strategic priority is itself a signal.

PBNA pricing/volume split: PBNA was flat in aggregate. Watch whether Pepsi no-sugar share gains and Gatorade sports recovery translate into positive volume, or whether beverages stay pricing-dependent.

Sources

PepsiCo Q2 2025 8-K / press release exhibit 99.1 — https://www.sec.gov/Archives/edgar/data/77476/000007747625000046/q220258-kxexhibit991.htm
PepsiCo Q2 2025 earnings call Q&A (analyst exchanges referenced above)

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