tapebrief
PEP · Q1 2026

PEP · Q2 2026 Earnings

Cautious

PepsiCo

Reported July 9, 2026

30-second summary

Q2 revenue grew 6.4% to $24.18B, beating consensus of $23.97B by 0.9% — but the reported print was aided by outsized FX (+2.2pp) and M&A (+1.8pp), with underlying organic growth of 2.4% decelerating from Q1's 2.6% and sitting in the lower half of the FY 2-4% range. Core EPS of $2.20 missed consensus by a penny (-0.5%), though YTD core EPS growth of +6% sits squarely within the FY 5-7% reported guide. PepsiCo reaffirmed every line of FY2026 guidance unchanged. The underlying algorithm is running near the low end: YTD organic revenue +2.5%, YTD core EPS growth +6%, both toward the floor of their respective bands two quarters in.

Headline numbers

EPS

Q2 FY2026

$2.20

-0.5% vs est.

Revenue

Q2 FY2026

$24.18B

+6.4% YoY

+0.9% vs est.

Gross margin

Q2 FY2026

54.2%

Operating margin

Q2 FY2026

16.6%

Key financials

Q2 FY2026
MetricQ2 FY2026Q2 FY2025YoYQ1 FY2026QoQ
Revenue$24.18B$22.73B+6.4%$19.44B+24.4%
EPS$2.20$2.12+3.8%$1.61+36.6%
Gross margin54.2%54.7%-50bps55.1%-90bps
Operating margin16.6%7.9%+870bps15.7%+90bps

Guidance

PepsiCo reaffirms full-year FY2026 guidance across all metrics; Q2 revenue beat consensus while EPS marginally missed.

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

Actuals vs prior guidance

MetricPeriodPrior guideActualΔResult
RevenueQ2 FY2026—$24.181 billion+0.9% above consensus ($23.97B)Beat
Core EPSQ2 FY2026—$2.20-0.5% below consensus ($2.21)Missed

Reaffirmed unchanged this quarter: Organic revenue growth (2% to 4%), Core constant currency EPS growth (4% to 6%), Core EPS growth (reported) (5% to 7%), 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 contribution to net revenue (1 percentage point)

Segment performance

Q2 FY2026
SegmentQ2 FY2026Q2 FY2025YoY
PepsiCo Foods North America (PFNA)$6.368B$6.476B-1.7%
PepsiCo Beverages North America (PBNA)$7.243B$6.796B+6.6%
International Beverages Franchise (IB Franchise)$1.523B$1.368B+11.3%

Platform metrics

Q2 FY2026
SegmentQ2 FY2026Q2 FY2025YoY
Organic revenue growth2.4%——
Organic volume growth1%——
Effective net pricing contribution2%——
FX translation benefit to net revenue2.2 ppts——

Profitability

Q2 FY2026
SegmentQ2 FY2026Q2 FY2025YoY
Core operating margin16.8%——
Core EPS growth4%——

Other KPIs

Q2 FY2026
SegmentQ2 FY2026Q2 FY2025YoY
Europe, Middle East and Africa (EMEA)$4.983B$4.536B+9.9%
Latin America Foods (LatAm Foods)$2.94B$2.548B+15.4%
Asia Pacific Foods$1.124B$1.002B+12.2%

Answers to last quarter's watch list

PBNA organic volume — PBNA Q2 organic revenue printed +1% (vs. +1% in Q1 YTD-implied) with disclosed organic volume of -2pp offset by +3pp effective net pricing. Reported revenue +7% is heavily aided by the acquisitions completed in 2025 (+6pp M&A contribution). Underlying volume remains negative but the pace of decline has moderated relative to earlier quarters. Status: Continue monitoring
PFNA volume sustainability — PFNA Q2 reported revenue -2% and organic -2%, with the decline attributed to lower effective net pricing. YTD PFNA organic volume contributed +1pp to organic revenue, but the Q2 stand-alone showed zero organic volume contribution — a clear deceleration from Q1. The Q1 volume turn narrated by management has not compounded into Q2. Status: Resolved negatively
Core gross margin trajectory — Core gross margin printed 54.3% in Q2, -80bps YoY, the second consecutive quarter of core gross margin compression. Core operating margin also turned negative at -40bps YoY, meaning SG&A leverage is no longer offsetting gross margin pressure. The prior watch item is now decisively answered: SG&A leverage cannot carry margin expansion when core gross margin keeps compressing. Status: Resolved negatively
Reported revenue vs. FY guide math — Q2 reported revenue printed $24.18B, +6.4% YoY, above the FY reported guide of 4-6%. But FX contributed +2.2pp and M&A contributed +1.8pp, both above their respective ~1pp FY guides — the reported outperformance is entirely non-organic, and organic at +2.4% actually decelerated slightly from Q1's +2.6% and sits below the FY organic midpoint. Status: Resolved positively on reported; Resolved negatively on underlying organic quality.

What to watch into next quarter

PFNA revenue and pricing dynamics in Q3: reported -2% in Q2 with the decline attributed to lower effective net pricing is the most important data point on the print. Watch whether PFNA affordability investments show through in volume/share gains large enough to offset the pricing headwind on revenue in Q3.

Reported vs. organic gap: Q2 reported +6.4% vs. organic +2.4% is a 4pp gap carried by FX (+2.2pp) and M&A (+1.8pp) — both running above the FY ~1pp guides. Watch whether Q3 sees FX moderate as the tailwind laps and whether the M&A contribution begins to normalize toward guidance.

Core operating margin trajectory: -40bps YoY in Q2 after Q1's flattish core operating margin turns margin negative. Watch whether Q3 returns to expansion or whether affordability investments are structurally consuming productivity savings.

Organic pricing vs. volume mix: Q2 organic build was +2pp pricing / +1pp volume — a healthier mix than 2025's price-dependent growth, but pricing continues to moderate and PFNA specifically saw -2pp pricing. Watch whether Q3 sustains the positive-volume/positive-pricing split at the total-company level or whether pricing compresses further under affordability investments.

Core constant-currency EPS vs. FY 4-6% guide: YTD core constant-currency EPS growth of +3% sits below the FY 4-6% band. Watch whether H2 accelerates to bring the metric into range or whether the FY constant-currency guide comes under pressure.

Sources

  1. PepsiCo Q2 2026 8-K / press release exhibit 99.1 — https://www.sec.gov/Archives/edgar/data/77476/000007747626000037/q220268-kxexhibit991.htm
  2. PepsiCo Q1 2026, Q4 2025, Q3 2025, Q2 2025 tapebriefs (prior-quarter trend baselines)

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