PepsiCo, Inc. — Form 10-Q Summary
Reporting period: 12 and 36 weeks ended September 5, 2026, compared with the periods ended September 6, 2025. The filing is unaudited; the independent accountant’s review reported no material modifications needed for GAAP conformity. International results follow calendar months, so period alignment differs from North America.
Financial performance
| Metric | 12 weeks | 36 weeks |
|---|---|---|
| Net revenue | $25.274 billion, +6% | $68.898 billion, +7% |
| Operating profit | $4.260 billion, +19% | $11.496 billion, +45% |
| Operating margin | 16.9%, versus 14.9% | 16.7%, versus 12.3% |
| Net income attributable to PepsiCo | $3.048 billion, +17% | $8.356 billion, +47% |
| Diluted EPS | $2.23, +17% | $6.10, +47% |
| Operating cash flow | Not reported separately | $7.950 billion, versus $5.468 billion |
| Free cash flow (non-GAAP) | Not reported separately | $5.857 billion, versus $3.241 billion |
For the 36 weeks, gross profit was $37.596 billion versus $35.239 billion; gross margin was approximately 54.6%, broadly unchanged. Net income attributable to PepsiCo was approximately 12.1% of revenue, versus 8.8% in the prior-year period. Company-defined core diluted EPS, a non-GAAP measure, was $2.34 for 12 weeks (+2%) and $6.15 for 36 weeks (+5%); constant-currency growth was 1.5% and 2%, respectively.
Revenue growth was 3% organic in both periods. Organic volume increased 0.5% for 12 weeks and 0.5% for 36 weeks; effective net pricing contributed 3% and 2%, respectively. Favorable foreign exchange contributed 1 percentage point to 12-week reported revenue growth and 2 points to 36-week growth.
Segments and changes versus prior year
- PFNA: Revenue was roughly flat and operating profit fell 13% in the quarter; nine-month operating profit declined 8%. Unfavorable pricing and higher costs weighed on results.
- PBNA: Revenue rose 5% for the quarter and 7% year to date, but unit volume declined 2% and 3%, respectively. Reported operating profit rose sharply, aided by tariff refunds, acquisition-related credits, productivity savings and the prior-year Rockstar impairment.
- International: IB Franchise, EMEA, LatAm Foods and Asia Pacific Foods generally reported revenue growth. Volume strength included India and parts of the Middle East; performance varied by market. LatAm reported growth benefited materially from favorable currency translation.
Reported operating-profit growth overstates underlying improvement in the 36-week comparison: the prior-year period included $1.960 billion of impairment and other charges, primarily for the Rockstar and Be & Cheery brands. The current period also benefited from tariff refunds and acquisition/divestiture-related credits. On the company’s adjusted constant-currency basis, operating profit grew 3% for 36 weeks and 2.5% for 12 weeks.
Cash, debt and liquidity
Operating cash flow increased by $2.482 billion year over year for the 36-week period, which management attributed primarily to stronger operating profit and favorable working-capital comparisons. Capital spending was $2.182 billion, down from $2.499 billion. Cash and cash equivalents were $10.675 billion and short-term investments $488 million at September 5, 2026.
Short-term debt was $9.223 billion and long-term debt $42.658 billion, totaling $51.881 billion, compared with $49.182 billion at December 27, 2025. Current assets of $32.559 billion were below current liabilities of $34.529 billion. The company had $4.8 billion of commercial paper outstanding and no borrowings under its new revolving credit facilities. Management said operating cash generation, financing access and credit facilities should be adequate for anticipated needs.
Cash dividends paid were $5.935 billion and share repurchases were $739 million during the 36 weeks. PepsiCo expects to return approximately $8.9 billion to shareholders in 2026: approximately $7.9 billion in dividends and $1.0 billion in repurchases. Its $10 billion repurchase authorization runs through February 28, 2030.
Outlook, commentary, risks and unusual items
- No full-year revenue, earnings or EPS guidance is stated in the provided filing text. Management expects approximately $500 million of additional pre-tax charges and $250 million of cash expenditures under its productivity plan during the remainder of 2026. The plan is expected to total approximately $6.15 billion of pre-tax charges, with most remaining charges and cash expenditures expected through 2027 and the balance through 2030.
- The 2019 Productivity Plan had generated $4.0 billion of pre-tax charges and $3.1 billion of cash expenditures through September 5, 2026. Management expects to fund charges primarily from operating cash flow.
- A $144 million pre-tax pension settlement charge ($111 million after tax, or $0.08 per share) arose from lump-sum distributions. Additional fourth-quarter distributions could trigger further charges.
- Tariff refunds favorably affected operating profit; the company received substantially all refunds sought for eligible tariffs invalidated by a U.S. Supreme Court ruling. New and potential tariffs leave continuing uncertainty around input costs, supply chains and demand.
- Other cited risks include commodity, labor and transportation costs; foreign exchange and currency restrictions; geopolitical instability; product taxes and regulation; climate-related requirements; retail and private-label competition; and changes in global tax rules. The 15% OECD global minimum tax took effect in various countries in 2026 and increased the income tax provision.
- Russia represented 5% of consolidated revenue for the 36 weeks, 5% of consolidated assets and 20% of consolidated cash and cash equivalents at period end. Management reported no material liquidity impact to date, while noting political, currency and operating risks.
- PepsiCo reported a $12 million fair value for poppi acquisition contingent consideration, which could require a $300 million payment if performance milestones are achieved by the third quarter of 2027. A separate post-period investment conversion and hedge is expected to produce $50 million of pre-tax income in fourth-quarter 2026.
- The Baltimore lawsuit’s remaining public-nuisance claim was dismissed; plaintiffs appealed. Management does not expect the disclosed litigation and proceedings, individually or collectively, to have a material adverse effect, though outcomes are uncertain.
- ERP implementation materially affected internal control over financial reporting, but management said it had no adverse effect and is not expected to have one. Disclosure controls were assessed as effective.
Investor verification priorities
- Separate recurring operating trends from prior-year impairments, tariff refunds, currency movements, productivity charges and poppi-related fair-value credits; review the company’s GAAP-to-non-GAAP reconciliations.
- Track PBNA and PFNA volume, pricing and margins, as well as whether international growth persists after currency effects.
- Assess cash conversion, working-capital movements, capital needs and the funding of dividends, repurchases and debt maturities.
- Monitor short-term borrowings, commercial-paper access, leverage and the portion of debt exposed to variable rates, which rose to approximately 15% from 11% at year-end.
- Verify actual productivity-plan charges and cash expenditures against management’s remaining 2026 and longer-term estimates, and monitor possible additional pension settlement charges.
- Follow tariff policy and refunds, international currency and geopolitical exposures, global minimum-tax effects, litigation developments and ERP-related control changes.