PepsiCo, Inc. 10-Q Filing Summary
Business Context and Reporting Period
This filing is a Quarterly Report on Form 10-Q for PepsiCo, Inc. for the 12-week period ended March 21, 2026. The company operates six reportable segments: PepsiCo Foods North America (PFNA), PepsiCo Beverages North America (PBNA), International Beverages Franchise (IB Franchise), Europe, Middle East and Africa (EMEA), Latin America Foods (LatAm Foods), and Asia Pacific Foods. The report includes unaudited condensed consolidated financial statements prepared in accordance with U.S. GAAP.
Key Financial Metrics
| Metric | Q1 2026 | Q1 2025 | Change |
|---|---|---|---|
| Net Revenue | $19,443 million | $17,919 million | +9% |
| Operating Profit | $3,213 million | $2,583 million | +24% |
| Operating Margin | 16.5% | 14.4% | +2.1 pts |
| Net Income (Attributable to PepsiCo) | $2,327 million | $1,834 million | +27% |
| Diluted EPS | $1.70 | $1.33 | +27% |
| Operating Cash Flow | $41 million | ($973 million) | Improvement |
| Free Cash Flow (Non-GAAP) | ($393 million) | ($1,444 million) | Improvement |
| Total Debt (Short + Long Term) | $52,728 million | N/A | N/A |
| Cash & Equivalents | $10,475 million | N/A | N/A |
Note: Total Debt calculated as Short-term debt obligations ($10,151M) + Long-Term Debt Obligations ($42,577M) as of March 21, 2026.
Material Changes vs. Prior Period
- Revenue Growth: Consolidated net revenue increased 9% year-over-year, driven by a 3% organic revenue increase. Favorable foreign exchange translation contributed 3 percentage points to the reported growth, primarily due to the appreciation of the Mexican peso, Russian ruble, and euro.
- Profitability: Operating profit surged 24%, exceeding revenue growth. This was driven by productivity savings, net revenue growth, favorable mark-to-market gains on commodity derivatives, and a favorable net impact from acquisition/divestiture credits. These were partially offset by operating cost increases.
- Segment Performance:
- EMEA: Reported an 18% revenue increase and 27% operating profit increase, heavily influenced by a 12-percentage-point favorable foreign exchange impact (Russian ruble).
- LatAm Foods: Revenue up 16% and operating profit up 24%, driven by a 13-percentage-point favorable FX impact (Mexican peso).
- PBNA: Operating profit jumped 60% due to lower restructuring charges and favorable acquisition/divestiture credits related to the poppi acquisition, despite a 2.5% decline in unit volume.
- PFNA: Operating profit declined 7% due to operating cost increases and unfavorable net pricing, despite a 2% increase in unit volume.
- Cash Flow: Operating cash flow improved significantly from a use of $973 million in the prior year to a provision of $41 million, reflecting favorable working capital comparisons and operating profit performance.
Guidance, Outlook, and Risks
- Shareholder Returns: On February 3, 2026, the company announced a new $10 billion share repurchase program (expiring Feb 2030) and a 4% increase in the annualized dividend to $5.92 per share. The company expects to return approximately $8.9 billion to shareholders in 2026.
- Productivity Plan: The 2019 Multi-Year Productivity Plan has been extended through 2030. Total expected pre-tax charges are approximately $6.15 billion. As of March 21, 2026, $3.7 billion has been incurred. The majority of remaining charges are expected through 2027.
- Acquisitions: The company acquired poppi (May 2025) and Siete (Jan 2025). The poppi acquisition included contingent consideration, the fair value of which decreased by $116 million in Q1 2026, resulting in a credit to earnings.
- Risks and Contingencies:
- Geopolitical & FX: Operations in Russia (4% of revenue) and other volatile markets (Argentina, Turkey, Middle East) pose risks regarding currency controls, sanctions, and geopolitical instability. Russia accounted for 19% of consolidated cash and 40% of accumulated currency translation adjustment loss.
- Tariffs: Uncertainty remains regarding U.S. tariffs and potential refunds following a Supreme Court ruling invalidating some prior tariffs. New tariffs initiated by the U.S. Administration could impact input costs.
- Taxation: Implementation of the OECD global minimum tax (15%) in 2026 has increased the income tax provision.
- Legal: Ongoing litigation regarding plastic pollution in the U.S. Virgin Islands (USVI Matter) was remanded to state court in March 2026.
Investor Verification Checklist
- Foreign Exchange Sensitivity: Verify the sustainability of revenue and profit growth given the significant contribution (3 percentage points) from favorable FX translation, particularly the Russian ruble and Mexican peso.
- Productivity Plan Execution: Monitor the remaining $2.45 billion in expected pre-tax charges for the 2019 Productivity Plan and the associated cash outflows through 2030.
- Commodity Hedging: Review the impact of mark-to-market gains on commodity derivatives ($182 million credit to operating profit) and assess the risk of reversal in future periods.
- Debt Maturity Profile: Confirm the company's ability to manage debt maturities, noting $1.6 billion in U.S. dollar-denominated senior notes matured and were paid in Q1 2026, alongside new euro-denominated issuances.
- Acquisition Integration: Track the performance of recent acquisitions (poppi, Siete) and the finalization of purchase price allocations, particularly for poppi's contingent consideration.