10-QPeriod: Q3 FY2025

COCA COLA CO Quarterly Report for Q3 Ended Sep 26, 2025

Filed October 23, 2025For Securities:KO

Summary

The Coca-Cola Company reported a strong third quarter for fiscal year 2025, with consolidated net income attributable to shareowners reaching $3.696 billion, a significant increase from $2.848 billion in the prior year period. This growth was driven by a 5% increase in net operating revenues, totaling $12.455 billion, fueled by effective pricing strategies and a favorable product and geographic mix, which offset moderate volume performance and currency headwinds. Profitability saw a notable improvement, with operating income rising 59% year-over-year to $3.982 billion, largely due to a substantial reduction in "other operating charges" compared to the prior year, which included significant non-recurring items. The company continues to manage its debt effectively, with a strong liquidity position and robust cash flow from operations. The company also provided an update on its ongoing tax litigation with the IRS, noting a continued appeal and a revised tax reserve, though it maintains confidence in its position. Overall, the results demonstrate the company's resilience and ability to drive profitable growth through strategic execution.

Financial Highlights

52 data points
Beta

Revenue

$12.46B

61.5% Gross Margin

Net Income

$3.70B

29.7% Net Margin

EPS (Diluted)

$0.86

Total Assets

$106.05B

Cash & Equivalents

$12.73B

Free Cash Flow

$4.56B

Financial Statements
Beta
Revenue$12.46B
Cost of Revenue$4.80B
Gross Profit$7.66B
SG&A Expenses$3.62B
Operating Income$3.98B
Interest Expense$391.00M
Net Income$3.70B
EPS (Basic)$0.86
EPS (Diluted)$0.86
Shares Outstanding (Basic)4.30B
Shares Outstanding (Diluted)4.31B

Key Highlights

  • 1Net operating revenues increased by 5% to $12.455 billion for the three months ended September 26, 2025, compared to $11.854 billion in the prior year period, driven by a 6% favorable impact from price, product, and geographic mix.
  • 2Consolidated Net Income Attributable to Shareowners surged by 29.8% to $3.696 billion for the third quarter, up from $2.848 billion in the prior year.
  • 3Operating income increased significantly by 59% to $3.982 billion, primarily due to a substantial reduction in "other operating charges" compared to the prior year's $1.044 billion.
  • 4Gross profit margin improved to 61.5% from 60.7% year-over-year, reflecting favorable pricing initiatives and bottling operation refranchising.
  • 5The company generated $3.652 billion in net cash from operating activities for the nine months ended September 26, 2025, an increase of 28% from the prior year, demonstrating strong operational cash generation.
  • 6The company continues to manage its debt, with long-term debt of $43.177 billion at the end of the quarter, while maintaining a robust cash and cash equivalents balance of $12.732 billion.
  • 7A significant update on the ongoing IRS tax litigation was provided, including the payment of a substantial deposit and the ongoing appeals process, with a revised tax reserve of $502 million.

Frequently Asked Questions

The primary driver of the significant increase in operating income was a substantial reduction in "other operating charges" compared to the prior year's third quarter. The prior year period included $1.044 billion in such charges, largely related to the remeasurement of contingent consideration for the fairlife acquisition, while the current quarter recorded only $58 million in other operating charges.

Currency fluctuations had a mixed impact. For the three months ended September 26, 2025, foreign currency exchange rates had an even impact on consolidated net operating revenues and an unfavorable impact of 4% on operating income. For the nine months, it unfavorably impacted net operating revenues by 3% and operating income by 12%, primarily due to a stronger U.S. dollar against several foreign currencies.

The company paid $6.0 billion (including interest) as a deposit for the 2007-2009 tax years. The appeal process is ongoing, with the company having filed its principal appellate brief. The company maintains its belief that its tax positions will ultimately be sustained on appeal, but a revised tax reserve of $502 million has been established. The potential aggregate remaining incremental tax and interest liability for tax years 2010-2024 is estimated at $12 billion.

Divestiture activities, such as the sale of a portion of its interest in Coca-Cola Europacific Partners plc and refranchising of bottling operations in India, contributed to gains recognized in "other income (loss) - net." These activities also impacted the "Acquisitions & Divestitures" component in the revenue analysis, with the nine-month analysis showing a 1% decrease in net operating revenue attributed to these events.