10-QPeriod: Q2 FY2025

PEPSICO INC Quarterly Report for Q2 Ended Jun 14, 2025

Filed July 17, 2025For Securities:PEP

Summary

PepsiCo Inc. reported mixed financial results for the 12 weeks ended June 14, 2025. While net revenue saw a modest 1% increase to $22.7 billion, the company experienced a significant 56% decline in operating profit, falling to $1.8 billion. This sharp decrease in profitability was largely driven by a substantial $1.9 billion impairment charge related to the Rockstar and Be & Cheery brands. Excluding this one-time charge, operating profit showed a more moderate decline. For the 24-week period, net revenue remained flat at $40.6 billion, while operating profit declined 35% to $4.4 billion, also impacted by brand impairments and higher costs. The company completed significant acquisitions during the period, including Siete and poppi, which are expected to contribute to future growth. Despite the profitability challenges in the current quarter, PepsiCo continues to return capital to shareholders through dividends and share repurchases and has access to substantial credit facilities.

Financial Highlights

51 data points
Beta

Revenue

$22.73B

54.7% Gross Margin

Net Income

$1.26B

5.6% Net Margin

EPS (Diluted)

$0.92

Total Assets

$105.34B

Cash & Equivalents

$7.63B

Free Cash Flow

$1.97B

Financial Statements
Beta
Revenue$22.73B
Cost of Revenue$10.30B
Gross Profit$12.42B
SG&A Expenses$8.77B
Operating Income$1.79B
Interest Expense$260.00M
Net Income$1.26B
EPS (Basic)$0.92
EPS (Diluted)$0.92
Shares Outstanding (Basic)1.37B
Shares Outstanding (Diluted)1.37B

Key Highlights

  • 1Net revenue for the 12-week period increased 1% to $22.7 billion, while the 24-week revenue remained flat at $40.6 billion.
  • 2Operating profit for the 12-week period significantly declined by 56% to $1.8 billion, primarily due to a $1.9 billion impairment charge on the Rockstar and Be & Cheery brands.
  • 3The company completed two key acquisitions: Siete for $1.2 billion and poppi for $1.95 billion.
  • 4Net cash provided by operating activities decreased to $996 million for the 24-week period, down from $1.3 billion in the prior year, resulting in negative free cash flow of $342 million.
  • 5PepsiCo continues to prioritize returning capital to shareholders, with expected total distributions of approximately $8.6 billion in 2025 through dividends and share repurchases.
  • 6The company's international operations generated 41% of consolidated net revenue for the 24-week period, with ongoing monitoring of geopolitical and economic risks in key international markets.
  • 7Effective net pricing was a key driver for revenue growth in several segments, partially offsetting volume declines in some areas.

Frequently Asked Questions

The substantial decrease in operating profit for the 12 weeks ended June 14, 2025, was primarily due to a significant impairment charge of $1.9 billion related to the Rockstar and Be & Cheery brands. This non-recurring charge impacted the reported profitability for the quarter.

PepsiCo acquired Siete for $1.2 billion and poppi for $1.95 billion. These acquisitions are strategic moves aimed at expanding the company's portfolio in fast-growing food and beverage categories. While contributing to a significant outflow of cash for investing activities, they are expected to drive future revenue and market share growth.

PepsiCo has accessed capital markets by issuing new notes totaling $3.5 billion and has a strong liquidity position with significant revolving credit facilities. The company continues to return capital to shareholders through dividends and share repurchases, indicating confidence in its ongoing cash generation and financial stability. The company's total liabilities increased primarily due to higher short-term and long-term debt obligations.

Key risks include volatile geopolitical conditions in international markets impacting operations and currency exchange rates, commodity price fluctuations, supply chain disruptions, potential regulatory changes and taxes on products, and ongoing shifts in the retail landscape. The company also noted the impact of foreign exchange on revenue performance in certain international markets.