Why did GAAP EPS fall so sharply if the underlying business was relatively stable?

The $1.86 billion impairment of intangible assets, primarily related to the Rockstar and Be & Cheery brands, reduced GAAP operating profit by about 56% in the quarter. Management excludes this charge from core results, so core EPS of $2.12 gives a better view of ongoing performance, though the impairment does signal weaker expectations for those brands.

Is PepsiCo still on track to meet its 2025 guidance?

Management reaffirmed its 2025 guidance for low-single-digit organic revenue growth and core constant-currency EPS roughly flat versus 2024. The guidance is non-GAAP and excludes FX and commodity mark-to-market effects. Year-to-date core constant-currency EPS is down about 4.5%, so the company needs a stronger second half to reach a flat result.

What changed in the currency outlook, and why does it matter?

The company now expects an FX translation headwind of about 1.5 percentage points, down from about 3 points, because the U.S. dollar has weakened. This improves reported revenue and core EPS expectations in U.S. dollar terms, though the constant-currency underlying trend is unchanged.

Are the dividend and buyback commitments covered by cash flow?

The company still expects about $8.6 billion in shareholder returns for 2025, including $7.6 billion in dividends. Year-to-date operating cash flow was only $996 million, and dividends paid were $3.7 billion, so the balance depends on cash generation in the second half and on additional borrowing. Short-term debt rose to $12.1 billion, which investors may watch closely.

Where is growth coming from, and where is it lagging?

International segments drove results. EMEA organic revenue rose 7% and LatAm Foods rose 6%, and IB Franchise rose 5%. North America was weaker: PFNA organic revenue declined 2% and PBNA was flat, with PBNA volume down 2%. Management says it plans more portfolio innovation and cost optimization to improve North America performance.

PEP 8-K: Earnings & Results

01—Abstract

Summary

Summary of the 8-K filed July 17, 2025. Cited figures are marked; the original filing is the authoritative source.

PepsiCo reported second-quarter 2025 results for the 12 weeks ended June 14, 2025.

Net revenue rose 1.0% to $22.7 billion^a, and organic revenue grew 2.1%, a sign of improving top-line momentum versus the prior quarter. Reported diluted EPS fell 59% to $0.92, driven mainly by a $1.86 billion impairment charge tied to the Rockstar and Be & Cheery brands. On a non-GAAP basis, core EPS was $2.12, and core constant-currency EPS declined 5%.

Core constant-currency operating profit fell 3%^b, with International segments (IB Franchise, LatAm Foods, EMEA) offsetting weakness in North America and Asia Pacific Foods. Management reaffirmed its 2025 framework of low-single-digit organic revenue growth and core constant-currency EPS roughly flat versus 2024. The company lowered its expected foreign exchange headwind to about 1.5 percentage points from about 3 points, which improves the reported outlook.

On that basis, the company now implies a core EPS decline of about 1.5% from 2024 core EPS of $8.16^c, compared with a previously implied 3% decline. Cash returns to shareholders are still expected to total about $8.6 billion, including $7.6 billion in dividends and $1.0 billion in buybacks. The filing also shows balance sheet and cash flow pressure.

Year-to-date operating cash flow was $996 million^d versus $1,315 million a year earlier, as working capital absorbed cash. Short-term debt rose to $12.1 billion from $7.1 billion at year-end 2024, and year-to-date acquisition spending was about $3.1 billion. Investors will likely focus on whether North America execution improves enough to support the flat core EPS outlook, and on the pace of free cash flow generation relative to dividend commitments.

02—Key points

Key Highlights

Net revenue grew 1.0% to $22.726 billion in Q2 2025; organic revenue grew 2.1%, with International Beverages Franchise up 5% and EMEA up 7% organically.
GAAP diluted EPS fell 59% to $0.92, mainly due to a $1.86 billion impairment of intangible assets (Rockstar and Be & Cheery brands); impairment and other charges contributed roughly $1.05 per share.
Core EPS was $2.12, and core constant-currency EPS declined 5%; year-to-date core EPS was $3.59, down 4.5% on a constant-currency basis.
North America weakened: PBNA core operating profit was flat, PFNA's core constant-currency operating profit fell 13%, and PBNA volume declined 2% in the quarter.
Full-year 2025 guidance was maintained: low-single-digit organic revenue growth and core constant-currency EPS approximately flat, with the FX headwind revised down to about 1.5 points from about 3 points.
Implied 2025 core EPS decline improved to about 1.5% from 3%, based on the 2024 core EPS base of $8.16.
Year-to-date operating cash flow fell to $996 million from $1,315 million, and short-term debt rose to $12.1 billion from $7.1 billion at year-end 2024.

03—Questions

Frequently Asked Questions

Why did GAAP EPS fall so sharply if the underlying business was relatively stable?
The $1.86 billion impairment of intangible assets, primarily related to the Rockstar and Be & Cheery brands, reduced GAAP operating profit by about 56% in the quarter. Management excludes this charge from core results, so core EPS of $2.12 gives a better view of ongoing performance, though the impairment does signal weaker expectations for those brands.
Is PepsiCo still on track to meet its 2025 guidance?
Management reaffirmed its 2025 guidance for low-single-digit organic revenue growth and core constant-currency EPS roughly flat versus 2024. The guidance is non-GAAP and excludes FX and commodity mark-to-market effects. Year-to-date core constant-currency EPS is down about 4.5%, so the company needs a stronger second half to reach a flat result.
What changed in the currency outlook, and why does it matter?
The company now expects an FX translation headwind of about 1.5 percentage points, down from about 3 points, because the U.S. dollar has weakened. This improves reported revenue and core EPS expectations in U.S. dollar terms, though the constant-currency underlying trend is unchanged.
Are the dividend and buyback commitments covered by cash flow?
The company still expects about $8.6 billion in shareholder returns for 2025, including $7.6 billion in dividends. Year-to-date operating cash flow was only $996 million, and dividends paid were $3.7 billion, so the balance depends on cash generation in the second half and on additional borrowing. Short-term debt rose to $12.1 billion, which investors may watch closely.
Where is growth coming from, and where is it lagging?
International segments drove results. EMEA organic revenue rose 7% and LatAm Foods rose 6%, and IB Franchise rose 5%. North America was weaker: PFNA organic revenue declined 2% and PBNA was flat, with PBNA volume down 2%. Management says it plans more portfolio innovation and cost optimization to improve North America performance.

04—Continue

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