Why did GAAP EPS decline so sharply when revenue grew?

The decline was driven by non-cash impairment charges, mainly related to the Rockstar brand, which totaled $133M in Q3 and $1.99B year-to-date. These charges, together with other items affecting comparability, reduced GAAP operating profit by 8% in Q3 and 25% year-to-date, even though revenue increased. Core EPS, which excludes these items, was $2.29 in Q3.

Is PepsiCo maintaining its 2025 guidance?

Yes. PepsiCo affirmed its 2025 guidance for low-single-digit organic revenue growth and core constant currency EPS roughly flat versus 2024. It also reiterated a core tax rate of about 20% and total cash returns to shareholders of about $8.6B, including $7.6B in dividends and $1.0B in buybacks. The updated FX assumption, a 0.5-point headwind instead of 1.5, improves the core USD EPS outlook.

Who is the new CFO and what is his compensation?

Steve Schmitt, 52, currently CFO of Walmart U.S., will become EVP and CFO on November 10, 2025. He will receive a $900K base salary, a 150% target annual incentive, a $3.5M sign-on bonus (with $2M paid upfront and $1.5M after one year), a $5M target LTI award expected March 1, 2026, and a $7M one-time RSU grant that vests 50% at years one and two.

What happens to the outgoing CFO, Jamie Caulfield?

Jamie Caulfield will continue to work for PepsiCo through May 15, 2026, under a transition agreement. During that period he will keep his current base salary and remain eligible for annual and long-term incentive programs and certain retirement and health and welfare benefits. He will then retire, and the agreement includes customary confidentiality, non-compete, non-disparagement, non-solicitation, and general release provisions.

Does the board change or any other issue require attention?

Director Darren Walker notified the company on October 3, 2025, that he will retire from the board effective November 19, 2025. The company stated that his decision was not due to any disagreement with PepsiCo on operations, policies, or practices, and that he is leaving to focus on other professional opportunities as his tenure as president of the Ford Foundation ends this year.

PEP 8-K: Earnings & Results & Leadership Changes

01—Abstract

Summary

Summary of the 8-K filed October 9, 2025. Cited figures are marked; the original filing is the authoritative source.

PepsiCo reported third-quarter 2025 results for the 12 weeks ended September 6, 2025, with reported net revenue up 2.6% to $23.9 billion^a and organic revenue up 1.3%.

However, GAAP EPS fell 11% to $1.90^b, driven mainly by a $1.99 billion year-to-date impairment charge, primarily tied to the Rockstar brand, which pushed 36-week operating profit down 25%. On a non-GAAP basis, Q3 core EPS was $2.29, with core constant currency EPS down 2%. Year-to-date core constant currency EPS declined 3.5%, and the company's full-year outlook calls for low-single-digit organic revenue growth and core constant currency EPS roughly flat versus 2024's $8.16 core EPS.

Management said the improved outlook for core USD EPS reflects a smaller expected foreign exchange headwind of about 0.5 points, down from 1.5 points previously. Leadership changes are the other key item. Steve Schmitt, currently CFO of Walmart U.S., will become EVP and CFO effective November 10, 2025, succeeding Jamie Caulfield, who will stay on through a transition agreement ending May 15, 2026.

Schmitt's package includes a $900,000^c base salary, a 150% incentive target, a $3.5 million sign-on bonus, and a $7 million special RSU grant intended to offset forfeited compensation from his prior employer. Director Darren Walker will also retire from the board effective November 19, 2025, for reasons unrelated to any disagreement with the company. For investors, the central tension is between top-line stabilization and profit pressure.

Organic growth remains modest, cost pressure is severe enough to prompt a 'right-sizing' of the cost base, and the Rockstar impairment raises questions about the health of acquired and indefinite-lived brands. The CFO transition arrives at a time when management is emphasizing cost optimization and portfolio reshaping, so execution under new leadership will be closely watched.

02—Key points

Key Highlights

Q3 reported net revenue rose 2.6% to $23.9B, with organic revenue up 1.3%; year-to-date reported revenue grew 0.8%, and organic revenue grew 1.5%.
GAAP diluted EPS fell 11% to $1.90 in Q3 and 29% to $4.15 year-to-date, largely due to a $1.99B year-to-date impairment charge, mainly related to the Rockstar brand.
Core EPS was $2.29 in Q3, with core constant currency EPS down 2%; year-to-date core constant currency EPS declined 3.5%.
Full-year 2025 guidance was affirmed: low-single-digit organic revenue growth and core constant currency EPS approximately flat versus 2024's $8.16. Management improved the core USD EPS outlook because the FX headwind is now expected to be about 0.5 points, down from 1.5 points.
Steve Schmitt, Walmart U.S. CFO, will become PepsiCo's EVP and CFO effective November 10, 2025, with a $900K base salary, 150% target bonus, $3.5M sign-on bonus, and $7M special RSU grant.
Jamie Caulfield will remain under a transition agreement through May 15, 2026, before retiring. Director Darren Walker will retire from the board effective November 19, 2025.
Segment performance was mixed: PBNA GAAP operating profit fell 20% in Q3 due to impairment charges, while Asia Pacific Foods and EMEA showed stronger core constant currency gains.

03—Questions

Frequently Asked Questions

Why did GAAP EPS decline so sharply when revenue grew?
The decline was driven by non-cash impairment charges, mainly related to the Rockstar brand, which totaled $133M in Q3 and $1.99B year-to-date. These charges, together with other items affecting comparability, reduced GAAP operating profit by 8% in Q3 and 25% year-to-date, even though revenue increased. Core EPS, which excludes these items, was $2.29 in Q3.
Is PepsiCo maintaining its 2025 guidance?
Yes. PepsiCo affirmed its 2025 guidance for low-single-digit organic revenue growth and core constant currency EPS roughly flat versus 2024. It also reiterated a core tax rate of about 20% and total cash returns to shareholders of about $8.6B, including $7.6B in dividends and $1.0B in buybacks. The updated FX assumption, a 0.5-point headwind instead of 1.5, improves the core USD EPS outlook.
Who is the new CFO and what is his compensation?
Steve Schmitt, 52, currently CFO of Walmart U.S., will become EVP and CFO on November 10, 2025. He will receive a $900K base salary, a 150% target annual incentive, a $3.5M sign-on bonus (with $2M paid upfront and $1.5M after one year), a $5M target LTI award expected March 1, 2026, and a $7M one-time RSU grant that vests 50% at years one and two.
What happens to the outgoing CFO, Jamie Caulfield?
Jamie Caulfield will continue to work for PepsiCo through May 15, 2026, under a transition agreement. During that period he will keep his current base salary and remain eligible for annual and long-term incentive programs and certain retirement and health and welfare benefits. He will then retire, and the agreement includes customary confidentiality, non-compete, non-disparagement, non-solicitation, and general release provisions.
Does the board change or any other issue require attention?
Director Darren Walker notified the company on October 3, 2025, that he will retire from the board effective November 19, 2025. The company stated that his decision was not due to any disagreement with PepsiCo on operations, policies, or practices, and that he is leaving to focus on other professional opportunities as his tenure as president of the Ford Foundation ends this year.

04—Continue

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