01—Abstract
Summary
Summary of the 8-K filed April 16, 2026. Cited figures are marked; the original filing is the authoritative source.
PepsiCo reported first-quarter 2026 results for the 12 weeks ended March 21, 2026, with net revenue up 8.5% to $19.4 billiona.
Organic revenue grew 2.6%, a modest figure that was helped by pricing, with only a slight contribution from organic volume. Foreign exchange added 3.4 points and acquisitions and divestitures added 2.5 points. GAAP EPS rose 27% to $1.70b, but this was flattered by items affecting comparability, including net mark-to-market gains on commodity derivatives.
Core EPS rose 9% to $1.61c, and core constant-currency EPS rose a more modest 5%, which is the cleaner view of underlying earnings growth. Segment performance was mixed. North America Foods and Beverages showed sequential improvement in revenue and volume, with Foods returning to volume growth as innovation and affordability initiatives took hold.
Core operating profit in PFNA fell 4%d on a constant-currency basis, while PBNA rose 7%. International businesses showed resilience, with Asia Pacific Foods and EMEA posting strong core constant-currency operating profit growth of 30% and 17%, respectively. Core operating margin expanded only 10 basis points to 15.7%, indicating that productivity savings were largely consumed by operating cost increases and investments.
Management affirmed full-year 2026 guidance, including organic revenue growth of 2% to 4% and core constant-currency EPS growth of 4% to 6%, and it reiterated cash returns of about $8.9 billion. It also reaffirmed the previously announced 4% dividend increase, which marks the 54th consecutive annual increase.
Free cash flow conversion is guided to at least 80%. Operating cash flow of $41 million was far weaker than the prior year's use of $973 million, largely reflecting working capital and pension timing, so investors should look to later quarters to confirm cash generation.
02—Key points
Key Highlights
- Net revenue rose 8.5% to $19,443 million; organic revenue grew 2.6%, with FX contributing 3.4 points and acquisitions/divestitures 2.5 points.
- GAAP EPS increased 27% to $1.70, but core EPS rose 9% to $1.61 and core constant-currency EPS rose only 5%, showing the headline gain is largely inflated by mark-to-market gains and lower charges.
- Operating margin expanded 210 bps to 16.5%, while core operating margin rose just 10 bps to 15.7%, suggesting limited underlying margin leverage.
- Organic volume growth was slight and concentrated in PepsiCo Foods North America, which returned to volume growth; PepsiCo Beverages North America volume trends improved sequentially but remained negative.
- International segments were strong: Asia Pacific Foods core constant-currency operating profit rose 30% and EMEA rose 17%, while LatAm Foods remained resilient.
- FY2026 guidance was affirmed: organic revenue growth of 2-4%, core constant-currency EPS growth of 4-6%, FCF conversion of at least 80%, and about $8.9 billion in cash returns.
- Operating cash flow was only $41 million versus a $973 million outflow a year earlier, a weak quarterly start driven by working capital and pension contributions of $270 million.
03—Questions
Frequently Asked Questions
Did PepsiCo's underlying earnings growth match the headline 27% EPS increase?
No. The 27% GAAP EPS increase was boosted by favorable mark-to-market gains on commodity derivatives and lower restructuring and acquisition-related charges. Core EPS grew 9% to $1.61, and core constant-currency EPS grew only 5%, which is a more representative measure of operating performance.
Is PepsiCo's top-line growth organic or driven by other factors?
Mostly not organic. Reported net revenue growth of 8.5% included 3.4 points from favorable foreign exchange and 2.5 points from acquisitions net of divestitures. Organic revenue grew 2.6%, driven mainly by effective net pricing, with only a slight contribution from volume.
Is the full-year 2026 outlook changing?
No. Management affirmed its 2026 guidance, including 2-4% organic revenue growth, 4-6% core constant-currency EPS growth, a core tax rate of about 22%, and about $8.9 billion in shareholder cash returns. The dividend increase of 4% starting with the June 2026 payment was also reaffirmed.
Should investors be concerned about cash flow?
Near-term cash flow was weak. Operating cash flow was $41 million compared with a $973 million outflow in the prior-year period, reflecting working capital outflows and pension contributions. Management still expects free cash flow conversion of at least 80% for the full year, so the quarter's weakness may be timing-related, but it warrants monitoring in upcoming quarters.
Which segments are driving performance?
International segments led performance, with Asia Pacific Foods (core constant-currency operating profit up 30%) and EMEA (up 17%) showing strong growth. In North America, PepsiCo Foods saw core constant-currency operating profit decline 5%, while PepsiCo Beverages rose 7%, with volume trends improving sequentially.
04—Continue