01—Abstract
Summary
Summary of the 10-Q filed November 7, 2025. Cited figures are marked; the original filing is the authoritative source.
Yum!
Brands, Inc. reported third-quarter 2025 total revenues of $1.98 billiona, up from $1.83 billion a year earlier, and GAAP net income of $397 million, or $1.41 diluted EPS, versus $382 million and $1.35 a year earlier. Year to date, total revenues were $5.70 billion and net income was $1.02 billion, or $3.64 diluted EPS, compared with $3.73 in the prior-year period. Results include Special Items; excluding them, the company reported third-quarter diluted EPS of $1.58 versus $1.37 and year-to-date diluted EPS of $4.32 versus $3.87.
Quarterly system sales excluding FX rose 5%, same-store sales grew 3%, and Core Operating Profit increased 7%. The Taco Bell Division was the strongest performer, while the Pizza Hut Division's same-store sales declined 1% and the company has begun a strategic options review for that brand. The balance sheet remains heavily levered, with a shareholders' deficit of $7.51 billionb and long-term debt of $11.51 billion at September 30, 2025.
The company ended the quarter with a consolidated net leverage ratio of 3.7x EBITDA and credit ratings of BB+ (Standard & Poor's) and Ba2 (Moody's). In September 2025, the Taco Bell securitization issued $1.5 billionc of 2025-1 Notes, used in part to repay $938 million of notes due May 2026. The company also signed agreements to acquire 128 Taco Bell restaurants in the Southeast U.S. for approximately $670 million, expected to close in the fourth quarter of 2025.
The effective tax rate rose to 26.7% in the quarter and 30.3% year to date, driven by a $90 milliond charge related to the One Big Beautiful Bill Act, a $105 million foreign tax reserve, and a $63 million audit-related benefit. The company's IRS dispute, which involves a proposed underpayment of $2.1 billion plus $418 million in penalties, remains in litigation in U.S. Tax Court, and no reserve has been recorded because management believes the tax position is more likely than not to be sustained.
02—Key points
Key Highlights
- Q3 2025 total revenues of $1.98 billion, up from $1.83 billion; net income of $397 million versus $382 million.
- Q3 2025 diluted EPS of $1.41 versus $1.35; excluding Special Items, diluted EPS was $1.58 versus $1.37.
- Year-to-date diluted EPS of $3.64 versus $3.73, or $4.32 excluding Special Items versus $3.87.
- Quarterly system sales excluding FX rose 5%, same-store sales grew 3%, and Core Operating Profit rose 7%.
- Taco Bell Division system sales excluding FX rose 9% for the quarter, with same-store sales up 7%; Pizza Hut same-store sales declined 1%.
- Effective tax rate was 26.7% for the quarter and 30.3% year to date, including a $90 million OBBBA-related charge and a $105 million year-to-date foreign tax reserve.
- Agreement to acquire 128 Taco Bell restaurants in the Southeast U.S. for approximately $670 million, expected to close in the quarter ending December 31, 2025.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in Q3 FY2025, Yum! Brands kept $0.20.
- Revenue$1.98B100.0%
- Cost of revenue−$587.0M29.7%
- Gross profit$1.39B70.3%
- Operating costs−$726.0M36.7%
- Operating income$666.0M33.7%
- Interest, other & tax−$269.0M13.6%
- Net income$397.0M20.1%
04—Financials
Financial Highlights
Figures from 10-QQ3 FY2025filed November 7, 2025Financial Statements
Q3 FY2025 against Q3 FY2024
| Line item | Q3 FY2025Q3 FY2024 | Change |
|---|---|---|
| Revenue | $1.98B$1.83B | +8.4% |
| Cost of Revenue | $587.00M$523.00M | +12.2% |
| Gross Profit | $1.39B$1.30B | +6.8% |
| Operating Expenses | $1.31B$1.21B | +8.8% |
| Operating Income | $666.00M$619.00M | +7.6% |
| Net Income | $397.00M$382.00M | +3.9% |
| EPS (Basic) | $1.42$1.36 | +4.4% |
| EPS (Diluted) | $1.41$1.35 | +4.4% |
| Shares Outstanding (Basic) | 278.00M282.00M | −1.4% |
| Shares Outstanding (Diluted) | 281.00M285.00M | −1.4% |
05—Questions
Frequently Asked Questions
How did Yum! Brands perform in the third quarter of 2025?
Total revenues were $1.98 billion, up from $1.83 billion, and operating profit was $666 million versus $619 million. GAAP diluted EPS was $1.41 compared with $1.35, and Core Operating Profit rose 7% to $677 million.
Why did the effective tax rate increase so much?
The company cited a $105 million year-to-date reserve related to a Mexican subsidiary's ability to offset recapture gains, and $90 million of tax expense from the One Big Beautiful Bill Act, partly offset by a $63 million benefit from an audit resolution. The effective tax rate was 26.7% for the quarter and 30.3% year to date.
What is the status of the Pizza Hut brand?
Yum! has begun a review of strategic options for the Pizza Hut brand, with no set deadline or assurance of any specific outcome or transaction. The Pizza Hut Division's quarterly GAAP operating profit fell 8% and same-store sales declined 1%.
How is the company's debt position?
Long-term debt was $11.51 billion at September 30, 2025, and about 96% of the $11.5 billion of total debt is fixed, with an effective overall interest rate of approximately 4.5%. The consolidated net leverage ratio was 3.7x EBITDA, and the company had a $1.5 billion revolving facility that was undrawn.
What is the status of the IRS dispute?
The IRS asserts an underpayment of $2.1 billion plus $418 million in penalties for fiscal 2014, with interest estimated at about $1.7 billion through the third quarter of 2025. The company filed a petition in U.S. Tax Court in June 2025, and the litigation is ongoing. No reserve has been recorded because management believes the tax position is more likely than not to be sustained, but an unfavorable resolution could have a material adverse impact.
06—Continue