PepsiCo Inc (PEP) 10-Q 2026: AI Summary

Summary

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PepsiCo reported net revenue of $19.4B (up 9% YoY) and net income attributable to PepsiCo of $2.3B ($1.70 diluted EPS, up 27% YoY) for the 12 weeks ended March 21, 2026.

Operating profit increased 24%, which management attributes to productivity savings, net revenue growth, a favorable impact of net mark-to-market gains on commodity derivatives, a favorable net impact of acquisition and divestiture-related charges/credits and a 4-percentage-point favorable impact of foreign exchange translation, partially offset by certain operating cost increases. The reported tax rate was 21.3% in both periods.

Net revenue rose 9% to $19,443M from $17,919M, with operating profit up 24% to $3,213M and operating margin at 16.5% versus 14.4%.
Net income attributable to PepsiCo increased 27% to $2,327M, and diluted EPS rose 27% to $1.70 from $1.33.
Core EPS (non-GAAP) was $1.61 versus $1.48, up 9%, with a 4-percentage-point unfavorable foreign exchange translation impact.
Net cash provided by operating activities was $41M versus $(973)M in the prior-year period.

Results That Matter

Net Revenue
Current period
$19.4B
Prior period
$17.9B
Change
+8.5%
Reported net revenue increased 9%, with a 3-percentage-point unfavorable impact of foreign exchange translation and a 2.5-percentage-point unfavorable impact of acquisitions and divestitures, yielding organic revenue growth of 3%.
Operating Profit
Current period
$3.2B
Prior period
$2.6B
Change
+24.4%
Operating margin was 16.5% versus 14.4%, a 2.1-percentage-point increase.
Net Income Attributable to PepsiCo
Current period
$2.3B
Prior period
$1.8B
Change
—
Net income attributable to PepsiCo increased 27%, with net income (including noncontrolling interests) of $2,338M versus $1,843M.
Diluted EPS
Current period
$1.7
Prior period
$1.3
Change
+27.8%
Diluted weighted-average shares were 1,371M versus 1,376M; basic EPS was $1.70 versus $1.34.
Core EPS (non-GAAP)
Current period
$1.6
Prior period
$1.5
Change
+8.8%
Core EPS excludes mark-to-market net impact, restructuring and impairment charges, and acquisition and divestiture-related charges/credits; on a constant currency basis the change was 5%.

Financial highlights: current period, prior period, change, and investor takeaway per metric
Metric	Current Period	Prior Period	Change	Investor Takeaway
Net Revenue	$19.4B	$17.9B	+8.5%	Reported net revenue increased 9%, with a 3-percentage-point unfavorable impact of foreign exchange translation and a 2.5-percentage-point unfavorable impact of acquisitions and divestitures, yielding organic revenue growth of 3%.
Operating Profit	$3.2B	$2.6B	+24.4%	Operating margin was 16.5% versus 14.4%, a 2.1-percentage-point increase.
Net Income Attributable to PepsiCo	$2.3B	$1.8B	—	Net income attributable to PepsiCo increased 27%, with net income (including noncontrolling interests) of $2,338M versus $1,843M.
Diluted EPS	$1.7	$1.3	+27.8%	Diluted weighted-average shares were 1,371M versus 1,376M; basic EPS was $1.70 versus $1.34.
Core EPS (non-GAAP)	$1.6	$1.5	+8.8%	Core EPS excludes mark-to-market net impact, restructuring and impairment charges, and acquisition and divestiture-related charges/credits; on a constant currency basis the change was 5%.

Earnings Quality & Cash Conversion

Reported operating profit of $3,213M includes a mark-to-market net impact of $(182)M, restructuring and impairment charges of $132M and acquisition and divestiture-related charges/credits of $(113)M; the filing's core, non-GAAP operating profit is $3,050M. Reported net income attributable to PepsiCo of $2,327M includes mark-to-market net impact of $(139)M, restructuring and impairment charges of $102M and acquisition and divestiture-related charges/credits of $(86)M; core net income attributable to PepsiCo is $2,204M. The acquisition and divestiture-related credit in PBNA primarily relates to a $116M fair value decrease in poppi contingent consideration recorded in selling, general and administrative expenses.

Value Drivers & Capital Allocation

Capital expenditures $447.0M (prior $603.0M) (selected cash-flow amount, not necessarily total capital investment).

“Free cash flow is used by us primarily for acquisitions and financing activities, including debt repayments, dividends and share repurchases.”
— Filing statement

“The net proceeds from the issuances of the above notes were used for general corporate purposes, including the repayment of commercial paper.”
— Filing statement

Return on equity was 10.9% (period net income / period-end equity, not annualized); return on assets 2.1% (period net income / period-end assets, not annualized).

Forward Signals

No financial guidance was provided in the filing excerpts; the filing states that the results for the 12 weeks ended March 21, 2026 are not necessarily indicative of the results expected for any future period or the full year.

Known trends

In 2026, widespread implementation of the OECD model rules for a global minimum tax rate of 15% came into effect in various countries in which we do business, including European Union member states, resulting in an increase in our income tax provision.
We have seen and expect to continue to see a further shift to e-commerce, online-to-offline and other online purchasing by consumers.
In the 12 weeks ended March 21, 2026, favorable foreign exchange contributed to net revenue performance by 3 percentage points primarily due to an appreciation of the Mexican peso, Russian ruble and euro.

Subsequent events

As of March 21, 2026, our mandatory transition tax liability was $965 million, which was fully paid in April 2026.

Risks

4 source-verified filing excerpts. Selected excerpts are not a complete risk inventory.

Filing excerpt 1

EvidenceDuring the twelve weeks ended March 21, 2026, the U.S. Supreme Court ruled that many of the tariffs previously imposed under the International Emergency Economic Powers Act were invalid.

Filing excerpt 2

EvidenceOur operations in Russia accounted for 4% of our consolidated net revenue for the 12 weeks ended March 21, 2026. Russia accounted for 5% of our consolidated assets, including 19% of our consolidated cash and cash equivalents and 40% of our accumulated currency translation adjustment loss as of March 21, 2026.

Filing excerpt 3

EvidenceThe fair value of all derivative instruments with credit-risk-related contingent features that were in a net liability position as of March 21, 2026 was $97 million.

Filing excerpt 4

EvidenceWhile the results of such litigation, claims, legal or regulatory proceedings, inquiries and investigations cannot be predicted with certainty, management believes that the final outcome of the foregoing is not expected to have a material adverse effect on our financial condition, results of operations or cash flows.

Balance Sheet & Liquidity

Leverage: This filing's standardized financial data reports no debt balance under a concept whose scope can be verified. That is an unestablished scope, not zero debt and not a net cash position; no total debt, net debt or debt-to-equity figure is stated.

Liquidity: Cash and cash equivalents were $10,475M (up from $9,159M at December 27, 2025) with short-term investments of $353M; the Company cites cash generating capability, revolving credit facilities, working capital lines and commercial paper and long-term debt financing as liquidity sources, and had $5.0B of commercial paper outstanding excluding discounts.

Cash flow: Cash flow — operating $41.0M, investing $-477.0M, financing $1.7B.

Working capital: Current assets $30.9B vs. current liabilities $34.5B (current ratio 0.90x). Prior reported balance sheet as of 2025-12-27: $27.9B vs. $32.8B (0.85x).

Maturities & covenants

In the 12 weeks ended March 21, 2026, $1.6 billion of U.S. dollar-denominated senior notes matured and were paid.
In the 12 weeks ended March 21, 2026, the Company issued euro-denominated notes: floating rate due February 2028 (€500M), 3.300% due February 2034 (€650M), 3.700% due February 2038 (€850M) and 4.150% due February 2047 (€500M), designated as net investment hedges.
As of March 21, 2026, approximately 16% of total debt was subject to variable rates, after the impact of the related interest rate swap contracts, compared to approximately 11% as of December 27, 2025.

Notable Footnotes

Item	Impact
2019 Multi-Year Productivity Plan	The plan was expanded and extended through the end of 2030, with expected pre-tax charges of approximately $6.15B including cash expenditures of approximately $5.1B; plan-to-date through March 21, 2026, pre-tax charges of $3.7B and cash expenditures of $2.8B were incurred.
poppi acquisition contingent consideration	A $300M contingent consideration liability was recorded in connection with the poppi acquisition, payable upon achievement of certain performance milestones by the third quarter of 2027; its fair value was $162M as of March 21, 2026, reflecting a $116M fair value decrease in the 12 weeks ended March 21, 2026 recorded in selling, general and administrative expenses.
Siete acquisition purchase price allocation	The acquisition of Siete for total consideration of $1.2B in cash was accounted for in the first quarter of 2025 in the PFNA segment, with the purchase price allocation finalized in the first quarter of 2026; total purchase price was $1,246M, including goodwill of $630M.
Supply chain financing arrangements	As of March 21, 2026 and December 27, 2025, $1.6B and $1.7B, respectively, of accounts payable were to suppliers participating in supply chain finance arrangements.

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AI-generated. Informational only, not investment advice. May be incomplete or contain errors. The authoritative source is always the original SEC filing.