How did PEP's Q1 2024 earnings surprise investors?

PepsiCo's Q1 2024 earnings report exceeded investor expectations in terms of net income and diluted EPS, but fell slightly short in terms of revenue.

1. **Net Income and Diluted EPS**: PepsiCo reported a net income of $2.05 billion and a diluted EPS of $1.48 for Q1 2024. These figures surpassed the corresponding earnings of $1.53 billion and $1.11, respectively, indicating a year-over-year growth in profitability.

|code|Ticker|Name|Date|Total Revenue|Net Income|Diluted EPS|market_code|
|---|---|---|---|---|---|---|---|
|PEP|PEP.O|Pepsico|2023 Q2|2.2322E10|2.771E9|1.99|185|
|PEP|PEP.O|Pepsico|2023 Q3|2.3453E10|3.116E9|2.24|185|
|PEP|PEP.O|Pepsico|2023 Q4|2.785E10|1.324E9|0.94|185|
|PEP|PEP.O|Pepsico|2024 Q1|1.825E10|2.053E9|1.48|185|

|code|Ticker|Name|Date|Net Income YoY|Total Revenue YoY|Diluted EPS YoY|market_code|
|---|---|---|---|---|---|---|---|
|PEP|PEP.O|Pepsico|2023 Q2|91.63208852005532|10.368355995055625|93.20388349514562|185|
|PEP|PEP.O|Pepsico|2023 Q3|14.390602055800294|6.745255109007328|14.871794871794886|185|
|PEP|PEP.O|Pepsico|2023 Q4|147.47663551401868|-0.5215030718674096||185|
|PEP|PEP.O|Pepsico|2024 Q1|5.606995884773663|2.263812619074302|5.71428571428572|185|

2. **Revenue**: The company's total revenue for the quarter was $18.25 billion, which was marginally lower than the expected revenue of $18.36 billion. This slight discrepancy may not have been significant enough to alter the market's perception of the company's performance.
3. **Gross Margin and Operating Income**: PepsiCo's gross margin expanded by 91 basis points, and core gross margin expanded by 97 basis points. The reported operating income was $1,683 million, which, along with the increased gross margin, reflects improved operational efficiency and profitability.
4. **Stock Performance**: Despite the earnings beat, PepsiCo's shares declined by 1% in the pre-market session following the earnings release. This could be attributed to the soft volumes reported in the quarter, which hurt the top line and led to a slight miss in revenue.

In conclusion, PepsiCo's Q1 2024 earnings report was generally in line with investor expectations, with a slight positive surprise in terms of net income and diluted EPS. The company's strategic initiatives to mitigate inflationary pressures and improve gross margins have been successful, as evidenced by the earnings beat. However, the slight revenue miss and the impact of price hikes on demand may have led to some investor concerns.