PepsiCo 2025 Q2 Earnings Modest Revenue Growth Despite Significant Net Income Decline

PepsiCo (PEP), ranking 65th by market capitalization, reported its fiscal 2025 Q2 earnings on Jul 16th, 2025. The company's earnings fell short of expectations, with a significant decline in net income. Guidance remained in line, projecting low-single-digit organic revenue growth for fiscal 2025, while core constant currency EPS is expected to be approximately even with the prior year. The outlook for core USD EPS has improved due to moderated foreign exchange headwinds attributed to the weakening of the U.S. dollar.

Revenue

In the second quarter of fiscal 2025, PepsiCo achieved a 1.0% increase in total revenue, reaching $22.73 billion, up from $22.50 billion in the same period of 2024. The segment revenues included $6.48 billion from PFNA, $6.80 billion from PBNA, $1.37 billion from the IB Franchise, and $4.54 billion from EMEA. Additionally, LatAm Foods contributed $2.55 billion, while Asia Pacific Foods generated $1 billion, bringing the total to $22.73 billion.

Earnings/Net Income

PepsiCo's EPS dropped by 58.9% to $0.92 in 2025 Q2, compared to $2.24 in the previous year. The company reported a net income decline of 58.7%, amounting to $1.28 billion, down from $3.09 billion. This significant drop underscores challenges faced in profitability this quarter.

Price Action

The stock price of PepsiCo has edged up 1.05% during the latest trading day, has edged up 0.65% during the most recent full trading week, and has edged up 2.31% month-to-date.

Post-Earnings Price Action Review

Following PepsiCo's revenue beat expectations, a strategy of purchasing shares on the financial report release date and holding for 30 days yielded modest returns, albeit underperforming the market. The strategy's CAGR was 0.24%, with a total return of 1.11% compared to a benchmark return of 76.76%. Despite a Sharpe ratio of 0.02, indicating low risk-adjusted returns, the strategy avoided losses with a maximum drawdown of 0%. However, it faced volatility at 11.02%. While this approach offered minimal returns, it effectively managed risk, making it a viable option for investors prioritizing stability.

CEO Commentary

"We're encouraged by the acceleration in our net revenue growth versus the previous quarter with our businesses effectively navigating through a challenging environment," said Ramon Laguarta, Chairman and CEO. He highlighted the continued momentum in the international business and improvements in North America’s execution and competitiveness. Looking ahead, Laguarta emphasized the focus on expanding the International business and enhancing North America's performance through portfolio innovation and cost optimization initiatives. He expressed confidence in achieving low-single-digit organic revenue growth for fiscal 2025, while core constant currency EPS is expected to be approximately even with the prior year.

Guidance

PepsiCo remains confident in delivering low-single-digit organic revenue growth for fiscal 2025, with core constant currency EPS projected to be approximately even with the prior year. The outlook for core USD EPS has improved due to moderated foreign exchange headwinds attributed to the weakening of the U.S. dollar. PepsiCo’s guidance reflects ongoing strategic initiatives aimed at stimulating growth and profitability, despite the challenges posed by foreign exchange impacts and commodity fluctuations.

Additional News

In recent developments, PepsiCo has been actively working on enhancing its product portfolio and market presence. The company highlighted its "One North America" initiative, aimed at improving organic volume trends for its North American beverage division. Additionally, PepsiCo is focusing on its acquisition of Poppi, a prebiotic soda brand, to diversify its offerings and appeal to health-conscious consumers. Furthermore, institutional investors have shown interest in PepsiCo, with Bleakley Financial Group LLC increasing its holdings by 14.5% in the first quarter. These initiatives and investor actions demonstrate PepsiCo's resilience and strategic focus amidst ongoing geopolitical and macroeconomic challenges.