PepsiCo Reports Strong Q3 2025 Earnings, Surpassing Estimates
PepsiCo announced its fiscal third-quarter 2025 results on Thursday, surpassing Wall Street expectations with adjusted earnings per share (EPS) of $2.29 compared to the $2.26 forecast. Revenue climbed 2.6% year-over-year to $23.94 billion, slightly exceeding the anticipated $23.83 billion. The company’s net income attributable to shareholders declined to $2.6 billion, or $1.90 per share, from $2.93 billion, or $2.13 per share, a year earlier. Adjusted figures excluded restructuring, impairment charges, and other items.
Volume Declines Offset by Revenue Growth Amid Packaging Shift
Despite revenue growth, PepsiCo experienced a 1% decline in worldwide volume across food and beverage products, reflecting softer demand. CEO Ramon Laguarta attributed the volume drop partly to a strategic shift toward smaller packaging sizes aimed at price-conscious consumers, which, while reducing unit volume, contributed to higher revenue. Organic revenue, which adjusts for acquisitions, divestitures, and currency fluctuations, increased 1.3% during the quarter.
North American Market Faces Continued Pressure
The North American segment remains a challenge for PepsiCo, with food volume falling 4% and beverage volume down 3% in the quarter. Brands such as Doritos, Quaker Oats, and Pearl Milling have seen reduced demand, prompting PepsiCo to invest in innovation and cost reduction. To address shifting consumer preferences, PepsiCo is expanding its portfolio of healthier snacks, including Stacy’s pita chips and Quaker rice cakes, and plans to launch protein-enhanced options like Doritos Protein. The company is also enhancing product packaging to eliminate artificial colors and flavors, responding to consumer health trends. PepsiCo highlighted plans to use more olive and avocado oils in its snacks, aligning with the “Make America Healthy Again” movement. Additionally, pricing strategies such as more affordable multipacks and single-serving snacks aim to attract budget-conscious buyers.
Beverage Segment Shows Mixed Results
While overall beverage volume declined in North America, Pepsi’s flagship soda brand grew in both volume and revenue. The recently acquired Poppi brand reported retail sales growth exceeding 50% year-to-date. In a strategic move, PepsiCo divested its ownership of Rockstar Energy in the U.S. and Canada to competitor Celsius, retaining an 11% stake in the latter.
Activist Investor Elliott Management Takes Stake, Proposes Changes
In September, Elliott Investment Management disclosed a $4 billion stake in PepsiCo. The activist investor recommended several strategic initiatives, including potentially refranchising the North American bottling network and reinvesting in core soda brands to unlock shareholder value. CEO Laguarta acknowledged shared views with Elliott that PepsiCo is undervalued and indicated ongoing discussions to explore these proposals.
Leadership Transition Announced
PepsiCo revealed that Chief Financial Officer Jamie Caulfield will retire, with Walmart U.S. CFO Steve Schmitt appointed as his successor effective November 10.
Company Maintains Full-Year Outlook
PepsiCo reaffirmed its full-year guidance, anticipating core constant currency EPS to remain approximately flat compared to the prior year and projecting low single-digit organic revenue growth.
FinOracleAI — Market View
PepsiCo’s Q3 results reflect resilience in international markets compensating for ongoing volume challenges in North America. The company’s strategic pivot towards smaller packaging and healthier product innovation aligns with evolving consumer preferences but pressures volume metrics.
- Opportunities: Expansion in international markets, growth of health-conscious snack lines, and beverage brand innovation.
- Risks: Continued volume declines in North America, competitive pressures, and potential execution risks in cost-cutting and pricing strategies.
- Potential shareholder value unlock through activist investor engagement and refranchising initiatives.
- Leadership transition could influence financial strategy and investor confidence.
Impact: PepsiCo’s ability to stabilize North American performance while leveraging international growth will be critical to sustaining long-term profitability and shareholder returns.
