PepsiCo (PEP) Q1 2026 earnings

PepsiCo on Thursday reported quarterly earnings and revenue that topped analysts’ expectations as its struggling North American food business reported a return to volume growth.

Shares of the company rose 2% in afternoon trading.

Here’s what Pepsi reported compared with what Wall Street was expecting, based on a survey of analysts by LSEG:

• Earnings per share: $1.61 adjusted vs. $1.55 expected
• Revenue: $19.44 billion vs. $18.94 billion expected

Pepsi posted first-quarter net income attributable to the company of $2.33 billion, or $1.70 per share, up from $1.83 billion, or $1.33 per share, a year earlier.

Excluding items including restructuring and divestitures, the company earned $1.61 per share.

Net sales rose 8.5% to $19.44 billion, boosted by its acquisition of Poppi, the new distribution of Alani Nu energy drink and the divestiture of Rockstar. Pepsi’s organic revenue, which strips out acquisitions, divestitures and currency fluctuations, increased 2.6%.

For the first time in more than two years, Pepsi’s North American food business reported an increase in volume. The division, a combination of its North American Frito-Lay and Quaker Oats units, has faced pushback from consumers for hefty price rises when inflation spiked in 2022.

In February, Pepsi cut prices on Lay’s, Tostitos, Doritos and Cheetos by as much as 15% to try to win back shoppers, and many retailers rewarded the company by giving them more shelf space. The efforts are paying off already.

Pepsi’s North American food business reported volume growth of 2% for the quarter. The metric excludes pricing and foreign exchange fluctuations to reflect demand more accurately.

“We feel good about where we are at this at this point in the journey,” CEO Ramon Laguarta said on the company’s earnings conference call. “Still, in the process of all the shelf resets and launching the innovation — I would say by the end of Q2, we’d probably be almost completed in that process. But the early reads are quite exciting.”

The company’s North American beverage business reported that volume fell 2.5%. The division, which includes its namesake soda, Starry and Poppi, has also faced weaker demand as a result of higher prices.

Pepsi on Thursday said it would “restage” the Gatorade brand in an attempt to boost sales of the sports drink. The company plans to market Gatorade’s hydration benefits to nonathletes, release a lower-sugar version and start to remove artificial colors, among other changes.

Pepsi has also been leaning into snack and drink trends, particularly those that embrace higher protein and fiber content. Recent launches include Pepsi Prebiotic, Starbucks Coffee & Protein, Doritos Protein and SunChips Fiber.

Outside of the U.S., Pepsi’s international business is growing more quickly. The company’s Asia Pacific and Europe, Middle East and Africa food divisions both reported volume growth of 9%.

Globally, Pepsi hasn’t yet seen signs that consumers are pulling back their spending in response to higher fuel prices caused by the war, Laguarta said on CNBC’s “Squawk on the Street.”

In the short term, the U.S. conflict with Iran is actually boosting sales in some markets, according to Laguarta. He credited Pepsi’s strong supply chain, which has kept drinks and snacks in stock while some of its peers struggle to adapt.

For the full year, Pepsi reiterated its prior forecast that organic revenue will rise between 2% and 4% and core constant currency earnings per share will increase in a range of 4% to 6%. It noted that the global economy has become harder to predict due to the war in the Middle East.

“As we look ahead, the macroeconomic environment has become more volatile and uncertain because of ongoing geopolitical conflicts,” executives said in prepared remarks. “Systematic commodity hedging programs for market traded commodities are expected to provide some near-term protection and visibility on certain input costs.”