PepsiCo, Inc. Third Quarter 2026 Earnings

• GAAP results follow US accounting rules. PepsiCo's core results are non-GAAP and exclude items such as restructuring charges, acquisition related charges or credits, pension settlement effects and commodity mark to market gains or losses.
• Organic revenue removes the effects of currency translation and of acquisitions and divestitures, which isolates growth from the existing business.
• EPS is net income attributable to PepsiCo per diluted share. Core EPS applies the same math to core net income.
• Operating cash flow is cash generated by the business. PepsiCo defines free cash flow as operating cash flow minus capital spending plus proceeds from asset sales.
• Constant currency restates results at the prior year's exchange rates. Guidance is management's forecast, not a reported result. Comparisons are year over year unless labeled otherwise.

Revenue growth broadened and accelerated. Net revenue growth combined 3.1% organic growth, 1.7 points from acquisitions and 0.7 points from currency, according to the filing. Organic growth came from outside North America, led by 9% in both EMEA and Asia Pacific Foods. Both North American segments were roughly flat organically.

Core profit growth depended on tariff refunds. Core operating profit rose 3%. The company states that tariff refunds contributed 4 percentage points of that growth, and that productivity savings and pricing were partly offset by operating cost increases and higher advertising and marketing spending.

North America Foods remains the weak spot. PepsiCo Foods North America reported revenue of $6,504 million, essentially flat, with effective net pricing down 1 point and organic volume up 0.5 point. Its core operating profit fell to $1,382 million from $1,570 million, a 12% decline. The company says savory snacks volume and market share improved, but lower pricing is still eroding profit.

To reach core operating profit, the company adds back $192 million of restructuring charges and removes $96 million of acquisition related credits and $79 million of commodity mark to market gains. Net income attributable to PepsiCo was $3,048 million versus $2,603 million. The EPS bridge also adds back $0.10 per share of pension settlement charges.

The margin pressure sits below gross profit. Core gross margin improved to 54.4% from 53.9%, but core selling, general and administrative expenses rose 8.0% to $9,471 million, faster than the 5.6% revenue increase, calculated from company reported figures. Over 36 weeks, operating cash flow rose to $7,950 million from $5,468 million, helped by a much smaller outflow from payables.

Organic volume added 0.5 point of revenue growth and effective net pricing 3 points, according to the filing. Volume was strongest in Asia Pacific Foods at 11 points. North America Beverages saw volume fall 3 points, offset by pricing, and its 5% reported growth came mainly from $428 million of revenue from 2025 acquisitions.

According to CEO Ramon Laguarta, the company is acting with urgency in North America through more investment in innovation, brand building and channel execution. He also stated that additional structural cost reduction actions will be implemented in the coming months to fund those investments and offset rising input cost inflation. The filing does not quantify them.

The gap was funded partly with borrowing. Short term debt obligations rose to $9,223 million at September 5, 2026 from $6,861 million at December 27, 2025, while long term debt was little changed at $42,658 million, for total debt of $51,881 million, calculated from company reported figures. The liquidity position, cash and cash equivalents plus short term investments, was $11,163 million versus $9,530 million at year end, calculated from company reported figures.

Current liabilities of $34,529 million exceeded current assets of $32,559 million, and receivables rose to $13,623 million from $11,506 million since year end. Diluted weighted average shares declined to 1,367 million from 1,372 million a year earlier.

PepsiCo does not provide quarterly guidance. All forecasts below refer to fiscal 2026 and are management guidance, stated on a non-GAAP basis.

Unchanged items include capital spending below 5% of net revenue, free cash flow conversion of at least 80% of core net income, and cash returns of $8.9 billion. With $6,674 million returned through 36 weeks, about $2,226 million remains for the fourth quarter, calculated from company reported figures. Currency and 2025 acquisitions are now each expected to add about 1.5 points to reported revenue growth.

This quarter showed that PepsiCo's top line is moving in the right direction. Organic growth accelerated, volume grew in both global categories, and most international segments delivered double digit core profit growth. Cash generation also recovered sharply.

It did not show that this growth converts into earnings. Core operating profit grew only because of tariff refunds, costs below gross profit rose faster than sales, and management cut its earnings outlook in the same release that raised its revenue outlook. The announced cost actions are not yet quantified, so their effect cannot be assessed from the filing.

• Q4 2026 core EPS against the implied range of ≈ $2.19 to $2.27, calculated from guidance
• Core operating margin versus the prior year once tariff refund support is no longer in the comparison
• North America Foods core operating profit after the 12% decline in Q3 2026
• The size and timing of the additional structural cost reduction actions, and whether full year free cash flow conversion reaches the 80% target