8-K: PepsiCo Reports Q3 2025 Results, Appoints New CFO

PepsiCo announced its third-quarter 2025 financial results, affirmed its full-year guidance, and appointed Stephen Schmitt as its new Executive Vice President and Chief Financial Officer.

Summary

• Reported net revenue for Q3 2025 increased 2.6% to $23.937 billion.
• Reported diluted EPS for Q3 2025 decreased 11% to $1.90.
• Organic revenue performance for Q3 2025 increased 1.3%.
• Core constant currency EPS for Q3 2025 decreased 2%.
• Year-to-date 2025 reported net revenue increased 0.8% to $64.582 billion.
• Year-to-date 2025 reported diluted EPS decreased 29% to $4.15.
• Year-to-date 2025 organic revenue performance increased 1.5%.
• Year-to-date 2025 core constant currency EPS decreased 3.5%.
• The company affirmed its 2025 guidance for low-single-digit organic revenue growth and core constant currency EPS to be approximately even with the prior year.
• The expected foreign exchange translation headwind for 2025 was updated to approximately 0.5 percentage points (previously 1.5 percentage points), implying a 0.5% decline in core EPS for 2025 compared to 2024 core EPS of $8.16.
• Stephen Schmitt was appointed Executive Vice President and Chief Financial Officer, effective November 10, 2025.
• Darren Walker notified PepsiCo of his intent to retire from the Board of Directors, effective November 19, 2025.

Sentiment

Score: 6

Explanation: The results show accelerated revenue growth and an improved FX outlook, which are positive. However, the significant decline in reported EPS and operating profit, along with substantial impairment charges, temper the overall sentiment. The affirmation of guidance suggests stability but not strong growth.

Positives

• Reported net revenue growth accelerated in Q3 2025 (2.6%) compared to year-to-date (0.8%).
• The company noted resilience in its international business and improved momentum within North America Beverages.
• Benefits were realized from portfolio reshaping actions.
• Full-year 2025 guidance for low-single-digit organic revenue growth and core constant currency EPS approximately even with the prior year was affirmed.
• The full-year core USD EPS outlook improved due to a more favorable foreign exchange translation rate outlook, now expecting a 0.5% decline instead of a 1.5% decline.
• The appointment of Stephen Schmitt as CFO brings extensive financial leadership experience from Walmart and Yum! Brands.

Negatives

• Reported EPS decreased 11% in Q3 2025 and 29% year-to-date 2025.
• Core constant currency EPS decreased 2% in Q3 2025 and 3.5% year-to-date 2025.
• Significant impairment charges were recognized, primarily related to the Rockstar brand, totaling $133 million in Q3 and $1.993 billion year-to-date 2025.
• Operating profit decreased 8% in Q3 2025 and 25% year-to-date 2025.
• Net cash provided by operating activities decreased to $5.468 billion year-to-date 2025 from $6.220 billion in the prior year.
• Net cash used for investing activities increased significantly to $5.237 billion year-to-date 2025 from $2.965 billion in the prior year, largely due to acquisitions.

Risks

• Future demand for PepsiCo's products.
• Damage to PepsiCo's reputation or brand image.
• Product recalls or other issues or concerns with respect to product quality and safety.
• PepsiCo's ability to compete effectively.
• PepsiCo's ability to attract, develop and maintain a highly skilled workforce or effectively manage changes in its workforce.
• Water scarcity.
• Changes in the retail landscape or in sales to any key customer.
• Disruption of PepsiCo's manufacturing operations or supply chain, including increased commodity, packaging, transportation, labor and other input costs.
• Political, social or geopolitical conditions in the markets where PepsiCo's products are made, manufactured, distributed or sold.
• PepsiCo's ability to grow its business in developing and emerging markets.
• Changes in economic conditions in the countries in which PepsiCo operates.
• Changes in tariffs and global trade relations.
• Future cyber incidents and other disruptions to information systems.
• Failure to successfully complete or manage strategic transactions.
• PepsiCo's reliance on third-party service providers and enterprise-wide systems.
• Climate change or measures to address climate change and other sustainability matters.
• Strikes or work stoppages.
• Failure to realize benefits from PepsiCo's productivity initiatives or organizational restructurings.
• Deterioration in estimates and underlying assumptions regarding future performance of the business or investments that can result in impairment charges.
• Fluctuations or other changes in exchange rates.
• Any downgrade or potential downgrade of PepsiCo's credit ratings.
• Imposition or proposed imposition of new or increased taxes aimed at PepsiCo's products.
• Imposition of limitations on the marketing or sale of PepsiCo's products.
• Changes in laws and regulations related to the use or disposal of plastics or other packaging materials.
• Failure to comply with personal data protection and privacy laws.
• Increase in income tax rates, changes in income tax laws or disagreements with tax authorities.
• Failure to adequately protect PepsiCo's intellectual property rights or infringement on intellectual property rights of others.
• Failure to comply with applicable laws and regulations.
• Potential liabilities and costs from litigation, claims, legal or regulatory proceedings, inquiries or investigations.

Future Outlook

PepsiCo continues to expect low-single-digit organic revenue growth and core constant currency EPS to be approximately even with the prior year for fiscal 2025. The full-year core USD EPS outlook has improved due to a more favorable foreign exchange translation rate outlook, now anticipating an approximate 0.5 percentage point headwind (previously 1.5 percentage points), implying a 0.5% decline in core EPS for 2025 compared to 2024 core EPS of $8.16. The company's top priorities for the balance of the year and beyond are to accelerate growth and aggressively optimize its cost structure through innovation, sharpening price-pack architecture, and right-sizing the cost base.

Management Comments

• "Our reported net revenue growth accelerated and reflects the resilience of our international business, improved momentum within North America Beverages and the benefits of our portfolio reshaping actions." Chairman and CEO Ramon Laguarta.
• "As we look ahead to the balance of this year and beyond, our top priorities are to accelerate growth and aggressively optimize our cost structure." Chairman and CEO Ramon Laguarta.
• "To accomplish this, we are introducing a strong pipeline of innovation to accelerate portfolio transformation, continuously sharpening our price pack architecture to provide good value to consumers, and right sizing our entire cost base to help fund our activities." Chairman and CEO Ramon Laguarta.

Industry Context

PepsiCo's Q3 results indicate a mixed performance within the consumer staples sector. While the acceleration in reported net revenue and the resilience of its international business suggest strong brand positioning and effective global strategies, the decline in reported and core EPS, coupled with significant impairment charges, highlights ongoing challenges in cost management and portfolio optimization. The focus on innovation, price-pack architecture, and cost structure optimization aligns with broader industry trends where companies are navigating inflationary pressures, evolving consumer preferences, and intense competition.

Comparison to Industry Standards

• NA

Management Changes

Corporate Governance

Legal Proceedings

• NA

Related Party Transactions

• No related person transactions were disclosed between Mr. Schmitt and PepsiCo that would be required to be disclosed pursuant to Item 404(a) of Regulation S-K under the Exchange Act.

Stakeholder Impact

• Shareholders: Mixed financial results with revenue acceleration but EPS decline. Affirmation of guidance provides stability. Planned total cash returns to shareholders of approximately $8.6 billion (comprised of $7.6 billion in dividends and $1.0 billion in share repurchases) are expected.
• Employees: Transition of the CFO role, with Jamie Caulfield continuing through May 2026. Stephen Schmitt's compensation package includes a base salary of $900,000, an annual incentive target of 150% of base salary, a sign-on bonus of $3.5 million, and equity grants totaling $12 million.
• Customers: Management's focus on innovation and sharpening price-pack architecture aims to provide good value to consumers.
• Suppliers: Potential impact from aggressive optimization of the cost structure.

Next Steps

• Stephen Schmitt will assume the role of Executive Vice President and Chief Financial Officer on November 10, 2025.
• Jamie Caulfield will continue performing services for PepsiCo through May 15, 2026, for a transition period.
• Stephen Schmitt is expected to receive a March 1, 2026, long-term incentive award with a target grant date value of $5,000,000.
• Stephen Schmitt will receive a special one-time restricted stock unit (RSU) grant with a target grant date value of $7,000,000, vesting 50% on the first anniversary and 50% on the second anniversary of the grant date, contingent on continued employment.

Key Dates

Recommendation

While PepsiCo demonstrated resilience with accelerated net revenue growth and an improved foreign exchange outlook, the significant decline in reported EPS and operating profit, coupled with substantial impairment charges, indicates underlying challenges. The affirmation of guidance suggests stability, but the lack of strong EPS growth and the need for aggressive cost optimization warrant a 'hold' recommendation. Investors should monitor the effectiveness of the new CFO and the impact of portfolio transformation and cost-cutting initiatives on future profitability.

Keywords

PepsiCo, PEP, Q3 2025 Earnings, Financial Results, CFO Appointment, Board Retirement, Organic Revenue, EPS, Foreign Exchange, Consumer Staples, Beverages, Snacks, Food & Beverage