third-quarter 2026
Filed Oct 7, 2026PepsiCo Reports Third-Quarter 2026 Results
Third-quarter net revenue increased 5.6%, organic revenue performance increased 3.1%, and GAAP EPS increased 17%, while core EPS increased 2%. International businesses delivered strong growth, but core operating margin contracted 35 basis points and North America remains the focus of further investment and cost actions.
Key metrics
shortened, hover for the filing’s print| Metric | Value | q/q | y/y |
|---|---|---|---|
| Q3 2026 net revenueGAAP | $25.27B | – | 5.6% |
| Q3 2026 organic revenue performancenon-GAAP | 3.1% | – | 3.1% |
| Q3 2026 organic revenuenon-GAAP | $24.67B | – | 3% |
| Q3 2026 cost of salesGAAP | $11.52B | – | – |
| Q3 2026 gross profitGAAP | $13.75B | – | – |
| Q3 2026 gross marginGAAP | 54.4% | – | – |
| Q3 2026 core gross marginnon-GAAP | 54.4% | – | – |
| Q3 2026 selling, general and administrative expensesGAAP | $9.49B | – | – |
| Q3 2026 operating profitGAAP | $4.26B | – | 19% |
| Q3 2026 operating marginGAAP | 16.9% | – | 195 bps |
| Q3 2026 core operating profitnon-GAAP | $4.28B | – | 3% |
| Q3 2026 core operating marginnon-GAAP | 16.9% | – | (35) bps |
| Q3 2026 net incomeGAAP | $3.07B | – | – |
| Q3 2026 net income attributable to PepsiCoGAAP | $3.05B | – | – |
| Q3 2026 EPSGAAP | $2.23 | – | 17% |
| Q3 2026 core EPSnon-GAAP | $2.34 | – | 2% |
| Q3 2026 core constant currency EPSnon-GAAP | 1.5% | – | 1.5% |
| Q3 2026 effective tax rateGAAP | 21.4% | – | – |
| Q3 2026 core effective tax ratenon-GAAP | 21.2% | – | – |
| 36 weeks ended September 5, 2026 net revenueGAAP | $68.90B | – | 6.7% |
| 36 weeks ended September 5, 2026 organic revenue performancenon-GAAP | 2.7% | – | 2.7% |
| 36 weeks ended September 5, 2026 operating profitGAAP | $11.50B | – | 45% |
| 36 weeks ended September 5, 2026 operating marginGAAP | 16.7% | – | 440 bps |
| 36 weeks ended September 5, 2026 core operating profitnon-GAAP | $11.39B | – | 5% |
| 36 weeks ended September 5, 2026 core operating marginnon-GAAP | 16.5% | – | (25) bps |
| 36 weeks ended September 5, 2026 net income attributable to PepsiCoGAAP | $8.36B | – | – |
| 36 weeks ended September 5, 2026 EPSGAAP | $6.10 | – | 47% |
| 36 weeks ended September 5, 2026 core EPSnon-GAAP | $6.15 | – | 5% |
| 36 weeks ended September 5, 2026 net cash provided by operating activitiesGAAP | $7.95B | – | – |
| 36 weeks ended September 5, 2026 capital spendingGAAP | −$2.18B | – | – |
| Cash and cash equivalents as of September 5, 2026GAAP | $10.68B | – | – |
| Short-term debt obligations as of September 5, 2026GAAP | $9.22B | – | – |
| Long-term debt obligations as of September 5, 2026GAAP | $42.66B | – | – |
Segments
| Segment | Revenue | q/q | y/y |
|---|---|---|---|
| PepsiCo Foods North America (PFNA)Convenient foods net revenue trends improved sequentially, reflecting savory snacks volume growth and volume market share improvement, offset by lower effective net pricing. | $6.50B | – | – |
| PepsiCo Beverages North America (PBNA)Net revenue growth primarily reflected the benefits of acquisitions made in 2025; organic volume change was (3) and effective net pricing contributed 3 percentage points. | $7.71B | – | 5% |
| International Beverages FranchiseOrganic revenue performance increased 7%, aided by organic volume growth; organic volume change contributed 5.5 percentage points and effective net pricing contributed 2 percentage points. | $1.40B | – | 8% |
| Europe, Middle East and Africa (EMEA)Organic revenue performance increased 9%, aided by organic volume growth; effective net pricing contributed 7 percentage points. | $5.41B | – | 8% |
| Latin America Foods (LatAm Foods)Organic revenue performance increased 6%, aided by organic volume growth; foreign exchange translation had an (8)-percentage-point impact. | $3.02B | – | 14% |
| Asia Pacific FoodsOrganic revenue performance increased 9%, aided by organic volume growth; organic volume change contributed 11 percentage points and effective net pricing had a (2)-percentage-point impact. | $1.23B | – | 10% |
Fiscal 2026 outlook
- RevenueApproximately +6%
- Tax rateApproximately 21%
- NoteOrganic Revenue: Approximately +3%
- NoteForeign Exchange Translation: Approximately +1.5% to net revenue and core EPS growth
- NoteAcquisitions, net of Divestitures: Approximately +1.5% to net revenue growth
- NoteCore Constant Currency EPS: +1% to +2%
- NoteCore EPS: +2.5% to +3.5%
- NoteCapital Spending: Below 5% of net revenue
- NoteFree Cash Flow Conversion Ratio: At least 80 percent
- NoteCash Returns to Shareholders: $8.9 billion
- NoteDividends: $7.9 billion
- NoteShare repurchases: $1.0 billion
Capital returns
- 36 weeks ended September 5, 2026 cash dividends paid: $(5,935) million
- 36 weeks ended September 5, 2026 share repurchases: $(739) million
- Fiscal 2026 cash returns to shareholders guidance: $8.9 billion, comprised of dividends of $7.9 billion and share repurchases of $1.0 billion
What drove it
- Q3 net revenue increased 5.6%, driven by 3.1% organic revenue growth, a 1.7-percentage-point net benefit from acquisitions and divestitures, and a 0.7-percentage-point benefit from foreign exchange translation.
- Organic revenue growth reflected effective net pricing and a contribution from organic volume growth.
- Q3 core operating profit reflected productivity savings, effective net pricing and a 4-percentage-point favorable impact of tariff refunds.
- International businesses delivered strong net revenue growth, aided by organic volume growth within Asia Pacific Foods, International Beverages Franchise and Latin America Foods.
- Year-to-date operating profit benefited from prior-year impairment charges related to the Rockstar and Be & Cheery brands and a favorable net impact of acquisition and divestiture-related charges/credits.
Concerns
- Q3 core operating margin contracted 35 basis points to 16.9%.
- Certain operating cost increases and higher advertising and marketing expenses partially offset productivity savings, effective net pricing and tariff refunds.
- PFNA reported operating profit declined 13% in the third quarter and 8% year to date.
- PBNA organic volume change was (3) in both the third quarter and year to date.
- Management cited rising input cost inflation and said additional structural cost reduction actions are being identified.
What to watch
- North America performance following investments in innovation, brand building and sharper marketplace execution by channel.
- Whether planned structural cost reduction actions can fund investments that aim to accelerate organic revenue growth and mitigate rising input cost inflation.
- Organic volume performance in PBNA, where third-quarter organic volume change was (3).
- Delivery against fiscal 2026 guidance for approximately +3% organic revenue, approximately +6% net revenue, and +1% to +2% core constant currency EPS.
- The contribution of acquisitions made in 2025 to PBNA revenue growth.
Balance sheet and cash flow
- Net Cash Provided by Operating Activities for the 36 weeks ended September 5, 2026: $7,950 million, compared with $5,468 million
- Capital spending for the 36 weeks ended September 5, 2026: $(2,182) million, compared with $(2,499) million
- Net Cash Used for Investing Activities for the 36 weeks ended September 5, 2026: $(2,347) million, compared with $(5,237) million
- Net Cash Used for Financing Activities for the 36 weeks ended September 5, 2026: $(3,904) million, compared with $(1,008) million
- Cash and Cash Equivalents and Restricted Cash, End of Period: $10,728 million, compared with $8,171 million
- Cash and cash equivalents as of September 5, 2026: $10,675 million
- Short-term investments as of September 5, 2026: $488 million
- Short-term debt obligations as of September 5, 2026: $9,223 million
- Long-Term Debt Obligations as of September 5, 2026: $42,658 million
Analysis
PepsiCo delivered third-quarter net revenue of $25,274 million, up 5.6%, with organic revenue performance of 3.1%. The growth composition included a 1.7-percentage-point net benefit from acquisitions and divestitures and a 0.7-percentage-point benefit from foreign exchange translation. Organic revenue growth reflected effective net pricing and a contribution from organic volume growth. On a year-to-date basis, net revenue was $68,898 million, up 6.7%, and organic revenue performance was 2.7%.
International operations remained the central growth contributor. Third-quarter reported net revenue increased 8% at International Beverages Franchise, 8% in EMEA, 14% in LatAm Foods and 10% in Asia Pacific Foods. These businesses were aided by organic volume growth, with organic revenue performance of 7%, 9%, 6% and 9%, respectively. In North America, PFNA trends improved sequentially through savory snacks volume growth and volume market share improvement, although lower effective net pricing offset those gains. PBNA reported 5% net revenue growth primarily from 2025 acquisitions, while organic volume change was (3).
Reported profitability grew faster than core profitability. Q3 operating profit increased 19% to $4,260 million and operating margin expanded 195 basis points to 16.9%, primarily due to a favorable net impact of acquisition and divestiture-related charges and credits and favorable net mark-to-market gains on commodity derivatives. Core operating profit increased 3% to $4,277 million, but core operating margin fell 35 basis points to 16.9%. Productivity savings, effective net pricing and a 4-percentage-point favorable impact of tariff refunds were partly offset by operating cost increases and higher advertising and marketing expenses. GAAP EPS increased 17% to $2.23, while core EPS increased 2% to $2.34.
Cash generation improved through the first 36 weeks. Net cash provided by operating activities was $7,950 million compared with $5,468 million, while capital spending was $(2,182) million compared with $(2,499) million. PepsiCo paid $(5,935) million in cash dividends and repurchased $(739) million of shares during the period. Cash and cash equivalents were $10,675 million at September 5, 2026, against short-term debt obligations of $9,223 million and long-term debt obligations of $42,658 million.
The company updated fiscal 2026 guidance to approximately +3% organic revenue, approximately +6% net revenue, +1% to +2% core constant currency EPS, and +2.5% to +3.5% core EPS. It also guides to an approximately 21% core annual effective tax rate, capital spending below 5% of net revenue, at least 80 percent free cash flow conversion, and $8.9 billion of cash returns to shareholders. The operational focus is on sustaining international momentum while improving North American performance through innovation, brand investment, channel execution and further structural cost actions.
Management, verbatim
Our third-quarter results featured strong net revenue growth, an acceleration in organic revenue growth with organic volume growth across both global beverages and convenient foods. The results reflect the scale and resilience of the international business, the ongoing evolution of the global portfolio and an improved presence in underpenetrated channels and occasions.
Ramon Laguarta, Chairman and CEO
Looking ahead, we remain focused on building upon the strength of the International business while acting with urgency to sustainably improve our performance in North America through more investments in innovation, effective brand building, and sharper marketplace execution by channel. Additional structural cost reduction actions are being identified and will be implemented in the coming months to help fund investments that aim to accelerate organic revenue growth and mitigate the impacts of rising input cost inflation.
Ramon Laguarta, Chairman and CEO
Not in the filing
stated, not guessed- Quarterly operating cash flow was not reported.
- Quarterly capital spending was not reported.
- A reported free cash flow amount for the 36 weeks ended September 5, 2026 was not provided.
- A reported free cash flow conversion ratio for the 36 weeks ended September 5, 2026 was not provided.
- Prior-quarter comparisons for reported metrics were not provided.
- A separate previous-release outlook section was not provided for comparison with actual results.
AlphAI analysis generated from the company’s SEC earnings filing (Form 8-K Item 2.02, or Form 6-K for a foreign private issuer). Every figure was cross-checked against the filing text; consensus estimates, price targets and share-price reactions are not shown because they are not in the filing. AI-generated research, not investment advice.