PepsiCo’s first quarter saw revenue surpass Wall Street expectations, yet the market responded negatively due to declining sales and a slight miss on non-GAAP profit. Management attributed the softness primarily to persistent volume declines in North America snacks, particularly at Frito-Lay, and ongoing consumer caution. CEO Ramon Laguarta noted early signs of improvement from new price pack strategies but described the operating environment as “complex,” citing evolving consumer behavior and the lingering impact of last year’s SAP system rollout at Frito-Lay. The company also pointed to international operations as a bright spot, helping to offset domestic headwinds.
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PepsiCo (PEP) Q1 CY2025 Highlights:
- Revenue: $17.92 billion vs analyst estimates of $17.79 billion (1.8% year-on-year decline, 0.7% beat)
- Adjusted EPS: $1.48 vs analyst expectations of $1.49 (0.8% miss)
- Adjusted EBITDA: $3.47 billion vs analyst estimates of $3.45 billion (19.4% margin, 0.6% beat)
- Operating Margin: 14.4%, in line with the same quarter last year
- Organic Revenue rose 1.2% year on year (2.7% in the same quarter last year)
- Sales Volumes fell 2% year on year, in line with the same quarter last year
- Market Capitalization: $177 billion
While we enjoy listening to the management's commentary, our favorite part of earnings calls are the analyst questions. Those are unscripted and can often highlight topics that management teams would rather avoid or topics where the answer is complicated. Here is what has caught our attention.
Our Top 5 Analyst Questions PepsiCo’s Q1 Earnings Call
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Bonnie Herzog (Goldman Sachs) asked whether stepped-up investments in Frito-Lay are delivering results and if more aggressive action is needed. CEO Ramon Laguarta responded that early signs are promising, particularly with dual-size strategies, but emphasized full benefits will take time to realize.
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Steve Powers (Deutsche Bank) pressed for detail on the drivers of reduced full-year earnings outlook, specifically the role of tariffs. CFO Jamie Caulfield confirmed tariffs are the primary new headwind and described ongoing mitigation efforts.
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Filippo Falorni (Citi) asked about international business acceleration. Laguarta highlighted strong underlying trends in Europe, India, and Brazil, and acknowledged some weakness in China and Mexico tied to consumer sentiment.
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Andrea Teixeira (J.P. Morgan) inquired about volume declines in larger snack packs versus smaller packs. Laguarta explained that U.S. consumers are prioritizing lower absolute price points and that smaller packs are helping maintain brand engagement.
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Lauren Lieberman (Barclays) questioned the impact of legislative changes on product ingredients and SNAP exposure. Laguarta noted ongoing reformulation efforts and expects minimal impact from potential SNAP restrictions.
Catalysts in Upcoming Quarters
In the coming quarters, our analysts will closely monitor (1) whether North American snack volumes stabilize as new value-pack strategies and operational improvements are rolled out, (2) the pace and breadth of international expansion—especially in high-growth regions like India and Brazil, and (3) the effectiveness of tariff mitigation measures on margins. Progress on portfolio transformation to address evolving health and ingredient standards will also be a key area of scrutiny.
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