PepsiCo reported a 6.4% increase in second-quarter net revenue and reaffirmed its full-year financial guidance, presenting investors with a combination of strong international momentum, improving global volume and continuing pressure in its North American operations. Revenue reached $24.18 billion for the 12 weeks ended June 13, up from $22.73 billion in the comparable period. Organic revenue, which excludes currency translation and acquisition effects, increased 2.4%.

The headline growth rate was supported by several components. Organic performance contributed 2.4 percentage points, favorable foreign exchange translation added 2.2 percentage points, and acquisitions net of divestitures added another 1.8 percentage points. That mix underscores the distinction between PepsiCo’s reported expansion and the underlying rate generated by pricing, product mix and volume. Organic growth reflected continued effective net pricing as well as a positive contribution from organic volume.

Chief Executive Ramon Laguarta said the quarter featured strong organic volume and revenue growth across PepsiCo’s global convenient-food and beverage businesses. Year-to-date global organic volume increased at its fastest rate since 2022, according to the company, supported by international markets and a broader portfolio of portion-controlled, functional, protein-rich, high-fiber, energy and zero-sugar products.

Reported earnings benefited substantially from an unusually weak comparison period. Operating profit rose 125% to $4.02 billion, and reported operating margin expanded to 16.6% from 7.9%. Net income attributable to PepsiCo increased to $2.98 billion from $1.26 billion, while diluted earnings per share advanced 137% to $2.18. The prior-year quarter included $1.86 billion of impairment charges related to the Rockstar and Be & Cheery brands, making the reported year-over-year profit increase less representative of ongoing operating trends.

On a core basis, the earnings improvement was more moderate. Core operating profit increased 4% to $4.07 billion, while core EPS rose 4% to $2.20. Core constant-currency EPS increased 1%. Core operating margin declined 40 basis points to 16.8%, as productivity savings and pricing benefits were partly offset by higher operating costs, affordability investments and unfavorable volume and channel mix in North American beverages.

International operations remained the clearest source of underlying strength. International organic revenue increased 7% during the quarter, marking the 21st consecutive quarter with at least mid-single-digit organic growth. International convenient-food revenue rose organically by 6%, while international beverage revenue increased 7%. Organic volume grew in Asia Pacific Foods, the International Beverages Franchise and Europe, the Middle East and Africa, while Latin American foods recorded a sequential improvement.

International beverage-franchise organic volume increased 5%, and international convenient-food volume advanced 4%. PepsiCo said approximately 80% of international revenue is generated in developing and emerging markets, providing the company with exposure to growing consumption, increasing retail penetration and the expansion of packaged food and beverage categories. International core operating margin also improved as sales growth and productivity generated better operating leverage.

The regional figures included particularly strong reported revenue growth in Asia Pacific Foods, Latin America Foods and the International Beverages Franchise. Asia Pacific Foods revenue increased 12%, including organic growth of 9% and organic volume growth of about 10%. International Beverages Franchise revenue rose 11%, with organic revenue up 9%, while Latin America Foods posted a 15% reported increase and 4% organic growth. Currency movements accounted for a significant portion of the reported gains in several markets.

North America presented a more difficult operating environment. Organic revenue across the region declined 0.5% and trailed PepsiCo’s expectations as food and beverage category growth moderated. PepsiCo Beverages North America reported a 7% increase in net revenue, but six percentage points of that growth came from acquisitions net of divestitures. Organic revenue increased 1%, while organic volume declined 4%, including a modest headwind from the transition of the company’s case-pack water business to a third-party partner.

PepsiCo Foods North America reported a 2% decline in quarterly revenue, primarily because of lower effective net pricing. The company had expanded affordability programs and reduced prices on selected products to support demand and rebuild category participation. Although those actions pressured revenue per unit, management said the business gained volume share across several U.S. savory and salty-snack categories and improved household penetration.

The domestic slowdown reflects persistent pressure on consumer budgets. Laguarta said during the investor call that the consumer environment had weakened more than PepsiCo anticipated, with higher gasoline prices affecting disposable income and reducing impulse purchases at convenience stores and other channels. The company’s shares fell about 4% in morning trading, indicating that investors were focused less on reported revenue growth than on domestic volumes, margin pressure and the timing of the expected earnings acceleration.

PepsiCo plans to continue using price-pack architecture, targeted promotions and smaller package sizes to address affordability without relying on broad-based discounting. Management said portion-control multipacks, representing more than $3.5 billion in annual revenue, delivered both volume and revenue growth during the quarter. Products positioned as more permissible choices, including Baked, Simply, SunChips, Siete and Quaker Rice Cakes, also generated strong volume and revenue gains and represent approximately $3 billion in annual sales.

Within North American beverages, functional hydration and zero-sugar products remained areas of relative strength. Gatorade delivered volume and revenue growth and gained market share, supported by Gatorade Lower Sugar and Gatorlyte. Propel, which PepsiCo said generates more than $1 billion in estimated annual retail sales, also grew volume and revenue. Pepsi Zero Sugar, Mountain Dew Zero Sugar and several flavored carbonated-soft-drink varieties gained both value and volume share.

PepsiCo also continued to broaden its exposure to energy and newer beverage categories. Management said Celsius gained share and held nearly 20% of the U.S. energy category. The company is extending products including Pepsi Prebiotic, reformulated Muscle Milk, Starbucks Coffee & Protein, Pure Leaf Mental Focus and additional Mountain Dew varieties. Its away-from-home strategy includes broader distribution for Celsius, poppi, Alani Nu and zero-sugar products through restaurants and other food-service channels.

In foods, Doritos, Ruffles and Miss Vickie’s generated both volume and revenue growth. PepsiCo is also emphasizing protein, fiber and alternative ingredients through products such as Doritos Protein, PopCorners Protein, SunChips Fiber and snacks made with olive or avocado oil. The company plans to continue the brand restaging of Lay’s and Tostitos, while using events such as the 2026 FIFA World Cup to support consumer engagement and away-from-home sales occasions.

These initiatives require spending at a time when margins remain under scrutiny. PepsiCo said it intends to increase advertising and marketing investment during the remainder of the year while funding affordability measures and portfolio changes. To offset the expense, the company is accelerating automation, digitalization and organizational simplification. It expects record productivity savings and refund claims for tariffs paid in the prior year to mitigate a meaningful portion of higher costs.

Management nevertheless expects input-cost inflation to be higher in the second half than in the first. North American performance is also projected to improve more gradually than previously anticipated. Those conditions mean core EPS and core constant-currency EPS growth will be primarily weighted toward the fourth quarter, concentrating more of the annual earnings objective into a relatively narrow execution period. Investors will be watching whether domestic volumes stabilize before the holiday quarter and whether productivity is sufficient to protect margins as marketing and pricing investments rise.

PepsiCo maintained its forecast for 2026 organic revenue growth of 2% to 4% and core constant-currency EPS growth of 4% to 6%. It continues to expect a core annual effective tax rate of approximately 22%, capital spending below 5% of revenue and a free-cash-flow conversion ratio of at least 80%. The company also expects foreign exchange translation to add about one percentage point to reported revenue and core EPS growth.

Acquisitions completed in 2025, net of divestitures, are expected to contribute approximately one percentage point to full-year reported revenue growth. Taken together, PepsiCo’s assumptions imply reported net revenue growth of 4% to 6% and core EPS growth of approximately 5% to 7% for 2026. The EPS forecast incorporates the anticipated impact of global minimum-tax regulations.

The company’s cash-flow position improved during the first 24 weeks of the year. Net cash provided by operating activities rose to $2.37 billion from $996 million, supported by better operating profit and more favorable working-capital comparisons. Capital spending declined to $1.27 billion from $1.51 billion, while free cash flow improved to $1.17 billion from negative $342 million in the prior-year period.

PepsiCo continues to expect approximately $8.9 billion of cash returns to shareholders in 2026, consisting of about $7.9 billion in dividends and $1 billion in share repurchases. The company raised its annualized dividend by 4% to $5.92 per share beginning with the June payment and has a repurchase authorization of as much as $10 billion extending through February 2030.

The reaffirmed outlook provides continuity but not a material reduction in the operational risks facing the second half. International scale, product innovation, favorable currency translation and acquisition contributions give PepsiCo several sources of reported growth. At the same time, the North American business must demonstrate that affordability programs can sustain volume without causing excessive price and margin erosion.

The quarter therefore represents progress rather than a completed recovery. PepsiCo has improved global volume, maintained a strong international growth rate and generated better cash flow, but its most mature market remains under consumer and cost pressure. Delivering the affirmed guidance will depend on a steadier North American demand environment, continued international margin expansion and successful conversion of productivity savings into higher fourth-quarter earnings.