PepsiCo beat Wall Street expectations for quarterly earnings and revenue, but persistent weakness in North America forced the food and beverage company to lower its full year earnings forecast. International growth once again carried much of the load as the domestic turnaround moved more slowly than executives had expected.
With one quarter remaining in 2026, PepsiCo now expects core earnings per share to rise 2.5% to 3.5%. Its previous forecast called for growth at the low end of a range from 5% to 7%.
The company also raised its net revenue growth expectation to about 6%, placing it at the high end of its previous range of 4% to 6%. PepsiCo shares rose about 1% in premarket trading after the report.
Adjusted earnings came to $2.34 per share, above the $2.29 expected by analysts surveyed by LSEG. Revenue reached $25.27 billion, topping the $24.96 billion Wall Street estimate.
PepsiCo reported third quarter net income attributable to the company of $3.05 billion, or $2.23 per share. That compared with $2.6 billion, or $1.90 per share, during the same period a year earlier.
Net sales increased 5.6% to $25.27 billion, while organic revenue rose 3.1%. Organic revenue excludes the effects of acquisitions, divestitures and foreign exchange movements.
The company recorded beverage volume growth of 3% and food volume growth of 1% during the quarter. Volume strips out pricing and currency fluctuations to provide a clearer measure of demand.
International markets remained PepsiCo’s strongest area. CEO Ramon Laguarta said in prepared remarks that the international business accounted for 41% of the company’s net revenue so far this year.
Volume increased in every international business unit except one. The convenient foods division serving Europe, the Middle East and Africa posted a 1% volume decline.
Conditions were weaker in PepsiCo’s home market. “Our business in North America performed below our expectations and represents a meaningful opportunity for improvement,” Laguarta said.
North American beverage volume contracted 2%, while volume in the North American food division was flat. CFO Steve Schmitt said in prepared remarks that the domestic turnaround was taking longer than expected.
PepsiCo’s recovery strategy has concentrated on innovation, advertising and marketing. Within snacks, the company has emphasized simpler ingredients, alternative oils and functional benefits such as protein and fiber.
In February, PepsiCo reduced prices by as much as 15% on many snacks, including Lay’s and Doritos. The cuts followed weak United States performance as budget conscious consumers faced higher grocery prices and passed over chips.
Laguarta said the snack strategy had delivered improved volume performance. “We’re happy with the turnaround in the volume performance,” he said. “If you think about last year, that business was low single-digit negative volume growth. This year, we’re low single-digit positive growth.”
Even so, North American demand for PepsiCo snacks was weaker than expected during the quarter. Laguarta attributed that softness to “the consumer environment.”
Executives are projecting “a new wave of inflation” tied to higher energy prices. Laguarta said PepsiCo would use “revenue management tactics,” language that typically refers to price increases, while maintaining “guardrails” intended to prevent retailers from pricing snacks too high for shoppers.
The North American beverage operation delivered a more disappointing performance, particularly in carbonated soft drinks. PepsiCo’s portfolio includes its namesake soda, Mountain Dew and Poppi, and the company plans to focus on functional hydration, flavored soft drinks, energy drinks and zero sugar products.
There were some signs of improvement. Organic revenue at PepsiCo’s North American convenient foods business, which includes Doritos and Quaker Oats, improved sequentially during the quarter.
Organic volume trends also strengthened in the North American beverage unit, which includes Pepsi and Gatorade. Functional hydration and zero sugar drinks contributed to that improvement, although PepsiCo’s carbonated soft drink portfolio trailed the broader category, including rival Coca-Cola.
PepsiCo plans to reduce costs by cutting redundancies and discretionary spending. Laguarta said in prepared remarks that those savings would help fund continued investments in innovation and marketing as the company works to revive its North American operations.