Quick Read
- PepsiCo beat Q3 analyst expectations for both earnings and revenue.
- International sales growth offset declining North American volume.
- Steve Schmitt appointed as new CFO, replacing Jamie Caulfield.
- Activist investor Elliott Management holds $4 billion stake, pushing for strategic changes.
- PEP stock rose after the report, but is down nearly 6% year-to-date.
PepsiCo Surpasses Expectations: Q3 Earnings and Revenue Rise
On October 9, 2025, PepsiCo reported quarterly earnings and revenue that outpaced Wall Street forecasts, providing a much-needed boost to investor confidence in the food and beverage giant. As the market opened, shares ticked up, reflecting the company’s ability to generate growth internationally even as North American sales volumes declined. According to CNBC, adjusted earnings per share came in at $2.29, beating the $2.26 consensus estimate. Revenue for the quarter reached $23.94 billion, slightly higher than analyst projections.
But the headline numbers only tell part of the story. PepsiCo’s net income attributable to the company dropped to $2.6 billion, or $1.90 per share, down from $2.93 billion, or $2.13 per share, in the same period last year. The decline was attributed to restructuring and impairment charges, along with weaker performance in key domestic segments.
International Growth Cushions Domestic Weakness
PepsiCo’s global strategy paid dividends this quarter. While overall worldwide volume for both food and beverages fell by 1%, the Europe, Middle East, and Africa (EMEA) segment experienced robust organic sales growth of 5.5%. This international momentum helped offset the drag from North America, where food volumes declined by 4% and beverage volumes by 3%. Notably, brands like Doritos and Quaker Oats underperformed in the U.S. market, prompting the company to invest in more “permissible” snacks, such as Stacy’s pita chips and Quaker rice cakes, and to introduce new protein-rich products like Doritos Protein.
PepsiCo also debuted fresh packaging for Lay’s potato chips, highlighting the absence of artificial colors and flavors, and announced upcoming launches for Doritos and Cheetos “NKD”—formulas free from synthetic dyes and additives. These moves, partly influenced by consumer health trends and regulatory pressure, signal a shift toward cleaner ingredients and greater transparency.
Activist Investor Pressure and Strategic Response
The third quarter was marked not just by operational challenges, but by external pressure as well. In September, Elliott Investment Management revealed a $4 billion stake in PepsiCo, sparking calls for significant changes. Elliott’s proposals include outsourcing the company’s North American bottling network and divesting underperforming categories like pasta, cereals, and syrups. The activist investor believes these steps would allow PepsiCo to focus on its core, higher-margin brands—Pepsi, Mountain Dew, and Gatorade.
PepsiCo’s leadership, led by CEO Ramon Laguarta, acknowledged ongoing discussions with Elliott and emphasized their shared belief that the company is undervalued. “We’re going to have conversations in the coming weeks and months,” Laguarta said, suggesting that some of the activist’s recommendations may be under consideration.
As part of efforts to sharpen its domestic performance, PepsiCo is doubling down on cost-cutting, accelerating innovation, and revising its pricing strategies. The company is making multipacks and single-serve snacks more affordable, aiming to capture value-conscious shoppers, and exploring healthier oils such as olive and avocado in its products, responding to shifting consumer preferences.
Leadership Change: New CFO Appointed
In a significant leadership transition, PepsiCo announced that Chief Financial Officer Jamie Caulfield will retire, with Steve Schmitt—currently CFO of Walmart U.S.—set to take over on November 10. This move, highlighted by TipRanks and Investopedia, is seen as a strategic step to reinforce financial discipline and drive growth. Schmitt’s retail experience is expected to bring fresh perspective to PepsiCo’s operational and cost management initiatives.
PepsiCo also reiterated its full-year guidance, forecasting organic revenue growth in the low single digits and core constant currency earnings per share to remain roughly flat compared to last year. The company aims to return $7.6 billion to shareholders through dividends and another $1 billion via share repurchases, maintaining a solid dividend yield of nearly 4%.
Market Reaction and Analyst Outlook
Investor response was cautiously optimistic. PepsiCo shares rose in premarket trading, buoyed by the earnings beat and leadership changes. Year-to-date, however, PEP stock has lost nearly 6%, reflecting broader concerns about consumer demand, competition, and cost pressures in North America. Analyst sentiment on TipRanks remains moderately positive, with a “Moderate Buy” consensus and a price target averaging $155.93—implying potential upside of 12.3% from current levels. These ratings may be revised as analysts digest the latest quarterly results and assess the impact of ongoing strategic changes.
Despite recent challenges, PepsiCo’s core soda brands are showing signs of recovery, with both volume and revenue growth in the namesake beverage segment. Meanwhile, new acquisitions like Poppi have contributed to retail sales gains, and the company’s decision to divest Rockstar Energy to Celsius reflects a broader effort to streamline operations and focus on high-growth areas.
Challenges and Opportunities Ahead
PepsiCo’s journey this quarter illustrates the delicate balance between growth and adaptation. International expansion, innovation in product offerings, and leadership changes are helping the company navigate a turbulent market landscape. Yet, the persistent decline in domestic volumes and activist investor pressure underscore the need for further transformation. As PepsiCo moves forward, the challenge will be to sustain momentum abroad while reigniting demand at home—no small task in an industry shaped by rapidly evolving consumer tastes, regulatory shifts, and competitive dynamics.
PepsiCo’s Q3 performance reveals a company at a crossroads: international strength is cushioning domestic weakness, but shareholder pressure and leadership changes signal deeper shifts ahead. The next chapter will depend on how effectively PepsiCo can balance innovation, cost management, and core brand focus to restore consistent growth.