PURCHASE, N.Y. – PepsiCo on Thursday posted second-quarter net revenue of $24.18 billion, a 6.4 percent increase from a year earlier that beat Wall Street’s consensus estimate of roughly $23.95 billion, according to the company’s Form 8-K filing with the SEC. But the result came with a warning. Chief Executive Ramon Laguarta said the U.S. consumer is “worse than what we had anticipated,” a deterioration he attributed mainly to gas prices, and the company’s North American food business registered negative organic revenue growth for the period.
Core earnings per share reached $2.20, a 4 percent increase year-on-year but a penny below the analyst forecast of $2.21. Core operating margin contracted 40 basis points to 16.8 percent. PepsiCo shares, trading under the ticker PEP, were muted in premarket trading as investors weighed better-than-expected revenue against the earnings shortfall and the cautionary language from the top.
“The consumer is worse than what we had anticipated, and it’s driven mainly by gas prices,” Laguarta said on the company’s earnings call. The sentence summarized a quarter in which PepsiCo’s U.S. businesses lagged its international operations by a wide margin and in which the company’s ability to defend earnings came under pressure even as its top line held.
The domestic picture was clearest in PepsiCo Foods North America, which posted organic revenue of negative 2 percent in the second quarter. The business, which houses Lay’s, Doritos, Cheetos, and Quaker, generated less revenue on an organic basis than in the same period last year. PepsiCo Beverages North America fared better, registering 1 percent organic growth, but both segments underperformed the company’s consolidated organic revenue growth rate of 2.4 percent.
The story outside North America was different. Latin America posted organic revenue growth of 4 percent. Europe, the Middle East, and Africa combined for 6 percent. Asia-Pacific came in at 9 percent, the strongest regional performance in the quarter and one that reflects PepsiCo’s ongoing market-share gains in economies that have been less exposed to U.S. energy cost dynamics. Globally, food volume grew 3 percent and beverage volume increased 2 percent – a company selling more products by unit, not just by price.
Laguarta attributed the organic revenue result to “effective net pricing and a contribution from organic volume growth.” That framing carries weight in a consumer environment where volume growth has been harder to sustain than pricing gains. A food-and-beverage company that can grow both simultaneously is better positioned for a consumer-squeeze environment than one that must choose between the two.
The company affirmed its full-year guidance. PepsiCo maintained its forecast for 2 to 4 percent organic revenue growth and 4 to 6 percent core constant-currency earnings-per-share growth for 2026. Total cash returns to shareholders held at approximately $8.9 billion, a figure that encompasses both dividends and share repurchases. A core annual effective tax rate of approximately 22 percent was reaffirmed. The guidance affirmation suggested confidence that international strength would offset continued domestic softness, at least through year-end.
The 2026 environment has not been kind to consumer-staples companies exposed to gas prices. The sustained disruption to Hormuz shipping traffic has kept global energy costs elevated since the Iran-U.S. conflict earlier this year, and those costs transmit to household budgets at the pump. When consumers pay more to fill their tanks, Laguarta’s analysis goes, they buy fewer Lay’s. The mechanism is direct, the correction dependent on energy markets stabilizing.
The U.S. labor market has also shown signs of cooling, with June payrolls rising by only 57,000 jobs – a figure well below historical norms and one that, alongside elevated gas costs, describes a consumer whose budget headroom has been shrinking. PepsiCo’s negative food volume growth in North America fits that picture.
What Thursday’s report could not clarify is how durable the international strength will be if the same dynamics that are squeezing U.S. consumers start appearing in other markets. Asia-Pacific at 9 percent organic revenue growth is an encouraging number, but the segment remains smaller than either North American business in absolute revenue terms. Sustaining the top end of the full-year range requires the international businesses to keep performing, or the domestic situation to stabilize – or both. Laguarta said the company would continue to focus on “accelerating top line growth” through brand restaging and product innovation, without specifying when North American food would return to positive organic growth.
The $8.9 billion in projected shareholder returns signals that PepsiCo is not treating the current softness as a reason to conserve capital. Dividends have not been cut. Buybacks remain on schedule. But the quarter’s mechanics are worth noting: a company that beats revenue and misses earnings in the same period, while describing the U.S. consumer as worse than anticipated, is compressing margins to maintain volumes. That compression came in at 40 basis points this quarter. If gas prices remain elevated and North American food does not recover, the pressure does not automatically ease.
PepsiCo’s second quarter left the company in the position that many large consumer-staples names occupy in 2026: internationally healthy, domestically challenged, and reliant on the gap between those two dynamics to carry the year. Laguarta’s blunt assessment of the American consumer was the most useful sentence in Thursday’s presentation – not because it signaled a crisis, but because it named the mechanism and declined to predict when it ends.
