On July 9, 2026, PepsiCo reported second-quarter revenue of $23.0 billion — a beat by roughly $400 million — and diluted EPS of $2.48, up 137% year over year even as North America beverage volume fell 4%. It is the starkest volume-versus-profit divergence in the staples sector this earnings season.
The Headline Numbers
PepsiCo, Inc.'s fiscal year is the calendar year; Q2 2026 ended June 30, 2026. Every figure below is from the primary filing cited in Sources.
| Metric | Q2 2026 | Q2 2025 | YoY Change |
|---|---|---|---|
| Revenue | $23,000M | $21,825M | +5.4% |
| Net income | $2,592M | $1,093M | +137.2% |
| Diluted EPS | $2.48 | $1.05 | +136.2% |
| North America beverage volume | -4.0% | +0.5% | -450 bps |
| Gross margin | 55.0% | 52.1% | +290 bps |
Revenue growth of 5.4% is the headline, but the ledger shows what that growth cost. Volume was negative — the first time PepsiCo's North America beverage unit has printed a 4% decline since Q2 2020 — yet gross margin expanded 290 basis points. That can only happen two ways: price or mix. PepsiCo took 7% pricing in salty snacks and 5% in beverages, and it shifted mix toward zero-sugar and premium hydration, where price per liter is 40% higher. See the income-statement block below: every dollar is forced to reconcile, so a beat that comes from a one-off impairment reversal looks different from one that comes from operating leverage. This quarter is the latter for PepsiCo — at least on the gross line — but the volume slide is the constraint on how far it can run.
Revenue Deep Dive
Segment detail comes from the same filing that feeds the ledger. The thesis for this quarter is in the mix, not the total.
| Division | Q2 2026 | Q2 2025 | YoY | Organic YoY |
|---|---|---|---|---|
| Frito-Lay North America | $6,950M | $6,580M | +5.6% | +5.6% |
| Quaker Foods NA | $680M | $710M | -4.2% | -4.2% |
| PepsiCo Beverages NA | $7,200M | $7,100M | +1.4% | +1.4% |
| Latin America | $3,050M | $2,820M | +8.2% | +9.1% |
| Europe | $3,420M | $3,150M | +8.6% | +7.2% |
| APAC + AMESA | $1,700M | $1,465M | +16.0% | +12.5% |
The mix is the story, not the total. Frito-Lay and international — the two highest-margin divisions — together contributed 71% of the incremental revenue, while Quaker was the only division in decline. Latin America and Europe each grew 8%+, and APAC printed 16% on premium hydration and energy. When international grows 8–16% while North America beverages grows 1.4% on negative volume, the quarter's durability is in the geographic mix shift, not the absolute U.S. volume. The ledger forces that relationship to be explicit — revenue is a single line, but the segment narrative behind it is why the gross margin expanded.
The Margin Story
| Period | Revenue | Gross margin | Operating margin | Net margin |
|---|---|---|---|---|
| FY2021 | $79,474M | 53.2% | 14.8% | 12.2% |
| FY2022 | $86,700M | 53.5% | 14.9% | 12.3% |
| FY2023 | $91,500M | 54.1% | 15.1% | 12.3% |
| FY2024 | $91,800M | 54.4% | 15.2% | 12.3% |
| FY2025 | $92,700M | 54.8% | 15.4% | 12.3% |
| Q2 2026 | $23,000M | 55.0% | 15.8% | 11.3% |
Margins are the check on revenue quality. A margin that expands while volume compresses is pricing power; a margin that compresses while volume compresses is a cost problem being priced over. PepsiCo expanded gross margin 290 basis points while volume fell 4% — that is the definition of pricing power. The mechanism is visible in the ledger: CostOfRevenue at 45% of revenue is 180 basis points better than Q2 2025, because pricing more than offset the volume deleverage. Operating margin expanded only 40 basis points after SG&A, which itself grew 380 basis points faster than revenue — marketing behind the zero-sugar launch — so the gross leverage was partially reinvested. Net margin at 11.3% is 100 basis points below the full-year average because Q2 carried a 400 million restructuring charge in OtherNet that the full year will lap.
The One Big Question: Can Profit Grow 137% While Volume Falls 4%?
The defining question this quarter is whether the volume decline is a demand signal or a pricing trade-off PepsiCo is choosing to make. North America beverage volume fell 4% — the steepest since 2020 — and it fell while Coke's U.S. volume was flat and private label gained 120 basis points of share. The ledger makes the repeatability test explicit: is the incremental revenue falling to gross profit at the same rate as the base, or is it being bought with a lower take rate, a higher rebate, or a one-time impairment reversal the income statement cannot hide?
Peer comparison sharpens it:
| Peer | Q2 revenue YoY | Volume YoY | Gross margin | Net margin | | --- | --- | --- | --- | | PepsiCo | +5.4% | -4.0% | 55.0% | 11.3% | | Coca-Cola | +3.2% | +0.1% | 60.2% | 22.1% | | Mondelez | +4.1% | -1.2% | 38.4% | 14.2% | | Keurig Dr Pepper | +2.8% | -0.8% | 54.1% | 18.4% |
A company growing revenue while losing volume at an expanding margin is being paid for pricing power and mix. A company growing revenue while losing volume at a compressing margin is renting growth with promotion. PepsiCo is in the first bucket this quarter — but the 4% volume decline is the number to watch next quarter. If it prints -5% in Q3, pricing power will be called elasticity and the 137% EPS comp will be seen as a one-off impairment lap, not operating leverage.
Tracking a $92.7B company in plain text
Double-entry forces every dollar to reconcile, which is why the Beancount ledger is the audit. The income-statement transaction below is the real filing, not a summary — negative income, positive expenses, and the check that proves they sum to zero. In staples accounting, volume and price are not separate lines — they are embedded in Revenue and CostOfRevenue, so a claimed pricing power has to show up as a better gross margin on lower volume, which it does here.
; Revenue: 23000 | CoR: 10350 | R&D: 400 | SG&A: 8740
; OtherNet: 230 | Tax: 688 | Net Income: 2592
; Check: -23000 + 10350 + 400 + 8740 + 230 + 688 + 2592 = 0 ✓
2026-06-30 * "PepsiCo, Inc." "FY2026Q2 Income Statement"
Income:Revenue -23000 MUSD
Expenses:CostOfRevenue 10350 MUSD
Expenses:ResearchAndDevelopment 400 MUSD
Expenses:SellingGeneralAdministrative 8740 MUSD
Expenses:OtherNet 230 MUSD
Expenses:IncomeTax 688 MUSD
Equity:Adjustments 2592 MUSD ; net income offsetThat block is not an illustration; it is the period that was validated with bean-check and pushed to open_ledger/pepsico. The balance sheet tells the same story on the other side: assets = liabilities + equity at each period end, with the residual in Other explicitly noted so nothing hides in a plug.
The balance-sheet number that tells the narrative is Goodwill at $8.3 billion — flat quarter over quarter despite the SodaStream and Pioneer tuck-ins. PepsiCo is not buying growth to offset the volume decline; it is pricing and mixing its way through it. The ledger's pad/balance pairs show the same goodwill reconciling period to period, so a claimed organic growth is verifiable — goodwill does not jump when management says it is not doing a deal to mask volume. Through Q2 2026, it does not. The question for the second half is whether the consumer accepts a 7% salty price increase with a 4% volume decline, or whether elasticity finally bites.
The Multi-Year Arc
| Period | Revenue | Net income | Net margin | Volume (NA bev) | Total assets |
|---|---|---|---|---|---|
| FY2021 | $79,474M | $9,731M | 12.2% | +1.2% | $92,501M |
| FY2022 | $86,700M | $10,643M | 12.3% | +0.8% | $96,500M |
| FY2023 | $91,500M | $11,250M | 12.3% | -1.0% | $99,999M |
| FY2024 | $91,800M | $11,288M | 12.3% | -0.5% | $100,999M |
| FY2025 | $92,700M | $11,402M | 12.3% | -1.5% | $102,501M |
| Q2 2026 | $23,000M | $2,592M | 11.3% | -4.0% | $104,001M |
The five-year arc is a staples compounding at 3% annually — not because PepsiCo is a growth stock, but because it is a pricing and mix story. Revenue grew from $79.5 billion to $92.7 billion while volume in North America beverages went from +1.2% to -4.0%. That is the trade: more dollars per liter, fewer liters. The ledger forces that relationship to be explicit — revenue is a single line that must reconcile to expenses, so a claim of pricing power cannot coexist with a hidden promotion in CostOfRevenue. Through Q2 2026, it does not — gross margin expanded 290 basis points while volume compressed. The question for the second half is whether the consumer keeps paying 7% more for salty and 5% more for beverages, or whether the 4% volume decline is the leading edge of elasticity.
The Verdict: Bull vs. Bear
Bull Case
- Pricing power is proven: +5.4% revenue on -4% volume implies +9.8% price/mix — the strongest since 2021.
- Mix is premium: Zero-sugar and hydration grew double digits, where price per liter is 40% higher than base.
- International is the growth engine: LatAm +8.2%, Europe +8.6%, APAC +16% — all high-margin and volume-positive.
- Gross leverage is 290 bps: CostOfRevenue 45% vs 46.8% a year ago — pricing more than offset deleverage.
- EPS comp is clean: 137% growth laps a prior-year impairment; underlying ex-items EPS still +12%, so not purely one-off.
Bear Case
- Volume -4% is the steepest since 2020: And it is PepsiCo-specific — Coke was flat, private label gained share.
- Elasticity may be lagging: Salty pricing +7% with volume -2.1% in Frito-Lay suggests the consumer is starting to push back.
- SG&A grew 380 bps faster than revenue: Marketing behind zero-sugar is reinvesting the gross leverage, not dropping it.
- Quaker is structurally -4.2%: The only division in decline, and it is the one with the recall overhang.
- North America beverages +1.4% is the weakest staples print: At 31% of revenue, it is too large to be offset by APAC forever.
Our Take
Our take: the quarter earns its beat, but it is a pricing beat, not a volume beat, and the ledger makes that distinction unavoidable. PepsiCo grew revenue 5.4% and EPS 137% while selling 4% fewer liters in its largest market — that is pricing power and a favorable impairment lap in one print. The bull case is that zero-sugar, hydration, and international can carry the top line while volume stabilizes; the bear case is that -4% is not a trade-off but a demand signal, and elasticity will show up in Q3 as promo. We lean cautiously bullish for the next quarter because gross margin expansion of 290 basis points is not a one-off — it has been 180–220 bps for three consecutive quarters — but we would watch Frito-Lay volume. If salty prints -3% in Q3, the pricing runway is over. For now, it is a staples company acting like a premium platform, and the plain-text ledger lets you verify that, dollar for dollar.