PepsiCo, Inc. stock research
FY2024 Q3
PepsiCo (PEP) Gross Margin — Quarter Ended Sep 7, 2024
Gross profit rose as revenue increased slightly, while cost of revenue also rose, resulting in a gross margin that weakened compared to the prior quarter. Compared with the same quarter a year earlier, revenue was lower but gross profit was higher, as cost of revenue declined more sharply, leading to an improved gross margin.
Gross margin takeaway
Quarter ended Sep 7, 2024 · FY2024 Q3
Gross profit rose as revenue increased slightly, while cost of revenue also rose, resulting in a gross margin that weakened compared to the prior quarter. Compared with the same quarter a year earlier, revenue was lower but gross profit was higher, as cost of revenue declined more sharply, leading to an improved gross margin.
- The most observable driver of gross margin movement was the change in cost of revenue relative to revenue. Year-over-year margin improvement corresponded to a larger decline in cost of revenue than in revenue, while the sequential margin weakening reflected a faster increase in cost of revenue than in revenue.
- Sequentially, revenue, gross profit, and cost of revenue were all higher, but gross margin was lower. Year-over-year, revenue was lower while gross profit was higher, cost of revenue was lower, and gross margin was higher.
Gross margin snapshot
The selected quarter's reported revenue, gross profit, direct costs, and margin comparisons.
Gross margin
55.4%
Gross profit
$12.9B
Revenue
$23.3B
Cost of revenue
$10.4B
Quarter-over-quarter change
-0.5 pts
Year-over-year change
+0.9 pts
Quarterly gross margin trend
A four-quarter view of the revenue and direct-cost bridge behind gross margin.
| Period | Revenue | Gross profit | Cost of revenue | Gross margin |
|---|---|---|---|---|
| Sep 9, 2023 | $23.5B | $12.8B | $10.7B | 54.5% |
| Mar 23, 2024 | $18.3B | $10.0B | $8.2B | 54.8% |
| Jun 15, 2024 | $22.5B | $12.6B | $9.9B | 55.9% |
| Sep 7, 2024 | $23.3B | $12.9B | $10.4B | 55.4% |
Quarterly comparisons
Compare the selected margin with the preceding quarter and the same fiscal quarter one year earlier.
Previous-quarter change
Jun 15, 2024
-0.5 pts
Year-over-year change
Sep 9, 2023
+0.9 pts
What the margin says
Filing-constrained interpretation of margin direction, comparisons, and what to monitor next.
The most observable driver of gross margin movement was the change in cost of revenue relative to revenue. Year-over-year margin improvement corresponded to a larger decline in cost of revenue than in revenue, while the sequential margin weakening reflected a faster increase in cost of revenue than in revenue.
Sequentially, revenue, gross profit, and cost of revenue were all higher, but gross margin was lower. Year-over-year, revenue was lower while gross profit was higher, cost of revenue was lower, and gross margin was higher.
Monitor the trajectory of cost of revenue relative to revenue, as it has been the primary factor behind both the year-over-year improvement and the sequential weakening of gross margin.