Keurig Dr Pepper’s first quarter results were marked by solid top and bottom-line performance, surpassing Wall Street’s expectations. Despite this, the market responded negatively, with management attributing strong results to double-digit growth in U.S. refreshment beverages, notable market share gains for core brands like Dr Pepper and Canada Dry, and the successful integration of new energy drink offerings. CEO Tim Cofer acknowledged that while performance was healthy overall, U.S. Coffee faced a challenging start, primarily due to inflation and uneven competitive pricing, which weighed on volumes and mix.
Is now the time to buy KDP? Find out in our full research report (it’s free).
Keurig Dr Pepper (KDP) Q1 CY2025 Highlights:
- Revenue: $3.64 billion vs analyst estimates of $3.57 billion (4.8% year-on-year growth, 1.9% beat)
- Adjusted EPS: $0.42 vs analyst estimates of $0.38 (9.8% beat)
- Adjusted EBITDA: $1.01 billion vs analyst estimates of $990.1 million (27.8% margin, 2% beat)
- Operating Margin: 22%, in line with the same quarter last year
- Sales Volumes rose 8% year on year (-0.3% in the same quarter last year)
- Market Capitalization: $45.61 billion
While we enjoy listening to the management's commentary, our favorite part of earnings calls are the analyst questions. Those are unscripted and can often highlight topics that management teams would rather avoid or topics where the answer is complicated. Here is what has caught our attention.
Our Top 5 Analyst Questions Keurig Dr Pepper’s Q1 Earnings Call
- Dara Mohsenian (Morgan Stanley) asked about management’s confidence in maintaining earnings guidance given tariff and consumer risks. CFO Sudhanshu Priyadarshi said guidance assumes both risks and opportunities, with flexibility provided by Q1 outperformance and mitigation plans around cost savings and pricing.
- Lauren Lieberman (Barclays) questioned pricing elasticity in coffee and the strategy for maintaining affordability amid inflation. CEO Tim Cofer responded that while early price increases hurt volume, he expects normalization as competitors follow and highlighted value-oriented pack sizes and premium offerings.
- Nik Modi (RBC Capital Markets) inquired about trends in Hispanic consumer behavior and the impact of potential SNAP beverage restrictions. Cofer stated that while some softening is evident among Hispanic consumers, it has not materially impacted enterprise results, and the company would advocate for consumer choice in SNAP policy discussions.
- Chris Carey (Wells Fargo Securities) asked about the trajectory of free cash flow and capital allocation. Cofer said the company remains on track to improve free cash flow conversion over the next two years, with priorities including deleveraging, disciplined investment, and steady dividends.
- Peter Grom (UBS) sought clarification on the expected momentum for GHOST and trends in the energy category. Cofer indicated that GHOST’s contribution would build throughout the year, and energy as a category remains one of the fastest-growing segments in beverages.
Catalysts in Upcoming Quarters
In the coming quarters, our analysts will monitor (1) the pace of volume and share gains in energy drinks and sports hydration, (2) the normalization and recovery trajectory in the U.S. Coffee segment as competitive pricing takes hold, and (3) management’s ability to mitigate tariff and inflationary pressures without eroding margins. Execution on new product launches and evidence of sustained momentum in core brands will also be key signposts.
Keurig Dr Pepper currently trades at $33.90, down from $35.14 just before the earnings. In the wake of this quarter, is it a buy or sell? The answer lies in our full research report (it’s free).
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