Keurig Dr Pepper Inc (0Z62.L) QQ2 2025 Results — Resilient Revenue Growth, Margin Discipline and Shareholder Focus
Executive Summary
Keurig Dr Pepper (KDP) delivered a solid QQ2 2025 quarter with a resilient top line and meaningful cash generation amidst a competitive beverage landscape. Revenue of $4.163 billion rose 6.14% year-over-year and 14.53% quarter-over-quarter, reflecting sustained demand for Packaged Beverages and strength in the Coffee Systems category. Gross profit reached $2.161 billion, yielding a gross margin of 51.9%, while operating income of $892 million produced an operating margin of 21.4% and a net income of $547 million (net margin 13.1%), with diluted EPS of $0.40. EBITDA stood at $1.085 billion, underscoring ongoing scale benefits and efficiency. Free cash flow was $323 million, supported by cash from operations of $431 million and capital expenditures of $108 million. The company returned $313 million to shareholders via dividends, and net debt stood at approximately $17.1 billion, with cash at period-end of $565 million. Balance sheet strength is notable in the context of a high-intangible asset base (Goodwill $20.2B; Intangibles $23.8B) and a total asset base of $54.37B. Liquidity remains modest (current ratio 0.64, quick ratio 0.40; CCC negative 24.3 days), highlighting the importance of ongoing optimization of working capital. Management commentary specific to QQ2 2025 guidance was not included in the provided data; thus, forward-looking statements rely on the quarterly results as the basis for potential trajectory, with a focus on price realization, cost controls, mix effects, and capital allocation. Overall, the QQ2 2025 result signals earnings resilience and continued cash generation, supporting a constructive, but measured, investment thesis in a high-multiple equity environment.
Key Performance Indicators
Revenue
4.16B
QoQ: 14.53% | YoY:6.14%
Gross Profit
2.16B
51.91% margin
QoQ: 13.44% | YoY:3.84%
Operating Income
892.00M
QoQ: 15.69% | YoY:-2.83%
Net Income
547.00M
QoQ: 5.80% | YoY:6.21%
EPS
0.40
QoQ: 5.26% | YoY:5.26%
Revenue Trend
Margin Analysis
Key Insights
Net cash provided by operating activities: $0.431B.
- Capital expenditures: $0.108B.
- Free cash flow: $0.323B.
Balance Sheet & Leverage:
- Cash and cash equivalents: $0.509B; Cash at end of period: $0.565B.
- Total assets: $54.368B; Total liabilities: $29.383B; Total stockholders’ equity: $24.985B.
- Long-term debt: $15.354B; Short-term debt: $2.256B; Net debt: $17.100B.
Liquidity & Efficiency:
- Current ratio: 0.638; Quick ratio: 0.397; Cash ratio: 0.0705.
- DSO: 37.42 days; DIO: 78.27 days; DPO: 139.95 days; Cash conversion cycle: -24.26 days.
Profitability & Multiples:
- Gross margin: 51.9%; Operating margin: 21.4%; Net margin: 13.1%; Effective tax rate: 23.8%.
- P/E: 20.5x; Price to Sales: 10.8x; Dividend yield: 0.70%; Dividend payout: 57.2%.
- Enterprise value multiple: 57.15x (as per the data); Price to book: 1.80x; Price to cash flow: 104.19x.
Financial Highlights
Revenue: $4.163B; YoY +6.14%; QoQ +14.53%.
Gross Profit: $2.161B; Gross Margin 51.9%; YoY +3.84%; QoQ +13.44%.
Operating Income: $0.892B; Operating Margin 21.43%; YoY -2.83%; QoQ +15.69%.
Net Income: $0.547B; Net Margin 13.14%; YoY +6.21%; QoQ +5.80%.
EPS (Diluted): $0.40; YoY +5.26%; QoQ +5.26%.
EBITDA: $1.085B; EBITDA Margin (EBITDA / Revenue) ~26.1%.
Cash Flow:
- Net cash provided by operating activities: $0.431B.
- Capital expenditures: $0.108B.
- Free cash flow: $0.323B.
Balance Sheet & Leverage:
- Cash and cash equivalents: $0.509B; Cash at end of period: $0.565B.
- Total assets: $54.368B; Total liabilities: $29.383B; Total stockholders’ equity: $24.985B.
- Long-term debt: $15.354B; Short-term debt: $2.256B; Net debt: $17.100B.
Liquidity & Efficiency:
- Current ratio: 0.638; Quick ratio: 0.397; Cash ratio: 0.0705.
- DSO: 37.42 days; DIO: 78.27 days; DPO: 139.95 days; Cash conversion cycle: -24.26 days.
Profitability & Multiples:
- Gross margin: 51.9%; Operating margin: 21.4%; Net margin: 13.1%; Effective tax rate: 23.8%.
- P/E: 20.5x; Price to Sales: 10.8x; Dividend yield: 0.70%; Dividend payout: 57.2%.
- Enterprise value multiple: 57.15x (as per the data); Price to book: 1.80x; Price to cash flow: 104.19x.
Income Statement
Metric
Value
YoY Change
QoQ Change
Revenue
4.16B
6.14%
14.53%
Gross Profit
2.16B
3.84%
13.44%
Operating Income
892.00M
-2.83%
15.69%
Net Income
547.00M
6.21%
5.80%
EPS
0.40
5.26%
5.26%
Key Financial Ratios
currentRatio
0.64
grossProfitMargin
51.9%
operatingProfitMargin
21.4%
netProfitMargin
13.1%
returnOnAssets
1.01%
returnOnEquity
2.19%
debtEquityRatio
0.71
operatingCashFlowPerShare
$0.32
freeCashFlowPerShare
$0.24
dividendPayoutRatio
57.2%
priceToBookRatio
1.8
priceEarningsRatio
20.52
Net Income vs. Revenue
Expense Breakdown
Management Commentary
No earnings call transcript was provided in the data set. As a result, there are no management quotes or thematic extracts to analyze. If the transcript is supplied, I will extract key themes by topic (strategy, operations, market conditions) and annotate quotes with their implications for the investment thesis.
Not available in the provided data.
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Not available in the provided data.
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Forward Guidance
No formal forward guidance is included in the provided materials. Given the QQ2 2025 results, potential trajectories could hinge on: (1) price realization and product mix driving margin stability or expansion, (2) ongoing efficiency programs and SG&A discipline, (3) volume resilience in core Packaged Beverages and Coffee Systems, (4) commodity and currency headwinds/offsets. Investors should monitor (a) input cost volatility (sweeteners, beverages ingredients), (b) supply chain resilience, (c) leverage progression and ability to deleverage with free cash flow, and (d) capital allocation signals (dividends vs. buybacks vs. strategic investments).
Competitive Position
Company
Gross Margin
Operating Margin
Return on Equity
P/E Ratio
0Z62.L Focus
51.91%
21.40%
2.19%
20.52%
0J4X.L
30.50%
7.37%
1.39%
134.19%
0JT5.L
47.40%
30.50%
13.50%
19.34%
0L8A.L
50.10%
25.30%
2.59%
28.70%
Gross Profit Margin
Operating Profit Margin
Return on Equity
P/E Ratio Comparison
Investment Outlook
QQ2 2025 demonstrates ongoing revenue resilience and meaningful free cash flow generation, supporting an investment thesis centered on cash-based dividends and potential deleveraging. The discount to peers on certain margin and liquidity metrics warrants cautious optimism; valuation appears to reflect a premium to growth with a high enterprise value multiple. Key factors for monitor include the pace of margin stabilization through pricing and cost actions, the trajectory of leverage and balance-sheet flexibility, and the ability to sustain organic growth amid macro uncertainties. If management sustains pricing power, maintains cost discipline, and gradually reduces net debt while continuing to return capital, the medium-term risk-adjusted return could be favorable. Investors should remain attentive to commodity cycles, FX risk, and liquidity constraints given the current balance sheet dynamics.
Key Investment Factors
Growth Potential
Large, diversified brand portfolio with scale across Coffee Systems, Packaged Beverages, and Latin America Beverages providing multiple growth vectors. Continued demand for core brands (e.g., Dr Pepper, Snapple line) and potential Margin expansion through price realization, SKU optimization, and mix shift toward higher-margin beverages may support mid-single-digit revenue growth, complemented by ongoing internationalization in select markets.
Profitability Risk
Key risks include commodity cost volatility (sweeteners, caffeine, dairy), currency fluctuation given Latin America exposure, macroeconomic softness impacting consumer purchases, competitive pressure from premium and value segments, and substantial leverage elevating sensitivity to rise in interest rates and financing costs. Integration of acquisitions and brand investments may also introduce execution risk if cost synergies lag.
Financial Position
Balance sheet reflects a high level of intangibles and goodwill, with total assets of $54.37B and stockholders’ equity of $24.99B. Net debt around $17.1B and slow liquidity metrics (current ratio 0.64) imply a need for disciplined capital allocation. The company generated $0.431B of operating cash flow and $0.323B of free cash flow in QQ2 2025, supporting modest dividend payments ($0.313B) and some debt reduction, but overall leverage remains a key area for monitoring.
SWOT Analysis
Strengths
Scale in the US and international beverage markets with a diversified portfolio of brands.
Strong gross margin (~51.9%) and EBITDA generation underpinning cash flow.