AI Takeaway
KDP reported Q1 2026 revenue of $3.98B (+9.4% YoY), but net income fell sharply by 47.8% to $270M, driven by rising costs, higher SG&A, and a significant balance sheet expansion tied to a major financing event.
Revenue
$3.98B
++9.38% YoY
EPS (Basic)
$0.20
-47.37% YoY
Gross Margin
52.8%
-1.84% YoY
Operating Income
$756M
-5.62% YoY
Filed · Source: SEC EDGAR 10-Q filing
Revenue grew 9.4% YoY to $3.98B in Q1 2026, but Cost of Revenue rose faster at 13.8% YoY to $1.88B, compressing Gross Margin from 54.6% to 52.8%. This indicates input cost inflation or unfavorable product mix is outpacing top-line growth.
Source: Source: 10-Q Income Statement (XBRL Financial Data)
SG&A expenses increased 12.6% YoY to $1.34B, contributing to a 5.6% decline in Operating Income to $756M despite higher revenues. Operating Margin contracted from 22.0% to 19.0%, signaling elevated investment in selling and administrative functions.
Source: Source: 10-Q Income Statement (XBRL Financial Data)
Net Income dropped from $517M to $270M YoY, with EPS (basic and diluted) falling from $0.38 to $0.20. The decline beyond operating income suggests significant below-the-line charges such as higher interest expense, likely tied to the substantial increase in long-term debt.
Source: Source: 10-Q Income Statement & Balance Sheet (XBRL Financial Data)
2 more insights available
Upgrade to unlockLong-term debt surged 75.2% YoY to $20.89B, likely associated with a major acquisition or financing transaction in Q1 2026. The resulting interest burden appears to be a primary driver of the 47.8% net income decline, and elevated leverage (Debt-to-Equity of 1.57) increases financial risk if earnings or cash flows deteriorate.
Source: Source: 10-Q Balance Sheet & Income Statement (XBRL Financial Data)
Unlock 4 more detailed risk analysis
Upgrade to unlockReported EPS of $0.39 versus the $0.38 analyst consensus — a +3.8% beat for Q1 FY2026.
| Metric | Current | Previous | YoY Change |
|---|---|---|---|
Revenue | $3.98B | $3.63B | +9.38% |
Cost of Revenue | $1.88B | $1.65B | +13.82% |
Gross Profit | $2.1B | $1.99B | +5.69% |
Operating Income | $756M | $801M | -5.62% |
Net Income | $270M | $517M | -47.78% |
EPS (Basic) | $0.20 | $0.38 | -47.37% |
EPS (Diluted) | $0.20 | $0.38 | -47.37% |
SG&A Expense | $1.34B | $1.19B | +12.58% |
| Metric | Current | Previous | YoY Change |
|---|---|---|---|
Total Assets | $73.14B | $53.7B | +36.20% |
Current Assets | $23.13B | $4.35B | +432.26% |
Total Liabilities | $39.54B | $29.25B | +35.17% |
Current Liabilities | $10.03B | $9.17B | +9.31% |
Stockholders' Equity | $25.26B | $24.45B | +3.33% |
Cash & Equivalents | $898M | $653M | +37.52% |
Long-Term Debt | $20.89B | $11.93B | +75.16% |
| Metric | Current | Previous | YoY Change |
|---|---|---|---|
Operating Cash Flow | $281M | $209M | +34.45% |
Investing Cash Flow | $-98M | $-57M | -71.93% |
Financing Cash Flow | $17.64B | $-7M | +252085.71% |
Dividends Paid | $312M | $312M | 0.00% |
| Metric | Current | Previous | YoY Change |
|---|---|---|---|
Gross Margin | 52.8% | 54.6% | -1.84% |
Operating Margin | 19.0% | 22.0% | -3.02% |
Net Margin | 6.8% | — | — |
ROE | 1.1% | — | — |
ROA | 0.4% | — | — |
Current Ratio | $2.307 | — | — |
Debt to Equity | $1.565 | — | — |
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KDP's Q1 2026 results showed strong revenue growth of 9.4% to $3.98B, but net income fell 47.8% to $270M due to rising costs and higher interest expense from a major debt-financed transaction. The company's balance sheet expanded dramatically, with total assets rising 36.2% to $73.1B and long-term debt nearly doubling to $20.89B, suggesting a significant acquisition or strategic deal closed in the quarter.
KDP's net income declined 47.8% YoY to $270M, primarily because long-term debt surged 75.2% to $20.89B, which likely generated substantial additional interest expense below the operating income line. Operating income itself also fell 5.6% to $756M due to cost of revenue growing faster than sales and SG&A expenses rising 12.6% YoY.
Yes, KDP reported Q1 2026 revenue of $3.98B, up 9.4% from $3.64B in Q1 2025, demonstrating solid top-line momentum. However, cost pressures meant that gross profit only grew 5.7% and operating income actually declined 5.6% despite the revenue increase.
KDP's short-term liquidity appears strong with a Current Ratio of 2.31 and Operating Cash Flow of $281M, but the company's leverage has increased significantly with Debt-to-Equity rising to 1.57 and long-term debt at $20.89B. A concern is that dividends paid ($312M) exceeded net income ($270M) in the quarter, which is not sustainable if earnings do not recover.
Based on the financial data, the most prominent risks for KDP include elevated debt levels following a major financing event, gross margin compression from input costs rising faster than revenue, and the potential integration challenges of what appears to be a large acquisition. SG&A cost discipline and the sustainability of the dividend relative to earnings are also areas investors should monitor closely.