Beverage company Keurig Dr Pepper (NASDAQ: KDP) reported Q1 CY2025 results topping the market’s revenue expectations, with sales up 4.8% year on year to $3.64 billion. Its non-GAAP profit of $0.42 per share was 9.8% above analysts’ consensus estimates.
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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: $1.02 billion vs analyst estimates of $990.1 million (28% margin, 2.9% beat)
- Operating Margin: 22%, in line with the same quarter last year
- Free Cash Flow was $102 million, up from -$73 million in the same quarter last year
- Sales Volumes rose 8% year on year (-0.3% in the same quarter last year)
- Market Capitalization: $47.74 billion
Company Overview
Born out of a 2018 merger between Keurig Green Mountain and Dr Pepper Snapple, Keurig Dr Pepper (NASDAQ: KDP) is a consumer staples powerhouse boasting a portfolio of beverages including sodas, coffees, and juices.
Beverages, Alcohol, and Tobacco
These companies' performance is influenced by brand strength, marketing strategies, and shifts in consumer preferences. Changing consumption patterns are particularly relevant and can be seen in the rise of cannabis, craft beer, and vaping or the steady decline of soda and cigarettes. Companies that spend on innovation to meet consumers where they are with regards to trends can reap huge demand benefits while those who ignore trends can see stagnant volumes. Finally, with the advent of the social media, the cost of starting a brand from scratch is much lower, meaning that new entrants can chip away at the market shares of established players.
Sales Growth
Examining a company’s long-term performance can provide clues about its quality. Any business can have short-term success, but a top-tier one grows for years.
With $15.52 billion in revenue over the past 12 months, Keurig Dr Pepper is one of the larger consumer staples companies and benefits from a well-known brand that influences purchasing decisions. However, its scale is a double-edged sword because it’s harder to find incremental growth when your existing brands have penetrated most of the market. For Keurig Dr Pepper to boost its sales, it likely needs to adjust its prices, launch new offerings, or lean into foreign markets.
As you can see below, Keurig Dr Pepper grew its sales at a mediocre 6.5% compounded annual growth rate over the last three years, but to its credit, consumers bought more of its products.
This quarter, Keurig Dr Pepper reported modest year-on-year revenue growth of 4.8% but beat Wall Street’s estimates by 1.9%.
Looking ahead, sell-side analysts expect revenue to grow 4.9% over the next 12 months, a slight deceleration versus the last three years. This projection is underwhelming and indicates its products will face some demand challenges.
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Volume Growth
Revenue growth can be broken down into changes in price and volume (the number of units sold). While both are important, volume is the lifeblood of a successful staples business as there’s a ceiling to what consumers will pay for everyday goods; they can always trade down to non-branded products if the branded versions are too expensive.
Keurig Dr Pepper’s average quarterly volume growth was a healthy 1.5% over the last two years. This is pleasing because it shows consumers are purchasing more of its products. 
In Keurig Dr Pepper’s Q1 2025, sales volumes jumped 8% year on year. This result was an acceleration from its historical levels, certainly a positive signal.
Key Takeaways from Keurig Dr Pepper’s Q1 Results
It was encouraging to see Keurig Dr Pepper beat analysts’ EPS and EBITDA expectations this quarter. We were also happy its revenue outperformed Wall Street’s estimates. On the other hand, its gross margin slightly missed. Overall, this quarter had some key positives. The stock traded up 2.3% to $35.94 immediately following the results.
Keurig Dr Pepper may have had a good quarter, but does that mean you should invest right now? What happened in the latest quarter matters, but not as much as longer-term business quality and valuation, when deciding whether to invest in this stock. We cover that in our actionable full research report which you can read here, it’s free.
