Beverage company Coca-Cola (NYSE:KO) reported Q1 CY2025 results exceeding the market’s revenue expectations, but sales were flat year on year at $11.22 billion. Its non-GAAP profit of $0.73 per share was 1.4% above analysts’ consensus estimates.
Is now the time to buy KO? Find out in our full research report (it’s free).
Coca-Cola (KO) Q1 CY2025 Highlights:
- Revenue: $11.22 billion vs analyst estimates of $11.15 billion (flat year on year, 0.6% beat)
- Adjusted EPS: $0.73 vs analyst estimates of $0.72 (1.4% beat)
- Adjusted EBITDA: $4.05 billion vs analyst estimates of $4.06 billion (36.1% margin, in line)
- Operating Margin: 32.6%, up from 19.1% in the same quarter last year
- Free Cash Flow was -$5.51 billion, down from $158 million in the same quarter last year
- Organic Revenue rose 6% year on year (11% in the same quarter last year)
- Sales Volumes rose 2% year on year (1% in the same quarter last year)
- Market Capitalization: $299.3 billion
StockStory’s Take
Coca-Cola’s first quarter results were shaped by region-specific demand shifts, ongoing margin expansion, and targeted investments in brand relevance. CEO James Quincey pointed to volume growth across global beverage categories, but acknowledged challenges in North America and Mexico, particularly among Hispanic consumers, where weaker sentiment and a misleading viral video weighed on flagship brand performance. The company emphasized agility in responding to market-specific headwinds, with bright spots in products like Coca-Cola Zero Sugar and Fairlife.
Looking ahead, management reiterated its confidence in the company’s strategy as it navigates uneven consumer trends and macroeconomic uncertainty. The outlook is supported by Coca-Cola’s focus on affordability, local production, and continued innovation, including the return of the Share a Coke campaign and expansion in functional beverages. CFO John Murphy noted, "We are being prudent to not get flow through" on currency guidance and remain committed to long-term growth targets, while preparing for potentially choppy conditions in coming quarters.
Key Insights from Management’s Remarks
Coca-Cola’s management attributed the quarter’s results to a mix of geographic and product-specific dynamics, with particular attention to regional consumer sentiment and brand performance outside core markets. Deviation from consensus expectations came mainly from stronger-than-expected operating margin expansion, driven by cost management, and continued focus on local execution rather than headline growth rates.
-
North America softness: The company cited weakening consumer sentiment, especially among Hispanic consumers, and the impact of a false viral video affecting Coca-Cola Original sales in Southern states. Management responded by increasing focus on affordability options and tailored promotions.
-
Mexico volume pressures: Softer performance in Mexico was attributed to cycling strong growth in the prior year, calendar shifts, and macro uncertainty following local elections. The company launched the Hecho en Mexico campaign and emphasized value packaging to regain momentum.
-
Asia-Pacific and India growth: Volume gains in Asia-Pacific were led by strong execution in India and a recovery in China, where marketing activations during Lunar New Year and portfolio rationalization helped drive demand.
-
Fairlife’s continued expansion: Fairlife remained the leading contributor to retail dollar growth in the beverage industry. Management expects growth to moderate as the brand’s size increases, with new production capacity scheduled to come online later in the year.
-
Margin improvement levers: Operating margin expansion was supported by productivity initiatives, bottler refranchising, and targeted cost management. Management noted some timing benefits in the quarter but reiterated a focus on sustainable long-term margin gains.
Drivers of Future Performance
Management expects the next quarter and the full year to be influenced by local consumer dynamics, continued marketing investment, and the company’s ability to adapt to external volatility, such as shifting trade policies and currency fluctuations.
-
Affordability and local relevance: Coca-Cola is prioritizing affordable product packages and emphasizing the local production of global brands to build resilience and maintain relevance amid economic and geopolitical uncertainties.
-
Innovation and marketing: The return of the Share a Coke campaign and expansion into functional beverages, like prebiotic sodas, are expected to drive consumer engagement, particularly among younger demographics.
-
Productivity and margin focus: Management believes ongoing cost optimization and supply chain enhancements will help offset external pressures, supporting long-term operating margin targets even as revenue growth moderates in certain regions.
Top Analyst Questions
-
Dara Mohsenian (Morgan Stanley): Asked about maintaining guidance despite a strong quarter, with management citing prudence due to early-year uncertainties and anticipated tougher comparisons ahead.
-
Bryan Spillane (Bank of America): Probed on Mexico’s soft performance; CEO James Quincey highlighted macro uncertainty, calendar shifts, and the company’s focus on affordability and local campaigns to restore growth.
-
Lauren Lieberman (Barclays): Questioned responses to anti-brand sentiment in the U.S.; Quincey explained efforts to reinforce local economic impact and regain affected consumer demographics.
-
Chris Carey (Wells Fargo): Sought clarity on sustainability of margin gains; CFO John Murphy pointed to timing benefits this quarter but expressed confidence in long-term productivity levers and investment in growth.
-
Robert Ottenstein (Evercore): Inquired about Fairlife’s growth trajectory and capacity expansion; Quincey detailed plans for new production capabilities and maintained that long-term opportunity remains substantial as the brand scales.
Catalysts in Upcoming Quarters
In the coming quarters, the StockStory team will be monitoring (1) Coca-Cola’s success in regaining volume momentum in North America and Mexico through targeted marketing and affordability initiatives, (2) the impact of capacity expansion on Fairlife’s growth rate and category share, and (3) the effectiveness of the Share a Coke campaign and new functional beverage launches in attracting younger consumers. We will also track the company’s ability to sustain margin improvements amidst potential trade and currency headwinds.
Coca-Cola currently trades at a forward P/E ratio of 23.1×. Is the company at an inflection point that warrants a buy or sell? Find out in our free research report.
High-Quality Stocks for All Market Conditions
The market surged in 2024 and reached record highs after Donald Trump’s presidential victory in November, but questions about new economic policies are adding much uncertainty for 2025.
While the crowd speculates what might happen next, we’re homing in on the companies that can succeed regardless of the political or macroeconomic environment. Put yourself in the driver’s seat and build a durable portfolio by checking out our Top 6 Stocks for this week. This is a curated list of our High Quality stocks that have generated a market-beating return of 176% over the last five years.
Stocks that made our list in 2020 include now familiar names such as Nvidia (+1,545% between March 2020 and March 2025) as well as under-the-radar businesses like the once-small-cap company Comfort Systems (+782% five-year return). Find your next big winner with StockStory today.