Ahead of the Q3 2025 Earnings release
Release date: October 21, 2025 (before the opening bell)
Revenue: $10.64 billion expected (+7.4% vs. $9.91 billion in Q3 2024)
EPS: $2.09 expected (+9.4% vs. $1.91 in Q3 2024)
Latest guidance – Q3 2025 EPS: $2.08 to $2.13 (including ¢5 favorable FX)
Q3 2025 announcement will presumably be the most consequential earnings release for PMI since the onset of the “from $90 to $180” rally in April 2024. On the day of the Q2 2025 announcement, PMI shares declined more than 8% due to the disappointing ZYN U.S. shipment volume and failed to recover since then. Heading into the Q3 2023 results, PMI trades just shy of the $160 mark – around 15% below the all-time high ($186.7) marked in mid-June 2025.
Q3 2025 Results
Adjusted Net Revenue: up +9.4% to 10.85$Bn (vs. $10.64Bn expected; +5.9% organic basis; mainly driven by pricing and higher smoke-free volume, partially offset by unfavorable cigarette volume/mix and Indonesia business model change)
Adjusted EPS: up +17.3% to $2.24 (vs. $2.09 expected; +13.1% ex-FX)
Adjusted Operating Income: up +12.4% to $4.67 billion (+7.5% on an organic basis)
Adjusted Operating Income margin: %43.1 (up +1.2pp vs. Q3 2024; up +0.6pp on an organic basis)
Total volume: up +0.7% to 204.9 billion (Heated tobacco volume: +15.5% to 40.8 billion; oral nicotine volume: +16.9% to 5.2 billion; e-vapor volume +91% to 0.9 billion; cigarette volume: -3.2% to 157.9 billion)
Smoke-free weight: %41 by revenue; %22.9 by volume
U.S. business: 7% of revenue and 9% adj. operating income in YTD2025
Smoke-free business (SFB)
– Accounts for 41% of total net revenues (up by +2.9pp vs. Q3 2024) and over %42 of total gross profit (up by +2.5pp vs. Q3 2024). Smoke-free products are now available in 100 markets, nearly half of which have at least two of flagship brands (IQOS, ZYN and VEEV) available for sale and 25 of which have all three
– Smoke-free shipment volume up by %16.6, net revenue up by %17.7 (%13.9 organically) and gross profit up by %19.5 (%14.8 organically). In PMI’s 100-market footprint, PMI smoke-free IMS growth is more than +12% while the industry growth is +2%-3%
– Heated tobacco (IQOS): Second largest nicotine brand in markets where present (+0.9pp share gain, reaching 9.1% share). 76% global category volume share. Heated tobacco in-market sales (IMS) volume growth of 9% (note: this is lower-than-expected). Japan: IQOS market share up by 1.8pp to 31.7%. Despite increased competitive activity, IMS up by +6% (note: very muted growth). PMI category share is 69% (vs. 70% in 2024). The overall category exceeds 50% of total nicotine offtake share in 14 out of 20 major cities and 10 prefectures. Europe: Adjusted IMS reached a record 15 billion units, up +7.3% with a further acceleration in Italy and strong growth in many markets, notably Greece, Spain and Romania. ILUMA i device roll-out and consumable innovation ongoing; DELIA sourcing incremental users from new cohorts and LEVIA growing its appeal among vapers. IQOS HTU adjusted market share increased by +1.2pp to 10.7%. Rest of the World: Strong adjusted IMS growth and offtake share increase in key cities across the globe, including Cairo, Mexico City, Tunis, Riyadh, Seoul, Jakarta and Kuala Lumpur. In Indonesia, the broader roll-out of BONDS by IQOS continues as a complementary offer to IQOS ILUMA with promising early results.
– E-vapor (VEEV): Increasingly profitable growth. Now available in 46 markets. Shipment volume up +91%, driven by Europe and Indonesia. Within the closed pods segment, VEEV holds the #1 position in 8 markets and Top-3 position in 15 markets.
– Modern oral nicotine (ZYN): Shipment volume up by 16.9% in pouches and 20.2% in cans. Nicotine pouch volume up 37% to 205 million cans in the U.S. and more than doubled in new markets (ex-U.S. &Nordics) U.S.: ZYN accelerated its offtake growth to 39% in Q3 2025, driving category growth to over 40%. A wide range of commercial activities to further enhance the brand strength/presence and competitive price positioning; select short-term re-launch promotions. Negative impact on Americas Region Q3 2025 net revenue and operating income growth. New markets: Strong growth in Pakistan, the UK, Poland, and South Africa. ZYN is now available in 46 international markets
Combustibles
– Volume decline as expected. Net revenue up +4.3% (up +1.0% organically), fueled by high single-digit pricing, partly offset by negative mix dynamics. Gross profit up +7.7% (up +%4.8 organically)
– Marlboro continues to gain market share, reaching 10.9% category share and achieving its highest quarterly market share since the 2008 spin-off. Overall cigarette category share broadly stable in YTD2025.
FY25 Guidance: Adjustments reduced by $0.12; lower-end of the reported EPS increased by $0.03
– Reported diluted EPS: in a range of $7.39 to $7.49 (vs. $4.52 in 2024)
– Adjusted EPS: in a range of $7.46 to $7.56, excluding a total adjustment of $0.07 per share and representing a growth rate of %13.5 to %15.1 (vs. $6.57 in 2024)
– Adjusted EPS, at constant FX: in a range of $7.36 to $7.46, excluding a total favorable FX of $0.10 per share and representing a growth rate of %12 to %13.5 (vs. $6.57 in 2024)
FY25 Assumptions
– International industry (ex-China&US) volume decline: ~1% (no change)
– PMI volume growth: +1% (no change) driven by smoke-free products volume growth of 12% to 14% and offsetting cigarette volume decline of around 2%.
– Heated tobacco volume growth: 10% to 12%
– U.S. nicotine pouch shipment volume: broadly in-line with offtake growth before trade inventory movements (before: 800 to 840 million cans)
– Net revenue growth: 6% to 8% on an organic basis
– Organic operating income growth: 10% to 11.5, including the impact of higher U.S. investments (before: 11% to 12.5%)
– Amortization of acquired intangibles: $0.50 per share, including the amortization of IQOS commercialization rights in the U.S.
– Effective tax rate: 22% (before: 22% to 23%)
– Operating cash flow: more than $11.5 billion (before: $11.5 billion), now includes dividend income from the deconsolidated Canadian affiliate
– CAPEX: $1.6 billion, almost entirely due to investments supporting the smoke-free business (ne change)
– Leverage: further improvement towards the target ratio of around 2x by the end of 2026 (no share repurchases)
New Segment Reporting
PMI plans to implement a new organizational model with two primary business units: International and U.S. The change is scheduled for implementation effective January 1, 2026, and as a result PMI anticipates realigning its reportable segments. The current four geographic segments will be replaced with three new segments: International Smoke-Free, International Combustibles, and U.S. The company plans to report its financial results based on the new segments as of Q1 2026
