By Timothy S. Donahue

Top Takeaways:

• Record quarter: PMI surpassed $11 billion in quarterly net revenue for the first time, as smoke-free products continued to drive growth.
• Smoke-free momentum: IQOS, ZYN and VEEV fueled double-digit growth in smoke-free revenue, with smoke-free products accounting for approximately 42% of total net revenue.
• U.S. investment: Following FDA authorization of ZYN as the first nicotine pouch with modified-risk status, PMI plans to accelerate U.S. investment in ZYN and prepare for the future launch of IQOS ILUMA.

Philip Morris International reached a significant financial milestone in the second quarter, reporting more than $11 billion in quarterly net revenue for the first time.

Strong demand for its smoke-free portfolio and a resilient combustible cigarette business drove double-digit earnings growth and prompted the company to reaffirm its confidence in its long-term transformation strategy.

The company reported second-quarter net revenues of $11.2 billion, up 10.4% from the same period last year. Adjusted diluted earnings per share increased 15.2% to $2.20, exceeding prior expectations. Shipment volume rose 2.5%, driven primarily by smoke-free products, which grew 7.5%, while the combustible business posted stronger-than-expected shipment growth of 1.1%.

“We delivered outstanding results in the second quarter, driving net revenues to over $11 billion for the first time with excellent growth across all headline metrics,” PMI Chief Executive Officer Jacek Olczak said.

“With a robust first half under our belt, including continued momentum and strong results in our smoke-free business, we are well positioned to deliver on our full-year targets while investing for future growth.”

The results reinforce PMI’s ongoing shift toward smoke-free products while highlighting the resilience of its traditional cigarette business, which continues to generate substantial revenue and profit as the company invests in next-generation nicotine products.

Smoke-Free Business Continues to Drive Growth

PMI’s international smoke-free business remained the company’s primary growth engine during the quarter, reporting 14.2% net revenue growth and 17.1% gross profit growth as IQOS, nicotine pouches, and VEEV e-vapor products continued to gain traction across multiple regions.

Smoke-free products now account for approximately 42% of PMI’s total net revenue, up from the prior year, and the company’s smoke-free portfolio is now available in 109 markets worldwide.

IQOS remained the dominant contributor, with heated tobacco unit shipments up 7.6%. PMI maintained roughly three-quarters of the global heated tobacco category by volume. Although demand in Japan softened following an excise tax-driven price increase and Poland experienced disruption from its characterizing flavor ban, underlying performance remained robust elsewhere.

Excluding Japan and Poland, adjusted IQOS in-market sales grew by about 10%, reflecting continued momentum across Europe and emerging markets. Strong performances in Germany, Romania, Greece, and Spain helped offset temporary regional headwinds, while markets outside Europe and Japan—including Mexico City, Jakarta, Riyadh, Kuala Lumpur, and Taipei—continued to post double-digit gains.

Argentina also entered the company’s heat-not-burn footprint after legislation regulating the category took effect in May.

PMI executives described the quarter as another demonstration of IQOS’ resilience despite temporary regulatory and tax-related disruptions.

“Our Q2 results were once again powered by excellent performance, as expected, from our international smoke-free business,” Chief Financial Officer Emmanuel Babeau told investors during the earnings call. “Our multicategory commercial approach continues to gain momentum, supported by ZYN and VEEV.”

VEEV also continued to expand rapidly, with shipments up 55.1% during the quarter. PMI said the brand now holds the No. 1 closed-pod position in Europe, supported by strong performances in Germany, Romania and Greece.

Meanwhile, PMI’s international nicotine pouch business continued to expand geographically despite weakness in the Nordic snus market. Modern oral pouch volumes increased 14.7% excluding the Nordics, with ZYN now available in 60 markets and recording strong growth in countries including Pakistan, Poland, and the United Kingdom.

ZYN MRTP Authorization Shapes U.S. Strategy

While PMI’s U.S. business remained relatively small compared with its international operations, executives devoted significant attention to ZYN’s regulatory and commercial outlook after the FDA’s June authorization granting modified-risk status to 20 ZYN nicotine pouch variants.

The company described the authorization as a major milestone that reinforces its scientific strategy and supports future U.S. expansion.

During the quarter, ZYN shipments increased 1.8% to 2.9 billion pouches, despite comparisons to a stronger prior-year inventory build. PMI also launched ZYN ULTRA in 9 mg and 11 mg strengths and expanded flavors in its flagship dry pouch lineup, with additional 1.5 mg and 8 mg products scheduled for release in the third quarter.

To support those launches, PMI said it will accelerate U.S. investments in the second half of the year while preparing for the eventual U.S. commercialization of IQOS ILUMA.

“We believe it is the right moment to accelerate U.S. investments in the second half of the year to support ZYN’s brand equity and portfolio expansion, and to prepare for the future launch of IQOS ILUMA,” Babeau said.

The company said the FDA’s MRTP authorization—the first ever granted to a nicotine pouch product—further validates the scientific evidence supporting ZYN’s role in tobacco harm reduction.

Combustibles Continue to Generate Strong Results

Although PMI’s long-term strategy centers on smoke-free products, cigarettes produced another surprisingly strong quarter.

International cigarette shipments increased by 1.1%, driven by growth in Turkey, Indonesia, and Egypt. Net revenues from combustibles rose 9.8%, supported by approximately 10% price increases, while Marlboro increased its market share to 11%, matching its highest recorded category share.

Executives acknowledged that the combustible business outperformed expectations and continues to provide the financial foundation for PMI’s smoke-free transformation.

“Our combustibles performance was above our expectations in an especially strong quarter,” Babeau said. “Such results demonstrate the robustness of our portfolio as we leverage our leadership in cigarettes to support the switching of legal-age smokers to better alternatives.”

For the full year, PMI now expects cigarette shipments to decline by approximately 2% to 3%, an improvement over its previous forecast. It also forecasts overall shipment volumes to remain broadly stable, as smoke-free growth offsets continued cigarette declines.

The company also raised its 2026 adjusted diluted earnings outlook to a range of $8.26 to $8.41 per share, reflecting projected annual growth of 9.5% to 11.5%.

PMI noted that the conflict in the Middle East has so far had only a limited impact on operations, primarily through higher transportation and energy costs. While management acknowledged ongoing geopolitical uncertainty, the company said it does not expect a prolonged effect on consumer demand or its broader financial outlook.

The second-quarter results further underscore PMI’s increasingly balanced business model. Smoke-free products continue to deliver the fastest growth and are approaching half of company revenue, while traditional cigarettes remain highly profitable and continue to generate the cash flow needed to fund new product development, geographic expansion and regulatory investment.

Surpassing $11 billion in quarterly revenue marks not only a financial milestone for the company but also another indication that its multiyear transition toward a predominantly smoke-free business continues to gain momentum.