Apple Inc. (AAPL) Q1 2025 Earnings Summary
Executive Summary
- Apple delivered an all-time record December quarter: revenue $124.3B (+4% y/y) and diluted EPS $2.40 (+10% y/y), with company gross margin at 46.9% (high end of guidance) .
- Results modestly beat S&P Global consensus: Revenue $124.3B vs $124.03B*, EPS $2.40 vs $2.35*, Gross Margin 46.9% vs 46.57%*; beats were driven by mix and Services strength, partly offset by flat iPhone y/y .
- Category highlights: Services hit an all-time high $26.3B (+14% y/y), Mac +16% y/y, iPad +15% y/y; iPhone $69.1B was roughly flat y/y; Wearables down 2% y/y .
- Outlook (March quarter): total revenue growth low-to-mid single digits y/y despite ~2.5ppt FX headwind; Services low double-digit y/y; GM 46.5–47.5%, OpEx $15.1–$15.3B, OI&E ~-$300M, tax ~16% .
- Potential catalysts: Apple Intelligence rollout to more languages in April; continued Services momentum and high-margin mix; gross margin guidance near record territory; watch Greater China (down 11% y/y with channel destock) and FX as key swing factors .
What Went Well and What Went Wrong
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What Went Well
- “Our best quarter ever” with revenue $124.3B and EPS $2.40, both all-time records; installed base reached a new record across products and regions .
- Services set an all-time record ($26.3B, +14% y/y), with paid accounts and paid subscriptions growing double-digit y/y and Services GM at 75% .
- Record upgraders in iPhone; Apple Intelligence correlated with better iPhone performance in launched markets; “over 2.35 billion active devices” installed base .
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What Went Wrong
- Greater China revenue fell 11% y/y; over half of the decline was due to channel inventory reductions; competitive intensity remains high .
- Wearables, Home and Accessories fell 2% y/y; tough compare in Watch and uneven hardware demand .
- Operating cash flow of $29.9B was strong but reflected $11.9B paid during the quarter related to the EU State Aid decision; FX to be a 2.5ppt headwind to March-quarter revenue y/y .
Financial Results
Headline financials (USD)
Notes: Q4 2024 non-GAAP EPS $1.64 and non-GAAP net income $24.98B exclude a one-time $10.2B net tax charge related to the EU State Aid decision .
Segment revenue by quarter ($B)
Profitability mix
Geographic revenue — Q1 2025 vs Q1 2024 ($B)
Cash flow and capital returns (select items, Q1 2025)
- Operating cash flow $29.94B; share repurchases $23.61B; dividends $3.86B; net cash increased by $0.36B q/q; cash and equivalents ended at $30.30B .
- Board declared a $0.25 dividend payable Feb 13, 2025 (record date Feb 10, 2025) .
Guidance Changes
Earnings Call Themes & Trends
Management Commentary
- “Today Apple is reporting our best quarter ever, with revenue of $124.3 billion, up 4 percent from a year ago.” — Tim Cook .
- “Company gross margin was 46.9%, at the high end of our guidance range and up 70 basis points sequentially, primarily driven by favorable mix.” — CFO Kevan Parekh .
- “We set an all-time record for upgraders… the 16 outperformed the 15 from launch… markets where we had launched Apple Intelligence… outperformed those we did not.” — Tim Cook .
- “Services revenue reached an all-time record of $26.3 billion, up 14% year-over-year… paid accounts and paid subscriptions grew double digits.” — CFO Kevan Parekh .
- “If you look at our Greater China revenue… we were down 11% year-over-year… over half of the decline… was driven by change in channel inventory.” — Tim Cook .
Q&A Highlights
- Apple Intelligence demand signal: Markets with AI availability saw stronger iPhone 16 performance; all-time record upgraders; 16 family outperforming 15 since launch .
- China: -11% y/y; >50% of decline from channel destock; national subsidy program announced Jan 20 (post-Q1) covers Apple categories; competitive landscape intense .
- Gross margin cadence: Mar qtr GM 46.5–47.5% guided; FX headwind offsets favorable costs/services mix; product leverage declines sequentially post-holidays .
- Mac/iPad sustainability: Strength driven by compelling M-series products; “best AI PC” positioning; unwilling to project category-level forward sales .
- Services durability and margins: Services GM 75%; broad-based momentum across offerings and geographies; over 1B paid subscriptions; recurring elements growing faster .
Estimates Context
Values retrieved from S&P Global.*
Implications: modest top-line and EPS beats with margin outperformance support higher FY margin base; Street likely nudges up Services and GM for March given 46.5–47.5% guide and low-double-digit Services growth, while modeling iPhone conservatively given flat y/y in December and China pressure .
Key Takeaways for Investors
- Quality beat: modest revenue/EPS beats with stronger-than-expected GM; mix and Services remain tailwinds .
- Services engine compounding: +14% y/y revenue, 75% GM, and double-digit growth in paid accounts/subs underpin multiple and cash flow resilience .
- Hardware bifurcation: Mac/iPad double-digit growth vs iPhone ~flat and Wearables -2% y/y; AI PC positioning could sustain Mac momentum .
- China is the swing factor: -11% y/y with channel destock; watch impact of national subsidies and AI language rollout on demand normalization .
- March guide constructive: revenue low-to-mid single-digit y/y growth despite FX; GM 46.5–47.5% and lower OpEx ($15.1–$15.3B) support earnings durability .
- Near-term catalysts: April AI language expansion and continued Services strength; traders may key off incremental AI adoption signals and China stabilization .
- Capital returns steady: $30B+ returned in Q1; dividend maintained; buybacks remain robust, with net cash of $45B at Q1-end .
Appendix: Q1 2025 vs S&P Global Consensus (detail)
- Revenue consensus: $124.03B* vs actual $124.30B .
- EPS consensus: $2.35* vs actual $2.40 .
- GM consensus: 46.57%* vs actual 46.9% .
Values retrieved from S&P Global.*
Sources: Apple Q1 FY25 press release and Form 8-K (financial statements, dividend) ; Q1 FY25 earnings call (gross margin, guidance, category growth, installed base, regional trends, Q&A) ; Prior quarters for trend (Q4 FY24 and Q3 FY24 press releases and calls) .