01—Abstract
Summary
Summary of the 10-Q filed January 31, 2025. Cited figures are marked; the original filing is the authoritative source.
Apple Inc.'s Q1 2025 earnings report (ending December 28, 2024) shows robust growth, driven primarily by a significant surge in Services revenue, which climbed 14% year-over-year to $26.34 billiona.
This offset a slight 1% decline in iPhone revenue, which totaled $69.14 billionb. Overall net sales increased by 4% to $124.3 billion, demonstrating the company's ability to expand its revenue base beyond its flagship product. The company's profitability also saw a healthy improvement, with net income rising by 7% to $36.33 billion and diluted earnings per share increasing to $2.40 from $2.18 in the prior year period.
This strong performance was supported by an expansion in the overall gross margin percentage to 46.9%, notably driven by a substantial 17% increase in Services gross margin. Apple continues its aggressive capital return program, repurchasing approximately $23.3 billionc of its stock during the quarter, reflecting confidence in its financial position and commitment to shareholder value.
02—Key points
Key Highlights
- Total net sales grew 4% year-over-year to $124.3 billion, driven by strong performance in Services and other product categories.
- Services revenue saw substantial growth, increasing 14% to $26.34 billion, highlighting the increasing importance of Apple's ecosystem.
- iPhone revenue experienced a slight decrease of 1% to $69.14 billion, indicating a potential plateau or shift in demand for the flagship product.
- Diluted earnings per share increased to $2.40 from $2.18 in the prior year, demonstrating improved profitability.
- Gross margin improved to 46.9% from 45.9% in the prior year, largely due to the high-margin Services segment.
- Apple continued its significant capital return program, repurchasing $23.3 billion of its common stock and paying $3.9 billion in dividends.
- Net income increased by 7% to $36.33 billion, underscoring the company's strong operational efficiency and revenue growth.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in Q1 FY2025, Apple Inc. kept $0.29.
- Revenue$124.30B100.0%
- Cost of revenue−$66.03B53.1%
- Gross profit$58.27B46.9%
- Operating costs−$15.44B12.4%
- Operating income$42.83B34.5%
- Interest, other & tax−$6.50B5.2%
- Net income$36.33B29.2%
04—Financials
Financial Highlights
Figures from 10-QQ1 FY2025filed January 31, 2025Financial Statements
Q1 FY2025 against Q1 FY2024
| Line item | Q1 FY2025Q1 FY2024 | Change |
|---|---|---|
| Revenue | $124.30B$119.58B | +4.0% |
| Cost of Revenue | $66.03B$64.72B | +2.0% |
| Gross Profit | $58.27B$54.85B | +6.2% |
| R&D Expenses | $8.27B$7.70B | +7.4% |
| SG&A Expenses | $7.17B$6.79B | +5.7% |
| Operating Expenses | $15.44B$14.48B | +6.6% |
| Operating Income | $42.83B$40.37B | +6.1% |
| Net Income | $36.33B$33.92B | +7.1% |
| EPS (Basic) | $2.41$2.19 | +10.0% |
| EPS (Diluted) | $2.40$2.18 | +10.1% |
| Shares Outstanding (Basic) | 15.08B15.51B | −2.8% |
| Shares Outstanding (Diluted) | 15.15B15.58B | −2.7% |
05—Questions
Frequently Asked Questions
How did Apple's Services segment perform this quarter?
Apple's Services segment demonstrated robust growth, with net sales increasing by 14% year-over-year to $26.34 billion. This growth was primarily driven by higher revenues from advertising, the App Store, and cloud services, contributing significantly to the company's overall revenue and profitability.
What is the outlook for iPhone sales based on this report?
iPhone net sales were relatively flat, experiencing a slight decrease of 1% to $69.14 billion compared to the same quarter last year. While not a significant decline, this performance suggests a potential moderation in iPhone demand or increased competition, making the growth in Services even more critical for overall company performance.
How is Apple managing its cash and returning capital to shareholders?
Apple continues to maintain a strong liquidity position. During the quarter, the company repurchased approximately $23.3 billion of its common stock and paid $3.9 billion in dividends and dividend equivalents. The company's management believes its unrestricted cash, cash equivalents, and marketable securities, along with ongoing cash generation, are sufficient to meet its financial obligations and capital return program.
What were the key drivers of the improved gross margin?
The overall gross margin percentage increased to 46.9% from 45.9% in the prior year. This improvement was largely driven by the Services segment, which saw its gross margin percentage increase to 75.0% from 72.8%, due to a favorable Services mix and higher net sales, partially offset by increased costs.
06—Continue