Apple Inc. (AAPL) Q4 2025 Earnings Call Transcript
Access earnings results, analyst expectations, report, slides, earnings call, and transcript.
Overview
The earnings call reflects strong financial performance, with high gross margins and expected revenue growth, despite some supply constraints. Positive developments include record high upgraders, new product launches, and AI investments. While there are concerns about supply and demand balance and tariff impacts, optimistic guidance for the December quarter, particularly in China, and strong demand for new products suggest a positive stock price movement. However, management's lack of clarity on certain issues tempers the sentiment slightly.
Key Financial Performance
Revenue $102.5 billion, up 8% year-over-year. Reasons: September quarter record, growth in vast majority of markets, and strong demand for products and services.
Services Revenue $28.8 billion, up 15% year-over-year. Reasons: All-time record, double-digit growth in developed and emerging markets, and records across advertising, App Store, cloud services, Music, payment services, and video.
iPhone Revenue $49 billion, up 6% year-over-year. Reasons: September quarter record, strong demand for iPhone 16 family, and growth in most markets despite supply constraints.
Mac Revenue $8.7 billion, up 13% year-over-year. Reasons: Driven by MacBook Air, strong double-digit growth in emerging markets, and high customer satisfaction.
iPad Revenue $7 billion, flat year-over-year. Reasons: Difficult comparison with prior year launches, offset by better-than-expected performance of iPad.
Wearables, Home, and Accessories Revenue $9 billion, flat year-over-year. Reasons: Growth in Watch and AirPods offset by decline in accessories due to strong prior year performance.
Gross Margin 47.2%, up 70 basis points sequentially. Reasons: Favorable mix and inclusion of $1.1 billion tariff-related costs.
Products Gross Margin 36.2%, up 170 basis points sequentially. Reasons: Favorable mix.
Services Gross Margin 75.3%, down 30 basis points sequentially. Reasons: Not explicitly mentioned.
Operating Expenses $15.9 billion, up 11% year-over-year. Reasons: Increased investment in R&D.
Net Income $27.5 billion, September quarter record. Reasons: Strong business performance.
Diluted Earnings Per Share (EPS) $1.85, up 13% year-over-year. Reasons: September quarter record, strong revenue and net income.
Operating Cash Flow $29.7 billion, September quarter record. Reasons: Strong revenue and operational performance.
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Operating Highlights
iPhone 17 Pro: Redesigned with A19 Pro chip, 8x telephoto camera, and new finishes like Cosmic Orange. Achieved $49 billion in revenue, up 6% YoY.
Apple Watch Ultra 3: Features largest display ever, improved battery life, and emergency SOS via satellite. Introduced hypertension notifications and sleep score.
M5 Chip: Launched with neural accelerators in each GPU core, enhancing AI workflows. Powers new MacBook Pro, iPad Pro, and Apple Vision Pro.
AirPods Pro 3: Improved sound quality, fit, and active noise cancellation. Features Live Translation powered by Apple Intelligence.
iPad Pro with M5: Offers enhanced AI performance and combines power with portability.
Emerging Markets: Achieved all-time revenue records in India and other emerging markets. Expanded retail presence in India and UAE.
Apple TV and F1 Partnership: Apple TV to host F1 races in the U.S. starting next year, enhancing its sports content portfolio.
AI Investments: Investing $600 billion over 4 years in areas like advanced manufacturing, silicon engineering, and AI. Opened a new AI-focused factory in Houston.
Services Revenue: Achieved $28.8 billion in revenue, up 15% YoY, with growth across advertising, App Store, cloud services, Music, and payment services.
Unified Software Design: Introduced Liquid Glass material for a unified experience across platforms.
Apple Intelligence: Enhanced AI features like Live Translation, Workout Buddy, and visual intelligence. Developers leveraging device foundation models for new experiences.
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Risk or Challenges
Macroeconomic Conditions: Potential adverse impacts on the company's business and results of operations due to macroeconomic conditions.
Tariffs and Trade Measures: Approximately $1.1 billion in tariff-related costs were incurred, with an estimated $1.4 billion impact expected in the December quarter. These costs could affect gross margins and overall profitability.
Supply Constraints: Supply constraints on several iPhone 16 and iPhone 17 models due to strong demand, which could limit revenue growth.
Regulatory and Legal Risks: Legal and regulatory proceedings pose risks to the company's operations and financial results.
R&D Investment Costs: Increased R&D expenses, up 11% year-over-year, could pressure operating margins.
Economic Uncertainties: The company's forward-looking guidance assumes no worsening of the global macroeconomic outlook, indicating sensitivity to economic uncertainties.
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Guidance & Outlook
December quarter revenue growth: Expected to grow by 10% to 12% year-over-year, marking the best quarter ever for the company.
iPhone revenue: Projected to grow double digits year-over-year, achieving the best iPhone quarter ever.
Mac revenue: Anticipated to face a challenging comparison against the prior year's launches of M4 MacBook Pro, Mac Mini, and iMac.
Services revenue: Expected to grow at a year-over-year rate similar to fiscal year 2025.
Gross margin: Forecasted to be between 47% and 48%, including an estimated $1.4 billion impact from tariff-related costs.
Operating expenses: Projected to range between $18.1 billion and $18.5 billion, reflecting increased investments in AI and product development.
Tax rate: Estimated to be around 17% for the December quarter.
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Shareholder Return Plan
Dividend Declaration: Apple's Board of Directors has declared a cash dividend of $0.26 per share of common stock, payable on November 13, 2025, to shareholders of record as of November 10, 2025.
Share Repurchase Program: Apple returned $24 billion to shareholders during the quarter, including $20 billion through open market repurchases of 89 million Apple shares.
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Key Q&A
Q:Why is the iPhone 17 experiencing significant success?
A:Tim Cook attributed the success to the strong product lineup, including the iPhone 17 Pro, which is the most advanced phone they've ever made, and the iPhone Air, which is thin and light. The iPhone 17 offers great value by incorporating features previously reserved for Pro models into the consumer lineup.
Q:How is Apple managing component cost inflation, particularly with memory prices?
A:Kevan Parekh stated that Apple's procurement team is finding cost-saving opportunities. Memory and storage prices are providing a slight tailwind, and gross margins were above guidance at 47.2%. New products have higher costs, but Apple is focused on reducing these costs over time.
Q:What is the outlook for iPhone sales in China for the December quarter?
A:Tim Cook mentioned that store traffic in China is up significantly year-over-year, and the iPhone 17 family has been well-received. Apple expects to return to growth in Q1 due to the strong reception of the iPhone.
Q:What drove the strong performance in Services revenue?
A:Kevan Parekh explained that the strong performance was organically driven, with an all-time revenue record of $28.8 billion for the quarter. Growth was broad-based across categories and geographies, with no abnormal factors contributing.
Q:What are the drivers of acceleration in Services revenue growth?
A:Kevan Parekh stated that the growth was broad-based across categories and geographies, with no single factor driving the outperformance. The portfolio's diversity contributed to the strong results.
Q:Are there any notable shifts in iPhone sell-through trends between upgraders and switchers?
A:Tim Cook noted that Apple set a September quarter record for upgraders. However, it is too early in the iPhone 17 cycle to comment on trends between upgraders and switchers. Channel inventory ended at the low end of the targeted range due to strong demand.
Q:What are the expectations for gross margins in the December quarter?
A:Kevan Parekh stated that gross margins are expected to be in the range of 47% to 48%, driven by favorable product mix and higher leverage, despite higher costs for new products.
Q:What caused the weakness in China during the September quarter?
A:Tim Cook attributed the 4% year-over-year decline in Greater China revenue to supply constraints for the iPhone 16. However, Apple expects growth in the December quarter due to strong demand for the iPhone 17 family.
Q:Will Apple resolve iPhone supply constraints by the end of December?
A:Tim Cook stated that Apple is working hard to meet demand but did not predict when supply and demand would balance. He did not quantify the revenue impact of the constraints.
Q:What is the outlook for Services growth sustainability?
A:Tim Cook mentioned that the advertising category set a record, but he avoided providing specific details about the sustainability of mid-teens growth rates for Services.
Q:What role do smartphone subsidies play in China's iPhone sales momentum?
A:Tim Cook acknowledged that subsidies have a favorable effect on consumer demand but noted that they only apply to certain price ranges, excluding some higher-priced Apple products.
Q:What is driving the increase in operating expenses for the December quarter?
A:Kevan Parekh explained that the increase is primarily due to investments in AI and the product roadmap, with most of the increase driven by R&D.
Q:What is the impact of tariffs on iPhone revenue and production?
A:Tim Cook explained that tariffs are projected to increase from $1.1 billion to $1.4 billion in the December quarter. The change reflects the recent reduction in tariffs in China from 20% to 10%.
Q:What is Apple's strategy for promoting other products alongside the iPhone?
A:Tim Cook stated that Apple actively promotes other products to iPhone buyers. He also noted that the Mac outgrew the market despite a tough comparison to last year's product launches.
Q:What caused iPhone supply constraints, and how is Apple addressing them?
A:Tim Cook clarified that the constraints were due to underestimating demand for the iPhone 16 and strong demand for the iPhone 17. Apple is working to fulfill back orders but did not provide specific estimates.
Q:How might AI and chatbots impact the App Store?
A:Tim Cook believes AI presents opportunities for the App Store, as developers adopt on-device models to enhance their apps.
Q:What is the mix of demand for iPhone 17 models?
A:Tim Cook stated that it is too early to determine the mix of demand for iPhone 17 models, and Apple does not disclose this information for competitive reasons.
Q:What is Apple's approach to building its Private Cloud Compute (PCC) for AI?
A:Tim Cook mentioned that Apple is using PCC for Siri queries and is expanding its infrastructure, including a new manufacturing plant in Houston. Kevan Parekh added that CapEx investments in PCC were made in 2025.
Q:Does the iPhone Air's reception indicate potential for foldable phones?
A:Tim Cook stated that the iPhone Air's reception is not necessarily a proxy for the foldable phone market. He emphasized the strong reception of the iPhone lineup overall.
Q:What is Apple's strategy for AI development and M&A?
A:Tim Cook explained that Apple is developing its own foundation models and is open to M&A opportunities that align with its roadmap.
Q:Are AI capabilities a significant purchase consideration for iPhones?
A:Tim Cook stated that AI capabilities are one of many factors influencing purchasing decisions and expects them to become more significant over time.
Q:Will Apple alter its hybrid approach to data centers due to AI demand?
A:Kevan Parekh stated that Apple will continue its hybrid model of using both first-party and third-party data centers, with increased CapEx spending for AI investments.
Q:Review of Unclear Management Responses
A:1. Tim Cook avoided providing specific details about when iPhone supply and demand would balance or the revenue impact of constraints. 2. Tim Cook did not provide a clear answer about the sustainability of mid-teens growth rates for Services. 3. Tim Cook avoided disclosing the mix of demand for iPhone 17 models for competitive reasons. 4. Tim Cook did not provide a direct answer about the potential for foldable phones based on the iPhone Air's reception. 5. Kevan Parekh did not provide specific details about the role of Apple silicon in the M5 series of chipsets.
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Earnings Word Cloud
The most frequently occurring keywords in this quarter's earning call
AI
Air
AirPods
Apple TV
Apple Watch
Apple product
Asia
Services record
Watch lineup
base
basis
cash
chip
customer satisfaction
design
device
experience
feature
iPad Pro
iPhone
investment
launch
level
majority market
market record
noise
record digit
record majority
record market
season
service
sleep
thousand
user world
way
AAPL Transcript
Apple Inc. (AAPL) Q4 2025 Earnings Call Transcript
Positive10-30
The earnings call reflects strong financial performance, with high gross margins and expected revenue growth, despite some supply constraints. Positive developments include record high upgraders, new product launches, and AI investments. While there are concerns about supply and demand balance and tariff impacts, optimistic guidance for the December quarter, particularly in China, and strong demand for new products suggest a positive stock price movement. However, management's lack of clarity on certain issues tempers the sentiment slightly.
Apple Inc. (AAPL) Q3 2025 Earnings Call Transcript
Positive7-31
The earnings call summary and Q&A indicate strong iPhone demand, significant capital investments, and optimistic guidance despite tariff headwinds. The new product innovation and retail expansion signal growth potential. While revenue growth may decelerate slightly, the overall sentiment remains positive with strategic investments in AI and supply chain optimization. The positive factors outweigh minor concerns, suggesting a positive stock price movement.
Apple Inc. (AAPL) Q2 2025 Earnings Call Transcript
Positive5-1
The earnings call summary reveals strong financial performance, with record EPS and revenue growth across most segments, despite some challenges in wearables. Positive guidance for revenue and services growth, coupled with a dividend increase and significant shareholder returns, further supports a positive outlook. The Q&A section highlights some uncertainties, particularly around tariffs and production mix, but these are not substantial enough to overshadow the overall positive sentiment. The combination of strong earnings, optimistic guidance, and shareholder-friendly moves suggests a positive stock price movement in the short term.
Apple Inc. (AAPL) Q1 2025 Earnings Call Transcript
Positive1-30
The earnings call reflects strong financial performance with record revenues and EPS growth. Shareholder returns are robust, with substantial share repurchases and dividends. Despite challenges in China, the overall market strategy and product innovation, including Apple Intelligence, are positive. The Q&A reveals optimism about future innovation and growth in emerging markets. Gross margin guidance remains strong, and the company is managing inventory well. The positive outlook and financial health suggest a positive stock price movement, although some caution is warranted due to geopolitical risks and competitive pressures in China.
AAPL Report
Frequently Asked Questions
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They are generated by a specialized financial-language model trained exclusively on 15+ years of earnings transcripts. The model extracts financial figures, guidance, and tone with 97%+ accuracy and is regularly validated against human analysts. The full raw transcript always remains available for verification.
