Apple Inc. (AAPL) Q2 2025 Earnings Call Transcript
Access earnings results, analyst expectations, report, slides, earnings call, and transcript.
Overview
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.
Key Financial Performance
Revenue $95.4 billion, up 5% year-over-year, driven by growth in iPhone, iPad, and Mac despite a headwind of almost 2.5 percentage points from foreign exchange.
Diluted EPS $1.65, up 8% year-over-year, marking a March quarter record.
iPhone Revenue $46.8 billion, up 2% year-over-year, driven by the iPhone 16 family and an all-time high in the iPhone active installed base.
Mac Revenue $7.9 billion, up 7% year-over-year, driven by the latest MacBook Air, MacBook Pro, and Mac Mini models.
iPad Revenue $6.4 billion, up 15% year-over-year, driven by the new M3-powered iPad Air.
Wearables, Home and Accessories Revenue $7.5 billion, down 5% year-over-year, facing a difficult comparison against the launch of the Apple Vision Pro and Watch Ultra 2 in the previous year.
Services Revenue $26.6 billion, up 12% year-over-year, achieving an all-time revenue record despite over 2 percentage points of foreign exchange headwinds.
Gross Margin 47.1%, up 20 basis points sequentially, primarily driven by favorable mix.
Products Gross Margin 35.9%, down 340 basis points sequentially, driven by mix, foreign exchange, and a seasonal loss of leverage.
Services Gross Margin 75.7%, up 70 basis points sequentially, primarily driven by a different mix, partly offset by foreign exchange.
Operating Expenses $15.3 billion, up 6% year-over-year.
Net Income $24.8 billion.
Operating Cash Flow $24 billion.
Cash and Marketable Securities $133 billion.
Total Debt $98 billion.
Net Cash $35 billion.
Shareholder Returns $29 billion returned to shareholders, including $3.8 billion in dividends and $25 billion through share repurchases.
Dividend Increase 4% increase to $0.26 per share.
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Operating Highlights
iPhone 16e Launch: Introduced iPhone 16e, an entry-level addition to the iPhone 16 lineup, powered by the A18 chip and featuring the new C1 modem for improved battery life.
MacBook Air Update: Launched M4-powered MacBook Air with a 12-megapixel Center Stage camera and enhanced performance.
New iPad Air: Released new iPad Air with M3 chip, combining performance and portability.
Apple Vision Pro: Showcased Apple Vision Pro with new immersive experiences and features.
Global Market Expansion: Set quarterly records in multiple countries including the UK, Spain, Brazil, and India.
Retail Expansion: Opened two new retail stores and announced plans for new stores in the UAE, Saudi Arabia, and India.
Investment in U.S. Operations: Announced plans to invest $500 billion over four years, expanding teams and facilities across several states.
Chip Sourcing: Expected to source over 19 billion chips from various U.S. states, with significant production in Arizona.
Sustainability Goals: Achieved a 60% reduction in emissions from 2015 levels and committed to carbon neutrality by 2030.
Shareholder Returns: Authorized an additional $100 billion for share repurchases and raised dividends by 4%.
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Risk or Challenges
Tariff Impact: For the June quarter, Apple estimates a potential impact of $900 million in costs due to tariffs, assuming current global tariff rates and policies remain unchanged.
Foreign Exchange Headwinds: The company faced a headwind of almost 2.5 percentage points from foreign exchange in the March quarter, which affected revenue growth.
Macroeconomic Conditions: The company expressed uncertainty regarding the global macroeconomic outlook, which could impact future performance.
Supply Chain Optimization: While the March quarter had limited tariff impact due to supply chain optimization, future uncertainties remain regarding potential changes in tariffs.
Competitive Pressures: Apple continues to face competitive pressures in various markets, particularly in the smartphone and wearable segments, which could affect market share.
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Guidance & Outlook
Capital Investment: Apple plans to spend $500 billion over the next four years, expanding teams and facilities across several states in the U.S.
Chip Sourcing: In 2025, Apple expects to source more than 19 billion chips from a dozen states, including significant production in Arizona.
Sustainability Goals: Apple aims for carbon neutrality across its supply chain and product lifecycle by 2030, having cut emissions by 60% from 2015 levels.
Product Innovation: Apple continues to innovate with new product launches, including the iPhone 16e and M4-powered MacBook Air.
Retail Expansion: Apple is opening new retail stores in the UAE, Saudi Arabia, and India.
Revenue Outlook: For the June quarter, Apple expects total company revenue to grow low to mid-single digits year-over-year.
Gross Margin Guidance: Gross margin is expected to be between 45.5% and 46.5%, factoring in $900 million in tariff-related costs.
Operating Expenses: Operating expenses are projected to be between $15.3 billion and $15.5 billion.
Other Income & Expense: Other income and expense is expected to be around negative $300 million.
Tax Rate: The tax rate is anticipated to be around 16%.
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Shareholder Return Plan
Dividend Increase: The dividend was raised by 4% to $0.26 per share of common stock.
Dividend Payment Date: The cash dividend will be payable on May 15, 2025, to shareholders of record as of May 12, 2025.
Share Repurchase: During the quarter, Apple returned $29 billion to shareholders, which included $25 billion through open market repurchases of 108 million Apple shares.
Authorized Share Repurchase: The Board authorized an additional $100 billion for share repurchases.
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Key Q&A
Q:Where do you expect the mix of India-sourced iPhones for the U.S. to be by the end of your fiscal year? Is it the goal to source 100% of your U.S.-bound iPhones from India?
A:For the June quarter, we expect the majority of iPhones sold in the U.S. will have India as their country of origin. I wouldn't want to predict the mix of production in the future.
Q:Can you help us understand if sell-in and sell-through were aligned in the March quarter? Do you believe that consumers are accelerating hardware purchases to get ahead of any potential pricing increases?
A:We don't believe that we saw obvious evidence of a significant pull forward in demand in the March quarter due to tariffs.
Q:Could it be a multiple of the $900 million figure or is it just completely unknown?
A:I don't want to predict the future because I'm not sure what will happen with the tariffs.
Q:Can you provide more color on the trajectory in China given all the geopolitical tensions?
A:We were down 2%, but we were roughly flat when you remove the headwinds from foreign exchange.
Q:Will you continue to build ahead with inventory until we get clarity on the Section 232 investigation?
A:We believe in engagement and we'll continue to engage. We have nothing to announce today regarding pricing.
Q:Can you talk about the factors that may have impacted product gross margins in the quarter?
A:We had a decrease in the product gross margin by 340 basis points sequentially, primarily driven by mix, seasonal loss of leverage, and foreign exchange.
Q:Can you talk about the unique factors that are benefiting you in the June quarter?
A:I wouldn't want to go through all of them.
Q:How should investors think about the gross margin trajectory as you source more from the U.S.?
A:We don't really forecast beyond the current quarter.
Q:What have you seen in terms of developer behavior in areas like Europe with alternate app stores?
A:It's embedded in our results, but I don't want to predict beyond the current quarter.
Q:Can you update us on your thoughts on supply chain resiliency and redundancy?
A:There's always risk in the supply chain. We have opened up new sources of supply.
Q:Is there any quantifiable impact on demand to date from tariffs?
A:Our best thinking is reflected in the range that we provided.
Q:What are some of the learnings you had from the delays in Siri?
A:We just need more time to complete the work so they meet our high-quality bar.
Q:Do you feel you have ample ways to mitigate potential negative impacts on your Services business?
A:We strongly disagree with the court's order and we're going to appeal.
Q:How important is it for Apple to have their own foundational models?
A:We want to have certain models and we'll partner as well.
Q:How do you see the modem strategy playing out?
A:We're super excited to ship the first one and get it out there.
Q:Review of Unclear Management Responses
A:Management avoided giving a direct answer regarding the future mix of production for India-sourced iPhones and the unique factors benefiting them in the June quarter. They also did not provide clarity on the trajectory of services growth or the impact of tariffs on demand.
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Earnings Word Cloud
The most frequently occurring keywords in this quarter's earning call
AI
Air
Apple Intelligence
Apple Pay
Apple Watch
Arizona
Clean
Earth
Image Wand
Services
app
base
cash
chip
color
customer satisfaction
device
digit
dividend
employee
exchange
experience
feature
goal
iPad
language
level
life
market
model
point
product
rate
record
segment
service
share
state
store
tariff
user
way
world
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
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