Apple FY25Q1 corresponds to the actual calendar period of October/November/December 2024.
Apple FY2025 Q1 Earnings Summary:
Revenue was $124.3B, up 4% year over year. Net income was $36.33B, up 7.1% year over year.
Global active installed base of all products hit a new all-time high (devices that used an Apple service within 90 days are considered active. FY24Q1 was over 2.2B, FY25Q1 is over 2.35B).
iPhone revenue was $69.138B, down 1% year over year. iPhone active installed base hit a new all-time high. The number of iPhone upgraders hit a new high. The iPhone 16 series only overtook the 15 series after two quarters on the market. About half of the Greater China decline this quarter was due to channel inventory issues. Cook is pinning hopes on government subsidies to boost sales.
Services revenue was $26.34B, up 14% year over year, the ninth consecutive quarter of record highs. Services gross margin was 75%, up modestly sequentially. Services transacting accounts and paid accounts both hit all-time highs, with double-digit year-over-year growth. Global paid subscriptions exceed 1B (unchanged for five quarters), a new all-time high. Services revenue breakdown has not been disclosed for two consecutive quarters.
Mac revenue was $8.987B, up 16% year over year. Mac active installed base hit a new all-time high. iPad revenue was $8.088B, up 15% year over year. iPad active installed base hit a new all-time high. iPad growth was driven primarily by iPad Air and other entry-level models. Over half of iPad revenue came from new users.
Wearables, Home and Accessories revenue was $11.747B, down 2% year over year, the sixth consecutive quarter of year-over-year decline.
Greater China revenue was $18.513B, down 11% year over year, the sixth consecutive quarter of year-over-year decline. Greater China operating margin was 44.1%, higher only than the Americas and Europe. This marks the third consecutive quarter where only Greater China posted a year-over-year revenue decline. Japan posted the fastest growth this quarter.
Apple is gaining ground in many markets worldwide. This quarter, revenue hit all-time highs in multiple developing countries across Latin America, the Middle East, and South Asia (aside from India, specific countries were not disclosed). India set a new record for the period.
FY25Q2 revenue is guided to grow low-to-mid single digits year over year. FX impact is a 2.5 percentage point headwind. Excluding FX, growth would be consistent with Q1. Services revenue guided to grow low double digits. Gross margin 46.5%-47.5%. Opex $15.1B-$15.3B. This implies Q2 revenue growth of roughly 3% year over year and net income growth of roughly 1% year over year.
The company repurchased $23.3B of shares and paid $3.9B in dividends this quarter. Net cash was $45B.
Apple Intelligence is now available in the U.S., Australia, Canada, New Zealand, South Africa, and the U.K. Non-English versions will launch in April.
Overall, Apple's earnings were characteristically flat. Revenue growth (+4% YoY) and net income growth (+7% YoY, forward PE 30.9x) lagged the other three mega-caps: Microsoft (+12% revenue, +10% net income, forward PE 30.3x), Google (+12% revenue, +28% net income, forward PE 22.2x), and Amazon (+10% revenue, +88% net income, forward PE 37.3x). Next quarter's guide is also uninspiring, suggesting Buffett will continue trimming. Microsoft, Google, and Amazon all delivered solid profit results despite massive AI investment, yet the market still worries about overinvestment hurting profits, while pinning outsized hopes on Apple's AI despite its relatively modest investment to date. Perhaps not even open source can save Apple AI.
Apple's core growth formula: AAPL = active installed base * customer engagement (active installed base at new high * paid subscribers at new high).
Both sides of Apple's core growth formula are still growing, but at a modest pace. Apple's flywheel remains hardware-weak, growth driven entirely by software. The market remains overly optimistic about AI driving iPhone volume growth and Apple's late-mover AI advantage.