Apple Inc. reported its best-ever quarterly performance as it closed its fiscal first quarter of 2025 with record-breaking earnings, showcasing its resilience against the backdrop of declining iPhone sales. On January 31, 2025, the tech behemoth announced total revenue of $124.3 billion for the quarter ending December 28, 2024, marking a 4% increase from the previous year’s $119.6 billion. Net profit for the quarter rose to $36.3 billion, or $2.40 per diluted share, compared to $33.9 billion, $2.18 per share, for the same period last year.
CEO Tim Cook expressed enthusiasm about the results, noting, "We were thrilled to bring customers our best-ever lineup of products and services during the holiday season." The highlight of the company’s performance was its gross margin, which hit 46.9%, exceeding expectations and setting a new record, following the previous peak of 46.6% reported last March. This remarkable margin, referred to as the profit remaining after accounting for the cost of goods sold, underlines Apple’s effective cost management and pricing power across its expansive array of products.
Despite the bright overall financial picture, Apple reported iPhone revenue of $69.14 billion, which fell short of Wall Street's target of $71.03 billion. This marks the first time Apple has missed iPhone sales expectations since its fiscal Q1 2023. Analysts attributed this decline largely to weakness within the Greater China region, where sales dropped significantly by 11.1% to $18.51 billion. Cook attributed the decline to two main factors: changes in channel inventory and the absence of the Apple Intelligence suite—an AI feature newly integrated with iPhone 16, not yet available within mainland China.
"During the December quarter, we saw... the year-over-year performance on the iPhone 16 family was stronger in markets where we had rolled out Apple Intelligence than those where we had not," Cook stated during the earnings call. This indicates potential for sales recovery as Apple expands the software's language support and availability beyond English-speaking countries, which may rekindle interest and bolster iPhone sales.
While iPhone sales faltered, Apple's Services division thrived, generating $26.34 billion—up 14% compared to the previous year—easily surpassing analyst expectations. The surge was largely attributed to subscriptions across services like iCloud and Apple TV+, alongside additional revenue streams. Cook highlighted this division as Apple’s biggest profit driver, confirming, "We have well over a billion paid subscriptions across the Services platform,” pointing to the significant shift toward service-oriented income sources.
Complementing the Services success, Apple’s hardware segments witnessed impressive growth, especially within the Mac and iPad categories. Mac revenue increased by 15% to $8.99 billion, exceeding the estimated $7.96 billion, driven by excitement around newly launched products. Conversely, iPad sales also surged by 15% to $8.09 billion, outperforming the $7.32 billion forecast. These figures reveal broader interest driven by recent product innovations, as indicated by Cook’s commentary on consumers responding positively to new launches. Cached data suggest the company’s active devices base has also seen remarkable growth, crossing 2.35 billion, underlining Apple’s strong market presence.
Looking forward, Apple foresees revenue growth continuing, albeit at slower rates. The company declined to provide specific guidance for the upcoming quarter, but suggested expectations for growth would lie within the low- to mid-single digits year-over-year. Apple’s CFO, Kevan Parekh, affirmed confidence about maintaining strong operating margins, stating, "Our record revenue and strong operating margins drove EPS to a new all-time record with double-digit growth and allowed us to return over $30 billion to shareholders." He also confirmed the company declared a quarterly dividend of $0.25 per share, reflecting Apple’s commitment to returning value to its investors.
Another influential factor affecting growth is the current economic environment, especially concerning shifts within Chinese consumer behavior. The company noted significant adjustments at play, primarily driven by increased competition and the recent establishment of national subsidies to stimulate economic activity. These developments are anticipated to forge new prospects within the region and possibly support recovery from current declines.
Overall, Apple’s impressive revenue figures, bolstered by its dynamic Services sector, countered weaknesses observed within the iPhone market. By leveraging the success of its latest offerings and strategically addressing challenges, Apple is likely to navigate its upcoming quarters successfully, as demonstrated by the innovative potential of its products and enhanced customer engagement.