Apple Inc. has reported its strongest earnings ever for the first quarter of fiscal year 2025, even as iPhone sales fell short of Wall Street expectations.<\/p>
During its recent earnings call, Apple announced record revenue of $124.3 billion for the quarter ending December 28, 2024, signifying a 4% rise year-over-year. This figure outperformed analyst projections, which estimated revenue at around $124.1 billion. The tech giant’s earnings for the quarter surged to $36.3 billion, up 7.1% compared to the $33.92 billion reported for the same period last year.
CEO Tim Cook described the quarter as the “best quarter ever,” highlighting strong sales across various product lines. The company’s gross profit margin reached record levels at 46.9%, surpassing the previous high of 46.6% and exceeding analysts’ expectations of 46.5%. Earnings per share (EPS) also climbed to $2.40, reflecting a 10% increase year-over-year. Financial analysts had estimated it at $2.35.
Much of the revenue growth can be attributed to the strong demand for the iPhone 16 series, which alone generated $69.1 billion, marking a 15% increase from the previous year. Cook attributed the expansion largely to rising acceptance of Apple’s AI capabilities and new services, which have greatly contributed to overall sales.
“During the December quarter, we saw... year-over-year performance on the iPhone 16 family was stronger than those markets where we had not rolled out Apple Intelligence,” said Cook. He pointed out the inconsistent rollout of Apple Intelligence AI and weaker demand from China as mitigating factors affecting iPhone sales, especially as this market has yet to see the software rollout.
While iPhone sales experienced growth, they fell below analysts’ expectations of just above $71 billion. Specifically, the sales figures reflected an 11.1% drop to $18.5 billion across Asia, which Cook pointed out correlates directly with the lack of rollout for Apple Intelligence capabilities, unlike other regions where demand has surged.
To mitigate this downturn, Apple plans to expand its AI offerings to new languages and markets, which Cook believes will promote greater adoption of their products. This launch is expected to take place soon, potentially bolstering sales moving forward.
The company’s services segment, which includes the App Store and subscription products, saw significant growth as well, hitting $26.3 billion—an impressive 14% increase year-over-year. Notably, paid memberships surpassed one billion, reflecting strong user engagement and revenue growth.
Meanwhile, performance from other product lines, including the newest M4-powered Macs and iPads, also contributed positively to the company’s financial results. Mac revenue soared 16% year-over-year to $9 billion, and iPad sales recorded a 15% increase, aiding Apple’s overall performance.
Apple’s gross margin improved sequentially with product margins sitting at 39.3%, and services gross margins at 75%. CFO Kevan Parekh remarked on the impressive operational effectiveness and product mix, driving these higher margins. “Our record revenue and strong operating margins drove EPS to a new all-time record... returned over $30 billion to shareholders,” he noted.
Despite strong earnings, the company must navigate challenges, especially considering the upcoming foreign currency headwinds affecting its results. The forecast indicates operating costs are anticipated to range between $15.1 billion and $15.3 billion, with gross margins flanked between 46.5% and 47.5% for the next quarter.
Yet, analysts remain cautiously optimistic. They anticipate Apple’s services revenue will continue to rise, but project overall income to increase only by low-to-mid single digits year-over-year. The company’s outlook for Q2 is positive, with projected revenues ranging between $91.7 billion and $95.3 billion.
Conversing with analysts, Cook insisted on the potential elevated sales performance by easing operational costs and hinted at future enhancements to Apple Intelligence capabilities.
“I don't think we're going to really depart from what served us pretty well,” CFO Parekh remarked when discussing Apple’s disciplined pricing strategy, which has historically allowed the brand to maintain customer loyalty.
Despite the bumps along the way, the path forward looks optimistic for Apple, with plans for strategic expansions and innovations meant to broaden their customer base and reclaim fervor among their loyal following. Tim Cook’s remarks on the company’s future express confidence as they continue to analyze their premium pricing and product strategies.