EPS of $2.40 increased by 10.1% from previous year
Gross margin of 46.9%
Net income of 36.33B
""We achieved all-time revenue records across the majority of the countries and regions we track, including the Americas, Europe, Japan, and the rest of Asia Pacific."" - Tim Cook
Apple Inc (AAPL) Q1 2025 Results Analysis - Record Revenue & EPS Growth
Executive Summary
Apple Inc reported impressive results for Q1 2025, achieving a historic revenue of $124.3 billion, a 4% increase year-over-year. Driven by strong demand across its products and services, the company also set an all-time record EPS of $2.40, reflecting a 10% increase from the previous year. The growth was bolstered by the performance of the iPhone and the ongoing expansion of services, which now comprises nearly $100 billion in revenue across the past year. Management expressed optimism about the future, particularly regarding Apple's innovations in AI and their gradual rollout, which are expected to enhance user engagement and satisfaction.
The overall revenue growth was supported by continual investments in product innovation and strategic user engagement initiatives. Notably, the gross margin improved to 46.9%, up 70 basis points sequentially, largely due to a favorable product mix and efficiencies within the supply chain. This highlights Apple’s robust operational management, effectively leveraging its ecosystem to capitalize on consumer demand across various segments.
Income Statement
Metric
Value
YoY Change
QoQ Change
Revenue
124.30B
3.95%
30.94%
Gross Profit
58.28B
6.23%
32.81%
Operating Income
42.83B
6.09%
44.75%
Net Income
36.33B
7.12%
146.54%
EPS
2.41
10.05%
148.45%
Key Financial Ratios
currentRatio
0.92
grossProfitMargin
46.9%
operatingProfitMargin
34.5%
netProfitMargin
29.2%
returnOnAssets
10.6%
returnOnEquity
54.4%
debtEquityRatio
1.45
operatingCashFlowPerShare
$1.99
freeCashFlowPerShare
$1.79
dividendPayoutRatio
10.6%
priceToBookRatio
57.74
priceEarningsRatio
26.53
Net Income vs. Revenue
Expense Breakdown
Management Commentary
### Key Insights from Management
- On Revenue Growth: Tim Cook emphasized, "Today, Apple is reporting revenue of $124.3 billion for the December quarter, up 4% from a year ago, and an all-time record."
- Services Growth: Cook also noted, "We achieved an all-time revenue record in services, generating nearly $100 billion in the last year."
- AI Integration: Cook highlighted the impact of Apple Intelligence saying, "We have compelling reasons to upgrade... and those markets where we launched Apple Intelligence outperformed others."
These statements from management underline the company’s strategy of leveraging AI innovations to drive user retention and overall growth while emphasizing the success of their services segment as a critical profit center.
"We achieved all-time revenue records across the majority of the countries and regions we track, including the Americas, Europe, Japan, and the rest of Asia Pacific."
— Tim Cook
"Our services revenue reaches an all-time high of $26.3 billion, up 14% year-over-year."
— Kevan Parekh
Forward Guidance
Looking ahead, management expects revenue growth to continue amidst anticipated challenges such as foreign exchange headwinds estimated to impact revenue by approximately 2.5%. For Q2 2025, they estimate total company revenue growth at low-to-mid single digits year-over-year, with services expected to grow at double-digits. They remain confident in maintaining gross margins between 46.5% to 47.5%, illustrating a stable operating environment despite external pressures.
Competitive Position
Company
Gross Margin
Operating Margin
Return on Equity
P/E Ratio
AAPL Focus
46.88%
34.50%
54.40%
26.53%
LPL
2.86%
-8.94%
-9.59%
-1.39%
SNEJF
26.90%
9.27%
2.95%
18.10%
PCRFY
29.70%
4.11%
1.45%
10.89%
SONO
43.80%
8.73%
10.70%
9.12%
Gross Profit Margin
Operating Profit Margin
Return on Equity
P/E Ratio Comparison
Investment Outlook
Overall, Apple Inc presents a compelling investment opportunity given its robust financial performance, strong commitment to innovation, and strategic growth initiatives. Despite facing headwinds due to foreign exchange and market volatility, the company’s broadening portfolio of services and sustained fiscal management position it well for future profitability. Investors should keep an eye on the rollout of new features under Apple Intelligence, growth in emerging markets, and adaptability to market changes as key metrics for performance.
Key Investment Factors
Growth Potential
- Continued innovation in AI and product enhancements expected to drive user engagement and revenue growth
- Expansion in emerging markets, particularly India and South Asia, with record sales and plans for new retail presence.
- Strong demand for services, with over 1 billion paid subscriptions, indicating a stable revenue stream that is expected to grow further.
Profitability Risk
- Potential adverse effects from geopolitical tensions impacting supply chain and consumer sentiment, particularly in China.
- Currency fluctuations impacting international sales, with an expectation of a 2.5% headwind from the strengthening dollar.
Financial Position
- Solid balance sheet with $141 billion in cash and cash equivalents, indicating strong liquidity.
- Overall debt levels remain manageable with a total debt of $97 billion, leading to a net cash position of $45 billion, which provides room for strategic investments and shareholder returns.
SWOT Analysis
Strengths
Strong brand loyalty and customer satisfaction, with over 2.35 billion active devices.
Diverse product line, providing multiple revenue streams including hardware and services.
Robust financial position with high cash reserves, facilitating strategic investments.
Weaknesses
Heavy reliance on iPhone sales, making the company vulnerable to market saturation.
Profit margins in hardware could face pressure from rising component costs or market competition.
Opportunities
Growth potential in emerging markets offering a larger consumer base.
Increased revenue from services, particularly in gaming, streaming, and finance sectors.
Threats
Intense competition from other technology companies, especially in smartphone and cloud services.
Regulatory challenges and geopolitical tensions that could disrupt supply chains and sales.