Apple Inc (AAPL) Q2 2025 Earnings Call Highlights: Record Revenue and Strategic Investments ...

GuruFocus News

Fri, May 2, 2025, 1:19 AM 4 min read

Revenue: $95.4 billion, up 5% year over year.
Diluted EPS: $1.65, up 8% year over year.
iPhone Revenue: $46.8 billion, up 2% year over year.
Mac Revenue: $7.9 billion, up 7% year over year.
iPad Revenue: $6.4 billion, up 15% year over year.
Wearables, Home, and Accessories Revenue: $7.5 billion, down 5% year over year.
Services Revenue: $26.6 billion, up 12% year over year.
Gross Margin: 47.1%.
Operating Expenses: $15.3 billion, up 6% year over year.
Net Income: $24.8 billion.
Operating Cash Flow: $24 billion.
Shareholder Returns: $29 billion returned, including $3.8 billion in dividends and $25 billion in share repurchases.
Cash and Marketable Securities: $133 billion.
Net Cash: $35 billion.

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Release Date: May 01, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

Apple Inc (NASDAQ:AAPL) reported $95.4 billion in revenue, up 5% year over year, with a March quarter record for diluted EPS at $1.65.
Services achieved an all-time revenue record of $26.6 billion, growing 12% compared to the prior year.
iPhone revenue increased by 2% year over year, driven by the iPhone 16 family, with a strong active installed base.
Mac revenue grew by 7% year over year, with every geographic segment showing growth and high customer satisfaction.
Apple Inc (NASDAQ:AAPL) announced plans to invest $500 billion in the US over the next four years, expanding facilities and sourcing more components domestically.

Negative Points

Wearables, Home, and Accessories revenue declined by 5% year over year, facing a difficult comparison against previous product launches.
The company faces a potential $900 million cost impact from tariffs in the June quarter, with uncertainty about future tariff changes.
China revenue decreased by 2% year over year, although it was roughly flat when adjusted for foreign exchange headwinds.
Product gross margins decreased by 340 basis points sequentially, driven by mix, foreign exchange, and seasonal loss of leverage.
There are ongoing legal challenges, including the Epic case and Google antitrust trial, which could impact Apple Inc (NASDAQ:AAPL)'s Services business.

Q & A Highlights

Q: Tim, can you provide clarity on the mix of India-sourced iPhones for the US and whether the goal is to source 100% of US-bound iPhones from India? A: Timothy Cook, CEO: For the June quarter, we expect the majority of iPhones sold in the US to have India as their country of origin. We are not predicting the future mix but are providing clarity for the June quarter.

Q: Can you clarify if sell-in and sell-through were aligned in the March quarter, and if you expect them to be aligned in the June quarter? A: Timothy Cook, CEO: We did not see significant pull forward in demand due to tariffs in the March quarter. Channel inventory was similar from the beginning to the end of the quarter.

Q: How should investors think about the gross margin trajectory as you source more from the US and other supply chain changes? A: Timothy Cook, CEO: We are excited about bringing more production to the US, and some of this is already built into the margins. We do not forecast beyond the current quarter.

Q: Can you provide more color on the factors impacting product gross margins in the quarter? A: Kevan Parekh, CFO: Sequentially, product gross margin decreased due to mix, seasonal loss of leverage, and foreign exchange, partly offset by cost savings. Year-over-year, it was down due to different mix and foreign exchange.

Q: How do you see the impact of tariffs on demand and pricing strategies? A: Timothy Cook, CEO: We are engaged in tariff discussions and have nothing to announce on pricing today. Our operational team is optimizing the supply chain and inventory.

Q: What are your thoughts on the supply chain's resiliency and redundancy, and any risks from export control issues? A: Timothy Cook, CEO: We have a complex supply chain with inherent risks. We have diversified sources of supply to mitigate risks and will continue to do so.

Q: How important is it for Apple to have its own foundational AI models, and how does this relate to your data center strategy? A: Timothy Cook, CEO: We have a hybrid data center strategy, utilizing third parties and making our own investments. We are working on foundational models and will partner where necessary.

Q: Can you provide insights on the impact of Apple Intelligence on iPhone sales in markets where it is available? A: Timothy Cook, CEO: In markets with Apple Intelligence, iPhone 16 family performance was stronger year-over-year. Many languages were rolled out in April, impacting Q3.

Q: How do you view the impact of legal cases on Apple's Services business? A: Timothy Cook, CEO: We disagree with the recent Epic case injunction and are appealing. The Google antitrust trial is ongoing, and we are monitoring these closely.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

This article first appeared on GuruFocus.

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