APPLE’S Q1 EARNINGS REPORT: A MIXED BAG OF RESULTS
Apple Inc. (AAPL) has released its fiscal first-quarter earnings report, which showed a mixed bag of results. While the company’s services revenue grew, iPhone sales fell short of expectations. Here’s a breakdown of the key highlights from the report:
SERVICES REVENUE GROWS 14%
Apple’s services revenue grew 14% year-over-year to $26.34 billion, driven by strong performance in the App Store, Apple Music, and Apple TV+. This segment has been a key area of growth for Apple in recent years, and it continues to be a major contributor to the company’s revenue.
MAC AND IPAD SALES RISE BY DOUBLE-DIGIT PERCENTAGES
Mac and iPad sales also saw significant growth, rising by over 15% to $8.99 billion and $8.09 billion, respectively. This is a positive sign for Apple’s hardware business, which has been facing intense competition in recent years.
IPHONE SALES FALL SHORT OF EXPECTATIONS
However, the company’s biggest source of revenue, iPhone sales, fell just under 1% to $69.14 billion, missing projections. This is a disappointing result, especially given the strong performance of the iPhone 16 lineup.
CHINA SALES FALL, BUT COOK REMAINS OPTIMISTIC
The Greater China region was the only region in which Apple saw its sales fall in the first quarter from the year before. However, CEO Tim Cook remains optimistic about the company’s prospects in China, citing the strong performance of the iPhone 16 lineup in markets where Apple Intelligence is available.
OUTLOOK FOR Q2
Looking ahead, Apple said it anticipates fiscal second-quarter revenue to grow by a percentage in the mid-to-low single digits, roughly in line with expectations. The company also expects gross margins to land between 46.5% and 47.5%, above the analyst consensus.
STOCK PRICE REACTION
Shares of Apple climbed about 3% in extended trading Thursday following the company’s earnings call. The stock has gained over 27% over the last 12 months through Thursday’s close.
OVERALL PERFORMANCE
While Apple’s Q1 earnings report showed a mixed bag of results, the company’s services revenue growth and strong performance in the Mac and iPad segments are positive signs. However, the decline in iPhone sales is a concern, and the company will need to continue to innovate and execute in order to drive growth in this segment.
Excerpt
Apple’s Earnings Top Estimates as Services Revenue Grows, But iPhone Sales Fall Short
By Andrew Kessel Updated January 30, 2025 07:09 PM EST
Apple store
CFOTO / Contributor / Getty ImagesApple (AAPL) reported fiscal first-quarter earnings that topped estimates as its services revenue rose, though iPhone sales fell short.
The iPhone maker’s revenue rose 4% year-over-year to a record $124.3 billion, roughly in-line with the analyst consensus from Visible Alpha. Earnings came in at $36.33 billion, an all-time high of $2.40 per share, compared to $33.92, or $2.28 per share, a year earlier and above expectations.1
By segment, Apple’s services revenue grew 14% to $26.34 billion. Mac and iPad sales also rose by double-digit percentages, up over 15% to $8.99 billion and $8.09 billion, respectively. However, the company’s biggest source of revenue, iPhone sales, fell just under 1% to $69.14 billion, missing projections. It was the first full quarter since the iPhone 16 was released in September.
The results come amid concerns about falling sales in China, as Chinese smartphone makers like Vivo and Huawei have expanded their market share. The Greater China region was the only region in which Apple saw its sales fall in the first quarter from the year before.
Apple CEO Tim Cook said on the company’s earnings call that iPhone 16 sales have been stronger in markets where Apple Intelligence is available. In some markets like China, Apple Intelligence is not available yet due to regulatory hurdles.2
Since its debut, the iPhone 16 lineup has outperformed the iPhone 15 line’s post-launch performance a year earlier, Cook said. Apple saw a record number of device upgrades in the quarter, Cook added, with the number of active Apple devices reaching an all-time high of 2.35 billion.
Looking ahead, Apple said it anticipates fiscal second-quarter revenue to grow by a percentage in the mid-to-low single digits, roughly in line with expectations, and gross margins to land between 46.5% and 47.5%, above the analyst consensus.
Shares of Apple climbed about 3% in extended trading Thursday following the company’s earnings call. The stock has gained over 27% over the last 12 months through Thursday’s close.
UPDATE—Jan. 30, 2025: This article has been updated since it was first published to include additional information and reflect more recent share prices.
Source: Investopedia
