Apple(AAPL) - 2025 Q3 - Quarterly Report

Part I - Financial Information Financial Statements Presents Apple's unaudited consolidated financial statements for Q3 and nine months 2025, highlighting growth in sales and net income Condensed Consolidated Statements of Operations Details Q3 and nine-month 2025 sales and net income, showing significant year-over-year growth Q3 & Nine Months Ended June 28, 2025 - Statement of Operations (YoY) | Metric | Q3 2025 (in millions) | Q3 2024 (in millions) | YoY Change | Nine Months 2025 (in millions) | Nine Months 2024 (in millions) | YoY Change | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | Total Net Sales | $94,036 | $85,777 | +9.6% | $313,695 | $296,105 | +5.9% | | Products Net Sales | $66,613 | $61,564 | +8.2% | $233,287 | $224,908 | +3.7% | | Services Net Sales | $27,423 | $24,213 | +13.3% | $80,408 | $71,197 | +12.9% | | Gross Margin | $43,718 | $39,678 | +10.2% | $146,860 | $136,804 | +7.4% | | Operating Income | $28,202 | $25,352 | +11.2% | $100,623 | $93,625 | +7.5% | | Net Income | $23,434 | $21,448 | +9.3% | $84,544 | $79,000 | +7.0% | | Diluted EPS | $1.57 | $1.40 | +12.1% | $5.62 | $5.11 | +10.0% | Condensed Consolidated Balance Sheets Presents Apple's balance sheet as of June 28, 2025, showing changes in assets, liabilities, and equity Balance Sheet Highlights (as of June 28, 2025 vs. Sep 28, 2024) | Metric | June 28, 2025 (in millions) | September 28, 2024 (in millions) | Change | | :--- | :--- | :--- | :--- | | Cash and cash equivalents | $36,269 | $29,943 | +$6,326 | | Total current assets | $122,491 | $152,987 | -$30,496 | | Total Assets | $331,495 | $364,980 | -$33,485 | | Total current liabilities | $141,120 | $176,392 | -$35,272 | | Total Liabilities | $265,665 | $308,030 | -$42,365 | | Total Shareholders' Equity | $65,830 | $56,950 | +$8,880 | Condensed Consolidated Statements of Cash Flows Summarizes cash flows for the nine months ended June 28, 2025, detailing operating, investing, and financing activities Cash Flow Summary (Nine Months Ended) | Activity | June 28, 2025 (in millions) | June 29, 2024 (in millions) | | :--- | :--- | :--- | | Cash generated by operating activities | $81,754 | $91,443 | | Cash generated by investing activities | $17,782 | $1,490 | | Cash used in financing activities | ($93,210) | ($97,035) | | Increase/(Decrease) in cash | $6,326 | ($4,102) | - Major uses of cash in financing activities for the nine months ended June 28, 2025 included $70.6 billion for common stock repurchases and $11.6 billion for dividend payments[27] Notes to Condensed Consolidated Financial Statements Provides detailed disclosures supporting financial statements, including revenue disaggregation, financial instruments, and segment performance Disaggregated Net Sales (Nine Months Ended, YoY) | Category | Net Sales 2025 (in millions) | Net Sales 2024 (in millions) | YoY Change | | :--- | :--- | :--- | :--- | | iPhone | $160,561 | $154,961 | +3.6% | | Mac | $24,982 | $22,240 | +12.3% | | iPad | $21,071 | $19,744 | +6.7% | | Wearables, Home and Accessories | $26,673 | $27,963 | -4.6% | | Services | $80,408 | $71,197 | +12.9% | | Total Net Sales | $313,695 | $296,105 | +5.9% | - During the nine months ended June 28, 2025, the Company repurchased 312 million shares of its common stock for $69.3 billion[53] Geographic Segment Net Sales (Nine Months Ended, YoY) | Region | Net Sales 2025 (in millions) | Net Sales 2024 (in millions) | YoY Change | | :--- | :--- | :--- | :--- | | Americas | $134,161 | $125,381 | +7.0% | | Europe | $82,329 | $76,404 | +7.8% | | Greater China | $49,884 | $51,919 | -3.9% | | Japan | $22,067 | $19,126 | +15.4% | | Rest of Asia Pacific | $25,254 | $23,275 | +8.5% | Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses Q3 and nine-month 2025 financial results, highlighting sales growth, gross margin, operating expenses, and capital return - The company warns that macroeconomic conditions (inflation, interest rates), tariffs, and other international trade disputes could materially impact business, results, and financial condition[65][67] - During Q3 2025, the company announced new versions of its operating systems: iOS 26, macOS Tahoe 26, iPadOS 26, watchOS 26, visionOS 26, and tvOS 26[65] Segment Operating Performance Analyzes net sales growth across geographic segments for Q3 and nine months 2025, noting regional variations and key product drivers Net Sales by Geographic Segment (YoY Change) | Region | Q3 2025 Change | Nine Months 2025 Change | | :--- | :--- | :--- | | Americas | +9% | +7% | | Europe | +10% | +8% | | Greater China | +4% | -4% | | Japan | +13% | +15% | | Rest of Asia Pacific | +20% | +9% | - Growth drivers by region: - Americas & Europe: Higher net sales of iPhone and Services[69][70] - Greater China: Q3 growth from iPhone and Mac; nine-month decline due to lower iPhone sales[71] - Japan & Rest of Asia Pacific: Higher net sales of iPhone and Services[72][73] Products and Services Performance Reviews net sales performance for products and services in Q3 and nine months 2025, highlighting growth drivers and declining categories Net Sales by Category (YoY Change) | Category | Q3 2025 Change | Nine Months 2025 Change | | :--- | :--- | :--- | | iPhone | +13% | +4% | | Mac | +15% | +12% | | iPad | -8% | +7% | | Wearables, Home and Accessories | -9% | -5% | | Services | +13% | +13% | - Key performance drivers: - iPhone: Growth driven by higher net sales of Pro models[75] - Mac: Growth from both laptops and desktops[76] - iPad: Q3 decline due to lower iPad Pro sales, but nine-month growth driven by iPad Air[77] - Services: Growth driven by advertising, the App Store, and cloud services[78] Gross Margin Examines gross margin performance for Q3 and nine months 2025, noting improvements in Services and declines in Products Gross Margin Percentage (YoY Comparison) | Category | Q3 2025 | Q3 2024 | Nine Months 2025 | Nine Months 2024 | | :--- | :--- | :--- | :--- | :--- | | Products | 34.5% | 35.3% | 36.9% | 37.5% | | Services | 75.6% | 74.0% | 75.5% | 73.8% | | Total | 46.5% | 46.3% | 46.8% | 46.2% | - The decrease in Products gross margin percentage in Q3 was primarily due to tariffs and a different product mix[81] - The increase in Services gross margin percentage in Q3 was primarily due to a different mix of services[82] Operating Expenses Details the increase in total operating expenses for Q3 2025, driven by higher R&D and SG&A costs Operating Expenses (Q3 YoY) | Expense Category | Q3 2025 (in millions) | Q3 2024 (in millions) | YoY Change | | :--- | :--- | :--- | :--- | | Research and development | $8,866 | $8,006 | +10.7% | | Selling, general and administrative | $6,650 | $6,320 | +5.2% | | Total operating expenses | $15,516 | $14,326 | +8.3% | - Growth in both R&D and SG&A expenses was primarily driven by increases in headcount-related expenses[86][87] Liquidity and Capital Resources Assesses the company's liquidity and capital resources, including cash position, purchase obligations, and capital return program - The company believes its current liquidity is sufficient to satisfy cash requirements and its capital return program for the next 12 months and beyond[91] - In Q3 2025, Apple repurchased $21.0 billion of its common stock and paid $3.9 billion in dividends and dividend equivalents[95] - The quarterly cash dividend was set at $0.26 per share, with an intention to increase it annually[94] Quantitative and Qualitative Disclosures About Market Risk Reports no material changes to the company's market risk during the first nine months of fiscal 2025 - There have been no material changes to the Company's market risk during the first nine months of 2025[100] Controls and Procedures Management concluded that disclosure controls and procedures were effective as of June 28, 2025, with no material changes to internal controls - The principal executive officer and principal financial officer concluded that the Company's disclosure controls and procedures were effective as of June 28, 2025[101] - There were no changes in internal control over financial reporting during the third quarter of 2025 that materially affected, or are reasonably likely to materially affect, the Company's internal controls[102] Part II - Other Information Legal Proceedings Details significant legal proceedings, including European Commission investigations, a U.S. DOJ antitrust lawsuit, and the Epic Games case - The European Commission opened two formal investigations under the Digital Markets Act (DMA). It fined Apple €500 million in one investigation, a decision Apple has appealed[104] - The U.S. Department of Justice (DOJ) filed a civil antitrust lawsuit against Apple on March 21, 2024, alleging monopolization in the smartphone market[105] - In the Epic Games lawsuit, a California District Court found Apple in violation of a 2021 injunction and referred the company for a determination on whether criminal contempt proceedings are appropriate. Apple is appealing the decision[106] Risk Factors Reports no material changes to the company's risk factors since the 2024 Form 10-K, with prior disclosures incorporated - There have been no material changes to the Company's risk factors since the 2024 Form 10-K, other than those previously disclosed in the Q1 and Q2 2025 10-Q filings[108] Unregistered Sales of Equity Securities and Use of Proceeds Details the company's share repurchase activity for Q3 2025, including the total shares repurchased and new authorization Share Repurchase Activity (Q3 2025) | Period | Total Shares Purchased (in thousands) | Average Price Paid Per Share | | :--- | :--- | :--- | | Mar 30 - May 3, 2025 | 43,161 | $200.79 | | May 4 - May 31, 2025 | 28,223 | $203.17 | | Jun 1 - Jun 28, 2025 | 32,880 | $200.73 | | Total | 104,264 | N/A | - On May 1, 2025, the Company announced an additional program to repurchase up to $100 billion of its common stock[112] Defaults Upon Senior Securities Reports no defaults upon senior securities - None[109] Mine Safety Disclosures This item is not applicable to the company - Not applicable[110] Other Information Reports no insider trading arrangements - Insider Trading Arrangements: None[111] Exhibits Lists exhibits filed with the Form 10-Q, including CEO/CFO certifications and Inline XBRL documents - Lists exhibits filed with the report, including CEO/CFO certifications (Exhibits 31.1, 31.2, 32.1) and Inline XBRL data (Exhibits 101, 104)[114]