Apple Q3 Earnings Beat Estimates, Services Drive Top-Line Growth

Core Insights - Apple reported third-quarter fiscal 2025 adjusted earnings of $1.57 per share, exceeding the Zacks Consensus Estimate by 10.56% and increasing 12.1% year over year [1][10] - Net sales rose 9.6% year over year to $94.04 billion, surpassing the Zacks Consensus Estimate by 5.75% [1][10] Sales Performance - Product sales, which constitute 70.8% of total sales, increased 8.2% year over year to $66.61 billion [2] - Services revenue grew 13.3% year over year to $27.42 billion, accounting for 29.2% of total sales, and beat the consensus mark by 1.74% [2] - iPhone sales increased 13.5% year over year to $44.58 billion, representing 47.4% of total sales, and exceeded the Zacks Consensus Estimate by 9.78% [4] - Mac sales reached $8.05 billion, up 14.8% year over year, accounting for 8.6% of total sales, and beat estimates by 12.33% [5] - iPad sales decreased 8.1% year over year to $6.58 billion, lagging the Zacks Consensus Estimate by 2.94% [5] - Wearables, Home and Accessories sales fell 8.6% year over year to $7.4 billion, but beat the consensus mark by 0.85% [6] Geographic Performance - Greater China sales increased 4.4% year over year to $15.37 billion, accounting for 16.3% of total sales [7] - Japan revenues rose 13.4% year over year to $5.78 billion, contributing 6.1% of total sales [7] - Sales in the Rest of Asia soared 20.1% year over year to $7.67 billion, accounting for 8.2% of total sales [7] - European sales grew 9.7% to $24 billion, while Americas' sales were $41.2 billion, up 9.3% [8] Margin and Expenses - Gross margin expanded 20 basis points year over year to 46.5%, although it contracted 60 basis points sequentially due to tariffs [11] - Operating expenses rose 8.3% year over year to $15.52 billion, driven by a 10.7% increase in R&D expenses [12] - Operating margin expanded 40 basis points year over year to 30% [12] Financial Position - As of June 28, 2025, cash and marketable securities totaled $132.99 billion, compared to term debt of $91.78 billion [13] - Apple returned nearly $27 billion in the reported quarter through dividends and share repurchases [13] Future Outlook - Apple expects fourth-quarter fiscal 2025 net sales to grow mid to high single digits year over year [14] - Gross margin is projected to be between 46-47% in the fourth quarter, including a tariff impact of $1.1 billion [14] - The Zacks Consensus Estimate for fourth-quarter revenues is $96.43 billion, suggesting 1.58% growth year over year [15]