Apple(AAPL) - 2025 Q2 - Earnings Call Transcript

Financial Data and Key Metrics Changes - The company reported revenue of $95.4 billion, up 5% year over year, and diluted EPS of $1.65, an 8% increase year over year [4][24] - Gross margin was 47.1%, up 20 basis points sequentially, while product gross margin was 35.9%, down 340 basis points sequentially [22][24] - Net income reached $24.8 billion, with operating cash flow at $24 billion [24] Business Line Data and Key Metrics Changes - iPhone revenue was $46.8 billion, up 2% year over year, with a record high in the active installed base [6][24] - Mac revenue increased to $7.9 billion, a 7% rise year over year, driven by new models [8][26] - iPad revenue was $6.4 billion, up 15% year over year, with strong performance from the new M3 powered iPad Air [10][27] - Wearables, Home, and Accessories revenue decreased to $7.5 billion, down 5% year over year [11][29] - Services revenue reached an all-time high of $26.6 billion, up 12% year over year, with strong growth across all categories [13][30] Market Data and Key Metrics Changes - The company achieved growth in the majority of markets tracked, with double-digit growth in both developed and emerging markets [22][23] - The installed base of active devices reached an all-time high across all product categories and geographic segments [22] Company Strategy and Development Direction - The company plans to invest $500 billion over the next four years to expand teams and facilities across several states [5] - The strategy includes sourcing more than 19 billion chips from various states, with significant production in Arizona [6] - The company is focused on innovation and sustainability, aiming for carbon neutrality across its supply chain by 2030 [19] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in continuing to build the world's best products and services, despite uncertainties in the macroeconomic environment [21][36] - The company anticipates low to mid-single-digit revenue growth for the June quarter, factoring in potential tariff impacts [36] Other Important Information - The company returned $29 billion to shareholders, including $3.8 billion in dividends and $25 billion in share repurchases [34][35] - The dividend was raised by 4% to $0.26 per share, with plans for annual increases [35] Q&A Session Summary Question: Tariff impact and sourcing from India - Management indicated that the majority of iPhones sold in the U.S. are expected to have India as their country of origin by the end of the fiscal year [38][40] Question: Sell-in and sell-through alignment - Management noted no significant evidence of a pull forward in demand due to tariffs, with channel inventory remaining stable [44][45] Question: Future tariff impacts - Management refrained from predicting future tariff impacts, citing ongoing investigations and uncertainties [50][51] Question: Gross margin trajectory - Management discussed the complexities of gross margin management, emphasizing the importance of product cycles and cost structures [73][76] Question: Developer behavior in Europe - Management acknowledged the impact of the Digital Markets Act but did not provide specific insights on developer behavior [79][80] Question: AI strategy and foundational models - Management highlighted the importance of developing proprietary foundational models and the ongoing investment in R&D [122][115]