Apple Inc ((AAPL)) has held its Q2 earnings call. Read on for the main highlights of the call.
The recent earnings call from Apple Inc. painted a mixed picture, reflecting both achievements and challenges. While the company celebrated significant revenue and EPS records, and robust growth in services, iPad, and Mac revenues, it faced hurdles in the Wearables, Home, and Accessories segment, tariff-related costs, and a decline in China revenue. Despite these challenges, Apple’s expansion plans in the U.S. and the performance of the iPhone 16 family offer a promising outlook for future growth.
Record Revenue and EPS
Apple reported a remarkable $95.4 billion in revenue, marking a 5% increase from the previous year. The company also achieved a March quarter record with a diluted EPS of $1.65, reflecting an 8% year-over-year growth. These figures underscore Apple’s strong financial performance despite the broader economic challenges.
All-Time Services Revenue Record
The services segment of Apple reached an all-time revenue record of $26.6 billion, up 12% from the prior year. This growth was driven by strong performance across all service categories, highlighting the increasing importance of services in Apple’s revenue mix.
Growth in iPad and Mac Revenue
Apple’s iPad and Mac segments showed impressive growth, with iPad revenue climbing 15% year-over-year to $6.4 billion, and Mac revenue increasing by 7% to $7.9 billion. These gains reflect the ongoing demand for Apple’s computing devices.
Expansion Plans in the U.S.
Apple announced ambitious plans to invest $500 billion over the next four years in the U.S. This includes expanding teams and facilities in several states and opening a new factory in Texas, underscoring Apple’s commitment to domestic growth and innovation.
iPhone Revenue Growth
The iPhone segment reported revenue of $46.8 billion, a 2% increase year-over-year. The iPhone 16 family played a significant role in this growth, demonstrating the continued consumer demand for Apple’s flagship product.
Decline in Wearables, Home and Accessories Revenue
Revenue from Wearables, Home, and Accessories fell by 5% to $7.5 billion. This decline highlights the challenges Apple faces in maintaining growth across all its product lines.
Challenges Related to Tariffs
Apple is grappling with tariff-related costs, which are expected to add $900 million to expenses in the upcoming June quarter. The uncertainty surrounding future tariffs poses a potential risk to Apple’s cost structure.
Impact of Foreign Exchange Headwinds
Foreign exchange headwinds negatively impacted Apple’s revenue growth by approximately 2.5 percentage points, illustrating the challenges posed by global currency fluctuations.
China Revenue Decline
Revenue in China declined by 2% year-over-year, affected by geopolitical tensions and foreign exchange impacts. This decline underscores the complexities of operating in international markets.
Forward-Looking Guidance
Looking ahead, Apple remains focused on innovation and long-term growth. The company plans to source over 19 billion chips domestically during calendar year 2025, reflecting its commitment to strengthening its supply chain. Despite potential tariff costs, Apple is poised to continue its trajectory of growth and expansion.
In summary, Apple’s latest earnings call highlighted both the company’s impressive financial achievements and the challenges it faces. While revenue and EPS records, along with growth in services, iPad, and Mac, are notable, the decline in Wearables, Home, and Accessories, along with tariff and foreign exchange challenges, present hurdles. Nevertheless, Apple’s expansion plans and the success of the iPhone 16 family provide a positive outlook for the future.