2025-05-06 04:50:11
We break down Apple’s failure in U.S. District Court and what it means for the future of Apple’s policies, corporate culture, corporate executives, and bottom line. Also (awkward!) we discuss Apple’s quarterly financial results.
2025-05-06 00:00:20
Ahoy, Hexachromes! It’s your best friend and best nemesis, Glenn! I’m joining the Six Colors stable as a nice shade of beige to answer both your least and most troubling problems across the Apple ecosystem. You may know me from such books as Take Control of Your Apple Account, How Comics Are Made (in bookstores on June 3), and Why Johnny Can’t Restart His Mac (publication banned in most countries).
I started in computing in the late 1970s, tapping away on an Apple ][ at a local computer store that tolerated me for far too long. Eventually, saving my pennies, I bought an off-brand 6502-based computer from Ohio Scientific, Inc. My first Mac exposure was in high school, where our forward-thinking journalism teacher bought one and had me, the paper’s typesetter, take it home over winter break to learn how to use PageMaker 1.0. We switched over from phototypesetting to LaserWriter page output in January 1986. For a while, I tracked my computer ownership history; click the OSI screen for a throwback surprise. I’ve worked as a graphic designer, catalog manager, and journalist, and most recently started diving deeply into printing history, including the history of newspaper comics told through reproduction.
I’m just off a 10-year stint writing the Mac 911 column at Macworld and eager to forge a more personal relationship with all of you. I was the third person to write under that nameplate, used for 21 years, with Ted Landau and Chris Breen preceding me. Mac 911’s flourishing lifetime wasn’t brought to an end for any reason but the modern reality of how people discover what they need (and Macworld handled it beautifully with me). Macworld will continue publishing the how-to articles and clever tips that have been a leg of the publication for decades.
We could look at Mac 911 as being a “wholesale” distributor of answers, while “Help Me, Glenn!” is retail. Macworld’s parent companies (we’re on number three now) took user questions and posted the answers for all to see, which generated lots of different kinds of traffic and produced many kinds of revenue as a result: print magazine subscription sales, ad views on a page, affiliate revenue, and so forth. Without speaking to their current business model or strategy over at Foundry, one that has kept them afloat while many others have gone away, a lot of the revenue side of things has dwindled or narrowed. The print edition disappeared over a decade ago—leading to the founding of this site—although a digital magazine continues to be produced for subscribers and via Apple News+.
Search isn’t dead, but it might as well be. The biggest engine, Google, has become riddled with slop and crud, particularly when it comes to finding answers to technology questions. Ask a question about how to add a password to an item in Note, and you get an AI summary that often combines fragments from people posting in forums in which they have no answer yet with advice that’s derived from several different releases of Apple’s operating system producing a hotch-potch of garbage. Nonetheless, reports show many people read that nonsense and don’t proceed to search results links below it. Yet those results are often no better. The links largely, but not always, take you to poorly written or AI-spewed text using templates with few or no accurate bits of advice in them.
The way around this is forging what I’d call the “retail” approach, which is what Jason and Dan and the rest of the crew have built as a community of general readers and subscribers at Six Colors. The site’s editors and writers know many of you through social media, email, in-person events, and (for subscribers) the Six Colors Discord server. We sit on stools and throw peanut shells on the sawdust-covered floor and talk about technology together.
So, instead of sweeping a wide net to answer your Apple-related questions—and maybe some that are tangentially connected to Apple—I’m turning to you (points at you) to ask what’s not working? What’s your current conundrum or what’s a persistent itch you can’t scratch? As befits a subscriber-underwritten publication, members can ask questions in the Discord server by typing /glenn
and then entering your question. That text gets fed into a spreadsheet I check. Any reader can email me at glenn@sixcolors.com, and those questions will go into my queue, too.
My columns also come with a bonus! I’ve just started an expanded role at Take Control Books, an Apple-focused ebook publisher that’s now 22 years old. Founded by Adam and Tonya Engst of TidBITS, their most prolific author, Joe Kissell (a former Macworld writer), bought the company eight years ago. I’ve written a couple dozen books and well over a hundred revisions, starting from day one. I’ve accepted a contract position as executive editor, where I’ll be continuing to write and update my nine active books, take over updating books where an author has retired from them, serve as editor for many of Joe’s titles, and provide consulting on expansion, crowdfunding, and more.
Some of the “more” is right here! Along with drawing on excerpts from Take Control titles to answer some questions, I’ll also be able to direct you to books that might provide more extensive details for more complicated issues. Six Colors and Take Control Books represent a significant hunk of the best remaining independent Apple news, troubleshooting, and education.
Let me close with the single best tip I’ve heard in the last decade, although it’s a little obscure. Reading social media four years ago, someone mentioned that you could reveal hidden files in the macOS Finder by pressing Command-Shift-period. Hidden files include many used by the system and any you’ve used a command-line process to mark as hidden. It’s a great way to find preferences folders, among other things. This shortcut has apparently been present for years and years—no one knows how long. When I ran a poll to ask people if they had encountered it, most had not.
I look forward to your questions, comments, and light ridicule.
2025-05-03 00:00:46
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2025-05-02 07:37:38
Things are weird in Apple-land. Legal judgments are piling up in unexpectedly bad ways. Tariffs threaten large parts of Apple’s business. This year’s banner Apple Intelligence features got delayed indefinitely.
I did have to laugh when I got to the end of The Verge’s piece about this Thursday morning, a few hours before Apple reported its latest quarterly financial results. “Look,” wrote deputy editor Todd Haselton, “I’m not saying Apple’s dead in the water here.”
Well, that’s good, Todd. Probably not a thing you should say.
In related news, Apple just put nearly $24 billion in profit into its piggy bank over the last three months.
The water is many things. It’s choppy. It’s chilly. There may be blood in it. There might even be sharks swarming. You pick the water metaphors you want, but what Apple’s certainly not is dead in it.
Let’s look at the highlights of the quarterly disclosures and obligatory analyst phone call.
This quarter was pretty usual for Apple, at least in terms of where the company has settled after the immediate effects of the pandemic. Overall revenue was up 5% versus the year-ago quarter, which is pretty much what it’s been for the last four quarters.
The Mac had another good quarter, up 7%, no doubt helped in part by the new M4 MacBook Air, which was on sale the last couple of weeks of the quarter.
And look at the iPad, up 15% and with four straight quarters of decent growth after being down nine of the 10 previous quarters. We’ll see if the iPad can keep it up, but it’s got momentum again after two years in the doldrums.
Speaking of doldrums: iPhone revenue was up 2%, and that qualifies as good news, given that it was down one percent last quarter. But the truth is that iPhone revenue has been essentially flat for the last three years. Not since fiscal 2021 has there been multiple quarters of double-digit growth. To be sure, the iPhone is still a money machine—it’s generated $200 billion in revenue while spending the last year in the doldrums. But if you’re a growth-obsessed investor, it’s a little troubling.
Apple’s motor of revenue growth, Services, continues to perform well in its post-inflationary period. For a while, Services was growing explosively, but it’s been kicking around 10% growth for the last three years, and this quarter’s 12% growth is right in line with that. Over the last six quarters, the growth has been exactly between 11% and 14%. It’s not bad, especially when you consider that it’s got a 75% profit margin.
Now to the ugly dog of the quarterly numbers, Wearables, Home, and Accessories. The category, once a fantastic mover, has fallen on hard times. The 5% drop year-over-year is in line with its last seven quarters, all of which showed revenue drops, and to be fair, it’s been looking bad 11 of the last 12. Apple claimed that the Apple Watch reached an all-time high in its installed base, which is great, and new AirPods probably helped a bit, but it feels like this category is seeking a major product release, and it’s probably AirPods Pro 3 or bust.
Kudos to Apple CFO Kevin Parekh for claiming that it was a tough compare for the category: “We did face a more difficult compare against the launch of the Apple Vision Pro in the year-ago quarter, as well as the Watch Ultra 2 launch last year,” Parekh said.
I can’t report if he said this with a straight face or not, because the conference call is audio only. And I suppose that technically, if Apple sold 115,000 Vision Pros during last year’s second quarter and none this quarter, that would account for the $400 million drop-off. Blaming it on sales of the Apple Watch Ultra 2, which had been out since the previous fall, also seems like a stretch. And it doesn’t change the fact that last year’s “difficult compare” was itself down 10 percent from the previous year-ago quarter. (Which was itself down 1% from the previous previous year-ago quarter.) I guess it’s turtles all the way down or something.
The topic of the day on the call with analysts was, as you might expect, how a tariff-powered global trade war might affect a company that depends on one of the world’s most internationally dispersed supply chains. Perhaps the most shocking moment of the call was when analyst Richard Kramer of Arete Research started his question by declaring, “I won’t ask about tariffs.”1
Now, if you want to ascribe Apple’s strong product sales numbers to people rushing to buy products in advance of tariffs kicking in, you probably can’t. This year’s second fiscal quarter ended March 29, and it wasn’t really until the weekend of April 5 that Apple Stores really saw major increases in sales due to tariff fears, at least according to my retail sources.
Cook backed that up, too: “If you look at the March quarter, we don’t believe that we saw obvious evidence of a significant pull forward in demand in the March quarter due to tariffs,” he said. But what he did say is that Apple “did build ahead inventory” for the following quarter—in other words, it built more products in advance, ahead of demand, so it could ship them into the U.S. before the tariffs took effect. Those sales will all be accounted for during the third fiscal quarter.
Another way Apple can reduce the impact of tariffs is by changing which global factories it uses to build products destined for the U.S. market. “For the June quarter, we do expect the majority of iPhones sold in the U.S. will have India as their country of origin,” Cook said, “and Vietnam to be the country of origin for almost all iPad, Mac, Apple Watch, and AirPods products also sold in the U.S.” He said that if you’re outside of the U.S., you’re most likely to be buying products made in China.
Cook also commented briefly on Apple’s philosophy in dealing with the issues of trade wars between various countries: “Obviously, we’re very engaged on the tariff discussions,” he said. “We believe in engagement and will continue to engage.” Elizabeth Warren take note, I guess.
Apple also put a number on how much it will be affected by tariffs during its next fiscal quarter: $900 million. Yes, that’s nearly a billion dollars, but when you consider that Apple just generated $95.4 billion in revenue and that it’s expecting to grow from the $85.8 billion it generated during last year’s third quarter, a $0.9 billion step back doesn’t seem like a massive amount. The company also said it would probably lose a couple of points of gross margin as part of the deal.
Beyond June, though, nobody’s willing to make any predictions. Cook said: “For our part, we will manage the company the way we always have, with thoughtful and deliberate decisions, with a focus on investing for the long term, and with dedication to innovation and the possibilities it creates.”
As you might expect, given the current political climate, Cook spent quite a bit of time recapping the company’s February announcement that it’s spending more than $500 billion in the United States in the next four years. Twice, Cook listed the key states that are a part of this endeavor: Michigan, Texas, California, Arizona, Nevada, Iowa, Oregon, North Carolina, and Washington, plus an advanced server manufacturing facility in Texas.
There were some more interesting details. Cook said that Apple expects to source “more than 19 billion chips from a dozen states, including tens of millions of advanced chips being made in Arizona this year.” That’s TSMC’s project in Arizona, which will generate systems-on-a-chip for Apple. According to Cook, Apple is “the largest and first customer getting product out of that.”
Credit to that brave analyst, Richard Kramer, who didn’t bother asking a ninth question about tariffs, but instead asked Cook head-on about the fact that Apple had failed to live up to its promise of shipping a more personalized Siri as a part of Apple Intelligence.
Cook talked about it, but not before listing—twice!—all the Apple Intelligence features that did ship. (For the record: “Since we launched iOS 18, we’ve released a number of Apple Intelligence features from helpful Writing Tools to Genmoji, Image Playground, Image Wand, Clean Up, Visual Intelligence, and a seamless connection to ChatGPT. We made it possible for users to create movies of their memories with a simple prompt and added AI-powered photo search, Smart Replies, priority notifications, summaries for mail, messages, and more. We’ve also expanded these capabilities to more languages and regions.”)
Anyway, the official word from Cook himself about why the personalized features were delayed is this: “We need more time to complete our work on these features so they meet our high-quality bar. We are making progress, and we look forward to getting these features into customers’ hands.”
So, there’s an implied promise that these features are coming, but that they were delayed because the results weren’t good enough. Tell your friends when they ask you about it on Friday night down at your local high-quality bar.
Kramer, who is going to get an analyst gold star for this, also asked Cook about the various court cases that might really impact Apple’s business. Regarding yesterday’s court ruling in the Epic case, Cook said, “We strongly disagree with [it]… We’ve complied with the court’s order, and we’re gonna appeal.” He declined to discuss Google’s case and the potential loss of search-engine referral revenue altogether.
But, and I think this is important, Cook did not wave off the suggestion that these were serious issues. “We’re monitoring these closely, but as you point out, there’s risk associated with them, and the outcome is unclear.”
The outcome is unclear about a lot of things these days, Tim. But in the meantime, Apple’s just going to keep throwing off a couple of dozen billion in profit.
2025-05-02 05:22:10
Every quarter after releasing financial results, Apple CEO Tim Cook and its CFO Kevan Parekh hop on a conference call with analysts to detail the quarter gone by, give a peek at what’s to come, and creatively avoid answering any pointed questions from analysts. This is Six Colors’s transcript of the call.
Thank you, Suhasini. Good afternoon, everyone, and thanks for joining the call. Today, we are reporting $95.4 billion in revenue, up 5% from a year ago and at the high end of the range we provided last quarter. Diluted EPS was $1.65, up 8% year-over-year and a March quarter record. Services achieved an all-time revenue record, growing 12% compared to the prior year. We also set a number of quarterly records in countries and regions across the world, including the UK, Spain, Finland, Brazil, Chile, Turkey, Poland, India, and the Philippines.
We are as dedicated as ever to the innovation and ingenuity that will enrich our customers’ lives and help us lead the world better than we found it. And we are proud to increase our impact around the world, including here in the United States, where we recently announced plans to spend $500 billion over the next four years. We’re going to be expanding our teams and our facilities in several states, including Michigan, Texas, California, Arizona, Nevada, Iowa, Oregon, North Carolina, and Washington, and we’re going to be opening a new factory for advanced server manufacturing in Texas. During calendar year 2025, we expect to source more than 19 billion chips from a dozen states, including tens of millions of advanced chips being made in Arizona this year. We also source glass used in iPhone from an American company. All told, we have more than 9,000 suppliers in the U.S. across all 50 states.
Now products, starting with iPhone. iPhone revenue was $46.8 billion, up 2% from a year ago. During the quarter, we introduced iPhone 16e, a great new entry-level addition to our iPhone 16 lineup. It’s powered by our latest generation A18 chip and includes the all-new Apple-designed C1 modem, the most energy-efficient modem ever in an iPhone, allowing iPhone 16e to have the longest battery life of any 6.1-inch iPhone. Meanwhile, iPhone 16 and iPhone 16 Plus users are exploring how they can use camera control, whether capturing stunning images or exploring the world with visual intelligence. And our iPhone 16 Pro models continue to be a hit with our users. They are turbocharged by the remarkable capabilities and efficiency of A18 Pro and feature larger displays and advanced cameras.
Mac revenue was $7.9 billion, 7% higher year-over-year, another great quarter for Mac. During the quarter we introduced significant new updates to our lineup. The world’s most popular laptop just got even better. The M4 powered MacBook Air features a 12 megapixel Center Stage camera and delivers a massive boost in performance, and now it comes in a beautiful new sky blue color. The new Mac Studio is the most powerful Mac we’ve ever shipped. Equipped with M4 Max and our new M3 Ultra chip, it’s a true AI powerhouse, capable of running large language models with over 600 billion parameters entirely in memory. Apple Intelligence brings great capabilities to the Mac, with features like Writing Tools and notification summaries that help users stay focused and get more done.
Turning to iPad, revenue for the quarter was $6.4 billion, up 15% from a year ago, another strong quarter of double-digit growth. Our iPad lineup continues to help users learn, work, play, and go wherever their imaginations take them. The new iPad Air with M3 combines powerful performance and exceptional portability, whether you’re taking it across the street or around the world. And Apple Intelligence and Apple Pencil Pro are a perfect match, with features like the clean up tool in photos to remove distractions, and Image Wand in the notes app to elevate simple sketches into polished illustrations.
Across wearables, home and accessories, revenue was $7.5 billion, down 5% from a year ago. From walking trails to bike paths, Apple Watch Series 10 is an essential partner wherever you are on the health and fitness journey. And AirPods 4 with active noise cancellation delivers an extraordinary experience in an open-ear design. Customers continue to tell me how important our hearing health features for AirPods Pro 2 are to them and we’ve been expanding their availability to reach even more users around the world. Millions have already taken hearing tests and the stories we received about the new hearing aid feature are deeply moving, showing how these innovations are making a real difference in people’s daily lives. It’s a powerful reminder of the impact technology can have when it’s designed with care.
Meanwhile, Apple Vision Pro takes the concert experience to a whole new level with Metallica, our latest Apple immersive video, which you have to see to believe. And visionOS 2.4 unlocks the first set of Apple Intelligence features for Vision Pro users, while inviting them to explore a curated and regularly updated collection of spatial experiences with the Spatial Gallery app.
In retail, in addition to the two stores we opened during the quarter, we’re also looking forward to a new retail store in the UAE, the arrival of the online store in Saudi Arabia, and new retail stores in India starting later this year.
Let’s now turn to Services, where we achieved an all-time revenue record of $26.6 billion, up 12% from a year ago, with strong performance across all of our categories. From starting their morning with their podcast of choice, to buying a coffee with Apple Pay, to spending an afternoon reading the latest bestseller on Apple Books, to using their favorite app from the App Store, or an evening workout with Fitness+, Apple services are enriching our users’ lives all throughout their day. With incredible shows like The Studio, Your Friends and Neighbors, and the culture-shaping Severance, Apple TV+ has become a must-see destination with record viewership during the quarter. And we’re excited for our upcoming movie, F1, starring Brad Pitt, which will hit theaters this summer and gives an incredible inside look at one of the most intense sports on earth. And there is so much more to come this year. It’s no wonder Apple TV+ has earned more than 2,500 award nominations and 560 wins.
We’re also reaching sports fans in more ways than ever, from watching their favorite teams go to bat on Friday Night Baseball, to cheering on their local team with MLS Season Pass, to following the results of every Grand Prix with Formula One now on the Apple Sports app.
Turning to software, we just released iOS 18.4, which brought Apple Intelligence to more languages, including French, German, Italian, Portuguese, Spanish, Japanese, Korean, and Simplified Chinese, as well as localized English to Singapore and India.
AI and machine learning are core to so many profound features we’ve rolled out over the years to help our users live a better day. It’s why we designed Apple Silicon with a neural engine that powers so many AI features across our products and third-party apps. It’s also what makes Apple products the best devices for generative AI.
At WWDC 24, we announced Apple Intelligence and shared our vision for integrating generative AI across our ecosystem into the apps and features our users rely on every day. To achieve this goal, we built our own highly capable foundation models that are specialized for everyday tasks. We designed helpful features that are right where our users need them and are easy to use, and we went to great lengths to build a system that protects user privacy, whether requests are processed on-device or in the cloud with Private Cloud Compute, an extraordinary step forward for privacy and AI.
Since we launched iOS 18, we’ve released a number of Apple Intelligence features from helpful Writing Tools to Genmoji, Image Playground, Image Wand, Clean Up, Visual Intelligence and a seamless connection to ChatGPT. We made it possible for users to create movies of their memories with a simple prompt and added AI-powered photo search, Smart Replies, priority notifications, summaries for mail, messages, and more. We’ve also expanded these capabilities to more languages and regions.
With regard to the more personal Siri features we announced, we need more time to complete our work on these features so they meet our high-quality bar. We are making progress, and we look forward to getting these features into customers hands.
Turning to sustainability, we just celebrated Earth Day and we were proud to announce that we’ve cut our emissions by 60% from our 2015 levels. Today we’re using more clean energy across our operations and more recycled materials in our products than ever. We have worked with suppliers to bring 17.8 gigawatts of renewable electricity online. We’re also saving billions of gallons of fresh water and redirecting millions of metric tons of waste from landfills. All of this will help us make important progress towards our goal of carbon neutrality across our supply chain and the life cycle of our products by 2030.
Now let me walk you through the impacts of tariffs in the March quarter and give you some color on what we expect for the June quarter. For the March quarter, we had a limited impact from tariffs as we were able to optimize our supply chain and inventory. For the June quarter, currently we are not able to precisely estimate the impact of tariffs, as we are uncertain of potential future actions prior to the end of the quarter. However, for some color, assuming the current global tariff rates, policies, and applications do not change for the balance of the quarter and no new tariffs are added, we estimate the impact to add $900 million to our costs. This estimate should not be used to make projections for future quarters, as there are certain unique factors that benefit the June quarter.
For our part, we will manage the company the way we always have, with thoughtful and deliberate decisions, with a focus on investing for the long term, and with dedication to innovation and the possibilities it creates. As we look ahead, we remain confident. Confident that we will continue to build the world’s best products and services. Confident in our ability to innovate and enrich our users’ lives. And confident that we can continue to run our business in a way that has always set Apple apart.
Next month, we can’t wait to welcome our developer community for the Worldwide Developers Conference, and we look forward to revealing some exciting announcements. With that, I’ll turn it over to Kevin.
Thanks, Tim, and good afternoon, everyone. Our March quarter revenue of $95.4 billion was up 5 percent year-over-year, despite a headwind of almost two-and-a-half percentage points from foreign exchange. We also grew in the majority of the markets we track. Products revenue was $68.7 billion, up 3% year-over-year, driven by growth in iPhone, iPad, and Mac. And thanks to our high levels of customer satisfaction and strong loyalty, our installed base of active devices reached an all-time high across all product categories and geographic segments.
Services revenue was $26.6 billion, up 12% year-over-year, despite over 2 percentage points of foreign exchange headwinds. And as Tim mentioned, this was an all-time revenue record. We also grew in every geographic segment and saw double-digit growth in both developed and emerging markets.
Company gross margin was 47.1 percent, in the middle of our guidance range, and up 20 basis points sequentially, primarily driven by favorable mix. Products gross margin was 35.9%, down 340 basis points sequentially, driven by mix, foreign exchange, and a seasonal loss of leverage. Services gross margin was 75.7%, up 70 basis points sequentially, primarily driven by a different mix, partly offset by foreign exchange. Operating expenses landed at $15.3 billion, up 6% year-over-year. Net income was $24.8 billion, and diluted earnings per share was $1.65, up 8% year-over-year and a March quarter record. Operating cash flow was also strong at $24 billion.
Now, I’m going to provide some more details for each of our revenue categories.
iPhone revenue was $46.8 billion, up 2% year-over-year, driven by the iPhone 16 family. The iPhone active installed base grew to an all-time high in total and in every geographic segment, and iPhone upgraders grew double digits year-over-year. According to a recent survey from Kantar, during the March quarter, iPhone was a top-selling model in the U.S., urban China, the U.K., Germany, Australia, and Japan, and we continue to see high levels of customer satisfaction in the U.S. at 97%, as measured by 451 Research.
Mac revenue was $7.9 billion, up 7% year-over-year, driven by the latest MacBook Air, MacBook Pro, and Mac Mini models. This performance was broad-based, with every geographic segment growing year-over-year. The Mac installed base reached an all-time high, and we saw strong growth for both upgraders and customers new to the Mac. Customer satisfaction was reported at 95% in the U.S.
iPad revenue was $6.4 billion, up 15% year-over-year, driven by the new M3-powered iPad Air. The iPad installed base reached another all-time high, and over half the customers who purchased an iPad during the quarter were new to the product. Based on the latest reports from 451 Research, customer satisfaction was 97% in the U.S.
Wearables, Home, and Accessories revenue was $7.5 billion, down 5% year-over-year. Keep in mind, we did face a more difficult compare against the launch of the Apple Vision Pro in the year-ago quarter, as well as the Watch Ultra 2 launch last year. At the same time, the Apple Watch installed base reached a new all-time high, with over half of customers purchasing an Apple Watch during the quarter being new to the product. And customer satisfaction for Watch in the U.S. was recently measured at 95 percent.
Our Services revenue reached an all-time high of $26.6 billion, up 12 percent year-over-year. This growth rate was comparable to the December quarter year-over-year growth rate when we removed the negative impact from foreign exchange. We saw strong momentum in the March quarter, and the growth of our installed base of active devices gives us great opportunities for the future. Customer engagement across our services offerings also continued to grow. Both transacting and paid accounts reached new all-time highs, with paid accounts growing double digits year over year. Paid subscriptions also grew double digits. We have well over a billion paid subscriptions across the services on our platform.
We continue to improve the quality and breadth of our service offerings, from additional features in News+ to new games available in Arcade. Apple Pay continues to help our customers with an easy, secure, and private payment solution, and we were pleased to see that our active users in Apple Pay reached an all-time record of double digits year-over-year.
Turning to Enterprise, organizations are investing more in Apple products and services to drive productivity and employee engagement. For example, KPMG recently rolled out iPhone 16 for all U.S. employees, reflecting their confidence in Apple’s security and privacy features. We also continue to see strong Mac performance in Enterprise. NewBank, the largest digital bank in Latin America, has selected MacBook Air as a standard computer for their thousands of employees. With Vision Pro, companies are continuing to find new and innovative ways to leverage this technology. Dassault Système, a leading provider for engineering and 3D design software, has natively integrated Apple Vision Pro into their next-generation platform, bringing a powerful and immersive spatial experience to thousands of enterprise customers.
Now, let’s turn to our cash position and capital return program. We ended the quarter with $133 billion in cash and marketable securities. We had $3 billion in debt maturities and increased commercial paper by $4 billion, resulting in $98 billion in total debt. Therefore, at the end of the quarter, net cash was $35 billion. During the quarter, we returned $29 billion to shareholders. This included $3.8 billion in dividends and equivalents, and $25 billion through open market repurchases of 108 million Apple shares. Given the continued confidence we have in our business now and into the future, today our board authorized an additional $100 billion for share repurchases as we maintain our goal of getting to net cash neutral. We’re also raising our dividend by 4% to 26 cents per share of common stock, and we continue plan for annual increases in the dividend going forward, as we have done for the last 13 years. This cash dividend will be payable on May 15, 2025, to shareholders of record as of May 12, 2025.
As we move ahead into the June quarter, I’d like to review our outlook, which includes the types of forward-looking information that Suhasani referred to. Importantly, the color we’re providing assumes that global tariff rates, policies, and application remain in effect as of this call and the global macroeconomic outlook doesn’t worsen from today for the current quarter. Despite the overall uncertain environment, we will still be providing color at the total company level, subject to these assumptions and the risk factors that we referred to at the beginning of the call.
We expect our June quarter total company revenue to grow low to mid single digits year over year. We expect gross margin to be between 45.5% and 46.5%, which includes the estimated impact of the $900 million of tariff-related costs that Tim referred to earlier. We expect operating expenses to be between $15.3 billion and $15.5 billion. We expect OI&E to be around negative $300 million, excluding any potential impact from the mark-to-market of minority investments, and our tax rate to be around 16 percent.
With that, let’s open the call to questions.
Eric Woodring, Morgan Stanley: Tim, I’d love to maybe touch on the tariff point first. You know, there were comments from you earlier on CNBC talking about 50% of iPhones for the U.S. currently coming from India. Where do you expect the mix of India-sourced iPhones for the U.S. to be by the end of your fiscal year? And is it the goal to source 100% of your U.S.-bound iPhones from India? Can you just help us understand kind of how we should expect that to trend as we look beyond just the June quarter?
Tim Cook: Yeah, Eric, hi, it’s Tim. The existing tariffs that apply to Apple today are based on the product’s country of origin, as you allude to. For the June quarter, we do expect the majority of iPhones sold in the U.S. will have India as their country of origin, and Vietnam to be the country of origin for almost all iPad, Mac, Apple Watch, and AirPods products also sold in the U.S. China would continue to be the country of origin for the vast majority of total product sales outside the U.S. And so, if you look at the category for the June quarter, most of our tariff exposure relates to the February IEEPA-related tariff at the rate of 20 percent, which applies to imports to the U.S. for products that have China as their country of origin. In addition, for China, there was an additional 125% tariff for imports of certain categories of products announced in April, and for us, that’s some of our U.S. AppleCare and accessories businesses and brings the total rate in China for these products to at least 145%. Also, for transparency and clarity, the vast majority of our products, including iPhone, Mac, iPad, Apple Watch, and Vision Pro, are currently not subject to the global reciprocal tariffs that were announced in April, as the Commerce Department has initiated a Section 232 investigation into imports of semiconductors, semiconductor manufacturing equipment and downstream products that contain semiconductors. And so if you, for the June quarter, as I talked about in my opening comments, we estimate the impact, assuming that the current global tariff rates, policies and applications don’t change for the balance of the quarter to be $900 million to our costs. I wouldn’t want to predict the mix of production in the future, but I wanted to give you clarity for the June quarter of, you know, where the country of origins are so you can you can use that for your modeling.
Eric Woodring, Morgan Stanley: Okay. I appreciate that color. Thank you, Tim. And then maybe my follow-up is, there were a number of reports during the quarter that Apple had pulled forward sell-in into the channel to get ahead of tariffs. So can you just help us better kind of understand or clarify if sell-in and sell-through were aligned in the March quarter, if you’re assuming that they would be aligned in the June quarter guide, and ultimately do you believe that consumers are accelerating hardware purchases to get ahead of any potential pricing increases or was, you know, behavior normal? Thank you so much, Tim.
Tim Cook: Yeah, thanks, Eric, for the question. There’s several questions there. One, in terms of the pull forward in demand, if you look at the March quarter, we don’t believe that we saw obvious evidence of a significant pull forward in demand in the March quarter due to tariffs. If you look at our channel inventory, from the beginning of the quarter to the end of the quarter, the unit channel inventory was similar, not only for iPhone but for the balance of our products. Again, for transparency, you will see that we did build ahead inventory, and that’s reflected in our manufacturing purchase obligations that you’ll see on the quarterly filing when it comes out. So I hope that answers all your questions.
Ben Reitzes, Mellius: Hey, Tim, if you had told me on April 2nd that your hit from tariffs is only a nickel a quarter at 900 mil, you know, that would have been a pretty good outcome, given the panic that ensued. I’m surprised that it’s that low. But then, you know, you did make a comment about after the June quarter, and sorry to push you on that, but could it be a multiple of that figure? Or is it just completely unknown? We’re all just trying to figure out what happens after June, and if there’s just any guidance you guys can possibly give that it’s bigger, smaller, or what, and hoping you can just give us a little color on that. Thanks.
Tim Cook: Yeah, Ben, thanks for the question. I tried to give you some information in the previous question about the country of origin, which currently is the key factor in determining the tariffs that we’re paying. I don’t want to predict the future, because I’m not sure what will happen with the tariffs, and there is this section 232 investigation going on, and so it’s very difficult to predict beyond June, and June has the assumptions in it that I mentioned earlier.
Ben Reitzes, Mellius: All right, well, thanks, Tim, and then just with regard to China, down 2%. I mean, you intuitively would have thought there would have been an increased nationalism there and perhaps it would have been worse than that, and, you know, the trajectory there, improving even with subsidies, because subsidies benefited your competitors too, just wondering if a little more color there. Can it keep improving? What are you thinking, you know, with regard to that trajectory in China, given all the geopolitical tensions? Thanks.
Tim Cook: Yeah, we were down 2%, as you point out, for the March quarter, and to provide a little more transparency around that, we were roughly flat when you removed the headwinds from foreign exchange, and so we did see quite a bit of sequential improvement from the December quarter, which was down 11. And again, going out of the way for transparency, the channel inventory at the end of March, the unit channel inventory was similar to where we started the quarter. So there wasn’t a build of channel inventory in there. I do believe that the subsidies played a favorable impact on the results. It’s difficult to estimate with precision as to exactly how much, but I think it was positive. Some of our products are included, some of them are not. Generally on iPhone, if something is priced above 6,000 RMB, it is not eligible for the subsidy and the other products have different rules. But I do think it helped, and I think it’s helping others as well, I’m sure. iPhone was the key driver of the improvement sequentially. And so hopefully that provides you some color. The other thing I would say is that the Mac, the iPad, and the watch are attracting a majority of customers new to that product and so that continues to look quite good in China and iPhone was the top two models in urban China, and iPad was the top two tablets in urban China. So there’s some positive nuggets there.
Michael Ng, Goldman Sachs: I was just wondering if you could talk a little bit about your responses on some of this trade policy uncertainty. I appreciated the transparency around building ahead with inventory. Will you continue to do that in this interim period until we get clarity on the section 232 investigation and could you talk a little bit about your philosophy on pricing, elevated costs, the extent that comes through, whether that be to resellers or end consumers and other efficiency efforts that you might be able to pursue.
Tim Cook: Yeah, obviously, we’re very engaged on the tariff discussions. We believe in engagement and will continue to engage. On the pricing piece, we have nothing to announce today. And I’ll just say that the operational team has done an incredible job around optimizing the supply chain and the inventory, and we’ll obviously continue to do those things to the degree that we can.
Michael Ng, Goldman Sachs: Great. Thanks, and just as a quick follow-up for Kevan, on product gross margins, I was just wondering if you could provide a little bit more color on some of the factors that may have impacted product gross margins in the quarter. Obviously down sequentially on seasonal factors, but there was a year-over-year decline as well, so any additional color would be helpful. Thank you.
Kevan Parekh: Yeah, Michael. Thanks. This is Kevan. So, on the sequential, as we mentioned in the prepared remarks, had a decrease in the product gross margin by 340 basis points sequentially. That was primarily driven by mix, seasonal loss of leverage, foreign exchange, and that was partly offset by cost savings, and when we look at the year-on-year performance, we were down 70 basis points on a year-on-year basis, and that was driven by a different mix in foreign exchange.
Amit Daryanani, Evercore: I guess I’ll have to start with the tariff question as well. Tim, I think when you talked about the $900 million impact to your cost of goods sold, you sort of had a statement that, you know, there are certain unique factors that benefit you in the June quarter related to that number. Can you just talk about what are these unique factors that are benefiting you in the June quarter and what would the impact be without those benefits, essentially?
Tim Cook: I wouldn’t want to go through all of them, but as an example… the build-ahead that is, I mentioned earlier that’s in the manufacturing purchase obligations, is more helpful.
Amit Daryanani, Evercore: Got it, and then, you know, as I think about the June quarter guide of, you know, low- to mid-single-digit revenue growth. I was wondering, do you folks expect services growth to remain in the double-digit range as you go into the back half of the year? I imagine FX is a bit of a benefit as you go to the back half. I’d love to just understand within that framework, how do you think services stacks up as you go through the June quarter?
Kevan Parekh: So I think when we talk about the overall June quarter, we talked about the load in mid-single digits year over year. We do expect foreign exchange in the June quarter to improve sequentially, however, we are expecting it to be a slight headwind to revenue on a year-on-year basis. With respect to Services, given the uncertainty we see from several factors, we aren’t providing the category level of color today?
Wamsi Mohan, Bank of America: How should investors think about the gross margin trajectory as you source more from the U.S. in particular, or other supply chain changes that you’re making, including in India. How should those kind of play into the cost structure, and how should we think about that post-market trajectory?
Tim Cook: We’re excited about bringing more production to the U.S. As you know, we’ve been very key in the TSMC project in Arizona and are the largest and first customer getting product out of that, and that’s the SOC that’s coming out of there. We also have glass coming out of the U.S., and the Face ID module, and loads of chips. In fact, there’s 19 billion chips coming out across 12 states. This is down to the resistor and capacitor level, obviously. And so there’s some that is already built in to the margins that Kevan has quoted, and we don’t really forecast beyond the current quarter, as you know.
Kevan Parekh: Yeah, and maybe I’ll add a couple more points as we think about just the margin going forward. You know, a couple of observations I’d mention is, every product cycle is different, and over the years we have managed gross margin well. We’ve made good decisions balancing units, revenue, margins. You know, when we launch new products, they tend to have a higher cost structure than the products they replace, as we introduce new features and technologies. We do have a good track record of reducing those costs and structures over the life of the product, and our products and services all have different levels of profitability and their relative success in the marketplace has an impact on the overall gross margin. So I hope that’s helpful color and context for you.
Wamsi Mohan, Bank of America: Yeah, no, that’s super helpful. Thank you. I guess you just noted that you weren’t going to give services, maybe growth forecast here in light of some of the uncertain news, but maybe, Tim, could you share any color around what you have seen in developer behavior in areas like Europe where there has now been emergence of alternate app stores for a little more time. What have you seen anecdotally or within your data in terms of maybe developer behavior, whether it’s large or small, any color you can share on what has actually happened?
Tim Cook: It’s embedded in our results that Kevan talked about earlier, and embedded in the overall company color that was provided. But as you know, the Digital Markets Act went into effect in, I believe it was March of last year, and so the Digital Markets has been enacted for a bit over a year and there’s been alternate app stores for some period of time of that, and so it’s at this point in Europe, there are some embedded in the actuals. There may be more to come and so forth. I don’t want to predict beyond the current quarter.
David Vogt, UBS: Tim, this is more of a big picture supply chain philosophical question. So can you maybe update us on your thoughts on how you’re thinking about your sort of resiliency and redundancy following the changes that you guys talked about earlier on the call? I guess what I’m trying to understand is how do we think about where your supply chain is two to three years from now, and is there any risk at least in the near term of maybe some export control issues in your outlook for the balance of this year? And I’ll give you my second one at the same time: You quantified a nine hundred million dollar hit from tariffs, but Kevan, is there any impact in how you’re thinking about the demand backdrop in your outlook for the June quarter on the revenue line holistically?
Tim Cook: In terms of the resiliency and risk, et cetera. We have a complex supply chain, there’s always risk in the supply chain. And so I wouldn’t tell you anything different than that. What we learned some time ago was that having everything in one location had too much risk with it and so we have, over time, with certain parts of the supply chain, not the whole thing, but certain parts of it, opened up new sources of supply. And you could see that kind of thing continuing in the future. I’ll let Kevan answer the other question.
Kevan Parekh: Hi David. On the other question, I would say that our best thinking is captured in the outlook that we provided. However, I did want to re-emphasize the point that the assumptions we’ve made on the outlook do assume that the global tariff rates the policies and application remain the same as they are today as of this call and that the global macroeconomic outlook doesn’t worsen from today.
David Vogt, UBS: Okay, but no quantifiable impact on demand to date, at least from where we are over the last month? Is there a way to kind of think about that, you know, from early April to early May?
Kevan Parekh: I would say our best thinking is reflected in the range that we provided.
Samik Chatterjee, J.P. Morgan: Hi. Good afternoon. Thanks for taking my questions. I guess, Tim, you made a comment on the last earnings call about Apple Intelligence making a visible impact on iPhone sales in the countries where it was available. I’m just curious if you continue to see that play out similarly in sort of the more broader number of countries you’ve rolled that out or the delays that you talked about relative to Siri features, has that had an impact in terms of consumer willingness to upgrade?
Tim Cook: Thank you for the question. During the March quarter, we saw that in markets where we had rolled out Apple Intelligence that the year-over-year performance on the iPhone 16 family was stronger than those where Apple Intelligence was not available. A lot of the languages that I think you’re referring to rolled out in April and so they actually rolled out in Q3.
Samik Chatterjee, J.P. Morgan: Okay. Got it. Yeah. Then maybe for my follow-up, I mean, you have a lot of insights now in terms of how consumers are reacting to the overall macro, and I know you sort of prefaced all your guidance with macro remaining consistent, but what are you seeing in terms of of the U.S. consumer and what’s the reaction there in terms of the tariff impact, or we saw U.S. GDP also shrink here in 1Q, when you look at velocity at the stores or trade down within those sort of iPhone portfolio mix, what are you seeing in terms of how the consumers are reacting to the macro at this point?
Tim Cook: You know, I’m not an economist, and so I start by saying that. In terms of the, as you can see from a total company point of view, our results accelerated sequentially to the 5% level, and the U.S. is obviously the vast majority of the Americas segment, and you can see how the Americas performed during the quarter. And so that’s all I want to say about that. I don’t want to try to predict what happens in the months from now. But the past, I’m quite pleased with the results from Q2.
Krish Sankar, TD Cowen: Tim, thanks for that information on the $500 billion U.S. investment. I’m kind of curious how to about the composition of that, how much is CAPEX versus R&D, how much is, you know, going into like the Texas server, how much is going into maybe TSMC Arizona, any kind of color you can give on that $500 billion investment would be helpful as another follow-up.
Tim Cook: Well, there’s lots of all of it is what I would say. We’re not giving out the exact split but as we expand facilities in the different states from Michigan to Texas to California and Arizona and Nevada and Iowa and Oregon and North Carolina and Washington, there will be CAPEX involved in that and OPEX involved in it and standing up advanced server manufacturing in Texas, we’ll do that through a partner as we do our manufacturing through a partner, but we’ll be putting a fair amount in cost of goods sold to do that, and some OPEX as well, and I’m sure some CAPEX as well, and so it’s a bit of all of it.
Krish Sankar, TD Cowen: I kind of have a long term, like a philosophical question. In the past you’ve spoken about AI on the edge. Obviously, it’s very topical to you from both the iPhone angle and the Mac angle, but I’m just kind of curious and look at AI on the edge. Are the current smartphone specs, include hardware and silicon specs, good enough to meet future Edge LLM for inference? Or do you think we need to come up with a whole new different kind of device? We’re kind of curious how to think about the evolution of the Edge devices from here.
Tim Cook: Yeah, as you know, we’re shipping an LLM on the iPhone 16 today. and there are some of the queries that are being used by our customers are on-device, and then others go to the private cloud where we’ve essentially mimicked the security and privacy of the device into the cloud, and then others for world knowledge are, with integration with ChatGPT, and so we continue to be very excited about the opportunities here. We are very excited about the roadmap. We are, you know, pleased with the progress that we’re making.
Richard Kramer, Arete Research: I won’t ask about tariffs. Tim, given your recognition that a new Siri assistant is taking longer than you thought to deliver, I’d like to go back to my question from the last call and ask about what some of the learnings you had from those delays and whether you attribute them to organizational factors, to your legacy software stack, or is it a matter of R&D spending? And what are some of the key gating factors investors should look for, either at WWDC or beyond, have a sense that Apple can deliver on some of the promises of the announcements at the prior WWDC?
Tim Cook: Yeah, if you sort of step back from what we said at WWDC, we talked about a number of different features that would launch with iOS 18, and we’ve released a slew of those, from Writing Tools to seamlessly connecting to ChatGPT, to Genmoji, to Image Playground, to Image Wand, to Clean Up, Visual Intelligence, making movies of your memories with a simple prompt, AI-powered photo search, smart replies, priority notifications, and the list goes on, and so we’ve delivered a lot, and we’ve just recently, just a few weeks ago, expanded it into several different languages, including French, German, Italian, Portuguese, Spanish, Japanese, Korean, Simplified Chinese, as well as localized English for both Singapore and India. So we’ve delivered a lot. However, with regard to the more personal Siri, as you mentioned, we just need more time to complete the work so they meet our high-quality bar, and there’s not a lot of other reason for it. It’s just taking a bit longer than we thought. But we are making progress and we’re extremely excited to get the more personal Siri features out there.
Kevan Parekh:: And Richard, I’ll just add that, you know, on your question about investment, that we don’t underinvest in our business. You know, we make significant investments in R&D that continues to grow. We’re continuing to grow our R&D investment, and so we definitely are making all the investments we think we need to enable our roadmap.
Richard Kramer, Arete Research: Thanks, and Kevan, one for you. I mean, it’s hard to ignore this some of the ongoing very high profile legal cases that touch on Apple, be it yesterday’s Epic case injunction or the Google antitrust trial touching on default search, and investors are clearly concerned that these might have material impacts on your Services business. Do you feel now that you have ample ways in which you might be able to mitigate some of the potential negative impacts on Apple services business that might come about from what’s been proposed or might come about in legal rather than commercial pressures that the business faces?
Tim Cook: Let me make a couple of comments on that before Kevan. The case yesterday, we strongly disagree with. We’ve complied with the court’s order and we’re gonna appeal. In the DOJ case that you referenced with Google, that case is ongoing and I don’t really have anything to add beyond that. And so, we’re monitoring these closely, but as you point out, there’s risk associated with them and the the outcome is unclear.
Kevan Parekh: Yeah, I think Tim answered it really well. I don’t have anything to add to that.
Aaron Rakers, Wells Fargo: I want to go back to the AI strategy a little bit. I know, Tim, in your prepared comments you had mentioned building some of your own foundational models and, you know, I’m curious of how important you think it is for Apple to have their own foundational models and, you know, kind of dovetailed with that is that, you know, how do you think about your data center footprint when we look at Apple spending, call it $3 billion a quarter, relative to some of these other companies spending multiples of that? How does the strategy play out in your opinion?
Tim Cook: Well, we, on the data center side, we have a hybrid strategy, and so we utilize third parties in addition to the data center investments that we’re making, and as I mentioned in the $500 billion, there’s a number of states that we’re expanding in. Some of those are data center investments, and so we do plan on making investments in that area, and we’re not gating it. We invest in the business first, as Kevin talked about, is our most important thing to do. In terms of the foundation models, we want to have certain models, and we’ll partner as well. I don’t view it as an all-of-one or all-of-the-other. We’ve been working on foundation models for quite some time and are shipping some today, obviously, with what’s on device and what’s in the Private Cloud Compute.
Aaron Rakers, Wells Fargo: I’m curious with the iPhone 16e launching this quarter, internalizing your C1 modem. I’m curious of how you see the modem strategy playing out, or maybe just the continual deepening of that internal silicon opportunity for Apple.
Tim Cook: We’re super excited to ship the first one and get it out there, and it’s gone well. We love that we can produce better products from a point of view of really focusing on battery life and other things that customers want, and so we have started on a journey, is the way I would put it.
2025-05-02 04:41:07
On Thursday, Apple reported its second-quarter 2025 fiscal results. Revenue was $95.4 billion, up 5% versus the year-ago quarter. Mac revenue was up 7%, iPad revenue up 15%, iPhone revenue up 2%, and Services revenue up 12%. The Wearables/Home/Accessories category was down 5%.
Read on for more charts!