2025-11-01 07:59:42
Taylor Sheridan signs a free agent deal with NBCU, Warner Bros. Discovery might have many interested bidders, and we answer your letters! (Downstream+ subscribers also get: Google/Disney carriage, Dancing With the Stars, Apple/F1, and Disney/Doctor Who.)
2025-10-31 07:28:05
On the day that Apple announces its quarterly fiscal results, as it did on Thursday, there’s a little ritual that happens down in Cupertino: Financial journalists get a pre-briefing about the results from Tim Cook, and they rush to their live shots to breathlessly report the news on CNBC or Bloomberg Business or Fox Business from atop the Apple Park Visitors Center just as the announcement is posted publicly.
Sometimes I imagine that Cook and CFO Kevan Parekh say goodbye to them, jump in a car and just joyride all around Apple Park, doing donuts and singing out loud until they have to calm it down and get on the phone with financial analysts about half an hour later.
Thursday was one of those “doing donuts” days. Not only did Apple announce an all-time record for revenue for its fiscal fourth quarter, which also wrapped up an all-time record for Apple revenue in a fiscal year, and it wasn’t even close. And to top it all off, Cook dropped the mother of all forms of “guidance,” which is what you call it when companies publicly predict their next-quarter results three months in advance: “We expect the December quarter’s revenue to be the best ever for the company and the best ever for iPhone.”
Can Tim Cook dunk? I’m imagining him dunking. It was one of those days.
So much fiscal disclosure of public companies is regulated that everyone is very careful what they say, lest they be sued or get in trouble with the government. At the top of every single Apple phone call, Suhasini Chandramouli of Apple’s investor relations appears to point out that the future is promised to no one:
Please note that some of the information you’ll hear during our discussion today will consist of forward-looking statements, including, without limitation, those regarding revenue, gross margin, operating expenses, other income and expense, taxes, capital allocation, and future business outlook. These statements involve risks and uncertainties that may cause actual results or trends to differ materially from our forecast, including risks related to the potential impact to the company’s business and results of operations from macroeconomic conditions, tariffs and other measures, and legal and regulatory proceedings… Apple assumes no obligation to update any forward-looking statements, which speak only as of the date they are made.
Translation: This is what we think will happen, but who knows? Things could change.
In any event, Parekh shortly thereafter dropped the kind of statement that makes investors and analysts lean way forward in their seats:
We expect our December quarter total company revenue to grow by 10 to 12 percent year over year, which would be our best quarter ever. We expect iPhone revenue to grow double digits year-over-year, which would be our best iPhone quarter ever.
Just so we’re clear, that’s about $138B in total revenue and a minimum of $76B in iPhone revenue. (Check back in January to see if they were right.) Keep in mind that the results reported on Thursday only have a week or two of iPhone sales, while Apple now has an addition month of sales data with which to make projections. And if Apple is this confident, iPhone 17 sales data has to be really, really good.
One reason Apple is so confident is that it’s supply-constrained. In other words, for at least some iPhone models, it just can’t make enough to fulfill demand. Cook specifically called out Greater China revenue decreasing largely because the company faced iPhone supply constraints, and said that generally Apple was “constrained on several [iPhone] 17 models.”
Selling as many iPhones as you can make is a good problem to have, but it does make it tough to get an idea of how the long run of iPhone 17 sales will go. The bulk of iPhone 17 sales are yet to come, but Apple can’t actually tell how strong demand is for each model. When asked by Aaron Raker of Wells Fargo if certain iPhone categories were popping, Cook demurred:
It’s really too early to call the mix, to be honest. And we don’t like to publicly disclose that for competitive reasons. But frankly, we don’t really know what the mix will be yet, because we have constraints on both sides of the ledger at the top and at the entry, and so we’ll see what happens as we get more supply.
In other words, there’s a general sense that people are buying loads of iPhones, but the company can’t yet tell which models are the biggest hits. (But just to be clear, if it knew, it probably wouldn’t tell you.)
It was a good quarter critically for Apple’s Services category, what on account of all those Emmy wins for Apple TV’s “The Studio” and “Severance.” But enough about art—let’s talk filthy lucre. It was an all-time record Services quarter, with the category posting its ninth consecutive quarter of double-digit year-over-year growth. (Apple said that it was an all-time record everywhere but Greater China, which only managed to set a fourth-quarter record.)
That’s impressive, but I think maybe I can top it: The Services category has broken its own all-time record for 13 straight quarters. There’s not a lot of seasonality in Services, I’ll grant you—that’s kind of the point. The credit cards just keep getting charged, month after month, off into the future. But it’s a remarkable growth path given the relative seasonality of all of Apple’s other businesses.
In the post-results call with financial analysts, Wamsi Mohan of Bank of America asked Cook for a little more detail about Apple’s search revenue, given its lucrative deal with Google, and whether that revenue growth might decelerate if Google’s search traffic were to be impacted by the growth of AI. Cook’s response was, if I do say so myself, an all-timer for these calls:
Cook: This is Tim. The advertising category, which is a combination of third-party and first-party, did set a record during the quarter.
Mohan: Okay, and sorry, just to be clear, both Apple’s own internal advertising and within the licensing individually set records?
Cook: I actually I’m not saying that. I’m just saying that the combination of the two set a record. We don’t divulge—I’m dodging the question intentionally because we don’t split it at that level.
Look, these calls are almost entirely Apple execs dodging the questions of fiscal analysts. At least Tim Cook admitted it this time. You want to know how much Google is paying us and if that’s growing or shrinking? Well, I’m not gonna tell you!
Mac revenue was a real highlight this quarter, with revenue up 13% over the year-ago quarter. That’s eight straight quarters of year-over-year growth, so it’s been two very strong years for the Mac after a year where it fell a bit off the heights of improved sales due to COVID and the advent of Apple silicon.
However, Apple warned that despite the rosy outlook for its next quarter, the Mac was going to not be a top performer. The reason, you may not be surprised to discover, is a “tough compare.” In other words, this holiday quarter, the only fresh, new Mac is the M5 MacBook Pro, a perfectly nice computer. The problem is what was available last year, as Cook pointed out:
From a Mac point of view, the challenge is that last year was sort of the mother of all Mac launches. All of these, from Mac Mini to iMac, to all the MacBook Pros, all launched literally at same time. And this year, that compares to launching the 14-inch MacBook Pro. And so there’s a very difficult compare. Of course, in the long run, I’m very bullish on them. You can see that the Mac again last quarter outgrew the market. And so we feel really well about how Mac is positioned, but this certain quarter is an extremely difficult compare.
So: Pretty good news for the Mac, but maybe put a note in Reminders not to freak out in late January when Apple reports disastrous Mac revenue growth, okay?
At the end of Cook’s opening statements in his call with analysts, he tries to include an optimistic look at ways that Apple is acting to follow its own corporate values and leave the world better than it found it. Here’s what he said Thursday:
Everywhere we operate, and in everything we do, we strive to give the best to our users while living by our values. Whether that’s building new accessibility features into our most recent software releases, or advancing our environmental work by using even more recycled materials in our latest lineup, or providing free educational programming to train and support American businesses with our new Apple Manufacturing Academy in Detroit.
And we’re continuing to invest in innovation and user experiences that will transform our future. A great example is the work we’re doing in the U.S. where we’re committed to invest six hundred billion dollars over the next four years with a focus on innovation and strategic areas like advanced manufacturing, silicon engineering, and artificial intelligence. These commitments build on our long-standing investments in America while supporting more than 450,000 jobs with thousands of suppliers across all 50 states. We built a new factory in Houston for advanced AI servers, for example, which just started shipping its first products off the line. And we’re leading the creation of end-to-end silicon supply chain across the country.
That feels like a pretty accurate depiction of the cards Apple is interested in showing in 2025: accessibility, recycling, education, and investing in the American economy. That’s absolutely what the company is focusing on today. Just for a contrast, here is the opening portion of Cook’s much longer statement from three years ago:
At Apple, we’re proud of the ways we are able to help customers be productive, get healthy, stay safe, and unlock their creative potential. We also understand we have an important responsibility to the communities we serve. That’s why we continue to invest in education, racial equity and justice, and the environment, and we are making important progress toward a more inclusive and diverse workforce.
Through our community education initiative, we’re working alongside more than 150 partners to help students around the world learn new science and technology skills. This summer, we joined with community partners to support coding academies across the United States from Code Academy in Nashville to One Summer Chicago to the Coding 5K Camp for Girls right next door in San Jose. We’ve also just expanded our racial equity and justice initiative into the UK for the first time. Alongside the South Bank Center, we’re helping aspiring creatives develop their own voices and position themselves for long lasting careers. Back in the US, we welcomed a new class of Black, Latino, and indigenous entrepreneurs to Apple’s second impact accelerator. This group of innovators is focused on using green technology to mitigate the effects of climate change and serve communities most affected by it.
Hmm. Some things never change when it comes to these Apple results. Other things do.
(Not enough charts? All the charts are available in this other Six Colors story.)
2025-10-31 05:19:17
Every quarter after releasing financial results, Apple CEO Tim Cook and 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.
Good afternoon, everyone, and thanks for joining the call. Today, Apple is proud to report $102.5 billion in revenue, up 8% from a year ago and a September quarter record. Services achieved an all-time revenue record of $28.8 billion, growing 15% from a year ago. EPS came in at $1.85, setting a September quarter record.
We grew in the vast majority of markets we track and had September quarter revenue records in dozens of markets, including the U.S., Canada, Latin America, Western Europe, the Middle East, Japan, Korea, and South Asia. We also set a September quarter revenue record in emerging markets and an all-time revenue record in India.
These results come at the close of an extraordinary year for Apple, in which we achieved an all-time revenue record of $416 billion for the fiscal year. We set all-time revenue records in emerging and developed markets. We set an all-time revenue record for iPhone. And in services, we achieved all-time records across every geographic segment. These results reflect the tremendous customer enthusiasm for Apple products and services, as well as our deep commitment to innovation. We are incredibly excited about the strength we’re seeing across our products and services, and we expect the December quarter’s revenue to be the best ever for the company and the best ever for iPhone.
We are heading into the holiday season with a truly remarkable lineup. That includes the biggest leap ever for iPhone, which has had a tremendous response from our users around the world. Our Apple Watch lineup is more capable than ever, too, giving users ways to take charge of their health like never before through new features like hypertension notifications and sleep score. And the next-level sound quality and active noise cancellation of AirPods Pro 3 are hitting all the right notes for our users.
In October, we also broke new ground in power-efficient performance with the incomparably fast M5 chip packed with neural accelerators in each GPU core to supercharge AI workflows. iPad Pro combines game-changing features in iPadOS 26 with the power of M5 to create our most capable iPad ever. At the same time, the M5 MacBook Pro raises the bar for what users can do with a laptop, while the new M5-powered Apple Vision Pro opens up amazing possibilities on its infinite canvas.
We also launched a beautiful new software design that creates a unified experience across all of our platforms for the very first time. The design is crafted with a new material called Liquid Glass that brings fluidity, vitality, and flexibility to our products. Along with the new design, we delivered powerful new features to enable users to do even more with their devices. That includes updates to the Phone and Messages apps in iOS 26 to help users stay connected, Continuity enhancements in Mac to deliver an even more seamless experience across devices, and a powerful new windowing system that fundamentally transforms the user experience in iPadOS 26.
As we continue to expand our investment in AI, we’re bringing intelligence to more of what people already love about our products and services, making every experience even more personal, capable, and effortless. At the heart of it all is Apple silicon, and we were thrilled to launch new products powered by the A19 Pro chip and M5. These incredibly advanced chips make Apple products the very best place to experience the power of AI. With Apple Intelligence, we’ve introduced dozens of new features that are powerful, intuitive, private, and deeply integrated into the things people do every day. Features like Live Translation, which help users communicate across languages in real time, and Visual Intelligence, which opens new ways to learn about and explore the world. We also introduced Workout Buddy, a new experience that uses AI to provide personalized motivational insights based on a user’s workout data and fitness history. And these join so many others from cleanup in Photos and new image creation tools to powerful writing tools. We’re also seeing developers take advantage of our on-device foundation models to create entirely new experiences for users around the world. We’re also excited for a more personalized Siri. We’re making good progress on it, and as we’ve shared, we expect to release it next year.
Now let’s take a closer look at the September quarter results across our lineup, starting with iPhone. iPhone set a revenue record for the September quarter at $49 billion, up 6% from a year ago, with growth in the vast majority of markets we track, despite supply constraints we’ve faced on several iPhone 16 and iPhone 17 models given strong demand. Redesigned from the inside out and powered by the outstanding A19 Pro chip, the iPhone 17 Pro is by far the most powerful iPhone we’ve ever made, setting a whole new standard for the smartphone industry. The iPhone 17 Pro also offers our best camera system ever, with an all-new 8x telephoto camera and looks stunning with bold new finishes like Cosmic Orange. The iPhone Air introduces an incredibly breakthrough design, and with a bigger and brighter display with ProMotion, the iPhone 17 is a fantastic upgrade, packed with features users will love.
In Mac, we had a strong September quarter with revenue of $8.7 billion, up 13% year over year, driven by the strength of the MacBook Air. The MacBook Air enables users to get things done easily on the world’s most popular laptop. Mac Mini users are loving how much performance is packed into our smallest Mac ever made, while Mac Studio customers are pushing the envelope of what’s possible with our most powerful Mac ever. And the latest 14-inch MacBook Pro unlocks incredible speed and next-level performance with the all-new M5 chip, which delivers three and a half times faster AI performance than M4.
Turning to iPad, revenue was $7 billion for the September quarter. Last month, we released one of the most attention-grabbing software updates we’ve had in years with iPadOS 26, and we recently gave iPad users even more to love with the launch of the incredible M5 iPad Pro, which offers an incredible boost in AI performance. With an unmatched combination of power and versatility, the new iPad Pro makes every interaction delightful, with its thin, light, and portable design.
In Wearables, Home, and Accessories, revenue was $9 billion. As I mentioned earlier, we were excited to unlock new possibilities for users with the launch of our newest Apple Watch lineup, making the world’s most popular watch even better. That includes Apple Watch Ultra 3, with the largest display ever in an Apple Watch, improved battery life, and Emergency SOS via Satellite. Apple Watch Series 11 brings our users the most comprehensive set of health features yet, and Apple Watch SE 3 delivers advanced capabilities at an incredible value. AI and advanced machine learning are at the core of powerful health features like heart-rate monitoring, fall detection, crash detection, and more.
With our latest Apple Watch lineup, we were proud to introduce Hypertension notifications, developed using large-scale machine learning models. Hypertension is one of the leading risk factors for heart attack and stroke, affecting more than one billion adults worldwide, and we expect to notify more than a million users of this life-threatening condition. We’re also excited about Sleep Score, a simple, intuitive way to help users better understand their sleep quality and discover ways to improve it. That’s something I’m sure we can all benefit from.
Meanwhile, AirPods Pro 3 have been a huge hit. You have to hear them to really understand just how remarkable they are. Users and reviewers alike are praising their incredible sound quality and improved fit. They feature the world’s best in-ear active noise cancellation, removing up to two times as much noise as the previous generation. And with live translation powered by Apple Intelligence, AirPods deliver an incredibly new and exciting experience for users around the world.
Turning to Services, as I mentioned earlier, revenue was $28.8 billion for the September quarter, 15% higher year-over-year and an all-time record. We saw double-digit growth in both developed and emerging markets and set new all-time records across advertising, App Store, cloud services, Music, payment services, and video. Apple TV celebrated a big night at this year’s Emmy Awards with 22 wins. “The Studio” led the night with 13 wins, the most of any comedy series in Emmys history. “Severance” topped all dramas with eight wins, adding to the accolades for this landmark series. To date Apple TV productions have now earned over 600 wins and 2,800 nominations in total, driven by powerful, original storytelling. And we’re excited for audiences to discover new productions like “Pluribus” and to catch returning favorites like “Slow Horses” and “The Morning Show.”
And soon, Apple TV will be the destination for F1 fans across the US on track day, thanks to a new partnership with Formula One. F1 is one of the most exciting and fastest-growing sports in the world, and starting next year, Apple TV will be the place for subscribers to follow every twist and turn of the new season. And in addition, “F1 The Movie,” one of the year’s biggest blockbusters, will be coming to Apple TV on December 12th.
During the September quarter, we also mark the 10-year anniversary of Apple News. Apple News provides access to front-page news from all around the world, putting hundreds of publications right at users’ fingertips.
Turning to retail, we’re heading into our busiest time of year with our best-ever lineup. In the last few months, we’ve opened new stores in emerging markets like India and the UAE and new locations in the US and China. I was also in Tokyo last month for the opening of the redesigned and reimagined Apple Ginza store, and the energy among the crowd was truly remarkable. When it originally opened, it was our first store outside the United States, and so it was especially meaningful to come back to welcome customers to the beautiful new space.
Everywhere we operate, and in everything we do, we strive to give the best to our users while living by our values. Whether that’s building new accessibility features into our most recent software releases, or advancing our environmental work by using even more recycled materials in our latest lineup, or providing free educational programming to train and support American businesses with our new Apple Manufacturing Academy in Detroit.
And we’re continuing to invest in innovation and user experiences that will transform our future. A great example is the work we’re doing in the U.S. where we’re committed to invest six hundred billion dollars over the next four years with a focus on innovation and strategic areas like advanced manufacturing, silicon engineering, and artificial intelligence. These commitments build on our long-standing investments in America while supporting more than 450,000 jobs with thousands of suppliers across all 50 states. We built a new factory in Houston for advanced AI servers, for example, which just started shipping its first products off the line. And we’re leading the creation of end-to-end silicon supply chain across the country.
In recent months, I’ve connected with developers, innovators, artists, entrepreneurs, and so many others around the world—people passionate about innovation and all the things they can do with Apple products. Each one is another reminder of why we do what we do. We’re driven to empower people to do more of the things that matter most to them and enrich their lives along the way. As we head into the holiday season with our most powerful lineup ever, I couldn’t be more excited for what’s to come. With that, I’ll turn it over to Kevan.
Thanks, Tim, and good afternoon, everyone.
Our revenue of $102.5 billion was up 8% year-over-year and is a new September quarter record. We set September quarter records in the Americas, Europe, Japan, and the rest of Asia-Pacific and grew in the vast majority of markets we track.
Products revenue was $73.7 billion, up 5% year-over-year, driven by growth across iPhone and Mac, and reached a September quarter record. Thanks to our exceptional customer satisfaction and strong levels of loyalty, our installed base of active devices has reached another all-time high across all product categories and geographic segments. Services revenue was $28 billion, up 15% year-over-year, and an all-time record. The performance was broad-based, with double-digit growth in the vast majority of the markets we track and double-digit growth across most of our Services categories. Company gross margin was 47.2%, above the high end of our guidance range and up 70 basis points sequentially, driven by favorable mix. This includes approximately $1.1 billion of tariff-related costs, which is in line with what we had estimated on our last call. Products gross margin was 36.2%, up 170 basis points sequentially, driven by favorable mix. Services gross margin was 75.3%. down 30 basis points sequentially. Operating expenses landed at $15.9 billion, up 11% year over year, driven by increased investment in R&D.
These strong levels of business performance led to September quarter records for both net income and diluted earnings per share. Net income was $27.5 billion, and diluted earnings per share was $1.85, up 13% year-over-year on an adjusted basis excluding the one-time charge we recognized during the fourth quarter of 2024. Operating cash flow was also a September quarter record at $29.7 billion.
Now I’m going to provide some more details for each of our revenue categories.
iPhone revenue was $49 billion, up 6% year-over-year, driven by the iPhone 16 family. iPhone grew in the vast majority of the markets we track, with September quarter records in many emerging markets, including Latin America, the Middle East, and South Asia, and an all-time record in India. The iPhone active installed base grew to an all-time high, and we set a September quarter record for upgraders. According to the recent survey from World Panel, iPhone was a top-selling model in the U.S., urban China, the UK, France, Australia, and Japan. We continue to see very high levels of customer satisfaction in the U.S. at 98% as measured by 451 Research.
Mac revenue was $8.7 billion, up 13% year-over-year, driven by MacBook Air. We grew in every geographic segment, with strong double-digit growth in emerging markets. The Mac installed base reached another all-time high, with nearly half of customers who purchased a Mac being new to the product. And the latest customer satisfaction for Mac in the U.S. was reported at 96%.
iPad revenue was $7 billion, flat year-over-year. Keep in mind, we faced a difficult compare against the full quarter impact of the iPad Air and iPad Pro launch from last year, offset by the better-than-expected performance on the iPad. The installed base reached an all-time high, with a September quarter record for upgraders, and over half of 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 98% in the U.S.
Wearables, Home and Accessories revenue was $9 billion, flat year-over-year. This was driven by growth on Watch and AirPods, offset by accessories, which was impacted by strong performance in the year-ago quarter driven by the iPad launches. Both the Apple Watch and AirPods installed bases reached new all-time highs. Over half of the customers purchasing an Apple Watch during the quarter were new to the product, and we also set a September record for upgraders on Apple Watch. And in the U.S., customer satisfaction was recently measured at 95%.
Our Services revenue reached an all-time high of $28.8 billion, up 15% year-over-year. We achieved all-time revenue records in the Americas, Europe, Japan, and Rest of Asia Pacific, as well as a September quarter record in Greater China. The majority of categories saw a sequential acceleration and, as Tim mentioned, we set many all-time revenue records, including payment services, where we reached an all-time revenue record and saw double-digit growth year-over-year on Apple Pay active users. This strong momentum in the September quarter drove our total fiscal year services revenue to surpass $100 billion, up 14 percent year-over-year, and our best ever. The growth of our installed base of active devices continues to offer 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. And we continue to improve the quality and expand the reach of our Services offerings. From additional markets for Apple Pay, now available in nearly 90 countries, to AppleCare One, a great new way to cover multiple Apple products in a single plan.
Turning to Enterprise, we are seeing an adoption of Apple products accelerate across industries to improve productivity and drive innovation. The BMW Group has been deploying tens of thousands of iPhones, including to factory employees, to further strengthen its digital capabilities and advance innovation at the company. Capital One has expanded its Mac choice program by adding thousands more MacBook Airs across its workforce. In the Czech Republic, its largest bank, Česká spořitelna, continues to invest in the Apple ecosystem with over 5,000 iPhones in addition to its existing thousands of iPads and Macs. And Purdue University has launched a spatial computing hub built around Vision Pro, designed to help prepare students to lead the next wave of innovation in critical industries like semiconductor and pharmaceutical manufacturing.
Let’s turn to our cash position and capital return program. We ended the quarter with $132 billion in cash and marketable securities. We had $1.3 billion of debt maturities and decreased commercial paper by $1.9 billion, resulting in $99 billion in total debt. Therefore, at the end of the quarter, net cash was $34 billion. During the quarter, we returned $24 billion to shareholders. This included $3.9 billion in dividends and equivalents, and 20 billion through open market repurchases of 89 million Apple shares.
Taking a step back, we are very pleased with our record fiscal year 2025 results. As Tim mentioned, total company revenue for the year was $416 billion, with growth in iPhone, Mac, iPad, and services, and all-time records in the vast majority of markets we track. This revenue performance led to very strong full-year operating results, with all-time records for net income and for diluted EPS, which grew double-digits year-over-year on an adjusted basis.
As we move ahead into the December quarter, I’d like to review our outlook, which includes the types of forward-looking information Suhasini referred to. Importantly, the color we’re providing assumes that the global tariff rates, policies, and application remain in effect as of this call, and the global macroeconomic outlook does not worsen from today.
We expect our December quarter total company revenue to grow by 10 to 12 percent year over year, which would be our best quarter ever. We expect iPhone revenue to grow double digits year-over-year, which would be our best iPhone quarter ever. On Mac, keep in mind, we expect to face a very difficult compare against the M4 MacBook Pro, Mac Mini, and iMac launches in the year-ago quarter. We expect services revenue to grow at a year-over-year rate similar to what we reported in the fiscal year 2025. We expect gross margin to be between 47% and 48%, which includes an estimated impact of $1.4 billion of tariff-related costs. And as we’ve said before, we are significantly increasing our investments in AI while continuing to invest in our product roadmap, and so, for the December quarter, we expect operating expenses to be between $18.1 billion and $18.5 billion, OI&E to be around $150 million, excluding any potential impact from the mark-to-market of minority investments, and our tax rate to be around 17 percent. Finally, today our Board of Directors has declared a cash dividend of 26 cents per share of common stock. payable on November 13, 2025, to shareholders of record as of November 10, 2025. With that, let’s open the call to questions.
Eric Woodring, Morgan Stanley: Congrats on the results. Tim, can you maybe share a bit more detail on why you think the iPhone 17 is having the degree of success that it is at this point? And really the question is, do you believe this is, you know, the aging installed base replacement cycle kicking in, or are there specific features or functionality you believe stand out this cycle versus past cycles that consumers are really looking for?
Tim Cook: Eric, thanks for your comments. I think it’s all about the product. The product lineup is incredibly strong. They’re strong as ever. The 17 Pro is the most pro phone we’ve ever done. It’s incredible, and the design sings. The iPhone Air feels so thin and so light in your hand. It feels like it’s going to fly away, and then the 17 phone is an incredible value and takes several of the features that were reserved for Pro before and brings them down to the consumer lineup. So overall, strongest iPhone lineup ever, and it’s resonating around the world.
Eric Woodring, Morgan Stanley: Can you maybe just discuss your approach to managing component cost inflation during this time? You’re obviously increasing the memory content in your devices quite substantially at the same time. Memory prices are going through some pretty significant inflation, so just how are you managing through this cycle?
Kevan Parekh: Hey, Eric. Thanks for the question. Look, as you know, we’ve got a pretty (chuckles) incredible world-class procurement team as we’re constantly finding ways to continue to drive cost opportunities. Right now on the commodity side, I would say we’re seeing a slight tailwind on memory and storage prices and nothing really to note there. And as we saw from our gross margin performance, we had in a pretty good spot above the high end of the guidance range at 47.2%. And as well, we’re guiding at 47% to 48%. So I think we’re managing costs pretty well. As you’ll recall, when we talked about this time in the cycle, we just launched a bunch of new products. Those new products do have a slightly higher cost structure than the products they replace, but the team does a very good job of focusing our efforts on getting those costs down over time, and we feel pretty good about the performance we’re seeing right now overall in material cost savings.
Ben Reitzes, Mellius Research: Tim, can you talk a little bit about iPhone in China, specifically how is that going to trend in the December quarter, and have you turned the corner there? And how do you think that trajectory is going?
Tim Cook: Yeah, Ben, I was just there. It’s incredibly vibrant and dynamic. The store traffic is up significantly year over year. The iPhone 17 family has been very well received there. We do believe that we’ll return to growth in Q1, and that is largely based on the reception of the iPhone there, and so I couldn’t be more pleased with how things are going there in the early going.
Ben Reitzes, Mellius Research: That’s great. And then services, great upside there. A little surprising, right? We were a little worried about that one only a few quarters ago. I was wondering if there were any tax payments in there or if the resolution that we saw with the antitrust ruling with one of your partners was a boost, and if that played a role, or if it was all really just organic outperformance with many of the things you mentioned.
Kevan Parekh: Hey, Ben. It’s Kevin here. Let me try to answer that question. You’re referring, just wanted to clarify, when you’re referring to the antitrust piece, you’re talking about the Google trials, is that what you’re referring to?
Ben Reitzes, Mellius Research: Yeah. Yes, sir.
Kevan Parekh: Okay. There was no cash related impact, and what I would say is our strong performance of the quarter is really organically driven, and again, just to reiterate, we had an all-time revenue record here for the quarter at $28.8 billion, and as well, we surpassed $100 billion, so the best year ever at 14% year-on-year. So really, that was all organic growth, as Tim outlined and I outlined in the prepared remarks. We saw a majority of the categories have sequential acceleration, and we had many all-time revenue records. But nothing abnormal at all, really pretty much all organic growth.
Michael Ng, Goldman Sachs: First, just to follow up on the last one, you know, the Services revenue growth, I think, was the fastest across many categories, and certainly the fastest in the last two years. I was just wondering if you could just unpack a little bit more of the drivers of the acceleration. You know, was there kind of cross-selling with the new iPhone launch? Was it just installed-base growth? I know you’ve been doing a lot of bundling with Apple One and AppleCare One, so any thoughts on that would be very helpful.
Kevan Parekh: Hi, Michael. It’s Kevin. Thanks for the question. Yeah, let me build on the answer there. The way we look at it is not one thing to point to that would have driven this higher performance. You’re right that it is slightly higher than we’ve seen in the last few quarters. But as you know, our Services portfolio is very broad, with a broad range of businesses, all that have different growth profiles and different performance characteristics. So those can vary in any given quarter. I would say our strength, again, was very broad-based, both across categories and also geographically, so I wouldn’t point to any particular factor that drove any kind of outperformance at all. We were just very pleased to see that result.
Michael Ng, Goldman Sachs: Great. Thank you. And just on iPhone sell-through, I was wondering if you were seeing any notable shifts in trends between the sell-through coming from upgraders versus switchers? Is the U.S. carrier competitive dynamic helping at all in terms of promotional activity? And any thoughts on channel inventory? Thank you.
Tim Cook: Okay. We did set a September quarter record for upgraders, and so it was a great quarter from that point of view. It’s really too early in the cycle on 17 to make any comments about upgraders or switchers. In terms of channel inventory, we ended the quarter toward the low end of the targeted range. Obviously, because we had constraints on several models of the 16 and the 17. And for complete transparency and clarity, we’re constrained today on several models of the iPhone 17. There’s not a ramp issue, it’s just we have very strong demand and we’re working very hard to fulfill all the orders that we have.
Amit Daryanani, Evercore: Kevan, maybe just to start with gross margins, can you just walk through the expectations for December quarter? I think it implies up 30 basis points or so sequentially. Can you just talk about the puts and takes on gross margin, given you do have very sizable operating leverage in the quarter, so just maybe what are the puts and takes around that would be really helpful?
Kevan Parekh: Yeah, sure. Let me walk through that. As we mentioned in our outlook, we’re targeting a range of 47 to 48 percent. We take the midpoint of that range at the 47.5, you said it’s roughly 25 basis points, 30 basic points higher. Really there’s a lot of puts and takes as I talked about earlier. This is a quarter we launched a lot of new products. Those new products tend to have a higher cost structure than the products they replace, so there’s definitely an impact from the cost side of things, but that was more than offset by a favorable mix, especially on the product side. As well as you outlined, we typically see higher leverage in this quarter. So I would say those are the two big drivers, and so the sequential increase is really going to be driven by favorable mix, and particularly from the product side.
Amit Daryanani, Evercore: Got it. If I could just go back to the China discussion for a minute. The performance in China at least in September quarter was a bit muted. Could you talk about what resulted in the weakness over there and do you think it was a bit more of a pause given the iPhone Air, for example, I don’t think was available until a few weeks ago, so just what drove the weakness in September and is the uptick or better expectations for December there just from the iPhone Air coming out or all there other factors as well?
Tim Cook: Yeah, Greater China revenue was down 4% in the year-over-year in the September quarter. It was driven by iPhone, and if you look at the iPhone, the majority of the sequential year-over-year change was due to supply constraints that I mentioned earlier. And so it was basically supply constraints that drove the results. We’re thrilled with what we’re seeing right now with traffic being up significantly year over year and the reception of the 17 family. We expect to return to growth this quarter.
Wamsi Mohan, Bank of America: Tim, if I could follow up on your comments about the constrained supply in the quarter, just given the very strong demand for iPhones. Do you expect that, as you can see your visibility across demand and supply, do you think that you will be exiting December at a point where you wouldn’t be constrained anymore, or do you still expect that there could be constraints as you exit the December quarter? And any way to quantify what revenue could have been in this quarter without constraints?
Tim Cook: Yeah, if you look at the supply constraints, today we are constrained on several 17 models. We’re not predicting when the supply/demand will balance. We’re obviously working very hard to achieve that because we want to get as many of these products out to the customers as possible, but today I’m not going to predict.
Wamsi Mohan, Bank of America: I heard you talk about new records across a lot of categories and services. I didn’t hear search explicitly called out so, maybe it’s a little bit of a follow-up to Ben’s question, but given that there are some concerns around search volumes decelerating at the expense of AI, how do you think about the broader sustainability of these very strong mid-teens growth rates for services over an extended period of time, not just not just for next quarter where you’re obviously guiding to 14.
Tim Cook: This is Tim. The advertising category, which is a combination of third-party and first-party, did set a record during the quarter.
Wamsi Mohan, Bank of America: Okay, and sorry, just to be clear, both Apple’s own internal advertising and within the licensing individually set records?
Tim Cook: I actually I’m not saying that. I’m just saying that the combination of the two set a record. We don’t divulge—I’m dodging the question intentionally because we don’t split it at that level.
Samik Chatterjee, J.P. Morgan: Tim, you talked about the strong momentum you’re seeing in China, which is also driving your conference for the December quarter. Any thoughts on the role that the smartphone subsidies in that region are playing in this momentum? And how do you think about what portion of consumers are maybe using some of those subsidies, leveraging subsidies at this point? Any more insights into that?
Tim Cook: Yeah, the subsidies play a favorable role. The subsidies, as you know, are sort of across multiple categories from PCs to tablets to smartwatches and smartphones. However, it’s important to note, they only apply to certain price ranges, and so there’s a maximum price, and there’s several of our products that sell above that price and therefore are not eligible for a subsidy. But it does have a favorable effect, and it’s clearly, at least from our vantage point, driving some consumer demand.
Samik Chatterjee, J.P. Morgan: On the OPEX increase going into the December quarter, fairly sizable step-ups. So if you could just dig into that number a bit more, what are the components towards what you’re spending? And then, that increase year over year in OPEX does sort of exceed your revenue growth. So is that sort of what we should expect on a going-forward basis as well, where you probably need to invest a bit more in the near future?
Kevan Parekh: As we’ve been outlining and reiterated in our last call, we are increasing our investments in AI. We’re also continuing to invest in our product roadmap. The vast majority of the increase to our operating expenses are driven by R&D. While we continue to manage the company in a thoughtful and disciplined way, we’re also managing the business for the long term and are super excited about all the opportunities we see ahead. As related to the question around OPEX and revenue growth, while OPEX has been growing at a faster rate than revenue, you know, we have seen gross margin expansion, and so when we look at that on a combined basis, it does allow us to have healthy operating leverage and our operating income growth has been generally outpacing revenue growth for the past several years.
David Vogt, UBS: Can you help us understand the tariff impact sequentially from the September quarter to the December quarter, particularly around iPhone supply constraints? Because I think I heard you say tariffs go from $1.1 to $1.4 billion, but the sequential uplift in iPhone revenue and presumably production given supply chain constraints, is dramatically bigger. So can you help us understand how to think about the timing of those tariff headwinds as we move forward, and sort of that correlation?
Tim Cook: David, I’ll take this one. You’re right, it goes from $1.1 to a projection of $1.4, and the $1.4 is based on sort of what we know right now and where the tariff rates and policies and so forth are. So it assumes a stable kind of environment for the quarter. It does comprehend the change that was just made, which we’re very encouraged to see, with the tariffs moving from 20 percent to 10 percent in China. And so that is factored in, and that is one of the reasons why it’s not linear to volume, if you will. Does that make sense?
David Vogt, UBS: Got it. No, that’s helpful. That’s what I was asking, if the change is reflected in that outlook. And then just as a follow-up, you know, when you think about on the Mac side, I know people aren’t asking about it. You talked about the tough comp, but you’re going into sort of a holiday season. I understand that. But when you think about the attach possibility for other products to the iPhone in the holiday season, you know, how do we think about sort of where the consumer’s head’s at and their wallet is at this point in the cycle and, granted, it is a tough comp but is there an opportunity to see some maybe upside from an attach rate perspective given the strength of the iPhone portfolio?
Tim Cook: We always like to remind people that buy an iPhone, all the other things that we offer, and so you can bet that we’re doing that. From a Mac point of view, the challenge is that last year was sort of the mother of all Mac launches. All of these, from Mac Mini to iMac, to all the MacBook Pros, all launched literally at same time. And this year, that compares to launching the 14-inch MacBook Pro. And so there’s a very difficult compare. Of course, in the long run, I’m very bullish on them. You can see that the Mac again last quarter outgrew the market. And so we feel really well about how Mac is positioned, but this certain quarter is an extremely difficult compare.
Kevan Parekh: And, Tim, I’ll add to that that we also had the DRAM upgrades last year for the Mac lineup.
Tim Cook: Good point.
Kevan Parekh: Which also is another factor.
Krish Sankar, TD Cowen: My first one is on the iPhone constraints. Is there a way to quantify how much business you left on the table because of those constraints, and is the a different iPhone manufacturing from two different regions contributing to the constraint?
Tim Cook: To be clear, the constraint was not related to manufacturing capacity per se. It was that we called the number of iPhone 16’s that we were going to make, and were a bit short of where the demand really was. So we could have sold more. We’re not publicly, at least, estimating the extent of that. And then on iPhone 17 family, the demand is very strong, and so we obviously came out of the Q4 timeframe with lots of backorders.
Krish Sankar, TD Cowen: Got it, thanks for that, Tim, and then a quick follow-up. Given the prevalence of chatbots and now some of these AI-infused web services, do you think that could change the consumer behavior on mobile app ecosystems, or are you seeing any of that, and would that have any impact on your App Store?
Tim Cook: I think there are opportunities on the App Store with artificial intelligence. And so I think as we have made our on-device models available for developers and we’ve seen developers begin to adopt them, and so I think as that proliferates, there’s an opportunity for developers and for Apple to benefit from that, from adding features to their apps and so forth.
Aaron Raker, Wells Fargo: When we look at the iPhone 17 demand, which you’ve repeatedly highlighted is very strong, I’m curious if there’s been any discernible kind of change in the mix within the iPhone 17 categories between the Pro and the Pro Max versions relative to prior cycles?
Tim Cook: It’s really too early to call the mix to be honest. And we don’t like to publicly disclose that for competitive reasons. But frankly, we don’t really know what the mix will be yet because we have constraints on both sides of the ledger at the top and at the entry, and so we’ll see what happens as we get more supply.
Aaron Raker, Wells Fargo: I’m curious as we kind of work through kind of the AI narrative that continues to build, could you provide any kind of updated thoughts around the build-out of Apple’s private compute cloud and how we should think about that kind of as we look forward?
Tim Cook: Yeah, we’re obviously using PCC, our Private Cloud Compute today for a number of queries for Siri, and we will continue to build it out. In fact, the manufacturing plant that makes the servers used for Apple Intelligence just started manufacturing in Houston a few weeks ago, and we’ve got a ramp planned there for use in our data centers. And, you know, it’s robust.
Kevan Parekh: Yeah, and I’ll add maybe there, too, since you asked the question about Private Cloud Compute, that we, in ’25, we did have CapEx costs associated with building out our Private Cloud Compute environment in our first-party data centers. So, you know, you would have seen that in some of the CapEx investment in the year.
Atif Malik, Citi: Does the consumer reception on iPhone Air give you a feel on perhaps the foldable phone market or are the two form factors very different?
Tim Cook: I’m not sure that that one is a proxy for the other. The thing that I would say is that, where we don’t get into the model kind of demand at the aggregate level, we are thrilled with how iPhone has been received and that’s the reason that we’re expecting double-digit growth in the current quarter.
Atif Malik, Citi: Good to know that the personalized Siri is making good progress and on track for next year. Will you continue to use the three-pronged approach with your own foundation models and partner with other LLM providers and maybe potential M&A, or is one strategy more emphasized over another?
Tim Cook: We’re obviously creating Apple Foundation Models within Apple. We ship them on device and use them in the Private Cloud Compute as well. And we’ve got several in development. We also continually to surveil the market on M&A and are open to pursuing M&A if we think that it will advance our roadmap.
Richard Kramer, Arete Research: Tim, we’ve often seen Apple be a fast follower with iPhone and new technology, whether large displays or 4G or 5G, but with all the hype now around AI, are you seeing evidence that AI capabilities or features are a material purchase consideration for consumers, or are the record sales levels you’re reporting simply reflecting other factors like the retention of your iOS base?
Tim Cook: I think that there are many factors that influence people’s purchasing considerations, and we don’t have a great in-depth survey yet on the current iPhone 17 because it’s very new in the cycle, and we give it some time to formulate. But I would say that Apple Intelligence is a factor, and, you know, we’re very bullish on it becoming a greater factor, and so that’s the way that we look at it.
Richard Kramer, Arete Research: In the wake of nearly every other large tech company massively increasing their CapEx in advance of AI demand, and also mentioning that there’s scarce capacity, do you anticipate Apple altering its long-standing hybrid approach to your own and third-party data centers, and maybe can you talk a little bit about the role you see for Apple silicon with the new M5 series of chipsets?
Kevan Parekh: Hi, Richard. Thanks for the question. In general, I think as we’ve talked about before, we are expecting increases in our CapEx spending related to AI investments. For example, as I mentioned earlier, we did end up having investments this year to build out our Private Cloud Compute environment, and we do believe this hybrid model has served us very well and we continue to want to leverage it, and so I don’t see us moving away from this hybrid model where we leverage both first-party capacity, as well as leverage third-party capacity. We’ll continue to want to build out Private Cloud Compute, as Tim outlined, as we have more usage there over time. But I think in general, we’ll want to continue to have this hybrid model.
2025-10-31 04:40:53
Apple announced the results of its fiscal fourth quarter on Thursday. The company generated $102.5B, a Q4 record which also closed its biggest fiscal year in terms of revenue ever. The fast-growing Services category also set an all-time high. Mac and iPhone revenue were also up, with wearables and iPad revenue more or less flat.
Apple also provided guidance that it expects to break records in its holiday quarter, including in iPhone sales. Read more about that here.
Dan Moren and I also did a YouTube Stream discussing all these results in detail:
Now on to the charts!
2025-10-31 00:48:48
If there’s a company that’s not shy about experimenting with video possibilities on the Vision Pro, it’s Sandwich. Adam Lisagor and his crew have built two apps, Television and Theater, and have streamed John Gruber’s live Talk Show event in 3-D for the last two years.
On Thursday, they take another step forward with what could be argued as the world’s first immersive commercial. Sandwich and director Seth Worley made a conventional ad for Robot.com recently, but just before leaving for the shoot, Lisagor took ownership of a new Blackmagic URSA Cine Immersive camera and couldn’t resist taking it with him.
What followed was an experiment: After each standard 2-D shot was completed, Lisagor shot another version of the same scene with the immersive camera. The idea seems to have been to just see what it might be like to shoot an immersive commercial—pure experimentation.
Then Lisagor started looking at what he shot, digging through the enormous immersive video files he had shot. “I realized I had something unique, unlike anything we’d ever done or seen before,” he says.
But there were practical issues. The immersive shots weren’t the ad itself. They weren’t augmented by visual effects, and they included aspects of the production itself, including a light reflector and a boom microphone. There was clearly no budget to complete an entirely immersive version of the video, so instead, Lisagor and Dan Sturm figured out how to composite a floating screen playing the “real” ad into the immersive shots that matched it. That floating screen looks like a normal Vision Pro window, but it’s inside an immersive video, something that I’d never seen before—and apparently was an enormous production challenge.
The result is a fascinating blend that’s half ad, half immersive behind-the-scenes video. Lisagor says the video will be showcased in the Theater app and is also available for other formats and devices, including on YouTube in a VR180 format.
I got to spend a day at Apple Park last week as a part of the company’s immersive media day for developers, and more than anything else, what I came away thinking is that it’s still incredibly early in the process of building up Immersive videos. The reason Apple has struggled to release more Immersive video is, it turns out, because this stuff is so technically complex than modern workflows struggle to handle the data, all the software to do it is also in beta, and until the Blackmagic camera arrived, all the shooting had to be done with other cameras bodged together in a way that would let it shoot immersively.
Even now, Blackmagic may be struggling to fulfill unexpected demand for its camera, and the software to process this stuff is still going through heavy development and beta cycles. I told this story in this week’s Upgrade podcast, which is titled My TestFlight Has a TestFlight, because I got to peer into one company’s production process in which beta software was relying on other beta software to produce an immersive experience—it’s betas all the way down. (Lisagor acknowledged to me that my perception matches his experience.)
Most video production professionals love stability. But a few also get excited about exploring the edges of what’s known and being a part of the process to learn how to make new stuff and build the tools and the rules that will be used by future creators. (Apple certainly views itself as a builder of tools that enable creative professionals to achieve more.)
In any event, there’s no denying just how much Lisagor and the rest of Sandwich get excited about being on the cutting edge. Sandwich’s immersive commercial might be more of an experiment than a glimpse at the future of commercials, but it’s a great example of the creative energy that’s been deployed to figure out how this medium is going to work.
2025-10-30 04:33:24
What we use our Apple Watches for, moving to a new HomeKit home, the tech we use while cooking, and a new humanoid robot for the home.
