Apple Inc. Q3 FY2025 earnings call

Management Statement and Operational Highlights

• Financial Results: Q3 revenue was a record $94 billion, up 10% year-over-year; EPS was a record $1.57, up 12% year-over-year. Had June quarter revenue records in over two dozen countries/regions.
• Product Highlights: iPhone 16 family drove iPhone growth; Mac strong with M4 MacBook Air; Services at all-time high; iPadOS and macOS updates; Apple Watch celebrated 10-year anniversary; Vision Pro updates with spatial widgets and enterprise APIs.
• AI and Innovation: WWDC updates, including Liquid Glass design and Apple Intelligence features like live translation and Workout Buddy; significant AI investments, private cloud compute.
• Investments and Initiatives: $500 billion investment in the U.S. over 4 years, $0.5 billion commitment with MP Materials, Apple Manufacturing Academy in Detroit.
• Tariffs: Q3 incurred ~$800 million tariff-related costs; Q4 estimated ~$1.1 billion impact if tariffs remain unchanged.

Segment Performance

• iPhone: Revenue $44.6 billion, up 13% year-over-year. Driven by the iPhone 16 family, with growth in every geographic segment and double-digit growth in emerging markets. Contributed significantly to overall revenue.
• Mac: Revenue $8 billion, up 15% year-over-year. Largely driven by the strength of the M4 MacBook Air, with growth in every geographic segment and strong performance in emerging markets.
• Services: Revenue $27.4 billion, up 13% year-over-year, an all-time record. Saw broad-based growth in both developed and emerging markets.
• iPad: Revenue $6.6 billion, down 8% year-over-year, expected due to difficult comparison with prior year's iPad launches. However, iPad installed base reached an all-time high.
• Wearables, Home and Accessories: Revenue $7.4 billion, down 9% year-over-year, driven by difficult comparison on accessories. Apple Watch installed base hit a new all-time high.

Guidance

• September quarter total company revenue expected mid- to high single-digit year-over-year growth.
• Services revenue expected to grow at a rate similar to Q3.
• Gross margin expected 46%-47%, including estimated $1.1 billion tariff-related costs.
• Operating expenses expected $15.6 billion-$15.8 billion.
• OI&E expected around negative $25 million, excluding minority investment mark-to-market impact.
• Tax rate expected ~17%.
• Dividend declared: $0.26 per share payable August 14, 2025, to shareholders of record August 11, 2025.

Risks

• Macroeconomic conditions potentially impacting business results.
• Tariffs and trade measures leading to increased costs.
• Legal and regulatory proceedings posing uncertainties.

Question and Answer

Q: On upgrade rates and CapEx.

A: Tim and Kevan discuss upgrade rates tied to product strength (iPhone 16 family, Mac's Apple silicon), and CapEx driven by significant AI investments, including private cloud compute and first-party data centers.

Q: On Siri and AI investment.

A: Tim states good progress on personalized Siri, expecting release next year; significant AI investment growth, with reallocation of people to focus on AI features.

Q: On supply chain and iPhone demand.

A: Tim discusses tariff impact and supply chain strategy, noting majority of iPhones sold in U.S. have country of origin India; Kevan explains iPhone June quarter strength driven by product lineup strength, including iPhone 16 family and 16e.

Q: On Vision Pro and M&A.

A: Tim talks about Vision Pro's visionOS 26 updates and enterprise focus; Tim mentions Apple has acquired around seven companies this year, open to M&A accelerating road map but no specific deals to share today.