Apple Inc. (NASDAQ: AAPL)
Q2 Fiscal 2025 Financial Analysis | May 1, 2025
Executive Summary
Apple reported strong second quarter results for fiscal 2025, with total net sales of $95.4 billion, up 5.1% year-over-year, driven by robust Services growth and solid performance across most product categories. Net income reached $24.8 billion, a 4.8% increase from the previous year, resulting in earnings per share of $1.65, up 7.8% year-over-year. The company continued to demonstrate strong operational efficiency while investing in future growth opportunities.
Q2 2025 Highlights
Financial Performance
Apple delivered solid financial results for its second fiscal quarter of 2025, with total net sales reaching $95.4 billion, representing a 5.1% increase compared to the same quarter last year. This growth was primarily driven by a strong performance in Services, which grew 11.6% year-over-year to $26.6 billion, and continued strength in Mac and iPad sales.
The company’s gross margin improved to 47.1% from 46.6% in the year-ago quarter, reflecting favorable mix shift toward higher-margin Services and operational efficiencies. Operating income rose 6.1% year-over-year to $29.6 billion, resulting in an operating margin of 31.0%, up from 30.7% last year.
Net income reached $24.8 billion, a 4.8% increase from the previous year’s quarter. Diluted earnings per share grew at a faster rate of 7.8% to $1.65, benefiting from the company’s ongoing share repurchase program, which reduced the share count by approximately 2.7% compared to the prior year.
Apple’s balance sheet remains strong with $132.9 billion in total cash and marketable securities as of March 29, 2025. The company returned significant capital to shareholders during the first half of fiscal 2025, with $49.5 billion in share repurchases and $7.6 billion in dividends and dividend equivalents.
Product Category Analysis
| Category | Q2 2025 Revenue ($M) | Q2 2024 Revenue ($M) | YoY Change | % of Total Revenue |
|---|---|---|---|---|
| iPhone | 46,841 | 45,963 | +1.9% | 49.1% |
| Mac | 7,949 | 7,451 | +6.7% | 8.3% |
| iPad | 6,402 | 5,559 | +15.2% | 6.7% |
| Wearables, Home and Accessories | 7,522 | 7,913 | -4.9% | 7.9% |
| Services | 26,645 | 23,867 | +11.6% | 27.9% |
| Total | 95,359 | 90,753 | +5.1% | 100.0% |
iPhone continued to be Apple’s largest revenue driver, with sales of $46.8 billion, up 1.9% year-over-year, accounting for 49.1% of total revenue. This modest growth reflects a maturing smartphone market and the product cycle timing, as the iPhone 15 series was in the middle of its lifecycle during the quarter.
Mac showed solid growth with revenue of $7.9 billion, up 6.7% year-over-year. This performance was likely driven by the refreshed MacBook Pro lineup with M3 processors launched in the previous quarter, along with continuing demand for Apple Silicon-powered devices.
iPad was a standout performer with revenue of $6.4 billion, up 15.2% year-over-year. This strong growth was aided by the launch of new iPad Pro and iPad Air models featuring improved capabilities and the new M-series chips.
Wearables, Home and Accessories was the only category to decline, with revenue of $7.5 billion, down 4.9% year-over-year. This decrease might reflect the maturation of the Apple Watch and AirPods product lines, with consumers potentially waiting for new models.
Services continued its impressive growth trajectory with revenue of $26.6 billion, up 11.6% year-over-year, now representing 27.9% of total revenue. This growth was driven by continued expansion in the installed base and increased customer engagement across Apple’s services portfolio, including App Store, Apple Music, Apple TV+, iCloud, and Apple Pay.
Geographic Performance
| Region | Q2 2025 Revenue ($M) | Q2 2024 Revenue ($M) | YoY Change | % of Total Revenue |
|---|---|---|---|---|
| Americas | 40,315 | 37,273 | +8.2% | 42.3% |
| Europe | 24,454 | 24,123 | +1.4% | 25.6% |
| Greater China | 16,002 | 16,372 | -2.3% | 16.8% |
| Japan | 7,298 | 6,262 | +16.5% | 7.7% |
| Rest of Asia Pacific | 7,290 | 6,723 | +8.4% | 7.6% |
| Total | 95,359 | 90,753 | +5.1% | 100.0% |
Americas remained Apple’s largest market with revenue of $40.3 billion, up 8.2% year-over-year, representing 42.3% of total revenue. This strong performance was driven by robust Services growth and solid demand across most product categories in the region.
Europe showed modest growth with revenue of $24.5 billion, up 1.4% year-over-year, accounting for 25.6% of total revenue. Economic challenges and currency headwinds in the region likely contributed to the more subdued growth compared to other markets.
Greater China experienced a slight decline with revenue of $16.0 billion, down 2.3% year-over-year, representing 16.8% of total revenue. This decrease reflects increasing competition in the region, particularly from local smartphone manufacturers and macroeconomic pressures in mainland China.
Japan was the standout performer with revenue of $7.3 billion, up 16.5% year-over-year, accounting for 7.7% of total revenue. This strong growth was likely driven by favorable foreign exchange rates, successful product launches, and continued expansion of Apple’s service offerings in the country.
Rest of Asia Pacific also delivered strong growth with revenue of $7.3 billion, up 8.4% year-over-year, representing 7.6% of total revenue. This performance reflects Apple’s continued efforts to expand its presence in emerging markets across the region.
Services Growth Analysis
Apple’s Services segment continued its strong performance in Q2 2025, with revenue reaching $26.6 billion, a 11.6% year-over-year increase. Services now account for 27.9% of Apple’s total revenue, up from 26.3% in the same quarter last year, highlighting the growing importance of this high-margin business segment.
The Services gross margin expanded to 75.7% in Q2 2025, compared to 74.6% in the year-ago quarter, contributing significantly to Apple’s overall margin improvement. This expansion reflects the scalability of Apple’s services business and the favorable mix shift within the segment toward higher-margin offerings.
Key drivers of Services growth include:
- Continued expansion of the installed base of active devices, which reached an all-time high across all geographic segments and major product categories
- Strong growth in paid subscriptions, with over 1 billion paid subscriptions across the services on Apple’s platform
- Increasing adoption and usage of Apple Pay and financial services
- Growth in advertising revenue from the App Store and Apple TV+
- Successful expansion of content offerings on Apple TV+, Apple Music, and Apple Arcade
The sustained double-digit growth in Services highlights Apple’s successful execution of its strategy to monetize its large installed base through recurring revenue streams, reducing dependence on hardware sales cycles and improving overall business stability.
Balance Sheet & Cash Flow
Apple maintained a strong financial position at the end of Q2 2025, with total cash and marketable securities of $132.9 billion ($28.2 billion in cash and cash equivalents, $20.3 billion in current marketable securities, and $84.4 billion in non-current marketable securities). This represents a decrease from $156.7 billion at the end of fiscal 2024, primarily due to significant capital returns to shareholders.
The company’s total debt stood at $98.2 billion ($19.6 billion in current debt and $78.6 billion in non-current debt), resulting in a net cash position of $34.7 billion. Apple’s debt-to-total-capitalization ratio remains conservative, providing financial flexibility for future investments and capital returns.
For the first half of fiscal 2025, Apple generated:
- $53.9 billion in operating cash flow, compared to $62.6 billion in the same period last year
- $12.7 billion in cash from investing activities, driven by net proceeds from marketable securities
- Cash outflow of $68.4 billion from financing activities, primarily due to share repurchases and dividend payments
Capital allocation during the first half of fiscal 2025 included:
- $49.5 billion in share repurchases, up from $43.3 billion in the same period last year
- $7.6 billion in dividends and dividend equivalents
- $6.0 billion in capital expenditures, up from $4.4 billion in the same period last year
Apple’s robust cash generation continues to support its capital return program while maintaining flexibility for strategic investments and potential acquisitions.
Risks & Opportunities
Opportunities
Risks
Conclusion
Strengths
- Services business growing at double-digit rates
- Improving gross margins across both Products and Services
- Strong cash flow generation supporting capital returns
- Robust growth in Americas and Japan markets
- iPad and Mac segments showing solid momentum
Focus Areas
- Reversing the decline in Greater China
- Reinvigorating growth in Wearables category
- Accelerating innovation in AI and machine learning
- Expanding presence in emerging markets
- Navigating regulatory challenges across global markets
Summary
Apple delivered a solid performance in Q2 fiscal 2025, with total revenue growing 5.1% year-over-year to $95.4 billion and diluted EPS increasing 7.8% to $1.65. The results were driven by continued strength in Services, which grew 11.6% and now represents 27.9% of total revenue, as well as strong performances in the iPad and Mac categories.
Geographic performance was mixed, with strong growth in the Americas, Japan, and Rest of Asia Pacific, modest growth in Europe, and a slight decline in Greater China. This highlights both opportunities for expansion in growing markets and challenges in maintaining momentum in increasingly competitive regions.
The company’s focus on operational efficiency led to improved gross margins, while its robust cash flow generation supported significant capital returns to shareholders through $49.5 billion in share repurchases during the first half of the fiscal year.
Looking ahead, Apple’s continued investment in innovation, expansion of its Services ecosystem, and strong financial position position the company well for sustainable growth, even as it navigates challenges including intensifying competition, regulatory pressures, and macroeconomic uncertainties.
