Apple Inc Earnings - Q4 2025 Analysis & Highlights
Apple Inc. reports a record-breaking Q1 2026 with strong revenue growth across products and services, driven by the iPhone 17 family and international market expansion, while navigating supply constraints and memory pricing increases. The company also highlights its AI initiatives and capital return program.
Key Financial Results
Apple reported its best-ever quarter with $143.8 billion in revenue, an increase of 16% from a year ago.
EPS reached an all-time record of $2.84, growing 19% year over year.
Net income was $42.1 billion, an all-time record.
Company gross margin was 48.2%, exceeding guidance and up 100 basis points sequentially.
Products gross margin was 40.7%, up 450 basis points sequentially.
Services gross margin was 76.5%, up 120 basis points sequentially.
Operating expenses were $18.4 billion, up 19% year over year, driven by increased investment in R&D.
Operating cash flow reached an all-time record of $53.9 billion.
Business Segment Results
iPhone revenue was $85.3 billion, up 23% year over year, setting an all-time record across every geographic segment.
Services revenue reached an all-time record of $30 billion, 14% higher than a year ago.
Mac revenue was $8.4 billion for the December quarter, down 7% year over year.
iPad revenue was $8.6 billion, up 6% from a year ago.
Wearables, Home and Accessories revenue was $11.5 billion, down 2% year over year.
Services set all-time revenue records in both developed and emerging markets.
iPhone saw strength globally, achieving all-time revenue records in the US, Greater China, Latin America, Western Europe, the Middle East, Australia, and South Asia, and a December quarter record in India.
The Mac installed base reached an all-time high, with nearly half of new purchasers being new to the product.
iPad also saw its installed base reach an all-time high, with over half of new purchasers being new to the product.
The wearables installed base reached a new all-time high, with over half of Apple Watch purchasers being new to the product.
Apple TV saw a 36% increase in viewership over the previous year in December.
Apple Music reached all-time highs in both listenership and new subscriber growth.
Apple Pay eliminated over $1 billion in fraud for partners last year and expanded to more markets.
The App Store welcomed over 850 million users every week on average, with developers earning over $550 billion since 2008.
Capital Allocation
Apple ended the quarter with $145 billion in cash and marketable securities.
Total debt was $91 billion, resulting in net cash of $54 billion.
Nearly $32 billion was returned to shareholders during the quarter.
This included $3.9 billion in dividends and equivalents.
$25 billion was used for open market repurchases of 93 million Apple shares.
A cash dividend of $0.26 per share of common stock was declared, payable on February 12, 2026.
Industry Trends and Dynamics
iPhone demand was described as "simply staggering" and "extraordinary," exceeding expectations.
The company is in a supply chase mode for iPhone due to high demand and lean channel inventory.
Constraints are driven by the availability of advanced nodes for SOC production, specifically 3-nanometer technology.
Memory pricing is expected to have a bit more impact on Q2 gross margin and is increasing significantly.
Apple believes it gained smartphone market share in the December quarter.
The smartphone market is the second largest in the world in India.
Competitive Landscape
Apple is collaborating with Google to develop the next generation of Apple Foundation models to power future Apple Intelligence features, including a more personalized Siri.
iPhone was the top selling model in the US, urban China, the UK, Australia, and Japan.
iPhones were among the top 3 smartphones in urban China.
iPad was the top tablet model in urban China.
The MacBook Air was the top selling laptop model, and Mac mini was the top selling desktop model in the December quarter in China.
Apple Silicon is considered an incredible game changer and a major competitive advantage.
Macroeconomic Environment
The company's outlook assumes that global tariff rates, policies, and their application remain in effect and the global macroeconomic outlook does not worsen.
Memory pricing is increasing significantly.
Tariffs amounted to approximately $1.4 billion for the December quarter.
Growth Opportunities and Strategies
Apple is focused on bringing Intelligence to its products, integrating it across the operating system in a personal and private way.
Apple Intelligence features include writing tools, clean up, and are available in 15 languages.
Visual intelligence helps users learn and do more with content on their iPhone screen.
Live translation is enabling seamless communication across languages.
The company is investing $600 billion over four years in advanced manufacturing, silicon engineering, and artificial intelligence in the US.
Apple is working with Corning in Kentucky to make 100% of cover glass for iPhone and Apple Watch.
Micron is developing a new advanced chip packaging and test facility.
Apple is advancing the development of an end-to-end silicon supply chain across the US, sourcing 20 billion US chips in 2025.
The Apple Manufacturing Academy in Detroit is training businesses and innovators in smart manufacturing and AI techniques.
India is seen as a huge opportunity due to its status as the second largest smartphone market and fourth largest PC market, with Apple having modest share despite strong growth.
Apple is seeing strong double-digit growth in the installed base in India.
Financial Guidance and Outlook
March quarter total company revenue is expected to grow by 13% to 16% year-over-year, accounting for constrained iPhone supply.
Services revenue is expected to grow at a year-over-year rate similar to the December quarter.
Gross margin is expected to be between 48% and 49%.
Operating expenses are projected to be between $18.4 billion and $18.7 billion, similar to the December quarter, driven by higher R&D.
Other Income & Expense (OI&E) is expected to be around $100 million, excluding potential mark-to-market impact of minority investments.
The tax rate is anticipated to be around 17.5%.
