Apple Reports Better-Than-Expected Earnings, But Services Division Disappoints
Apple Inc. reported its second fiscal-quarter earnings on Thursday, beating Wall Street expectations, but the company’s closely-watched Services division came up short of estimates. According to the report from CNBC, the iPhone maker’s shares fell as much as 4% in extended trading.
The company’s earnings per share (EPS) came in at $1.65, versus $1.63 estimated by LSEG, while revenue stood at $95.4 billion, compared to $94.66 billion estimated by LSEG. Apple’s iPhone revenue was $46.84 billion, beating estimates of $45.84 billion, while Mac revenue was $7.95 billion, above estimates of $7.77 billion.
However, the Services division, which includes iCloud subscriptions, Apple Music, and Apple TV+, among others, reported revenue of $26.65 billion, slightly below estimates of $26.70 billion. Despite this, Services revenue grew 11.65% annually, with Chief Executive Officer Tim Cook hailing the division’s growth.
"We continue to plan for annual dividend increases," Cook said, as reported by CNBC. "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."
Apple’s board authorized up to $100 billion in share repurchases this quarter, down from $110 billion in authorization last year. The company also announced a dividend of 26 cents per share, a 4% increase.
The company’s most important product line, iPhones, topped estimates at $46.8 billion in sales during the quarter, with overall product line sales up just under 2% on an annual basis. Apple’s hardware generally performed well during the quarter, with Mac sales rising nearly 7% to just under $8 billion, and iPad sales up 15% on an annual basis to $6.4 billion.
However, Apple’s wearables division, which includes Apple Watch, AirPods, and accessories sales, declined 5% versus the same period last year to $7.52 billion in revenue. Cook attributed the decline, in part, to the launch of the Vision Pro headset in the year-ago quarter.
In terms of geographic performance, sales in Greater China were down slightly year-over-year at $16 billion. Cook said that China sales were accelerating on a quarterly basis, and that Apple sales in the region would have been flat if not for foreign exchange rates. On the other hand, sales in the Americas, Apple’s largest market, rose nearly 8%.
The company expects overall revenue to grow "low to mid-single digits" on an annual basis during the current quarter, ending in June. Apple also expects gross margin to come in at 46% at the midpoint, taking into account tariff costs. According to Cook, the company expects tariffs to add $900 million to its costs for the current quarter, assuming no new tariffs or other major changes occur.
As reported by CNBC, Cook told analysts that Apple is already sourcing about half of the iPhones for the U.S. from India, and most of its other products for the U.S. from Vietnam, where tariffs are lower than they are from China. Apple still makes the "vast majority" of its products for other countries in China, Cook said.
The iPhone uses a lot of chips made domestically, said Cook, adding that Apple is buying 19 billion chips this year from the U.S. "With an iPhone, you really have to go a step lower and look at the individual parts and where they come from," he said.
Source: CNBC – Apple (AAPL) earnings report Q2 2025
This article provides an in-depth analysis of Apple’s Q2 2025 earnings report, including revenue, product performance, and geographic trends. According to the report from CNBC, Apple’s CEO Tim Cook discussed the impact of tariffs on the company’s business, as well as its strategy for managing costs and investing in innovation.
