Apple’s Earnings Set March Quarter Record; Services Revenue Hits All-Time High

Image: Apple’s shares remain resilient despite tariff pressures.

By Brian Nelson, CFA

On May 1, Apple (AAPL) reported better than expected second quarter results for fiscal 2025 with both revenue and GAAP earnings per share coming in ahead of the consensus forecasts. The iPhone giant reported quarterly revenue of $95.4 billion, up 5% year-over-year, while quarterly diluted earnings per share came in at $1.65, up 8% year-over-year. The board raised its dividend 4% and authorized an additional buyback program to the tune of $100 billion.

Management had the following to say about its fiscal second quarter showing:

Today Apple is reporting strong quarterly results, including double-digit growth in Services. We were happy to welcome iPhone 16e to our lineup, and to introduce powerful new Macs and iPads that take advantage of the extraordinary capabilities of Apple silicon. And we were proud to announce that we’ve cut our carbon emissions by 60 percent over the past decade.

Our March quarter business performance drove EPS growth of 8 percent and $24 billion in operating cash flow, allowing us to return $29 billion to shareholders. And thanks to our high levels of customer loyalty and satisfaction, our installed base of active devices once again reached a new all-time high across all product categories and geographic segments.

In the quarter, Products revenue expanded to $68.7 billion, up from $66.9 billion in the year-ago period, while Services revenue hit $26.6 billion, up from $23.9 billion in last year’s quarter. All geographies experienced increased revenue, with the exception of Greater China, where revenue fell to $16 billion from $16.4 billion last year. All categories experienced revenue expansion, too, with the exception of Wearables, Home and Accessories, where revenue dropped to $7.5 billion from $7.9 billion previously.

Apple’s operating income increased to $29.6 billion from $27.9 billion in the quarter last year, while net income nudged higher to $24.8 billion from $23.6 billion last year. Apple ended the quarter with a cash hoard of $132.9 billion and term debt and commercial paper of $98.2 billion. For the six months ended March 29, cash generated by operating activities was $53.9 billion, while capex came in at $6 billion, resulting in free cash flow of $47.9 billion. Apple launched an additional program to buy back up to $100 billion of company stock, and it raised its quarterly dividend 4%, to $0.26 per share.

Looking to the June quarter, Apple’s fiscal third quarter, the company expects the following: “We expect our June quarter total company revenue to grow low to mid-single digits year-over-year. We expect gross margin to be between 45.5% and 46.5%, which includes the estimated impact of the $900 million of tariff-related costs…We expect operating expenses to be between $15.3 billion and $15.5 billion.” Apple’s outlook for the June quarter came in better than feared, in our view, and we continue to like Apple as a core holding in both newsletter portfolios. Shares yield 0.5% at the time of this writing.

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