Apple’s forecast for the current quarter points towards a recovery in sales, with projections indicating low- to mid-single-digit growth. The company’s outlook, which followed its latest financial results, has provided a boost to investor confidence, as shares rose 2.5% on the Frankfurt Stock Exchange and an additional 3.2% in after-hours trading. The positive momentum suggests that Apple is poised to recover from a slight dip in iPhone sales during the first quarter of fiscal 2025.
For Q1 FY25 ended 28 December 2024, Apple reported revenues of $124.3bn, marking a 4% year-over-year (YoY) increase. Despite a minor shortfall in iPhone sales, the company exceeded expectations in other areas, including its services and hardware segments. iPhone sales amounted to $69.14bn, which fell just under analyst projections. This slight decline, the company explained, was primarily due to market conditions and a delayed rollout of artificial intelligence (AI) features in certain regions, notably China. The fiscal quarter also marked the first full period following the release of the iPhone 16, which has been performing well in markets where Apple’s AI features are available.
In terms of net income, Apple reported $36.33bn for the quarter, compared to $33.92bn in the same period the previous year. This represents a 10% YoY increase in earnings, translating to $2.4 per share.
Strong performance in other segments
While iPhone sales lagged, Apple’s other product categories performed robustly. The company saw double-digit percentage growth in Mac and iPad sales, which rose to $8.99bn and $8.09bn, respectively. Additionally, Apple’s services revenue surged by 14%, reaching $26.34bn, contributing to the overall growth in the quarter. Despite the mixed results from iPhone sales, Apple’s overall revenue growth was in line with analyst expectations, driven by these gains in services and hardware outside of its flagship smartphone line.
A significant concern for Apple in the Q1 FY25 was its performance in China, where the company saw sales decline. The Chinese market has become increasingly competitive, with domestic manufacturers such as Vivo and Huawei capturing greater market share. The absence of Apple’s AI capabilities in this region, due to regulatory hurdles, has been cited as a factor in the slowdown.
However, Apple CEO Tim Cook highlighted that iPhone 16 sales have been stronger in markets where Apple Intelligence is fully integrated, noting that regions with access to these features experienced better sales. Despite the challenges in China, the company observed a record number of device upgrades globally, with the total number of active Apple devices reaching an all-time high of 2.35 billion.
“We were thrilled to bring customers our best-ever lineup of products and services during the holiday season,” said Cook. “Through the power of Apple silicon, we’re unlocking new possibilities for our users with Apple Intelligence, which makes apps and experiences even better and more personal. And we’re excited that Apple Intelligence will be available in even more languages this April.”
Apple’s outlook for the fiscal second quarter suggests continued growth. The company expects revenue to rise by mid-to-low single digits, with gross margins projected to fall between 46.5% and 47.5%, slightly above analyst expectations.
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