Apple (NASDAQ: AAPL), an American multinational company based in Cupertino, CA, released its first quarter fiscal 2025 results on Thursday, January 30, 2025 to a positive market reaction. Let us take a deep dive into the first quarter results.
Apple (AAPL) Q1 Fiscal 2025 Results
For the first quarter of fiscal 2025, Apple reported revenue of $124.3 billion, which is in line with estimates of $124.4 billion and a 4% YoY increase. Diluted EPS came in at $2.40, a 10% YoY increase, beating estimates of $2.34 by 2.5%.
Product revenue came in at $97.96 billion, a 1.56% YoY increase, driven by sales for the Mac and iPad, but slightly below forecasts of $98.13 billion. Meanwhile, Services revenue rose 13.94% YoY to $26.34 billion, beating estimates of $26.06 billion by 1.1%.
The company reported a 7.1% YoY increase in net income to a record $36.33 billion, while the GAAP operating profit came in at $42.83 billion, a 6.1% YoY increase, and above estimates of $42.57 billion. Its gross margin came in at 46.9%, marking an increase from the 45.9% reported last year, while the profit margin was 34.5%, the same as the previous year. The company’s free cash flow margin declined to 21.7% from the 31.4% reported the previous year.
Growth By Market
Apple reported growth in all the markets its tracks, which are the Americas, Europe, Japan, and the rest of the Asia Pacific. However, it saw an 11% YoY decline in revenue in Greater China to $18.51 billion from $20.82 billion the previous year.
Apple CFO Timothy Donald Cook, attributed half of the decline in China to change in channel inventory from the start to the end of the first quarter. Additionally, he noted that they had not rolled out Apple intelligence in China.
Other Highlights
Apple CFO Donald Cook announced that the company’s install base rose to a new record of 2.35 billion active devices, with the company releasing its first set of Apple Intelligence features in October across the US. In December, they expanded to many more countries.
iPad revenue rose 15% YoY to $8.1 billion, while wearables, home, and accessories revenue was$11.7 billion in Q1. Meanwhile, Mac revenue was up 16% YoY to $9 billion. According to a recent survey by the company, customer satisfaction was at 94% in the US. However, the iPhone, which is still their biggest source of revenue, saw a slight 0.8% decline YoY to $69.14 billion.
Apple (AAPL) Market Performance
Following the EPS beat, and revenue in line with expectations, AAPL rose 4.27% in pre-market trading to $247.74 per share as of 8:38 AM EAST. The stock is up 8.87% in the past six months, while in the past year, it is up 23.92%.
AAPL has had a mixed performance compared to the rest of the market, with the S&P 500 rising 11.68% in the past 6 months and 23.20% in the past year. Meanwhile, the Technology sector is up 13.92% in the past 6 months, and 29.45% in the past 12 months. At the close of trading on Thursday, January 30, 2025, Apple had an intraday market cap of $3.573 trillion.
Looking at the forward P/E, Apple’s current price is in line with industry peer Microsoft (MSF), which has a Forward P/E ratio of 31.85, compared to 32.05 for AAPL.
Analysts are optimistic about the stock’s future, giving it a buy rating. They forecast a wide range of price targets, with a high of $325 and a low of $190. Their average forecast of $249.89 is a 5.18% upside based on Thursday’s closing price.
Should You Add Apple (AAPL) To Your Portfolio?
Apple’s Q1 results demonstrated growth, which is impressive for a company with such a massive scale. Its install base of 2.35 billion devices defies the conventional wisdom that growth goes down at such large numbers. In the past five years, the company has reported a respectable 8.1% annualized growth.
While the company’s total revenue was in line with expectations, its Services revenue outperformed expectations, signalling it could be a source of future growth. With Apple intelligence still being rolled out, 2025 could be another impressive year for this giant tech company. Consequently, adding AAPL to your portfolio could potentially yield market-beating results in the coming months.
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