Apple (Minutes): $500 billion investment will leverage third-party resources
Apple (AAPL.O) released its Q2 2025 fiscal year earnings report (as of March 2025) after U.S. market close on May 2, 2025, Beijing time. Key highlights:
Below is the transcript of Apple's Q2 2025 earnings call. For earnings analysis, please visit Apple: 'Lying Flat' Is Easy, Running Hard Is Tough
I.$Apple(AAPL.US) Key Earnings Highlights:
II. Detailed Earnings Call Content
2.1 Management Presentation Highlights:
1. Financial Performance Overview
Total Revenue: Apple reported Q2 revenue of $95.4 billion, up 5% YoY, with ~2.5% negative FX impact.
EPS: EPS reached $1.65, up 8% YoY, a new historical high.
Services Revenue: Services revenue hit $26.6 billion, up 12% YoY, with double-digit growth across all geographies.
Products Revenue: Products revenue was $68.7 billion, up 3% YoY, driven by iPhone, iPad and Mac sales.
Gross Margin: Overall gross margin was 47.1% (products 35.9%, services 75.7%).
Operating Expenses: OpEx rose 6% YoY to $15.3 billion.
Net Income & EPS: Net income grew 5% YoY to $24.8 billion; diluted EPS rose 8% to $1.65.
Operating Cash Flow: OCF was $24 billion.
2. Product Segment Performance
iPhone: Revenue reached $46.8 billion (+2% YoY). The quarter saw iPhone 16e launch with Apple's first in-house C1 modem. Active installed base hit record highs globally.
Mac: Revenue grew 7% YoY to $7.9 billion, driven by new MacBook Air/Pro/Mac mini. Installed base reached all-time high.
iPad: Revenue jumped 15% YoY to $6.4 billion, fueled by M3-powered iPad Air. Over 50% buyers were first-time iPad users.
Wearables/Home/Accessories: Revenue fell 5% to $7.5 billion. Apple Watch installed base hit record high.
Services: Revenue grew 12% YoY to $26.6 billion. Paid subscriptions exceeded 1 billion. Apple TV+ viewership hit records with shows like "Severance". iOS 18.4 expanded "Apple Intelligence" to more languages.
3. Tariff Impact & U.S. Investment
Tariffs: Limited impact this quarter due to supply chain optimization. Expect $900 million cost impact next quarter if current tariffs remain.
U.S. Investment: Announced $500 billion 4-year investment plan, including advanced server factory in Texas.
4. Financial Outlook & Capital Return
Q3 Guidance: Expect low-to-mid single-digit revenue growth (0-5% YoY). Gross margin 45.5%-46.5% ($900M tariff impact included).
Capital Return: Returned $29 billion to shareholders ($3.8B dividends + $25B buybacks). Approved new $100B buyback program. Raised dividend 4% to $0.26/share.
2.2 Q&A Highlights
Q: India-produced iPhone share in U.S. sales?
A: Majority of U.S. iPhones next quarter will originate from India; most iPads/Macs/Watches from Vietnam.
Q: China performance?
A: Mainland China revenue down 2% YoY (flat ex-FX), showing improvement from Q1's 11% decline.
Q: AI strategy?
A: Deployed LLM on iPhone 16 with on-device/cloud hybrid approach. Excited about roadmap progress.
Q: New Siri delay?
A: Need more time to meet quality standards for personalized Siri, though many AI features already shipped.
Q: Legal cases?
A: Disagree with Epic ruling (will appeal). Monitoring Google antitrust case closely.
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