Release Date: January 30, 2025
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Apple Inc (AAPL, Financial) reported an all-time high revenue of $124.3 billion for the December quarter, marking a 4% increase year over year.
- The company achieved all-time revenue records across multiple regions, including the Americas, Europe, Japan, and Asia Pacific, with strong momentum in emerging markets.
- Services revenue reached an all-time record of $26.3 billion, growing 14% year over year, with significant growth in both developed and emerging markets.
- Apple's installed base of active devices reached a new record of over 2.35 billion, driven by high customer satisfaction and loyalty.
- The introduction of Apple Intelligence features has been well-received, contributing to stronger iPhone sales in markets where it is available.
Negative Points
- Greater China revenue declined by 11% year over year, with over half of the decline attributed to changes in channel inventory.
- Wearables, Home, and Accessories revenue decreased by 2% year over year, facing challenges compared to the previous year's product launches.
- Foreign exchange headwinds are expected to negatively impact revenue by about 2.5 percentage points in the upcoming quarter.
- The company faces competitive pressures in China, where Apple Intelligence has not yet been rolled out, affecting iPhone replacement cycles.
- Operating expenses increased by 7% year over year, reaching $15.4 billion, which may impact future profitability if not managed effectively.
Q & A Highlights
Q: Tim, can you elaborate on how Apple Intelligence is impacting iPhone demand and which features are most popular?
A: We observed stronger year-over-year performance for the iPhone 16 family in markets where Apple Intelligence was available. Popular features include writing tools, Image Playground, Genmoji, and visual intelligence. Clean Up is also well-received, especially in-store demos.
Q: Can you discuss the challenges Apple faces in China, particularly regarding iPhone sales?
A: Greater China revenue was down 11% year-over-year, with over half of the decline due to changes in channel inventory. Apple Intelligence has not been rolled out in China, which affects performance. The market remains highly competitive, and recent fiscal stimulus could impact future results.
Q: How does Apple view the potential for innovation in iPhone form factors in the future?
A: We believe there is significant room for innovation in smartphones, and we are optimistic about our product pipeline. We expect continued advancements in form factors and features.
Q: What is driving the strong upgrade cycle for iPhones, and has Apple Intelligence played a role?
A: We set an all-time record for iPhone upgraders, with compelling reasons to upgrade. The iPhone 16 outperformed the 15 from launch to the end of the December quarter, and Apple Intelligence contributed to stronger performance in markets where it was available.
Q: Can you comment on the sustainability of growth in emerging markets and their potential to offset China headwinds?
A: We see robust growth in emerging markets, particularly in India, which set a December quarter record. The iPhone was the top-selling model in India, and we are expanding our retail presence there. Emerging markets offer significant upside potential.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
