Apple expects record December quarter revenue with 10%–12% growth amid strong iPhone performance and AI investment

Earnings Call Insights: Apple Inc. (AAPL) Q4 2025

MANAGEMENT VIEW

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Tim Cook reported, "Apple is proud to report $102.5 billion in revenue, up 8% from a year ago and a September quarter record. Services achieved an all-time revenue record of $28.8 billion, growing 15% from a year ago. EPS came in at $1.85, setting a September quarter record." Cook highlighted all-time revenue records in both emerging and developed markets, with significant growth in iPhone and Services, and emphasized customer demand for new AI features and products powered by the A19 Pro chip and M5 chip. "We expect the December quarter's revenue to be the best ever for the company and the best ever for iPhone," said Cook.

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Cook detailed product launches across the lineup, including iPhone 17 Pro, iPhone Air, M5 MacBook Pro, M5 iPad Pro, AirPods Pro 3, and new Apple Watch models, all with advanced AI features. He noted, "We're bringing intelligence to more of what people already love about our products and services, making every experience even more personal, capable and effortless."

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Cook announced, "We're committed to invest $600 billion over the next 4 years with a focus on innovation in strategic areas like advanced manufacturing, silicon engineering and artificial intelligence."

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Kevan Parekh stated, "Our revenue of $102.5 billion was up 8% year-over-year and is a new September quarter record. Products revenue was $73.7 billion, up 5% year-over-year, driven by growth across iPhone and Mac and reached a September quarter record. Services revenue was $28.8 billion, up 15% year-over-year and an all-time record." Parekh also highlighted gross margin at 47.2%, driven by favorable mix and strong net income of $27.5 billion.

OUTLOOK

* Parekh provided guidance: "We expect our December quarter total company revenue to grow by 10% to 12% year-over-year, which will be our best quarter ever. We expect iPhone revenue to grow double digits year-over-year, which would be our best iPhone quarter ever. On Mac, keep in mind, we expect to face a very difficult compare against the M4 MacBook Pro, Mac Mini and iMac launches in the year ago quarter. We expect Services revenue to grow at a year-over-year rate similar to what we reported in the fiscal year 2025. We expect gross margin to be between 47% and 48%, which includes an estimated impact of $1.4 billion of tariff-related costs." Operating expenses are expected between $18.1 billion and $18.5 billion for the December quarter.

FINANCIAL RESULTS

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Apple reported $102.5 billion in revenue for the quarter, $73.7 billion in Products revenue, and $28.8 billion in Services revenue. EPS reached $1.85. Gross margin stood at 47.2%. Net income was $27.5 billion. Operating cash flow was $29.7 billion.

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iPhone revenue was $49 billion, up 6% year-over-year. Mac revenue was $8.7 billion, up 13%. iPad revenue was $7 billion. Wearables, Home and Accessories revenue was $9 billion. Services revenue was $28.8 billion.

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Parekh stated, "We set September quarter records in the Americas, Europe, Japan and the rest of Asia Pacific and grew in the vast majority of markets we track."

Q&A

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Erik Woodring, Morgan Stanley: Asked about the iPhone 17's success and whether it's driven by the replacement cycle or new features. Cook responded, "I think it's all about the product. The product lineup is incredibly strong, our strongest ever. The 17 Pro is the most pro phone we've ever done... strongest iPhone lineup ever, and it's resonating around the world."

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Woodring also asked about managing component cost inflation. Parekh replied, "We're seeing a slight tailwind on memory in storage prices and nothing really to note there... we landed in a pretty good spot above the high end of the guidance range we provided at 47.2%."

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Benjamin Reitzes, Melius Research: Inquired about iPhone in China. Cook said, "It's incredibly vibrant and dynamic. The store traffic is up significantly year-over-year. The iPhone 17 has been... very well received there. We do believe that we'll return to growth in Q1."

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Michael Ng, Goldman Sachs: Asked about drivers of Services acceleration. Parekh stated, "I think that the way we look at it is not one thing to point to... our Services portfolio is very broad... our strength, again, was very broad-based, both across categories and also geographically."

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Wamsi Mohan, BofA Securities: Asked about supply constraints and gross margins. Cook said, "We're constrained today on several models of the iPhone 17. There's not a ramp issue. It's just we have very strong demand." Parekh added, "We're targeting a range of 47% to 48%" gross margin for the next quarter.

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Samik Chatterjee, JPMorgan: Questioned OpEx increase. Parekh explained, "We are increasing our investments in AI. We're also continuing to invest in our product road map. So the vast majority of the increase to our operating expenses are driven by R&D."

SENTIMENT ANALYSIS

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Analysts questioned supply constraints, growth in China, Services sustainability, and operating expenses, showing a neutral to slightly positive sentiment with curiosity about ongoing product demand and AI investment.

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Management maintained a confident tone throughout, especially about product strength and future revenue. Cook repeatedly emphasized the "strongest ever" lineup and Parekh referred to "exceptional customer satisfaction and strong loyalty."

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Compared to the previous quarter, analysts remain focused on similar topics, but management's confidence level appeared even higher, particularly regarding the December quarter outlook and AI progress.

QUARTER-OVER-QUARTER COMPARISON

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Guidance language shifted from "mid- to high single digits" growth to "10% to 12%" year-over-year for the December quarter.

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Revenue, EPS, and Services growth all accelerated in Q4 compared to Q3, with Services growing 15% versus 13% in the prior quarter.

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Management's tone was more optimistic regarding iPhone momentum and market expansion, compared to already positive commentary in Q3.

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Analyst questions consistently focused on iPhone demand, China performance, and AI/OpEx investments, with increasing attention to supply constraints and product mix.

RISKS AND CONCERNS

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Management highlighted $1.4 billion in tariff-related costs for the upcoming quarter.

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Persistent iPhone 17 supply constraints may limit upside, with Cook stating, "We're not predicting when the supply/demand will balance."

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Significant increase in R&D spending and OpEx, primarily due to AI investments, could impact margins if not matched by revenue growth.

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Uncertainties in China market performance and the impact of regional subsidies remain a watch point.

FINAL TAKEAWAY

Apple closed fiscal 2025 with record-breaking revenue, EPS, and Services growth, underpinned by strong demand for new AI-powered products and broad-based customer enthusiasm. Management projects continued momentum into the December quarter with anticipated double-digit revenue and iPhone growth, while navigating ongoing supply constraints and increased investment in artificial intelligence. The company remains confident in its strategy, market position, and ability to deliver sustained value through innovation and operational discipline.

Read the full Earnings Call Transcript [https://seekingalpha.com/symbol/aapl/earnings/transcripts]

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