Apple AAPL reported third-quarter fiscal 2025 adjusted earnings of $1.57 per share, which beat the Zacks Consensus Estimate by 10.56% and increased 12.1% year over year.
Net sales increased 9.6% year over year to $94.04 billion and beat the Zacks Consensus Estimate by 5.75%.
Overall, product sales (70.8% of sales) climbed 8.2% year over year to $66.61 billion. Services revenues grew 13.3% year over year to $27.42 billion and accounted for 29.2% of sales. The figure beat the consensus mark by 1.74%.
Apple TV+ viewership soared double-digit year over year in the fiscal third quarter. Both paid accounts and paid subscriptions grew double digits year over year. The company has more than 1 billion paid subscribers across the Services business.
Apple Inc. Price, Consensus and EPS Surprise
Apple Inc. price-consensus-eps-surprise-chart | Apple Inc. Quote
Apple shares were up almost 2% in pre-market trading following the results. Year to date, AAPL shares have dropped 17.2%.
Apple’s Top Line Rides on Strong iPhone and Mac Sales
iPhone sales increased 13.5% year over year to $44.58 billion and accounted for 47.4% of total sales. iPhone sales beat the Zacks Consensus Estimate by 9.78%. Apple saw iPhone sales growth in every geographic segment and double-digit growth in emerging markets, including India, the Middle East, South Asia and Brazil. Strong demand for the iPhone 16 family drove sales.
Mac sales of $8.05 billion increased 14.8% year over year and accounted for 8.6% of total sales. The figure beat the Zacks Consensus Estimate by 12.33%. Solid demand for M4 Macbook Air drove top-line growth. Apple saw double-digit sales growth in emerging markets as well as double-digit growth in both the number of upgraders and new Mac customers.
iPad sales of $6.58 billion decreased 8.1% year over year and accounted for 7% of total sales. The figure lagged the Zacks Consensus Estimate by 2.94%.
Wearables, Home and Accessories sales decreased 8.6% year over year to $7.4 billion and accounted for 7.9% of net sales. The figure beat the consensus mark by 0.85%.
Non-iPhone revenues (iPad, Mac and Wearables) decreased 1.1% year over year on a combined basis.
Apple’s China Sales Recover, Japan and the Rest of Asia Jump
Greater China sales increased 4.4% year over year to $15.37 billion and accounted for 16.3% of total sales. Japan revenues increased 13.4% year over year to $5.78 billion and accounted for 6.1% of total sales. Rest of Asia sales soared 20.1% year over year to $7.67 billion and contributed 8.2% of total sales.
While Europe’s sales grew 9.7% to $24 billion, Americas’ sales were $41.2 billion, up 9.3%. Europe and Americas accounted for 43.8% and 25.5% of total sales, respectively.
Apple’s Gross & Operating Margins Expand Y/Y
The gross margin of 46.5% expanded 20 basis points (bps) on a year-over-year basis. The gross margin contracted 60 bps sequentially due to tariffs. Apple incurred $800 million in tariff-related costs in the reported quarter.
Products’ gross margin contracted 140 bps sequentially to 34.5% due to unfavorable mix and tariff. Services’ gross margin was 75.6%, down 10 bps sequentially.
Operating expenses rose 8.3% year over year to $15.52 billion due to a 10.7% increase in research & development expenses and a 5.2% improvement in selling, general & administrative expenses.
Operating margin expanded 40 bps on a year-over-year basis to 30%.
Apple’s Balance Sheet Remains Strong
As of June 28, 2025, cash & marketable securities were $132.99 billion compared with term debt of $91.78 billion. Apple had cash & marketable securities worth $132.92 billion compared with term debt of $92.2 billion as of March 29, 2025.
Including commercial paper of $9.92 billion, total debt was $101.7 billion as of June 28.
Apple returned nearly $27 billion in the reported quarter through dividend payouts ($3.9 billion) and share repurchases ($21 billion).
Apple’s Q4 Revenues to Grow Amid Tariff Headwinds
Apple expects the September quarter’s (fourth-quarter fiscal 2025) net sales to grow mid to high single digits on a year-over-year basis. The company expects the Services year-over-year growth rate to be similar to that of the June quarter.
Gross margin is expected to be 46-47% in the fourth quarter of fiscal 2025, including a tariff impact of $$1.1 billion. Operating expenses are expected to be between $15.6 billion and $15.8 billion.
Apple plans to spend $500 billion in the United States over the next four years and expects to source 19 billion chips during calendar year 2025.
The Zacks Consensus Estimate for fourth-quarter fiscal 2025 revenues is pegged at $96.43 billion, suggesting 1.58% growth over the figure reported in the year-ago quarter. The consensus mark for fourth-quarter fiscal 2025 earnings is pegged at $1.61 per share, indicating a 1.83% year-over-year decline.
Zacks Rank & Stocks to Consider
Currently, Apple carries a Zacks Rank #3 (Hold).
Arista Networks ANET, Bumble BMBL and DoorDash DASH are top-ranked stocks in the broader Zacks Computer & Technology sector. Each of the three stocks sports a Zacks Rank #1 (Strong Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here.
Arista Networks is scheduled to report its second-quarter 2025 results on Aug. 5. Both Bumble and DoorDash are scheduled to report their respective second-quarter 2025 results on Aug. 6.
In terms of share price movement, DoorDash and Arista Networks have returned 48.5% and 11.5%, respectively, year to date. Bumble shares have dropped 4.5% over the same timeframe.
Zacks' Research Chief Names "Stock Most Likely to Double"
Our team of experts has just released the 5 stocks with the greatest probability of gaining +100% or more in the coming months. Of those 5, Director of Research Sheraz Mian highlights the one stock set to climb highest.
This top pick is a little-known satellite-based communications firm. Space is projected to become a trillion dollar industry, and this company's customer base is growing fast. Analysts have forecasted a major revenue breakout in 2025. Of course, all our elite picks aren't winners but this one could far surpass earlier Zacks' Stocks Set to Double like Hims & Hers Health, which shot up +209%.
Free: See Our Top Stock And 4 Runners UpApple Inc. (AAPL) : Free Stock Analysis Report
Arista Networks, Inc. (ANET) : Free Stock Analysis Report
DoorDash, Inc. (DASH) : Free Stock Analysis Report
Bumble Inc. (BMBL) : Free Stock Analysis Report
This article originally published on Zacks Investment Research (zacks.com).
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
