Apple (AAPL +1%) saw its stock rise after announcing Q1 (Dec) results. The company reported a 4.0% year-over-year revenue increase to a record $124.3 billion, aligning with analyst expectations. Earnings per share exceeded projections. For Q2 (Mar), Apple anticipates revenue growth in the low-to-mid single digits, with consensus at +5.3%.
- iPhone: Sales fell short of expectations, declining 0.8% year-over-year to $69.14 billion, compared to the $71 billion forecast. Despite this, the iPhone active installed base hit an all-time high globally, and Apple set a record for upgraders. The iPhone 16 lineup, enhanced by Apple Intelligence, is driving customer upgrades.
- Mac: Sales surged 15.5% year-over-year to $8.99 billion, fueled by strong demand for products like the new Mac mini, MacBook Air, and MacBook Pro. The Mac installed base reached a record high, with double-digit growth in every region and among both upgraders and new customers.
- iPad: Revenue increased 15.2% year-over-year to $8.09 billion, driven by interest in the new iPad mini and iPad Air. The iPad installed base hit a new high, with over half of DecQ buyers being new to the product.
- Wearables: Revenue decreased 1.7% year-over-year to $11.75 billion, slightly below expectations. Despite this, the Apple Watch installed base reached a new peak, with over half of DecQ buyers being first-time customers. The new AirPods 4 generated excitement, although the Apple Watch faced tough comparisons against last year's Watch Ultra 2.
- Services: Revenue rose 13.9% year-over-year to a record $26.34 billion, surpassing estimates. Both transacting and paid accounts hit new highs, with paid subscriptions growing double-digits. Apple boasts over 1 billion paid subscriptions across its Services platform.
- Greater China was a weak spot, with sales declining 11% year-over-year to $18.5 billion. Over half of this decline was due to changes in channel inventory. The absence of Apple Intelligence in China likely affected iPhone 16 sales. Additionally, China remains a competitive market with challenging macroeconomic conditions.
Investors are generally satisfied with Apple's FY25 start. While iPhone sales underperformed, the impact of China's market conditions was anticipated. The guidance for low-to-mid single-digit revenue growth in MarQ is reassuring, especially considering a 2.5 percentage point FX headwind due to a stronger dollar.
