Apple Stock Resilient As Investors Focus On Positives Despite Q1 iPhone Revenue Miss: Retail Reposes Faith In Tech Giant
According to the company, record revenue and strong operating margins drove first-quarter EPS to an all-time high.
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Apple, Inc. (AAPL) stock traded up in Thursday’s after-hours session after the company reported better-than-expected fiscal year 2025 first-quarter earnings and a marginal revenue beat. Record services revenue, and strong iPad and Mac sales helped offset sub-par iPhone performance.
The company guided to another quarter of subpar revenue growth, with forex headwinds blamed for some of the softness.
Q1 Headline Numbers
Cupertino, California-based Apple reported first-quarter earnings per share (EPS) of $2.40, up from the year ago’s $2.18 and exceeding the $2.35 consensus estimate.
Quarterly revenue climbed 4% year-over-year (YoY) to $124.3 billion from $119.58 billion. This topline result was roughly in line with the consensus of $124.26 billion and the guidance for low to mid-single-digit revenue growth.
Product revenue was $97.96 billion, or 78.8% of the total revenue.
CEO Tim Cook called the quarter Apple’s best -ever and said, “We were thrilled to bring customers our best-ever lineup of products and services during the holiday season.”
Gross margin was 46.9%, up from 45.9% last year and in line with the guidance of 46%- 47%.
According to the company, record revenue and strong operating margins drove EPS to an all-time high.
Apple said its board declared a quarterly cash dividend of $0.25 per share that is payable on Feb. 13, to shareholders of record as of the close of business on Feb. 10.
Apple’s Products/Geographies
The flagship device, the iPhone, generated revenue of $69.14 billion, down 0.81% year over year and missing the consensus of $70.82 billion. iPad and Mac revenues climbed over 15% each to $8.09 billion and $8.99 billion, respectively, with both exceeding expectations.
The high-margin Service business clocked double-digit revenue growth (13.9%) at $26.34 billion, slightly above the expected $26.04 billion.
Wearable, home and accessories revenue came in light at $11.75 billion.
Apple reported YoY growth in all geographies except Greater China. This region, comprising mainland China, Taiwan, Hong Kong and Macau, reported a revenue decline of about 11% to $18.51 billion.
The Street already factored in China's weakness, as the tech giant struggled due to intensifying competition from low-cost models rolled out by domestic players and the absence of Apple Intelligence features in the country.
Cook said in the earnings release that Apple Intelligence, which made its debut in the U.S. in December, will be available in even more languages in April.
The company’s installed base of active devices, at 2.35 billion, reached new highs across all products and geographic segments.
Guidance
On the earnings call, new CFO Kevan Parekh said the company expects a negative forex of about 2.5 points YoY in the March quarter. He guided second-quarter YoY revenue growth to low to mid-single digits and Services growth to low double digits.
The company expects a gross margin of 46.5%-47.5%.
Analysts, on average, expect 5.4% revenue growth to $95.61 billion.
Retail Sentiment
On Stocktwits, retail sentiment toward the stock stayed bullish (64/100), with message volume remaining at ‘high’ levels.
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Apple was the top trending stock on Stocktwits late Thursday.
A stock watcher on the platform predicted new all-time highs for the stock, expressing optimism about the Services business.
Another said there would be all-round buying by all classes of investors and mentioned a potential resurgence in China as a positive.
Apple stock last traded up 3.03% to $244.79 in Thursday’s after-hours session. It fell over 5% in January after generating an above-market return of 31% in 2024.
The stock is trading off the all-time high of $260.10, scaled on Dec. 26.
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