Sales Rise 5% at Apple, Led by Significant Increases in iPad and Services Revenue

Apple is optimistic about its revenue growth in the current quarter, with CFO Luca Maestri indicating on an analyst call that the company expects similar overall growth to the previous quarter. The Services sector is projected to continue growing at around 14%, consistent with its performance in the prior three quarters. Maestri mentioned that operating expenditures are expected to range between $14.2 billion and $14.4 billion, with gross margins anticipated between 45.5% and 46.5%.

In the latest quarter, Apple reported net income of $21.45 billion, an increase from $19.88 billion or $1.26 per share in the same period last year. The iPhone remains Apple's most significant revenue driver, accounting for approximately 46% of total sales, although revenue from the product line declined about 1% year over year, totaling $39.29 billion.

CEO Tim Cook noted that, on a constant currency basis, year-on-year growth was achieved. He highlighted that while the impact of the newly announced Apple Intelligence service on sales cannot be assessed until it begins shipping later this fall, the company has already increased spending to prepare for the launch. Cook explained that many employees were redeployed to focus on AI projects, and that the company maintains a hybrid approach to data centers, balancing its own infrastructure with partnerships.

In terms of product performance, Apple experienced notable growth in its iPad division, which surged nearly 24% year over year to $7.16 billion in sales. The release of new iPads for the first time since 2022 drove this increase, and Cook mentioned that about half of iPad buyers were first-time purchasers, indicating that the tablet market still has room for growth. The Mac division reported $7 billion in sales, representing a 2% increase compared to the previous year.

Sales from the category encompassing Apple Watch, headphones (including Beats and AirPods), and HomePod speakers—labeled "Wearables, Home, and Accessories"—declined by 2% to $8.10 billion. However, Cook noted that two-thirds of Apple Watch buyers were new to the product, suggesting continued expansion in this segment.

Apple's Services business, which includes hardware warranties, revenue from Google, cloud storage subscriptions, and content subscriptions such as Apple TV+, is a critical growth area. The company reported $24.21 billion in Services revenue, reflecting a 14% increase that aligns with its forecasts and Wall Street estimates.

The total number of active devices across all regions reached an all-time high, a key metric as it indicates a substantial customer base for selling profitable services. Apple reported having 1 billion paid subscriptions, which encompass subscriptions to iPhone apps via the App Store. However, sales in greater China, which includes Taiwan and Hong Kong, fell by 6% to $14.72 billion. Apple faces significant competition in mainland China from local rivals such as Huawei. Despite this, Cook expressed confidence in Apple's long-term prospects, stating, “I don’t know how every chapter of the book reads, but we’re very confident in the long term.”

In addition to these financial metrics, Apple announced it spent $32 billion on dividends and share repurchases during the quarter, reflecting its commitment to returning value to shareholders. Overall, Apple’s strategy focuses on innovation, expanding its Services segment, and maintaining a strong product ecosystem to drive future growth.