Apple results: Holiday dunks and questions dodged
On the day that Apple announces its quarterly fiscal results, as it did on Thursday, there’s a little ritual that happens down in Cupertino: Financial journalists get a pre-briefing about the results from Tim Cook, and they rush to their live shots to breathlessly report the news on CNBC or Bloomberg Business or Fox Business from atop the Apple Park Visitors Center just as the announcement is posted publicly.
Sometimes I imagine that Cook and CFO Kevan Parekh say goodbye to them, jump in a car and just joyride all around Apple Park, doing donuts and singing out loud until they have to calm it down and get on the phone with financial analysts about half an hour later.
Thursday was one of those “doing donuts” days. Not only did Apple announce an all-time record for revenue for its fiscal fourth quarter, which also wrapped up an all-time record for Apple revenue in a fiscal year, and it wasn’t even close. And to top it all off, Cook dropped the mother of all forms of “guidance,” which is what you call it when companies publicly predict their next-quarter results three months in advance: “We expect the December quarter’s revenue to be the best ever for the company and the best ever for iPhone.”
Can Tim Cook dunk? I’m imagining him dunking. It was one of those days.
Forward-looking statements
So much fiscal disclosure of public companies is regulated that everyone is very careful what they say, lest they be sued or get in trouble with the government. At the top of every single Apple phone call, Suhasini Chandramouli of Apple’s investor relations appears to point out that the future is promised to no one:
Please note that some of the information you’ll hear during our discussion today will consist of forward-looking statements, including, without limitation, those regarding revenue, gross margin, operating expenses, other income and expense, taxes, capital allocation, and future business outlook. These statements involve risks and uncertainties that may cause actual results or trends to differ materially from our forecast, including risks related to the potential impact to the company’s business and results of operations from macroeconomic conditions, tariffs and other measures, and legal and regulatory proceedings… Apple assumes no obligation to update any forward-looking statements, which speak only as of the date they are made.
Translation: This is what we think will happen, but who knows? Things could change.
In any event, Parekh shortly thereafter dropped the kind of statement that makes investors and analysts lean way forward in their seats:
We expect our December quarter total company revenue to grow by 10 to 12 percent year over year, which would be our best quarter ever. We expect iPhone revenue to grow double digits year-over-year, which would be our best iPhone quarter ever.
Just so we’re clear, that’s about $138B in total revenue and a minimum of $76B in iPhone revenue. (Check back in January to see if they were right.) Keep in mind that the results reported on Thursday only have a week or two of iPhone sales, while Apple now has an addition month of sales data with which to make projections. And if Apple is this confident, iPhone 17 sales data has to be really, really good.
One reason Apple is so confident is that it’s supply-constrained. In other words, for at least some iPhone models, it just can’t make enough to fulfill demand. Cook specifically called out Greater China revenue decreasing largely because the company faced iPhone supply constraints, and said that generally Apple was “constrained on several [iPhone] 17 models.”
Selling as many iPhones as you can make is a good problem to have, but it does make it tough to get an idea of how the long run of iPhone 17 sales will go. The bulk of iPhone 17 sales are yet to come, but Apple can’t actually tell how strong demand is for each model. When asked by Aaron Raker of Wells Fargo if certain iPhone categories were popping, Cook demurred:
It’s really too early to call the mix, to be honest. And we don’t like to publicly disclose that for competitive reasons. But frankly, we don’t really know what the mix will be yet, because we have constraints on both sides of the ledger at the top and at the entry, and so we’ll see what happens as we get more supply.
In other words, there’s a general sense that people are buying loads of iPhones, but the company can’t yet tell which models are the biggest hits. (But just to be clear, if it knew, it probably wouldn’t tell you.)
Dodging the Services question
It was a good quarter critically for Apple’s Services category, what on account of all those Emmy wins for Apple TV’s “The Studio” and “Severance.” But enough about art—let’s talk filthy lucre. It was an all-time record Services quarter, with the category posting its ninth consecutive quarter of double-digit year-over-year growth. (Apple said that it was an all-time record everywhere but Greater China, which only managed to set a fourth-quarter record.)
That’s impressive, but I think maybe I can top it: The Services category has broken its own all-time record for 13 straight quarters. There’s not a lot of seasonality in Services, I’ll grant you—that’s kind of the point. The credit cards just keep getting charged, month after month, off into the future. But it’s a remarkable growth path given the relative seasonality of all of Apple’s other businesses.
In the post-results call with financial analysts, Wamsi Mohan of Bank of America asked Cook for a little more detail about Apple’s search revenue, given its lucrative deal with Google, and whether that revenue growth might decelerate if Google’s search traffic were to be impacted by the growth of AI. Cook’s response was, if I do say so myself, an all-timer for these calls:
Cook: This is Tim. The advertising category, which is a combination of third-party and first-party, did set a record during the quarter.
Mohan: Okay, and sorry, just to be clear, both Apple’s own internal advertising and within the licensing individually set records?
Cook: I actually I’m not saying that. I’m just saying that the combination of the two set a record. We don’t divulge—I’m dodging the question intentionally because we don’t split it at that level.
Look, these calls are almost entirely Apple execs dodging the questions of fiscal analysts. At least Tim Cook admitted it this time. You want to know how much Google is paying us and if that’s growing or shrinking? Well, I’m not gonna tell you!
The Mac and the grasshopper
Mac revenue was a real highlight this quarter, with revenue up 13% over the year-ago quarter. That’s eight straight quarters of year-over-year growth, so it’s been two very strong years for the Mac after a year where it fell a bit off the heights of improved sales due to COVID and the advent of Apple silicon.
However, Apple warned that despite the rosy outlook for its next quarter, the Mac was going to not be a top performer. The reason, you may not be surprised to discover, is a “tough compare.” In other words, this holiday quarter, the only fresh, new Mac is the M5 MacBook Pro, a perfectly nice computer. The problem is what was available last year, as Cook pointed out:
From a Mac point of view, the challenge is that last year was sort of the mother of all Mac launches. All of these, from Mac Mini to iMac, to all the MacBook Pros, all launched literally at same time. And this year, that compares to launching the 14-inch MacBook Pro. And so there’s a very difficult compare. Of course, in the long run, I’m very bullish on them. You can see that the Mac again last quarter outgrew the market. And so we feel really well about how Mac is positioned, but this certain quarter is an extremely difficult compare.
So: Pretty good news for the Mac, but maybe put a note in Reminders not to freak out in late January when Apple reports disastrous Mac revenue growth, okay?
Apple’s Values
At the end of Cook’s opening statements in his call with analysts, he tries to include an optimistic look at ways that Apple is acting to follow its own corporate values and leave the world better than it found it. Here’s what he said Thursday:
Everywhere we operate, and in everything we do, we strive to give the best to our users while living by our values. Whether that’s building new accessibility features into our most recent software releases, or advancing our environmental work by using even more recycled materials in our latest lineup, or providing free educational programming to train and support American businesses with our new Apple Manufacturing Academy in Detroit.
And we’re continuing to invest in innovation and user experiences that will transform our future. A great example is the work we’re doing in the U.S. where we’re committed to invest six hundred billion dollars over the next four years with a focus on innovation and strategic areas like advanced manufacturing, silicon engineering, and artificial intelligence. These commitments build on our long-standing investments in America while supporting more than 450,000 jobs with thousands of suppliers across all 50 states. We built a new factory in Houston for advanced AI servers, for example, which just started shipping its first products off the line. And we’re leading the creation of end-to-end silicon supply chain across the country.
That feels like a pretty accurate depiction of the cards Apple is interested in showing in 2025: accessibility, recycling, education, and investing in the American economy. That’s absolutely what the company is focusing on today. Just for a contrast, here is the opening portion of Cook’s much longer statement from three years ago:
At Apple, we’re proud of the ways we are able to help customers be productive, get healthy, stay safe, and unlock their creative potential. We also understand we have an important responsibility to the communities we serve. That’s why we continue to invest in education, racial equity and justice, and the environment, and we are making important progress toward a more inclusive and diverse workforce.
Through our community education initiative, we’re working alongside more than 150 partners to help students around the world learn new science and technology skills. This summer, we joined with community partners to support coding academies across the United States from Code Academy in Nashville to One Summer Chicago to the Coding 5K Camp for Girls right next door in San Jose. We’ve also just expanded our racial equity and justice initiative into the UK for the first time. Alongside the South Bank Center, we’re helping aspiring creatives develop their own voices and position themselves for long lasting careers. Back in the US, we welcomed a new class of Black, Latino, and indigenous entrepreneurs to Apple’s second impact accelerator. This group of innovators is focused on using green technology to mitigate the effects of climate change and serve communities most affected by it.
Hmm. Some things never change when it comes to these Apple results. Other things do.
(Not enough charts? All the charts are available in this other Six Colors story.)
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