Apple reported better-than-expected for its fiscal second quarter as iPhones, Macs and iPads sold well.
The company reported second quarter earnings of $1.65 a share on revenue $95.4 billion, up 5% from a year ago.
Wall Street was expecting Apple to report earnings of $1.63 a share on revenue of $94.66 billion.
Apple CEO Tim Cook said the company's devices sold well. What's unclear is whether demand was pulled forward due to tariff concerns. Cook said there was no obvious data pointing to demand being pulled forward. CFO Kevan Parekh said Apple saw record highs for the installed base of its devices.
By the numbers:
- Apple's iPhone revenue was $46.84 billion, up from $45.96 billion a year ago.
- Mac revenue in the second quarter was $7.95 billion, up from $7.45 billion a year ago.
- iPad revenue was $6.4 billion, up $5.56 billion a year ago.
- Wearables revenue was $7.52 billion, down from $7.91 billion a year ago.
- Services revenue was $26.64 billion, up from $23.87 billion a year ago.
On the earnings conference call, Cook spoke about Apple's supply chain. He said:
- "For the March quarter, we had a limited impact from tariffs as we were able to optimize our supply chain and inventory. For the June quarter, currently, we are not able to precisely estimate the impact of tariffs as we are uncertain of potential future actions prior to the end of the quarter."
- The impact of tariffs will add $900 million in costs for the third quarter.
- "During calendar year 2025, we expect to source more than 19 billion chips from a dozen states, including tens of millions of advanced chips being made in Arizona this year. We also source glass used in iPhone from an American company. All told, we have more than 9,000 suppliers in the U.S. across all 50 states."
- "For the June quarter, we do expect the majority of iPhones sold in the U.S. will have India as their country of origin and Vietnam to be the country of origin for almost all iPad, Mac, Apple Watch, and AirPods products sold in the U.S."
- "China would continue to be the country of origin for the vast majority of total product sales outside the U.S."
- "We don't believe that we saw obvious evidence of a significant pull forward in demand in the March quarter due to tariffs. If you look at our channel inventory, from the beginning of the quarter to the end of the quarter, the unit channel inventory was similar, not only for iPhone but for the balance of our products. Again, for transparency, you will see that we did build ahead inventory, and that's reflected in our manufacturing purchase obligations."
Constellation Research analyst Holger Mueller said there are multiple moving parts with Apple.
"Apple is slowly but steady moving into pedestrian speed on growth. Product sales are barely up by $2 billion and services growth has slowed. Are we now seeing the growth level that cannot ignite services sales? Of course, services has a very different level of profitability, so it makes sense for Apple to pursue, as it is margin accreditive. Apple did well geographically, with all regions except for China, growing. Now the key question for Tim Cook will be – what is the price elasticity and demand curve of the iPhone. Apple is profitable enough to keep prices the same and give up margin. For now, Apple is prioritizing Indian made hardware, but that may have side effects on the local markets demand."
