Apple reports second quarter results(apple.com) |
Apple reports second quarter results(apple.com) |
Reported quarterly revenue: ~$111 billion, so a 17% year-over-year increase.
Diluted earnings per share: ~$2. 22% increase compared to the same quarter last year.
Operating cash flow: surpassed $28 billion. Record for a March quarter.
iPhone: Record March-quarter revenue of ~$57 billion, heavily supported by demand for the iPhone 17.
Services: Hit an all-time high revenue record of ~$31 billion.
Capital Allocation: The board raised the quarterly cash dividend by 4% to $0.27 per share and authorized an additional $100 billion for share repurchases.
More generally, we're seeing a transition in their financials away from hardware dependence. At this point we can pretty conclusively say that Apple is now a hardware manufacturer mainly, backed up by a high-margin services ecosystem. Services revenue has grown consistently, providing a smoothing function against the more spikey revenue from the hardware product cycles.
Overall they've managed to maintain an ability to deliver double-digit growth, despite creating categories of product which haven't succeeded, providing enough free cash flow to continue their insane (in terms of scale) capital return program (dividends and massive buybacks in the main).
I think the issue is there's diminishing returns to spending, and in some cases it can be outright negative. For example, one major thing you can do with money is hire more people. Hiring more people than you can handle is a great way to grind everything to a halt. You're basically making a bet when you hire that the additional capacity outweighs the danger of coordination failure.
Perhaps you could invest more money in fabs or something like that. I don't know, I'm a software person. But I did work at apple on software for 15 years, and I do not think throwing more money at software is particularly effective. The biggest teams at apple are often the least functional.
And "Harmony OS" is going to threaten their ecosystem of hardware, software, services, and developers?
App Store grows as the addictive game publishers improve their manipulation skills, and Google’s check grows as browser usage increases. Every time someone types, say, “Citibank” into the search box and doesn’t add .com, Apple earns a tiny payment from Google.
I’m sure they als make a decent chunk of money from iCloud as users who buy base models are almost certainly forced to make use of iCloud Photo Library to free up enough space on the device to even function; but I suspect it’s orders of magnitude less than that.
Nonsense. They make 72% of their revenue from hardware, and without those hardware sales, the Services category would be nil.
"Real men have fabs." - Jerry Sanders, first CEO of AMD.
Actually, AMD, Nvidia, and Apple need to build their own fabs. Maybe Google, Amazon, and Meta too.
You can easily end up like AMD or Intel spending years with your own fab that’s uncompetitive.
One of the best things that ever happened to AMD was spinning off their fabs.
Intel only recently righted their ship after spending years with fabs that couldn’t keep up with competition, and even Panther Lake still contains some TSMC silicon.
The AI boom is inevitably not going to last forever. Either demand will subside or production will increase. High prices in tech rarely stick around.
It'd make them leaders in batteries.
It'd keep America at the forefront of EVs.
Huge disappointment.
It still blows my mind that this is the same company.
There’s a lot of truth to it. A huge amount of the software stack is inherited from NeXT. Steve Jobs was inherited from NeXT. Modern Apple is vastly more successful than NeXT ever was, but there’s a lot of continuity there as well.
They're a monster. Vastly impressive stuff.
It definitely looks like they've been able to stall the effect of rulings allowing apps to use third party payments. But earlier this week the courts reversed a stay of December's injunction that limits Apple to a very small fee, in their arguments against the stay Epic claimed developers were hesitant to use 3rd party payments until they knew what the final cost would be and that reversing the stay would mitigate their fears so it will be interesting to see what happens next quarter.
I used to tout the superiority of Apple Maps to people by saying "And there no ads, so you can trust the results". I can't do that anymore.
Net profit margin: 26.6% ($29.58B / $111.18B) — what the company and its shareholders keep after taxes and everything else. (edited)
Operating margin: 32.3% ($35.89B / $111.18B) — left after the product and running the company (staff, R&D, marketing, stores).
Gross margin: 49.3% ($54.78B / $111.18B) — left after paying suppliers and contract manufacturers. Shows how much more customers pay than it costs to build.
The only money that shareholders keep is the dividend per share which was $0.27 out of a profit of $2.01 per share.
Between the two someone needs to disrupt it with a cheaper stripped down alternative (from a big player) because the prices are going through the roof.
If the bubble bursts, Apple with its mountain of cash will be ready to buy the carcasses of whatever is left.
Google did this for several years in the early 2000s – snapping up talent and data center capacity from the casualties of the dotcom bust.
With more products, will Apple collapse under the weight of the complexity?
iPhone: iPhone 17e -> iPhone 17 -> iPhone 17 Pro (Niche: iPhone Air)
iPad: iPad -> iPad Air - > iPad Pro (Niche: iPad Mini)
Mac Laptop: Macbook Neo -> Macbook Air -> Macbook Pro
Mac Desktop: Mac Mini -> iMac -> Mac Studio
They have product with different screen sizes, but those are really just configuration options on the base product in that tier, now. Compare that to offerings from Samsung or Dell and you can see it could be much, much more complicated.
Also the price point shifted from primarily a 2K machine, to all price ranges, with the original iPhone being a few hundred bucks. More sales smaller units so the number of products being sold is more than it appears based on the revenue comparison.
Maybe the price per unit is available somewhere for people to trend how it changed over 2-3 decades.
Edit, I found this: https://www.macrumors.com/2026/04/29/apple-vision-pro-m5-flo... - seems like rumors; but perhaps as close to an announcement as we’ll ever get.
Why in a couple of generations? You've put your finger on why the product failed: Apple's fear of connectivity. Apple zealously cripples the I/O on all of its mobile products, rendering them unusable for so many things.
All the Vision Pro needed was a video input. Gamers, 3-D modelers, drone pilots, filmmakers, engineers, travelers... all would have been a ready market for an excellent head-mounted video device. But nope... Apple can't have people doing anything with its products that it didn't think of.
I'm more sad they cancelled their EV project. We need more healthy competition there than public spying VR ski goggles.
Far simpler and cheaper to snipe startups where you know you are getting a proven product. That comes with a fresh batch of engineers in most cases who specialize in the tech so you skip a lot of the hiring/training steps.
If I had an R&D request it would be they train some machine models on their developer feedback and public feedback databases to give some guidance on where the real holes are and what people are actually hoping for.
I certainly never wanted a car from them… the whole Apple business model is reducing the moving parts to reduce product failures and a car would be a huge regression.
[1] https://insideevs.com/news/614379/weel-evb-electric-concept-...
For me, I much prefer the convenience of having all my subscriptions centrally located in the App Store, and, more importantly, being able to cancel them with one click there too.
For me the ease of seeing what subscriptions I have in one place with easy cancellation options avoids the stress of trusting companies with PII and credit card info and ever needing to deal with anything over the phone.
That said… making it impossible to sell your product with less than a 30% margin does not seem in line with today’s software and streaming economics. I am not sure the model Apple should adopt, but the current one lacks artistry.
Vision Pro, however, should have been a full computer the way the Mac is as it was never going to appeal to non geeks.
The introductory video of this cyborg recording spatial video at birthday parties seemed pure fiction as there would not be smiles at the weird masked guy with the eyes flashing whenever he wanted to take a picture especially as glasses that record video are slammed so hard. I could only imagine such a thing maybe at a wedding.
Flip phones with apps were around a long time before the iPhone and people knew what to do with them.
Vision Pro really was a whole new thing and they biffed it not allowing people to vibe code and play on it directly instead forcing to dig through complicated X-code on a connected Mac. It needed a 3D Quartz Composer type thing at the very least that just isn’t there.
We can observe with Apple’s pricing staying stable that they have some of the best supplier arrangements in the industry.
They are literally being limited by TSMC (as well as the DRAM makers) because they don't have their own fabs.
Also, remember H100 will be ~years old. Sometimes I wonder whether the average HN crowd really thinks through things.
Apple has historically shown an unwillingness to deploy capital to "own" things. They partner with TSMC for manufactoring, they get their panels from Samsung, Google on Gemini ..
Vertically integrated doesnt mean they "make" everything, but instead partners build things to their specification.
Hopefully there is work being done on the replacement for the Mach kernel and OSX / iOS in general. If there isn't that would be a grave mistake and exactly the kind of one someone like Tim Cook would make. Look at how he fumbled AI at Apple. I'm not saying he isn't talented, he is, but he isn't a product guy or an engineer.
This could happen in parallel with existing software dev skunkworks style.
Something else you can do is buy companies.
You could.
Or you could have no fab and no supply of chips for your business.
Making chips on an uncompetitive lithographic process means your chips are worth less.
There is no scenario where not having a fab is beneficial.
Apple will have to build their own fabs, whether they like it or not. And they will need to make it competitive if they want to stay in business.
Mmm, I think that's an overly strong statement.
In the scenario where Apple has a fab that's doing work at a 2030 level in 2030, that's great, especially if everyone else is, by their standards, doing work at a 2025 level. In the scenario where Apple's fab is doing work at a 2030 level in 2035, and another fab is doing work at a 2035 level, owning their own fab has suddenly become a liability. If they had used that money to hire the output of other fabs, then as soon as it became clear that another one was eclipsing the one they were using, they could simply switch. And given the way businesses operate, it would be very hard to justify closing down their own fab to use the one that was outperforming it.
Now, granted, that's not an especially likely scenario, but it is a very realistic one.
So? Did I stutter when I said that would be great for competition?
Luxury cars go down in value pretty quickly on the used market after they age a while and then become affordable to the masses.
I live in an low income migrant EU neighborhood, and it's not full of new Kias and Hyundais, but 10+ year old BMWs, Mercedes and Audis, because some people prefer the status of a used old car from a luxury brand, rather than a new car from a budget brand.
Apple entering the ring with their supply chain and attention to detail, would have been a net positive impact to the car industry the same way Tesla was when it entered. No major car brand took EVs seriously before Tesla showed them how to make good cool looking ones, and their media entertainment units, even on 100k German cars, were laggy pieces of shit before Tesla changed the game. Tesla might not win this war, but they certainly moved the industry forward a lot in the right direction.
And to be fair, it kinda is. The OS on the Neo is the same as on a Mac Pro (RIP)
I am certain the reason Wine never tried Mac emulators is fear of Apple legal and consequently you far more easily run ancient Windows programs on Mac then you can even fairly recent Mac Applications.
A number of digital preservation standards are emerging (Wasm, MAME/MESS, EaaSI, Olive, ...) and I would like to see a legal requirement on OS vendors that platforms that are no longer supported must be made available to archivists.
Will things change? Perhaps if/when quantum computing becomes a bigger item.
HarmonyOS is interesting because it points at the right axis: one coherent OS fabric across many devices, not a set of separate device OSes glued together by continuity features. Continuity, iCloud, Handoff, AirDrop, HomeKit etc are impressive glue. They are not the same as one logical OS fabric.