Originally published at: Apple Q2 2025 Financials Solid Despite Upcoming Tariff Uncertainty - TidBITS
Reporting on its Q2 2025 financial results, Apple announced profits of $24.8 billion ($1.65 per diluted share, representing an 8% year-over-year increase) on revenues of $95.4 billion. The company’s revenues rose 5% compared to the year-ago quarter (see “Apple Revenues Drop 4% in Q2 2024, with Bright Spots from Services and Mac,” 3 May 2024) but didn’t match the record high of $97.3 billion set in 2022.
iPhone, Mac, and iPad revenues increased year-over-year, but Wearables revenues fell slightly. The big winner in the revenue category was Services, which brought in a record $26.6 billion, up $2.7 billion from the same quarter last year. Consequently, Services grew to account for 28% of Apple’s overall revenues, while an iPad rebound boosted its share to 7%, and Macs remained steady at 8%. Wearables continued its recent decline to 8% of the total, and although the iPhone remains Apple’s primary earner, its share of the revenues for the quarter dropped slightly, accounting for 49% of the total.
The dramatic tariff hikes that dominated recent headlines didn’t affect this quarter’s results since they happened in early April, after Q2 closed. However, Apple is taking aggressive steps to minimize their future impact—more on that later.
iPhone
The good news: iPhone revenues this quarter exceeded those from the same quarter last year; the less-good news: iPhone revenues remain below the Q2 revenue tallies for the three preceding years. Nonetheless, the number of customers upgrading their iPhones grew by double digits year over year, although Apple didn’t share specific numbers. Nor did Apple give any sense of the popularity of the entry-level iPhone 16e that debuted during the quarter (see “Apple Replaces iPhone SE with Larger, More Expensive iPhone 16e,” 20 February 2025). Nevertheless, it seems that Apple’s iPhone business remains reasonably healthy.
Mac
Revenues in the Mac segment rose 6.7% from last year’s quarter to $7.9 billion. This marks the third consecutive increase following a drop after two stellar years of Mac revenue growth driven by pandemic demand and the release of the first Macs with Apple silicon. Given the relative flatlining of Mac sales before the introduction of the M1 chip, it seems clear that Apple’s decision to power Macs with its own chips and maintain a roughly annual schedule of chip improvements has placed the Mac back on a growth track for the foreseeable future.
iPad
The iPad segment revenues recovered somewhat after three years of declines, posting $6.4 billion in revenues. That’s an increase of 15.2% from Q2 2024, though it still represents a drop from Q2 2023. Apple highlighted the M3 iPad Air as the driver of the quarter’s iPad income. How rumored enhancements to the iPad user experience might affect sales remains to be seen.
Wearables, Home, and Accessories
In contrast to the increased revenues of other Apple product categories, the Wearables segment marked the low point in Apple’s Q2 financial report. Wearables continued a three-year drop in Q2 revenues, generating $7.5 billion, a 4.9% decrease from the same quarter last year. Apple CFO Kevan Parekh attributed part of the decline to the classic “difficult compare” against last year’s second quarter, which featured the release of the Apple Vision Pro and sales of the Apple Watch Ultra 2. However, the Vision Pro was anything but a hit; the Apple Watch Ultra 2 was released at the end of the previous year; and 2024 was still a drop from 2023. Perhaps the rumored smart speaker with a display could boost future Wearables revenue?
Services
The Services revenue graph climbs so evenly that it’s spooky. Services accounted for $26.6 billion this year, representing an 11.6% increase from the year-ago quarter. As always, the Services income benefits from the ever-increasing number of users—Apple once again stated that the installed bases for the iPhone, Mac, and iPad hit all-time highs. Although Apple has added some features to Apple News+, introduced new games to Apple Arcade, and is enjoying positive word of mouth about certain Apple TV+ shows, it’s hard to see any of these making a significant difference. Minor enhancements may be necessary to maintain interest in Apple’s services, even if none are likely to drive subscriptions on their own. When an analyst asked how the antitrust case against Google might affect Apple’s reported $20 billion in search revenue, Tim Cook sidestepped the question.
Regional
In terms of geography, Apple’s revenue in China continues to decline, falling 2.3% from the year-ago quarter and accounting for just 17% of the overall mix. Foreign exchange rates played a role in those results, and Cook took pains to point out how well the iPhone and iPad performed in urban China, presumably where buyers are less price-sensitive than in rural areas. Revenues in all other regions grew, with Japan leading the pack with a 16.5% increase, followed by the Rest of Asia Pacific showing an 8.4% revenue increase and revenues in the Americas rising by 8.2%. Revenues from Europe grew only 1.4%, and it’s impossible not to wonder if some growth might have been lost to users being unhappy with Apple’s regulatory wrangling with the European Union: the company’s alleged violations of the Digital Markets Act recently led to a $570 million fine for restricting app developers from directing users to alternative purchasing options outside its App Store.
Fiscal Uncertainty?
Tariffs are the cause of much of Apple’s fiscal uncertainty looking ahead. Threatened tariff hikes in early April—after the close of this financial quarter—prompted Apple to fly 600 tons of iPhones from India to the US. Presumably, Apple was sufficiently aware of which way the winds were blowing to ramp up production in India. Even though smartphones were quickly granted a temporary exemption from the Chinese tariffs, Apple is taking the threat seriously. Tim Cook said that Apple would use factories in India for the majority of iPhones slated for the US market in the upcoming quarter. Similarly, nearly all Mac, iPad, Apple Watch, and AirPods manufacturing destined for the US market will occur in Vietnam.
Apple may experience a bump in sales next quarter from people who are accelerating a planned purchase in case tariffs force the company to raise prices. Even so, Cook estimated that tariffs could cost Apple $900 million in the next quarter, while he noted that Apple remains engaged in ongoing tariff discussions with the government.
He did suggest that Apple’s revenues next quarter will continue to grow, though not significantly. On the other hand, while it’s impossible to estimate how much Apple’s promotion of Apple Intelligence features drives sales, Apple Intelligence itself has failed to set the world on fire, and the more personalized version of Siri has been delayed, a situation that can’t help product revenues next quarter.
When pressed to speculate beyond next quarter, Cook merely said, “I don’t want to predict the future.” That seems like the better part of valor in these turbulent times.
