Apple Q4 2025: Services strength and upbeat iPhone outlook

Apple delivered a solid quarter, with double-digit growth in services revenue. The launch of the iPhone 17 lineup underscored continued customer loyalty and satisfaction, while the company’s ecosystem remains sticky and integrated.

Revenue grew 7.9% year-on-year in Q4 2025, achieving a September quarter record of US$102.5 billion. In full-year 2025, revenue rose 6.4% year-on-year to US$416.2 billion, setting an all-time revenue record across both developed and emerging markets, while iPhone revenue also rose to an all-time high.

Products revenue was mainly driven by iPhone and Mac. Apple’s active installed base hit a record high across all product categories and regions. The company also recorded the highest number of upgraders for iPhone, iPad, Apple Watch in the September quarter. Approximately half of customers who purchased a Mac, an iPad, or an Apple Watch during the quarter were new to the products.

The year-on-year mid-teens growth in services revenue was driven by broad-based growth across developed and emerging markets as well as most of its services categories (also sequential acceleration). The company achieved all-time revenue records across advertising, App Store, cloud services, Music, payment services, and video. In full-year 2025, services revenue surpassed US$100 billion for the first time, up 13.5% year-on-year to US$109.2 billion, driven by organic and strong performance.

Apple’s gross margin improved by 100 basis points year-on-year and 70 basis points sequentially to 47.2% in Q4 2025. The gross margin above its guidance range and was driven by favourable mix. Products and services gross margins declined by 10 and 130 basis points quarter-on-quarter to 36.2% and 75.3% respectively in Q4 2025. The margins were affected by tariff-related costs totalling US$1.1 billion as well as higher research and development expenses.

Adjusted diluted earnings per share increased 13% year-over-year instead in Q4 2025 as there was a one-off charge amounting to US$10.2 billion linked to its EU tax case in Ireland in the previous corresponding quarter.

The company opened new stores in India, the UAE as well as in new locations in the US and China. Apple Ginza store was refurbished and reopened during the quarter.

Apple is committed to investing US$600 billion across advanced manufacturing, silicon engineering and AI in the US over the next four years. A new factory was built in Houston to develop advanced AI service and Apple Intelligence and is already operational. Apple is developing foundation models that can run both directly on devices and in its private cloud, supporting a hybrid AI approach that balances performance and privacy. The private cloud compute is currently being used to handle Siri queries and a more personalised Siri will be released in 2026.

The company ended the quarter with a net cash position of US$33.8 billion (including non-current marketable securities). It spent US$3.9 billion and US$20 billion across dividend payments and share buybacks during the quarter. Management also declared a cash dividend of US$0.26 per share.

In the upcoming quarter Apple expects its quarterly revenue to grow between 10% and 12% year-on-year and reach record highs under the existing tariff and policy climate. iPhone revenue is anticipated to grow at double digits amid supply constraints. Mac will have a difficult comparison as the several Mac lineups were launched in the previous corresponding quarter with DRAM upgrades. Services revenue will grow at low- to mid-teens year-on-year. Gross margin is expected to hover between 47% and 48%. The margin will be partially impacted by tariff-related costs totalling US$1.4 billion as well as investment in AI and higher research and development expenses. As mentioned by CFO Kevan Parekh, Apple’s operating income growth has outpaced revenue growth for the past few years in general.

Products

In Q4 2025:

• Revenue from iPhone increased 6.1% year-on-year to US$49.0 billion, driven by the iPhone 16 family.
• Mac revenue increased 12.7% year-on-year to US$8.7 billion, driven by MacBook Air.
• iPad revenue remained flat at US$7.0 billion, given last year’s broad product refresh.
• Revenue from wearables, home, and accessories declined 0.3% year-on-year to US$9.0 billion, driven by Apple Watch and AirPods, offset by other accessories.

Apple products powered by M5 chips including iPad Pro, MacBook Pro, and Apple Vision Pro are capable of handling more AI workflows. Apple continues to focus on software standardisation to deliver a seamless, unified experience across different products.

Revenue from iPhone grew in most regions amid supply bottlenecks. Demand for iPhone 16 and iPhone 17 models was stronger than expected, with back orders extending beyond the quarter. The situation was not related to production capacity. As a result, channel inventory was at the low end of the management’s targeted range. According to a survey from World Panel, iPhone was the best-selling model in the US, the UK, urban China, France, Australia, and Japan.

Mac revenue demonstrated resilient growth in all regions and posted strong double-digit growth in emerging markets. Revenue from remained stable as the company had a strong previous corresponding quarter after iPad Air and iPad Pro was launched earlier in the year.

Apple continues to expand its health and safety capabilities across its Apple Watch lineups. It leverages AI and machine learning across features such as heart monitoring, fall and crash detection, and new hypertension and sleep insights.

Apple continues to introduce new capabilities and a suite of generative AI features under Apple Intelligence. This integration is designed to enhance productivity and communication across the Apple device ecosystem. For example, live translation is now powered by Apple Intelligence on the AirPods Pro 3.

In terms of enterprise adoption, Apple products have been deployed by clients across industries, including The BMW Group and Capital One, to improve productivity and drive innovation.

Services

Apple Pay continued its global expansion, now available in nearly 90 countries, while its active user base grew at a double-digit pace. Both transacting and paid accounts reached record highs during the quarter. To further enhance the stickiness of its ecosystem, the company introduced the AppleCare One subscription bundle, a new plan that protects and covers multiple Apple devices. The plan further enhances the stickiness of Apple ecosystem.

In media, Apple TV+ was well-received at the Emmy Awards and the team continues to bring new productions to the platform. Strategically, the service has secured an exclusive U.S. partnership with Formula 1 (starting in 2026) to broadcast the full racing season and leverage live sports to accelerate subscriber growth.

Key analyst questions

CEO Tim Cook noted that it is still early in the iPhone 17 cycle to gauge upgrade drivers but expects features like Apple Intelligence to become an increasing factor in purchase decisions over time. With the smartphone market maturing, iPhone sales seem increasingly tied to replacement cycles rather than new product excitement, as innovation at the device level becomes more incremental. He remained tight-lipped about the revenue mix within the iPhone 17 family.

Revenue from Greater China dropped 3.6% year-on-year to US$14.5 billion in Q4 2025, due partly to supply constraints. However, the store traffic in China improved significantly year-on-year according to Cook. He expects revenue from the region return to growth in the upcoming quarter based on robust demand for iPhone. The company benefited from a subsidy tailwind across its different product categories within certain price ranges.

Parekh responded to an analyst that the costs of new products may be higher, though anticipated memory prices were expected to ease. The procurement team managed costs well, as a result, the company posted a gross margin of 47.2% during the quarter, which was above expectation. He guided for the company’s gross margin in the December quarter to range between 47.0% and 48.0%, driven by a favourable product mix and higher operating leverage. Higher leverage means Apple’s cost structure became more efficient with higher sales, leading to better profit margins for the quarter.

When asked about Search revenue within Services, Cook declined to comment, noting that Apple does not disclose results at that level. This likely reflects ongoing confidentiality and regulatory sensitivity around the Google Search licensing agreement. Google reportedly pays Apple US$20 billion annually to remain the default search engine on Safari.
That revenue is a big driver of Apple’s Services segment, but it is not separately disclosed in Apple’s financials. The U.S. Department of Justice has an active antitrust case around Google’s search dominance, and Apple’s role as a distribution partner is part of that investigation. Parekh also confirmed that this revenue stream did not introduce any abnormal tax-related impacts during the quarter.

The fifth perspective

Apple enters the holiday quarter with strong iPhone demand and momentum across its ecosystem. Services continue to expand as a key growth and margin driver, further strengthening profitability. The company is well positioned to record resilient growth through the holiday season and near future.