AAPL Financial Analysis

Analysis Date: 1/31/2025

Business Model

Apple generates revenue through two main segments - Products and Services

Revenue Sources

• Products (78.8% of revenue): iPhone, Mac, iPad, Wearables/Home/Accessories
• Services (21.2% of revenue): App Store, iCloud, Apple Music, Apple TV+, etc.

Income Statement Analysis

• Revenue grew 4% YoY driven by Services (+14%) and Products (+1.6%)
• Gross margin improved to 46.9% vs 45.9% in prior year quarter
• Operating expenses increased 6.6% YoY but remained controlled as % of revenue
• Net income increased 7.1% YoY with EPS up 10% due to share repurchases

Balance Sheet Analysis

• Strong balance sheet with $141.4B in cash and marketable securities
• Reduced debt levels through term debt and commercial paper repayments
• Shareholders' equity increased 17.2% QoQ despite ongoing share repurchases

Cash Flow Analysis

• Generated $29.9B in operating cash flow despite tax payment related to State Aid decision
• Investing activities generated $9.8B primarily from net sales/maturities of marketable securities
• Returned over $30B to shareholders through dividends and share repurchases

Capital Allocation

Apple continues its significant capital return program, returning over $30B to shareholders in Q1 through $3.9B in dividends and $23.6B in share repurchases. The company maintains a quarterly dividend of $0.25 per share.

Management Commentary

Achieved all-time records for total revenue and EPS

Services revenue reached new all-time high with strong momentum across offerings

Greater China revenue declined 11% YoY, though half was due to channel inventory changes

Apple Intelligence driving stronger iPhone performance in markets where available

Overall Sentiment: Management tone was positive, highlighting record results and ongoing innovation while acknowledging regional challenges in China

Recommendation

Rating: Buy

Reason for Rating: Strong execution, growing services business, and upcoming AI opportunities support positive outlook

Disclaimer: This analysis is based on company filings and public information. It is for informational purposes only and not financial advice. Past performance does not guarantee future results.

Generated on: 1/31/2025, 4:27:43 AM