Apple has reported robust third-quarter results for fiscal year 2025, fueled by strong iPhone sales and continued growth in its high-margin services segment. The tech giant posted a total revenue of $94.04 billion, an increase of 9.6% compared to $85.78 billion in Q3 FY24.
Apple's Q3 FY25 earnings paint a clear picture of a company not only weathering global economic uncertainties but growing steadily across its most critical verticals. The numbers, at first glance, are impressive — but a deeper look at the underlying metrics and operational shifts shows how Apple is strategically tightening its financial levers while reinforcing its dominance in key markets.
Revenue growth driven by iPhone and services
Apple reported a 9.6% year-over-year increase in total revenue, reaching $94.04 billion for the quarter ended June 28, 2025. This is a significant uptick considering the broader tech sector's mixed performance during the same period. The company's flagship product, the iPhone, was again the largest contributor, bringing in $44.58 billion, up from $39.3 billion a year earlier. That's nearly a 13.5% jump, driven likely by the continued strong performance of the iPhone 15 lineup and possibly early adoption of AI features in its Pro variants.
"We saw iPhone growth in every geographic segment and double-digit growth in emerging markets including India, the Middle East, South Asia, and Brazil. Mac continued to see excellent results with revenue up 15% year-over-year, and we set another all-time revenue record in Services which grew 13% with double-digit growth in both developed and emerging markets," Tim Cook, CEO of Apple, said in a statement.
Services, which include Apple Music, iCloud, App Store, and AppleCare, contributed $27.42 billion, marking a 13.2% annual growth. This segment is increasingly becoming Apple's financial backbone. With gross margins typically far higher than hardware, the services division helps cushion Apple's bottom line, particularly when hardware segments fluctuate.
Interestingly, while Mac revenue rose by over $1 billion to $8.05 billion, iPad sales declined by about 8% to $6.58 billion. The Wearables, Home, and Accessories category—once Apple's fastest-growing unit—saw a drop from $8.1 billion to $7.4 billion, suggesting a cooling off in consumer appetite for high-end accessories like Apple Watch and AirPods.
Margins and profitability
Despite higher operating expenses—largely due to an uptick in research & development (R&D) spending, which rose to $8.87 billion—Apple managed to significantly grow its gross margin, from $39.68 billion to $43.72 billion. That's an increase of over 10%, even while the total cost of sales also grew. The services mix likely helped here. Overall, net income came in at $23.43 billion, up more than $2 billion year-over-year, and diluted earnings per share rose from $1.40 to $1.57, a double-digit percentage gain.
The increased R&D investment—nearly an 11% rise—suggests Apple is funnelling more money into long-term bets, possibly in AI, custom silicon, and health tech, areas where the company is looking to differentiate itself. Meanwhile, SG&A (Selling, General, and Administrative) expenses remained tightly controlled, increasing only marginally.
On the subject on tariffs, Cook said, "The situation around tariffs is evolving, so let me provide some color there. For the June quarter, we incurred approximately $800 million of tariff-related costs. For the September quarter, assuming the current global tariff rates, policies, and applications do not change for the balance of the quarter, and no new tariffs are added, we estimate the impact to add about $1.1 billion to our costs. This estimate should not be used to make projections for future quarters, as there are many factors that could change, including tariff rates."
Regional breakdown: Asia Pacific emerges strong
Revenue grew across all major geographic segments. The Americas remained the largest market, generating over $41 billion, followed by Europe at $24 billion. Notably, Japan and the rest of Asia Pacific recorded double-digit percentage growth, with the latter growing almost 20% year-over-year. These gains point to Apple's strengthening footprint in regions that were previously more price-sensitive—likely helped by the company's aggressive retail expansion and product localization.
Greater China showed modest growth from $14.7 billion to $15.37 billion, which, while positive, might reflect a cooling pace compared to previous years — a reflection of rising local competition and geopolitical uncertainty.
"We saw an acceleration of growth around the world in the vast majority of markets we track, including greater China and many emerging markets, and we had June quarter revenue records in more than two dozen countries and regions, including the U.S., Canada, Latin America, Western Europe, the Middle East, India, and South Asia. These results were driven by double-digit growth across iPhone, Mac, and services," Cook said.
On the balance sheet, Apple demonstrated tighter operational control. Inventories dropped from $7.29 billion to $5.93 billion, indicating smoother inventory turnover or possibly leaner supply chain practices. Meanwhile, accounts receivable fell, which may indicate faster customer collections — always a healthy sign of liquidity.
Cash and equivalents increased to $36.27 billion, up from $29.94 billion at the start of the fiscal year. This was despite a massive $70.6 billion spent on share buybacks and $11.56 billion on dividends over nine months. That level of capital return underscores Apple's continued confidence in its cash flow generation and a disciplined capital allocation philosophy.
At the same time, total liabilities fell from $308 billion to $265 billion, driven largely by reductions in accounts payable and other current liabilities. That reduction suggests Apple paid off significant obligations—either in inventory or services—and is now carrying a more streamlined operational balance sheet.
Apple generated $81.75 billion in operating cash flow over the nine-month period, which is slightly down from last year. However, what stands out is the company's improved performance in investing activities, where it generated $17.78 billion, compared to just $1.49 billion a year earlier.
On the flip side, financing activities led to a $93.21 billion cash outflow, largely due to buybacks, debt repayments, and dividends.
The increase in R&D spend, combined with aggressive share repurchases, indicates Apple is both playing long and short. It's investing deeply in innovation (possibly including on-device AI and Apple Intelligence) while keeping shareholders satisfied through buybacks and dividends. The dip in iPad and wearables sales may be worth watching in coming quarters, but the company's strong iPhone cycle and services expansion more than compensate for now.
Apple's Q3 FY25 results show a company in command of its core business while carefully positioning itself for the future. The narrative is clear: while the iPhone remains king, services are quickly becoming the kingdom. Strong global performance, operational discipline, and shareholder-friendly policies ensure Apple remains among the most stable and profitable tech companies in the world — and it's showing no signs of slowing down.
