Apple Inc.

Legal name

Apple Inc.

Headquarters

CUPERTINO, CA

Incorporated in

California

Fiscal year end

09/26

Exchange & ticker

NASDAQ: AAPL

Industry

Consumer Electronics

CIK

320193

Website

https://www.apple.com/ ↗

IR page

https://investor.apple.com/ ↗

Source: Form 10-K (FY2025) cover page and business description

Source: SEC EDGAR filing history. Release dates are the dates the earnings release was furnished to the SEC on Form 8-K (Item 2.02), which is normally the day results are announced. Fiscal years are labeled by the calendar year in which they end.

• Products

  iPhone

  Examples: iPhone 17 Pro, iPhone Air, iPhone 17, iPhone 16, iPhone 16e

  Smartphones on iOS — $209.6B in FY2025, 50% of total net sales. FY2025 growth came from Pro models.

• Products

  Mac

  Examples: MacBook Air, MacBook Pro, iMac, Mac mini, Mac Studio, Mac Pro

  Laptops and desktops on macOS — $33.7B in FY2025, up 12% year over year, the fastest-growing product category.

• Products

  iPad

  Examples: iPad Pro, iPad Air, iPad, iPad mini

  Tablets on iPadOS — $28.0B in FY2025.

• Products

  Wearables, Home and Accessories

  Examples: Apple Watch, AirPods, Beats, Apple Vision Pro, Apple TV 4K, HomePod

  $35.7B in FY2025, down from $39.8B in FY2023 — the only category that declined in both FY2024 and FY2025.

• Services

  Services

  Examples: App Store, advertising, iCloud, AppleCare, Apple Music, Apple TV, Apple Arcade, Apple Pay, Apple Card

  $109.2B in FY2025 at a 75.4% gross margin; growth led by advertising, the App Store, and cloud services.

Product lines and category revenue are from the FY2025 Form 10-K's Item 1 business description and MD&A (net sales by category).

Nearly three-quarters of Apple's revenue is one-time device sales, each re-won with every upgrade cycle. The remaining quarter — Services — is a mix of per-transaction App Store commissions, subscriptions, and multi-year licensing and support arrangements; the 10-K doesn't break Services down by contract type. Some service value is bundled into device prices and recognized over time: total deferred revenue was $13.7B at FY2025 year-end, of which Apple expects 66% to be realized within a year and 34% over one to three-plus years.

• Spot / one-off transaction

  Products (iPhone, Mac, iPad, Wearables/Home/Accessories)

  74% of FY2025 net sales ($307,003M)

  Typical term: One-time purchase per device, sold directly or through carriers/resellers

  Demand depends on the launch cycle and on customers choosing to upgrade — FY2024 Products revenue was flat as iPhone sales stalled ($200.6B → $201.2B) before Pro models drove FY2025 growth.

• Short-term contract

  Services (App Store, advertising & licensing, subscriptions, AppleCare, payments)

  26% of FY2025 net sales ($109,158M)

  Typical term: Mix of per-transaction commissions, monthly/annual subscriptions, and multi-year AppleCare and licensing arrangements

  Grew 13–14% a year from FY2023 to FY2025. Includes amortization of service value bundled into device sale prices, which is recognized over the service period rather than at sale.

Source: Form 10-K (FY2025) — Note 2, Revenue (net sales by category, deferred revenue timing)

The named suppliers are those Apple lists as partners in its U.S. manufacturing commitments ($600B over four years, announced August 2025). Apple's full supplier base is much larger than this list.

Apple's 10-K describes its markets as highly competitive, with aggressive price competition and competitors that imitate its product features or offer integrated solutions; some have broad product lines, low-priced products, and large installed bases. It doesn't name any competitor.

Company names link to this site’s analysis where one exists; “site ↗” opens the company’s own website.

Apple says it expands its range of offerings "through research and development (R&D), licensing of intellectual property and acquisition of third-party businesses and technology." No acquisition in the last five years was named in its 10-Ks: business-acquisition payments were $33M in FY2021 and $306M in FY2022, and from FY2023 they're no longer shown as a separate cash-flow line. The two deals below are older, but each is tied to a current product or service.

Cash spent on acquisitions, FY2021–FY2022: $339M (years not reported separately are excluded)

1. Announced Jul 2019

   Intel's smartphone modem business

   $1B

   Older deal, core to today's business

   The majority of Intel's smartphone modem business: about 2,200 Intel employees joined Apple, and Apple came away holding over 17,000 wireless technology patents (combined with its own portfolio).

   Stated purpose (company)

   The team and "significant acquisition of innovative IP" would "help expedite our development on future products and allow Apple to further differentiate moving forward" (Johny Srouji, Apple).

   What it is trying to do (this site's view)

   To develop cellular modems in-house.

   Since then: In February 2025 Apple introduced C1, "the first modem designed by Apple," in iPhone 16e, calling it the result of years of R&D and "the start of a long-term strategy" for more Apple products. The announcement doesn't mention the Intel acquisition.

   Source: Apple Newsroom, Jul 25, 2019 — Apple to acquire the majority of Intel's smartphone modem business · Apple Newsroom, Feb 2025 — Apple debuts iPhone 16e

2. Jul 2014 (FY2014)

   Beats Music and Beats Electronics

   $2.6B purchase price (announced as about $3B including ~$400M vesting over time)

   Older deal, core to today's business

   Beats Electronics made Beats headphones, speakers, and audio software; Beats Music was a subscription music-streaming service.

   Stated purpose (company)

   "Music is such an important part of Apple's DNA and always will be. The addition of Beats will make our music lineup even better" (Eddy Cue, Apple).

   What it is trying to do (this site's view)

   Bought a headphone and speaker brand and a subscription music-streaming service together.

   Since then: Apple Music launched about 11 months later (June 30, 2015), with a live radio station branded Beats 1; it is now part of Services. Beats products are still listed in Wearables, Home and Accessories in the FY2025 10-K, a category that has shrunk from $39.8B (FY2023) to $35.7B (FY2025).

   Source: Form 10-K (FY2014) — Note 4, Goodwill and Other Intangible Assets · Apple Newsroom, May 28, 2014 — Apple to Acquire Beats · Apple Newsroom, Jun 8, 2015 — Introducing Apple Music

Apple doesn't name its smaller acquisitions in its 10-Ks. Press reports of small AI and technology acquisitions aren't listed here, since this section uses only SEC filings and the company's own press releases.

Inputs (FY2025): free cash flow $98.77B (operating CF − capex); enterprise value $3,879.18B = market cap $3,835.22B + debt $98.66B − cash and short-term investments $54.7B; r = WACC of 9.5% using this page’s default assumptions (β 1.03, risk-free 4.0%, market premium 5.5%).

A simplified model for seeing what the market price assumes, not a forecast or a target price. It treats free cash flow as growing at one constant rate forever; the result swings widely with small changes in r and g, and is undefined when g reaches r. Free cash flow here is operating cash flow minus capex, which is after interest — a full DCF of enterprise value would use cash flow before interest. Market cap and enterprise value use the fiscal year-end price, not today’s.

• ✓

  Operating CF ÷ net income: averages 1.14x

  Profit is backed by cash coming in.

• ✓

  Accrual ratio (latest): 0.1%

  A small share of profit rests on accounting estimates.

• ✓

  Core-earnings share (operating income ÷ pretax income): 100%

  Most profit comes from core operations.

• ✓

  Days sales outstanding: 26 → 35 days

  No major slowdown in collecting on sales.

1. 1. Buybacks turn modest profit growth into faster per-share growth

   Net income grew about 4.3% a year from FY2021 ($94.7B) to FY2025 ($112.0B), but diluted EPS grew 7.4% a year ($5.61 → $7.46), because shares outstanding fell about 10% (16.4B → 14.8B). In FY2025 Apple spent $90.7B on buybacks and $15.4B on dividends, about 95% of net income.

   What has to hold

   Free cash flow stays near $100B a year (it was $98.8B in FY2025), so Apple can keep retiring shares at this pace without adding debt.

   The other side

   At a P/E of 34x (FY2025 year-end) each buyback dollar retires fewer shares than at 25x in FY2022. The dividend yield is only about 0.4%, so investors looking for income get little of the payout directly.

   Evidence: SEC EDGAR XBRL (net income, EPS, shares outstanding); Form 10-K cash flow statement

2. 2. Services is pushing up the whole company's margin

   Services grew 13–14% a year in FY2024–FY2025 at a 75.4% gross margin, versus 36.8% for Products. As its share of revenue rose from 22% (FY2023) to 26% (FY2025), Apple's operating margin climbed from 29.8% (FY2021) to 32.0% (FY2025).

   What has to hold

   App Store commissions and search-licensing payments, two of the main Services profit sources, aren't cut back sharply by regulation or court rulings.

   The other side

   Those same revenues are what the EU's Digital Markets Act, the Epic Games injunction, the DOJ lawsuit, and the U.S. v. Google remedies target (see Risks). The filing doesn't disclose how much of Services they account for, so the exposure can't be sized from public data.

   Evidence: Form 10-K MD&A (net sales by category, gross margin); SEC EDGAR XBRL operating income

3. 3. Large cash generation and more cash than debt

   Apple held $132.4B of cash and marketable securities at FY2025 year-end against $98.7B of debt (term debt plus commercial paper), and spent relatively little on capex ($12.7B against $111.5B of operating cash flow) because manufacturing is largely outsourced.

   What has to hold

   iPhone demand holds up; it was 50% of FY2025 net sales.

   The other side

   The market already prices this in. FCF yield fell from 4.5% (FY2022) to 2.6% (FY2025) as the P/E rose from 25x to 34x, so investors are paying more for each dollar of cash flow than a few years ago, with revenue growing 6% in FY2025 and 2% in FY2024.

   Evidence: Form 10-K Liquidity and Capital Resources; SEC EDGAR XBRL; this site's calculation

Dividend yield, payout ratio, P/E, and FCF yield above use the fiscal year-end share price, not today's price, so they shift as the stock moves.

1. 1Geopolitical

   Manufacturing concentration in Asia, and tariffs

   Company disclosure (summarized from the 10-K)

   A significant majority of manufacturing is done by partners in China mainland, India, Japan, South Korea, Taiwan, and Vietnam. New U.S. tariffs announced from Q2 FY2025 on imports from those countries (and retaliatory measures) already weighed on FY2025 Products gross margin, and a Section 232 investigation could lead to further sector-based tariffs.

   Company’s stated mitigation

   Manufacturing spread across several Asian countries rather than China alone; the 10-K lists partner and facility sourcing in the U.S. as well.

   This site’s assessment

   Impact High / Likelihood High

2. 2Law & regulation

   App Store rules under antitrust and platform regulation

   Company disclosure (summarized from the 10-K)

   The EU fined Apple €500 million under the Digital Markets Act in April 2025 and ordered changes to App Store steering rules. In the U.S., an April 2025 court ruling in the Epic Games case barred Apple from charging any commission on purchases made outside apps (under appeal), and the DOJ's March 2024 monopolization suit is pending. These directly target App Store commissions, one of the main drivers of Services growth.

   Company’s stated mitigation

   As of the FY2025 10-K, Apple had appealed the Epic ruling (Ninth Circuit oral arguments were set for October 2025) and had already changed App Store terms in the EU and U.S. to comply.

   This site’s assessment

   Impact High / Likelihood High

3. 3Law & regulation

   Google search-licensing revenue at risk from antitrust remedies

   Company disclosure (summarized from the 10-K)

   Apple earns licensing revenue from Google for default-search placement. A September 2025 remedies order in the U.S. v. Google case is subject to further proceedings and appeal; if the DOJ's original proposals were imposed on appeal, Google could be barred from paying Apple for search distribution. The filing doesn't disclose how much revenue these arrangements bring in.

   Company’s stated mitigation

   Not detailed in the filing; the current remedies order does not prohibit the payments.

   This site’s assessment

   Impact High / Likelihood Low

4. 4Demand & macro

   China demand and competition

   Company disclosure (summarized from the 10-K)

   Greater China revenue declined in both FY2024 and FY2025, mainly on iPhone. With 15.5% of net sales and a 41.8% segment operating margin, further weakness there would weigh on both revenue and profit.

   Company’s stated mitigation

   Growth in Europe (+10%), Japan (+15%), and Rest of Asia Pacific (+10%) in FY2025 more than offset the Greater China decline.

   This site’s assessment

   Impact Med / Likelihood Med

5. 5Competition & technology shift

   Product transitions and competitors' pricing

   Company disclosure (summarized from the 10-K)

   The 10-K describes its markets as marked by aggressive price competition, short product life cycles, and competitors imitating Apple's features. The company must keep introducing new products (and navigate the transitions between them) to stimulate upgrade demand; Wearables/Home/Accessories revenue has already declined two years running.

   Company’s stated mitigation

   R&D spending rose 10% to $34.6B in FY2025.

   This site’s assessment

   Impact Med / Likelihood Med

6. 6FX & interest rates

   Currency exposure

   Company disclosure (summarized from the 10-K)

   Sales outside the U.S. were 64% of FY2025 net sales. The 10-K notes that weaker foreign currencies relative to the U.S. dollar hurt Americas net sales in FY2025.

   Company’s stated mitigation

   Apple hedges foreign-currency exposure with forwards, options, and cross-currency swaps (Item 7A).

   This site’s assessment

   Impact Med / Likelihood Med

7. 7Governance & quality

   International tax disputes

   Company disclosure (summarized from the 10-K)

   The European Court of Justice's September 2024 ruling upholding the EU's State Aid Decision forced a one-time $10.2B net income tax charge in Q4 FY2024, pushing that year's effective tax rate to 24.1% (vs. 15.6% in FY2025). The 10-K describes the tax outcome as subject to significant judgment across many jurisdictions.

   Company’s stated mitigation

   The State Aid matter is now settled; uncertain tax positions are reserved for.

   This site’s assessment

   Impact Med / Likelihood Low