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100 | AAPL | 1 | 2,024 | 2024-02-01 17:00:00 | Apple Inc. | 24,937 | Operator: Our next question is from Amit Daryanani with Evercore. Please go ahead.
Amit Daryanani: Good afternoon. I have two as well. I guess, first off, I was hoping you could talk a little bit about what you're seeing in China right now. I think from a geographic basis, one of the few places that was down double-digits, while everything else was growing. So, I'm hoping you spend a bit of time discussing what are you seeing there from a competitive perspective and more importantly, from a demand perspective in China?
Tim Cook: Yeah. If you look at iPhone in China Mainland, which I think has been the focus of a lot of interest, and you look at it in constant currency, so more of an operational view, we were down mid-single digits on iPhone. And so, it was the other things that drove the larger contraction year-over-year. On the good news side, we had solid growth on upgraders year-over-year in Mainland China and we had four of the top six smartphone models in urban China. Also, IDC just put out a note, that you may have seen, that we were the top brand in -- for the full year and for the December quarter. And so, there's some good news along with – obviously, we'd prefer not to [contract] (ph).
Amit Daryanani: Fair enough. And then, as a follow-up, you folks have implemented a fair bit of changes around the App Store in Europe post the DMA implementation there. Can you just touch on what are some of the key updates? And then, Luca, as a net of it all, do you see it having any significant impact financially to your services or a broader Apple P&L statement? Thank you. |
101 | AAPL | 1 | 2,024 | 2024-02-01 17:00:00 | Apple Inc. | 24,937 | Tim Cook: Yes. You know, the -- let me try to answer a little bit of both and then Luca can add some comments to it. We announced a number of changes last week in Europe that would be in effect beginning in March. So, the last month of the first calendar quarter, the second fiscal quarter. Those are -- some of the things that we announced include alternate billing opportunities, alternate app stores, our marketplaces, if you will. We're also opening NFC for new capabilities for banking and wallet apps. And so, these are some of the things we announced. The -- if you think about what we've done over the years is, we've really majored on privacy, security, and usability. And we've tried our best to get as close to the past in terms of the things that are -- that people love about our ecosystem as we can, but we are going to fall short of providing the maximum amount that we could supply, because we need to comply with the regulation. And so, in terms of predicting the choices that developers and users will make, it's very difficult to do that with precision. And so, I will see what happens in March.
Luca Maestri: Yes, Amit. As Tim said, these are changes that we're going to be implementing in March. A lot will depend on the choices that will be made. Just to keep it in context, the changes applied to the EU market, which represents roughly 7% of our global app store revenue.
Amit Daryanani: Perfect. That's a really good perspective to have. Thank you very much.
Suhasini Chandramouli: Thank you, Amit. Operator, can we have the next question please?
Operator: Our next question is from Aaron Rakers with Wells Fargo. Please go ahead. |
102 | AAPL | 1 | 2,024 | 2024-02-01 17:00:00 | Apple Inc. | 24,937 | Operator: Our next question is from Aaron Rakers with Wells Fargo. Please go ahead.
Aaron Rakers: Yes. Thanks for taking the question. I have two as well as you would imagine. I guess, the first question I wanted to just ask maybe unpack a little bit more, just remarkable trends that we're seeing in your product gross margin specifically. So, I'm curious as we look forward, I guess on this last quarter, where there any kind of benefits you're seeing from like just the purchase component, obligations that you've put in place, let's say, a year ago, and that flowing through. And how are you thinking about the component pricing environment as we think about that gross margin into the March quarter and looking-forward?
Luca Maestri: Yes. On the product side and then maybe I'll make a comment in total for the company. On the product side, our gross margins increased sequentially 280 basis points. So, obviously, a very significant increase. I would say the two primary components of the increase are a favorable mix. Of course, iPhone did very well. We did very well with our high-end models. And leverage, of course, it's the biggest quarter of the year for us and so we get the leverage effect. We had a partial offset, negative impact from foreign exchange. But net-net, obviously, very significant improvement. And we had very similar dynamics on the Services side where we increased sequentially 190 basis points, also, in this case, due to a more favorable mix. And so, the combined effect of the two businesses gave us the 45.9% at the total company level, which is up 70% sequentially. You've heard from my prepared remarks that we are guiding total company gross margin to 46% to 47%, which is an additional expansion of margins compared to the already very strong results of the December quarter. |
103 | AAPL | 1 | 2,024 | 2024-02-01 17:00:00 | Apple Inc. | 24,937 | Aaron Rakers: Okay. And then, the second question I was just going to ask. Tim, you alluded to kind of your excitement around generative AI and some announcements that we should think about maybe later this year. One of the things that stands out for me is that, your capital expenditures has actually come down this last year. I'm curious as you look to lean in more to generative AI, is there something we should consider about the CapEx intensity at Apple to make investments to really set the table for generative AI, kind of platform as we move forward? Just given some of the things that we've seen from some other large tech companies.
Luca Maestri: I'll take the question, Aaron. We've always said, we will never underinvest in the business. So, we are making all the investments that are necessary throughout our product development, software development, services development. And so, we will continue to invest in every area of the business and at the appropriate level. And we're very excited about what's in store for us for the rest of the year.
Aaron Rakers: Thank you.
Suhasini Chandramouli: Thanks, Aaron. Operator, can we have the next question please?
Operator: Our next question is from Krish Sankar with TD Cowen. Please go ahead.
Krish Sankar: Yes. Hi. Thanks for taking my question. I have two of them. First one for Luca, a clarification on a question. The $5 billion impact in March quarter, is that for product revenue or is that total company revenue. And along the same part, you highlighted the strong gross margins. And I understand last year, some of the commodity costs were deflationary, buy looks like it’s going to be inflationary right now. And also you've done some of the Mac conversions that -- the silicon conversions. So I'm just trying to figure out how much juice is there more to squeeze on the gross margin side? And then I'll follow up for Tim. |
104 | AAPL | 1 | 2,024 | 2024-02-01 17:00:00 | Apple Inc. | 24,937 | Luca Maestri: Yes. The -- so the first part of the question was around -- oh, the $5 billion. The $5 billion, as I mentioned, a year ago we had this disruption of supply on iPhone 14 Pro and Pro Max because of the factory shutdown due to the COVID-19 situation. And so, essentially there was pent up demand as we exited December quarter, they got fulfilled and we also did the channel fill associated with it during the March quarter. So close to $5 billion that I mentioned is entirely related to iPhone. On the gross margin side, obviously, we are at very high levels of gross margin. And I'll repeat what I said before, we've had good expansion over the last few quarters and now we are guiding to 46% to 47% and that takes into account everything that is going on, which is, the commodity environment, which is the foreign exchange situation, and obviously the product and services mix. And the outcome of this is the guidance, which obviously is very strong and we're very happy with it.
Krish Sankar: Thanks a lot, Luca. And then I have a follow-up for Tim. Tim, it was very interesting to hear your comments on enterprise. And historically, Apple has been a consumer centric company. And now with Vision Pro, Mac, it's sort of penetrating more into the enterprise. I'm kind of curious how to think about Apple of the future? Would it still be consumer centric or do you think it's going to be more enterprise focused also as we get into the future? Thank you very much. |
105 | AAPL | 1 | 2,024 | 2024-02-01 17:00:00 | Apple Inc. | 24,937 | Tim Cook: We've really concluded that we can do both. That if you look at it, what has happened over the last several years is that, employees are in a position in many companies to choose their own technology that is the best for them. And so, it sort of took some of the central command from the traditional company and decentralized the decision-making. That is a huge advantage for Apple, because there's a lot of people out there that want to use a Mac. They're using a Mac at home. They'd like to use one in the office as well. iPad has also benefited from that. Vision Pro, it's -- when you look at the ton of use cases, I mean, we're starting with a million apps and 600 plus that are -- have been designed particularly for Vision Pro. When I look at what is coming out of Enterprise, it's some of the most innovative things I've seen come out of Enterprise in a long time. And so, I think there's a like there is for the Mac and iPad, and of course, iPhone has been in enterprise since the early days of iPhone. I think there's a nice opportunity there for Vision Pro as well.
Krish Sankar: Great. Thanks a lot Tim. Very interesting to hear. Thank you.
Suhasini Chandramouli: Thank you, Krish. Operator, can we have the next question, please?
Operator: Our next question is from David Vogt with UBS. Please go ahead. |
106 | AAPL | 1 | 2,024 | 2024-02-01 17:00:00 | Apple Inc. | 24,937 | Operator: Our next question is from David Vogt with UBS. Please go ahead.
David Vogt: Great. Thanks guys. And I have two questions as well. So, Tim and Luke, I appreciate the strength in the emerging markets like India and the other names that you kind of listed on the call, but can you maybe spend some time on the Americas? Obviously, that was relatively flat, you touched on China, but what are you seeing in that market from the carriers here in the States? And is the sales cycle elongating or the replacement cycle elongating? And in your view what has to change to kind of maybe re-accelerate that business in the America's, particular in the iPhone business? And then on sort of -- I just want to make sure I understand sort of the guide. So when I think about the $5 billion pull forward last year in the March quarter from a channel fill perspective, even if I back it out last quarter or I back it up this quarter, the March quarter, this would be sort of the softest quarter since the COVID pandemic. Obviously, I know the Americas as I just touched on is a little bit softer than China, which you cleared up earlier. But how do you think about the differences in sort of the macro conditions by region? And again, do you have a sense for are we nearing a trough from a macro demand perspective or how long do you think this particular weakness persists? Thanks. |
107 | AAPL | 1 | 2,024 | 2024-02-01 17:00:00 | Apple Inc. | 24,937 | Tim Cook: Let me take the first part of your question about America. If you look at the U.S., which obviously drives the vast, vast majority of the revenue in America, we grew in the December quarter from an iPhone business point of view and the install base hit an all-time high. If you look at the replacement cycle, it's very difficult to measure the replacement cycle at any given point. And so, what we focus on internally a lot is the active install base and the -- obviously, the sales over usually a cycle and we feel better about those things. If you look at the -- who's selling what in the U.S., the iPhone is four out of the top five selling smartphones in the US. And of course, the customer satisfaction in the U.S. as we alluded to earlier is 99%. So we feel very, very good about what our position is in the U.S.
Luca Maestri: And I would add to that, keep in mind, obviously, the extra week that we had a year ago that obviously makes the compare more -- a bit distorted. On the March quarter guide, I would point to you that, obviously, the COVID years had a lot of, let's say, turmoil in it, a lot of volatility that typically you wouldn't see. If you look at our sequential progression from December to March this year versus pre-COVID versus like a more normal environment, it's actually stronger than those years.
David Vogt: Got it. Thanks, guys.
Suhasini Chandramouli: Thank you, David. Operator, can we have the last question, please?
Operator: Thank you. Our last question is from Ben Reitzes with Melius Research. Please go ahead. |
108 | AAPL | 1 | 2,024 | 2024-02-01 17:00:00 | Apple Inc. | 24,937 | Operator: Thank you. Our last question is from Ben Reitzes with Melius Research. Please go ahead.
Ben Reitzes: Yes. Hi. Thanks. Appreciate it. Two questions, if I can sneak them in. Just wanted to clarify on China. Tim, I think last quarter you still thought it was a growth market. Obviously, there's some concerns with the -- recently and given what we saw in the quarter, is there something that we can kind of point to where you feel that that market can resume growth in the future? And I'm wondering if you're still upbeat about that prospect. And then I just have a quick follow up.
Tim Cook: Ben, we've been in China for 30 years. And I remain very optimistic about China over the long term. And I feel good about hitting a new install base number, high watermark and very good about the growth in upgraders year-over-year during the quarter.
Ben Reitzes: Great. Thanks Tim. And just in terms of AI, I know you're not going to talk about your plans, but do you believe -- are you a believer in the edge thesis that AI and processing on smartphones and devices like yours is going to have a huge role in AI and AI apps and that it's something you guys can take advantage of.
Tim Cook: Let me just say that, I think there's a huge opportunity for Apple with GenAI and AI. And without getting into to more details and getting out in front of myself.
Ben Reitzes: Thanks Tim.
Tim Cook: Yes, Thanks, Ben.
Suhasini Chandramouli: All right. Thank you Ben. A replay of today's call will be available for two weeks on Apple Podcasts, as a webcast on apple.com/investor and via telephone. The number for the telephone replay is 866-583-1035. Please enter confirmation code 0106234 followed by the pound sign. These replays will be available by approximately 5 p.m. Pacific time today. Members of the press with additional questions can contact Josh Rosenstock at 408-862-1142 and financial analysts can contact me, Suhasini Chandramouli, with additional questions at 408-974-3123. Thanks again for joining us. |
109 | AAPL | 1 | 2,024 | 2024-02-01 17:00:00 | Apple Inc. | 24,937 | Operator: Once again, this does conclude today's conference. We do appreciate your participation. |
110 | AAPL | 2 | 2,025 | 2025-05-01 19:13:00 | Apple Inc. | 24,937 | Suhasini Chandramouli: Good afternoon, and welcome to the Apple Q2 Fiscal Year 2025 Earnings Conference Call. My name is Suhasini Chandramouli, Director of Investor Relations. Today's call is being recorded. Speaking first today is Apple's CEO, Tim Cook; and he'll be followed by CFO, Kevan Parekh. After that, we'll open the call to questions from analysts. Please note that some of the information you'll hear during our discussion today will consist of forward-looking statements, including without limitation those regarding revenue, gross margin, operating expenses, other income and expense, taxes, capital allocation and future business outlook, including the potential impact of tariffs and other trade measures and macroeconomic conditions on the company's business and results of operations. These statements involve risks and uncertainties that may cause actual results or trends to differ materially from our forecast. For more information, please refer to the risk factors discussed in Apple's most recently filed reports on Form 10-Q and Form 10-K and the Form 8-K filed with the SEC today, along with the associated press release. Additional information will also be in our report on Form 10-Q for the quarter ended March 29, 2025 to be filed tomorrow and in other reports and filings we make with the SEC. Apple assumes no obligation to update any forward-looking statements, which speak only as of the date they are made. I'd now like to turn the call over to Tim for introductory remarks. |
111 | AAPL | 2 | 2,025 | 2025-05-01 19:13:00 | Apple Inc. | 24,937 | Tim Cook: Thank you, Suhasini. Good afternoon, everyone, and thanks for joining the call. Today, we are reporting 95.4 billion in revenue, up 5% from a year ago and at the high end of the range we provided last quarter. Diluted EPS was $1.65, up 8% year-over-year and a March quarter record. Services achieved an all-time revenue record, growing 12% compared to the prior year. We also set a number of quarterly records in countries and regions across the world, including the UK, Spain, Finland, Brazil, Chile, Turkey, Poland, India, and the Philippines. We are as dedicated as ever to the innovation and ingenuity that will enrich our customers' lives and help us leave the world better than we found it. And we are proud to increase our impact around the world, including here in the United States, where we recently announced plans to spend $500 billion over the next four years. We're going to be expanding our teams in our facilities in several states, including Michigan, Texas, California, Arizona, Nevada, Iowa, Oregon, North Carolina, and Washington. And we're going to be opening a new factory for advanced server manufacturing in Texas. During calendar year 2025, we expect to source more than 19 billion chips from a dozen states, including tens of millions of advanced chips being made in Arizona this year. We also source glass used in iPhone from an American company. All told, we have more than 9,000 suppliers in the U.S. across all 50 states. Now I'll turn to products, starting with iPhone. iPhone revenue was $46.8 billion, up 2% from a year ago. During the quarter, we introduced iPhone 16e, a great new entry-level addition to our iPhone 16 lineup. It's powered by our latest generation A18 chip and includes the all-new Apple-designed C1 modem, the most energy-efficient modem ever in an iPhone, allowing iPhone 16e to have the longest battery life of any 6.1-inch iPhone. Meanwhile, iPhone 16 and iPhone 16 Plus users are exploring how they can use Camera Control, whether capturing stunning images or exploring the world |
112 | AAPL | 2 | 2,025 | 2025-05-01 19:13:00 | Apple Inc. | 24,937 | iPhone 16 Plus users are exploring how they can use Camera Control, whether capturing stunning images or exploring the world with Visual Intelligence. And our iPhone 16 Pro models continue to be a hit with our users. They are turbocharged by the remarkable capabilities and efficiency of A18 Pro and feature larger displays, an advanced camera system and a beautiful design. Mac revenue was $7.9 billion, 7% higher year-over-year, another great quarter for Mac. During the quarter, we introduced significant new updates to our lineup. The world's most popular laptop just got even better. The M4-powered MacBook Air features a 12-megapixel Center Stage camera and delivers a massive boost in performance. And now it comes in a beautiful new sky blue color. The new Mac Studio is the most powerful Mac we've ever shipped, equipped with M4 Max and our new M3 Ultra chip. It's a true AI powerhouse capable of running large language models with over 600 billion parameters entirely in memory. Apple Intelligence brings great capabilities to the Mac with features like Writing Tools and Notification Summaries that help users stay focused and get more done. Turning to iPad. Revenue for the quarter was $6.4 billion, up 15% from a year ago, another strong quarter of double digit growth. Our iPad lineup continues to help users learn, work, play, and go wherever their imaginations take them. The new iPad Air with M3 combines powerful performance and exceptional portability, whether you're taking it across the street or around the world. And Apple Intelligence and Apple Pencil Pro are a perfect match, with features like the Clean Up Tool in Photos to remove distractions, and Image Wand in the Notes app to elevate simple sketches into polished illustrations. Across Wearables, Home and Accessories, revenue was $7.5 billion, down 5% from a year ago. From walking trails to bike paths, Apple Watch Series 10 is an essential partner wherever you are on the health and fitness journey. And AirPods 4 with active noise cancellation delivers an |
113 | AAPL | 2 | 2,025 | 2025-05-01 19:13:00 | Apple Inc. | 24,937 | essential partner wherever you are on the health and fitness journey. And AirPods 4 with active noise cancellation delivers an extraordinary experience in an open-ear design. Customers continue to tell me how important our Hearing Health features for AirPods Pro 2 are to them, and we've been expanding their availability to reach even more users around the world. Millions have already taken hearing tests and the stories we received about the new hearing aid feature are deeply moving, showing how these innovations are making a real difference in people's daily lives. It's a powerful reminder of the impact technology can have when it's designed with care. Meanwhile, Apple Vision Pro takes the concert experience to a whole new level with Metallica, our latest Apple immersive video, which you have to see to believe. And visionOS 2.4 unlocks the first set of Apple Intelligence features for Vision Pro users while inviting them to explore a curated and regularly updated collection of spatial experiences with the Spatial Gallery app. In retail, in addition to the two stores we opened during the quarter, we're also looking forward to a new retail store in the UAE, the arrival of the online store in Saudi Arabia and new retail stores in India starting later this year. Let's now turn to Services, where we achieved an all-time revenue record of $26.6 billion, up 12% from a year ago with strong performance across all of our categories. From starting their morning with their podcast of choice to buying a coffee with Apple Pay to spending an afternoon reading the latest bestseller on Apple Books to using their favorite app from the App Store or an evening workout with Fitness+, Apple Services are enriching our users' lives all throughout their day. With incredible shows like The Studio, Your Friends & Neighbors and the culture-shaping Severance, Apple TV+ has become a must-see destination with record viewership during the quarter. And we're excited for our upcoming movie F1 starring Brad Pitt, which will hit theaters this |
114 | AAPL | 2 | 2,025 | 2025-05-01 19:13:00 | Apple Inc. | 24,937 | viewership during the quarter. And we're excited for our upcoming movie F1 starring Brad Pitt, which will hit theaters this summer and gives an incredible inside look at one of the most intense sports on Earth. And there is so much more to come this year. It's no wonder Apple TV+ has earned more than 2,500 award nominations and 560 wins. We're also reaching sports fans in more ways than ever, from watching our favorite teams go to bat on Friday Night Baseball to cheering on their local team with MLS Season Pass to following the results of every Grand Prix with Formula 1 now on the Apple Sports app. Turning to software. We just released iOS 18.4, which brought Apple Intelligence to more languages, including French, German, Italian, Portuguese, Spanish, Japanese, Korean, and simplified Chinese as well as localized English to Singapore and India. AI and machine learning are core to so many profound features we've rolled out over the years to help our users live a better day. It's why we designed Apple Silicon with a neural engine that powers so many AI features across our products and third-party apps. It's also what makes Apple products the best devices for generative AI. At WWDC 24, we announced Apple Intelligence and shared our vision for integrating generative AI across our ecosystem into the apps and features our users rely on every day. To achieve this goal, we built our own highly capable foundation models that are specialized for everyday tasks. We designed helpful features that are right where our users need them and are easy to use. And we went to great lengths to build a system that protects user privacy, whether requests are processed on-device or in the cloud with Private Cloud Compute, an extraordinary step forward for privacy and AI. Since we launched iOS 18, we've released a number of Apple Intelligence features from helpful Writing Tools to Genmoji, Image Playground, Image Wand, Clean Up, Visual Intelligence and a seamless connection to ChatGPT, we made it possible for users to create movies of |
115 | AAPL | 2 | 2,025 | 2025-05-01 19:13:00 | Apple Inc. | 24,937 | Wand, Clean Up, Visual Intelligence and a seamless connection to ChatGPT, we made it possible for users to create movies of their memories with a simple prompt and added AI-powered photo search, smart replies, priority notifications, summaries for mail, messages and more. We've also expanded these capabilities to more languages and regions. With regard to the more personal Siri features we announced, we need more time to complete our work on these features so they meet our high-quality bar. We are making progress and we look forward to getting these features into customers' hands. Turning to sustainability. We just celebrated Earth Day, and we were proud to announce that we've cut our emissions by 60% from our 2015 levels. Today, we're using more clean energy across our operations and more recycled materials in our products than ever. We have worked with suppliers to bring 17.8 gigawatts of renewable electricity online. We're also saving billions of gallons of freshwater and redirecting millions of metric tons of waste from landfills. All of this will help us make important progress towards our goal of carbon neutrality across our supply chain and the life cycle of our products by 2030. Now let me walk you through the impacts of tariffs in the March quarter and give you some color on what we expect for the June quarter. For the March quarter, we had a limited impact from tariffs as we were able to optimize our supply chain and inventory. For the June quarter, currently, we are not able to precisely estimate the impact of tariffs as we are uncertain of potential future actions prior to the end of the quarter. However, for some color, 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 $900 million to our costs. This estimate should not be used to make projections for future quarters as there are certain unique factors that benefit the June quarter. For our part, we will manage the company the |
116 | AAPL | 2 | 2,025 | 2025-05-01 19:13:00 | Apple Inc. | 24,937 | future quarters as there are certain unique factors that benefit the June quarter. For our part, we will manage the company the way we always have, with thoughtful and deliberate decisions, with a focus on investing for the long term, and with dedication to innovation and the possibilities it creates. As we look ahead, we remain confident, confident that we will continue to build the world's best products and services, confident in our ability to innovate and enrich our users' lives, and confident that we can continue to run our business in a way that has always set Apple apart. Next month, we can't wait to welcome our developer community for the Worldwide Developers Conference, and we look forward to revealing some exciting announcements. With that, I'll turn it over to Kevan. |
117 | AAPL | 2 | 2,025 | 2025-05-01 19:13:00 | Apple Inc. | 24,937 | Kevan Parekh: Thanks, Tim, and good afternoon, everyone. Our March quarter revenue of $95.4 billion was up 5% year-over-year despite a headwind of almost 2.5 percentage points from foreign exchange. We also grew in the majority of the markets we track. Products revenue was $68.7 billion, up 3% year-over-year, driven by growth in iPhone, iPad, and Mac. And thanks to our high levels of customer satisfaction and strong loyalty, our installed base of active devices reached an all-time high across all product categories and geographic segments. Services revenue was $26.6 billion, up 12% year-over-year despite over 2 percentage points of foreign exchange headwinds. And as Tim mentioned, this was an all-time revenue record. We also grew in every geographic segment and saw double-digit growth in both developed and emerging markets. Company gross margin was 47.1%, in the middle of our guidance range and up 20 basis points sequentially primarily driven by favorable mix. Products gross margin was 35.9%, down 340 basis points sequentially, driven by mix, foreign exchange and a seasonal loss of leverage. Services gross margin was 75.7%, up 70 basis points sequentially, primarily driven by a different mix, partly offset by foreign exchange. Operating expenses landed at $15.3 billion, up 6% year-over-year. Net income was $24.8 billion and diluted earnings per share was $1.65, up 8% year-over-year and a March quarter record. Operating cash flow was also strong at $24 billion. Now I'm going to provide some more details for each of our revenue categories. iPhone revenue was $46.8 billion, up 2% year- over-year driven by the iPhone 16 family. The iPhone Active installed base grew to an all-time high in total and in every geographic segment, and iPhone upgraders grew double-digits year-over-year. According to a recent survey from Kantar, during the March quarter, iPhone was a top-selling model in the U.S., urban China, the UK, Germany, Australia, and Japan. And we continue to see high levels of customer satisfaction in the U.S. at |
118 | AAPL | 2 | 2,025 | 2025-05-01 19:13:00 | Apple Inc. | 24,937 | urban China, the UK, Germany, Australia, and Japan. And we continue to see high levels of customer satisfaction in the U.S. at 97% as measured by 451 Research. Mac revenue was $7.9 billion, up 7% year-over-year, driven by the latest MacBook Air, MacBook Pro and Mac Mini models. This performance was broad-based with every geographic segment growing year-over-year. Mac installed base reached an all-time high and we saw strong growth for both upgraders and customers new to the Mac. Customer satisfaction was reported at 95% in the U.S. iPad revenue was $6.4 billion, up 15% year-over-year, driven by the new M3-powered iPad Air. The iPad installed base reached another all-time high, and over half the customers who purchased an iPad during the quarter were new to the product. Based on the latest reports from 451 Research, customer satisfaction was 97% in the U.S. Wearables, Home and Accessories revenue was $7.5 billion, down 5% year-over-year. Keep in mind, we did face a more difficult compare against the launch of the Apple Vision Pro in the year ago quarter as well as the Watch Ultra 2 launched last year. At the same time, the Apple Watch installed base reached a new all-time high with over half of customers purchasing an Apple Watch during the quarter being new to the product. And customer satisfaction for Watch in the U.S. was recently measured at 95%. Our Services revenue reached an all-time high of $26.6 billion, up 12% year-over-year. This growth rate was comparable to the December quarter year-over-year growth rate when we removed the negative impact from foreign exchange. We saw strong momentum in the March quarter and the growth of our installed base of active devices gives us great opportunities for the future. Customer engagement across our Services offerings also continue to grow. Both transacting and paid accounts reached new all-time highs, with paid accounts growing double-digits year-over-year. Paid subscriptions also grew double-digits. We have well over 1 billion paid subscriptions across the |
119 | AAPL | 2 | 2,025 | 2025-05-01 19:13:00 | Apple Inc. | 24,937 | year-over-year. Paid subscriptions also grew double-digits. We have well over 1 billion paid subscriptions across the services on our platform. We continue to improve the quality and breadth of our service offerings from additional features in News+ to new games available on Arcade. Apple Pay continues to help our customers with an easy, secure and private payment solution, and we were pleased to see that our active users in Apple Pay reached an all-time record, up double-digits year-over-year. Turning to enterprise. Organizations are investing more on Apple products and services to drive productivity and employee engagement. For example, KPMG recently rolled out iPhone 16 for all U.S. employees, reflecting their confidence in Apple's security and privacy features. We also continue to see strong Mac performance in enterprise. New Bank, the largest digital bank in Latin America has selected MacBook Air as a standard computer for their thousands of employees. With Vision Pro, companies are continuing to find new and innovative ways to leverage this technology. Dassault Systèmes, a leading provider for engineering and 3D design software has natively integrated Apple Vision Pro into their next-generation platform, bringing a powerful and immersive spatial experience to thousands of enterprise customers. Now let's turn to our cash position and capital return program. We ended the quarter with $133 billion in cash and marketable securities. We had $3 billion in debt maturities and increased commercial paper by $4 billion, resulting in $98 billion in total debt. Therefore, at the end of the quarter, net cash was $35 billion. During the quarter, we returned $29 billion to shareholders. This included $3.8 billion in dividends and equivalents and $25 billion through open market repurchases of 108 million Apple shares. Given the continued confidence we have in our business now and into the future, today, our Board authorized an additional $100 billion for share repurchases as we maintain our goal of getting to net cash |
120 | AAPL | 2 | 2,025 | 2025-05-01 19:13:00 | Apple Inc. | 24,937 | today, our Board authorized an additional $100 billion for share repurchases as we maintain our goal of getting to net cash neutral. We're also raising our dividend by 4% to $0.26 per share of common stock, and we continue to plan for annual increases in the dividend going forward as we have done for the last 13 years. This cash dividend will be payable on May 15, 2025, to shareholders of record as of May 12, 2025. As we move ahead into the June quarter, I'd like to review our outlook, which includes the types of forward-looking information that Suhasini referred to. Importantly, the color we're providing assumes that global tariff rates, policies and application remain in effect as of this call. And the global macroeconomic outlook doesn't worsen from today for the current quarter. Despite the overall uncertain environment, we will still be providing color at the total company level, subject to these assumptions and the risk factors that we referred to at the beginning of the call. We expect our June quarter total company revenue to grow low to mid-single digits year-over-year. We expect gross margin to be between 45.5% and 46.5%, which includes the estimated impact of the $900 million of tariff-related costs that Tim referred to earlier. We expect operating expenses to be between $15.3 billion and $15.5 billion. We expect OI&E to be around negative $300 million, excluding any potential impact from the mark-to-market of minority investments and our tax rate to be around 16%. With that, let's open the call to questions. |
121 | AAPL | 2 | 2,025 | 2025-05-01 19:13:00 | Apple Inc. | 24,937 | Suhasini Chandramouli: We ask that you limit yourself to two questions. Operator, may we have the first question, please?
Operator: Certainly. We'll go ahead and take our first question from Erik Woodring with Morgan Stanley.
Erik Woodring: Great, thanks so much guys for taking my questions. Tim, I'd love to maybe touch on the tariff point first. There were comments from you earlier on CNBC talking about 50% of iPhones for the U.S. currently coming from India. Where do you expect the mix of India-sourced iPhones for the U.S. to be by the end of your fiscal year? And is it the goal to source 100% of your U.S.-bound iPhones from India? Can you just help us understand kind of how we should expect that to trend as we look beyond just the June quarter? And then I have a follow-up. Thank you. |
122 | AAPL | 2 | 2,025 | 2025-05-01 19:13:00 | Apple Inc. | 24,937 | Tim Cook: Yes, Erik, hi. It's Tim. The existing tariffs that apply to Apple today are based on the product's country of origin as you alluded to. For the June quarter, we do expect the majority of iPhones sold in the U.S. will have India as their country of origin and Vietnam to be the country of origin for almost all iPad, Mac, Apple Watch, and AirPods products sold in the -- also sold in the U.S. China would continue to be the country of origin for the vast majority of total product sales outside the U.S. And so if you look at the categories of tariffs that are applicable to us today, for the June quarter, most of our tariff exposure relates to the February IEEPA-related tariff at the rate of 20%, which applies to imports to the U.S. for products that have China as their country of origin. In addition, for China, there was an additional 125% tariff for imports of certain categories of products announced in April. And for us, that's some of our U.S. AppleCare and Accessories businesses and brings the total rate in China for these products to at least 145%. Also for transparency and clarity, the vast majority of our products, including iPhone, Mac, iPad, Apple Watch, and Vision Pro, are currently not subject to the global reciprocal tariffs that were announced in April as the Commerce Department has initiated a Section 232 investigation into imports of semiconductors, semiconductor manufacturing equipment and downstream products that contain semiconductors. And so if you -- for the June quarter, as I talked about in the -- in my opening comments, we estimate the impact, assuming that the current global tariff, rates, policies and applications don't change for the balance of the quarter, to be 900 million to our costs. I wouldn't want to predict the mix of production in the future, but I wanted to give you clarity for the June quarter of where the country of origins are so you can use that for your modeling. |
123 | AAPL | 2 | 2,025 | 2025-05-01 19:13:00 | Apple Inc. | 24,937 | Erik Woodring: Okay. I appreciate that color. Thank, Tim. And then maybe my follow-up is there were a number of reports during the quarter that Apple had pulled forward sell-in into the channel to get ahead of tariffs. So can you just help us better kind of understand or clarify if sell-in and sell-through were aligned in the March quarter? If you're assuming that they would be aligned in the June quarter guide? And ultimately, do you believe that consumers are accelerating hardware purchases to get ahead of any potential pricing increases or was behavior normal? Thank you so much, Tim.
Tim Cook: Yes. Thanks, Erik, for the question. There are several questions there. One, in terms of the pull forward in demand, if you look at the March quarter, we don't believe that we saw obvious evidence of a significant pull forward in demand in the March quarter due to tariffs. If you look at our channel inventory, from the beginning of the quarter to the end of the quarter, the unit channel inventory was similar, not only for iPhone but for the balance of our products. Again, for transparency, you will see that we did build ahead inventory, and that's reflected in our manufacturing purchase obligations that you'll see on the quarterly filing when it comes out. So I hope that makes the -- answers all your questions.
Erik Woodring: Thank you so much, Tim. Good Luck.
Tim Cook: Thanks.
Suhasini Chandramouli: Thank you, Eric. Operator, could we have the next question, please?
Operator: Our next question is from Ben Reitzes with Melius. Please go ahead. |
124 | AAPL | 2 | 2,025 | 2025-05-01 19:13:00 | Apple Inc. | 24,937 | Operator: Our next question is from Ben Reitzes with Melius. Please go ahead.
Ben Reitzes: Hi, thanks a lot. Tim, if you had told me that on April 2 that your hit from tariffs was only a nickel-ish a quarter at 900 million, that would have been a pretty good outcome, given the panic that ensued. I'm surprised that it's that low. But then you did make a comment about after the June quarter, and sorry to push you on that, but could it be a multiple of that figure or is it just completely unknown? We're all just trying to figure out what happens after June. And if there's just any guidance you guys can possibly give that it's bigger, smaller or what? And hoping you can just give us a little color on that. Thanks.
Tim Cook: Yes, Ben. Thanks for the question. I tried to give you some information in the previous question about the country of origin, which currently is the key factor in determining the tariffs that we're paying. I don't want to predict the future because I'm not sure what will happen with the tariffs, and there is the Section 232 investigation going on. And so it's very difficult to predict beyond June. And June has the assumptions in it that I had mentioned earlier.
Ben Reitzes: All right, Tim. And then just with regard to China down 2%, I mean, you intuitively would have thought there would have been an increased nationalism there and perhaps it would have been worse than that. And the trajectory there improving even with subsidies because subsidies benefited your competitors, too. Just wondering if I could get a little more color there. Can it keep improving? What are you thinking with regard to that trajectory in China, given all the geopolitical tensions? Thanks. |
125 | AAPL | 2 | 2,025 | 2025-05-01 19:13:00 | Apple Inc. | 24,937 | Tim Cook: Yes, we were down 2%, as you point out, for the March quarter. And to provide a little more transparency around that, we were roughly flat when you remove the headwinds from foreign exchange. And so we did see quite a bit of sequential improvement from the December quarter, which was down 11. And again, for going out of the way for transparency, the channel inventory at the end of March, the unit channel inventory was similar to where we started the quarter. So there wasn't a build of channel inventory in there. I do believe that the subsidies played a favorable impact on the results. It's difficult to estimate with precision as to exactly how much, but I think it was positive. Some of our products are included. Some of them are not. Generally, on iPhone, if something is priced above RMB6,000, it is not eligible for the subsidy and the other products have different rules. But I do think it helped. And I think it's helping others as well, I'm sure. iPhone was the key driver of the improvement sequentially. And so hopefully, that provides you some color. The other thing I would say is that the Mac, the iPad, and the Watch are attracting a majority of customers new to that product. And so that continues to look quite good in China. And iPhone was the top two models in urban China, and iPad was the top two tablets in urban China. So there's some positive nuggets there.
Ben Reitzes: Thanks a lot, Tim.
Tim Cook: Yes. Thank you, Ben.
Suhasini Chandramouli: Thank you, Ben. Operator, may we have the next question, please?
Operator: Our next question is from Michael Ng with Goldman Sachs. Please go ahead. |
126 | AAPL | 2 | 2,025 | 2025-05-01 19:13:00 | Apple Inc. | 24,937 | Operator: Our next question is from Michael Ng with Goldman Sachs. Please go ahead.
Michael Ng: Hi, good afternoon. Thank you very much for the question. I was just wondering if you could talk a little bit about your responses on some of this trade policy uncertainty. I appreciated the transparency around building ahead with inventory. Will you continue to do that in this interim period until we get some clarity on Section 232 investigation? And could you talk a little bit about your philosophy on pricing, elevated costs to the extent that comes through, whether that be to resellers or end consumers and other efficiency efforts that you might be able to pursue? Thank you.
Tim Cook: Yes. Obviously, we're very engaged on the tariff discussions. We believe in engagement and we'll continue to engage. On the pricing piece, we have nothing to announce today. And I'll just say that the operational team has done an incredible job around optimizing the supply chain and the inventory. And we'll obviously continue to do those things to the degree that we can.
Michael Ng: Great. Thanks. And just as a quick follow-up for Kevan, on product gross margins, I was just wondering if you could provide a little bit more color on some of the factors that may have impacted product gross margins in the quarter. Obviously, down sequentially on seasonal factors but there was a year-over-year decline as well. So any additional color would be helpful? Thank you.
Kevan Parekh: Yes, Michael, thanks. This is Kevan. So on the sequential, as we mentioned in the prepared remarks, we had a decrease in the product gross margin by 340 basis points sequentially. That was primarily driven by mix, seasonal loss of leverage, foreign exchange and that was partly offset by cost savings. And when we look at the year-on-year performance, we were down 70 basis points on a year-on- year basis. And that was driven by a different mix and foreign exchange.
Michael Ng: Thank you.
Kevan Parekh: Thank you. |
127 | AAPL | 2 | 2,025 | 2025-05-01 19:13:00 | Apple Inc. | 24,937 | Michael Ng: Thank you.
Kevan Parekh: Thank you.
Suhasini Chandramouli: Thank you, Mike. Operator, could we have the next question, please?
Operator: Our next question is from Amit Daryanani with Evercore. Please go ahead.
Amit Daryanani: Thanks a lot. I guess I'll have to start with a tariff question as well. Tim, I think when you talked about the 900 million impact to your cost of goods sold, you sort of had a statement that there are certain unique factors that benefit you in the June quarter related to that number. Can you just talk about what are these unique factors that are benefiting you in the June quarter? And what would the impact be without those benefits essentially?
Tim Cook: I wouldn't want to go through all of them. But as an example, the build ahead that is -- I mentioned earlier that's in the manufacturing purchase obligations is -- were helpful.
Amit Daryanani: Got it. And then as I think about the June quarter guide of low to mid-single-digit revenue growth, I was wondering, do you folks expect services growth to remain in the double-digit range as you go into the back half of the year? I imagine FX is a bit of a benefit as you go to the back half. I would love to just understand, within that framework, how do you think services stacks up as you go through the June quarter?
Kevan Parekh: Yes, Amit. Hi, it's Kevan. So I think when we talk about the overall June quarter, we talk about the low to mid-single digits year- over-year. We do expect foreign exchange in the June quarter to improve sequentially. However, we are expecting it to be a slight headwind to revenue on a year-on-year basis. With respect to services, given the uncertainty we see from several factors, we aren't providing the category level of color today.
Amit Daryanani: Got it. Thank you.
Kevan Parekh: Thank you.
Suhasini Chandramouli: Thanks, Amit. Operator, could we have the next question, please?
Operator: Our next question is from Wamsi Mohan with Bank of America. Please go ahead. |
128 | AAPL | 2 | 2,025 | 2025-05-01 19:13:00 | Apple Inc. | 24,937 | Operator: Our next question is from Wamsi Mohan with Bank of America. Please go ahead.
Wamsi Mohan: Yes. Thank you. Tim or Kevan, how should investors think about the gross margin trajectory as you source more from the U.S. in particular or other supply chain changes that you are making, including in India? How should those kind of play into the cost structure and how should we think about that gross margin trajectory and I will follow-up?
Tim Cook: We're excited about bringing more production to the U.S. As you know, we've been very key in the TSMC project in Arizona and are the largest and first customer getting product out of that. And that's the SoC that's coming out of there. We also have glass coming out of the U.S. and the Face ID module and loads of chips. In fact, there's 19 billion chips coming out across 12 states. This is down to the resistor and capacitor level, obviously. And so there's some that is already built into the margins that Kevan has quoted. And we don't really forecast beyond the current quarter as you know.
Kevan Parekh: Yes, maybe I'll add a couple of more points as we think about just the margin going forward. A couple of observations I'd mention is every product cycle is different and over the years we have managed gross margin well. We've made good decisions balancing units revenue margins. When we launch new products, they tend to have a higher cost structure than the products they replace as we introduce new features and technologies. We do have a good track record of reducing those costs and structures over the life of the product. And our products and services all have different levels of profitability and their relative success in the marketplace has an impact on the overall gross margin. So I hope that's helpful color and context for you. |
129 | AAPL | 2 | 2,025 | 2025-05-01 19:13:00 | Apple Inc. | 24,937 | Wamsi Mohan: No, that's super helpful. Thank you. I guess you just noted that you weren't going to give services maybe a growth forecast here in light of some of the uncertain news. But maybe, Tim, could you share any color around what you have seen in developer behavior in areas like Europe where there has now been emergence of alternate app stores for a little more time? What have you seen anecdotally or within your data in terms of maybe develop a behavior, whether it's large or small? Any color you can share on what has like actually happened?
Tim Cook: It's embedded in our results that Kevan talked about earlier and embedded in the overall company color that was provided. But as you know, the Digital Markets Act went into effect in, I believe it was March of last year. And so the Digital Markets Act has been enacted for a bit over a year and there's been alternate app stores for some period of time of that. And so it's -- at this point in Europe, there are some embedded in the actuals. There may be more to come and so forth. I don't want to predict beyond the current quarter.
Wamsi Mohan: Okay. Thank you, Tim.
Suhasini Chandramouli: Thank you, Wamsi. Operator, could we have the next question, please?
Operator: Our next question is from David Vogt with UBS. Please go ahead. |
130 | AAPL | 2 | 2,025 | 2025-05-01 19:13:00 | Apple Inc. | 24,937 | Operator: Our next question is from David Vogt with UBS. Please go ahead.
David Vogt: Great. Thanks, guys. Thanks for taking my question. So I've got two as well, and Tim, this is more of a big picture supply chain philosophical question. So can you maybe update us on your thoughts on how you're thinking about your resiliency and redundancy, following the change that you guys talked about earlier on the call? I guess what I'm trying to understand is how do we think about where your supply chain is two to three years from now? And is there any risk, at least in the near term, of maybe some export control issues in your outlook for the balance of this year? And I'll give you my second one at the same time. You quantified a $900 million hit from tariffs. Or Kevan, is there any impact in how you're thinking about the demand backdrop in your outlook for the June quarter on the revenue line holistically? Thanks.
Tim Cook: In terms of the resiliency and risk, et cetera, there -- we have a complex supply chain. There's always risk in the supply chain. And so I wouldn't tell you anything different than that. What we learned some time ago was that having everything in one location had too much risk with it. And so we have, over time, with certain parts of the supply chain, not the whole thing, but certain parts of it opened up new sources of supply. And you could see that kind of thing continuing in the future. I'll let Kevan answer the other question.
Kevan Parekh: Hi, David. On the other question, I would say that our best thinking is captured in the outlook that we provided. However, I did want to reemphasize the point that the assumptions we made on the outlook do assume that the global tariff rates, the policies and application remain the same as they are today as of this call and that the global macroeconomic outlook doesn't worsen from today. |
131 | AAPL | 2 | 2,025 | 2025-05-01 19:13:00 | Apple Inc. | 24,937 | David Vogt: Okay. But no quantifiable impact on demand to date, at least from where we are over the last month? Is there a way to kind of think about that from early April to early May?
Kevan Parekh: I would say our best thinking is reflected in the range that we provided.
David Vogt: Okay. Thanks, Kevan. Thanks, guys.
Kevan Parekh: Thank you.
Suhasini Chandramouli: Thank you, David. Operator, could we have the next question, please?
Operator: Our next question is from Samik Chatterjee with JPMorgan. Please go ahead.
Samik Chatterjee: Hi. Good afternoon. Thanks for taking my questions. I guess, Tim, you made a comment on the last earnings call about Apple Intelligence making a visible impact on iPhone sales in the countries where it was available. I'm just curious if you continue to see that play out similarly in the more broader number of countries you've rolled that out. Or the delays that you talked about related to Siri, personalized Siri features, has that had an impact in terms of consumer willingness to upgrade? And I have a follow-up. Thank you.
Tim Cook: Yes, thank you for the question. During the March quarter, we saw that in markets where we had rolled out Apple Intelligence, that the year-over-year performance on the iPhone 16 family was stronger than those where Apple Intelligence was not available. A lot of the languages that I think you're referring to rolled out in April and so they actually rolled out in Q3. |
132 | AAPL | 2 | 2,025 | 2025-05-01 19:13:00 | Apple Inc. | 24,937 | Samik Chatterjee: Okay, got it. Then maybe for my follow-up, I mean, you have a lot of insights now in terms of what consumers or how consumers are reacting to the overall macro. And I know you prefaced all your guidance with macro remaining consistent. But how -- what are you seeing in terms of the U.S. consumer? And what's the reaction there in terms of the tariff impact? We saw U.S. GDP also shrink here in 1Q. When you look at velocity at the stores or trade down within the iPhone portfolio mix, what are you seeing in terms of how the consumer is reacting to the macro at this point? Thank you.
Tim Cook: I'm not an economist and so I'd start by saying that. In terms of the -- as you can see from a total company point of view, our results accelerated sequentially to the 5% level. And the U.S. is obviously the vast majority of the Americas segment, and you can see how the Americas performed during the quarter. And so that's all I want to say about that. I don't want to try to predict what happens in the months from now. The past, I'm quite pleased with the results from Q2.
Samik Chatterjee: Thank you. Thanks for taking the questions.
Tim Cook: Yes.
Suhasini Chandramouli: Thank you, Samik. Operator, could we have the next question, please?
Operator: Our next question is from Krish Sankar with TD Cowen. Please go ahead.
Krish Sankar: Yes, hi. Thanks for taking my question. I have two of them, too. Tim, thanks for that information on the $500 billion U.S. investment. I'm kind of curious how to think about the composition of that? How much is CapEx versus R&D? How much is going into like the Texas server? How much is going into maybe TSMC Arizona? Any kind of color you can give on that $500 billion investment would be helpful. And then I had a follow-up. |
133 | AAPL | 2 | 2,025 | 2025-05-01 19:13:00 | Apple Inc. | 24,937 | Tim Cook: Well, there's lots of all of it is what I would say. We're not giving out the exact split, but as we expand facilities in the different states from Michigan to Texas to California and Arizona and Nevada and Iowa and Oregon and North Carolina and Washington, there will be CapEx involved in that and OpEx involved in it. And standing up a server -- advanced server manufacturing in Texas, we did that through a partner. We do our manufacturing through a partner, but we'll be putting a fair amount in cost of goods sold to do that and some OpEx as well, and I'm sure some CapEx as well. And so it's a bit of all of it.
Krish Sankar: Got it, got it. And then kind of had like a long term, more like a philosophical question. When you look at -- in the past, you've spoken about AI on the Edge. Obviously, it's very topical to hear from both the iPhone angle and the Mac angle. But I'm just kind of curious, when you look at AI on Edge, are the current smartphone specs or improved hardware and silicon specs good enough to meet future Edge LLM for inference? Or do you think you need somewhat of a whole new different kind of device? Just kind of curious how to think about the evolution of the Edge devices from here.
Tim Cook: Yes. As you know, we're shipping an LLM on the iPhone 16 today. And there are -- some of the queries that are being used by our customers are on-device, and then others go to the private cloud where we've essentially mimicked the security and privacy of the device into the cloud. And then others, for world knowledge, are with the integration with ChatGPT. And so there's -- we continue to be very excited about the opportunities here. We are very excited about the road map, and we are pleased with the progress that we're making.
Krish Sankar: Thanks, sir.
Suhasini Chandramouli: Thank you, Krish. Operator, could we get the next question, please?
Operator: Our next question is from Richard Kramer with Arete Research. Please go ahead. |
134 | AAPL | 2 | 2,025 | 2025-05-01 19:13:00 | Apple Inc. | 24,937 | Operator: Our next question is from Richard Kramer with Arete Research. Please go ahead.
Richard Kramer: Thank you very much. Wanted to ask about tariffs. Tim, given your recognition that a new Siri system is taking longer than you thought to deliver, I'd like to go back to my question from the last call and ask about what some of the learnings you had from those delays and whether you attribute them to organizational factors, to your legacy software stack? Or is it a matter of R&D spending? And what are some of the key gating factors investors should look for either at WWDC or beyond to have a sense that Apple can deliver on some of the promises of the announcements of the prior WWDC? Thanks.
Tim Cook: Yes. If you sort of step back from what we said at WWDC, we talked about a number of different features that would launch with iOS 18. And we've released a slew of those from Writing Tools to seamlessly connecting to ChatGPT to Genmoji to Image Playground to Image Wand to Clean Up and Visual Intelligence, making movies or movies of your memories with a simple prompt, AI-powered photo search, smart replies, priority notifications, the list goes on. And so we've delivered a lot, and we've just recently, just a few weeks ago, expanded it into several different languages, including French, German, Italian, Portuguese, Spanish, Japanese, Korean, simplified Chinese as well as localized English for both Singapore and India. So we've delivered a lot. However, with regard to the more personal Siri, as you mentioned, we just need more time to complete the work so they meet our high-quality bar. And there's not a lot of other reason for it. It's just taking a bit longer than we thought. But we are making progress, and we're extremely excited to get the more personal Siri features out there. |
135 | AAPL | 2 | 2,025 | 2025-05-01 19:13:00 | Apple Inc. | 24,937 | Kevan Parekh: And Richard, I'll just add that on your question about investment that we don't underestimate -- underinvest in our business. We make significant investments in R&D. That continues to grow. We're continuing to grow our R&D investment. And so we definitely are making all the investments we think we need to enable our road map.
Richard Kramer: Thanks. And Kevan, 1 for you. I mean, it's hard to ignore some of the ongoing very high-profile legal cases that touch on Apple, be it yesterday's Epic case injunction or the Google antitrust trial touching on default search. And investors are clearly concerned that these might have material impacts on your Services business. Do you feel now that you have ample ways in which you might be able to mitigate some of the potential negative impacts on Apple Services business that might come about from what's been proposed or might come about in legal rather than commercial pressures that the business faces?
Tim Cook: Let me make a couple of comments on that before Kevan. The case yesterday, we strongly disagree with. We've complied with the court's order and we're going to appeal. In the DOJ case that you referenced with Google, that case is ongoing and I don't really have anything to add beyond that. And so we're monitoring these closely. But there -- as you point out, there's risk associated with them and the outcome is unclear.
Kevan Parekh: Yes, I think Tim answered it really well. I don't have anything to add to that.
Richard Kramer: Thank you.
Suhasini Chandramouli: Thank you, Richard. Operator, we will take our last question, please.
Operator: We'll go ahead and take our last question from Aaron Rakers with Wells Fargo. Please go ahead. |
136 | AAPL | 2 | 2,025 | 2025-05-01 19:13:00 | Apple Inc. | 24,937 | Operator: We'll go ahead and take our last question from Aaron Rakers with Wells Fargo. Please go ahead.
Aaron Rakers: Yes, thanks for taking the question. I want to go back to the AI strategy a little bit. I know, Tim, in your prepared comments, you had mentioned building some of your own foundational models. And I'm curious of how important you think it is for Apple to have their own foundational models. And kind of dovetailed with that is that, how do you think about your data center footprint when we look at Apple spending, call it, 3 billion a quarter relative to some of these other companies spending multiples of that. How does the strategy play out in your opinion?
Tim Cook: Well, we -- on the data center side, we have a hybrid strategy. And so we utilize third parties in addition to the data center investments that we're making. And as I've mentioned in the 500 billion, there's a number of states that we're expanding in. Some of those are data center investments. And so we do plan on making investments in that area and we're not gating it. We invest in the business first, as Kevan talked about, is our most important thing to do. In terms of the foundation models, we want to have certain models and we'll partner as well. And so I don't view it as a -- all of one or all of the other. We've been working on foundation models for quite some time and are shipping some today, obviously, with what's on-device and what's in the Private Cloud Compute.
Aaron Rakers: Yes. And then as a follow-up, I'm curious with the iPhone 16e launching this quarter, internalizing your C1 modem, I'm curious of how you see kind of the modem strategy playing out or maybe just the continual deepening of that internal silicon opportunity for Apple? |
137 | AAPL | 2 | 2,025 | 2025-05-01 19:13:00 | Apple Inc. | 24,937 | Tim Cook: We're super excited to ship the first 1 and get it out there and it's gone well. We love that we can produce better products from a point of view of really focusing on battery life and other things that customers want. And so we're -- we have started on a journey is the way I would put it.
Aaron Rakers: Thank you.
Tim Cook: Yes.
Suhasini Chandramouli: Thank you, Aaron. A replay of today's call will be available for two weeks on Apple Podcasts, as a webcast on apple.com/investor and via telephone. The number for the telephone replay is 866-583-1035. Please enter confirmation code 3729688 followed by the pound sign. These replays will be available by approximately 5 PM Pacific Time today. Members of the press with additional questions can contact Josh Rosenstock at 408-862-1142, and financial analysts can contact me, Suhasini Chandramouli with additional questions at 408-974-3123. Thank you again for joining us today.
Operator: Once again, this does conclude today's conference. We do appreciate your participation. |
138 | AAPL | 1 | 2,025 | 2025-01-30 17:00:00 | Apple Inc. | 24,937 | Suhasini Chandramouli: Good afternoon, and welcome to the Apple Q1 Fiscal Year 2025 Earnings Conference Call. My name is Suhasini Chandramouli, Director of Investor Relations. Today's call is being recorded. Speaking first today are Apple CEO, Tim Cook, and he will be followed by CFO, Kevan Parekh. After that, we'll open the call to questions from analysts. Please note that some of the information you'll hear during our discussion today will consist of forward-looking statements, including, without limitation, those regarding revenue, gross margin, operating expenses, other income and expense, taxes, capital allocation, and future business outlook, including the potential impact of macroeconomic conditions on the company's business and results of operations. These statements involve risks and uncertainties that may cause actual results or trends to differ materially from our forecast. For more information, please refer to the risk factors discussed in Apple's most recently filed annual report on Form 10-K and the Form 8-K filed with the SEC today along with the associated press release. Apple assumes no obligation to update any forward-looking statements, which speak only as of the date they are made. I'd now like to turn the call over to Tim for introductory remarks. |
139 | AAPL | 1 | 2,025 | 2025-01-30 17:00:00 | Apple Inc. | 24,937 | Tim Cook: Thank you, Suhasini. Good afternoon, everyone, and thanks for joining the call. Before I talk about our results I'd like to take a moment to acknowledge the devastating wildfires that impacted the Los Angeles area this month. From our retail teams to Apple TV+, Apple Music, Fitness Plus, Beats and more LA is home to many of our team members. Our thoughts are with everyone who is beginning the road to recovery. For our part, we are contributing to the relief efforts and we will continue to support our teams and the local community. Now turning to the quarter. Today, Apple is reporting revenue of $124.3 billion for the December quarter, up 4% from a year ago, and an all-time record. EPS also set an all-time record of $2.40, 10% higher year-over-year. We achieved all-time revenue records across the majority of the countries and regions we track, including the Americas, Europe, Japan, and the rest of Asia Pacific. We also continue to see momentum in emerging markets, setting all-time revenue records in a number of markets, including Latin America, the Middle East, and South Asia, among others. In services, we achieved an all-time revenue record, and in the past year, we've seen nearly $100 billion in revenue from our services business. I'm also pleased to announce that we reached a new record for our installed base with over 2.35 billion active devices. In October, we released the first set of Apple Intelligence features in U.S. English for iPhone, iPad, and Mac, and we rolled out more features and expanded to more countries in December. Now users can discover the benefits of these new features in the things they do every day. They can use writing tools to help find just the right words, create fun and unique images with Image Playground and Genmoji, handle daily tasks and seek out information with a more natural and conversational Siri, create movies of their memories with a simple prompt, and touch up their photos with clean up. We introduced visual intelligence with camera control to help users |
140 | AAPL | 1 | 2,025 | 2025-01-30 17:00:00 | Apple Inc. | 24,937 | a simple prompt, and touch up their photos with clean up. We introduced visual intelligence with camera control to help users instantly learn about their surroundings. Users can also seamlessly access chat GPT across iOS, iPadOS and MacOS. And we were excited to recently begin our international expansion with Apple Intelligence now available in Australia, Canada, New Zealand, South Africa, and the U.K. We're working hard to take Apple Intelligence even further. In April, we're bringing Apple Intelligence to more languages, including French, German, Italian, Portuguese, Spanish, Japanese, Korean, and simplified Chinese, as well as localized English to Singapore and India. And we'll continue to roll out more features in the future, including an even more capable Siri. Apple Intelligence builds on years of innovations we've made across hardware and software to transform how users experience our products. Apple Intelligence also empowers users by delivering personal context that's relevant to them. And importantly, Apple Intelligence is a breakthrough for privacy and AI with innovations like Private Cloud Compute, which extends the industry-leading security and privacy of Apple devices into the cloud. Apple Intelligence opens up an exciting new frontier and is already elevating experiences across iPhone, iPad, and Mac. We're going to keep investing in innovation and in transformative tools that help users in their everyday lives. Let me now turn to our results for the quarter, starting with iPhone. iPhone revenue came in at $69.1 billion, reaching all-time iPhone revenue records in dozens of markets and regions. Our iPhone 16 lineup takes the smartphone experience to the next level in so many ways, and Apple Intelligence is one of many reasons why customers are excited. With the A18 powered iPhone 16 and iPhone 16 Plus, users are getting a big boost in battery life and incredible camera experiences with camera control. Our amazingly powerful iPhone 16 Pro models go even further with larger-than-ever displays and a |
141 | AAPL | 1 | 2,025 | 2025-01-30 17:00:00 | Apple Inc. | 24,937 | with camera control. Our amazingly powerful iPhone 16 Pro models go even further with larger-than-ever displays and a pro camera system so advanced it can turn moments into masterpieces. In Mac, revenue was $9 billion for the December quarter, 16% higher year-over-year, driven by significant excitement around the world for our latest Mac lineup. The Mac is more than just a powerful tool. It's a launchpad to enable users to bring their best ideas and boldest creations to life. And there are so many reasons to choose Mac, from the breathtaking performance of the M4 family of chips to the groundbreaking and growing capabilities of Apple Intelligence. Every product in the Mac lineup offers something extraordinary, whether that's the super portable MacBook Air, the powerhouse MacBook Pro, the world's best all-in-one iMac, or the small wonder that is the Mac Mini, which is not only stunningly capable, but is our first carbon neutral Mac. All of this is enabled by the unparalleled power of Apple Silicon. iPad revenue was $8.1 billion, up 15% from a year ago, driven by strong interest for our latest products. We love hearing from customers, who are discovering for the first time the versatility of iPad from the ultra-portal iPad Mini, built from the ground up for Apple intelligence, to the powerful M4 iPad Pro in a stunningly thin and light design. iPad is there for our users whenever they need it and wherever they go and we are pleased to see so much excitement and enthusiasm for our lineup. Wearables home and accessories revenue came in at $11.7 billion. With its most advanced display yet and a thinner more comfortable design, the all-new Apple Watch Series 10 is the perfect companion to help users pursue their health and fitness goals this year. From the powerful Vitals app to more customizable activity rings, users have an ever-increasing set of innovative health tools at their fingertips and watchOS 11. Health innovation has long been a focus for us, and we're committed to continuing to advance this work, because |
142 | AAPL | 1 | 2,025 | 2025-01-30 17:00:00 | Apple Inc. | 24,937 | and watchOS 11. Health innovation has long been a focus for us, and we're committed to continuing to advance this work, because we know how much it matters to our users. We've introduced new hearing health features on AirPods Pro 2, and new sleep apnea notifications on Apple Watch are also helping users learn of a potentially serious condition that's thought to affect up to a billion people worldwide. During the quarter, we also brought Apple Vision Pro to even more countries, enabling more customers to discover the magic of spatial computing. Users are enjoying incredible immersive entertainment experiences and powerful new features and enhancements to Mac virtual display. Vision Pro is also supercharging the creative process and the incredibly talented director John M. Chu recently shared how its extraordinary capabilities helped him bring the movie Wicked to life. Turning to services, we set an all-time revenue record of $26.3 billion for the December quarter, growing 14% from a year ago. We set all-time records in the Americas, Europe, and rest of Asia-Pacific, and a December quarter record in Japan. Five years since launch, Apple TV+ continues to be home to incredible storytelling that viewers love. There's nothing quite like the anticipation that comes when a fan favorite returns, and we were thrilled to debut the second season of Severance earlier this month. We have so much in store for our subscribers this year with new shows like The Studio and Your Friends and Neighbors. And we can't wait for the premiere of Formula 1 starring Brad Pitt on June 27, which will take viewers inside the sport in a truly unprecedented way. We're excited that Apple TV+ continues to draw attention and accolades. To-date, Apple TV+ productions have earned more than 2,500 nominations and 538 wins. During the quarter, we were also excited to launch a new Find My Service that can help our users when they lose their luggage. For the first time, if you put an air tag in your suitcase, you'll be able to share its location |
143 | AAPL | 1 | 2,025 | 2025-01-30 17:00:00 | Apple Inc. | 24,937 | when they lose their luggage. For the first time, if you put an air tag in your suitcase, you'll be able to share its location information with many major airlines, so they can quickly track down your bags if they get lost. Turning to retail, our teams went above and beyond to help customers find the perfect gift throughout the holiday season. We also celebrated openings of new stores in China, Spain, and the U.S. and we were excited to announce plans to connect with even more customers this year by adding a fifth store in the UAE and bringing our online store to Saudi Arabia this summer. We can't wait to welcome customers to the first of several flagship store locations in Saudi Arabia that were opening beginning in 2026. I just had the chance to visit both countries last month, and I had a great time meeting with customers and team members. There's an incredible energy and passion for technology in these growing markets. Every day, I get deeply moving notes about the many ways our technology is enriching our users' lives. I recently got a note from a customer who put his watch on his father's wrist when he feared something was wrong with him. The watch alerted them that the father was an AFib and they were able to get him to the hospital for potentially life-saving treatment. Another user put his new watch on for the first time and within 15 minutes was notified of a low heart rate that led to a necessary pacemaker. And there are so many touching notes around the profound impact of our new hearing health feature like a recent user who told me it had changed her life, allowing her to take part in conversations with her children and grandchildren. These are the kind of stories that remind us of how profoundly important our work is, and it drives us to innovate each and every day. At Apple, the future is full of promise and potential. We're always searching across a world of possibilities, finding those places where we can do the most good and putting all of our energy and ingenuity into making something special. |
144 | AAPL | 1 | 2,025 | 2025-01-30 17:00:00 | Apple Inc. | 24,937 | finding those places where we can do the most good and putting all of our energy and ingenuity into making something special. With that, I'll turn it over to Kevin. |
145 | AAPL | 1 | 2,025 | 2025-01-30 17:00:00 | Apple Inc. | 24,937 | Kevan Parekh: Thanks Tim, and good afternoon everyone. I'm going to cover the results for the first quarter of our fiscal year. We are very pleased to report an all-time high for revenue with December quarter revenue of $124.3 billion, up 4% year-over-year. We achieved all-time revenue records in the Americas, Europe, Japan, and rest of Asia Pacific and grew in the vast majority of markets we track. Products revenue was $98 billion, up 2% year-over-year, driven by growth from iPad and Mac. Thanks to our incredible customer satisfaction and strong loyalty, our installed base of active devices reached an all-time high across all products and geographic segments and is now over 2.35 billion active devices. Services revenue reached an all-time record of $26.3 billion, up 14% year-over-year. We grew in every geographic segment and achieved all-time records in both developed and emerging markets. Company gross margin was 46.9% at the high-end of our guidance range and up 70 basis points sequentially, primarily driven by favorable mix. Products gross margin was 39.3%, up 300 basis points sequentially, primarily driven by favorable mix and leverage. Services gross margin was 75%, up 100 basis points sequentially, primarily driven by mix. Operating expenses of $15.4 billion landed at the midpoint of our guidance range and up 7% year-over-year. This strong business performance resulted in all-time records for both net income at $36.3 billion and diluted earnings per share of $2.40, up 10% year-over-year. Operating cash flow was also strong at $29.9 billion, which included the impact of the $11.9 billion we paid during the quarter in connection with the state aid decision. Now, I'm going to provide some more details for each of our revenue categories. iPhone revenue was $69.1 billion, roughly flat to the prior year. We grew in the majority of markets we track and reached all-time revenue records in several developed markets, including Canada, Western Europe, and Japan and in emerging markets like Latin America, the Middle |
146 | AAPL | 1 | 2,025 | 2025-01-30 17:00:00 | Apple Inc. | 24,937 | several developed markets, including Canada, Western Europe, and Japan and in emerging markets like Latin America, the Middle East, and South Asia. The iPhone Active installed base grew to an all-time high in total in an average geographic segment. We also set an all-time record for upgraders. According to a recent survey from Kantar during the December quarter, iPhone was a top-selling model in the U.S., Urban China, India, the U.K., France, Australia, and Japan. We continue to see high levels of customer satisfaction in the U.S. at 96% as measured by 451 research. Mac generated $9 billion in revenue, up 16% year-over-year. We saw strength across our lineup from the new Mac Mini to the latest MacBook Air and MacBook Pro models. This incredible performance was broad-based with double-digit growth in every geographic segment. With our latest advances in Apple Silicon and our fastest neural engine ever, customers are able to take advantage of the full capabilities of AI and Mac. The Mac installed base reached an all-time high and we saw a double-digit growth for both upgraders and customers new to the Mac. Additionally, customer satisfaction in the U.S. was recently measured at 94%. iPad revenue was $8.1 billion, up 15% year-over-year, driven by the new iPad Mini and latest iPad Air. The iPad installed base reached another all-time high, and over half of the customers who purchased an iPad during the quarter were new to the product. Customer satisfaction was at 96% in the U.S. based on the latest reports from 451 Research. Wearable's home and accessories revenue was $11.7 billion, down 2% year-over-year. Customers are excited about the new AirPods 4 and the latest hearing health features in AirPods Pro 2. On watch, although we face a difficult compare against the watch Ultra 2 launch last year, the Apple Watch installed base reached a new all-time high, with over half of customers purchasing an Apple Watch during the quarter being new to the product. Customer satisfaction for watch in the U.S. was reported at 94%. |
147 | AAPL | 1 | 2,025 | 2025-01-30 17:00:00 | Apple Inc. | 24,937 | an Apple Watch during the quarter being new to the product. Customer satisfaction for watch in the U.S. was reported at 94%. Our services revenue reached an all-time high of $26.3 billion, up 14% year-over-year. Services continues to see strong momentum, and the growth of our installed base of active devices gives us great opportunities for the future. We also see increased customer engagement with our services offerings. Both transacting and paid accounts reached new all-time highs, with paid accounts growing double-digits year-over-year. Paid subscriptions also grew double-digits. We have well over 1 billion paid subscriptions across the services on our platform. We remain focused on improving the breadth and quality of our services offerings, from new games on Apple Arcade to exciting new programming on Fitness Plus, and the continued expansion of features like Tap to Pay, now live in 20 markets. Turning to enterprise, we have seen businesses continue to expand their deployments of our products and services. Deutsche Bank launched its Mac as Choice program for the developers and also issued the latest MacBook Air as a standard computer for their entire mortgage lending division. And we're excited to see leading enterprises such as SAP leverage Apple Intelligence in the U.S., with features like writing tools, summarize, and priority notifications to enhance both their employee and customer experiences. We also see strong demand in our emerging markets. For example, Zomato, a leading food ordering and delivery company in India, has deployed 1,000 of Macs across their workforce to foster innovation. In Vision Pro continues to see more use cases in enterprise, with Cisco's new spatial meetings delivering a fully immersive video conferencing experience for remote collaboration and learning. Let me quickly summarize our cash position and capital return program. We ended the quarter with $141 billion in cash and marketable securities. We repaid $1 billion in maturing debt and decreased commercial paper by $8 |
148 | AAPL | 1 | 2,025 | 2025-01-30 17:00:00 | Apple Inc. | 24,937 | with $141 billion in cash and marketable securities. We repaid $1 billion in maturing debt and decreased commercial paper by $8 billion, resulting in $97 billion in total debt. Therefore, net cash at the end of the quarter was $45 billion. During the quarter, we returned over $30 billion to shareholders. This included $3.9 billion in dividends and equivalents and $23.3 billion through open market repurchases of 100 million Apple shares. As usual, we will provide an update to our capital return program when we report results for the March quarter. As we move ahead into the March quarter, I'd like to review our outlook which includes the types of forward-looking information that Suhasini referred to at the beginning of the call. The color we're providing today assumes that the macroeconomic outlook doesn't worsen from what we're projecting today for the current quarter. As the dollar is strengthened significantly, we expect foreign exchange to be a headwind and to have a negative impact on revenue of about 2.5 percentage points on a year-over-year basis. Despite that headwind, we expect our March quarter total company revenue to grow low to mid-single-digits year-over-year. We expect services revenue to grow low-double-digits year-over-year. When you remove the negative impact of the foreign exchange headwinds I described earlier, the year-over-year growth rate would be comparable to that of the December quarter. We expect gross margin to be between 46.5% and 47.5%. We expect operating expenses to be between $15.1 billion and $15.3 billion. We expect OI&E to be around negative $300 million, excluding any potential impact from the mark-to-market of minority investments, and our tax rate to be around 16%. Finally, today our Board of Directors has declared a cash dividend of $0.25 per share of common stock payable on February 13, 2025, to shareholders of record as of February 10, 2025. With that, let's open to call the questions. |
149 | AAPL | 1 | 2,025 | 2025-01-30 17:00:00 | Apple Inc. | 24,937 | Suhasini Chandramouli: Thank you, Kevin. We ask that you limit yourself to two questions. Operator, may we have the first question please?
Operator: Certainly, we will go ahead and take our first question from Erik Woodring with Morgan Stanley. Please go ahead.
Erik Woodring: Great guys, Thanks so much for taking my questions. Tim, in your prepared remarks, you had noted that iPhone 16 models are selling better in markets where Apple Intelligence is available? And I'm just wondering if you could double-click on that comment a bit and share any other details you believe could better help us understand how Apple Intelligence is really impacting iPhone demand and/or what features you find that users are using most often already? And then I just have a quick follow-up. Thank you.
Tim Cook: Yes, Eric. Hi, it's Tim. The -- we did see that the markets where we had rolled out Apple Intelligence, that the year-over-year performance on the iPhone 16 family was stronger than those where Apple Intelligence was not available. In terms of the features that people are using, they're using all of the ones that I'd referenced in my opening comments from writing tools to image playground and Genmoji to visual intelligence and more. And so we see all of those being used. The cleanup is another one that is popular and people love seeing that one demoed in the stores as well. We only had 2, 2.5 weeks or so during the December quarter of the second release of [18.2] (ph) and then only had the U.K. and the other English language countries for the 2.5 weeks. And so we've got just the early indications at the moment, but we were glad…
Erik Woodring: Okay, that's really helpful.
Tim Cook: Yes. |
150 | AAPL | 1 | 2,025 | 2025-01-30 17:00:00 | Apple Inc. | 24,937 | Erik Woodring: Okay, that's really helpful.
Tim Cook: Yes.
Erik Woodring: Okay, thank you for that, Tim. It's helpful. And then, you know, if we just touch on China, obviously, in the news fairly frequently, if we set aside China Macro, which I understand is still challenging, can you maybe talk about the headwinds that that Apple faces, whether that's, you know, shifting preferences for Western technology brands in favor of domestic vendors, or is this just a function of not necessarily having Apple intelligence available with the iPhone 16, which is, you know, not necessarily helping replacement cycles. Just maybe double clicking on, on what you think and what you're hearing in China as a regard as it relates to the iPhone. Thanks so much.
Tim Cook: Yes, sure. If you look at our greater China revenue for the quarter, we were down 11% year-over-year. And over half of the decline that we experienced was driven by change in channel inventory from the beginning to the end of the quarter. And of course on the Apple intelligence side we have not rolled out in China and as we just talked about we did see better results in the markets that we had rolled out in than markets we hadn't rolled out in. And of course, it's the most competitive market in the world. And so all of those things are true. In terms of the macro situation, there was a fiscal stimulus or subsidy announced in very recently in January that did not affect the December quarter. There were some provincial subsidies in the December quarter, but the national program was announced, I believe, on January 20. And it does cover the categories that we have products in from smartphones to tablets and PCs and smart watches up to a certain, a maximum price point. And so we do see fiscal stimulus occurring and we'll be glad to talk about what that looks like on the next call.
Erik Woodring: Great. Thanks so much, Tim. Good luck.
Tim Cook: Thank you.
Suhasini Chandramouli: Thank you, Eric. Operator, can we have the next question, please? |
151 | AAPL | 1 | 2,025 | 2025-01-30 17:00:00 | Apple Inc. | 24,937 | Tim Cook: Thank you.
Suhasini Chandramouli: Thank you, Eric. Operator, can we have the next question, please?
Operator: Our next question is from Ben Reitzes with Melius. Please go ahead.
Ben Reitzes: Hey, guys. Thanks a lot for the question. And, hey, Tim, I wanted to ask you who -- you knew this one was coming, but there's a perception that you're a big beneficiary of lower cost of compute and I was wondering if you could give your worldly perspective here on the DeepSeek situation and if you are going to, if you, if anything's happened to change your views in terms of a tailwind to margins and your ability to execute even due to the potential for cost to come down due to that development and probably what was going to happen anyway. But I'd love your perspective on that and then have a quick follow-up. Thanks.
Tim Cook: Sure. In general, I think innovation that drives efficiency is a good thing. And that's what you see in that model. Our tight integration of silicon and software, I think, will continue to serve us very well. As you know, we do things on the device, and we do things in the private cloud and which mimics from a architectural point of view the -- what happens on the device. And from a CapEx point of view, we've always taken a very prudent and deliberate approach to our expenditure and we continue to leverage a hybrid model, which I think continues to serve us well.
Ben Reitzes: Oh, great. All right. Thanks, Tim. And then, you know, just with regard to, you know, the iPhone trajectory, do you feel like, I guess, what is -- you obviously don't talk about new products and stuff like that, but do you feel that there's a lot of room for form factor innovation in the future? Or do you feel that the current lineup kind of it shows where you're going? I guess without pulling punches wondering if you, you thought you know in terms of the phone innovation if there's a lot more to come and you could see the kind of current market changing a bit over the next two to three years. Thanks. |
152 | AAPL | 1 | 2,025 | 2025-01-30 17:00:00 | Apple Inc. | 24,937 | Tim Cook: I think, Ben, I think there's a lot more to come and I could not feel more optimistic about our product pipeline. So I think there's a lot of innovation left on the smartphone.
Ben Reitzes: Thanks a lot, Tim.
Tim Cook: Yes, thank you.
Suhasini Chandramouli: Thank you, Ben. Operator, could we have the next question, please?
Operator: Our next question is from Michael Ng with Goldman Sachs. Please go ahead.
Michael Ng: Good afternoon. Thank you for the question. I have two as well. First, it was encouraging to hear about the record for iPhone upgraders, which I think is something you haven't said for about a year now. I was wondering if you could talk a little bit about what you would attribute this upgrade strength to? Has Apple Intelligence played a role in helping upgrades in the markets that you've launched in? Thanks.
Tim Cook: Yes, thank you for the question. If you look at iPhone, we did set an all-time record for upgraders, so we've never seen a higher level of upgraders before. The installed base hit a new all-time high as well. And if you look at the 16, compared to the 15 from launch, which occurred, as you know, in September, so this is across now two quarters from September to the end of the December fiscal quarter, the 16 outperformed the 15. And so I think you can conclude from that, that there are compelling reasons to upgrade. And in the markets where we had launched Apple Intelligence, they outperformed the markets that we did not. So lots…
Michael Ng: Great, thank you, Tim. That's…
Tim Cook: Yes, lots of good color there.
Michael Ng: Great, thank you, Tim. That's very clear. And then I had one about the iPad Pro and for the thinner version. I was just wondering if you could talk about that thin form factor for the iPad Pro. How did it help iPad sales overall and what did your kind of marketing consumer research tell you about how consumers valued that thin product form factor? Thank you. |
153 | AAPL | 1 | 2,025 | 2025-01-30 17:00:00 | Apple Inc. | 24,937 | Tim Cook: It's a good question. iPad overall grew 15% for the quarter and it was more driven by iPad Air and the entry level iPad than it was the top level iPad. But overall we could not be more pleased with the iPad category growing 15%. It's a great achievement for the quarter. And probably what is most important is that over half of the sales in the December quarter went to customers who were new to the iPad. So that tells us that there's a good amount of customers there to attract.
Michael Ng: Thank you very much, Tim.
Tim Cook: Yes. Thank you.
Suhasini Chandramouli: Thanks, Mike. Operator, could we have the next question, please?
Operator: Our next question is from Amit Daryanani from Evercore. Please go ahead.
Amit Daryanani: Good afternoon, everyone. I have two as well. Maybe to start with, you folks are seeing some very robust growth trends in emerging markets right now for Apple products? Can you just add a high level, just talk about the durability of growth that you see in emerging markets? And then do you think the summation of these emerging markets are starting to get big enough or perhaps starting to grow fast enough that it can actually offset some of the China headwinds you're going through?
Tim Cook: We have great results in a number of emerging markets. And as you know from past calls, I'm particularly keen on India. India set a December quarter record during the quarter. And we're opening more stores there. We've announced that we're going to open four new stores there. We also, the iPhone was the top selling model in India for the quarter. And it's the second largest smartphone market in the world and the third largest for PCs and tablets and so there's a huge market and we are -- we have very modest share in these markets. And so I think there's lots of upside there. And that's just one of the emerging markets. |
154 | AAPL | 1 | 2,025 | 2025-01-30 17:00:00 | Apple Inc. | 24,937 | Kevan Parekh: Yes, maybe I'll add, Amit, that in emerging markets we're also seeing double-digit growth on the install base, both in total and for the iPhone as well. So that's also an encouraging sign.
Amit Daryanani: Perfect. Thank you. And then, you know, just a question on gross margins for the March quarter. You folks are guiding gross margin is flattish on a sequential basis. Typically, I think it tends to be guided up a little bit, 50 basis points, so sequentially. Can we just touch on like, what are the offsets of the puts and takes you see here on gross margins? And Kevan, maybe you can just talked about its FX having an outsized impact in your margin profile as well in March?
Kevan Parekh: Yes, Amit, let me take that One. You know, as we mentioned in my remarks, we're guiding to 46.5% to 47.5%. So we think it's, you know, we're very pleased with that level of guidance. As you mentioned, there's always puts and takes. We do think there's going to be some FX headwinds, which we talked about, that's going to affect, you know, our revenue growth as well. You know, it'll have an impact here on the margin, a sequential impact on margins. But we think that's going to be offset by favorable costs and the relative mix of services. We also, as you know, when we move from Q1 to Q2, especially on the product side, because Q1 is such a large quarter for a products business, we do have a loss of leverage. So there are some puts and takes, and I think we feel good about the range. We think it's a very, very strong guide for gross margin.
Suhasini Chandramouli: Thanks, Amit. Operator, could we get the next question, please?
Operator: Our next question is from Wamsi Mohan with Bank of America. Please go ahead. |
155 | AAPL | 1 | 2,025 | 2025-01-30 17:00:00 | Apple Inc. | 24,937 | Operator: Our next question is from Wamsi Mohan with Bank of America. Please go ahead.
Wamsi Mohan: Yes, thank you so much. Tim, I want to follow-up on your comment about channel inventory in China. I was wondering if you could maybe address more broadly if channel inventory across your different product lines and regions? Do you feel they're elevated or out of range in any other regions? And given the clearing event that kind of happened in China, I guess in the quarter, should we think of a more normal progression quarter-on-quarter into the March quarter in China in particular, and I will follow.
Tim Cook: Yes, I don't want to project sales for the current quarter by region, but if you if you look at the channel inventory and look at iPhone in the aggregate, so on a worldwide basis we're very comfortable with our channel inventory position in the -- in China my point was that our channel inventory reduced from the beginning of the quarter to the end of the quarter, and that was over half of the reduction in the reported results. And so if you look, part of the reason for that is that our sales were a bit higher than we forecasted them to be toward the end of the quarter. And so we ended a little leaner than we had expected to.
Wamsi Mohan: Okay, that's very clear. Thank you.
Tim Cook: Yes, thank you.
Wamsi Mohan: And then maybe as my follow-up, your services growth has been very strong and I know you've kind of been navigating some pretty challenging regulatory burdens on the business globally. So how should investors think about maybe either a top line or margin headwind that let's say you're currently absorbing in your results that could potentially maybe reverse in a more balanced regulatory environment? Thank you so much. |
156 | AAPL | 1 | 2,025 | 2025-01-30 17:00:00 | Apple Inc. | 24,937 | Kevan Parekh: Yes. So I think one, I just wanted to kind of reiterate the fact that, you know, our services business had an all-time record for December quarter of 14%. And that was a one strength that we saw across all geographic segments and also was very broad base across all of our services. So we have, as you know, a very broad services portfolio. And so we do see, you know, good momentum across the board. And as well, we continue to see increasing engagement across the customer base, across all of the service offerings, both transacting and paid accounts. We talked about reaching all-time highs, and we have over now 1 billion paid subscriptions across the services platform.
Suhasini Chandramouli: All right. Thanks, Wamsi. Operator, could we get the next question, please?
Operator: Our next question is from Samik Chatterjee with JPMorgan. Please go ahead.
Samik Chatterjee: Hi. Thanks for taking my questions. I guess for the first one, if I -- I mean, you had a great quarter on Macs and iPads both. And I'm just curious, in terms of if you can help us think about the sustainability of this double-digit growth that you saw in both the product lines, and more interest are also here, we are talking about Apple Intelligence sort of influencing volumes on iPhones, but any thoughts on sort of how -- what does that influence look like in terms of volumes for Macs, for example, where I think there's a lot of conversation on AI PCs, how you're thinking about the impact there? And I have a quick follow-up. Thank you. |
157 | AAPL | 1 | 2,025 | 2025-01-30 17:00:00 | Apple Inc. | 24,937 | Tim Cook: Yes. If you look at Mac, Mac was up 16% and on iPad, we were up 15%. The Mac was driven by the very strong uptake on our new products during the quarter and the continued success of the MacBook Air. And so as you know, we've launched an M4-based MacBook Pro, an iMac and a Mac Mini during the quarter. We believe we've got the best AI PC out there for running workloads. The silicon in the Mac is, and it has been for several years now, designed by us and really designed for these workloads. And so I don't want to project at the category level for the future, but we're incredibly pleased with both the Mac and the iPad for the quarter.
Samik Chatterjee: Okay. And Tim, I'm going to use your earlier discussion about India as a strong emerging market to sort of ask you about the supply chain planning there in terms of how much of the supply chain planning there that you're doing is more of a reflection of the growth expectations from that market relative to in terms of diversification of the supply chain? And how should we sort of think about that strategy in terms of that particular country? Thank you.
Tim Cook: Yes. If you look at the manufacturing we do there, we do manufacturing both for the domestic market, and we export. And so in -- our business needs a certain economies of scale for it to make sense to manufacture in country. And so that really means that we're going to be both a use for the domestic market and an export market.
Samik Chatterjee: Great. Thank you.
Tim Cook: Yes, thanks.
Suhasini Chandramouli: Thank you, Samik. Operator, could we get the next question, please?
Operator: Our next question is from David Vogt with UBS. Please go ahead. |
158 | AAPL | 1 | 2,025 | 2025-01-30 17:00:00 | Apple Inc. | 24,937 | Operator: Our next question is from David Vogt with UBS. Please go ahead.
David Vogt: Great, thanks, guys, for taking my question. So maybe, Tim, this is for you. I'm trying to think about your commentary around Apple Intelligence being sort of a momentum driver for the iPhone business. But when I think about your kind of framework for the March quarter, if I kind of adjust for channel inventory over the last couple of years, kind of, feels like your iPhone revenue for the March quarter is going to be relatively similar to the quarter two years ago and even the quarter last year? So how do we square kind of the momentum versus kind of the iPhone business effectively really kind of unchanged over the last couple of years? And then second, when I think about kind of the gross margin profile of the business, obviously, you've done a great job in taking gross margins up. Where do you think we sit in terms of, on the services side at least, where margins could go? It looks like the 75% margin has been incredibly successful quarter. But just trying to get a sense for where do you think this number could go over the intermediate term? Thank you.
Tim Cook: Yes. If you look at Apple Intelligence, what my point earlier was, that markets where we had rolled out Apple Intelligence during the Q1 period performed better on a year-over-year basis than markets where we had not. And so that gives us -- it's a positive indicator that we were pleased with. There are many compelling reasons to upgrade. And the other thing I would say, that I think I mentioned earlier, is that if you look at it from a launch to the end of the December quarter, and so that goes back to September, the 16 family is outperforming the 15 family. And so I think those are two good data points. Our next round of language rollouts will be in April. And so it will be at the -- in our Q3 quarter. And I'll let Kevan take the gross margin question.
David Vogt: Yes, great. |
159 | AAPL | 1 | 2,025 | 2025-01-30 17:00:00 | Apple Inc. | 24,937 | David Vogt: Yes, great.
Kevan Parekh: Hi, David. How are you? So on the Services gross margin, I think maybe just stepping back a second. Services business in general in aggregate is accretive to the overall company margin. And one of the things, as an important reminder, is we've got a very broad services portfolio. And those businesses have very different margin profiles. And so I think, one, it's because of the nature of those businesses and in part also because of the way we account for them. And so one of the big factors that drive the Services gross margins and relative performance of those different businesses within the portfolio. We also have the dynamic of some scale businesses like payment services, iCloud, that are actually growing. And there, when we add incremental users, those end up being accretive to margins as well. And so in general, what we saw in the December quarter was nice momentum across our entire services business that allows us to deliver that 75% margin at the services level. And I think our guidance takes into consideration what we think we're going to land from a company standpoint of 46.5% to 47.5%, which again, we think is a strong guide.
David Vogt: Great, thanks, guys.
Suhasini Chandramouli: All right, thank you, David. Operator, could we have the next question, please?
Operator: Our next question is from Krish Sankar with TD Cowen. Please go ahead.
Krish Sankar: Yes, thanks for taking my question. I also had two of them. One, the first one for Tim. You had very strong Mac growth, 16% year-over-year last quarter. Just wondering how much of that was driven by some of the Mac silicon innovation versus a replacement cycle for Macs? |
160 | AAPL | 1 | 2,025 | 2025-01-30 17:00:00 | Apple Inc. | 24,937 | Tim Cook: I don't know the answer to your question precisely, but I think it is a combination of these products are so compelling, the M4-based products are so compelling, that it's driving both upgrades at the double-digit level and it's driving switchers at a double-digit level. And so we're seeing both come out, and I think it's just because of the compelling products.
Krish Sankar: Got it. Got it. Thanks for that, Tim. And then a follow-up for Kevan on the gross margin. I want to ask you on the product side. Last quarter, you had 39.3%, which is very strong, similar to a year ago period. I'm kind of curious how much more levels do you have on the product side to improve the gross margin? Or do you think with some of the more new AI-related devices, there's more upside to gross margin from here on the product hardware side? |
161 | AAPL | 1 | 2,025 | 2025-01-30 17:00:00 | Apple Inc. | 24,937 | Kevan Parekh: Yes. Thanks, Krish, for the question. So on the product side, as you mentioned, we had pretty strong sequential improvement, 300 basis points, for the December quarter. That was really driven by, we talked about, favorable mix and leverage. As you know, in Q1, again, it's a launch quarter for many products, and so we tend to benefit from the leverage that we get from that higher volume. I would say, in general, our gross margin on products is driven by a number of factors. One of them is the various product launches that we have. Different products do have different margin profiles. And so that mix does make a difference. And in particular, what we're seeing is, for example, many of our mix is across like phone, for example, we're seeing customers gravitate towards our Pro products because of things like affordability that allows our customers to get into our best products, which have favorable gross margins. So we're continuing to see that trend, that impacted us in the December quarter. As well, I think we're in a favorable commodity environment from a cost standpoint. And so we're benefiting from that as well in the December quarter. And then that's going to be, as we talked about, we're going to have a foreign exchange headwind heading into the March quarter, but we figured that's contemplated in the guidance range that we gave, the 46.5% to 47.5%.
Krish Sankar: Thanks, Kevan. Thanks, Tim.
Suhasini Chandramouli: Thank you, Krish. Operator, could we get the next question, please?
Operator: Our next question is from Richard Kramer with Arete Research. Please go ahead. |
162 | AAPL | 1 | 2,025 | 2025-01-30 17:00:00 | Apple Inc. | 24,937 | Operator: Our next question is from Richard Kramer with Arete Research. Please go ahead.
Richard Kramer: Thanks very much. My first question is for Tim. I'd like to ask about what might accelerate the pace of Apple Intelligence adoption. I guess do you see this simply as a question of time i.e., to launch more markets and languages or increase the percentage of installed base devices that can support it? Or is it a question of money, i.e., shifting R&D or marketing spend towards AI? And based on other prior Apple services, do you expect a sort of tipping point where adoption will go mainstream? Thanks.
Tim Cook: I do believe it will go mainstream. I'm getting feedback from people using different features today. And this is -- keep in mind that on the iPhone side of our business, you either have to have an iPhone 15 Pro or iPhone 16 to use Apple Intelligence. And so the -- as that base grows, I think the usage will continue to grow. And I think -- I know from my own personal experience, once you start using the features, you can't imagine not using them anymore. I know I get 100s of e-mails a day, and the summarization function is so important. So I think it's a combination of that. And of course, in April, we roll out a whole series of new languages that we had mentioned, and so the base grows further.
Richard Kramer: Okay, thank you. And then, Kevan, one of Luca's legacies was really getting Apple to record margin levels and also maintaining very consistent pricing across the product range. But taking the current high levels of profitability as fairly stable, what observations might you share about price sensitivity of users and whether having a wider range of pricing across the products might unlocks potentially further market share gains or boost overall product growth? |
163 | AAPL | 1 | 2,025 | 2025-01-30 17:00:00 | Apple Inc. | 24,937 | Kevan Parekh: Yes, it's a good question. I think one, I don't think we're going to really depart from what served us pretty well to now. I mean we always take it into consideration, looking at short-term -- comparison between the short term and the long term. I think we've had a pretty disciplined pricing strategy, which would serve us pretty well. And I think we're going to continually kind of stick with that as far as I can tell.
Richard Kramer: Okay, thanks.
Suhasini Chandramouli: Thank you, Richard. Operator, could we get the next question, please?
Operator: Our next question is from Atif Malik with Citi. Please go ahead.
Atif Malik: Hi, thank you for taking my question. How do you guys see the potential tariff impact to your product for consumer demand under Trump 2.0 you guys did find under Trump 1.0?
Tim Cook: We are monitoring the situation and don't have anything more to add than that.
Atif Malik: Great. And Tim, as a follow-up, there is a lot of discussion on agentic AI, the use of agents. Do you guys see the upgraded series expected in April as something that will, let's say, be the killer application among the suite of features that you have announced in Apple Intelligence?
Tim Cook: I think the killer feature is different for different people. But I think for most, they're going to find that they're going to use many of the features every day. And certainly, one of those is the -- is Siri, and that will be coming over the next several months.
Atif Malik: Thank you.
Suhasini Chandramouli: All right. Thank you, Atif. Operator, could we please get the last question?
Operator: Our last question is from Ben Bollin from Cleveland Research Company. Please go ahead. |
164 | AAPL | 1 | 2,025 | 2025-01-30 17:00:00 | Apple Inc. | 24,937 | Operator: Our last question is from Ben Bollin from Cleveland Research Company. Please go ahead.
Ben Bollin: Good evening, everyone. Thanks for taking the question. Tim, I'm interested in your thoughts and how you would have us think about the average useful life of these devices in the wild. And in particular, curious, if you look at the strength you saw in fiscal ‘21 and how that might support accelerated refresh opportunity into the future?
Tim Cook: Yes. Ben, I think it's different for different types of users. I mean you have very early adopter kind of users that are very quick to jump on the latest technology that upgrade very frequently. And then you have people that are on the entire opposite side of that barbell. And most people are between those two points. And so I do think there were lots of units that are sold during the COVID period of time, and it's a huge opportunity for us as a company to -- for more than one of the product categories.
Ben Bollin: That’s it from me. Thanks, Tim.
Tim Cook: Thank you.
Suhasini Chandramouli: All right. Thanks, Ben. A replay of today's call will be available for two weeks on Apple Podcasts or as a webcast on apple.com/investor and via telephone. The number for the telephone replay is 866-583-1035. Please enter confirmation code 7398532 followed by the pound sign. These replays will be available by approximately 5 p.m. at Pacific Time today. Members of the press with additional questions can contact Josh Rosenstock at 408-862-1142. And financial analysts can contact me, Suhasini Chandramouli, with additional questions at 408-974-3123. Thanks again for joining us here today.
Operator: Once again, this does conclude today's conference. We do appreciate your participation. |
165 | ABNB | 4 | 2,024 | 2025-02-13 16:30:00 | Airbnb, Inc. | 115,705,393 | Operator: Good afternoon, and thank you for joining Airbnb, Inc.'s earnings conference call for the fourth quarter of 2024. As a reminder, this conference call is being recorded and will be available for replay from the Investor Relations section of Airbnb, Inc.'s website following this call. I will now hand the call over to Angela Yang, Director of Investor Relations. Please go ahead. |
166 | ABNB | 4 | 2,024 | 2025-02-13 16:30:00 | Airbnb, Inc. | 115,705,393 | Angela Yang: Good afternoon, and welcome to Airbnb, Inc.'s fourth quarter of 2024 earnings call. Thank you for joining us today. On the call today, we have Airbnb, Inc.'s co-founder and CEO, Brian Chesky, and our Chief Financial Officer, Ellie Mertz. Earlier today, we issued a shareholder letter with our financial results and commentary for our fourth quarter of 2024. These items were also posted on the Investor Relations section of Airbnb, Inc.'s website. During the call, we will make brief opening remarks and then spend the remainder of time on Q&A. Before I turn it over to Brian, I would like to remind everyone that we will be making forward-looking statements on this call that involve a number of risks and uncertainties. Actual results may differ materially from those expressed or implied in the forward-looking statements due to a variety of factors. These factors are described under forward-looking statements in our shareholder letter and in our most recent filings with the Securities and Exchange Commission. We urge you to consider these factors and remind you that we undertake no obligation to update information contained on this call to reflect subsequent events or circumstances. You should be aware that these statements should be considered estimates only and are not a guarantee of performance. Also during the call, we will discuss some non-GAAP financial measures. We provide a reconciliation to the most directly comparable GAAP financial measures in the shareholder letter posted to our investor relations website. These non-GAAP measures are not intended to be a substitute for our GAAP results. With that, I'll pass the call to Brian. |
167 | ABNB | 4 | 2,024 | 2025-02-13 16:30:00 | Airbnb, Inc. | 115,705,393 | Brian Chesky: Alright. Well, thank you very much. And hey, everyone. Thanks for joining me today. 2024 Airbnb, Inc. outpaced the travel industry's growth. We ended the year with Q4 revenue. Now before we get into the results, nights booked, and GBV all accelerating from Q3. I want to just quickly touch on some of the work that got us here. You know, over the past several years, we've been preparing for Airbnb, Inc.'s next chapter and we wanted to make sure that guests and hosts love our core service before we introduce something new. So we listened to their feedback and we rolled out more than 535 features and upgrades to improve the experience. These upgrades include major reliability efforts, like guest favorites. Guest favorites make it easier for guests to find the best listings in Airbnb, Inc. We've also made it easier to host by launching the Toast network. It's a really simple way to find the best local host to manage your Airbnb. Now in just four months, the cohost network has grown to almost 100,000 listings. At the same time, we've been driving growth in a number of product optimizations. We made it easier for guests to find the perfect stay with enhanced search functionality and better merchandising. And this includes things like suggested destinations, more detailed maps, and a new welcome guide for guests. We also introduced flexible payment options in local payment methods in nearly two dozen countries, making it easier for people around the world to use Airbnb, Inc. And we're in the process of rolling out a completely redesigned checkout experience that makes it even simpler to book at Airbnb, Inc. As a result, we've seen a higher conversion rate, and we expect these improvements to continue delivering growth in 2025. By optimizing key parts of our product, like search, merchandising, and payments, we're seeing strong near-term results, and we're building a foundation to support the introduction of new offerings. Finally, we've rebuilt our platform from the ground up with a new technology stack. |
168 | ABNB | 4 | 2,024 | 2025-02-13 16:30:00 | Airbnb, Inc. | 115,705,393 | support the introduction of new offerings. Finally, we've rebuilt our platform from the ground up with a new technology stack. This includes new listing management tools for hosts, and these tools make it easier for hosts to list and manage their homes while giving them the ability to eventually offer more services. We've also upgraded our messaging system into a single unified platform, making communication between guests and hosts smoother and more reliable. Now with this new tech platform, we are able to innovate faster and expand beyond short-term rentals into becoming an extensible platform with a range of new offerings, and 2025 marks the start of Airbnb, Inc.'s next chapter. No. Today, our service is better than ever, and our platform is ready for the support with next. In 2025, we will continue building on this momentum. We're executing on a multiyear growth strategy to perfect our core service, accelerate growth in global markets, and launch and scale new offerings. Now we've talked a lot on previous calls about how we're preparing to expand beyond our core business. In this year, you'll see the beginning of a new Airbnb, Inc. So now I'm gonna turn it over to Ellie to give you a financial update. Ellie? |
169 | ABNB | 4 | 2,024 | 2025-02-13 16:30:00 | Airbnb, Inc. | 115,705,393 | Ellie Mertz: Thank you, Brian, and good afternoon. I'll start with a review of our financial results and then provide our current outlook for Q1 2025. As Brian mentioned, we ended last year on a strong note. Nights and experiences booked accelerated in Q4 to 12%, making it the highest year-over-year growth quarter of 2024. Revenue also grew 12% year-over-year to $2.5 billion in Q4. Net income was $461 million and adjusted EBITDA was $765 million. For the full year, adjusted EBITDA totaled $4 billion, representing an adjusted EBITDA margin of 36%. Since 2020, we've delivered over 4,000 basis points of EBITDA margin expansion. Next, I'll turn to the balance sheet and cash flow. During Q4, we generated $458 million of free cash flow. And for the full year, we generated $4.5 billion, representing a free cash flow margin of 40%. At the end of the year, we had $10.6 billion of corporate cash and investments, as well as $5.9 billion of funds held on behalf of our guests. Our strong balance sheet allowed us to repurchase $838 million of our Class A common stock during Q4 and $3.4 billion for the full year. At the end of Q4, we had $3.3 billion remaining on our repurchase authorization. Now let's shift to our Q1 2025 outlook. After closing out 2024 with our highest quarter of nights and bookings growth, we're excited about the strong demand we continue to see early in 2025. For Q1, we expect to deliver revenue between $2.23 billion and $2.27 billion, representing 4% to 6% year-over-year growth, or 7% to 9% when excluding FX headwinds. As we mentioned last quarter, revenue in Q1 2024 benefited from both the timing of Easter and the extra day from leap year, creating a hard year-over-year comparison. Without these calendar impacts and FX headwinds, our revenue growth would be about 6 percentage points higher, or 10% to 12%, which is relatively stable compared to Q4. For nights and experiences booked, we expect year-over-year growth in Q1 2025 to be relatively in line with Q1 2024 once you exclude leap day, which |
170 | ABNB | 4 | 2,024 | 2025-02-13 16:30:00 | Airbnb, Inc. | 115,705,393 | booked, we expect year-over-year growth in Q1 2025 to be relatively in line with Q1 2024 once you exclude leap day, which contributed about one percentage point of growth last year. On profitability, we expect adjusted EBITDA and adjusted EBITDA margin to decline compared to Q1 2024, driven by the same factors impacting revenue. That said, if you exclude the calendar and FX headwinds, adjusted EBITDA margin in Q1 would remain relatively flat year-over-year. As we look ahead to 2025, we're focused on executing our multiyear growth strategy. Our strategy is designed to drive long-term growth and deliver market share gains through three levers: one, perfecting our core service; two, accelerating growth in global markets; and three, launching and scaling new offerings. We're focused on strengthening the economics of our core business and generating strong free cash flow while also investing in growth opportunities. This year, we plan to invest $200 million to $250 million towards launching and scaling new businesses, which we'll introduce in May. Even with these investments, we expect to maintain strong profitability, delivering a full-year adjusted EBITDA margin of at least 34.5%. Because these investments will roll out throughout the year, their impact on our quarterly adjusted EBITDA margin will be the most pronounced in the first nine months of 2025. As these new businesses scale over the coming years, we expect them to make a significant contribution to revenue growth. And so each year, we'll layer in new offerings where we see long-term revenue growth opportunities. And at the same time, we'll focus on delivering strong profitability and world-class free cash flow for our core business. And now with that, I'll open it up to Q&A. |
171 | ABNB | 4 | 2,024 | 2025-02-13 16:30:00 | Airbnb, Inc. | 115,705,393 | Operator: We will now begin the question and answer session.
Stephen Ju: Thank you. So I think in the past, in terms of the global sort of localization effort, you've talked about Brazil and I think in the shareholder letter, you were showing your localization effort for Japan. So just wondering how long it typically takes for one of these efforts to localize in any given country you know, it takes to come together. If you have you guys have mentioned Argentina, Germany, South Korea, and other places. Ellie, I guess, the $200 to $250 million of investment that you're planning to incur I guess, in the, you know, the front half of this year for the most part. What is that primarily gonna be geared to? Is it gonna be marketing? Is gonna be engineering, staff up, or any color there would be helpful. Thank you. |
172 | ABNB | 4 | 2,024 | 2025-02-13 16:30:00 | Airbnb, Inc. | 115,705,393 | Ellie Mertz: Great. Thank you, Stephen. Let me start just giving a little bit of color in terms of our global market strategy. As backdrop in terms of context on this strategy, we've shared over the last year that Airbnb, Inc. is a very global brand. However, our business is concentrated in our top five core markets. So that's the US, UK, Canada, France, and Australia. Those five markets comprise about 70% of our gross booking value. And so as a growth lever that we've been investing in, we've been targeting markets outside of that top five. Where we think that there's a sizable opportunity for us to invest and both gain penetration in the markets and also provide a tailwind to our global growth rates. I think what you've seen over the last not just the Q4 results, but over 2024 as well is that those investments and that targeting of new geos has had a meaningful impact on our growth. In particular, what we shared in Q4 was that those markets that we've targeted are growing about double the rate of our core markets. And to your question in terms of, you know, how long does it take, I would say it depends on the specific market. I think Brazil is a huge success case, and that's a market that we've been focused on in particular with adding brand marketing over the last two years, and we've been able to materially increase the scale of our business in that country in particular. I think there's other markets that maybe the duration for building scale will take longer. A country that I would put in that category would be Japan, which is a market that we just commenced our brand marketing in Q4. And we're starting at a lower base of domestic awareness. So each of our targeted markets, you know, we have to factor in where the market is, the level of awareness and consideration we have among local travelers and the level of product optimizations we need to make to make sure that we are appropriately addressing the local audience. So your second question is around our investments in scaling launching and scaling the new |
173 | ABNB | 4 | 2,024 | 2025-02-13 16:30:00 | Airbnb, Inc. | 115,705,393 | addressing the local audience. So your second question is around our investments in scaling launching and scaling the new businesses. As the letter details, we're planning to spend approximately $200 to $250 million this year. And you should see the bulk of that investment hit both our marketing line and our product development line items. Just to give a little bit more color here. In terms of marketing, we will obviously be spending to build out the teams to drive the supply operations around those new offerings. We will also be investing behind awareness of the new products and demand generation. And then on the product side, we will be slightly increasing our pace of count growth across our development organization. So that we can move more quickly across our road map and support these new businesses. |
174 | ABNB | 4 | 2,024 | 2025-02-13 16:30:00 | Airbnb, Inc. | 115,705,393 | Operator: Our next question comes from the line of Richard Clarke with Bernstein. Please go ahead.
Richard Clarke: Hi. Thanks for taking my questions. I just want to ask about the launch we've seen of AI. I think Airbnb, Inc. avoided some of the volatility that some of your peers had. But are you leaning into those operators? Are you or are you confident you can kind of control the AI flow through the Airbnb, Inc. platform? |
175 | ABNB | 4 | 2,024 | 2025-02-13 16:30:00 | Airbnb, Inc. | 115,705,393 | Brian Chesky: Hey, Richard. Yeah. Here's what I think about AI. I think it's still really early. It's probably similar to, like, the mid to late nineties for the Internet. So I think it's gonna have a profound impact on travel. But I don't think, you know, it's yet fundamentally changed for any of the large travel platforms. And so you know, we want to be the leading company for, you know, AI-enabled traveling and eventually living. I'll just talk about a little bit about how we're gonna do that. So most companies, what they're actually doing is they're doing integrations with these other platforms on trip planning. But the trip planning, it's still early. I don't think it's quite ready for prime time. We're actually choosing a totally different approach which is we're actually starting with customer service. So later this year, we're gonna be rolling out, as part of our summer release, AI-powered customer support. You know, as you imagine, we get millions of contacts every year, AI can do an incredible job of customer service. It's gonna speak every language 24/7. They can read a corpus of thousands of pages of documents. And so we're starting with customer support. Over the coming years, what we're gonna do is we're gonna take the AI-powered customer service agent and we're gonna bring it into essentially, Airbnb, Inc. search to eventually graduate to be a travel living concierge. I think it's a really exciting time in the space because you've seen, like, with Deepseek and more competition with models, these models are getting cheaper or nearly free. They're getting faster, and they're getting more intelligent. And for all of this, it's starting to get commoditized. What I think that means is a lot of value is gonna accrue to the platform. And, ultimately, I think the best platforms, the best applications are gonna be the ones that, like, most accrue the value from AI, and I think we're gonna be the one to do that with traveling and living. |
176 | ABNB | 4 | 2,024 | 2025-02-13 16:30:00 | Airbnb, Inc. | 115,705,393 | Operator: Our next question comes from the line of Eric Sheridan with Goldman Sachs. Please go ahead.
Eric Sheridan: Thanks so much for taking the question. Maybe just one quick follow-up, Brian, and then I could ask a follow-up. With respect to the AI, I appreciate your answer with respect to outward-looking and how it might change the landscape. Where do you think the potential is internally to apply AI for efficiencies inside the company and create an additional layer of potential margin efficiency and or free cash flow conversion in the years ahead? And then in terms of the way you guys framed the year with exiting it up higher margin trajectory post some of the investments you called out, will there be any change or thought about how your capital allocation process might evolve as you move through 2025? Thanks so much. |
177 | ABNB | 4 | 2,024 | 2025-02-13 16:30:00 | Airbnb, Inc. | 115,705,393 | Brian Chesky: Alright. Hey, Eric. I'll answer the efficiency deal. I'll wait for the second part. So yeah. There's, like, a couple of efficiencies that you could imagine. Airbnb, Inc., one is obviously customer service. I think that's, like, one of the biggest ones. I've kinda already covered that, but I think that's, like, a massive change for Airbnb, Inc. Other I assume you refer to is essentially engineering productivity. We are seeing some productivity gains. I've talked to a lot of other tech CEOs who and here's what I've heard talking to other, like, tech CEOs. Most of them haven't seen a material, like, change in engineering productivity. Most of the engineers are using AI tools. They're seeing some productivity, I don't think it's flowing to, like, a fundamental step change in productivity yet. I think a lot of us believe in some kind of medium term of a few years, you could easily see, like, a 30% increase in technology and engineering productivity. And then, of course, you know, beyond that, I mean, I think it could be, like, an order of magnitude more productivity because it but but that's that's gonna be, like, down the road. And I think that's gonna be something that almost all companies benefit from. I think the kinda younger, more innovative startup-like companies might benefit a little bit more because they'll have engineers who are more likely to adopt the tool. That's probably pretty important. But I think I think this is what I'm hearing from other people and we're pretty much having the same experience. |
178 | ABNB | 4 | 2,024 | 2025-02-13 16:30:00 | Airbnb, Inc. | 115,705,393 | Ellie Mertz: Eric, to answer your question with regards to the capital allocation strategy, I would say, no, no meaningful change in terms of strategy. What we've stated consistently over the last two years is that our capital allocation strategy includes, one, obviously, investing in our core operation, valuing M&A where there's relevant opportunities, and three, returning capital to shareholders. Obviously, given the strength of our balance sheet as well as our world-class free cash flow margins, we have the capital to do all three. You can see from our 2025 guidance that we are leaning in through the P&L in terms of investing slightly more in terms of the core operations and in particular new businesses. And then from a returning capital to shareholders, you know, you should look at the volume of repurchase activity in 2024 as a guide with regard to the magnitude in 2025. I would expect us to, you know, be slightly price sensitive and to dial up the quarterly repurchasing based on the underlying stock price.
Operator: Our next question comes from the line of Justin Patterson at KeyBanc. Please go ahead.
Justin Patterson: Great. Thank you very much. Brian, could you see how how you're thinking about the pace of product innovation versus the past? It sounds like this new tech stack should be beneficial to product velocity. So I'm curious where you saw friction points on the prior tech stack and how you think this new new tech stack really positions you to to execute on those growth initiatives you outlined at at the start? Thank you. |
179 | ABNB | 4 | 2,024 | 2025-02-13 16:30:00 | Airbnb, Inc. | 115,705,393 | Brian Chesky: Yeah. Hey, Justin. I mean, this tech stack probably like, this project probably started, frankly, six years ago, if I'm not mistaken. So this has been a very, very long thing. We've been doing it for quite a long time. I think the big milestone is that, like, you know, most of the work is now complete. And you're gonna see this year, like, almost every part of the application is gonna be essentially rebuilt from the ground up. What you've seen is, like, we've done 535 upgrades. The vast majority of those upgrades have actually been in the last two years. So every year, we are increasing the throughput of features and upgrades. This summer release is gonna be significantly larger than past ones, and I expect the ones after that will be larger. So it's gonna just basically, what it's gonna lead to is the, fewer engineers being able to basically, ship features faster. And so, you know, there's a pretty, pretty huge gain here. So I think I think what you should expect is this year, we're gonna launch significantly more upgrades than last year, and every year, it should increase.
Operator: Next question comes from the line of Brian Nowak with Morgan Stanley. Go ahead.
Brian Nowak: Great. Thanks for taking my questions. Good good guide, guys. Just two questions. One, so, Brian, as you're as you're thinking about sort of the the new products and new use cases to come from the some of the growth opportunities, launching in May. Can you just talk us through some of the the larger points of friction or opportunities high level that you see from a a guest and a host perspective you're looking to address with some of these products? And then the second one, Ellie, on the on the full year margin guide, the at least 34%, can you just sort of walk us through how you're thinking thinking about the the contribution from the invest sort of growth throughout the throughout the year and as you kind of tumble through the comps for the margin guide? |
180 | ABNB | 4 | 2,024 | 2025-02-13 16:30:00 | Airbnb, Inc. | 115,705,393 | Brian Chesky: Yeah. Hey, Brian. I will and are you asking just to clarify the first this is specifically, friction point for new products and services, not product optimizations. Correct? That's right. Yeah. So the, you know, the $200 to $250 million. Yeah. The new new business is running. Yep. Yep. So let me just kinda back up and just give you a little bit of our philosophy. So you know, we spent the last, like, four to you know, four or five years really trying to get to this moment where we could prepare for the next chapter of Airbnb, Inc. What we did, as I said, is we built a tech stack from the ground up. We listened to guest and host feedback made over 500 upgrades, we built this new business organization that Dave is now leading. Become obviously, went from breakeven to quite profitable. So I think we're now ready for this next platform, next next chapter expand beyond our core where Airbnb, Inc. is you know, just a place to stay. And to do that, here's a couple of philosophies a couple principles we have in our philosophy I'll share and I'll just tell you a little bit about the friction. Number one, I think we can do this quite efficiently because we are not gonna launch separate apps or separate brands. We're gonna have one app, one brand, the Airbnb, Inc. app. We want the Airbnb, Inc. app kinda similar to Amazon to be one place to go for all of your traveling and living needs. A place to stay is just really, frankly, a very small part of the overall equation. Every new business we launch, we'd like to be strong enough. It could stand alone, but it makes the core business stronger. You know, I think that each business could take three to five years to to scale. A great business could get to a billion dollars of revenue. It doesn't mean all of them will. And you should be able to expect, like, you know, one or a couple businesses to launch every single year for the next five years. We're gonna start initially with things very closely adjacent to travel. So, you know, when people book an Airbnb, Inc., |
181 | ABNB | 4 | 2,024 | 2025-02-13 16:30:00 | Airbnb, Inc. | 115,705,393 | years. We're gonna start initially with things very closely adjacent to travel. So, you know, when people book an Airbnb, Inc., there's a lot of, like, you know, experiences and services and other things that would make their stay more special. And it would even include things they wouldn't think to search for. And from there, we're just gonna keep expanding, and we're gonna expand out to more host services to enable them to become better hosts. And then eventually, we'll move it, you know, further and further away from our core. I think, like, maybe the analogy of Amazon is a really good one, which is to say, they started with books, the nearest adjacency to books was DVDs and CDs back when people bought physical media, and then they went to, like, I don't know, maybe toys and other things. And eventually, they ended up with fashion, and pretty soon, they were doing things pretty far adjacent from, you know, media and books. So we're gonna probably follow that path. So we're gonna really, really start adjacent to travel, and part of the reason why is a traveler booking a home, what else would they wanna book? And the other great thing is like, we offer these other experiences and services that could potentially bring a new guest that then book more homes in Airbnb, Inc. And I think one of the ultimate goals is you know, Airbnb, Inc. is used by, like, I think, 1.6 billion devices a year. So it's got a pretty big volume of users. But we're not very we're not a very frequently used app. People typically use us once it's right a year. And I would love for it to be one day for people to use this once or twice a week. And so that's kind of one of the goals over the long term. |
182 | ABNB | 4 | 2,024 | 2025-02-13 16:30:00 | Airbnb, Inc. | 115,705,393 | Ellie Mertz: Great, Brian. Let me talk a little bit about margins over the course of the year. So to restate, or just reiterate the guidance that we provide for the full year, we're going to invest $200 and $250 million in terms of launching and scaling the new businesses. We anticipate that the negative impact to margin from those investments will be heavily weighted in Q1 through Q3. Whereas the revenue obviously won't pick up until we've launched those new products. At the end of Q2. And so we would assume that the benefit from that lift would really be concentrated in terms of our x rate of Q4. But more broadly, I think the, you know, the takeaway from our guide is that even with that investment level, we're obviously maintaining extremely strong healthy margins for our core business. And obviously, the global floor on EBITDA gets you to that number. I think in terms of the general question of comps, I think the most notable comp, I would say, noise is what we described in the letter with regard to Q1. It's obviously in the letter, but just to restate it here. Q1 revenue will be heavily impacted by both the FX headwinds as well as the calendar changes vis a vis or relative to 2024. That will impact not just revenue, but also Q1 EBITDA. We've called that out in the letter just to highlight that. Absent those pieces, the Q1 EBITDA margins would actually be relatively flat.
Operator: Our next question will come from the line of Ron Josie at Citi. |
183 | ABNB | 4 | 2,024 | 2025-02-13 16:30:00 | Airbnb, Inc. | 115,705,393 | Operator: Our next question will come from the line of Ron Josie at Citi.
Ron Josie: Thanks for taking the question. Brian, I wanted to ask a little bit more on the here now. You in the letter, you talked about recent product enhancements around search and better merchandising. Love to hear your thoughts on what what you're finding, what you're seeing with search and merchandising and learnings there to help inform these newer experiences and products that are come down the pike. And then next question is just on nights and experiences both to the acceleration this quarter. Talk to us about the contribution between just the broader travel market being relatively healthy and and these newer products that are launching, the ex like, co-hosting or experiences or the next nine. Thank you. |
184 | ABNB | 4 | 2,024 | 2025-02-13 16:30:00 | Airbnb, Inc. | 115,705,393 | Brian Chesky: Yeah. Hey, Ron. I'll take the first. Yeah, when you think about the here and now, you know, when we call this out in our letter really around product optimizations. And, Ron, I'll kinda just let's just start, like, three parts. Step one, people come to Airbnb, Inc. It's really we have a huge amount of traffic. We have nearly 5 billion visitor unique 5 billion visitors a year. It's really important that, like, when people come to Airbnb, Inc., they are able to find the right Airbnb, Inc. for them. We've done a lot around, you know, like, we've introduced a personalized welcome tour. Again, people use Airbnb, Inc. only a couple times a year, so it's really important to orient them. So we've got this welcome tour that's personalized to every person. Based on your past searches, we suggest destinations that you we think you're gonna be interested in. Based on past filters, we offer up those filters as essentially, like, quick filters to apply. We've also found that, you know, this is probably obvious, but, our mobile app converts significantly higher than our mobile website. So we've been pushing to get more people to download our mobile app, and now in Q4, mobile bookings represented 60% of our overall bookings up from, I think, 55% the year before. You know, our checkout page, it this sounds like a simple thing, but the checkout page like, the page to to pay, not the checkout Airbnb, Inc., the page to pay, was really, really long, and we found that if you make it shorter, simpler, that leads to a massive increase in conversion. I'm just giving you a couple examples. There's really a long list of dozens and dozens of things again, you know, a hundred basis point increase on a GBV of $80 billion, you know, you're gonna be soon approaching like, $100 million optimizations just one at a time for some of these really, really big efforts. So once you find an Airbnb, Inc., it's important that that Airbnb, Inc. is affordable. And affordability is in our DNA. So we've made a lot of improvements around |
185 | ABNB | 4 | 2,024 | 2025-02-13 16:30:00 | Airbnb, Inc. | 115,705,393 | important that that Airbnb, Inc. is affordable. And affordability is in our DNA. So we've made a lot of improvements around affordability that have also increased optimization. Like showing the total price display. When guests toggle on total price display, that includes all fees including cleaning fees, we see that people are booking higher value Airbnb, Inc.s. We've also created a lot of tools for hosts. Whether it's monthly and weekly monthly discounts, price tips, search tips, all these things are essentially efforts to make everything more affordable, and it's working. Because during 2024, hotel prices were up year to year while comparable Airbnb, Inc. listings were down year over year in price. So we're making progress. And the last thing is if you find the Airbnb, Inc. is a good price, it's still really important that it's of high quality. For every person who books in Airbnb, Inc., about 90 people book a hotel. And so if we do, you know, around a 500 million IT year and we got the extra hotel grass to use Airbnb, Inc., go from 500 million nights to a billion room nights. So that's a really, really big opportunity. And we think the number one way to do that is to improve the reliability and quality of our service especially your host. So the way to do that is elevate the best and cut the bottom. We introduced guest favorites in October 2023, it's now gotten 250 million nights booked. If you book a guest favorite, customer service rates are down. Trip issues are down, guest net promoter is up, cancellations are down, so it's really great. We also since April 2023, we introduced a new host quality system and removed 400,000 listings that don't meet our or don't meet our guest expectation. Ron, those are essentially the three levers. We have usability, making it easier for people to find the listing by increasing conversion. Affordability, getting prices to be better and more competitive, and then reliability and quality of the service. So again, we've made know, hundreds of updates over the past few years |
186 | ABNB | 4 | 2,024 | 2025-02-13 16:30:00 | Airbnb, Inc. | 115,705,393 | and then reliability and quality of the service. So again, we've made know, hundreds of updates over the past few years on these, but these are just a couple callouts. |
187 | ABNB | 4 | 2,024 | 2025-02-13 16:30:00 | Airbnb, Inc. | 115,705,393 | Ellie Mertz: And and Ron, to answer your question in terms of quantifying the Q4 demand. I would say, you know, obviously, we benefited from organic tailwinds across the industry. But in addition to that, all of the product optimizations that Brian shared from our testing of those improvements, we estimate the exit rate growth rate for our business was lifted by a couple hundred basis points due to those improvements. And we see it through improvements in our booking conversion.
Operator: Our next question will come from the line of James Lee at Mizuho. Please go ahead.
James Lee: Great. Thanks for taking my questions. I'm sorry I joined the call a little bit late, so I apologize if my question has been repeated. Two questions here. One on experiences. Can you guys talk about maybe some of the friction you're able to resolve in the upcoming launch? Any indication that you can give us on the confidence of a successful launch this time? And secondly, I just want to double click on you know, Brian's commentary on Beyond the Core. Are you thinking about maybe some sort of concierge service, meaning, like grocery shopping, access to spa, to gym, maybe some kind of access to recreation. Is that what we should think about when we think about adjacency to travel? Thanks. |
188 | ABNB | 4 | 2,024 | 2025-02-13 16:30:00 | Airbnb, Inc. | 115,705,393 | Brian Chesky: Yeah. I can I can handle this? Hey, James. So frictions do you wanna resolve with experiences? Let's ask, though, what were the were some of the challenges the first time around? Well, the first time around, I don't think we integrated the experiences really well. The products. If you go to airbnb.com or app right now, it's pretty hard to find them. The second thing is that when you find the experiences, I don't think they were merchandised as compellingly as they could. Third, there weren't really a lot of integrations with social media. I think social media is a great distribution. And fourth, I think we are completely rethinking the kind of supply we're gonna have. I think it's gonna be really, really compelling. And then fifth, we didn't really market it that much, and I think this we're gonna be a bit more aggressive in marketing then because we're really proud of the quality of product we have. Confidence of how successful the launch is gonna be. You know, I wanna be measured in my response because know, you know, this is a this is a second shot at it. I am extremely confident that this product can be incredibly, incredibly compelling, though. So I think if people give it a shot, I think they're gonna be really in love with the product because people really do actually like the current Airbnb, Inc. experiences, and I think this one's gonna be significantly better. I probably won't say much more, tune in in May, and we're gonna, like, you know, I'll walk you through the entire product and product launch. As far as adjacencies, yeah. I mean, there are you know, dozens and dozens I mean, if you got really granular, hundreds of opportunities. Endless. We could spend many, many years picking all the adjacencies to be able to travel somewhere and list somewhere. Number like, you know, 17, 18% of our nights booked are longer-term stays of more than 30 days. And that's gonna become an even greater share of our business. I think down the road, and so if you think about what all the service need to |
189 | ABNB | 4 | 2,024 | 2025-02-13 16:30:00 | Airbnb, Inc. | 115,705,393 | become an even greater share of our business. I think down the road, and so if you think about what all the service need to travel or live somewhere, there's a lot of opportunities. Now the key is not to do them obviously all at once, to be to prioritize, to pick the most differentiated services guests want the most that are, you know, the most compelling, opportunities from a business standpoint and just start from there. We're not we're not gonna go into too many more details, but stay tuned. |
190 | ABNB | 4 | 2,024 | 2025-02-13 16:30:00 | Airbnb, Inc. | 115,705,393 | Operator: Our next question will come from the line of Jed Kelly at Oppenheimer. Please go ahead.
Jed Kelly: Hey. Great. Thanks for taking my questions. Just first, can you talk about as you kind of increase your reliability, where are where are you in potentially partnering with some you know, larger companies that might be able to provide these enhanced services. And then just just circling back to North America. I mean, how do you view that market opportunity? I know room nights accelerated mid-single digits, but I'm sure you want it to grow faster. So so just how should we view the North American market? Thank you.
Brian Chesky: Yeah. Why don't I start in with partners? I imagine eventual like, Airbnb, Inc., first of all, we haven't done a lot of partnership. We historically have not had a robust business development or partnerships function. So most of our platform, we feel as kind of a little bit more of a closed ecosystem. I imagine this next chapter of Airbnb, Inc. is much more of an open ecosystem. If you think about the really large tech platforms, they're kinda ecosystem ecosystems, essentially, and they're ecosystems that partner with other companies and developers to build on their platform. And Airbnb, Inc. is the kind of company where there are quite literally thousands of companies like cleaning companies, key exchange, like grocery companies, there's all sorts of companies built on top of Airbnb, Inc., especially local businesses. So I think that Airbnb, Inc., there is a play to the ecosystem where we could partner with local companies and global brands. So we are absolutely thinking about that. It's not the first thing we would do. We'd probably start with kinda first party before we go to third party, but third party integrations is incredibly compelling because why not, like, allow the world to build an Airbnb, Inc.? We don't need to build future by ourselves. |
191 | ABNB | 4 | 2,024 | 2025-02-13 16:30:00 | Airbnb, Inc. | 115,705,393 | Ellie Mertz: K. Just to talk a little bit about North America. So one to just call it the trends that we saw in the back half of the year. North America, like all other regions, accelerated from Q3 to Q4. What I would say about you know, the the state of play in North America is we believe we can grow faster than we are growing today. And and why is that? I would say one is that North America, despite the scale that we've been able to achieve in North America, is still a market dominated by hotels. Our business continues to be a a fraction of the overall lodging industry, and, you know, there's there's plenty of room to grow. Short-term rental in particular, our business relative to hotels as compared to what it looks like in other regions. I would say second, we've we've mentioned this in prior calls. We look across the states and identify that there's there's several demos that we we just frankly don't do as well as we do in other demos. The ones that we've called out in particular would be the Latino population, the kind of crossover heartland states outside of the coast, and those are areas that we continue to, you know, work to drive penetration and, increase consideration.
Operator: Our next question will come from the line of Doug Anmuth with JPMorgan. Please go ahead.
Doug Anmuth: Thanks for taking the questions. Brian, can you just talk about in what markets or for what kind of listings you're seeing the cohost network work best and what's really driving them to earn twice as much as other listings. And then, Ellie, I'm just curious where you might be finding the most traction in managing the cost structure to make room for some of these new investments coming up. Thanks. |
192 | ABNB | 4 | 2,024 | 2025-02-13 16:30:00 | Airbnb, Inc. | 115,705,393 | Brian Chesky: Yeah. Hey, Doug. Co Host Network, just to give people a little bit of background on the Co Host Network, you know, we did a bunch of surveys, and we talked to a lot of prospective hosts. And here's the status surprised us. More than 40% of people we surveyed say they would be interested in sharing their home on Airbnb, Inc., but the biggest obstacle to them doing that was that felt like it was a lot of work. We also noticed there were a lot of people that were hosting Airbnb, Inc. that would like to expand, but they don't have another home to put in Airbnb, Inc. And so we thought, what if we created a marketplace to match people with extra time with people to have home? And that is the Co Host network. The reason why the Co Host listings are so much productive they make about twice as much revenues listings matched by Co Host than other listings. It's because we only invited top hosts on Airbnb, Inc. to become a cohost. So the average rating for a host in Airbnb, Inc. is significantly higher. The majority of listings managed by Co Host, I believe, are guest 85% help manage a guest favorite, 75% of Co Hosts are actually Superhosts. We launched in ten countries with 10,000 cohosts. Those countries where I think it was Australia, Brazil, Canada, France, Germany, Italy, Mexico, Spain, UK, and US. So it was those ten countries, and that's it. You know? And since we've and the average cohost has an exceptional rating of 4.87. That's a really, really good rating. But I was, like, four months ago, five months ago. Today, went from 10,000 cohosts to 15,000 cohosts. We now have 100,000 listings under management. The next plan is to expand to Asia. So the two countries we're focused on are Japan and Korea. And, we'll give you updates as that progresses. |
193 | ABNB | 4 | 2,024 | 2025-02-13 16:30:00 | Airbnb, Inc. | 115,705,393 | Ellie Mertz: Great. And, Doug, to talk about margins in terms of where there's opportunity for incremental efficiencies? Just to restate our our margin guide every year, we will be looking to invest in new growth opportunities while also finding incremental efficiencies in our core business. In terms of 2025 and and the outlook there, I would say incremental opportunities across our variable costs. So areas like payment processing and customer service opportunities to just be frankly a little bit more efficient and to deliver some margin expansion there. Similarly, we continue to be extremely disciplined with our G&A expenses and headcount growth, allowing for some margin expansion there as well. And then on the marketing line item, in 2024, we did increase our overall marketing intensity over the course of the year because we saw opportunities to lean into. Our current plan for 2025 plans for a flat percent of revenue for the core business on marketing.
Operator: Our next question will come from the line of Lee Horowitz at Deutsche Bank. Please go ahead. |
194 | ABNB | 4 | 2,024 | 2025-02-13 16:30:00 | Airbnb, Inc. | 115,705,393 | Operator: Our next question will come from the line of Lee Horowitz at Deutsche Bank. Please go ahead.
Lee Horowitz: Great. Thanks for thanks for taking the question. Maybe just on some of the growth markets. You guys highlighted some really healthy growth rates in these expansion regions. And obviously put up nice numbers in the 4Q. But as we look after to the first quarter, nice growth is sort of reverting back to what you did for March of 2024. So can you maybe help us unpack why the success you are seeing in some of these regions is not necessarily pulling up the overall growth rate in the first quarter? And then maybe relatedly to the marketing comments, you just made in terms of it being sort of flat year on year. I guess, how how do we maybe, you know, put together the pieces of, you know, marketing intensity perhaps flat year on year, with a number of different growth regions still out there, that are are probably not quite as large as you want at this point. Like, do you no longer really have to invest in them, or have you reached investment sort of threshold on those? Are you gonna start to get leverage on the investments that you've made in those regions? How come they they don't necessarily need more marketing dollars to deleverage next year? Thanks so much. |
195 | ABNB | 4 | 2,024 | 2025-02-13 16:30:00 | Airbnb, Inc. | 115,705,393 | Ellie Mertz: Sure. Let me let me start with the latter question. So if you think about how we've been managing our overall marketing dollars, the majority of the spend is on brand marketing. And the way to think about brand marketing is that it is effectively a fixed amount of spend for each market in terms of the minimum amount that you need to spend for that market to be efficient. And so it is not necessarily a one for one, like, performance marketing in terms of how you need to scale it up. And so what we've done over the last couple of years is keep the the growth of spending against our core markets relatively modest while adding on these incremental new markets and the incremental brand marketing dollars that requires. And so as we look forward to 2025, the way that we're able to maintain strong growth in the core markets, but also incrementally invest in a higher level of marketing intensity for the expansion market is not to grow the core market marketing spend faster than revenue. And and that the the way we're able to do that is our lack of of strong reliance on performance marketing which would be entirely variable. Instead, in a market like the US, we have a base fixed amount that is dedicated to brand. On top of which we we surgically add performance marketing. And so the the broad takeaway should be that in particular, in our core markets because they are so heavily reliant on brand, we are not adding dollar for dollar as revenue increases, and therefore, the marketing budget's allowed to expand and be more heavily dedicated to expansion markets.
Operator: Our next question will come from the line of Justin Post at B of A. Please go ahead. |
196 | ABNB | 4 | 2,024 | 2025-02-13 16:30:00 | Airbnb, Inc. | 115,705,393 | Operator: Our next question will come from the line of Justin Post at B of A. Please go ahead.
Justin Post: Great. Thanks. A couple questions. Looks like you know, we've already covered it. US accelerated. Looking back, what what might have pressured the the growth rates and and on a macro level? And do you see those those pressures changing this year? And then, maybe Ellie, you could talk a little about the take rates contemplated in your outlook. What are some of the the positives and and negatives for for take rates? Thank you. |
197 | ABNB | 4 | 2,024 | 2025-02-13 16:30:00 | Airbnb, Inc. | 115,705,393 | Ellie Mertz: Yeah. Certainly. So let's talk a little bit about North America in terms of what, you know, what 2024 looks like. You'll recall this past summer, North America in particular, we saw at the beginning of the summer peak that there was a pretty material contract in terms of lead times, which made bookings growth in Q3 relatively muted. I think the question at the time was, is this a signal of weakening demand or is this a signal of simply a little bit of a volatility in terms of consumer behavior? When people book their next trip. What we found at the end of Q3 and consistent with our Q3 results that that played through with Q4 is that that volatility and kind of usage bookings growth we saw over the summer was somewhat temporal. And those folks who were, you know, somewhat on the sidelines in terms of making their future bookings in the summer came back to us in the fall and did indeed make bookings. I think subsequent to that, we've certainly seen that past the initial uncertainty leading into the election. The consumer and in particular the North American consumer has been strong and in particular has been been strong in terms of of contemplating future travel. In terms of take rates, if we play back the if we play back last year, let's talk about the puts and takes for last year and how they impact the take rate for 2025. So as you'll recall, we introduced an FX service fee mid-2024. That service fee is approximately 100 basis points applied to 20% of our GBV. So on an annualized basis, you would assume that it would list the implied take rate by about 20 basis points. It did that. However, in Q3, we had some offsets and in Q4, we also had some offsets. So specifically, in Q3, we had elevated made goods, which come in as a contra revenue and offset the the lift we received from the FX service fees. And then fast forward to the last quarter, the offset was a hard comp from some benefits we got to revenue in Q4 of 2023. Associated with breakage of gift cards. So fast forward to 2025, we don't |
198 | ABNB | 4 | 2,024 | 2025-02-13 16:30:00 | Airbnb, Inc. | 115,705,393 | from some benefits we got to revenue in Q4 of 2023. Associated with breakage of gift cards. So fast forward to 2025, we don't anticipate any of those similar one-offs that will offset the the benefit we get from the FX service fee. And so instead for full year 2025, you should assume that, the implied take rate gets the full benefit of 20 basis points increase on a year-over-year basis. As compared to 2024. |
199 | ABNB | 4 | 2,024 | 2025-02-13 16:30:00 | Airbnb, Inc. | 115,705,393 | Operator: Our next question will come from the line of Ken Gawrelski with Wells Fargo. Please go ahead.
Ken Gawrelski: Thank you. Two, if I may. First, just on the expense side, maybe, Ellie, you talk a little bit going looking beyond 2025. How do you think about the fixed investments you've made to prepare for the product launches in 2025? How should we think about that fixed versus variable component in 2026 and beyond? And then and then second maybe for Brian, you you talked about how you there's still opportunity in North America and the the the bookings of alternative accommodations relative to hotels and still it's very heavily weighted to to hotels. Could you talk about some of the elements you think that that could change that kind of price to value equation for consumers, especially in maybe in urban markets. Where where alternative accommodations had tougher time gaining share versus vacation markets where where you picked up a ton of share? Thank you.
Ellie Mertz: So let me, let me talk about the product investments. Brian has shared that in in the letter we shared that we've sent the the last couple of years effectively rebuilding the tech stack. And so I would say, you know, while that work is not fully complete, a lot of it is behind us. So think from investor standpoint, you should be excited that most of the hard work has been done in terms of rebuilding the tech stack and and frankly modernizing our app that sets us up well to now turn our product road map towards supporting these these new services as well as continuing to perfecting the the core service. So what that means from an expense perspective is that on the go forward, we can increasingly dedicate our product resources to those consumer-facing growth additive features that, you know, obviously, the the consumer benefits. |
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