Summary
Full summaryExecutive Assessment
Apple reports FY2024 revenue of $391.0B, up 2.0% YoY, with net income of $93.7B, down 3.4% YoY, impacted by a one-time $10.2B income tax charge related to the European Commission State Aid Decision.
- Total net sales increased 2.0% to $391.0B, driven by Services growth of 12.9% to $96.2B, while Products revenue declined 1.1% to $294.9B.
- Net income decreased 3.4% to $93.7B, primarily due to a $10.2B net one-time income tax charge; diluted EPS was $6.08 compared to $6.13 in the prior year.
- Gross margin expanded 210 basis points to 46.2%, with Products gross margin up 70 bps to 37.2% and Services gross margin up 310 bps to 73.9%.
- The company returned $110.2B to shareholders through $95.0B in share repurchases and $15.2B in dividends, and authorized a new $110B share repurchase program.
Financial Highlights
| Metric | Current Period | Prior Period | Change | Investor Takeaway |
|---|---|---|---|---|
Total Net Sales | $391.0B | $383.3B | +2.0% | Growth driven by Services, partially offset by declines in Products. |
Net Income | $93.7B | $97.0B | −3.4% | Decrease primarily due to a one-time $10.2B net income tax charge related to the State Aid Decision. |
Diluted EPS | $6.1 | $6.1 | −0.8% | Reflects lower net income and a 2.6% reduction in diluted share count. |
Gross Margin | 46.2% | 44.1% | +2.1 ppts | Products margin improved due to cost savings; Services margin improved due to mix. |
Operating Cash Flow | $118.3B | $110.5B | +7.1% | Increase driven by higher net income adjusted for non-cash items and favorable working capital changes. |
Free Cash Flow | $108.8B | $99.6B | +9.2% | Operating cash flow less capital expenditures of $9.4B. |
Profitability
- Operating margin expanded to 31.5% from 29.8%, driven by gross margin expansion and operating expense leverage.
- Net margin declined to 24.0% from 25.3%, primarily due to the higher effective tax rate (24.1% vs. 14.7%).
- Return on equity increased to 164.6% from 156.1%, reflecting lower shareholders' equity due to share repurchases.
Cash flow
- Operating cash flow of $118.3B, up 7.0% YoY, supported by net income and a $15.6B increase in other current and non-current liabilities.
- Investing cash flow was $2.9B, down from $3.7B, with lower net purchases of marketable securities and reduced capex.
- Financing cash flow was -$122.0B, compared to -$108.5B, driven by higher share repurchases ($94.9B vs. $77.6B).
Balance sheet
- Total assets increased to $365.0B from $352.6B, with current assets up 6.6% to $153.0B.
- Cash and marketable securities (current and non-current) totaled $156.7B, down from $162.1B, with $140.8B in unrestricted cash and marketable securities.
- Total debt (term debt and commercial paper) was $106.6B, down from $111.1B; net cash position remains strong.
- Shareholders' equity decreased to $57.0B from $62.1B, primarily due to share repurchases exceeding net income.
Investment Risks & Concerns
Risk Factor
Dependence on global economic conditions and international operations, with a majority of sales outside the U.S. and supply chain concentrated in Asia.
Risk Factor
Intense competition in global markets for smartphones, personal computers, tablets, and services, with aggressive pricing and rapid technological change.
Risk Factor
Reliance on single-source and limited-source component suppliers, exposing the company to supply shortages and price increases.
Risk Factor
Legal and regulatory compliance risks, including the European Commission State Aid Decision resulting in a $10.2B net tax charge and ongoing uncertain tax positions.
Risk Factor
Potential impact of changes to App Store business practices and regulatory requirements, such as the EU Digital Markets Act, on Services revenue.
Management Strategy & Execution
Themes
- Services growth was the primary driver of total net sales increase, with advertising, App Store, and cloud services cited as key contributors.
- Products gross margin improvement attributed to cost savings, partially offset by unfavorable mix and foreign exchange.
- R&D expense growth of 5% driven by headcount-related expenses, reflecting continued investment in innovation.
- Greater China net sales declined 8% due to lower iPhone and iPad sales, with unfavorable currency impact from the renminbi.
Capital allocation
- Repurchased $95.0B of common stock (499 million shares) and paid $15.2B in dividends and dividend equivalents.
- Authorized a new $110B share repurchase program in May 2024 and raised the quarterly dividend to $0.25 per share.
- Capital expenditures were $9.4B, down from $11.0B, primarily for manufacturing process equipment and facilities.
“Services net sales increased during 2024 compared to 2023 due primarily to higher net sales from advertising, the App Store and cloud services.”
— Management (MD&A)
“Products gross margin and Products gross margin percentage increased during 2024 compared to 2023 due to cost savings, partially offset by a different Products mix and the weakness in foreign currencies relative to the U.S. dollar.”
— Management (MD&A)
Business Segment Analysis
| Segment | Revenue | Change | Commentary |
|---|---|---|---|
| Americas | $167.0B | +3% | Increase due primarily to higher net sales of Services. |
| Europe | $101.3B | +7% | Increase due primarily to higher net sales of Services and iPhone. |
| Greater China | $67.0B | -8% | Decrease due primarily to lower net sales of iPhone and iPad, with unfavorable currency impact. |
| Japan | $25.1B | +3% | Increase due primarily to higher net sales of iPhone, partially offset by unfavorable yen impact. |
| Rest of Asia Pacific | $30.7B | +4% | Increase due primarily to higher net sales of Services, with net unfavorable currency impact. |
Liquidity & Capital Structure
Leverage: Total debt (term debt and commercial paper) of $106.6B, with $140.8B in unrestricted cash and marketable securities; net cash position remains robust.
Liquidity: Unrestricted cash, cash equivalents, and marketable securities of $140.8B as of September 28, 2024, plus $118.3B in operating cash flow, sufficient to meet cash requirements and capital return program.
Shareholder returns
- Share repurchases of $95.0B in FY2024, with $110B new authorization.
- Dividends and dividend equivalents of $15.2B, with quarterly dividend raised to $0.25 per share.
Forward Outlook & Investment Implications
Not disclosed—the company does not provide quantitative guidance in the 10-K filing.
Drivers
- Not disclosed—no specific forward-looking financial metrics or growth targets provided.
Watch items
- Potential volatility in gross margins due to foreign exchange, product mix, and competitive pricing pressures.
- Impact of regulatory changes, including the EU Digital Markets Act, on App Store and Services revenue.
- Resolution of uncertain tax positions and the State Aid Decision payment.
Notable Footnotes
| Item | Impact |
|---|---|
| State Aid Decision (Note 7) | One-time $10.2B net income tax charge in Q4 2024; $15.8B escrow released to Ireland. |
| Revenue Recognition (Note 2) | Deferred revenue of $12.8B as of September 28, 2024; 64% expected to be realized within one year. |
| Share Repurchase Program (Note 10) | New $110B authorization in May 2024; 499 million shares repurchased for $95.0B in FY2024. |
| Uncertain Tax Positions (Note 7) | Gross unrecognized tax benefits of $22.0B; possible decrease of $5B–$13B in next 12 months. |
3-Year Investment Perspective
Revenue declined 0.8% in FY2023 to $383.3B, then grew 2.0% in FY2024 to $391.0B, still below FY2022's $394.3B. Net income has declined from $99.8B in FY2022 to $93.7B in FY2024, with FY2024 impacted by a one-time tax charge. Services revenue has grown steadily from $78.1B in FY2022 to $96.2B in FY2024, while Products revenue declined from $316.2B to $294.9B over the same period.
Inflections
- Services revenue surpassed $96B, now representing 24.6% of total net sales, up from 19.8% in FY2022.
- iPhone revenue declined from $205.5B in FY2022 to $201.2B in FY2024, but remained the largest product category.
- Gross margin expanded from 43.3% in FY2022 to 46.2% in FY2024, driven by Services mix and cost savings.
- Operating cash flow declined from $122.2B in FY2022 to $110.5B in FY2023, then recovered to $118.3B in FY2024.
Prior-period comparison
- FY2023 revenue of $383.3B was down 2.8% from FY2022, with Products down 5.7% and Services up 9.1%.
- FY2023 net income of $97.0B was down 2.8% from FY2022, with a lower effective tax rate of 14.7% vs. 16.2%.
- FY2023 diluted EPS of $6.13 was down 0.3% from $6.11 in FY2022, reflecting lower net income and share repurchases.
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