Apple's 2025 10-K: Services Soar While China Sales Stumble

Apple recently filed its annual report for the 2025 fiscal year, giving us a comprehensive look under the hood of the world's most valuable company. For anyone interested in the tech giant's financial health and strategic direction, this Form 10-K filing is required reading. Let's break down the key numbers and see what they tell us about Apple's performance.

For the fiscal year ending September 27, 2025, Apple posted total net sales of $416.2 billion, a solid 6% increase from the $391.0 billion reported in 2024. Net income was even more impressive, jumping to $112.0 billion from last year's $93.7 billion.

To get a clearer picture of how Apple generates its revenue and where the money goes, the following flow diagram visualizes the company's annual income statement.

The Power of Services

While the iPhone remains the star of the show, Apple's Services division is increasingly becoming the main character in its growth story. Here's how the different business segments performed:

• iPhone: Sales grew by 4% to reach $209.6 billion, driven by strong demand for the Pro models. The iPhone is still Apple's largest revenue source by a wide margin.
• Services: This segment, which includes the App Store, advertising, AppleCare, and cloud services, saw revenue surge by an impressive 14% to $109.2 billion. Critically, the Services business boasts a gross margin of 75.4%, significantly higher than the 36.8% margin for Products. This shift is a key driver of Apple's growing overall profitability.
• Mac: The Mac line had a strong year, with sales increasing by 12% to $33.7 billion.
• iPad: iPad sales saw a modest 5% increase, bringing in $28.0 billion.
• Wearables, Home and Accessories: This was the only category to see a decline, with sales dropping 4% to $35.7 billion. This segment includes popular products like the Apple Watch and AirPods.

A Mixed Global Picture

Apple's growth wasn't uniform across the globe. While most regions performed well, a key market showed signs of weakness.

• Strong Growth: The Americas (up 7%), Europe (up 10%), Japan (up 15%), and the Rest of Asia Pacific (up 10%) all delivered robust sales growth.
• Greater China Falters: In contrast, net sales in Greater China, which includes Hong Kong and Taiwan, decreased by 4% to $64.4 billion. The filing attributes this primarily to lower iPhone sales in the region, a potential sign of tougher competition and challenging economic conditions.

Investing in the Future and Rewarding Shareholders

Apple continues to invest heavily in its future while also returning massive amounts of capital to its shareholders. Research and development (R&D) expenses climbed 10% to $34.6 billion, signaling a deep commitment to innovation.

Simultaneously, the company's capital return program remains a priority. In fiscal 2025, Apple spent $90.1 billion on share repurchases and paid out $15.4 billion in dividends to its shareholders.

In conclusion, Apple's 2025 fiscal year demonstrates a company that is still growing at a remarkable scale. The continued expansion of its high-margin Services business is successfully boosting the bottom line and reducing its reliance on hardware sales cycles. However, the sales dip in Greater China is a significant development to watch, highlighting the challenges of navigating a complex global market with formidable local competitors.