BEN BOLLIN
bbollin@cleveland-research.com
(216) 649-7211
ANDREW KUCH
akuch@cleveland-research.com
(216) 649-7291
BRIAN WILCOX
bwilcox@cleveland-research.com
(216) 649-7220
BRETT HIGH
bhigh@cleveland-research.com
(216) 649-7264
June 25, 2025
Apple Inc. (AAPL: $200.30 – BUY)
Important disclosures can be found in Appendix
AAPL: CY25 iPhone Unit Forecasts Appear Stable – US and China Promotional
Intensity Supporting Directional Improvement (Cleveland Research)
Key Points
1. View Jun-Q tracking in-line with guidance with in-line iPhone, favorable Mac, & muted iPad & Other Products attach
2. Hearing directional Y/Y improvements in iPhone sell-through in US supported by intensifying promotional
environment in Jun-25 Q; EMEA iPhone sell-through remains soft (down mid-singles or more)
3. See steady CY25 iPhone unit forecasts of +0-2% Y/Y – increased promotions & 2H cohort refresh opportunities seen
as primary growth catalysts (not AI)
4. Mac feedback appears more positive on accelerating refresh, share gains, sell-in benefit, & pull-forward activity
Read through to the Model
• FY25 Product mix: iPhone 45% of rev, Services 31%, Mac 8%, iPad 7%, Other Products 9%
• FY25 Geo mix: Americas 42%, Europe 26%, China 17%, Japan 8%, rest of APAC 8%
• Modeling Jun-Q rev of $88.8B, +3.5% Y/Y vs. cons of $88.8B, +3.5% Y/Y; EPS of $1.42 vs. cons of $1.42
• Modeling FY25 rev of $407.5B, +4.2% Y/Y vs. cons of $407.3B, +4.2% Y/Y; EPS of $7.21 vs. cons of 7.17
3Q25 (Jun-Q) Guidance
• Jun-Q total revenue growth of low-to-mid single digits Y/Y, inclusive of slight fx headwind (~50bps)
• GM of 45.5-46.5% with $900m of tariff expense and component environment remaining favorable
• OPEX of $15.3-$15.B; OIE of ($300M)
Conclusion
Work suggests directional improvement in iPhone unit sell through in the US and China compared to 60 days ago, and
continued softness in EMEA. Increased carrier promotions in the US in the Jun-Q is contributing to better iPhone
refresh/upgrade activity, while China sounds to be benefitting from an elevated subsidy environment. Partner outlooks
for iPhone units over the next 6+ months appear stable, with CY25 forecasts remaining unchanged (+0-2% Y/Y) and we
continue to view growth as more dependent on aged device replacement and promotions vs. Apple Intelligence. Mac
feedback suggests incremental momentum in the past 60 days, supported by enterprise share gains, refresh activity, some
pull-forward, and sell-in from recent product launches. Our estimates are in-line with cons for FY25.
Apple Inc. Earnings and Market Data Summary Rating: BUY Price: $200.30
CRC Cons CRC Cons
1Q25 2.40$ 1Q26 2.59$ 2.45$ Shares Outstanding 15,056.1 Div Yield 0.5%
2Q25 1.65$ 2Q26 1.82$ 1.76$ Market Cap (B) $3,010 Book Value $4.44
3Q25 1.42$ 1.42$ 3Q26 1.73$ 1.60$ 52-Week High $260
Net Cash/Share (MRQ)
$2.31
4Q25 1.73$ 1.65$ 4Q26 1.93$ 1.86$ 52-Week Low $169
Revenue (Trailing 4Qs)
$391,035
Sep-25E 7.21$ 7.17$ Sep-26E 8.07$ 7.78$ Avg. Volume (M) 54.4 5-Year Grow th Rate 8%
PE 27.8x PE 24.8x
PE Ex Cash 27.5x
PE Ex Cash
24.5x
Price: FCF 28.7x Price: FCF 21.1x
Apple Inc. (AAPL) - CRC
June 25, 2025
Page 2
BEN BOLLIN
bbollin@cleveland-research.com
(216) 649-7211
ANDREW KUCH
akuch@cleveland-research.com
(216) 649-7291
BRIAN WILCOX
bwilcox@cleveland-research.com
(216) 649-7220
BRETT HIGH
bhigh@cleveland-research.com
(216) 649-7264
Highlights
1. View Jun-Q tracking in-line with promotion driven improvement in US iPhone demand & Mac outperformance
partially offset by soft EMEA. Service provider feedback is pointing to directional Y/Y improvements in iPhone sell-
through vs. the Mar-Q. N. America SPs cite intensifying promotions as the primary driver to better iPhone refresh and
upgrade activity through April, May, and into June. We see select US SP’s is investing in greater than seasonal
marketing/subsidies in C2Q to offset soft C1Q performance and enhance sell through. We view N. America service
providers tracking up low-to mid-single digits Y/Y (vs. flat performance in the Mar-Q).
China feedback appears similar, with partners suggesting healthy demand for iPhone and domestic OEMs supported
by the elevated subsidy environment. As a partial offset, EMEA discussions sound more cautious vs. our prior work.
EMEA service providers are suggesting iPhone unit sell through tracking down mid-to-high single digits (vs. prior Q flat
to down low-singles Y/Y), with more instances of asset sweating and increased demand for legacy devices. EMEA SPs
also sound to be seeing headwinds from more opportunities going direct through Apple.com.
Mac discussions appear more positive vs. 60 days ago. We hear enterprise PC/Mac demand is benefiting from
accelerating refresh activity, share gains, and some tariff-related pull-forward. Feedback also suggests additional sell-
in benefit in the Jun-Q from recent product launches for both Mac and iPad (iPad 11, M3 iPad Air, M4 MacBook Air,
M4 Mac Studio). Services discussions are consistent, with tailwinds from the growing installed base, increased cross-
and upsell of additional subscriptions, and favorable point-of-sale sponsorship. Our estimates are in-line with cons for
the Jun-Q.
2. Outlooks appear consistent – see stable CY25 iPhone unit assumptions following reduced forecasts/expectations
~60 days ago. Supply chain partner and service provider iPhone outlooks appear stable at flat to up low-singles Y/Y,
following 1-2 pt. downward revisions in the Mar-Q (previously +2-3% Y/Y). Promotion-driven improvements in US
iPhone sell-through do not appear to be translating into stronger forecasts from service providers and suppliers to-
date, with partners maintaining concerns around lengthening device refresh rates, a tightening consumer spending
environment, and tariffs. Apple Intelligence has not been discussed as a catalyst to consumer hardware
refresh/upgrades at service providers or suppliers. Increased promotional intensity in 2H25 and visibility into a larger
mix of iPhone users coming off 36-month financing are expected to be more meaningful drivers of refresh and upgrade
volumes for the remainder of the year. Partners now expect many of these users to push upgrades to the iPhone 17
cycle, potentially contributing to a more 2H-weighted year than originally anticipated (to achieve sales targets).
3. Mac, iPad, and Other Product feedback (combined 24% of mix) suggests favorable Mac & mixed iPad & Wearables
demand. Discussions suggest stronger Y/Y growth for Mac in the Jun-Q, with supply chain partners noting higher build
forecasts over the past 30-45 days. Partners continue to see strong enterprise refresh activity, share gains, and
instances of tariff-related pull forward (both OEM and consumer driven). Discussions suggest AAPL and other OEMs
as likely pulling forward shipments to fill the channel before the end of the 90-day tariff pause in July. This appears to
be contributing to some uncertainty in 2H25 forecasts, with organic demand viewed as difficult to distinguish from
pull-forward behavior. Partners also highlight share opportunities for Mac driven by growing workplace preference
for mixed-device environments (both MacOS & Windows vs. prior Windows centric), longer product life cycles, and
higher residual value vs. other OEMs. iPad and Other Product feedback sounds consistent, with point-of-sale partners
continuing to suggest muted attach for iPad and Watch.
Apple Inc. (AAPL) - CRC
June 25, 2025
Page 3
BEN BOLLIN
bbollin@cleveland-research.com
(216) 649-7211
ANDREW KUCH
akuch@cleveland-research.com
(216) 649-7291
BRIAN WILCOX
bwilcox@cleveland-research.com
(216) 649-7220
BRETT HIGH
bhigh@cleveland-research.com
(216) 649-7264
Apple (AAPL)
Benjamin J. Bollin
bbollin@cleveland-research.com
AAPL FY21 FY22 FY23 1Q24 2Q24 3Q24 4Q24 FY24 1Q25 2Q25 3Q25E 4Q25E FY25E FY26E
Product Rev 297,392$ 316,199$ 298,085$ 96,458$ 66,886$ 61,564$ 69,958$ 294,866$ 97,960$ 68,714$ 61,610$ 71,001$ 299,285$ 308,649$
Service Rev 68,425$ 78,129$ 85,200$ 23,117$ 23,867$ 24,213$ 24,972$ 96,169$ 26,340$ 26,645$ 27,167$ 28,078$ 108,230$ 120,532$
Product COGS 192,266$ 201,471$ 189,282$ 58,440$ 42,424$ 39,803$ 44,566$ 185,233$ 59,447$ 44,030$ 40,663$ 45,582$ 189,722$ 194,964$
Service COGS 20,714$ 22,075$ 24,855$ 6,280$ 6,058$ 6,296$ 6,485$ 25,119$ 6,578$ 6,462$ 7,199$ 7,300$ 27,540$ 30,901$
Product GP $105,126 $114,728 $108,803 $38,018 $24,462 $21,761 $25,392 $109,633 $38,513 $24,684 $20,947 $25,418 $109,563 $113,685
GM 35.3% 36.3% 36.5% 39.4% 36.6% 35.3% 36.3% 37.2% 39.3% 35.9% 34.0% 35.8% 36.6% 36.8%
Service GP $47,711 $56,054 $60,345 $16,837 $17,809 $17,917 $18,487 $71,050 $19,762 $20,183 $19,968 $20,778 $80,691 $89,632
GM 69.7% 71.7% 70.8% 72.8% 74.6% 74.0% 74.0% 73.9% 75.0% 75.7% 73.5% 74.0% 74.6% 74.4%
$70,429 $54,243 $169,148 54,855$ 42,271$ 39,678$ 43,879$ $180,683 58,275$ 44,867$ 40,915$ 46,196$ $190,253 $203,317
PC Rev 35,190$ 40,177$ 29,357$ 7,780$ 7,451$ 7,009$ 7,744$ 29,984$ 8,987$ 7,949$ 7,570$ 7,976$ 32,482$ 33,781$
Q/Q 2% -4% -6% 10% 16% -12% -5% 5%
Y/Y 23% 14% -27% 1% 4% 2% 2% 2% 16% 7% 8% 3% 8% 4%
ASP 288$ 211$ 46$ 19,283 19,669 20,062 20,463 28$ 21,077 21,499 21,499 21,714 49$ 55$
Q/Q 3% 2% 2% 2% 3% 2% 0% 1%
Y/Y -56% -27% -78% 541% 541% 224% 9% -39% 9% 9% 7% 6% 75% 12%
% of Rev 10% 10% 8% 7% 8% 8% 8% 8% 7% 8% 9% 8% 8% 8%
iPad Rev 31,862$ 29,292$ 28,300$ 7,023$ 5,559$ 7,162$ 6,950$ 26,694$ 8,088$ 6,402$ 6,446$ 7,159$ 28,094$ 29,256$
Y/Y 34% -8% -3% -25% -17% 24% 8% -6% 15% 15% -10% 3% 5% 4%
% of Rev 9% 7% 7% 6% 6% 8% 7% 7% 7% 7% 7% 7% 7% 7%
ASP 679$ 675$ 660$ 510$ 536$ 796$ 541$ 829$ 546$ 609$ 584$ 608$ 1,049$ 1,495$
Q/Q 1% -19% 56% 1% 1% -27% -4% 4%
Y/Y 33% -1% -2% -9% -15% 20% 7% 26% 7% 14% -27% 12% 27% 43%
Services 68,425$ 78,129$ 85,200$ 23,117$ 23,867$ 24,213$ 24,972$ 96,169$ 26,340$ 26,645$ 27,167$ 28,078$ 108,230$ 120,532$
Q/Q 4% 3% 1% 3% 5% 1% 2% 3%
Y/Y 27% 14% 9% 11% 14% 14% 12% 13% 14% 12% 12% 12% 13% 11%
% of Rev 19% 20% 22% 19% 26% 28% 26% 25% 21% 28% 31% 28% 27% 28%
iPhone Rev 191,973$ 205,489$ 200,583$ $69,702 $45,963 $39,296 $46,222 201,183$ $69,138 $46,841 $39,903 $46,824 202,705$ 208,553$
Q/Q -65% -34% -15% 18% -66% -32% -15% 17%
Y/Y 39% 7% -2% 6% -10% -1% 6% 0% -1% 2% 2% 1% 0.8% 3%
% of Rev 52% 52% 52% 58% 51% 46% 49% 51% 56% 49% 45% 47% 50% 49%
iPhone Units 227.5 241.3 230.0 79.5 56.0 49.0 48.4 232.9 78.0 56.6 49.0 47.9 231.5 236.1
Q/Q 69% -30% -13% -1% 61% -27% -13% -2%
Y/Y 24% 6% -5% 1% -4% 7% 3% 1% -2% 1% 0% -1% -1% 2%
iPhone ASP 844$ 852$ 872$ 877$ 821$ 802$ 955$ 864$ 886$ 828$ 814$ 977$ 876$ 883$
Q/Q 12% 1% 2% -6% -6% -2% 19% -1% -7% -7% -2% 20% 1% 1%
Y/Y 12% 1% 2% 5% -6% -7% 2% -1% 1% 1% 2% 2% 1% 1%
Other Products Rev 38,367$ 41,241$ 39,845$ 11,953$ 7,913$ 8,097$ 9,042$ 37,005$ 11,747$ 7,522$ 7,692$ 9,042$ 36,003$ 37,058$
Y/Y 25% 7% -3% -11% -10% -2% -3% -7% -2% -5% -5% 0% -3% 3%
% of Rev 10% 10% 10% 10% 9% 9% 10% 9% 9% 8% 9% 8% 9% 9%
Q/Q 28% -34% 2% 12% 30% -36% 8% 8%
Total Revenue 365,817$ 394,328$ 383,285$ 119,575$ 90,753$ 85,777$ 94,930$ 391,035$ 124,300$ 95,359$ 88,777$ 99,079$ 407,515$ 429,181$
Y/Y 33% 8% -3% 2% -4% 5% 6% 2% 4% 5% 3.5% 4% 4.2% 5%
Cost of Sales 212,981$ 223,546$ 214,137$ 64,720$ 48,482$ 46,099$ 51,051$ 210,352$ 66,025$ 50,492$ 47,862$ 52,883$ 217,262$ 225,865$
% of Rev 58.2% 56.7% 55.9% 54.1% 53.4% 53.7% 53.8% 53.8% 53.1% 52.9% 53.9% 53.4% 53.3% 52.6%
Y/Y 26% 5% -4% -3% -8% 2% 4% -2% 2% 4% 4% 4% 3% 4%
Gross Profit 152,836$ 170,782$ 169,148$ 54,855$ 42,271$ 39,678$ 43,879$ 180,683$ 58,275$ 44,867$ 40,915$ 46,196$ 190,253$ 203,317$
% of Rev 41.8% 43.3% 44.1% 45.9% 46.6% 46.3% 46.2% 46.2% 46.9% 47.1% 46.1% 46.6% 46.7% 47.4%
R&D 21,914$ 26,251$ 29,915$ 7,696.0$ 7,903.0$ 8,006.0$ 7,765.0$ 31,370$ 8,268.0$ 8,550.0$ 8,523$ 8,025$ 33,366$ 34,590$
% of Rev 6.0% 6.7% 7.8% 6.4% 8.7% 9.3% 8.2% 8.0% 6.7% 9.0% 9.6% 8.1% 8.2% 8.1%
Sales and Marketing 21,973$ 25,094$ 24,932$ 6,786$ 6,468$ 6,320$ 6,523$ 26,097$ 7,175$ 6,728$ 6,836$ 7,233$ 27,972$ 28,069$
% of Rev 6.0% 6.4% 6.5% 5.7% 7.1% 7.4% 6.9% 6.7% 5.8% 7.1% 7.7% 7.3% 6.9% 6.5%
Operating Expenses 43,887$ 51,345$ 54,847$ 14,482$ 14,371$ 14,326$ 14,288$ 57,467$ 15,443$ 15,278$ 15,358$ 15,258$ 61,338$ 62,658$
% of Rev 12.0% 13.0% 14.3% 12.1% 15.8% 16.7% 15.1% 14.7% 12.4% 16.0% 17.3% 15.4% 15.1% 14.6%
Y/Y 13% 17% 7% 1% 5% 7% 6% 5% 7% 6% 7% 7% 7% 2%
Operating Income 108,949$ 119,437$ 114,301$ 40,373$ 27,900$ 25,352$ 29,591$ 123,216$ 42,832$ 29,589$ 25,557$ 30,938$ 128,916$ 140,658$
% of Rev 29.8% 30.3% 29.8% 33.8% 30.7% 29.6% 31.2% 31.5% 34.5% 31.0% 28.8% 31.2% 31.6% 32.8%
Interest Income 258$ (334)$ (565)$ (50.0)$ 158.0$ 142.0$ 19.0$ 269$ (248.0)$ (279.0)$ (300.0)$ (300.0)$ (1,127)$ (600)$
Income Before Tax 109,207$ 119,103$ 113,736$ 40,323$ 28,058$ 25,494$ 29,610$ 123,485$ 42,584$ 29,310$ 25,257$ 30,638$ 127,789$ 140,058$
% of Rev 29.9% 30.2% 29.7% 33.7% 30.9% 29.7% 31.2% 31.6% 34.3% 30.7% 28.4% 30.9% 31.4% 32.6%
Provision for Current Taxes (Recovery) 14,527$ 19,300$ 16,741$ 6,407$ 4,422$ 4,046$ 14,874$ 29,749$ 6,254$ 4,530$ 4,041$ 4,902$ 19,727$ 22,409$
Total Taxes 14,527$ 19,300$ 16,741$ 6,407$ 4,422$ 4,046$ 14,874$ 29,749$ 6,254$ 4,530$ 4,041$ 4,902$ 19,727$ 22,409$
Tax Rate 13.3% 16.2% 14.7% 15.9% 15.8% 15.9% 50.2% 24.1% 14.7% 15.5% 16.0% 16.0% 15.4% 16.0%
Net Income 94,680$ 99,803$ 96,995$ 33,916$ 23,636$ 21,448$ 14,736$ 93,736$ 36,330$ 24,780$ 21,216$ 25,736$ 108,062$ 117,649$
% of Rev 25.9% 25.3% 25.3% 28.4% 26.0% 25.0% 15.5% 24.0% 29.2% 26.0% 23.9% 26.0% 26.5% 27.4%
Shares 16635 16118 15672 15577 15465 15348 15243 15243 15151 15056 15002 14892 14892 14473
End Shr Count 16,635 16,326 15,813 15576.6 15464.7 15348.2 15242.9 15,408 15150.9 15056.1 14,947 14,838 14,998 14,577
EPS 5.62$ 6.11$ 6.13$ 2.18$ 1.53$ 1.40$ 0.97$ 6.08$ 2.40$ 1.65$ 1.42$ 1.73$ 7.21$ 8.07$
Apple Inc. (AAPL) - CRC
June 25, 2025
Page 4
BEN BOLLIN
bbollin@cleveland-research.com
(216) 649-7211
ANDREW KUCH
akuch@cleveland-research.com
(216) 649-7291
BRIAN WILCOX
bwilcox@cleveland-research.com
(216) 649-7220
BRETT HIGH
bhigh@cleveland-research.com
(216) 649-7264
APPENDIX
Important Disclosures
Important disclosures can be found at www.cleveland-research.com/clients/disclosures
Companies Mentioned
Apple Inc. (AAPL: $200.30 - BUY)
Microsoft Corporation (MSFT: $490.11 – BUY)
Cleveland Research Company - Ratings Distribution
Rating
Percent
Buy
25%
Neutral
75%
Underperform
0%
Disclosures
Buy: The stock’s return is expected to exceed the market due to superior fundamentals and positive catalysts.
Underperform: The stock’s total return is expected to underperform the market due to weak fundamentals and a lack of catalysts.
Neutral: The stock is expected to be in line with the market due to full valuation and/or a lack of catalysts.
Valuation and Risk: Price targets are established under various valuation methods including P/E, P/S, EV/EBITDA on financial estimates based on
forward earnings. Price targets are not established for every stock. The price target’s effectiveness may be affected by various outside factors. Risk
assessments can be found in the most recent research on these stocks.
Other Disclosures: We, Benjamin J. Bollin, Andrew Kuch, Brian Wilcox and Brett High certify that the views expressed in the research report(s)
accurately reflect our personal views about the subject security(s). Further we certify that no part of our compensation was, is, or will be directly or
indirectly related to the specific recommendations or views contained in the research report(s). CRC, its principals and partners have investments and
own a minority interest in a fund manager which may or may not have a position in this security in the funds it manages and oversees. Cleveland
Research Company provides no investment banking services of any type on this or any company. Proprietary research and Information contained
herein which forms the basis for findings or opinions expressed by Cleveland Research Company may be used by Cleveland Research for other purposes
in the course of compensated consulting and other services rendered to third parties. The information transmitted is intended only for the person or
entity to which it is addressed. Any review, retransmission, dissemination or other use of, or taking of any action in reliance upon, this information by
persons or entities other than the intended recipient is prohibited. If you received this in error, please contact the sender and delete the material from
any computer. Member FINRA/SIPC
