Apple Earnings Preview: Fiscal Q1 2025 – iPhone Expectations Continue to Move Lower

Total revenues expected for fiscal Q1 have started to tick down slightly from the beginning of last quarter, according to Visible Alpha consensus, from $126.9 billion to $123.4 billion. This move is surprising, given Apple announced its new lineup ahead of the holiday season. Instead of numbers moving up, sentiment seems to reflect a view that the holiday buying was a bit underwhelming, due to continued weakness in China and fewer users upgrading in the US. Since last fall, expected Q1 iPhone units declined to 77 million and FY 2025 decreased further from 228 million to 223 million. Currently, Q1 is expected to deliver $70.7 billion in iPhone sales and $207.7 billion in 2025. Overall full-year iPhone revenue expectations have continued to edge down since early August 2024.

Apple Revisions

Expectations for the high-margin Services segment remained stable for Q1 at $26 billion. The gross margin for the Services segment is over 70%, significantly higher than the 36% gross margin for Products. Given the large installed base, we are looking forward to what the company says in the Q1 earnings release about growth in Services and the role of Apple Intelligence in FY 2025.

Vision Pro will show another set of results this quarter. In Q1, the consensus of four analysts estimated 53,800 units to be sold, generating $279.7 million. For the full year, consensus revenue estimates for the Vision Pro are expected to remain flat year-over-year at $1.0 billion.