APPLE INC. (AAPL) — INVESTMENT REPORT

Analysis of the Form 10-K | Fiscal year ended September 27, 2025

FY2025, ended September 27, 2025 (52 weeks). FY2024 ended September 28, 2024 (52 weeks). FY2023 ended September 30, 2023 (53 weeks). Amounts in millions of US$ (mn) unless stated in billions.

1. COMPANY PROFILE

Apple designs, has manufactured and sells smartphones, personal computers, tablets, wearables and accessories, and sells related services. Hardware is assembled almost entirely by third parties: the document refers to partners "located primarily in China mainland, India, Japan, South Korea, Taiwan and Vietnam". Product revenue is generally recognised on shipment, services revenue over time. For third-party applications sold through the App Store the company records "only the commission it retains".

Services include advertising (including licensing arrangements with third parties), AppleCare, cloud, digital content and payments. Direct channels generated 40% of FY2025 net sales and indirect channels 60%.

The operating segments are geographic, not product-based. The document defines five: Americas, Europe (which includes India, the Middle East and Africa), Greater China (China mainland, Hong Kong, Taiwan), Japan and Rest of Asia Pacific. Operating income by product line is not provided.

Net sales by category (US$ mn):

Category FY2025 % of total FY2024 FY2023 Chg. 25/24 Chg. 24/23
iPhone 209,586 50.4% 201,183 200,583 +4.2% +0.3%
Mac 33,708 8.1% 29,984 29,357 +12.4% +2.1%
iPad 28,023 6.7% 26,694 28,300 +5.0% −5.7%
Wearables, Home and Accessories 35,686 8.6% 37,005 39,845 −3.6% −7.1%
Services 109,158 26.2% 96,169 85,200 +13.5% +12.9%
Total 416,161 100.0% 391,035 383,285 +6.4% +2.0%

Net sales by geographic area (US$ mn):

Segment FY2025 % of total FY2024 FY2023 Chg. 25/24 Chg. 24/23
Americas 178,353 42.9% 167,045 162,560 +6.8% +2.8%
Europe 111,032 26.7% 101,328 94,294 +9.6% +7.5%
Greater China 64,377 15.5% 66,952 72,559 −3.8% −7.7%
Japan 28,703 6.9% 25,052 24,257 +14.6% +3.3%
Rest of Asia Pacific 33,696 8.1% 30,658 29,615 +9.9% +3.5%
Total 416,161 100.0% 391,035 383,285 +6.4% +2.0%

Segment shares add up to 100.1% because of rounding to one decimal. United States share of net sales = 151,790 / 416,161 = 36.5%.

The FY2024 versus FY2023 comparison is penalised by the extra week in FY2023. The document does not quantify the contribution of that week.

As of September 27, 2025 the company had approximately 166,000 full-time equivalent employees. Net sales per employee = 416,161 / 166,000 = US$2.51 mn.

The document is signed by Timothy D. Cook (Chief Executive Officer) and Kevan Parekh (Chief Financial Officer). Item 9B states that Chris Kondo, Principal Accounting Officer, will transition from his role on January 1, 2026 and that Ben Borders will succeed him. The document does not say whether the Chief Financial Officer changed compared with the prior fiscal year.

Items and events that the document reports for FY2025 and that have no counterpart in the comparative columns:

2. BUSINESS QUALITY AND GROWTH DYNAMICS

Competitive advantage

The stated advantage is the integration of hardware, software and services, and in the document it can be measured only through margins. The company states that it "designs and develops nearly the entire solution for its products". It also states that it has "a minority market share in the global smartphone, personal computer, tablet and wearables markets". With a minority share, the FY2025 operating margin was 133,050 / 416,161 = 32.0%.

Indicator Formula Result
Services gross margin FY2025 82,314 / 109,158 75.4%
Products gross margin FY2025 112,887 / 307,003 36.8%
Services share of gross profit FY2025 82,314 / 195,201 42.2%
Services share of gross profit FY2023 60,345 / 169,148 35.7%

Services account for 26.2% of net sales and 42.2% of gross profit. Two years earlier the share of gross profit was 35.7%.

The document does not provide the installed base of active devices, the number of subscriptions or retention rates. The resilience of the advantage cannot be verified on usage data.

Pricing power

The document does not publish unit volumes or average selling prices. Pricing power can only be read indirectly.

First indication: iPhone net sales grew 4.2% "due to higher net sales of Pro models", that is, through mix towards the high end. Second indication: Products gross margin fell from 37.2% to 36.8% in a year with tariff costs. The document attributes the decline to mix and tariffs, partly offset by other favourable costs. Part of the tariffs was therefore absorbed in the margin; the document does not say how much.

On currencies, the company states that a weakening of foreign currencies "generally leads the Company to raise international pricing". The same page warns that in some cases it may decide not to.

In Services the margin percentage rose 1.5 points, from 73.9% to 75.4%, "primarily due to a different mix of services". The document cites no price increases. Management writes that gross margins "will be subject to volatility and downward pressure".

Transparency of growth (organic vs inorganic)

The document reports no acquisitions with amounts and has no business combinations note. In the cash flow statement, investing outflows other than capex and securities are grouped in the "Other" line, equal to 1,480 mn. On this basis the 6.4% growth should be regarded as organic, with the reservation that acquisitions are not disclosed separately.

Contribution to net sales growth Formula Result
Increase in net sales 416,161 − 391,035 25,126
Increase in Services 109,158 − 96,169 12,989
Services share of the increase 12,989 / 25,126 51.7%
Increase in iPhone 209,586 − 201,183 8,403
iPhone share of the increase 8,403 / 25,126 33.4%

The document does not provide constant-currency growth. It only notes that the weakness in foreign currencies had an unfavourable effect on Americas net sales.

Scalability

Item FY2025 FY2024 Change
Net sales 416,161 391,035 +6.4%
Cost of sales 220,960 210,352 +5.0%
Research and development 34,550 31,370 +10.1%
Selling and marketing 19,524 18,639 +4.7%
General and administrative 8,077 7,458 +8.3%
Total operating expenses 62,151 57,467 +8.2%
Unallocated Corporate costs 42,627 38,828 +9.8%
Operating income 133,050 123,216 +8.0%

Operating leverage in FY2025 came from gross margin, not from operating expenses. Cost of sales grew less than net sales; operating expenses grew more than net sales.

Operating expenses as a share of net sales Formula Result
FY2025 62,151 / 416,161 14.9%
FY2024 57,467 / 391,035 14.7%

Research and development is the fastest-growing line: +10.1% after +4.9% in FY2024. The document attributes the increase to headcount and to "infrastructure-related costs".

3. IN-DEPTH FINANCIAL ANALYSIS

Income statement — last 3 years

US$ mn FY2025 FY2024 FY2023 Chg. 25/24 Chg. 24/23
Net sales 416,161 391,035 383,285 +6.4% +2.0%
Cost of sales 220,960 210,352 214,137 +5.0% −1.8%
Gross profit 195,201 180,683 169,148 +8.0% +6.8%
Gross margin 46.9% 46.2% 44.1%
Research and development 34,550 31,370 29,915 +10.1% +4.9%
Selling, general and administrative 27,601 26,097 24,932 +5.8% +4.7%
Operating income 133,050 123,216 114,301 +8.0% +7.8%
Operating margin 32.0% 31.5% 29.8%
Other income/(expense), net (321) 269 (565)
Income before taxes 132,729 123,485 113,736 +7.5% +8.6%
Income taxes 20,719 29,749 16,741 −30.4% +77.7%
Net income 112,010 93,736 96,995 +19.5% −3.4%
Diluted earnings per share (US$) 7.46 6.08 6.13 +22.7% −0.8%
Weighted-average diluted shares (thousands) 15,004,697 15,408,095 15,812,547 −2.6% −2.6%

The 19.5% growth in net income is inflated by a non-recurring tax charge in FY2024. The tax reconciliation in Note 7 contains the line "Impact of the State Aid Decision": 10,246 mn in 2024 and (486) mn in 2025. The table below removes that single line from both years.

State Aid adjustment Formula Result
Adjusted net income FY2024 93,736 + 10,246 103,982
Adjusted net income FY2025 112,010 − 486 111,524
Growth in adjusted net income 111,524 / 103,982 − 1 +7.3%
Adjusted income taxes FY2024 29,749 − 10,246 19,503
Tie-out FY2024 123,485 − 19,503 103,982
Adjusted diluted earnings per share FY2024 (US$) 103,982 / 15,408.095 6.75
Adjusted diluted earnings per share FY2025 (US$) 111,524 / 15,004.697 7.43
Growth in adjusted earnings per share 7.43 / 6.75 − 1 +10.1%

Growth in adjusted net income (+7.3%) is close to growth in operating income (+8.0%). Adjusted earnings per share grows more, +10.1%, because weighted-average diluted shares fell 2.6%.

FY2025 net sales, operating income and net income are the highest among the years present in the document (FY2023–FY2025). The document does not allow comparisons over longer periods.

Balance sheet (as of September 27, 2025)

US$ mn Sep 27, 2025 Sep 28, 2024
Cash and cash equivalents 35,934 29,943
Current marketable securities 18,763 35,228
Non-current marketable securities 77,723 91,479
Total liquidity 132,420 156,650
Commercial paper 7,979 9,967
Term debt, current portion 12,350 10,912
Term debt, non-current portion 78,328 85,750
Lease liabilities 13,720 12,430
Gross debt 112,377 119,059
Shareholders' equity 73,733 56,950
Net cash (liquidity − gross debt) 20,043 37,591
Balance sheet indicator Formula Result
Net cash FY2025 132,420 − 112,377 20,043
Net cash FY2025 excluding leases 132,420 − 98,657 33,763
Decline in liquidity during the year 156,650 − 132,420 24,230
FY2024 liquidity net of escrow 156,650 − 15,800 140,850
Non-current securities as a share of liquidity 77,723 / 132,420 58.7%
Short-term financial debt 12,350 + 7,979 20,329
Shareholders' equity / total assets 73,733 / 359,241 20.5%
Current assets / current liabilities FY2025 147,957 / 165,631 0.89
Current assets / current liabilities FY2024 152,987 / 176,392 0.87
Days of inventory FY2025 5,718 / 220,960 × 365 9.4
Days of inventory FY2024 7,286 / 210,352 × 365 12.6
Days payable FY2025 69,860 / 220,960 × 365 115
Days payable FY2024 68,960 / 210,352 × 365 120

Days of inventory and days payable are calculated on period-end balances in both years.

The company has net cash of 20,043 mn, down from 37,591 mn. The 2024 liquidity balance included 15.8 billion restricted in escrow for the State Aid Decision, no longer present at the end of FY2025.

Unrealised losses on the securities portfolio were 3,027 mn, against 4,638 mn a year earlier. The principal of the Notes is 91,281 mn, of which 12,393 mn falls due in fiscal year 2026.

Retained earnings are negative by 14,264 mn because repurchases are charged to that line. Off balance sheet there remain 56.2 billion of manufacturing purchase obligations and 14.8 billion of other purchase obligations.

Cash flows and dilution (focus on share-based compensation)

US$ mn FY2025 FY2024 FY2023
Operating cash flow 111,482 118,254 110,543
Capex 12,715 9,447 10,959
Free cash flow (FCF) 98,767 108,807 99,584
SBC 12,863 11,688 10,833
FCF net of SBC 85,904 97,119 88,751
Cash paid for income taxes 43,369 26,102 18,679
Buybacks 90,711 94,949 77,550
Dividends 15,421 15,234 15,025
Buybacks + dividends 106,132 110,183 92,575
Taxes on net share settlement 5,960 5,441 5,431

FCF fell 9.2% in a year in which operating income rose 8.0%.

Breakdown of the decline in FCF Formula Result
Change in operating cash flow 111,482 − 118,254 −6,772
Increase in capex 12,715 − 9,447 +3,268
Change in FCF 98,767 − 108,807 −10,040
Increase in cash paid for income taxes 43,369 − 26,102 +17,267
Decline in current income taxes payable 26,601 − 13,016 13,585

Operating cash flow fell mainly because of taxes: cash taxes paid rose by 17,267 mn. The 15.8 billion owed to Ireland was in escrow at the end of FY2024 and no longer is at the end of FY2025. The document does not break down taxes paid by jurisdiction, so the link between the two figures is an inference. Accounts receivable absorbed 6,682 mn, against 3,788 mn in FY2024.

One outflow is already scheduled: the deemed repatriation tax of 8.8 billion, payable within 12 months.

Cash indicator Formula Result
FCF net of SBC 98,767 − 12,863 85,904
Owner earnings 112,010 + 11,698 − 12,715 110,993
SBC / net sales 12,863 / 416,161 3.1%
SBC / operating income 12,863 / 133,050 9.7%
Value of RSUs granted during the year 73,466 × 226.68 16,653
Buybacks + dividends / FCF 106,132 / 98,767 107.5%
Excess of returns over FCF 106,132 − 98,767 7,365

Owner earnings are net income plus depreciation and amortisation minus capex. SBC is not deducted again because net income already includes it as a cost. The document does not separate maintenance and growth capex: total capex is used.

SBC grew 10.1%, faster than net sales. RSUs granted during the year are worth 16,653 mn at grant date, more than the 12,863 mn expense for the year. Unrecognised cost is 21.8 billion.

The cash cost of share-based compensation is not limited to the SBC line. The company paid 5,960 mn to tax authorities on behalf of employees for shares withheld, an outflow classified within financing activities.

Shares Formula Result
Net issuance over opening shares 58,146 / 15,116,786 0.4%
Repurchases over opening shares 401,672 / 15,116,786 2.7%
Net change in shares 14,773,260 / 15,116,786 − 1 −2.3%
Average repurchase price (US$) 89,300 / 401.672 222.3
RSUs outstanding over shares outstanding 151,574 / 14,773,260 1.0%

Buybacks and dividends exceeded FCF by 7,365 mn. In the same year liquidity fell by 24,230 mn.

Key metrics

Indicator FY2025 FY2024 FY2023
Gross margin 46.9% 46.2% 44.1%
Products gross margin 36.8% 37.2% 36.5%
Services gross margin 75.4% 73.9% 70.8%
Operating margin 32.0% 31.5% 29.8%
Net margin 26.9% 24.0% 25.3%
R&D / net sales 8.3% 8.0% 7.8%
EBITDA (operating income + depreciation and amortisation) 144,748 134,661 125,820
EBITDA margin 34.8% 34.4% 32.8%
FCF / net sales 23.7% 27.8% 26.0%
FCF / net income 88.2% 116.1% 102.7%
SBC / net sales 3.1% 3.0% 2.8%
Capex / net sales 3.1% 2.4% 2.9%
Capex / depreciation and amortisation 1.09 0.83 0.95
Effective tax rate 15.6% 24.1% 14.7%

The depreciation and amortisation used for EBITDA is the cash flow statement figure. It is already included in operating income as a cost: there is no double counting.

Indicator Formula Result
EBITDA FY2025 133,050 + 11,698 144,748
NOPAT FY2025 133,050 × (1 − 20,719 / 132,729) 112,281
Invested capital FY2025 73,733 + 112,377 186,110
ROIC FY2025 112,281 / 186,110 60.3%
NOPAT FY2024 123,216 × (1 − 29,749 / 123,485) 93,532
Invested capital FY2024 56,950 + 119,059 176,009
ROIC FY2024 93,532 / 176,009 53.1%
Invested capital FY2025 net of liquidity 186,110 − 132,420 53,690
Debt / EBITDA 112,377 / 144,748 0.78x
Net debt / EBITDA (112,377 − 132,420) / 144,748 −0.14x
FCF / net income conversion 98,767 / 112,010 88.2%

ROIC is calculated on period-end balances in both years, because the 2023 balance sheet is not in the document. Invested capital is shareholders' equity plus gross debt. Net of liquidity, capital falls to 53,690 mn and the ratio exceeds 200%: with a denominator reduced this much by repurchases, the number loses meaning.

Interest coverage: the document does not disclose interest expense, which is included in the "Other income/(expense), net" balance. The ratio cannot be calculated. As an order of magnitude, interest on the Notes payable within 12 months is 2.6 billion: 133,050 / 2,600 = 51x operating income. The figure excludes interest on commercial paper.

Multiples. The closing price supplied is US$254.52 as of September 27, 2025. Shares outstanding are 14.77 billion as of October 17, 2025. All numerators and denominators refer to fiscal year FY2025; amounts in the formulas are in billions of US$.

Multiple Formula Result
Market capitalisation (US$ billion) 254.52 × 14.77 3,759.26
P/E on diluted earnings per share 254.52 / 7.46 34.1x
Market capitalisation / net income 3,759.26 / 112.010 33.6x
P/FCF 3,759.26 / 98.767 38.1x
FCF yield 98.767 / 3,759.26 2.63%
FCF yield net of SBC 85.904 / 3,759.26 2.29%
P/S 3,759.26 / 416.161 9.03x
Enterprise value (US$ billion) 3,759.26 + 112.377 − 132.420 3,739.22
EV/EBITDA 3,739.22 / 144.748 25.8x
EV / operating income 3,739.22 / 133.050 28.1x
Price / book value 3,759.26 / 73.733 51.0x
Dividend yield 1.02 / 254.52 0.40%
Buyback and dividend yield 106.132 / 3,759.26 2.82%

The first two multiples differ because of the share count: 14.77 billion in the supplied figure against 15.00 billion weighted-average diluted shares in the income statement.

4. RISKS — CRITICAL ANALYSIS

The heaviest risks are regulatory and hit Services, which generate 42.2% of gross profit.

  1. App Store in the United States (materialised). On April 30, 2025 the U.S. District Court for the Northern District of California found the company in violation of the 2021 injunction in the Epic Games case. It enjoined the company from imposing "any commission or any fee on purchases that consumers make outside an app". It also referred the company to the U.S. Attorney for a determination on criminal contempt proceedings. The stay was denied; oral arguments on appeal were heard in October 2025. The document does not say how much of the 109,158 mn of Services comes from the U.S. App Store.

  2. Digital Markets Act (partly materialised). On April 23, 2025 the European Commission imposed a fine of 500 million euros in the Article 5(4) investigation, with a cease and desist order; the company has appealed. Preliminary findings were issued in the Article 6(4) investigation. The fine can reach 10% of worldwide net sales: 10% × 416,161 = 41,616 mn as a theoretical ceiling. What matters more is any forced change to commercial terms, which the document does not quantify.

  3. Licensing arrangements with Google (potential). The company reports revenue from arrangements with Google LLC for search services on its platforms. On September 2, 2025 the District of Columbia court ordered remedies in the antitrust proceedings against Google; the order is subject to appeal. A reversal could reinstate remedies "prohibiting Google from offering the Company commercial terms for search distribution". The amount of this revenue is not in the document.

  4. Tariffs (materialised, amount not disclosed). Beginning in the second quarter of FY2025, new U.S. tariffs were announced on imports from China, India, Japan, South Korea, Taiwan, Vietnam and the European Union. Tariff costs are cited among the causes of the decline in Products gross margin from 37.2% to 36.8%. An investigation under Section 232 is open on semiconductors and products that contain them.

  5. Supply chain concentration (potential). Final assembly of "substantially all" hardware products is performed by partners located primarily in Asia, and many components have a single source. Two vendors account for 46% and 23% of vendor non-trade receivables, which total 33,180 mn. Manufacturing purchase obligations are 56.2 billion.

  6. Greater China (materialised). Segment net sales fell 7.7% in FY2024 and 3.8% in FY2025. Over two years the decline is 64,377 / 72,559 − 1 = −11.3%. Segment operating income went from 30,328 to 26,917 mn. The segment operating margin is 26,917 / 64,377 = 41.8%. China mainland is also one of the manufacturing locations listed in the document.

  7. Dependence on iPhone (potential). The category accounts for 50.4% of net sales. The document warns that a decline in demand for that single category "could significantly impact net sales and gross margins".

  8. Department of Justice antitrust lawsuit (potential). Filed on March 21, 2024, it alleges monopolisation of the smartphone markets and seeks equitable relief. The document does not disclose any accrual. For asserted claims as a whole, management believes there was not at least a reasonable possibility of a material loss.

  9. Taxes (partly materialised). The State Aid Decision cost 10.2 billion net in FY2024. Gross unrecognised tax benefits are 23,242 mn, up from 22,038 mn, and are the only Critical Audit Matter. Foreign earnings as a share of pretax income = 82.0 / 132.7 = 61.8%.

  10. Currencies (potential). Sales outside the United States are 100% − 36.5% = 63.5% of the total. The company estimates with 95% confidence a maximum one-day loss of 590 mn on foreign currency derivatives. A year earlier the estimate was 538 mn.

5. GOVERNANCE AND MANAGEMENT

Governance information is largely deferred to another document. Items 10 to 14 (directors, compensation, significant ownership, related parties, auditor fees) are incorporated by reference to the 2026 proxy statement, not yet filed at the date of the 10-K. Executive compensation, directors' holdings and related-party transactions are not available in the document.

Voting structure: there is a single class of common stock. Exhibit 4.1 states that holders are entitled to "one vote per share" and are not entitled to cumulative voting. There were 22,429 shareholders of record as of October 17, 2025. The document does not identify controlling shareholders.

Board, as shown by the signatures dated October 31, 2025: Arthur D. Levinson (Director and Chair of the Board), Timothy D. Cook (Chief Executive Officer and Director), Wanda Austin, Alex Gorsky, Andrea Jung, Monica Lozano, Ronald D. Sugar, Susan L. Wagner. The Chair and the Chief Executive Officer are different people. The document does not classify directors as independent or not.

The Chief Executive Officer is identified as the chief operating decision maker. Among the risk factors the company cites its dependence on its "Chief Executive Officer, executive team and other highly skilled employees". The document contains no information on succession plans.

Auditor: Ernst & Young LLP, which states "We have served as the Company’s auditor since 2009". The opinion is unqualified on both the financial statements and internal control; both reports are dated October 31, 2025. The document reports no material changes in internal control in the fourth quarter. Under insider trading arrangements Item 9B states "None".

6. ACCOUNTING ANALYSIS AND EARNINGS QUALITY

Earnings are reported under US GAAP with no adjusted measures; the areas of judgement are taxes and the allocation of revenue between hardware and services.

Changes during the year. ASU 2023-07 on segment reporting was adopted using a retrospective method: it adds detail but does not change results. The document mentions reclassifications of prior-period amounts in the notes, without quantifying them. Three new standards are not yet applied: ASU 2023-09 (fourth quarter of 2026), ASU 2024-03 (fourth quarter of 2028), ASU 2025-06 (first quarter of 2029). There are no restatements: on the cover page the box on the correction of errors is not checked.

Critical Audit Matter: only one, "Uncertain Tax Positions". The auditor refers to the 23.2 billion of gross unrecognised tax benefits. Of these, 10.6 billion would affect the effective tax rate if recognised.

Accounting choices that move earnings:

GAAP and non-GAAP: the document presents no non-GAAP measures and no adjusted earnings. The State Aid adjustment in section 3 is a calculation on GAAP lines, not a company measure.

Taxes. The FY2025 effective tax rate is 20,719 / 132,729 = 15.6%. The statutory federal rate is 21%. The reconciliation (US$ mn):

Line FY2025 FY2024 FY2023
Computed expected tax at 21% 27,873 25,932 23,885
Earnings of foreign subsidiaries (8,120) (5,311) (5,744)
Change in valuation allowance 2,091 0 0
Research and development credit, net (1,049) (1,397) (1,212)
Impact of the State Aid Decision (486) 10,246 0
Other 410 279 (188)
Provision for income taxes 20,719 29,749 16,741
Tax indicator Formula Result
Increase in the benefit from foreign earnings 8,120 − 5,311 2,809
Decreases in unrecognised tax benefits in FY2025 2,939 + 1,552 4,491
FY2024 tax rate without the State Aid line 19,503 / 123,485 15.8%
Cash taxes paid / income statement taxes FY2025 43,369 / 20,719 2.1x

The document specifies that the foreign earnings line includes "the impact of changes in unrecognized tax benefits", without separating the amount. Part of the FY2025 tax benefit may therefore not recur, but the document does not allow it to be measured.

Without the State Aid line the FY2024 tax rate would be 15.8%, close to the 15.6% of FY2025. In FY2025 cash taxes paid were 2.1 times the income statement charge.

7. CATALYSTS AND UPSIDE POTENTIAL

The six points rest on facts stated in the document; none is a company forecast.

  1. Growing weight of Services. Services grew 13.5% with a gross margin of 75.4%. Products grew 4.1% with a margin of 36.8%. Through mix, the consolidated gross margin went from 44.1% to 46.9% in two years.

  2. Product cycle announced at fiscal year-end. The document places in the fourth quarter of FY2025 the announcement of the iPhone 17 line, iPhone Air, the new Apple Watch models and AirPods Pro 3. Their twelve-month contribution therefore falls largely in the following fiscal year; this is an inference from the calendar, not a figure in the document. The document gives no indication on demand.

  3. Authorised repurchase capacity. Of the 100 billion programme of May 2025, 99,779 mn remains. At the supplied price this equals 99.779 / 3,759.26 = 2.7% of market capitalisation. The programme does not oblige the company to repurchase.

  4. Investments under way. Capex rose 34.6%, to 12,715 mn. Research and development rose 10.1%, to 34,550 mn. Long-lived assets in the United States grew from 35,664 to 40,274 mn, that is +12.9%. The document does not link these investments to specific products or revenue.

  5. Growth areas outside China. Europe, which includes India, grew 9.6% and Japan 14.6%. Together they added 9,704 + 3,651 = 13,355 mn of net sales. Greater China lost 2,575 mn.

  6. Outcome of the Epic appeal. The court of appeals agreed to consider the appeal on an expedited basis. A reversal of the April 30, 2025 injunction would restore the ability to charge commissions on external purchases. The outcome is not known at the date of the document.

8. DOCUMENT CHECK — STATED EXPECTATIONS AND RESULTS

The comparison is possible for three items only. The 10-K contains no numerical targets for net sales, margins or capex, and does not reproduce the text of the prior year's statements. Only commitments made before FY2025 that the document itself recalls can be verified.

Item Stated Delivered Variance
Buyback programme announced on May 2, 2024 Up to 110 billion Fully used; the final 19.8 billion in the fourth quarter of FY2025 None
State Aid charge recorded in the fourth quarter of FY2024 10.2 billion net Adjustment of (486) mn in FY2025; escrow no longer present Favourable by 486 mn
Quarterly dividend US$0.25 until May 2025 US$0.26 from May 2025, +4.0% Increased
Margin targets, capex plan, multi-year targets Not present in the document Not applicable Comparison not possible

The following statements are contained in this document and concern the future. It is not possible to say whether they appeared identically in the prior document; they will be verifiable on FY2026.

Statement in the FY2025 10-K Measurable starting point
Buyback programme of May 1, 2025, up to 100 billion 221 million used; 99,779 mn remaining
"intends to increase its dividend on an annual basis" Quarterly dividend at US$0.26
Gross margins "subject to volatility and downward pressure" FY2025 gross margin at 46.9%; Products at 36.8%
Unrecognised tax benefits could decrease by up to 6 billion within 12 months Gross balance of 23,242 mn
Deemed repatriation tax payable within 12 months 8.8 billion

9. FINAL SUMMARY — A VALUE INVESTOR'S ASSESSMENT

Strengths

  1. Operating profitability: operating margin of 32.0% on 416,161 mn of net sales, up from 29.8% in FY2023.
  2. Services: net sales of 109,158 mn, growing 13.5%, with a gross margin of 75.4%.
  3. Cash generation: FCF of 98,767 mn, equal to 23.7% of net sales, with capex at 3.1% of net sales.
  4. Balance sheet: net cash of 20,043 mn after leases and gross debt equal to 0.78x EBITDA.
  5. Share count reduction: −2.3% in the year net of issuance; weighted-average diluted shares down 2.6% in each of the last two fiscal years.

Weaknesses and main risks

  1. Concentration: iPhone is 50.4% of net sales and grew 0.3% and 4.2% in the last two fiscal years.
  2. Greater China: net sales down 11.3% in two years, from 72,559 to 64,377 mn.
  3. Regulatory exposure of Services: Epic injunction of April 30, 2025, 500 million euro DMA fine, Google remedies of September 2, 2025. The document does not quantify the revenue exposed.
  4. Quality of earnings growth: +19.5% reported against +7.3% net of the State Aid line; FCF down 9.2%.
  5. Shareholder returns above FCF: 107.5% in FY2025, with liquidity down 24,230 mn.

Open questions

Assessment

At the supplied price, market capitalisation is 33.6 times net income, against adjusted net income that grew 7.3%. The FCF yield is 2.63% and falls to 2.29% net of SBC. The buyback and dividend yield is 2.82%: it exceeds the FCF yield because returns exceeded FCF by 7,365 mn.

With these numbers the buyer's return depends largely on future growth. The price embeds three assumptions. First: Services keep growing at double digits with margins close to 75.4%. Second: earnings per share grow faster than earnings thanks to repurchases. Third: the litigation on the App Store and on search arrangements does not erode the most profitable part of Services.

The second assumption has an arithmetic limit. With FCF and returns unchanged, net cash would reach zero in 20,043 / 7,365 = 2.7 fiscal years. Beyond that point, repurchases at the current pace require net debt. At higher multiples, moreover, each dollar of repurchase retires fewer shares: the average price paid in FY2025 was US$222.3, against the US$254.52 of the supplied price.

The third assumption cannot be verified on the document, because the revenue exposed is missing. The thesis holds if Services growth and a Products margin around 36.8% continue together. It weakens if either fails while the multiple stays at 33.6 times earnings.

Metrics to monitor in the coming quarters:

Report based exclusively on the Apple Inc. Form 10-K for the fiscal year ended September 27, 2025, filed on October 31, 2025. The multiples use the closing price of US$254.52 as of September 27, 2025 and 14.77 billion shares as of October 17, 2025, both supplied by the client; no other market data was used. The report is for analysis purposes and does not constitute investment advice.

The full data table behind this report — every line item with its source in the filing and the arithmetic checks — is published separately: Apple FY2025 data table.