Good morning. Apple SVP and CFO Kevan Parekh participated in his first earnings call on Thursday, and it was a banger. Parekh reported that Apple, whose market cap is bigger than the GDP of most countries, is bringing in more money than ever and that its profit margins keep growing.
For its fiscal 2025 first quarter, which ended Dec. 28, Apple reported revenue of $124.3 billion, up 4% from a year ago, an all-time record. Earnings per share (EPS) came in at $2.40, up 10% year over year.
Services revenue reached an all-time record of $26.3 billion, up 14% year over year. Apple also had stronger-than-expected sales of Macs and iPads. The company’s gross margin was 46.9% at the high end of its guidance range and up 70 basis points.
“Our record revenue and strong operating margins drove EPS to a new all-time record with double-digit growth and allowed us to return over $30 billion to shareholders,” Parekh said in a statement.
He joined the company in 2013 and began his tenure as CFO on Jan. 1, most recently serving as VP of financial planning and analysis. Parekh succeeds former CFO Luca Maestri, who held the role for over 10 years. Maestri leads the corporate services teams.
During the earnings call on Thursday, an analyst noted that one of Maestri’s legacies was getting Apple to record margin levels and maintaining consistent pricing across the product range. However, as the company is experiencing high levels of profitability, Parekh was asked whether having a wider range of pricing across its products could potentially unlock further market share gains or boost overall product growth.
“I don’t think we’re going to really depart from what served us pretty well,” Parekh said. Apple has had a “disciplined pricing strategy,” he said. “We’re going to continually kind of stick with that as far as I can tell.”
Apple has certainly created a loyal fan base who are willing to pay premium prices for their products. The strategy revolves around product differentiation, brand equity, and perception of value. However, sales for the iPhone dropped slightly in the quarter, about 1% to $69.14 billion, compared to the same time last year. Apple CEO Tim Cook expects iPhone sales to recover as the company rolls out AI features.
Fortune’s David Meyer’s new feature article is “Apple is looking for its next iPhone-like hit. Can it find it before losing momentum?” The piece explores Apple’s dominance, but also where it’s lagging.
“Apple finished 2024 in record fashion, with a staggering $3.6 trillion market capitalization that not only topped every other company on the planet but also eclipsed the economic value of all but a handful of the world’s countries,” Meyer writes.
However, a late start to generative AI put Apple in “the embarrassing position of shipping the newest iPhone without its marquee features available at launch,” Meyer writes. And Apple has also had some recent product misfires.
“Even as Apple’s accomplishments and balance sheet give comfort to the faithful, a nagging question is likely to shadow the company as 2025 unfolds: Does Apple still have its mojo?” Meyer writes. You can read the complete article here.
Have a good weekend.
Sheryl Estrada
sheryl.estrada@fortune.com
The following sections of CFO Daily were curated by Greg McKenna.
Leaderboard
Fortune 500 Power Move
Stryker (No. 197), a medical technologies provider, announced today that Glenn S. Boehnlein will retire from his role as VP and CFO. Boehnlein’s decision follows a 22-year career at Stryker. Preston Wells, who currently serves as group CFO for Stryker’s Orthopaedics Group, will become VP and CFO, effective April 1. Every Friday morning, the weekly Fortune 500 Power Moves column tracks Fortune 500 company C-suite shifts—see the most recent edition.
More notable moves week:
Lin Tao was promoted to CFO of Japanese conglomerate Sony (NYSE: SONY), effective Apr. 1. She will succeed current COO and CFO Hiroki Totoki, who will step away from the position to assume the roles of president and CEO.
Taoufiq Boussaid was promoted to CFO of Lucid Group, Inc. (Nasdaq: LCID), a maker of electric vehicles, effective Feb. 25. Boussaid previously served as group CFO of N.V. Bekaert S.A., a Belgium-listed industrial steel and coatings technology company.
Kevin Jacobsen, CFO of The Clorox Company (NYSE: CLX) has decided to retire, effective April 1. Jacobsen joined Clorox in 1995 and has served as CFO since 2018. Luc Bellet, an 18-year Clorox veteran, will succeed Jacobsen.
Alexandra Cliff was promoted to CFO of Lloyd’s of London, an insurance and reinsurance provider, effective May 1. Cliff joined Lloyd’s as deputy CFO in November 2022. She will succeed Burkhard Keese, the current CFO.
Robin Harries was appointed CFO of trivago N.V. (Nasdaq: TRVG), a global hotel and accommodation search platform, effective April 1. Harries returns to the company, previously serving in various leadership positions between 2012 and 2018.
Scott Sekella was appointed CFO of Victoria’s Secret (NYSE: VSCO), America’s largest lingerie retailer, effective in June. He will succeed Timothy Johnson, who is retiring. Sekella most recently served as CFO of fabric and crafts retailer Joann.
Steven W. Morris will retire as CFO of Allete (NYSE: ALE), an energy company based in Minnesota that is set to be acquired by Global Infrastructure Partners and the Canada Pension Plan Investment Board. Morris will remain with the company until July.
Big Deal
A new report released by research and consulting firm Gartner finds that compensation remains a top area for budget boosts, second only to enterprise technology spending. Out of 300 CFOs polled in October 2024, about 61% are planning to increase average employee compensation this year, down from 71% in 2024 and 86% in 2023, according to Gartner's data sets.
“Even though the labor market is cooling, CFOs must balance the potential risks of attrition and low engagement as employees still face stubbornly high costs for household necessities,” Randeep Rathindran, distinguished VP of research in Gartner’s finance practice, said in a statement.
Going deeper
Here are four Fortune weekend reads:
“A peak under the hood of Elon Musk’s Tesla reveals a worrying trend—its auto business is rusting away,” by Christiaan Hetzner
“The Social Security Administration’s new boss is an unmatched operator—and now the second biggest business figure in Trump-land,” by Shawn Tully
“Decathlon doesn’t do shoe boxes or big adverts. Yet the French giant has quietly become the crown jewel of the sports retail world,” by Prarthana Prakash
“Trump’s decision to target DEI among federal contractors opens up a new realm of corporate risk and a legion of ‘potential enforcers’,” by Brit Morse
Overheard
“The productivity promises of AI may be in its infancy, but the race to procure AI has already delivered us a new era of technology finance.”
— Andrew Moore, non-resident fellow at the Center for New American Security, and Johannes Lang, John F. Kennedy Scholar at the Harvard Kennedy School, wrote in a Fortune opinion piece about how the race to develop AI has already rewritten the traditional rules of finance.
