Apple Inc. (AAPL) is a global technology company that designs, manufactures, and sells smartphones, personal computers, tablets, wearables and accessories. Some of its main products include the iPhone, the Mac line of personal computers and laptops, iPad, Apple Watch, and Apple TV. The company also has a fast-growing services business that includes its iCloud cloud service, and its digital content streaming services such as Apple Music and Apple TV+, the latter launched in November.

Apple faces numerous competitors including smartphone manufacturers Samsung Electronics Co. Ltd. (005930) and LG Electronics Inc. (066570), computer manufacturers Lenovo Group Ltd. (0992) and Dell Technologies Inc. (DELL), streaming-content providers Spotify Technology S.A. (SPOT) and Netflix Inc. (NFLX), and other technology companies like Microsoft Corp. (MSFT), Alphabet Inc. (GOOGL), and Inc. (AMZN).

Key Takeaways

  • Apple sells smartphones, personal computers, tablets, wearables and accessories, and services.
  • iPhones are Apple's biggest source of revenue by product, and the Americas is the largest revenue generator among its geographic regions.
  • Apple's high-margin services business is one of the company's fastest growing sources of revenue.
  • The company closed all of its stores in China due to the spread of coronavirus and is beginning to reopen them gradually.

Apple’s Financials

Apple posted net income of $55.3 billion on revenue of $260.2 billion for fiscal year (FY) 2019, which ended September 28, 2019. Apple refers to revenue as net sales in its reports. Both net income and revenue fell during the year after rising substantially in 2018. Net income declined 7.2% in FY 2019 versus a rise of 23.1% the previous year. Revenue declined 2.0% after climbing 15.9% in FY 2018.

Those declines were largely driven by lower iPhone sales, which fell 13.6% in FY 2019, and lower sales in Greater China, as discussed further below. Even with that drop, revenue from iPhones comprises about 55% of Apple's total revenue. Apple's second-biggest revenue generator is Services (18% of revenue); followed by Mac (10%); iPad (8%); and Wearables, Home and Accessories (9%). While the smallest product category at Apple is Wearables, Home and Accessories, it saw explosive revenue growth, rising 40.9% for the year.

Apple has mounted a major corporate strategy to reduce its dependence on lower-margin hardware products, which face slowing growth, while accelerating the growth of its Services business, which has higher margins and a more predictable, recurring revenue stream. FY 2019 was a landmark year for Apple's Services offerings, having introduced Apple Arcade, Apple TV+, Apple News+, and Apple Card. Services revenue grew 16.5% in FY 2019 even as corporate revenue fell. Also, the high margins in Apple's Services business have continued to rise. Gross margin as a percentage of sales was 63.7% for Services compared to just 32.2% for Products in last year.

Apple posted strong year-over-year (YOY) net income and revenue growth for the first quarter of FY 2020, which ended December 28, 2019. Net income grew 11.4% and on an 8.9% increase in revenue compared to the same quarter a year ago. Revenue also hit a record, driven by a pickup in demand for iPhones and record numbers for Services and Wearables.

Apple’s Business Segments

Apple provides a breakdown of revenue and operating income for the following geographical segments: Americas; Europe; Greater China; Japan; and Rest of Asia Pacific.

While the U.S. is still the dominant market, Asia is rapidly catching up. Last year, markets in China, Japan and Asia Pacific contributed 37% of operating income and 32% of revenue. That makes the Asia region dramatically more important than Europe to Apple for growth and profits.


The Americas segment includes both North and South America. Revenue grew 4.3% during FY 2019 to $116.9 billion, comprising nearly 45% of Apple's total revenue. The U.S. alone accounts for over 39% of total revenue. Operating income grew 0.7% to $35.1 billion, comprising nearly 41% of the operating income for all segments.


The Europe segment includes European countries, as well as India, the Middle East and Africa. Revenue fell 3.4% during FY 2019 to $60.3 billion, comprising about 23% of Apple's total revenue. Operating income fell 3.8% to $19.2 billion, comprising more than 22% of combined operating income for all segments.

Greater China

The Greater China segment includes China, Hong Kong, and Taiwan. Revenue fell 15.9% during FY 2019 to $43.7 billion, comprising almost 17% of Apple's total revenue. Operating income fell 17.8% to $16.2 billion, comprising about 19% of the combined operating income for all segments.


Revenue for the segment fell 1.0% during FY 2019 to $21.5 billion, comprising over 8% of Apple's total revenue. Operating income fell 1.4% for the year to $9.4 billion, comprising almost 11% of the combined operating income for all segments.

Rest of Asia Pacific

The Rest of Asia Pacific segment includes Australia and those Asian countries not included in the company’s other reportable geographic segments. Revenue for the segment grew 2.2% during FY 2019 to $17.8 billion, comprising nearly 7% of Apple's total revenue. Operating income fell 2.0% to $6.1 billion, comprising 7% of the combined operating income for all segments.

A note to readers that the combined operating income used in the segment breakdowns above and in the pie charts was $86.0 billion in FY 2019. To arrive at Apple's lower, reported consolidated operating income of $63.9 billion for the year, Apple makes deductions for research and development expenses and other corporate expenses.

Apple’s Recent Developments

Apple announced in February that it no longer expects to meet its previous revenue guidance for the current quarter due to the coronavirus. The closing of the company's stores in China, as well as many partner stores and iPhone manufacturer partner sites, is expected to materially affect sales. Apple stores and its manufactures are slowly reopening or recommencing operations.