Common-Size Income Statement
Quarterly Data
Apple Inc., common-size consolidated income statement (quarterly data)
Based on: 10-Q (reporting date: 2026-06-27), 10-Q (reporting date: 2026-03-28), 10-Q (reporting date: 2025-12-27), 10-K (reporting date: 2025-09-27), 10-Q (reporting date: 2025-06-28), 10-Q (reporting date: 2025-03-29), 10-Q (reporting date: 2024-12-28), 10-K (reporting date: 2024-09-28), 10-Q (reporting date: 2024-06-29), 10-Q (reporting date: 2024-03-30), 10-Q (reporting date: 2023-12-30), 10-K (reporting date: 2023-09-30), 10-Q (reporting date: 2023-07-01), 10-Q (reporting date: 2023-04-01), 10-Q (reporting date: 2022-12-31), 10-K (reporting date: 2022-09-24), 10-Q (reporting date: 2022-06-25), 10-Q (reporting date: 2022-03-26), 10-Q (reporting date: 2021-12-25), 10-K (reporting date: 2021-09-25), 10-Q (reporting date: 2021-06-26), 10-Q (reporting date: 2021-03-27), 10-Q (reporting date: 2020-12-26), 10-K (reporting date: 2020-09-26), 10-Q (reporting date: 2020-06-27), 10-Q (reporting date: 2020-03-28), 10-Q (reporting date: 2019-12-28).
The financial data reveals a strategic transition in revenue composition and a consistent expansion of profitability margins over the analyzed period. A clear shift is observed as the proportion of net sales derived from services increases, while the relative contribution of product sales gradually declines, despite recurring seasonal peaks in December.
- Revenue Mix and Composition
- A long-term trend indicates a growing reliance on the services segment. While product sales historically dominated the revenue stream—often exceeding 80% during the fourth calendar quarter—this share has trended downward toward the low 70s in non-peak quarters. Conversely, services have grown from approximately 13.85% of net sales in December 2019 to consistently representing between 26% and 29% of net sales in recent quarters. This transition suggests a successful diversification of the income base toward higher-margin recurring revenue.
- Gross Margin Expansion
- Gross margins exhibit a steady and significant upward trajectory, rising from 38.35% in December 2019 to 50.06% by June 2026. This improvement is primarily driven by a reduction in the cost of sales as a percentage of net sales, which fell from 61.65% to 49.94%. Specifically, the cost of products as a percentage of total net sales decreased from approximately 56% to 43%, indicating either improved manufacturing efficiencies, a shift toward higher-priced premium hardware, or the dilutive effect of higher-margin services on the total cost structure.
- Operating Expense Trends
- Operating expenses demonstrate an increasing trend, largely driven by an escalation in research and development (R&D) spending. R&D as a percentage of net sales more than doubled, moving from 4.85% in December 2019 to 10.72% by June 2026. Selling, general, and administrative (SG&A) expenses remained relatively stable, typically fluctuating between 5% and 8% of net sales. The increase in total operating expenses reflects a prioritized investment in innovation and product development.
- Profitability and Net Income
- Operating income margins have remained robust, generally fluctuating between 27% and 35%. Despite the rise in operating expenses, the expansion of the gross margin has largely offset these costs, maintaining strong operating profitability. Net income margins have remained relatively stable, typically ranging between 24% and 29%, with a notable anomaly in September 2024 where net income dropped to 15.52% due to a sharp increase in the provision for income taxes, which spiked to 15.67% of net sales for that period.
AI Ask an analyst for more