Common-Size Income Statement
Quarterly Data
Apple Inc., common-size consolidated income statement (quarterly data)
Based on: 10-K (reporting date: 2026-09-26), 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).
A structural shift in revenue composition is evident, characterized by a gradual decline in the proportion of net sales derived from products and a corresponding increase in the contribution from services. While product sales consistently peak during the December quarters, the long-term trajectory shows services expanding from approximately 14% of net sales in late 2020 to frequently exceeding 25% by 2024 and 2025.
- Gross Margin Expansion
- There is a sustained upward trend in the overall gross margin, which grew from 39.78% in December 2020 to a peak of 50.06% in June 2026. This expansion is primarily driven by a reduction in the cost of sales for products as a percentage of net sales, which improved from -55.75% to lows around -43.09%. The services segment maintains a relatively stable cost structure, contributing to the overall margin enhancement as its share of total revenue grows.
- Operating Expense Trends
- Operating expenses as a percentage of net sales have trended upward over the analyzed period. Research and development (R&D) spending shows a significant increase, rising from 4.63% in December 2020 to peaks above 10% in 2026. Selling, general, and administrative (SG&A) expenses have also seen a moderate increase, shifting from approximately 5% to a range between 6% and 7%. This indicates a strategic increase in investment in innovation and operational scaling.
- Operating Income Stability
- Despite the rise in operating expenses, operating income has remained resilient, generally fluctuating between 28% and 35% of net sales. The growth in gross margins has effectively offset the increased spending on R&D and SG&A, allowing the company to maintain a high level of operational profitability.
- Net Income and Tax Anomalies
- Net income has remained largely stable, typically ranging between 24% and 29% of net sales. However, a notable anomaly occurred on September 28, 2024, where net income dropped sharply to 15.52%. This decline was directly attributable to a significant spike in the provision for income taxes, which reached -15.67% of net sales for that specific quarter, contrasting with the historical average of -3% to -6%.
In summary, the financial trajectory indicates a successful transition toward a higher-margin services model. The company has successfully leveraged gross margin expansion to fund increased investments in research and development while maintaining consistent bottom-line profitability, notwithstanding isolated tax-related volatility.
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