Apple sold $416bn of products and services in its last full year. It kept $112bn of that as profit. The income statement is the page that shows every step between those two numbers.
It reads from top to bottom, like a staircase. Sales sit at the top. Each line below takes a cost away. Whatever is left at the bottom belongs to the shareholders.
What is an income statement? It is a company's report of its sales, costs and profit over a period, usually a quarter or a year. It is also called the profit and loss statement, or P&L.
Read it from the top down: sales, then each cost taken away, then the profit left at each step.
The lines in between show where the money goes. Apple kept about $27 of every $100 it sold in fiscal 2025.
Margins turn each profit line into a % of sales, so years and companies can be compared. One-off items can distort a single year.
Where to find it
Every US-listed company files an income statement each quarter in its 10-Q report. It files a full-year one in its annual 10-K. They are free on the SEC's website and on each company's investor relations page.
Apple's financial year ends in late September. Its latest full year, fiscal 2025, ended on 27 September 2025. Apple calls the page its "Consolidated Statements of Operations". The name changes from company to company. The layout barely does.
The income statement, line by line
Here is Apple's fiscal 2025 statement, with each line as an amount out of every $100 of sales.
Line | Fiscal 2025, $bn | Per $100 of sales |
|---|---|---|
Net sales | 416.2 | 100.0 |
Cost of sales | (221.0) | (53.1) |
Gross profit | 195.2 | 46.9 |
Research and development (R&D) | (34.6) | (8.3) |
Selling, general and administrative (SG&A) | (27.6) | (6.6) |
Operating income | 133.1 | 32.0 |
Other income/(expense), net | (0.3) | (0.1) |
Income before tax | 132.7 | 31.9 |
Provision for income taxes | (20.7) | (5.0) |
Net income | 112.0 | 26.9 |
Brackets mean a cost taken away. Source: Apple Form 10-K, fiscal 2025.
Each line has a plain meaning:
Net sales (also called revenue) is everything customers paid for Apple's products and services.
Cost of sales is the direct cost of what was sold: parts, manufacturing and the direct cost of delivering its services.
Gross profit is what is left after those direct costs. Apple labels this line "gross margin".
Operating expenses are the costs of running the company. R&D (research and development) pays for future products. SG&A (selling, general and administrative) covers sales, marketing, stores, staff and offices.
Operating income is the profit from the business itself, before interest and tax.
Other income/(expense) is mostly interest earned and paid, plus gains and losses on investments.
Provision for income taxes is the tax due on the year's profit.
Net income is the bottom line: the profit that belongs to shareholders.
The chart below shows the same statement as a staircase. Blue bars are sales and the profit left at each stage. Orange bars are the costs taken away.
Source: Apple Form 10-K, fiscal 2025
The biggest step down is the first one. Cost of sales took $221.0bn, more than half of everything Apple sold. Running the company took another $62.2bn. Tax and other items took $21.0bn. That left $112.0bn of net income.
Gross profit: what is left after making the product
Apple splits its statement into two parts: products (iPhone, Mac, iPad, wearables and accessories) and services (the App Store, iCloud, Apple Music, AppleCare, advertising and payments).
Source: Apple Form 10-K, fiscal 2025
Products brought in $307.0bn, or 74% of sales. Services brought in $109.2bn, or 26%. Gross profit tells a different story. Services produced $82.3bn of it, which is 42% of the total.
The reason is cost. Each $100 of services left Apple with $75.40 after direct costs. Each $100 of products left $36.80. A dollar of services brings in about twice as much gross profit as a dollar of products. That is why the services line matters more than its size suggests.
Margins: the numbers that make it comparable
A margin is a profit line divided by sales. It shows how much of each dollar the company keeps.
Gross margin = gross profit ÷ net sales. Apple's was 46.9% in fiscal 2025.
Operating margin = operating income ÷ net sales. Apple's was 32.0%.
Net margin = net income ÷ net sales. Apple's was 26.9%.
Margins let you compare a company with its own past, or with a rival of a different size. The chart below shows Apple's three margins over ten years.
Source: Apple Form 10-K filings, fiscal 2016 to 2025
Apple's gross margin rose from 39.1% in fiscal 2016 to 46.9% in fiscal 2025. Part of the reason is mix. Services sales rose 28% between fiscal 2023 and fiscal 2025, against 3% for products. The operating margin followed, from 27.8% to 32.0%. A rising margin means each dollar of sales brings in more profit than before.
Watch for one-off items
Look closely at the net margin line in fiscal 2024. It dipped while the other two kept rising.
That dip came from a single tax bill. In September 2024, Europe's top court confirmed a 2016 European Commission decision that Ireland had given Apple unlawful state aid through its tax rulings. Apple booked a one-time tax charge of $10.2bn. Income before tax rose 9% that year, while net income fell 3%.
The charge did not repeat in fiscal 2025. So net income jumped 19%, while income before tax rose 7%. Neither swing said much about the business itself.
This is why it pays to read the lines above net income. Operating income and income before tax both sit above the tax line. So tax surprises do not touch them. They show how the business itself performed.
At the very bottom, the statement divides net income by the number of shares. That gives earnings per share, or EPS. Apple's diluted EPS was $7.46 in fiscal 2025. "Diluted" counts shares that staff stock awards could still create, so it is the more cautious figure. Basic EPS, which leaves those out, was $7.49.
EPS can grow faster than net income when a company buys back its own shares. We explain how in What Is a Stock?.
What the income statement does not show
The income statement shows profit. It does not show cash. A sale counts when it is made, even if the customer pays later. A factory's cost is spread over many years, even though the cash went out at once. The cash flow statement tracks the money itself.
It also says nothing about what a company owns or owes. That is the job of the balance sheet.
Read the three together for the full picture. Start with the income statement. It answers the first question about any business. Does it make money? How much of each sale does it keep?
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