On its quarterly earnings calls, Apple provides informal financial guidance that helps set expectations for investors and Wall Street analysts. On its latest earnings call yesterday, however, Apple mentioned something that it had not before.
Specifically, Apple's CFO Kevan Parekh said that the company's September quarter revenue outlook was contingent on Apple's revenue-sharing agreement with Google continuing. As noted by Jason Snell at Six Colors, this is seemingly the first time Apple has directly referred to the threat of losing this revenue within its prepared remarks.
Here is what Parekh said, with emphasis added:
As we move into the September quarter, I'd like to review our outlook, which includes the types of forward-looking information that Suhasini referred to. Importantly, the color we're providing assumes that the global tariff rates, policies, and application remain in effect as of this call, the global macroeconomic outlook does not worsen from today, and the current revenue-share agreement with Google continues.
Google reportedly pays Apple billions of dollars per year to be the default search engine in Safari across the iPhone, iPad, and Mac, with a court document revealing that Google paid Apple a whopping $20 billion in 2022 alone.
In August 2024, a U.S. federal judge ruled that Google's default search engine agreement with Apple violated antitrust law. However, the court has not yet issued any remedies, and Google will almost certainly appeal any unfavorable decision.
"I don't really want to speculate on the court ruling and how they would rule and what we would do as a consequence of it," said Apple CEO Tim Cook, on the earnings call.
