Apple’s chief executive officer looks at the conversation about mental health during a spouse program on the final day of Asia-Pacific Economic Cooperation (APEC) Leaders’ Week at Apple Park in San Francisco, California, November 17, 2023. (CEO) Tim Cook.
Andrew Caballero-Reynolds | AFP | Getty Images
apple Reported fiscal year 1st quarter revenue However, Apple saw sales decline by 13% in China, one of its most important markets.
Apple shares fell more than 4% in after-hours trading after management released details about its outlook for the current quarter that suggested weaker iPhone sales.
Here’s how Apple performed relative to LSEG (formerly Refinitiv) consensus estimates for the quarter ending December 30:
- EPS: $2.18 vs. estimated $2.10
- revenue: $119.58 billion vs. estimated $117.91 billion
Here’s how Apple’s product line compared to LSEG’s expectations.
- iPhone revenue: $69.7 billion vs. estimated $67.82 billion
- mac’s revenue: $7.78 billion vs. estimated $7.73 billion
- ipad revenue: $7.02 billion vs. estimated $7.33 billion
- Other product revenue: $11.95 billion vs. estimated $11.56 billion
- service revenue: $23.12 billion vs. estimated $23.35 billion
- gross profit margin: 45.9% vs. estimated 45.3%
Apple did not provide guidance for the current quarter, which ends in June.
Apple Chief Financial Officer Luca Maestri said he discounted $5 billion in sales a year ago, which was a result of outperforming business results as supply recovered from coronavirus shutdowns and caught up with demand. Later, Apple said it expects iPhone sales for the March quarter to be similar to last year’s $51.33 billion.
Maestri said the company’s total revenue would be similar to last year’s $94.84 billion after subtracting $5 billion in iPhone sales. He added that service growth will be 11%, the same as in the December quarter.
Apple reported a 2% increase in sales for the December quarter, marking the fourth consecutive quarter of annual sales decline. Apple’s gross profit margin continues to rise, almost topping 46% in the December quarter. Apple reported net income for the quarter of $33.92 billion, an increase of 13% from the same period last year.
Apple CEO Tim Cook told CNBC’s Steve Kovach that due to the way Apple’s corporate calendar works, this year’s December quarter is one week shorter than last year’s first quarter, so the company’s growth rate has declined. Some said it actually represented a “significant acceleration” from the previous quarter.
“It’s important to keep in mind that last year the quarter was 14 weeks, this year it was 13 weeks,” Cook said.
iPhone sales rose nearly 6% to $69.7 billion, slightly below revised street estimates, a positive sign for the iPhone 15 model launched in September. This is Apple’s first quarter with iPhone 15 sales.
Apple’s profitable services business posted revenue of $23.11 billion, up 11% in the quarter, but still slightly below expectations. Investors are focused on the growth of Apple’s services business, which includes subscriptions such as Apple Music, warranties, search license revenue, Apple Pay and payments from Apple’s advertising.
Apple said it has 2.2 billion active devices in use, which many analysts say is an indicator of how they expect Apple’s services to grow. This is an increase from his 2 billion active devices during the same period last year.
Cook attributed the growth in services to advertising, cloud services, payments and products such as the company’s App Store. He said Apple claims more than 1 billion paid subscriptions, including app subscriptions through the App Store.
Apple showed sales growth in all regions except Greater China, which was down nearly 13% from the same period last year, potentially raising concerns that demand for Apple could wane in its third-largest market. I raised it. It faces increasing competition from local companies like Huawei. Greater China includes Hong Kong and Taiwan, as well as the mainland.
Cook told CNBC’s Kovacs that iPhone sales in the region “seemed to be on everyone’s radar.”
“If you double-click on the 13th and look at mainland China and look at constant currencies, you see that the dollar is very strong against the renminbi,” Cook said. “So -13 is a mid-single digit number. And that’s how we did with phones last quarter. The good news is that we’re the top six smartphone sellers in urban China. I joined four of them.”
Mac sales rose less than 1% in the quarter to $7.7 billion, in line with expectations. It’s a significant turnaround for a product line that was down nearly 34% on an annual basis in the September quarter.
iPad sales continued to be weak, falling 25% to $7.02 billion during the quarter, slightly below street expectations. For the first time in the product’s history, Apple will not release a new iPad model in 2023.
Cook said the iPad’s performance “wasn’t a surprise to us.”
“If you recall, iPad faced a very difficult quarter last year when we launched the iPad Pro and iPad 10th generation,” Cook said.
The company’s wearables business (also known as “other products”) includes AirPods headphones and the Apple Watch. Although sales exceeded street expectations, it was a tough quarter, falling 11% year over year to $11.95 billion. The latest Apple Watch was removed from Apple Stores for several days in December over a patent dispute with medical device company Masimo.
Apple said it spent nearly $27 billion on dividends and stock buybacks during the quarter.
