Apple's Performance in the Last Quarter: A Mixed Bag
Apple's performance in the last quarter was a mixed bag, with the company missing on wearables, China, and service revenues. UBS had Apple sentiment at a relatively subdued 6/10 prior to the earnings report. This was largely due to the fact that, despite the enthusiasm surrounding Apple's WWDC event over the summer, iPhone unit sell-through in the September quarter was effectively flat year over year at around 46 million units.
UBS analyst David Vogt had anticipated September Quarter results largely in line with his forecast of $94 billion/$158 billion, with potential upside driven by iPad sales and flat iPhone units of 46 million. Factoring in 5 million iPhone channel fill, David forecasted 51 million iPhone units and iPhone revenue of $45.7 billion.
Despite multiple observations that AI is not boosting iPhone sales, investors continue to give Apple the benefit of the doubt of a successful iPhone 16 launch. However, many are holding out for further confirmation until the rollout of Apple Intelligence.
Apple's Performance in the September Quarter
Apple reported the following for the quarter ended Sept 30:
- Adjusted EPS 1.64 c vs. $1.46 y/y, beating estimates of 1.58
- Revenue $94.93 billion, +6.1% y/y, beating estimates of $94.36 billion
- Products revenue $69.96 billion, +4.1% y/y, beating estimates $69.15 billion
- iPhone revenue $46.22 billion, +5.5% y/y, beating estimates $45.04 billion
- Mac revenue $7.74 billion, +1.7% y/y, in line with estimates $7.74 billion
- iPad revenue $6.95 billion, +7.9% y/y, missing estimates $7.07 billion
- Wearables, home and accessories $9.04 billion, -3% y/y, missing estimate $9.17 billion
- Service revenue $24.97 billion, +12% y/y, missing estimate $25.27 billion
The one major issue was the unexpected drop in revenues from China, down 0.3% YoY.
Breakdown of Sales by Product Category
Revenue from the iPhone came in higher than expected, lifting overall revenue. It came in at $46.2 billion, beating estimates of $45 billion and growing over $1 billion year-over-year. However, the rest of the product suite was mixed with Mac revenue coming in line with estimates at $7.74 billion, while both iPads and wearables missed expectations.
The iPad was a surprising miss, coming in just shy of $7 billion despite the release of the new iPad Pro and iPad Air models earlier this year. Wearables, Home and Accessories was another disappointment, declining considerably and missing Wall Street expectations.
China Sales Decline for a Fifth Consecutive Quarter
Contrary to expectations for a modest rebound, China sales declined for a fifth consecutive quarter, down 0.3%, and printing at $15.03 billion, below the $15.8 billion estimate. The rest of the world saw growth, modest in the Americas at 3.9%, and stronger in Europe and APAC, both double digits.
Apple reached a new record in terms of its installed base of devices around the world. However, with iPhone revenue ahead but China revenue missing, there’s a question: Did iPhone grow in China?
Service Revenue Misses Estimates
After wearables and China missed, so did Service revenue, which at $24.97 billion, up 12%, came light of estimates $25.27 billion. While services revenue was at an all-time record, the softness could become even softer in the future if governments continue to get their way and make Apple open up its App Store to alternative distribution and payment methods.
CFO Luca Maestri commented on the quarter, stating that the record business performance during the September quarter drove nearly $27 billion in operating cash flow, allowing the company to return over $29 billion to shareholders.
Bottom Line
These mixed results will affirm concerns among investors that Apple is losing its shine considerably in China while continuing to flood the market with products that consumers simply don’t find appealing, as well as devices that are only iterative tweaks from prior versions. And so far, nothing Apple has shown in terms of its AI technology has the look of a company that is set to own a core piece of that industry moving forward.
What do you think about Apple's performance in the last quarter? Share your thoughts and don't forget to sign up for the Daily Briefing, which is everyday at 6pm.
Apple's Performance in the Last Quarter: A Mixed Bag
Apple's performance in the last quarter was a mixed bag, with the company missing on wearables, China, and service revenues. UBS had Apple sentiment at a relatively subdued 6/10 prior to the earnings report. This was largely due to the fact that, despite the enthusiasm surrounding Apple's WWDC event over the summer, iPhone unit sell-through in the September quarter was effectively flat year over year at around 46 million units.
UBS analyst David Vogt had anticipated September Quarter results largely in line with his forecast of $94 billion/$158 billion, with potential upside driven by iPad sales and flat iPhone units of 46 million. Factoring in 5 million iPhone channel fill, David forecasted 51 million iPhone units and iPhone revenue of $45.7 billion.
Despite multiple observations that AI is not boosting iPhone sales, investors continue to give Apple the benefit of the doubt of a successful iPhone 16 launch. However, many are holding out for further confirmation until the rollout of Apple Intelligence.
Apple's Performance in the September Quarter
Apple reported the following for the quarter ended Sept 30:
- Adjusted EPS 1.64 c vs. $1.46 y/y, beating estimates of 1.58
- Revenue $94.93 billion, +6.1% y/y, beating estimates of $94.36 billion
- Products revenue $69.96 billion, +4.1% y/y, beating estimates $69.15 billion
- iPhone revenue $46.22 billion, +5.5% y/y, beating estimates $45.04 billion
- Mac revenue $7.74 billion, +1.7% y/y, in line with estimates $7.74 billion
- iPad revenue $6.95 billion, +7.9% y/y, missing estimates $7.07 billion
- Wearables, home and accessories $9.04 billion, -3% y/y, missing estimate $9.17 billion
- Service revenue $24.97 billion, +12% y/y, missing estimate $25.27 billion
The one major issue was the unexpected drop in revenues from China, down 0.3% YoY.
Breakdown of Sales by Product Category
Revenue from the iPhone came in higher than expected, lifting overall revenue. It came in at $46.2 billion, beating estimates of $45 billion and growing over $1 billion year-over-year. However, the rest of the product suite was mixed with Mac revenue coming in line with estimates at $7.74 billion, while both iPads and wearables missed expectations.
The iPad was a surprising miss, coming in just shy of $7 billion despite the release of the new iPad Pro and iPad Air models earlier this year. Wearables, Home and Accessories was another disappointment, declining considerably and missing Wall Street expectations.
China Sales Decline for a Fifth Consecutive Quarter
Contrary to expectations for a modest rebound, China sales declined for a fifth consecutive quarter, down 0.3%, and printing at $15.03 billion, below the $15.8 billion estimate. The rest of the world saw growth, modest in the Americas at 3.9%, and stronger in Europe and APAC, both double digits.
Apple reached a new record in terms of its installed base of devices around the world. However, with iPhone revenue ahead but China revenue missing, there’s a question: Did iPhone grow in China?
Service Revenue Misses Estimates
After wearables and China missed, so did Service revenue, which at $24.97 billion, up 12%, came light of estimates $25.27 billion. While services revenue was at an all-time record, the softness could become even softer in the future if governments continue to get their way and make Apple open up its App Store to alternative distribution and payment methods.
CFO Luca Maestri commented on the quarter, stating that the record business performance during the September quarter drove nearly $27 billion in operating cash flow, allowing the company to return over $29 billion to shareholders.
Bottom Line
These mixed results will affirm concerns among investors that Apple is losing its shine considerably in China while continuing to flood the market with products that consumers simply don’t find appealing, as well as devices that are only iterative tweaks from prior versions. And so far, nothing Apple has shown in terms of its AI technology has the look of a company that is set to own a core piece of that industry moving forward.
What do you think about Apple's performance in the last quarter? Share your thoughts and don't forget to sign up for the Daily Briefing, which is everyday at 6pm.
