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Apple Inc. is a leading technology company that designs, manufactures, and markets a wide range of consumer electronics, including smartphones, personal computers, tablets, wearables, and accessories, along with offering various related services . The company's product lines include the iPhone, Mac, iPad, and Wearables, Home, and Accessories, which are significant contributors to its revenue . In addition to hardware, Apple provides services such as advertising, AppleCare, cloud services, digital content, and payment services, which have become an increasingly important part of its business .
- iPhone - Develops and markets smartphones that are a major contributor to the company's revenue.
- Services - Offers a range of services including advertising, AppleCare, cloud services, digital content, and payment services, which have reached a new all-time high in revenue.
- Wearables, Home, and Accessories - Produces and sells wearables and home accessories, contributing significantly to the company's sales.
- Mac - Designs and sells personal computers that are a substantial part of the company's product offerings.
- iPad - Manufactures and markets tablets that are an important segment of the company's product line.
What went well
- Strong Revenue Growth in Europe and Emerging Markets: Apple reported double-digit growth of 11% in Europe, with notable performance across both developed and emerging markets. This includes significant growth in Turkey, Saudi Arabia, UAE, and India, where the company set an all-time revenue record during the September quarter.
- Positive Momentum in China Market: Despite flat year-over-year performance in China, Apple achieved an all-time high in the installed base of active devices and held the top 2 selling smartphones in urban China according to Kantar. Additionally, a large percentage of new customers are adopting Apple products in China, with over 50% of Mac and iPad buyers and over 75% of Apple Watch buyers being new to the product. These metrics indicate strong customer acquisition and potential for future growth.
- High Adoption Rate of Latest Technologies: The adoption rate of Apple's latest operating system, iOS 18.1, is twice that of 17.1, reflecting strong customer interest in the company's newest innovations. Apple Intelligence is considered a compelling upgrade reason, suggesting it may drive increased product upgrades and sales.
What went wrong
- Apple's guidance for the December quarter is cautious, with the company expecting total revenue to grow low to mid-single digits year-over-year but not providing specific details on iPhone growth. This lack of specificity could indicate concerns about iPhone demand. ( )
- The rollout of Apple Intelligence features is staggered and slower than typical software releases, potentially limiting its near-term impact on sales. Tim Cook stated that Apple Intelligence will add more languages in April and more as they step through the year. This gradual rollout may delay the upgrade catalyst for customers. ( )
- In China, Apple's revenue was relatively flat year-over-year, and the improvement was partly due to a sequential improvement in foreign exchange. Tim Cook did not comment on the impact of China's stimulus plans, which could suggest uncertainty about future growth in this key market. ( )
Q&A Summary
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Revenue Guidance and iPhone Growth
Q: Do you expect iPhone growth in upcoming quarter?
A: Management expects total company revenue to grow low to mid-single digits but did not provide specific guidance on iPhone growth. They emphasized being early in the product cycle with many new products and features launching , and noted that Apple Intelligence is rolling out over time. -
Gross Margins Outlook and Commodity Prices
Q: How are component prices affecting gross margins?
A: Gross margins are affected by many variables, including commodity prices. Most commodities are moving down in price for the September and December quarters, while NAND and DRAM prices increased during the September quarter and are expected to increase in December quarter. Management is pleased with record levels of gross margins. -
China Sales and Demand
Q: What is the demand outlook in China?
A: China performance was relatively flat year-over-year. Sequential improvement in foreign exchange helped. The installed base of active devices reached an all-time high. Apple had the top two selling smartphones in urban China, according to Kantar. Over 50% of Mac and iPad buyers were new customers, and over 75% for Watch. Management would not speculate on the impact of China's stimulus plans. -
CapEx Outlook and AI Investments
Q: Will investments in AI change CapEx outlook?
A: Apple will continue to make all necessary investments, including in AI-related CapEx. They are rolling out Apple Intelligence features now and will make all necessary capacity available. Their CapEx may not be comparable to others due to their hybrid data center model. -
Impact of Apple Intelligence on Upgrade Cycle
Q: Is Apple Intelligence affecting iPhone demand?
A: Apple believes Apple Intelligence is a compelling upgrade reason. Initial data shows that iOS 18.1 adoption is twice as fast as 17.1. They are seeing significant interest. Constraints on the iPhone 16 Pro models make it too early to determine precise consumer behavior. -
Services Growth and Recurring Revenue
Q: How much of Services is recurring vs transactional?
A: The recurring portion of Services has grown and is growing faster than the transactional piece. Apple has well over 1 billion paid subscriptions, which continue to grow at strong double digits. -
R&D Spending on AI
Q: Is Apple increasing R&D investment in AI?
A: Apple has been investing heavily in R&D over the last several years. They have reallocated existing resources to AI technology, increasing the level of intensity in AI. -
iPhone Model Mix Shift
Q: Are consumers changing buying behavior among iPhone models?
A: It's too early to determine the precise mix between consumer and Pro models due to constraints on iPhone 16 Pro and Pro Max in October. Apple will assess the mix as they move forward. -
Tariff Impact Preparedness
Q: How is Apple preparing for potential tariffs?
A: Tim Cook did not want to speculate on potential tariffs or how Apple is prepared to deal with them. -
Services Offerings and Growth Potential
Q: How will underperforming services improve?
A: Apple sees lots of opportunity in all services and will continue investing and adding new features. They focus on being the best rather than the most. -
DOJ Case on Google Revenue Sharing
Q: Thoughts on DOJ case about Google deal?
A: Tim Cook did not want to speculate on the ongoing legal case. -
Capital Allocation and Net Cash Position
Q: Will Apple use its cash for investments or shareholder returns?
A: Apple's fundamental philosophy is to look after the business first, and then return excess cash to shareholders. They will continue to evaluate ways to put cash to work in the business.
Guidance Changes
Quarterly guidance for Q1 2025:
- Total Company Revenue: Expected to grow low to mid-single digits year-over-year (no change from ~5% year-over-year )
- Services Revenue: Expected to grow at double digits similar to what was reported in fiscal year 2024 (no change from double-digit growth similar to the first three quarters of FY 2024 )
- Gross Margin: 46% to 47% (raised from 45.5% to 46.5% )
- Operating Expenses (OpEx): $15.3 billion to $15.5 billion (raised from $14.2 billion to $14.4 billion )
- Other Income and Expense (OI&E): Negative $250 million (lowered from negative $50 million )
- Tax Rate: ~16% (lowered from ~16.5% )
- With Services revenue reaching a $100 billion run rate, can you elaborate on the sustainability and growth prospects of the recurring versus transactional components, and how competitive pressures might affect these segments?
- Given that peers are significantly increasing their R&D investments in AI, do you believe reallocating existing resources is adequate, or should Apple increase its R&D spending beyond the current 7% to 8% of sales to fully capitalize on AI opportunities?
- Despite your large installed base, services like Apple Music, News, Arcade, and Fitness are not leading in their markets; what strategies do you have to enhance their competitiveness, and is the decision to keep them non-cross-platform limiting their growth potential?
- You've maintained around $50 billion in net cash despite pledges to achieve a net neutral cash position; how do you plan to utilize this cash effectively, and are there more aggressive investment opportunities you're considering instead of increasing shareholder returns?
- Considering economic uncertainties and geopolitical tensions in China, how do you plan to mitigate potential risks in this crucial market, and what impact might these factors have on your future growth strategies there?
Q4 2024 Earnings Call
- Issued Period: Q4 2024
- Guided Period: Q1 2025
- Guidance:
- Total Company Revenue: Expected to grow low to mid-single digits year-over-year .
- Services Revenue: Expected to grow double digits at a rate similar to what was reported in fiscal year 2024 .
- Gross Margin: Expected to be between 46% and 47% .
- Operating Expenses (OpEx): Expected to be between $15.3 billion and $15.5 billion .
- Other Income and Expense (OI&E): Expected to be around negative $250 million, excluding any potential impact from the mark-to-market of minority investments .
- Tax Rate: Expected to be around 16% .
Q3 2024 Earnings Call
- Issued Period: Q3 2024
- Guided Period: September quarter
- Guidance:
- Total Company Revenue: Expected to grow year-over-year at a rate similar to the June quarter, which was 5% .
- Services Revenue: Expected to grow double digits at a rate similar to what was reported in the first three quarters of the fiscal year .
- Gross Margin: Expected to be between 45.5% and 46.5% .
- Operating Expenses (OpEx): Expected to be between $14.2 billion and $14.4 billion .
- Other Income and Expense (OI&E): Expected to be around negative $50 million, excluding any potential impact from the mark-to-market of minority investments .
- Tax Rate: Expected to be around 16.5% .
- Foreign Exchange Impact: Expected to have a negative impact on revenue of about 1.5 percentage points on a year-over-year basis .
Q2 2024 Earnings Call
- Issued Period: Q2 2024
- Guided Period: June quarter of 2024
- Guidance:
- Total Company Revenue: Expected to grow low single digits year-over-year, despite a foreign exchange headwind of about 2.5 percentage points .
- Services Revenue: Expected to grow double digits at a rate similar to the growth reported for the first half of the fiscal year .
- iPad Revenue: Expected to grow double digits .
- Gross Margin: Expected to be between 45.5% and 46.5% .
- Operating Expenses (OpEx): Expected to be between $14.3 billion and $14.5 billion .
- Other Income and Expense (OI&E): Expected to be around $50 million, excluding any potential impact from the mark-to-market of minority investments .
- Tax Rate: Expected to be around 16% .
Q1 2024 Earnings Call
- Issued Period: Q1 2024
- Guided Period: Q2 2024
- Guidance:
- Gross Margin: Expected to be between 46% and 47% .
- Operating Expenses (OpEx): Expected to be between $14.3 billion and $14.5 billion .
- Other Income and Expense (OI&E): Expected to be around $50 million, excluding any potential impact from the mark-to-market of minority investments .
- Tax Rate: Expected to be around 16% .
- Foreign Exchange Impact: Expected to be a revenue headwind of about 2 percentage points on a year-over-year basis .
- Services Business Growth: Expected to have a similar double-digit growth rate to what was reported in the December quarter .
- Additionally, Apple declared a cash dividend of $0.24 per share of common stock payable on February 15, 2024, to shareholders of record as of February 12, 2024 .
Recent developments and announcements about AAPL.
Corporate Leadership
Leadership Change
Who is leaving? Luca Maestri, Apple’s Chief Financial Officer, has stepped down as part of a planned transition.
Why? This is part of Apple’s previously announced CFO transition plan.
Who is stepping up? Kevan Parekh has been appointed as the new Senior Vice President and Chief Financial Officer, effective January 1, 2025. He has been with Apple since 2013 and previously held roles such as Vice President of Financial Planning and Analysis and Vice President of Finance for Sales, Marketing, and Retail.
Leadership Change
Who is leaving: Chief Financial Officer Luca Maestri.
Why: Transitioning from his role on January 1, 2025, but will continue to lead Corporate Services teams.
Who is stepping up: Kevan Parekh, Apple’s Vice President of Financial Planning and Analysis, will become Chief Financial Officer and join the executive team .
CFO Change
Apple Inc. announced that Chief Financial Officer Luca Maestri will transition from his role on January 1, 2025. He will continue to lead Corporate Services teams and report to CEO Tim Cook. Kevan Parekh, currently Vice President of Financial Planning and Analysis, will succeed him as CFO .
Board Change
Monica Lozano has been appointed to the Apple Inc. Board of Directors, effective January 4, 2021. She will serve on the Audit and Finance Committee and will receive a $100,000 annual retainer as a non-employee director .
Board Change
Monica Lozano has been appointed to the Apple Inc. Board of Directors, effective January 4, 2021. She will serve on the Audit and Finance Committee and will receive a $100,000 annual retainer as a non-employee director .
Leadership Change
Bruce Sewell is leaving his position as Apple's Senior Vice President, General Counsel, and Secretary. He is retiring at the end of the year. Katherine Adams will step up to succeed him as General Counsel and Senior Vice President, effective November 13, 2017 .
Financial Actions
- Revenue: Apple reported a quarterly revenue of $94.9 billion, marking a 6% increase compared to the same quarter last year .
- Earnings Per Share (EPS): The diluted earnings per share were $0.97. However, when excluding a one-time charge related to the reversal of the European General Court’s State Aid decision, the EPS was $1.64, reflecting a 12% year-over-year increase .
- Product Launches: During the quarter, Apple launched new products, including the iPhone 16 lineup, Apple Watch Series 10, and AirPods 4, along with new features for hearing health and sleep apnea detection .
- Cash Flow and Shareholder Returns: The company generated nearly $27 billion in operating cash flow and returned over $29 billion to shareholders .
- Dividend: Apple declared a cash dividend of $0.25 per share, payable on November 14, 2024, to shareholders of record as of November 11, 2024 .
- Services Revenue: The services segment reached a new all-time high, contributing significantly to the overall revenue .
- Apple's active installed base of devices reached a new all-time high across all products and geographic segments, driven by high customer satisfaction and loyalty .
- The company continues to focus on privacy in AI with the release of Apple Intelligence features, setting a new standard in the industry .
- For press inquiries, contact Josh Rosenstock at jrosenstock@apple.com.
- For investor relations, contact Suhasini Chandramouli at suhasini@apple.com .
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Revenue: Apple reported a quarterly revenue of $85.8 billion, marking a 5% increase year-over-year. This sets a new record for June quarter revenue .
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Earnings Per Share (EPS): The company achieved a quarterly earnings per diluted share of $1.40, which is an 11% increase compared to the same period last year .
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Services Revenue: The services segment reached a new all-time high, contributing significantly to the overall revenue growth .
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Operating Cash Flow: Apple generated nearly $29 billion in operating cash flow during the quarter, which facilitated the return of over $32 billion to shareholders .
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Dividend: Apple's board of directors declared a cash dividend of $0.25 per share, payable on August 15, 2024, to shareholders of record as of August 12, 2024 .
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Geographic Performance: The installed base of active devices reached a new all-time high across all geographic segments, driven by high levels of customer satisfaction and loyalty .
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Product and Segment Sales: The net sales for products were $61.564 billion, while services brought in $24.213 billion. The Americas region led with $37.678 billion in sales, followed by Europe with $21.884 billion .
- Revenue: Apple reported a quarterly revenue of $90.8 billion, which is a 4% decrease compared to the same quarter last year .
- Earnings Per Share (EPS): The company achieved a record EPS for the March quarter at $1.53 per diluted share .
- Services Revenue: Apple set an all-time revenue record in its Services segment, contributing significantly to its overall financial performance .
- Share Repurchase and Dividend: The Board has authorized an additional $110 billion for share repurchases and increased the quarterly dividend by 4% to $0.25 per share, marking the twelfth consecutive year of dividend increases .
- Product Launches and Future Plans: During the quarter, Apple launched the Apple Vision Pro and is planning an exciting product announcement next week, along with the Worldwide Developers Conference next month .
- Installed Base Growth: Apple's active installed base of devices reached a new all-time high across all products and geographic segments, driven by high customer satisfaction and loyalty .
- Geographic Sales: The Americas remained the largest market with $37.3 billion in sales, followed by Europe and Greater China .
- Product Category Performance: iPhone sales were $45.96 billion, while Services revenue was $23.87 billion, highlighting the growing importance of Apple's services ecosystem .
Dividend Policy
Apple's Q4 2024 Earnings Results
Apple has announced its financial results for the fourth quarter of fiscal 2024, which ended on September 28, 2024. Here are the key highlights:
Significant Trends:
For more detailed financial information, Apple will provide a live stream of its Q4 2024 financial results conference call on October 31, 2024, at 2:00 p.m. PT .
Contact Information:
Dividend Policy
Apple's Q3 2024 Earnings Results
Apple has announced its financial results for the fiscal third quarter of 2024, which ended on June 29, 2024. Here are the key highlights:
These results reflect Apple's strong performance and strategic focus on expanding its services and maintaining high customer satisfaction across its product lines.
Dividend Policy
Apple's Earnings Results for Q2 2024
Apple has released its financial results for the second fiscal quarter of 2024, which ended on March 30, 2024. Here are the key highlights:
Significant Trends:
Apple will host a live streaming of its Q2 2024 financial results conference call on May 2, 2024, at 2:00 p.m. PT, which will be available for replay for approximately two weeks .
For more detailed financial data, you can visit Apple's investor relations website .