Q4 2024 Summary
Published Jan 28, 2025, 9:22 PM UTC- 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.
- 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. ( )
| Metric | Period | Guidance | Actual | Performance |
|---|---|---|---|---|
Total Company Revenue Growth (YoY) | Q4 2024 | ~5% YoY | ~6% YoY (from 89,498 millionIn Q4 2023 to 94,930 millionIn Q4 2024) | Beat |
Services Revenue Growth (YoY) | Q4 2024 | “Double digits” YoY | ~12% YoY (from 22,314 millionIn Q4 2023 to 24,972 millionIn Q4 2024) | Met |
Gross Margin | Q4 2024 | 45.5% – 46.5% | ~46.2% ((94,930 million – 51,051 million) ÷ 94,930 million) | Met |
Operating Expenses (OpEx) | Q4 2024 | 14.2B – 14.4B | ~14.29B (Sum of SG&A: 6,523 million+ R&D: 7,765 million) | Met |
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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.