Apple CEO Tim Cook attends the annual developer conference at the corporate headquarters in Cupertino, California, USA on June 10, 2024.
Carlos Barria | Reuters
Apple reported third-quarter earnings on Thursday that beat Wall Street expectations, with total revenue rising 5%.
Apple shares remained unchanged in prolonged trading.
Here’s how Apple fared in comparison with LSEG consensus estimates for the quarter ended June 29:
- EPS: $1.40 vs. $1.35 estimated
- revenue: $85.78 billion versus $84.53 billion estimated
- iPhone sales: $39.30 billion versus $38.81 billion estimated
- Mac sales: $7.01 billion versus $7.02 billion estimated
- iPad sales: $7.16 billion versus $6.61 billion estimated
- Sales of wearables, home and accessories: $8.10 billion versus estimated $7.79 billion
- Service turnover: $24.21 billion in comparison with estimated $24.01 billion
- Gross margin: 46.3% versus 46.1% estimated
Apple expects similar overall revenue growth in the present quarter, CFO Luca Maestri said in a conference call with analysts.
Apple also expects its services business to grow at in regards to the same pace because the previous three quarters, at about 14 percent. The company expects operating expenses in the present quarter to be between $14.2 billion and $14.4 billion, Maestri added, with a gross margin of between 45.5 percent and 46.5 percent.
Apple reported net income of $21.45 billion for the quarter, up from $19.88 billion, or $1.26 per share, a 12 months earlier. the previous 12 months period.
Apple’s most significant business stays the iPhone, which accounted for about 46 percent of the corporate’s total revenue within the quarter. Although the tech giant beat LSEG estimates, revenue for the product line still fell about 1 percent year-on-year to $39.29 billion.
“On a constant currency basis, we’ve grown year over year. And that’s pretty much how we see it from an operational perspective,” Apple CEO Tim Cook told CNBC’s Steve Kovach.
Cook said that while Apple cannot comment on the positive impact of the newly announced Apple Intelligence service on sales until it’s delivered to customers this fall, the corporate has already increased spending to finish the service.
“We’ve reallocated a lot of people who were working on other things to AI,” Cook said. “From a data center perspective, as you know, we’re taking a hybrid approach. So we have both our own people and partners. And so the capital expenditures would go into the partners’ finances and we would pay the expenditures.”
“Our results this quarter certainly reflect an increase in the amount we spend on AI and Apple intelligence compared to last year,” Cook added.
Apple reported the strongest growth in its iPad division, which grew nearly 24% 12 months over 12 months to $7.16 billion in revenue. The company launched recent iPads within the quarter for the primary time since 2022, sparking a wave of upgrades.
Cook said about half of iPad buyers are first-time buyers, suggesting the tablet market is just not yet saturated.
Apple’s Mac division reported revenue of $7 billion, about 2% greater than the identical quarter last 12 months.
Sales of Apple Watch, headphones corresponding to Beats or AirPods, and HomePod home speakers are reported under “wearables, home and accessories.” Sales on this category fell 2% to $8.10 billion within the quarter.
“A full two-thirds of Apple Watch buyers were new to the product, so we’re still building that base,” Cook said.
The services business is the important growth category for Apple and includes hardware warranties, revenue from Google, monthly cloud storage subscriptions and the corporate’s content subscriptions corresponding to Apple TV+. The company reported services revenue of $24.21 billion, up 14% and consistent with Apple’s forecast and LSEG estimates.
Apple said in an announcement that it has more lively devices in each of its regions than ever before, but didn’t provide a particular number. The variety of lively devices is significant since it represents a gaggle of existing customers to whom the corporate can sell its profitable services. Apple said in February that it had 2.2 billion lively devices.
The company said it has over one billion paid subscriptions, including subscriptions to iPhone apps through Apple’s App Store.
However, Apple’s sales in Greater China, a region that features Taiwan and Hong Kong, fell 6 percent to $14.72 billion. Apple is under pressure in mainland China as local rivals corresponding to Huawei launch competing products.
“I don’t know what each chapter of the book says, but we are very confident about the long term,” Cook said in a conference call with analysts.
Apple said it spent $32 billion on dividends and share buybacks through the quarter.
