Key Points

  • Apple's Q4 earnings report reveals its fourth consecutive quarter of YoY sales declines, totaling $89.5 billion.
  • Despite this, the company's net income grew by nearly 11% YoY, reaching $22.96 billion, exceeding expectations.
  • iPhone revenue increased by 3% to $43.8 billion, marking a September quarter record.
  • The record number of active Apple devices hints at the early performance of the iPhone 15.
  • Apple's services segment, including Apple TV+, saw over 14% YoY revenue growth, reaching an all-time quarterly record of $22 billion.

Apple has unveiled its Q4 earnings report, showing its fourth consecutive quarter of year-over-year sales declines. Sales reached $89.5 billion in the three months ending on September 30, a 1% drop compared to the same period in the previous year.

While Apple's revenue figures remained essentially in line with Wall Street's expectations, the iPhone maker did manage to grow its net income by almost 11% YoY, reaching $22.96 billion, surpassing analysts' projections.

Navigating Economic Headwinds

Despite this income growth, Apple's shares fell more than 1% in after-hours trading following the report. The company's CEO, Tim Cook, attributed this downturn to an "uneven macroeconomic environment" during an analyst call, but remained optimistic, saying, "We've continued to invest in the future... We've adapted continuously to circumstances beyond our control, while being thoughtful and deliberate on spending."

Apple faced a decrease of over 5% in revenue from its products segment in the September quarter, primarily due to declines in Mac and iPad sales. iPhone revenue, however, increased by 3% from the previous year to $43.8 billion, setting a September quarter sales record.

One notable point is the record number of active devices across all product lines and geographic segments. This could provide an early indication of the iPhone 15's performance. The iPhone 15 lineup was released just eight days before the end of the September quarter, so its true impact will likely be seen during the crucial holiday quarter. Apple also recently unveiled upgrades to its laptops and desktop computers.

iPhone 15 Cycle: Uncertain Prospects and Strong Performances

Concerns regarding the uninspiring iPhone 15 cycle were raised by analysts, with some suggesting consumers might be less motivated to upgrade due to minimal improvements. Brian White, an analyst at Monness Crespi Hardt, stated, "We believe this precarious macro [economic] environment, combined with a mature market, will lead to an uninspiring iPhone 15 cycle." Cook countered this uncertainty, stating that "it's really too early to call the iPhone [15] cycle... it's really too early to tell what the upgrade rates will be and what the switcher rates will be."

There was also a 2.5% YoY decline in Apple's China sales in the September quarter, a potential sign that Apple could be losing ground in this critical market. Analysts pointed to rising competition from local companies, such as Huawei, as a significant factor.

However, Cook attributed the sales dip in China to a difficult foreign exchange rate, highlighting that iPhone sales achieved a September quarter record in mainland China. The decline was primarily linked to decreases in Mac and iPad revenue, similar to the overall results.

In contrast to declining device revenue, Apple's services segment continues to show positive growth. The services unit, which includes subscription products like Apple TV+, reported more than 14% YoY gains in the September quarter, reaching an all-time quarterly record of over $22 billion.

Apple could see further revenue growth from its services business in the December quarter, following price hikes for Apple TV+, Apple Arcade, and Apple News subscriptions. Cook also teased the forthcoming launch of the Vision Pro mixed reality headset, expected to be available to consumers early next year.

The company's outlook for the December quarter anticipates essentially flat total revenue growth compared to the prior year. Luca Maestri, Apple's CFO, mentioned that this quarter is one week shorter than the previous year. Cook revealed that the Vision Pro headset will initially be sold exclusively in Apple stores to provide consumers with educational support on its usage. Developers worldwide have been working in select developer labs, creating apps for this innovative product.

Apple's continued ability to navigate through challenging economic conditions and pivot toward services provides insights into the company's resilience. The true impact of its latest iPhone lineup and new hardware upgrades will be more evident during the holiday season, which could reshape the trajectory of its performance.

About Apple Inc.

  • Ticker AAPL
  • Exchange NASDAQ
  • Sector Technology
  • Industry Consumer Electronics
  • Shares Outstandng 16,070,800,384
  • Market Cap $2.65T
  • Description
  • Apple Inc. designs, manufactures, and markets smartphones, personal computers, tablets, wearables, and accessories worldwide. It also sells various related services. In addition, the company offers iPhone, a line of smartphones; Mac, a line of personal computers; iPad, a line of multi-purpose tablets; AirPods Max, an over-ear wireless headphone;...
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