Apple reports Q3 revenue down 1.4% YoY to $81.8B, declining for a third quarter in a row but largely in line with estimates, and net income up 2.3% to $19.9B
https://www.businesswire.com/ ... Twitter: Alexei Oreskovic / @lexnfx : Apple lost $132 billion in market value today. Amazon added $140 billion. Wealth transfer? Eric Jackson / @ericjackson : Anyone hoping for Big Tech earnings to cause the market to fall in on itself got disappointed for the 5th earnings season in a row Avi Greengart / @greengart : I love that @tim_cook is highlighting improvements to accessibility on the $AAPL earnings call. Accessibility is the best use of technology, helps usability for everyone, and if that isn't enough for financial analysts, it's also good for the brand. Gene Munster / @munster_gene : $AAPL results were inline. Guidance was 1% below the Street. What matters most is the active device base continued to growth and revenue growth will quicken in December with iPhone 15 and India. All systems go for AAPL. https://deepwatermgmt.com/... Evan / @stockmktnewz : Apple $AAPL currently has $166.5 Billion of cash on its balance sheet @thetranscript_ : $AAPL CEO: “On a constant currency basis, we grew compared to the prior year's quarter in aggregate and in the majority of markets we track” @thetranscript_ : Apple with a double beat. CEO @tim_cook: “We are happy to report that we had an all-time revenue record in Services during the June quarter” CFO: “Our June quarter YoY business performance improved from the March quarter” $AAPL -0.6% AH [image] @thetranscript_ : Messi getting mentioned in the Apple earnings call by CEO @tim_cook: “....we're thrilled to see Messi suiting up with Inter Miami...we are beating our expectation in terms of subscribers, and the fact that Messi went to Inter Miami helped us out there a bit.” - $AAPL CEO [image] @thetranscript_ : $AAPL CFO: “We expect our September quarter YoY revenue performance to be similar to the June quarter, assuming that the macroeconomic outlook doesn't worsen from what we are projecting today for the current quarter...We expect the revenue for both Mac and iPad to decline by... @zerohedge : *APPLE CFO: Q4 YEAR OVER YEAR PERFORMANCE TO BE SIMILAR TO Q3 @zerohedge : *APPLE HAS SLOWED DOWN HIRING TO LOWER COSTS, CFO SAYS Patrick McGee / @patrickmcgee_ : Tim Cook said he uses the Vision Pro “daily” and reiterated that it will ship “early” next year Ed Ludlow / @edludlow : Analyst to Cook/Maestri on AI: “Your strategy seems quite different to that of your peers.” Cook: “we view AI and machine learning as core technologies.” Neil Cybart / @neilcybart : Apple saw a quarterly record for the number of iPhone switchers (from Android) last quarter. Neil Cybart / @neilcybart : We are in a holding pattern here until Apple's call when management will give some commentary about the current quarter (and we should find out if the iPhone launch is a go for September). @thetranscript_ : $AAPL CFO: “During the quarter, we generated very strong operating cash flow of $26 billion, returned over $24 billion to our shareholders, and continued to invest in our long-term growth plans# Alexei Oreskovic / @lexnfx : Is this the worst rev decline ever for iPads? Down 19.8% year-over-year, from $7.2 billion to $5.8 billion. $AAPL Neil Cybart / @neilcybart : This probably won't get much attention, but Apple's SG&A (selling, general and administrative) is pretty much trending flat year-over-year. Apple is being very disciplined on expenses. Apple is the leanest company in Big Tech. Dan Ives / @divestech : Solid Apple results with the all important services beat front and center. Overall generally in line quarter with all focus around China commentary which was a source of strength in the quarter. This quarter takes a back seat to iPhone 15 drumroll for Sept..all focus on call 🍎 Stephen Nellis / @stephennellis : This is new for Cook, who has previously said little about generative AI specifically. Cook is acknowledging the company is spending on gen AI, with R&D spend is up $3.1 bln so far this year. Stephen Nellis / @stephennellis : Apple CEO @tim_cook says the company has been investing in generative AI research for years and that continued investment in the field is showing up in the company's increased R&D spending this year. Full story on that and Apple results below: https://www.reuters.com/... [image] Patrick McGee / @patrickmcgee_ : Apple posted a surprise profit in the June quarter, despite revenues falling, as the # of paying subscribers to ‘Apple services’ crossed 1bn — above 150mn from a year ago. Net profits rose 2.3% to $19.9bn. Wall St had expected they'd fall 3.6%. Margins: 44.5%, a June record [image] Avi Greengart / @greengart : You know that Apple's earnings aren't great when the press release highlights the active device installed base. You know that Apple is in an incredibly strong position when its active installed base of premium devices sets a new record during a tech downturn. Patrick McGee / @patrickmcgee_ : Amazon earned far more revenue than Apple last quarter — $134.4bn to $81.8bn — but Apple margins were 44.5%, so profits of $19.9bn were ~3x Amazon's. Gene Munster / @munster_gene : Overall revenue was inline. 1. Missed iPhone revenue by 1.4% (~50% of revenue) 2. Beat Services by 2% (~20% of revenue) 3. Missed iPad by 11% (~10% of revenue) 4. Beat Mac by 9% (~10% of revenue) 5. Inline with wearables (~10% of revenue) Gene Munster / @munster_gene : $AAPL said the magical phrase at the top of the June earnings release, stated the “installed base of active devices sets all-time record”. That comment means the Apple ecosystem is expanding is the most important update on the June quarter for long term investors. Forums: r/technews : Apple Finishes Dumping Intel Entirely, Touts Results r/technology : Tim Cook touts that Apple has been investing in generative AI tech ‘for years’ See also Mediagazer
Context & Ripple Effects
Apple’s services business had already become a meaningful counterweight to device cycles: it reported 860 million paying subscribers in the prior year’s services update, and services revenue continued growing in the quarter before this report. The latest results extend that arc, with a services revenue record and more than 1 billion paying subscribers despite a third straight quarter of total-sales decline.
The report also keeps the iPad weakness in view. A later quarter would show another steep iPad revenue decline, suggesting this was not simply a one-quarter offset to otherwise broad hardware momentum.
First-order effects
- Apple’s revenue contraction continues, but higher net income and record services revenue cushion the immediate financial impact of weaker hardware sales.
- iPad faces the clearest near-term pressure after its roughly 20% year-over-year revenue drop, while Apple’s services customers become a larger source of recurring revenue.
Second-order effects
- A larger services subscriber base gives Apple more scope to defend earnings through its installed base when device replacement demand is uneven, raising the importance of retention and service attachment.
- The reported record of iPhone switchers from Android increases pressure on rival handset ecosystems to limit defections through hardware, software, and service integration.
Third-order effects
- If services growth continues to offset uneven hardware categories, Apple’s results will become less dependent on unit sales and more on monetizing a large installed base.
- Vision Pro’s planned early-next-year launch points to a longer-term effort to add a new hardware platform, though this report does not establish whether it can materially change Apple’s revenue mix.
The trend: Large consumer-device platforms are increasingly using recurring services to stabilize earnings through cyclical hardware demand.