Apple reports record Q3 revenue of $83B, up 2% YoY, vs $82.8B est., net income down 11% to $19.4B, iPhone revenue up 3% to $40.7B, Mac revenue down 10% to $7.4B

iPhone and Services drive June quarter record revenue — Active installed base of devices reaches all-time high for all major product categories

Apple 2022-07-29

Context & Ripple Effects

Apple’s June-quarter revenue has climbed from the $53.8B reported in Q3 2019 to $81.4B in Q3 2021, when iPhone sales and Services were also central to the result. The latest quarter extends the revenue record while showing a much slower growth rate and lower net income.

The all-time-high active installed base gives added weight to the stated role of iPhone and Services: Apple is reporting growth from its device ecosystem even as Mac revenue contracts.

First-order effects

Apple beat the cited revenue estimate as iPhone and Services drove the quarter, while Mac revenue fell 10% to $7.4B.
Net income declined 11% to $19.4B despite record revenue, separating top-line expansion from profit growth in the reported quarter.

Second-order effects

The Mac decline makes Apple’s near-term sales mix more dependent on iPhone and Services, whose contribution offset weakness in the computer business.
An all-time-high installed base increases the commercial importance of services revenue tied to Apple’s existing device users rather than to Mac sales alone.

Third-order effects

If this mix persists, Apple’s growth narrative will increasingly be judged by revenue generated across its installed base, not solely by quarterly hardware-category performance.
The contrast with Q3 2021’s 36% revenue growth points to a more mature scale of growth, with category mix and profitability becoming more consequential measures than headline revenue records.

The trend: Apple is moving toward an installed-base-led model in which Services and iPhone performance carry more of the company’s growth profile as individual hardware categories diverge.

Discussion

@emilychangtv Emily Chang on x
Just spoke to Apple CEO @tim_cook who told me: - Apple will continue to invest through downturn but be “deliberate” in spending decisions. - Expects revenue to accelerate in Sept. despite “some softness in some areas.” - Saw “significant improvement” in China in supply/demand
@ophirgottlieb Ophir Gottlieb on x
$AAPL... wow Apple CFO Says: * Seeing No Demand Slowdown For iPhones * Expect Revenue Growth To Accelerate In Current Quarter Vs June Quarter Rate
@stevekovach Steve Kovach on x
Just got off the phone with Tim Cook. On hiring: he says Apple will be “deliberate” in hiring. But wouldn't call it a slow down.
@stevekovach Steve Kovach on x
On that 10% fall in Mac sales yoy: Cook told me supply constraints and foreign exchange to blame.
@bleedsixcolors @bleedsixcolors on x
The Mac's been on quite a run but it was down 10% year over year, the first drop in more than two years. Supply constraints will probably factor in here. https://twitter.com/...
@neiltwitz Neil Shah on x
@Apple has “multiple profitable billion dollar” lines & is best positioned in the entire tech industry to continue hiring & attract talent from other firms which are grappling with uncertainty & layoffs. That is what @tim_cook means by “deliberately”!! https://twitter.com/...
@benbajarin Ben Bajarin on x
And another record quarter for Apple. https://twitter.com/...
@patrickmcgee_ Patrick McGee on x
@tim_cook @Apple Tim Cook asked about AR (nice try as always): “We're we're thrilled right now to have over 14,000 AR kit apps in the App Store, and they're providing incredible AR experiences for millions of people.”
@bleedsixcolors @bleedsixcolors on x
Everything about $AAPL is context. This was a $83B revenue quarter. It was also kind of “meh” - up 2% YOY. That's “meh” in a way only Apple can be “meh.” https://twitter.com/...
@neilcybart Neil Cybart on x
Apple's “Guidance” - Revenue growth will accelerate next quarter despite a 600 bp yoy impact from FX. - Services revenue growth to decelerate further. Oh? - Gross margin commentary (41.5% to 42.5%) is weak but FX is the driver.
@charliebilello Charlie Bilello on x
Apple Revenue (Billions) 2022(est): 393 2021: 378 2020: 294 2019: 268 2018: 266 2017: 229 2016: 216 2015: 234 2014: 183 2013: 171 2012: 157 2011: 108 2010: 65 2009: 43 2008: 37 2007: 25 2006: 19 2005: 14 2004: 8.3 2003: 6.2 2002: 5.7 2001: 5.4 2000: 8.0 1999: 6.1 1998: 5.9 $AAPL
@carnage4life Dare Obasanjo on x
Google, Apple, Microsoft and Amazon are effectively recession proof based on their earnings where they've all grown double digits in key already large businesses while everything falls apart around them. https://twitter.com/...
@stevekovach Steve Kovach on x
On supply constraints: Cook told me the impact was LESS than the $4 billion - $8 billion he warned about last quarter. Although would not say precisely how bad it was.
@chandrarsrikant Chandra R. Srikanth on x
Apple does not provide a country-wise split of its revenues but the “Rest of Asia-Pacific Region”, which includes India, reported revenues of $6.15 billion for the quarter ended June 25, 2022, a 14 percent increase from $5.4 billion in the year-ago period.
@benbajarin Ben Bajarin on x
Another important observation within these macro-economic concerns. Businesses with the most diverse revenue streams (ideally across different market segments) can weather economic down turns better.
@carnage4life Dare Obasanjo on x
Looks like the greatest American companies in big tech are... (•_•) ( •_•)>⌐■- ■ (⌐■_■) ...MAGA
@jimcramer Jim Cramer on x
i say own it, don't trade it because if you listen to Apple's conference call you will know this company is simply a cut above all others
@carnage4life Dare Obasanjo on x
This earnings season has really made clear that the companies in FAAMNG aren't equal. Apple's moat and customer loyalty with the iPhone is so significant that their revenue was mostly impacted by supply chain issues not reduced demand. They expect faster revenue growth in Q3. 🤯 h…
@patrickmcgee_ Patrick McGee on x
Tim Cook on iPhone: “We set a June quarter record for both revenue and switchers to iPhone with its advanced performance capability, and ease of use.” (CFO Maestri tells me “switchers” — people coming from Android - saw double-digit growth)
@benbajarin Ben Bajarin on x
Important observation as Apple continues to defy macro concerns (just like they did in 08-09 economic downturn). The premium/high-end segments of the market are not as susceptible to downturns as the mid and low-end. Apple may see some pullback, but unlikely to be hit as hard.
@joannastern Joanna Stern on x
“We didn't have enough product to test the demand,” Cook says of impact of inflation and other macroeconomic trends on iPad and Mac in last quarter. A different story from Apple than from Microsoft / Intel this week...
@jason_kint Jason Kint on x
At this point, iOS value proposition to “switchers” who care about privacy is light years ahead of Google based on the academic study out of Vanderbilt showing Google passively mines your android data 24/7 for its own ad business exploitation. https://twitter.com/...
@trengriffin Tren Griffin on x
“Apple said it spent over $28 billion on share buybacks and dividends during the quarter.” Can you name a large Apple shareholder that didn't sell any shares? https://www.cnbc.com/...
@divestech Dan Ives on x
Picasso-like quarter from Cupertino. Demand holding up in this economic storm. China numbers impressive. Another hall of fame moment for Tim Cook. Important data point for tech sector in jittery tape. Guidance commentary on call.
@munster_gene Gene Munster on x
* $AAPL - Impressive results. Apple beat the iPhone by 5% which surprised me given the discounting in China. Also a sign of how dependent the world is on the iPhone. https://twitter.com/...
@neilcybart Neil Cybart on x
Maybe just me but Cook doesn't sound too comfortable talking about advertising ins and outs. It's not a big business for Apple today. Probably doesn't get much talk space during executive meetings. Question remains if that will change (I think yes, but that's another discussion).
@neilcybart Neil Cybart on x
Analyst asks Cook about Apple's role in advertising given ATT. Cook: We want to empower our users and care about their privacy. We do offer search ads. (Not surprisingly, Cook didn't take the bait. No hints on Apple's role in the ad market.)
@ron_miller Ron Miller on x
This is a crucial piece of Apple's business and it needs to continue to grow as hardware loses steam. https://twitter.com/...
@epro Emil Protalinski on x
$AAPL is up after hours despite Mac, iPad, and accessories down because its money-maker (iPhone) is up and its future money-maker (Services) is up https://twitter.com/...
@jimcramer Jim Cramer on x
Own Apple don't trade it
@neilcybart Neil Cybart on x
Remarkable how Apple nearly grew revenue in Greater China in 3Q22 despite the COVID lockdowns. $14.6B of revenue vs. $14.8B last year. Speaks to very strong iPhone results in the region in the second half of the quarter.
@neilcybart Neil Cybart on x
Very few analyst questions about China on Apple's earnings call. Been that way for a number of quarters now. Interesting.
@trungtphan Trung Phan on x
Big Tech earnings, explained [Meme: Virgin Zuck - Chad Tim]
@lapcatsoftware Jeff Johnson on x
“Tim Cook said Apple has 816 million current paid subscriptions, which includes anyone who subscribes to an app sold on the Apple App Store” Tim considers your subscribers to be Apple's subscribers. https://twitter.com/...
@stroughtonsmith Steve Troughton-Smith on x
You can tell Apple financial call analyst ‘questions’ are just PR talking points by how nobody has asked about the potential hit to services revenue and platform in general by antitrust regulation around the world, likely Apple's biggest existential crisis in decades 🤷‍♂️
@divestech Dan Ives on x
This is another trophy case moment for Cook and Apple given the macro. Demand holding firm and iPhone 14 product cycle on the way. China down only 1% was a shocker given shutdowns during quarter. Positive call. Combining this with Amazon print, tech bulls will sleep well tonight
@divestech Dan Ives on x
The all-important China region posted revenues of $14.60 billion coming in just below their year-ago performance of $14.76 billion which we view as a Top Gun Maverick type feat for Cook & Co. given the ongoing COVID shutdown and speaks to the overall demand story seen with Apple
@neilcybart Neil Cybart on x
Apple margins are taking a hit (as expected). FX & inflation can't be offset completely. However, a 43.3% gross margin is still very good. Suggests Apple is not afraid to push price increases. That is important as it implies Apple revenue growth isn't coming from cutting prices.
@neilcybart Neil Cybart on x
Apple: We had a record number of Android switchers to iPhone. (All data points suggest iPhone is taking share in the smartphone space.)
@anthony Anthony DeRosa on x
Apple's profit falls about 11%, the worst quarter since the July-through-September period in 2020, but iPhone sales remain resilient $AAPL https://www.wsj.com/...
@mingchikuo @mingchikuo on x
Apple has seen “significant improvement” in China in supply/demand. https://twitter.com/...
@neilcybart Neil Cybart on x
Here are Apple's granular 3Q22 results: - iPhone revenue: $40.7B (my estimate: $39.9B) - Services: $19.6B (vs. my $20.1B) - Wearables / Home: $8.1B (vs my $9.4B) - Mac: $7.4B (vs my $8.9B) - iPad: $7.2B (vs my $7.6B) Good iPhone numbers. Mac & iPad likely hit by supply issues.
@samifathi_ Sami Fathi on x
Damn. Apple's Tim Cook said Mac supply was so limited this quarter that they couldn't even test demand. Very tough supply chain hitting the Mac. $AAPL
@neilcybart Neil Cybart on x
Apple being very careful not to call a bottom in the silicon shortage but Cook's language suggests things are improving.
@markgurman Mark Gurman on x
Pretty sure deliberate and slowing are the same thing in this context. But of course some will bend over backwards to try to spin the slowdown as overblown. The reality is that it's absolutely more aggressive and widespread than Apple is letting on with its careful wording. https…

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