Apple, Inc. (AAPL) Q3 2023 Earnings Call Aug. 03, 2023
Here is a summary of the AAPLE earnings call - you can hear the full call (including Q&A) on the audio above.
Timothy Cook (CEO & Director) Opening remarks
Apple Inc. has recently reported robust revenue of $81.8 billion for the June quarter, surpassing expectations.
This success is largely attributable to substantial iPhone sales in emerging markets, including India, Indonesia, Mexico, the Philippines, Poland, Saudi Arabia, Turkey, and the UAE, resulting in total revenue records for the June quarter. Further, revenue records were also set in France, the Netherlands, Austria, and other regions.
Despite ongoing macroeconomic challenges, including a 4 percentage point hit from foreign exchange headwinds, Apple’s growth has remained steady when compared to the prior year's quarter.
The company continues to innovate and explore new possibilities, highlighted by recent groundbreaking announcements at the Worldwide Developers Conference (WWDC), including new Mac models and the introduction of spatial computing.
A highlight of the event was the unveiling of the Apple Vision Pro, a revolutionary new product built on years of Apple-specific innovation.
Touted as the most advanced personal electronic device ever created, it has been received positively by the press, analysts, developers, and content creators.
In terms of product-specific results, iPhone revenue for the quarter was $39.7 billion, slightly down from the previous year due to currency fluctuations.
However, the iPhone 14 lineup has been lauded for its battery life, health features, larger screen size, and superior camera system.
Mac sales generated $6.8 billion in revenue, showing a 7% YoY decrease, though Apple is excited about the transition to their proprietary silicon and the release of the new 15-inch MacBook Air, M2 Max and M2 Ultra Mac Studios, and M2 Ultra Mac Pro.
iPad sales were $5.8 billion, down 20% YoY due to the timing of the iPad Air launch last year.
Despite this, the iPad's versatility and value are appreciated by customers.
Meanwhile, the Wearables, Home, and Accessories segment generated $8.3 billion in revenue, up 2% YoY.
Apple’s services experienced an exciting quarter, reaching a record revenue of $21.2 billion, an 8% YoY increase.
Apple Pay and Apple Card have continued to be popular among customers, and the Apple TV+ platform has received numerous award nominations and wins.
Retail has played a crucial role in Apple's customer service strategy, with the opening of an online store in Vietnam and the redesign of their first-ever store in Virginia.
Additionally, Apple strives to create inclusive technology with features catering to cognitive, vision, hearing, and mobile accessibility.
Apple remains committed to user privacy, exemplified by the updates to Safari Private Browsing, Communication Safety, and Lockdown Mode.
The company has also increased its commitment to the Racial Equity and Justice Initiative to over $200 million.
Furthermore, Apple continues to focus on environmental sustainability, partnering with Acumen to improve livelihoods in India through clean energy and maintaining its goal of being carbon neutral by 2030.
Education remains a priority for Apple, evidenced by the expansion of its Learning Coach program, training educators to maximize the potential of Apple technology in classrooms.
Graduates from Apple's app developer academies worldwide are also being celebrated.
In summary
Apple continues to champion innovation and is determined to make a positive impact on the world, fostering creativity and customer-centric practices.
Despite global macroeconomic challenges, the company's focus remains on pushing the boundaries of what's possible, planning for the long term, and placing the customer at the center of its operations.
Luca Maestri - CFO & SVP
June quarter revenue was $81.8 billion, a 1% decrease from last year, impacted by 4 percentage points of negative effect from foreign exchange.
On a constant currency basis, revenue showed year-over-year growth.
Europe and Greater China achieved June quarter records.
Products revenue reached $60.6 billion, a 4% drop from last year due to FX headwinds and a varied macroeconomic environment.
Installed base hit an all-time high across all geographic segments.
Services revenue recorded an all-time high of $21.2 billion, showing an 8% growth year-over-year and double digits in constant currency.
Company gross margin was at 44.5%, the highest level for a June quarter.
Operating expenses were $13.4 billion, decelerating from the March quarter.
Net income of $19.9 billion, diluted earnings per share of $1.26, and operating cash flow of $26.4 billion were achieved.
iPhone revenue stood at $39.7 billion, a 2% decrease year-over-year.
Mac revenue was $6.8 billion, down 7% year-over-year, but with strong upgrade activity and new customer acquisition.
iPad revenue was $5.8 billion, a 20% drop year-over-year.
Wearables, Home and Accessories revenue increased by 2% year-over-year to $8.3 billion.
The company reached 1 billion paid subscriptions across services on its platform, a milestone achievement.
Cash position and capital return program ended the quarter with over $166 billion.
Over $24 billion was returned to shareholders during the quarter.
Expectations for the September quarter: year-over-year revenue performance similar to the June quarter.
Anticipate iPhone and Services year-over-year performance to accelerate from June quarter, while revenue for Mac and iPad will decline by double digits year-over-year.
Forecasting gross margin to be between 44% and 45%, OpEx to be between $13.5 billion and $13.7 billion.
Board declared a cash dividend of $0.24 per share of common stock payable on August 17, 2023.
Anne Chapman
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