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Apple (AAPL) Q4 Earnings Top Estimates, Revenues Increase Y/Y
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Apple (AAPL - Free Report) reported fourth-quarter fiscal 2022 earnings of $1.29 per share, which beat the Zacks Consensus Estimate by 2.38% and our estimate of $1.28 per share.
The reported figure increased 4% year over year.
Net sales increased 8.1% year over year to $90.15 billion, which beat the Zacks Consensus Estimate by 1.90% and our estimate of $88.22 billion. Unfavorable forex hurt revenues by more than 600 basis points (bps).
iPhone sales increased 9.7% from the year-ago quarter to $42.63 billion and accounted for 47.3% of total sales. However, the figure missed the consensus mark of $42.76 billion.
Our estimate for fiscal fourth-quarter iPhone sales was pegged at $45.30 billion.
iPhone sales were driven by strong demand for the iPhone 13 family of devices.
Services revenues grew 5% from the year-ago quarter to $19.19 billion and accounted for 21.3% of sales. The figure lagged the Zacks Consensus Estimate by 2.76%.
Our estimate for fiscal fourth-quarter Services revenues was pegged at $19.14 billion.
Apple now has more than 900 million paid subscribers across its Services portfolio, up 40 million sequentially and 155 million year over year.
Strong Americas & Rest of Asia Pacific Sales Aid Growth
Americas sales increased 8.1% year over year to $39.81 billion and accounted for 44.2% of total sales. The figure beat the Zacks Consensus Estimate by 2.35% and our estimate of $38.14 billion.
Europe generated $22.80 billion in sales, up 9.6% on a year-over-year basis. The region accounted for 25.3% of total sales. Europe’s sales beat the consensus mark by 4.58% and our estimate of $21.20 billion.
Greater China sales increased 6.2% from the year-ago quarter to $15.47 billion, accounting for 17.2% of total sales. The figure lagged the consensus mark by 3.81% and our estimate of $16.48 billion.
Japan’s sales of $5.70 billion missed the Zacks Consensus Estimate by 8.80% and our estimate of $6.05 billion. Japan’s sales decreased 4.9% year over year, accounting for 6.3% of total sales.
Rest of the Asia Pacific generated sales of $6.37 billion, up 22.7% year over year. The region accounted for 7.1% of total sales. The figure beat the consensus mark by 6.73% and our estimate of $6.35 billion.
Top-Line Details
Product sales (78.7% of sales) increased 9% year over year to $70.96 billion. Non-iPhone revenues (iPad, Mac and Wearables) increased 8.1% on a combined basis.
iPad sales of $7.17 billion declined 13.1% year over year and accounted for 8% of total sales. The figure missed the consensus mark by 5.89% and our estimate of $7.13 billion.
Mac sales of $11.51 billion increased 25.4% from the year-ago quarter and accounted for 12.8% of total sales. The figure beat the consensus mark by 27.73% and our estimate of $8.69 billion.
Wearables, Home and Accessories sales increased 9.8% year over year to $9.65 billion and accounted for 10.7% of total sales. The figure beat the Zacks Consensus Estimate by 4.46% and our estimate of $7.96 billion.
Apple Watch’s adoption rate continues to grow rapidly. More than two-thirds of the customers who purchased the Apple Watch during the reported quarter were first-time customers.
Operating Details
Gross margin of 42.3% expanded 10 basis points (bps) on a year-over-year basis.
However, the gross margin decreased 40 bps sequentially due to unfavorable forex.
Products’ gross margin contracted 190 bps sequentially to 34.5% due to unfavorable forex and revenues mix.
Services’ gross margin was 71.5%, down 110 bps sequentially, due to a different mix and unfavorable forex.
Operating expenses rose 15.9% year over year to $13.20 billion due to higher research & development and selling, general & administrative expenses, which increased 17.1% and 14.7%, respectively.
Operating margin contracted 90 bps on a year-over-year basis to 27.6%.
Balance Sheet
As of Sep 24, 2022, cash & marketable securities were $169.11 billion compared with $179.31 billion as of Jun 25, 2022.
Term debt, as of Sep 24, 2022, was $110.09 billion, up from $108.71 billion as of Jun 25, 2022.
Apple returned $28 billion in the reported quarter through dividend payouts ($3.7 billion) and share repurchases ($25.2 billion).
Guidance
Apple did not provide revenue guidance for the first quarter of fiscal 2023.
It expects year-over-year revenue growth to decelerate during the fiscal first quarter compared with the fiscal fourth quarter due to unfavorable forex of roughly 10%.
Moreover, Mac revenues are expected to be negatively impacted by forex. Apple expects Mac revenues to decline substantially year-over-year during the December quarter.
Services revenue growth is expected to be negatively impacted by challenging macroeconomic conditions, unfavorable forex, as well as weakness in digital advertising and gaming.
Gross margin is expected between 42.5% and 43.5% in the fiscal first quarter. Operating expenses are expected between $14.7 billion and $14.9 billion.
Zacks Rank & Stocks to Consider
Currently, Apple has a Zacks Rank #3 (Hold).
Apple shares have outperformed the Zacks Computer & Technology sector year to date. While AAPL shares have lost 19.3%, the Computer & Technology sector declined 34.7%.
Airbnb (ABNB - Free Report) , Super Micro Computer (SMCI - Free Report) and Blackbaud (BLKB - Free Report) are some better-ranked stocks that investors can consider in the broader sector. Super Micro sports a Zacks Rank #1 (Strong Buy), while Airbnb and Blackbaud carry a Zacks Rank #2 (Buy). All three stocks are set to report their quarterly results on Nov 1. You can see the complete list of today’s Zacks #1 Rank stocks here.
Shares of Airbnb and Blackbaud are down 32.2% and 32.8% year to date, respectively. Super Micro is up 52.5% over the same time frame.
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Apple (AAPL) Q4 Earnings Top Estimates, Revenues Increase Y/Y
Apple (AAPL - Free Report) reported fourth-quarter fiscal 2022 earnings of $1.29 per share, which beat the Zacks Consensus Estimate by 2.38% and our estimate of $1.28 per share.
The reported figure increased 4% year over year.
Net sales increased 8.1% year over year to $90.15 billion, which beat the Zacks Consensus Estimate by 1.90% and our estimate of $88.22 billion. Unfavorable forex hurt revenues by more than 600 basis points (bps).
iPhone sales increased 9.7% from the year-ago quarter to $42.63 billion and accounted for 47.3% of total sales. However, the figure missed the consensus mark of $42.76 billion.
Our estimate for fiscal fourth-quarter iPhone sales was pegged at $45.30 billion.
Apple Inc. Price, Consensus and EPS Surprise
Apple Inc. price-consensus-eps-surprise-chart | Apple Inc. Quote
iPhone sales were driven by strong demand for the iPhone 13 family of devices.
Services revenues grew 5% from the year-ago quarter to $19.19 billion and accounted for 21.3% of sales. The figure lagged the Zacks Consensus Estimate by 2.76%.
Our estimate for fiscal fourth-quarter Services revenues was pegged at $19.14 billion.
Apple now has more than 900 million paid subscribers across its Services portfolio, up 40 million sequentially and 155 million year over year.
Strong Americas & Rest of Asia Pacific Sales Aid Growth
Americas sales increased 8.1% year over year to $39.81 billion and accounted for 44.2% of total sales. The figure beat the Zacks Consensus Estimate by 2.35% and our estimate of $38.14 billion.
Europe generated $22.80 billion in sales, up 9.6% on a year-over-year basis. The region accounted for 25.3% of total sales. Europe’s sales beat the consensus mark by 4.58% and our estimate of $21.20 billion.
Greater China sales increased 6.2% from the year-ago quarter to $15.47 billion, accounting for 17.2% of total sales. The figure lagged the consensus mark by 3.81% and our estimate of $16.48 billion.
Japan’s sales of $5.70 billion missed the Zacks Consensus Estimate by 8.80% and our estimate of $6.05 billion. Japan’s sales decreased 4.9% year over year, accounting for 6.3% of total sales.
Rest of the Asia Pacific generated sales of $6.37 billion, up 22.7% year over year. The region accounted for 7.1% of total sales. The figure beat the consensus mark by 6.73% and our estimate of $6.35 billion.
Top-Line Details
Product sales (78.7% of sales) increased 9% year over year to $70.96 billion. Non-iPhone revenues (iPad, Mac and Wearables) increased 8.1% on a combined basis.
iPad sales of $7.17 billion declined 13.1% year over year and accounted for 8% of total sales. The figure missed the consensus mark by 5.89% and our estimate of $7.13 billion.
Mac sales of $11.51 billion increased 25.4% from the year-ago quarter and accounted for 12.8% of total sales. The figure beat the consensus mark by 27.73% and our estimate of $8.69 billion.
Wearables, Home and Accessories sales increased 9.8% year over year to $9.65 billion and accounted for 10.7% of total sales. The figure beat the Zacks Consensus Estimate by 4.46% and our estimate of $7.96 billion.
Apple Watch’s adoption rate continues to grow rapidly. More than two-thirds of the customers who purchased the Apple Watch during the reported quarter were first-time customers.
Operating Details
Gross margin of 42.3% expanded 10 basis points (bps) on a year-over-year basis.
However, the gross margin decreased 40 bps sequentially due to unfavorable forex.
Products’ gross margin contracted 190 bps sequentially to 34.5% due to unfavorable forex and revenues mix.
Services’ gross margin was 71.5%, down 110 bps sequentially, due to a different mix and unfavorable forex.
Operating expenses rose 15.9% year over year to $13.20 billion due to higher research & development and selling, general & administrative expenses, which increased 17.1% and 14.7%, respectively.
Operating margin contracted 90 bps on a year-over-year basis to 27.6%.
Balance Sheet
As of Sep 24, 2022, cash & marketable securities were $169.11 billion compared with $179.31 billion as of Jun 25, 2022.
Term debt, as of Sep 24, 2022, was $110.09 billion, up from $108.71 billion as of Jun 25, 2022.
Apple returned $28 billion in the reported quarter through dividend payouts ($3.7 billion) and share repurchases ($25.2 billion).
Guidance
Apple did not provide revenue guidance for the first quarter of fiscal 2023.
It expects year-over-year revenue growth to decelerate during the fiscal first quarter compared with the fiscal fourth quarter due to unfavorable forex of roughly 10%.
Moreover, Mac revenues are expected to be negatively impacted by forex. Apple expects Mac revenues to decline substantially year-over-year during the December quarter.
Services revenue growth is expected to be negatively impacted by challenging macroeconomic conditions, unfavorable forex, as well as weakness in digital advertising and gaming.
Gross margin is expected between 42.5% and 43.5% in the fiscal first quarter. Operating expenses are expected between $14.7 billion and $14.9 billion.
Zacks Rank & Stocks to Consider
Currently, Apple has a Zacks Rank #3 (Hold).
Apple shares have outperformed the Zacks Computer & Technology sector year to date. While AAPL shares have lost 19.3%, the Computer & Technology sector declined 34.7%.
Airbnb (ABNB - Free Report) , Super Micro Computer (SMCI - Free Report) and Blackbaud (BLKB - Free Report) are some better-ranked stocks that investors can consider in the broader sector. Super Micro sports a Zacks Rank #1 (Strong Buy), while Airbnb and Blackbaud carry a Zacks Rank #2 (Buy). All three stocks are set to report their quarterly results on Nov 1. You can see the complete list of today’s Zacks #1 Rank stocks here.
Shares of Airbnb and Blackbaud are down 32.2% and 32.8% year to date, respectively. Super Micro is up 52.5% over the same time frame.