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Apple (AAPL) to Report Q4 Earnings: What's in the Offing?

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Apple (AAPL - Free Report) is set to report its fourth-quarter fiscal 2023 results on Nov 2.

The company expects the to-be-reported quarter’s year-over-year revenue growth to be similar to that of the June quarter due to unfavorable forex of roughly 2%.

In fiscal third-quarter, net sales declined 1.4% year over year to $81.8 billion

The Zacks Consensus Estimate for fiscal fourth-quarter revenues is currently pegged at $88.82 billion, indicating a decline of 1.47% year over year.

Apple Inc. Price and EPS Surprise

Apple Inc. Price and EPS Surprise

Apple Inc. price-eps-surprise | Apple Inc. Quote


The consensus mark for earnings is currently pegged at $1.39 per share, unchanged over the past 30 days, indicating a 7.75% increase from the figure reported in the year-ago quarter.

Apple’s earnings beat the Zacks Consensus Estimate in three of the trailing four quarters, missing in the remaining one, the earnings surprise being 2.81% on average.

Let’s see how things have shaped up for the upcoming announcement.

iPhone Revenues to Grow From Higher Shipments

Apple’s fortunes are heavily reliant on the iPhone, which is by far its biggest revenue contributor. The device accounted for 48.5% of net sales in the last reported quarter, wherein sales decreased 2.4% year over year to $39.67 billion.

Apple expects iPhone’s year-over-year performance to accelerate from the June quarter. Our model estimates for fiscal fourth-quarter iPhone net sales are pegged at $45.997 billion, up 7.9% year over year.

Apple is expected to have shipped roughly 49 million iPhones in the fourth quarter of fiscal 2023, per our model.

Per the latest Canalys report on worldwide smartphone shipments, Apple’s market share was 17% in third-quarter 2023, lagging Samsung’s 20%.

Services Growth to Accelerate in Q4

For the fiscal fourth quarter, Services revenues are expected to have accelerated on a year-over-year basis compared with the June quarter.

In the fiscal third quarter, Services revenues grew 8.2% from the year-ago quarter to $21.21 billion and accounted for 25.9% of sales.

An expanding paid subscriber base has been a key catalyst for the Services business, which is riding on the increasing popularity of the App Store and an expanding installed base of devices.

Apple has more than 1 billion paid subscribers across its Services portfolio. App Store continues to grab the attention of prominent developers from around the world, helping the company to offer exciting new apps that drive traffic.

Services like Apple TV+, Apple Arcade, Apple News+, Apple Card, Apple Fitness+ and Apple One bundle are expected to have contributed to overall growth.

Apple TV+ has been gaining recognition due to award-winning shows like Ted Lasso. Apple’s impressive run at the award shows has been instrumental in driving recognition of Apple TV+ in the saturated streaming market currently dominated by the likes of Amazon (AMZN - Free Report) Prime Video, Netflix (NFLX - Free Report) and Disney’s (DIS - Free Report) Disney+.

However, that has not essentially turned into a market share gain for Apple TV+. According to 9TO5Mac, which cited a JustWatch report, Amazon Prime Video was #1 in terms of market share (22%) in the United States, trailed by Netflix (21%). Max, Disney+ and Hulu had 15%,12% and 11% market share, respectively. Apple TV+’s market share increased from 6% to 7%.

Our estimate for fiscal fourth-quarter Services net sales is pegged at $20.39 billion, indicating 6.3% year-over-year growth.

Currently, Apple has a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar.

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