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Apple's (AAPL) Q1 Earnings Beat Estimates, Revenues Up Y/Y
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Apple (AAPL - Free Report) reported first-quarter fiscal 2024 earnings of $2.18 per share, which beat the Zacks Consensus Estimate by 4.31% and increased 16% year over year.
Net sales increased 2.1% year over year to $119.58 billion, which beat the Zacks Consensus Estimate by 1.66%.
Product sales (80.7% of sales) were almost flat year over year to $96.46 billion, driven by strong iPhone sales, partially offset by weak iPad and Wearables, Home and Accessories revenues. One less week of sales, the December 2023 quarter being a 13-week quarter in comparison to the year-ago quarter’s 14-week, also hurt top-line growth.
iPhone sales increased 6% from the year-ago quarter to $69.7 billion and accounted for 58.3% of total sales. iPhone sales beat the Zacks Consensus Estimate by 1.54%. Strong demand for iPhone 15 models drove year-over-year top-line growth.
Services revenues grew 11.3% from the year-ago quarter to $23.12 billion and accounted for 19.3% of sales. The figure lagged the consensus mark by 1.2%.
Apple now has more than 1 billion paid subscribers across its Services portfolio, more than double what it had four years ago. Paid subscriptions grew double-digits year over year in the reported quarter.
Geographic Details
America’s sales increased 2.3% year over year to $50.43 billion and accounted for 42.2% of total sales. The figure beat the Zacks Consensus Estimate by 1.21%.
Europe generated $30.4 billion in sales, up 9.8% on a year-over-year basis. The region accounted for 25.4% of total sales. Europe’s sales beat the consensus mark by 6.08%.
Rest of the Asia Pacific generated sales of $10.16 billion, up 6.6% year over year. The region accounted for 8.5% of total sales. The figure beat the consensus mark by 9.54%.
Japan’s sales of $7.77 billion increased 15% year over year, accounting for 6.5% of total sales. The figure beat the consensus mark by 8.69%.
Apple witnessed strong double-digit growth in many emerging markets, with all-time records in Malaysia, Mexico, The Philippines, Poland and Turkey. It also posted December quarter records in India, Indonesia, Saudi Arabia and Chile.
However, Greater China sales decreased 13% from the year-ago quarter to $20.82 billion, accounting for 17.4% of total sales. The figure lagged the Zacks Consensus Estimate by 10.72%.
Mac Sales Up, iPad & Wearables Decline
Non-iPhone revenues (iPad, Mac and Wearables) decreased 12.6% year over year on a combined basis.
Mac sales of $7.78 billion increased 0.6% from the year-ago quarter and accounted for 6.5% of total sales. The figure beat the Zacks Consensus Estimate by 0.16%.
Mac sales benefited from strong demand for M3-powered MacBook Pro models. Growing adoption among enterprises, including Target and India-based Zoho, drove Mac sales in the reported quarter.
Apple’s latest Vision Pro has garnered significant enterprise attention, with the likes of Walmart, Nike, Vanguard, Stryker, Bloomberg, and SAP investing in the device.
iPad sales of $7.02 billion declined 25.3% year over year and accounted for 5.9% of total sales. The figure beat the Zacks Consensus Estimate by 3.75%.
Wearables, Home and Accessories sales decreased 11.3% year over year to $11.95 billion and accounted for 10% of total sales. The figure beat the consensus mark by 6.05%.
Apple Watch’s adoption rate continues to grow rapidly. Nearly two-thirds of the customers who purchased the Apple Watch during the reported quarter were first-time customers.
Operating Details
Gross margin of 45.9% expanded 290 bps on a year-over-year basis. The gross margin expanded 70 bps sequentially due to a favorable mix.
Products’ gross margin expanded 280 bps sequentially to 39.4%. Services’ gross margin was 72.8%, up 190 bps sequentially.
Operating expenses rose 1.2% year over year to $14.48 billion due to higher selling, general & administrative expenses, which increased 2.7% year over year. Research & development expenses decreased 0.2% year over year.
Operating margin expanded 300 bps on a year-over-year basis to 33.8%.
Balance Sheet
As of Dec 30, 2023, cash & marketable securities were $172.58 billion compared with $162.1 billion as of Sep 30, 2023.
Term debt, as of Dec 30, 2023, was $106.04 billion, down from $105.29 billion as of Sep 30, 2023.
Apple returned nearly $27 billion in the reported quarter through dividend payouts ($3.8 billion) and share repurchases ($20.5 billion).
Guidance
Apple expects the March quarter’s (second-quarter fiscal 2024) revenues and iPhone revenues to be similar to that of the year-ago quarter’s figure after removing the additional $5 billion it generated due to pent-up demand for iPhone 14 and iPhone 14 Pro Max in the year-ago quarter.
Unfavorable forex is expected to hurt revenues by 2% on a year-over-year basis.
For the Services segment, Apple expects a double-digit growth rate, similar to the December-end quarter.
Gross margin is expected to be 46% in the second quarter of fiscal 2024. Operating expenses are expected to be between $14.3 billion and $14.5 billion.
Zacks Rank & Stocks to Consider
Apple currently carries a Zacks Rank #3 (Hold).
Shares of the iPhone maker have declined 3% in the past six months, underperforming the Zacks Computer & Technology sector’s return of 12.4%.
Image: Bigstock
Apple's (AAPL) Q1 Earnings Beat Estimates, Revenues Up Y/Y
Apple (AAPL - Free Report) reported first-quarter fiscal 2024 earnings of $2.18 per share, which beat the Zacks Consensus Estimate by 4.31% and increased 16% year over year.
Net sales increased 2.1% year over year to $119.58 billion, which beat the Zacks Consensus Estimate by 1.66%.
Product sales (80.7% of sales) were almost flat year over year to $96.46 billion, driven by strong iPhone sales, partially offset by weak iPad and Wearables, Home and Accessories revenues. One less week of sales, the December 2023 quarter being a 13-week quarter in comparison to the year-ago quarter’s 14-week, also hurt top-line growth.
iPhone sales increased 6% from the year-ago quarter to $69.7 billion and accounted for 58.3% of total sales. iPhone sales beat the Zacks Consensus Estimate by 1.54%. Strong demand for iPhone 15 models drove year-over-year top-line growth.
Services revenues grew 11.3% from the year-ago quarter to $23.12 billion and accounted for 19.3% of sales. The figure lagged the consensus mark by 1.2%.
Apple Inc. Price, Consensus and EPS Surprise
Apple Inc. price-consensus-eps-surprise-chart | Apple Inc. Quote
Apple now has more than 1 billion paid subscribers across its Services portfolio, more than double what it had four years ago. Paid subscriptions grew double-digits year over year in the reported quarter.
Geographic Details
America’s sales increased 2.3% year over year to $50.43 billion and accounted for 42.2% of total sales. The figure beat the Zacks Consensus Estimate by 1.21%.
Europe generated $30.4 billion in sales, up 9.8% on a year-over-year basis. The region accounted for 25.4% of total sales. Europe’s sales beat the consensus mark by 6.08%.
Rest of the Asia Pacific generated sales of $10.16 billion, up 6.6% year over year. The region accounted for 8.5% of total sales. The figure beat the consensus mark by 9.54%.
Japan’s sales of $7.77 billion increased 15% year over year, accounting for 6.5% of total sales. The figure beat the consensus mark by 8.69%.
Apple witnessed strong double-digit growth in many emerging markets, with all-time records in Malaysia, Mexico, The Philippines, Poland and Turkey. It also posted December quarter records in India, Indonesia, Saudi Arabia and Chile.
However, Greater China sales decreased 13% from the year-ago quarter to $20.82 billion, accounting for 17.4% of total sales. The figure lagged the Zacks Consensus Estimate by 10.72%.
Mac Sales Up, iPad & Wearables Decline
Non-iPhone revenues (iPad, Mac and Wearables) decreased 12.6% year over year on a combined basis.
Mac sales of $7.78 billion increased 0.6% from the year-ago quarter and accounted for 6.5% of total sales. The figure beat the Zacks Consensus Estimate by 0.16%.
Mac sales benefited from strong demand for M3-powered MacBook Pro models. Growing adoption among enterprises, including Target and India-based Zoho, drove Mac sales in the reported quarter.
Apple’s latest Vision Pro has garnered significant enterprise attention, with the likes of Walmart, Nike, Vanguard, Stryker, Bloomberg, and SAP investing in the device.
iPad sales of $7.02 billion declined 25.3% year over year and accounted for 5.9% of total sales. The figure beat the Zacks Consensus Estimate by 3.75%.
Wearables, Home and Accessories sales decreased 11.3% year over year to $11.95 billion and accounted for 10% of total sales. The figure beat the consensus mark by 6.05%.
Apple Watch’s adoption rate continues to grow rapidly. Nearly two-thirds of the customers who purchased the Apple Watch during the reported quarter were first-time customers.
Operating Details
Gross margin of 45.9% expanded 290 bps on a year-over-year basis. The gross margin expanded 70 bps sequentially due to a favorable mix.
Products’ gross margin expanded 280 bps sequentially to 39.4%. Services’ gross margin was 72.8%, up 190 bps sequentially.
Operating expenses rose 1.2% year over year to $14.48 billion due to higher selling, general & administrative expenses, which increased 2.7% year over year. Research & development expenses decreased 0.2% year over year.
Operating margin expanded 300 bps on a year-over-year basis to 33.8%.
Balance Sheet
As of Dec 30, 2023, cash & marketable securities were $172.58 billion compared with $162.1 billion as of Sep 30, 2023.
Term debt, as of Dec 30, 2023, was $106.04 billion, down from $105.29 billion as of Sep 30, 2023.
Apple returned nearly $27 billion in the reported quarter through dividend payouts ($3.8 billion) and share repurchases ($20.5 billion).
Guidance
Apple expects the March quarter’s (second-quarter fiscal 2024) revenues and iPhone revenues to be similar to that of the year-ago quarter’s figure after removing the additional $5 billion it generated due to pent-up demand for iPhone 14 and iPhone 14 Pro Max in the year-ago quarter.
Unfavorable forex is expected to hurt revenues by 2% on a year-over-year basis.
For the Services segment, Apple expects a double-digit growth rate, similar to the December-end quarter.
Gross margin is expected to be 46% in the second quarter of fiscal 2024. Operating expenses are expected to be between $14.3 billion and $14.5 billion.
Zacks Rank & Stocks to Consider
Apple currently carries a Zacks Rank #3 (Hold).
Shares of the iPhone maker have declined 3% in the past six months, underperforming the Zacks Computer & Technology sector’s return of 12.4%.
Shopify (SHOP - Free Report) , BlackLine (BL - Free Report) and Pinterest (PINS - Free Report) are some better-ranked stocks that investors can consider in the broader sector, each sporting a Zacks Rank #1 (Strong Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here.
Shopify shares have gained 22.6% in the past six-month period. SHOP is set to report its fourth-quarter 2023 results on Feb 13.
BlackLine shares have returned 10.1% in the past six-month period. BL is set to report its fourth-quarter 2023 results on Feb 13.
Pinterest shares have gained 34.1% in the past six-month period. PINS is set to report its fourth-quarter 2023 results on Feb 8.