Apple remains the most resilient FAANG company. While other big tech companies (like Alphabet, Microsoft, and Facebook) report gloomy news, Apple managed to set new records, increase the number of Android-to-iPhone switches, but still fell short of expectations.
The company released its fourth-quarter results on Thursday night.
Decent results in a terrible week in tech
Overall, Apple's quarterly results were okay in a terrible tech week. Total sales hit a new record of $90.100 billion, up 8% year-over-year on earnings of $1,29 per share.
Wall Street consensus expectations were around $88.900 billion at $1,27 a share. (It should be noted that Apple's new Morgan Stanley analyst Erik Woodring's estimates came close to everyone.) Gross margins reached 42,3%.
However, the relative weakness of some segments speaks to the challenges we all face. “We are still living in unprecedented times,” CEO Tim Cook said, citing economic challenges, the war in Ukraine, COVID-19 and weather-related crises. "The world is still unpredictable."
Annually, revenues reached a new record of €394.3 billion, up 8%.
Despite the difficulties, net sales increased in all regions except Japan, with new records in India. Apple also increased revenue in all segments except iPad, although the rate of growth in some areas seems to fluctuate.
Strong dollar is not good everywhere
Looking ahead, company executives seemed as confident as anyone in such a feverish economic environment. "Revenue performance will slow in the December quarter," they warned, citing currency fluctuations as a major hurdle.
In a more stable monetary environment in which currency issuance would not have reduced revenue by 600 basis points, Apple would have seen revenue growth of more than 14% year over year.
As it stands, for the next quarter, management has suggested 8% year-over-year growth. It may help that Apple's December quarter is a week longer than usual.
What happened to iPhone sales?
iPhone sales were weaker than expected, but the slight weakness was more than offset by strong Mac sales. The company no longer releases figures, but reported iPhone sales of €42,600 billion, up 9,7%, but slightly below consensus expectations of €43,400 billion in sales. That's still way ahead of the smartphone industry as a whole: Apple is driving market share by comparison.
We have heard speculation that consumers buying iPhones are choosing to invest in Pro devices, above the standard range, suggesting that the overall sales figures may have declined slightly, in line with the general industry trend. (This is offset by a higher average spend per user.)
"We had three of the top four smartphones in the US, the UK, the top three in urban China, the top six in Australia, four of the top five in Germany and the top two in Japan," he said. . “Customer satisfaction with iPhone continues to be very, very strong at 98%.
"We're very pleased with our performance in Q14 and certainly the start of this generation. I would suggest we're going to be limited for a while on the 14 Pro and XNUMX Pro Max, but we're working very hard to try to remedy that." Cook said.
Services revenue is growing, the pace is slowing
Service revenues reached $19.200 billion, up 5%. Analysts were disappointed, given the double-digit growth we've seen in the category so far. They had budgeted $20.100 billion.
The good news is that Apple now has more than 900 million subscribers to its services, up from 155 million in the last 12 months. Apple CFO Luca Maestri noted that advertising and digital games were weak.
Apple recently increased the prices of some of its services. He claims this reflects higher levels of music royalties.
This decision, combined with what appears to be slowing the pace of growth in the segment, suggests that the company will soon have to address churn as consumers face multiple challenges. Although Apple explained that amid stable currency trading, the segment would have seen double-digit growth.
It's worth noting that Apple is expected to expand its catalog of sports entertainment programming available on TV+, which could help both increase subscriptions and mitigate churn.
Mac sales: Apple's best quarter ever
Mac sales soared 25% to €11.5 billion. "It was the best quarter we've ever had in the history of the company," Cook said.
He said a backlog of Mac orders that the company was unable to fulfill in the third quarter due to Covid-related factory closures helped boost Apple's fourth quarter. But he also pointed to strong sales since the MacBook Air M2's introduction.
Fall in iPad sales
iPad revenue was $7.200 billion. That is 13,1% less. To explain this, Cook tried to argue that while the new iPads were introduced in time to impact last year's quarter results, that wasn't the case this year, with the iPads introduced in October.
One bright spot highlighted by Apple management: The iPad installed base is now at an all-time high, and more than half of those who bought iPads during the quarter were new to the product.
Apple Watch, AirPods and more
Clothing and accessories reached 9.600 billion dollars, 9,8% more. Cook confirmed that the new Apple Watch Ultra was popular and admitted that supply of the device remains limited.
Strong green shoots for future growth
Beyond the standard numbers, Apple added some very important nuggets of information. Continue to generate healthy sales from people who discover your offers. More than 50% of iPad sales and "more than two-thirds" of Apple Watch sales went to consumers who had never owned either product before.
It also generated record sales in India and higher revenues in China. Sales also doubled in Thailand, Vietnam, Indonesia and Mexico, showing that the company is focused on expanding its markets.
What an analyst says
“Like other big tech companies, even Apple is being negatively impacted by a deteriorating macroeconomic backdrop and ongoing supply chain issues, though it has been more successful in navigating this challenging environment,” said Jesse Cohen, principal analyst at Apple. Investment. com
What is the next step ?
From the balance sheet, it's clear that Apple continues to invest in the next big thing or things. Research and development spending reached $6700 billion in the quarter, compared with $5700 billion a year ago. Spending in this area reached €26.200 billion, compared to €21.900 billion. It's hard not to imagine that Apple is working on something, especially since the company continues to make "one acquisition a month," according to Cook.
“As we head into the holiday season with our most powerful lineup, we lead by our values in every action we take and every decision we make,” Cook said. "We are deeply committed to protecting the environment, ensuring user privacy, improving accessibility, and creating products and services that can unleash the full creative potential of humanity.
Investors get...
Apple's board of directors declared a cash dividend of 23 cents per company common share.
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