Apple missed sales projections in key product categories, such as the company’s iPhone division and services, but its fiscal fourth-quarter results topped Wall Street expectations in terms of revenue and earnings per share.
Apple’s fiscal fourth-quarter results, which were released on Thursday, exceeded Wall Street projections in terms of revenue and earnings per share.
However, Apple fell short of revenue projections in key product categories, such as the iPhone business and services, for the corporation.
In late trading, Apple shares increased by more than 1%.
According to Refinitiv consensus estimates, Apple performed as follows:
• Revenue: $90.15 billion vs. $88.90 billion projected, up 8.1% annually; • EPS: $1.29 vs. $1.27 est., up 9.67% annually; • iPhone revenue: $42.63 billion vs. $43.21 billion estimated, up 9.67% annually
• Mac revenue was $11.51 billion compared to the estimated $9.36 billion, up 25.39% year over year. • iPad revenue was $7.17 billion compared to the estimated $7.94 billion, down 13.06% year over year. • Other products revenue was $9.65 billion compared to the estimated $9.17 billion, up 9.85%. • Services revenue was $19.19 billion compared to the estimated $20.10 billion, up 4.98%. • Gross margin was 42.3% compared to the estimated 42.1%
For its first fiscal quarter, which ends in December and includes Apple’s busiest shopping season of the year, Apple did not offer any formal guidance. Since 2020, it hasn’t given any advice, citing uncertainty.
However, during the company’s results conference, Apple CFO Luca Maestri provided investors with a few data points that briefly sent the price down.
According to him, December’s overall year-over-year sales growth would be slower than the 8.1% saw in the third quarter of 2017. He continued by saying that, on an annual basis, Mac sales will actually fall in the December quarter. Additionally, he predicted that the quarter’s services would increase year over year, but that the macroeconomic situation would impede this growth.
Maestri stated, “We’re not giving revenue forecast, but we are offering some directional information.
Tim Cook, the CEO of Apple, told CNBC that if it weren’t for the strong dollar, the company’s revenue would have climbed by “double-digits” during the quarter. In Apple’s fiscal year 2022, total revenues increased 8% to $394.3 billion.
Cook told CNBC’s Steve Kovach that the foreign exchange headwinds were more than 600 basis points for the quarter. Therefore, it was important. Without the foreign exchange headwinds, we would have had double-digit growth.
Cook admitted to CNBC that Apple’s recruiting rate has slowed. In anticipation of a potential recession and as financing rates increase, other IT businesses are seeking to make cuts.
“We are making strategic hires. Therefore, we have halted the hiring process, Cook stated.
Although sales of Apple’s iPhones climbed by nearly 9% annually, they fell short of analyst estimates. Analysts are keenly examining data from Apple’s September quarter, which included 8 days of sales of the iPhone 14, to see whether buyers are upgrading to more costly versions or whether the new smartphones are likely to maintain greater sales through Apple’s fiscal 2023.
Despite indications that other smartphone manufacturers are having trouble keeping up with a recent drop in demand, Cook claimed that Apple’s performance in phone sales was strong. He also claimed that the company saw an increase in “switchers,” or customers who switched from Android to an Apple phone. He continued by saying that there was a limited supply of the company’s premium phones, the iPhone 14 Pro.
If you look at third party assessments of what the smartphone sector accomplished, we definitely opposed the trends on the phone, Cook stated.
After multiple quarters in which supply bottlenecks hampered Apple’s sales, Cook claimed that supply concerns didn’t have a substantial impact on the company during the time. Cook stated to CNBC that some memory chips were cheaper.
Apple’s services division also below expectations.
Just under 5% growth was recorded by Apple’s services division during the quarter, a marked drop from the quarter before, when 12% growth was announced.
For the fiscal year, Apple services increased by little more than 14% to $78.13 billion, which was a lower growth rate than the 16% annual rise in 2021 and significantly slower than the 27% growth in services in 2020.
Apple’s online services like Apple Music and Apple TV+, sales from the App Store, hardware warranties, and search agreements with firms like Google are just a few of the many lines of commerce that make up the company. Apple claimed to have 900 million total subscriptions, including those for apps purchased from its App Store.
Apple just raised the cost of Apple Music and Apple TV+, while the price hikes really began in the December quarter.
Cook said that the price hikes were “disconnected” from the effectiveness of Apple’s services.
Cook explained, “Well, if you look at the pricing hikes as an example, Music, the cost of licencing has grown.
He continued by saying that now that Apple TV+ offers more programming, Apple believes the device to be more value.
Investors usually approve of Apple’s entry into the services sector since the offerings are more lucrative than the company’s hardware and frequently generate recurring income.
A few positive aspects of Apple’s report were included. Even though statistics from component suppliers, chipmakers, and rival PC companies throughout the quarter pointed to a big drop in laptop and desktop sales following two boom years during the epidemic, Mac sales were up over 25% to $11.51 billion.
Additionally, Apple’s Other Products division, which includes the Apple Watch and AirPods, witnessed yearly growth and above Wall Street forecasts. According to several experts, Apple’s wearables would most certainly suffer if recessionary worries reduced discretionary spending. To $9.65 billion, that firm saw an almost 10% yearly growth.
The iPad is Apple’s smallest individual business segment and suffered a roughly 10% year-over-year decline due to supply concerns. Just after the September quarter ended, the corporation just announced new models in October, which may increase sales. Cook acknowledged that the comparison was challenging because Apple delivered new iPads in September of the previous year.
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