Apple Cruises By With “Better Than Expected” Fiscal Q2 2023, Expects Revenue Decline To Continue
Apple (NASDAQ: AAPL) said on Thursday that its revenue decreased 3% to $94.8 billion in the first three months of the year, as consumers cut down on purchases of smartphones and laptops due to recession fears.
The company’s revenue was somewhat higher than what Wall Street projected at $92.96 billion, but it was the iPhone maker’s second consecutive quarterly revenue decline. Apple’s net income declined more than 3% year on year to almost $24.2 billion.
This translates to $1.52 earnings per share, also beating the $1.43 per share expected on the street.
The firm then attempted to placate investors by announcing share buybacks of up to $90 billion.
Apple CEO Tim Cook stated that the company achieved “a March quarter record for iPhone [sales] despite the challenging macroeconomic environment” and that the installed base of active devices reached an all-time high.
Apple also set an all-time quarterly services revenue record of $20.9 billion. Apple’s services division, which includes Apple Music and Apple TV+, is a growing revenue engine for the company that is less cyclical than hardware sales. Apple now has more than 975 million paid subscriptions across its services, up 150 million in a year, according to CFO Luca Maestri on Thursday’s analyst call.
Meanwhile, product revenue declined to $73.9 billion from last year’s $77.5 billion. Gross margin ended at 44.3%, just slightly beating the expected 44.1%.
According to IDC, the highlight of Apple’s report was iPhone sales, which increased over the previous quarter despite the fact that the whole smartphone market lost roughly 15% during the same period.
IPhone revenue grew 2% in the fiscal quarter that ended April 1, indicating that the product’s parts shortages and supply chain concerns, which had plagued it for several years — including an iPhone production shutdown late last year — had finally subsided.
Apple’s Mac and iPad divisions fared poorly. Last quarter, the company warned that both business sectors would decrease, owing in part to parts shortages, but they fell worse than projected.
Apple’s Mac sales dropped 31% to slightly over $7.17 billion. However, this is a difficult comparison to the previous year, when Apple was still benefiting from the end of a PC sales pandemic and a shift to its own chips that offer longer laptop battery life.
“There’s really two reasons for that,” Cook said. “One is the macro situation in general. And the other is where we’re still comparing to the very difficult compare of the M1 MacBook Pro 14 and 16-inch from the year-ago quarter.”
In an interview with CNBC, Cook said that the quarter was “better than we expected.”
Apple did not issue explicit guidance, continuing a pattern that dates back to 2020, when the Covid-19 pandemic began. On a call with analysts, management typically provides some data points. However, Maestri stated that the business anticipates overall revenue to fall by around 3% in the current quarter.
“We expect our June quarter year-over-year revenue performance to be similar to the March quarter assuming that the macroeconomic outlook does not worsen from what we are projecting today for the current quarter,” Maestri said on a call with analysts.
Cook was upbeat about Apple’s prospects in India during his visit there last month, where he established Apple stores and talked with lawmakers.
“The switcher and first-time buyer metrics look very good there for India,” Cook said. The word “switcher” is used by Apple to describe first-time iPhone buyers who previously owned Android handsets.
Cook also stated that Apple does not intend to initiate layoffs in the manner that other major technology companies did in the past year. “I view that as a last resort, and so mass layoffs are not something we’re talking about at the moment,” he said.
Apple last traded at $173.94 on the Nasdaq.
Information for this briefing was found via CNN, CNBC, and the sources mentioned. The author has no securities or affiliations related to this organization. Not a recommendation to buy or sell. Always do additional research and consult a professional before purchasing a security. The author holds no licenses.
