Apple posted its fiscal third-quarter earnings on Thursday, surpassing Wall Street estimations with a 5% increase in overall revenue. Meanwhile, despite this positive performance, Apple’s shares remained steady in extended trading.
The company outperformed expectations for the quarter ending June 29, with an earnings per share (EPS) of $1.40, exceeding the LSEG consensus estimate of $1.35. Additionally, revenue reached $85.78 billion, surpassing the LSEG consensus of $84.53 billion.
iPhone revenue amounted to $39.30 billion, surpassing the LSEG consensus estimate of $38.81 billion. Mac revenue stood at $7.01 billion, slightly lower than the LSEG consensus estimate of $7.02 billion. iPad revenue totaled $7.16 billion, exceeding the LSEG consensus of $6.61 billion.
Revenue for Wearables, Home, and Accessories reached $8.10 billion, exceeding the LSEG consensus estimate of $7.79 billion. Services revenue totaled $24.21 billion, slightly surpassing the LSEG consensus of $24.01 billion. Moreover, the gross margin stood at 46.3%, slightly higher than the estimated 46.1% by LSEG consensus.
Apple foresees a similar trajectory of revenue growth in the current quarter. Luca Maestri, the company’s finance chief, mentioned in a call with analysts that Services are expected to uphold a growth pace of around 14%, in sync with the performance of the previous three quarters.
Operating expenditures for the ongoing quarter are estimated to range between $14.2 billion and $14.4 billion, with a forecasted gross margin falling between 45.5% and 46.5%.
In terms of net income, Apple reported $21.45 billion for the quarter, a notable improvement from the previous year’s $19.88 billion, or $1.26 per share.
Although the iPhone remains a pivotal business for Apple, constituting approximately 46% of total sales in the quarter, it witnessed a marginal 1% decline year over year in revenue. Tim Cook, Apple’s CEO, highlighted that the company experienced year-over-year growth on a constant currency basis.
Cook mentioned that Apple cannot currently quantify the positive sales impact from the newly introduced Apple Intelligence service until it begins shipping to customers later in the fall. However, he highlighted that the company has ramped up investments to prepare for the service’s launch.
The iPad segment showcased the strongest growth, surging by almost 24% year over year to $7.16 billion in revenue, buoyed by the release of new iPad models. The Mac division saw a 2% uptick in sales, amounting to $7 billion.
Under the ‘Wearables, Home, and Accessories’ category, encompassing Apple Watch, headphones, and HomePod home speakers, sales dipped by 2% to $8.10 billion for the quarter.
Apple’s Services sector, a key growth driver for the company, encompassing hardware warranties, Google revenue, and Apple’s content subscriptions, including Apple TV+, achieved $24.21 billion in sales, marking a 14% increase in line with expectations.
Despite hitting milestones like surpassing 1 billion paid subscriptions and reaching more active devices in various regions, Apple faced a 6% sales decline amounting to $14.72 billion in Greater China, which includes Taiwan and Hong Kong. This decline was attributed to intensifying competition from local rivals like Huawei in mainland China.
Looking ahead, Cook expressed confidence in Apple’s long-term prospects despite immediate challenges, such as market pressures in certain regions. Apple reported a significant expenditure of $32 billion on dividends and share repurchases during the quarter.
