Apple reported its fiscal first-quarter earnings on Thursday, exceeding analyst expectations for both revenue and earnings. However, a notable 13% decline in sales in China, one of its crucial markets, sent Apple stock shares tumbling more than 4% in extended trading as concerns over iPhone sales emerged.
Here’s a breakdown of Apple’s performance compared to consensus expectations from LSEG (formerly Refinitiv) for the quarter ending December 30:
- Earnings per share: $2.18 vs. $2.10 expected
- Revenue: $119.58 billion vs. $117.91 billion expected
Product lines’ performance compared to LSEG expectations:
- iPhone revenue: $69.70 billion vs. $67.82 billion expected
- Mac revenue: $7.78 billion vs. $7.73 billion expected
- iPad revenue: $7.02 billion vs. $7.33 billion expected
- Other Products revenue: $11.95 billion vs. $11.56 billion expected
- Services revenue: $23.12 billion vs. $23.35 billion expected
- Gross margin: 45.9% vs. 45.3% expected
Apple’s CFO Luca Maestri did not guide for the current quarter ending in March but mentioned that iPhone sales were expected to be similar to last year’s $51.33 billion in revenue, after adjusting for $5 billion in outperformance attributed to supply recovery from Covid shutdowns. Maestri anticipated total company revenue to be comparable to last year’s $94.84 billion.
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Despite a 2% sales growth in the December quarter, Apple’s gross margin nearly reached 46%, with net income reaching $33.92 billion, up 13% from the same period last year.
CEO Tim Cook addressed concerns about the shortened quarter compared to the previous year, emphasizing that some growth rates represent a significant acceleration.
iPhone sales, just under revised Street expectations, grew nearly 6% to $69.70 billion, indicating a positive response to the iPhone 15 models released in September.
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While Apple’s profitable services business rose 11% to $23.11 billion, it fell slightly short of estimates. Cook attributed services growth to various products including advertising, cloud services, and the App Store.
Despite growth in all regions except Greater China, where sales fell nearly 13%, Cook highlighted the strong performance of iPhones in urban China.
Mac sales grew modestly, while iPad sales declined 25%, partly due to a tough comparison with the previous year’s quarter.
Apple’s wearables business, including AirPods and Apple Watch, also experienced a decline, attributed in part to a patent dispute that led to the temporary removal of the newest Apple Watches from stores in December.
During the quarter, Apple spent nearly $27 billion on dividends and share repurchases.
The mixed performance and outlook led to a decline in Apple’s share price, reflecting investor concerns over the company’s performance in key markets and product segments.
