Apple at the moment introduced monetary outcomes for its third fiscal quarter of 2024, which corresponds to the second calendar quarter of the yr.
For the quarter, Apple posted income of $85.8 billion and internet quarterly revenue of $21.4 billion, or $1.40 per diluted share, in comparison with income of $81.8 billion and internet quarterly revenue of $19.9 billion, or $1.26 per diluted share, within the year-ago quarter.
Apple set new June quarter information for each income and earnings per share, whereas the Companies class set an all-time income file. The iPad class additionally noticed a notable improve in income due to the introduction of latest iPad Professional and iPad Air fashions.
Gross margin for the quarter was 46.3 %, in comparison with 44.5 % within the year-ago quarter. Apple additionally declared a quarterly dividend cost of $0.25 per share, payable on August 15 to shareholders of file as of August 12.
“Today Apple is reporting a new June quarter revenue record of $85.8 billion, up 5 percent from a year ago,” mentioned Tim Prepare dinner, Apple’s CEO. “During the quarter, we were excited to announce incredible updates to our software platforms at our Worldwide Developers Conference, including Apple Intelligence, a breakthrough personal intelligence system that puts powerful, private generative AI models at the core of iPhone, iPad, and Mac. We very much look forward to sharing these tools with our users, and we continue to invest significantly in the innovations that will enrich our customers’ lives, while leading with the values that drive our work.”
As has been the case for over 4 years now, Apple is as soon as once more not issuing steerage for the present quarter ending in September.
Apple will present stay streaming of its fiscal Q3 2024 monetary outcomes convention name at 2:00 p.m. Pacific, and MacRumors will replace this story with protection of the convention name highlights.
Convention name recap forward…
1:41 pm: After declining over 1.5% in common buying and selling at the moment, Apple’s inventory is at present up over 1% in after-hours buying and selling following the earnings launch.
1:45 pm: Apple CEO Luca Maestri notes that Apple generated almost $29 billion in working money circulate and returned over $32 billion to shareholders through the quarter, whereas the corporate’s put in base of energetic units hit all-time highs in all geographic segments.
1:47 pm: On a year-over-year foundation, Apple’s iPhone income was down 1.0%, Mac income was up 2.5%, iPad income was up 23.7%, Wearables income was down 2.3%, and Companies income was up 14.1%
1:56 pm: Apple’s quarterly earnings name with analysts ought to start on the high of the hour. Anticipated on the decision are CEO Tim Prepare dinner and CFO Luca Maestri.
2:01 pm: The decision is starting with the same old warning about forward-looking monetary statements. Tim and Luca are certainly on the decision, starting with opening statements.
2:02 pm: “Apple assumes no obligation to update any forward looking statements, which speak only as of the date they are made.”
2:02 pm: Tim is on.
2:02 pm: Apple experiences a June quarter income file of $85.8 billion, up 5% from a yr in the past, and higher than Apple had anticipated. EPS grew double-digits to $1.40, a file for the June quarter. Set quarterly income information in additional than two dozen international locations and areas, together with Canada, Mexico, France, Germany, the UK, India. Indonesia, the Philippines and Thailand.
2:03 pm: Companies income set a brand new all-time file, up 14%.
2:03 pm: Tim goes over the bulletins from WWDC, particularly Apple Intelligence.
2:04 pm: “We are very excited about Apple, intelligence, and we remain incredibly optimistic about the extraordinary possibilities of AI, and its ability to enrich customers lives.”
2:05 pm: Now he is speaking up Apple Imaginative and prescient Professional, noting 2,500 native spatial apps and new immersive content material coming to Imaginative and prescient Professional. “And we’ve seen great interest for Vision Pro in the enterprise where it can empower companies large and small to pursue their best ideas like never before.”
2:06 pm: Now iPhone, income was $39.3 billion, down 1% yr over yr. On a relentless foreign money foundation, iPhone gross sales grew in comparison with 2023.
2:07 pm: Shifting to Mac, income was $7 billion, up 2% from a yr in the past. He is mentioning the M3-powered MacBook Air’s as the perfect pc for college students and others. Particularly, he notes Apple Intelligence working on M3, particularly security and privateness.
2:08 pm: iPad income was $7.2 billion, 20% larger yr over yr, on the again of the brand new 11- and 13-inch iPad Air, in addition to the brand new iPad Professional.
2:08 pm: iPad Professional and iPad Air fashions, powered by the M collection of Apple Silicon, will have the ability to use Apple Intelligence, he notes.
2:09 pm: In Wearables, Residence and Equipment, income was $8.1 billion, down 2% from final yr. This class consists of Apple Watch, AirPods, HomePods and the Apple Imaginative and prescient Professional.
2:09 pm: In Companies, Apple set an all-time income file of $24.2 billion, with paid subs rising to an all-time excessive. Set new information in promoting, cloud, and cost companies.
2:11 pm: Faucet to Pay on iPhone expanded to extra markets, together with Canada, Italy, and extra. New updates to Companies are coming this fall, together with Nationwide Park hikes to Apple Maps.
2:13 pm: Tim is speaking up Apple’s concentrate on privateness, safety, accessibility, and extra. “We are determined to keep users in control of their data. And we are just as dedicated to ensuring the security of our user’s data.”
2:13 pm: All of Apple’s knowledge facilities, together with these utilizing cloud compuete, function on 100% renewable power.
2:14 pm: Now Luca is on to debate the financials in additional element.
2:16 pm: There was a brand new file of $85.8 billion, up 5% yr over yr, regardless of 230 foundation factors of adverse international change influence. Merchandise income was $61.6 billion, up 2% yr over yr. The set up base of energetic units reached an all-time excessive throughout all merchandise and geographic segments.
Companies income reached a brand new file, with an all-time file in developed markets and a June quarter file in rising markets. Gross margin was 46.3%, on the excessive finish of its steerage vary. Merchandise gross margin was 35.3%, down 130 foundation factors. Companies gross margin was 74%, down 60 foundation factors from final quarter.
OpEx of $14.3 billion, up 7% yr over yr. Web earnings was $21.4 billion, diluted EPS of $1.40 (up 11% and a June quarter file). Working money circulate was $28.9 billion, additionally a June quarter file.
2:16 pm: iPhone income was $39.3 billion, down 1% YoY, however rising on a relentless foreign money foundation. “We set June quarter records across several countries, including the UK, Spain and In Poland, Mexico, Indonesia and the Philippines, and the iPhone active install base to a new all time high. In total, and in every geographic segment.”
2:17 pm: “According to a survey from Cantar iPhone was the top selling model. In the US, urban China, the UK, Germany, Australia and Japan. Customer satisfaction on the iPhone 15 family continues to be extremely high, with 451 Research measuring it at 98% in percent in the US in their latest reports.”
2:18 pm: “The Mac installed base reached an all time high, with half of MacBook Air customers in the quarter new to Mac. Customer satisfaction for Mac was recently reported at 96% In the US.”
2:19 pm: Nearly two thirds of shoppers shopping for an Apple Watch within the quarter had been new to the product. Buyer sat of 97% for Watch within the US.
2:20 pm: The expansion of the set up base of energetic units “sets a strong foundation for the future expansion of our ecosystem.” Transacting and paid accounts proceed to indicate sturdy double digit development. There are greater than 1 billion paid subscriptions throughout the platforms, greater than double that of 4 years in the past.
2:21 pm: “We continue to see businesses leveraging our entire suite of products to drive productivity and creativity for their teams and customers. USAA, a leading insurance and financial services company, recently expanded beyond their existing iPhone and iPad deployments to provide their employees the latest MacBook Air and American Express has continued to add to their fleet of over 10,000 Macs to enhance their employees’ productivity.”
2:22 pm: Apple entered the quarter with $153 billion in money and marketable securities. It repaid $4.3 billion in maturing debt and elevated business paper by $1 billion, leaving whole debt of $101 billion. Web money was $52 billion after returning $32 billion to shareholders between dividends and open market repurchases of $26 billion throughout 139 million AAPL shares.
2:23 pm: Overseas change will proceed being a headwind, affecting 1.5 proportion factors yr over ear. September quarter income is anticipated to develop at a fee much like June, with Companies income rising double digits at the same fee to the primary three quarters of the yr. Gross margin between 45.5 and 46.5%, OpEx between $14.2 and $14.4 billion, and a tax fee of round 16.5%. The board declared a money dividend of $0.25/share later in August.
2:23 pm: The Q&A session is starting.
2:25 pm: Q: Are you able to assist us perceive the place you see iPhone substitute cycles at the moment, the place you assume the dimensions of the bottom of iPhones which might be aged and more likely to improve are and what that interprets to, and potential pent up demand as we enter a brand new iPhone cycle?
A: The set up base hit an all time excessive through the quarter, and so we had been very blissful about that iPhone typically, it grew in fixed foreign money. And the 15, as you level out, in case you have a look at the identical variety of weeks of the 15 from launch and examine that to the 14, the 15 is doing higher than the 14. And in order that’s form of a state of of the place we at present are.
By way of improve charges, it’s extremely troublesome mid cycle to name improve charges. With Apple intelligence, we’re very excited and in regards to the degree of worth that we will present to customers and we imagine that that presents another excuse for a compelling improve.
2:28 pm: Q: Are you able to dig into China dynamics a bit, gross sales down 6% this quarter, 3% in content material foreign money, an enchancment from final quarter on a harder examine. that got here on the again of some iPhone discounting. So are you able to share coloration on the China market as a complete? How a lot do you imagine promotions helped within the quarter, how sustainable this enchancment is, and if this efficiency actually adjustments any of your strategy to the China market, as we glance ahead?
A: This quarter was an enchancment from the primary half of the yr. In case you have a look at iPhone, particularly, for Larger China, the set up base set a file. We additionally, in mainland China, set a June quarter file for upgraders. And so, that that is a really sturdy sign. iPhones had been the highest three fashions in City China.
One of many issues we have a look at is the 15 household in comparison with the 14 household for a similar variety of weeks from launch. So this goes all the best way again to the September of ’23 in case you in case you have a look at that, the 15 is outperforming the 14. As well as, one of many issues that we’re very centered on is the extent of latest prospects shopping for the our merchandise. And so in case you have a look at this on the Mac and iPad in mainland China, nearly all of prospects are shopping for for the primary time. We’re very assured in the long run.
2:29 pm: Q: Now that you’ve got launched Apple Intelligence, will it speed up Companies and increase it, possibly people want to purchase extra storage, how is it a catalyst for Companies within the subsequent yr?
A: We began the rollout of Apple Intelligence this week. Among the options are on the market as of Monday. We could not be extra enthusiastic about getting them on the market. This can allow builders to take their apps to the subsequent degree, we’re taking this primary step in getting the beta on the market and we’re excited to see what they do with it.
2:32 pm: Q: Have you ever seen a shift in demand for iPhone 15 Professional and Professional Max fashions that might probably foreshadow shopper demand for Apple Intelligence-enabled telephones?
A: We simply introduced the necessities for the system and the Silicon degree in June, and we had restricted time within the quarter so it is actually too early to inform.
2:33 pm: Q: With the concentrate on upgrader potential for the subsequent few years, what are you anticipating for the US promotional surroundings out of your channel companions given the significance of system gross sales for these companions throughout an improve cycle?
A: We’re very enthusiastic about Apple Intelligence and what it brings and it is one other compelling cause for an improve. I believe the promotional questions are for the carriers themselves to reply, however I believe will probably be a key time for a compelling improve cycle.
2:35 pm: Q: Is the intent to launch Apple Intelligence on the identical time to shoppers or will it get staggered? How might it have an effect on how shoppers purchase through the rollout?
A: We began with some options this week, however not the whole suite. There are some languages past US English that can occur over the course of the yr, and different options. ChatGPT will probably be built-in by the top of the calendar yr. It’s a staggered launch.
2:37 pm: Q: Companies development fee has been extraordinarily spectacular for a number of quarters. How a lot is coming from put in base development versus higher monetization of the present base? How do you see that going ahead?
A: Mixture of numerous elements, set up base development is essential, as a result of we now have extra prospects. We’re seeing this constantly for a lot of quarters, we see continued development within the degree of engagement that our prospects have with our ecosystem, we now have extra transacting accounts each quarter, extra individuals utilizing the ecosystem, each free and paid components. We see paid accounts rising double digits for a lot of quarters now. Our paid subscriptions on our platform are rising sturdy double digits as properly. Clearly, the rising degree of engagement helps us each from an ARPU standpoint and a quantity standpoint.
As you have seen during the last a number of years, we launch new companies and we have launched many new companies pretty not too long ago. Funds, Apple TV+, Apple Arcade, Health+, we’re offering extra alternatives for patrons to work together with the ecosystem. And we have achieved a superb job bettering the standard of those companies. Launching new exhibits and new video games on a regular basis and I believe you’ll proceed to see that going ahead. Very pleased with the 14% development that we had this quarter.
In case you have a look at efficiency of Companies a yr in the past, it bought just a little more difficult within the second half of the fiscal yr, however regardless of that we delivered a degree of development higher than we had been anticipating.
2:39 pm: Q: You introduced Apple Intelligence but in addition introduced partnerships with OpenAI and different companions down the street. How ought to we take into consideration monetization of fashions like these and these partnerships? The CapEx investments are being made by these potential companions, however you are leveraging your distribution. Do you see the Companies development from Apple Intelligence being the bigger contributor or these partnerships over time?
A: The best way I have a look at it, Apple Intelligence is the on-device processing and personal cloud compute. A number of that will probably be issues with a private context, after which for world data, we’re integrating with ChatGPT initially and that will probably be centered on world data. The monetization mannequin, I do not wish to get into the phrases of the business agreements as a result of they’re confidential, however I see each elements as being essential. Folks need each.
2:42 pm: Q: You had margin development during the last a number of years and a bit extra flat. Are there different headwinds moreover FX which might be limiting upside maybe?
A: Overseas change is incremental on a yr over yr foundation and is outdoors our management, we attempt to hedge however it’s what it’s. When the greenback is powerful our margins are affected. Throughout the merchandise enterprise, our merchandise have totally different margin profiles and relying on their relative success within the market, our product gross margin tends to maneuver. The combo of our merchandise has an influence on gross margin. We simply launched an iPad in order that’s one of many elements. We would like all our merchandise to achieve success, so we at all times have a look at gross margin {dollars} as first precedence and proportion follows from that.
Additionally we now have the state of the commodity markets and this tends to go in cycles, so we’ll see how that performs out over time. We be ok with the extent of gross margin we now have for our merchandise enterprise. We really feel in a superb place there.
2:44 pm: Q: We preserve listening to about this improve in silicon content material for AI edge units, Luca you discuss growing commodity prices, how ought to we take into consideration margins for brand new AI units, and do any Apple Intelligence options want extra {hardware} than we now have at the moment?
A: By way of the necessities to run Apple Intelligence, there are system necessities and there are silicon necessities, so from an iPhone perspective, the iPhone 15 Professional and Professional Max will run Apple Intelligence and the successor merchandise. In case you have a look at the Mac, it begins with the M-series of silicon that began in 2020, and the iPad is identical. The M collection of silicon. There are system necessities and silicon necessities that go together with every of these.
From a gross margin standpoint, we do not present any coloration for the quarter, 45.5-46.5, basically broadly in step with what we recorded for the June quarter.
2:45 pm: Q: On China, was the weak spot macro associated or associated to Apple or home rivals?
A: The aggressive surroundings is probably the most aggressive on the planet and that is still the case. The macro financial elements have been within the press too, I am not an skilled on these, I can solely inform you what we’re seeing. We had been happy that the enterprise confirmed enchancment from the primary half of the yr.
2:47 pm: Q: Builders are simply getting their palms on Apple Intelligence, are these going to be iterative purposes, is there some class that lends itself extra naturally to Apple Intelligence, video games, extra inventive, attempting to get a way…
A: In case you have a look at how we have deployed Apple Intelligence, we have considered it as all the apps you utilize day-after-day. Notes, Mail, Messages and all the remainder. There’s been a deep degree of eager about the way it impacts these apps. That is going to floor Apple Intelligence in a manner that’s pure to the person and in a manner that can get them very enthusiastic about it.
Equally, I believe the builders will try this on a broad foundation with their apps as properly. I believe it is profound, and we’ll see what the builders do. We’re excited to get the preliminary seed on the market this week and see what they do. I believe will probably be wonderful.
2:49 pm: Q: It seems like, with Companies being sturdy and FX easing, you are saying product income could be flat with the quarter subsequent yr. What are the places and takes in that outlook with Apple Intelligence stoking demand going ahead?
A: We have now supplied… we expect we’ll be rising firm income at a state that’s much like what we reported. 5%, regardless of the truth that we’ll have 150 bp of FX headwinds within the December quarter. We mentioned that we’ll develop Companies double digits at a fee much like the primary three quarters of the fiscal yr. We aren’t going into the opposite classes, there’s numerous good math that you are able to do from what we have given you. Have in mind, on Mac we’ll have a difficult examine from a yr in the past provided that we had a full-quarter influence of the MacBook Air 15-inch a yr in the past, and iPad we had the profit from the launch of the brand new iPad Air and iPad Professional this previous quarter so preserve that in thoughts on a sequential foundation.
2:50 pm: Q: You talked about a staggered launch of Apple Intelligence, are all of those going to be part of iOS 18 or will some probably be a part of iOS 19 subsequent yr?
A: We’ll begin with US English this fall and add extra performance, options, and languages and areas protection over the subsequent yr. We gave a timeframe and we’re monitoring to that.
2:52 pm: Q: Are you seeing any influence from adjustments made to the European app retailer guidelines?
A: We have now seen a superb degree of adoption from builders on these adjustments, we’re in ongoing discussions with the European Fee on how to make sure full compliance with the DMA. Typically, our outcomes for the Companies enterprise and the App Retailer have been fairly good. To offer a body of reference, the proportion of income we get from the EU on the App Retailer is about 7% of the full.
2:53 pm: Q: Re Apple Intelligence, how do you concentrate on the regulatory course of within the EU and China, eager about the rollout, are you embedding the regulartory facet in it and the way ought to we take into consideration timing?
A: We’re partaking with the regulatory our bodies and we’re shifting as quick as we will. Our goal is at all times to get options on the market for everybody. We have now to know the regulatory necessities earlier than we will decide to doing that however we’re engaged with each.
2:54 pm: Q: On Wearables, it has been lagging there for the final couple of quarters. Any touch upon that?
A: While you have a look at Wearables, Residence and Equipment, we now have a troublesome launch examine. Final yr we had the continued advantage of the AirPods Professional, the Watch SE, and the primary Watch Extremely. It is essential to maintain that in thoughts. In case you take a step again and have a look at the enterprise throughout the trailing 12 months, the Wearables enterprise has grown to virtually $40 billion, double what it was 5 years in the past.
2:56 pm: Q: You referenced the funding in innovation, R&D to gross sales ratio reached a file even earlier than launching Apple Intelligence. How ought to we take into consideration CapEx for cloud compute capability and is it attainable to forecast companies utilization as this stuff roll out?
A: We have elevated R&D over time, we have been investing in AI and ML for years. We have redeployed sure expertise onto AI and ML, and the expansion is kind of embedded in our numbers that we have shared. On CapEx, do not forget that we make use of a hybrid strategy the place we do issues internally and we now have companions that we do enterprise with externally the place the CapEx would seem of their respective companies. Sure, you possibly can anticipate that we’ll proceed to take a position and improve it yr on yr.
2:58 pm: Q: Once we have a look at the free money circulate margins for the primary 9 months, they’re up materially. What, within the companies combine or price controls, what’s driving structural larger free money circulate margins throughout the enterprise?
A: I am glad you observed that. We’re fairly happy with that reality. We additionally elevated our return to shareholders, a file quarter for us. An enchancment within the topline helps, margin enlargement that we have had during the last a number of years and quarters has helped. That’s driving higher working money circulate. On the CapEx entrance, as Tim mentioned, we make use of a hybrid mannequin. Some investments present up on our steadiness sheet, different investments present up elsewhere and we pay as we go. Typically, we attempt to run the corporate effectively. We expect capital effectivity is an efficient factor. We’re happy that our free money circulate is doing properly this yr.
2:59 pm: The decision has accomplished. Anticipate the subsequent quarterly earnings name in late October.