Apple, Inc. (NASDAQ:AAPL) announced fourth-quarter earnings and revenue that exceeded expectations Thursday thanks to strong uptake of the pricier version of its newest iPhone models and strong Mac sales.
The company’s sticky ecosystem retained and grew its customer base, as reflected by the increase in Apple's installed devices base to a new record.
Related Link: How To Trade Apple Stock Heading Into Q4 Earnings
Apple’s Key Q4 Numbers: Cupertino, California-based Apple reported fourth-quarter EPS of $1.29 per share, exceeding the consensus estimate of $1.27. The bottom-line results also beat the year-ago quarter’s $1.24 and the previous quarter’s $1.20.
Revenue rose 8% year-over-year from $83.36 billion to $90.1 billion. Analysts, on average, had modeled revenue of $88.9 billion for the quarter. Quarter-over-quarter, the topline improved by 8.6% from the third quarter’s $82.96 billion.
The gross margin came in at 42.3% compared to 42.2% in the year-ago quarter and 43.3% in the previous quarter.
“Our record September quarter results continue to demonstrate our ability to execute effectively in spite of a challenging and volatile macroeconomic backdrop,” said Luca Maestri, Apple’s CFO.
Apple generated $24 billion in operating cash flow and returned $29 billion to shareholders during the quarter. The company’s board approved a cash dividend of 23 cents per share, payable on Nov. 10 to shareholders of record as of Nov. 7.
How Product Categories, Geographies Fared: Apple said its installed base of devices rose to a new record. Among products, Mac stood out with strong double-digit growth from a year ago.
- iPhone revenue: $42.63 billion, up 9.7% Y-o-Y
- Mac: $11.51 billion, up 25.4% Y-o-Y
- iPad: $7.17 billion, down 13.1% Y-o-Y
- Wearables home & accessories: $9.65 billion, up 9.9% Y-o-Y
- Services: $19.19 billion, up 5% Y-o-Y
Ahead of the earnings, analysts held mixed views on how iPhone revenue would shape up. Most anticipated higher average selling price offsetting any potential unit weakness and adverse forex impact.
Morgan Stanley analyst Eric Woodring predicted 51.1 million units iPhone shipments for the quarter at an ASP of $838, potentially raking in $43 billion in iPhone revenue.
iPad revenues came in below Woodring’s forecast of $8.3 billion.
All geographies except Japan grew revenues year-over-year, with Japan likely taking a hit by the price increases enacted in the country due to the weakening of the yen.
- Americas: $39.81 billion, up 8.12% Y-o-Y
- Europe: $22.8 billion, up 9.62% Y-o-Y
- Greater China: $15.47 billion, up 6.23% Y-o-Y
- Japan: $5.7 billion, down 4.86% Y-o-Y
- Rest Of Asia-Pacific: $6.37 billion, up 22.75% Y-o-Y
What Analysts Are Listening For On Apple Earnings Call: Wedbush’s Daniel Ives expects Apple to give directional commentary rather than specific guidance for the December quarter.
Credit Suisse analyst Shannon Cross said she would look for commentary concerning demand elasticity and supply chain related to iPad, Mac and Wearables as well as gross margin.
Apple's Forward Outlook: For the key holiday selling season, when the company pushes out about one-third of total sales, analysts expect revenue of $128.38 billion, up about 3.6% year-over-year.
Most analysts have tempered their expectations for Apple for fiscal years 2023 and 2024, citing a weaker consumer spending backdrop.
One thing working in Apple’s favor would be a 14-week quarter in the fiscal year’s first quarter, Morgan Stanley’s Woodring said. This, according to the analyst, will drive an “acceleration in Y/Y Services revenue growth and sets up the Product business to grow above normal seasonality in the quarter.”
AAPL Stock: Apple shares have shed roughly 17% year-to-date, which is a more modest decline when compared to the Invesco QQQ Trust’s (NASDAQ:QQQ) 30% drop.
The average analyst rating for the stock is $183.37, suggesting roughly 21% upside from current levels, according to data compiled by TipRanks.
Technically, with the declines seen since Wednesday, Apple shares have approached a support area around $138. On the upside, it has resistance around $154.
After closing Thursday’s regular session at $144.80, down 3.05%, the stock was down 1.28% in after-hours trading to $142.95 in after-hours trading, according to Benzinga Pro data.
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Photo courtesy of Apple.
