Apple right this moment introduced monetary outcomes for its third fiscal quarter of 2024, which corresponds to the second calendar quarter of the 12 months.
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 report. 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 p.c, in comparison with 44.5 p.c within the year-ago quarter. Apple additionally declared a quarterly dividend fee of $0.25 per share, payable on August 15 to shareholders of report 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 Cook 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 dwell 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 right this 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 practically $29 billion in working money circulate and returned over $32 billion to shareholders through the quarter, whereas the corporate’s put in base of lively gadgets 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 Cook dinner and CFO Luca Maestri.
2:01 pm: The decision is starting with the standard 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 stories a June quarter income report of $85.8 billion, up 5% from a 12 months in the past, and higher than Apple had anticipated. EPS grew double-digits to $1.40, a report 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 report, up 14%.
2:03 pm: Tim goes over the bulletins from WWDC, specifically 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% 12 months over 12 months. 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 12 months in the past. He is mentioning the M3-powered MacBook Air’s as one of the best pc for college students and others. Specifically, he notes Apple Intelligence working on M3, specifically security and privateness.
2:08 pm: iPad income was $7.2 billion, 20% larger 12 months over 12 months, 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 be capable to use Apple Intelligence, he notes.
2:09 pm: In Wearables, House and Equipment, income was $8.1 billion, down 2% from final 12 months. 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 report of $24.2 billion, with paid subs rising to an all-time excessive. Set new information in promoting, cloud, and fee 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 information 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 report of $85.8 billion, up 5% 12 months over 12 months, regardless of 230 foundation factors of damaging overseas trade affect. Merchandise income was $61.6 billion, up 2% 12 months over 12 months. The set up base of lively gadgets reached an all-time excessive throughout all merchandise and geographic segments.
Companies income reached a brand new report, with an all-time report in developed markets and a June quarter report 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% 12 months over 12 months. Internet revenue was $21.4 billion, diluted EPS of $1.40 (up 11% and a June quarter report). Working money circulate was $28.9 billion, additionally a June quarter report.
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 consumers shopping for an Apple Watch within the quarter have 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 lively gadgets “sets a strong foundation for the future expansion of our ecosystem.” Transacting and paid accounts proceed to point out robust double digit progress. 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 industrial paper by $1 billion, leaving whole debt of $101 billion. Internet 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: International trade will proceed being a headwind, affecting 1.5 proportion factors 12 months over ear. September quarter income is anticipated to develop at a fee just like June, with Companies income rising double digits at an identical fee to the primary three quarters of the 12 months. 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 right this moment, the place you assume the dimensions of the bottom of iPhones which are aged and prone 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 have been very completely satisfied about that iPhone basically, it grew in fixed foreign money. And the 15, as you level out, when you take 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 type of a state of of the place we at present are.
When it comes to improve charges, it is very tough mid cycle to name improve charges. With Apple intelligence, we’re very excited and concerning the degree of worth that we will present to customers and we consider 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 more durable examine. You already know that got here on the again of some iPhone discounting. So are you able to share colour on the China market as a complete? How a lot do you consider promotions helped within the quarter, how sustainable this enchancment is, and if this efficiency actually modifications any of your strategy to the China market, as we glance ahead?
A: This quarter was an enchancment from the primary half of the 12 months. In case you take a look at iPhone, specifically, for Larger China, the set up base set a report. We additionally, in mainland China, set a June quarter report for upgraders. And so, that that is a really robust sign. iPhones have been the highest three fashions in City China.
One of many issues we take 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 when you when you take a look at that, the 15 is outperforming the 14. As well as, one of many issues that we’re very targeted on is the extent of latest prospects shopping for the our merchandise. And so when you take a look at this on the Mac and iPad in mainland China, the vast majority 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, perhaps of us want to purchase extra storage, how is it a catalyst for Companies within the subsequent 12 months?
A: We began the rollout of Apple Intelligence this week. A few of the options are on the market as of Monday. We could not be extra enthusiastic about getting them on the market. This may allow builders to take their apps to the following 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 doubtlessly foreshadow client 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 following few years, what are you anticipating for the US promotional surroundings out of your channel companions given the significance of machine 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 motive for an improve. I believe the promotional questions are for the carriers themselves to reply, however I believe it is going to 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 12 months, and different options. ChatGPT can be built-in by the top of the calendar 12 months. It’s a staggered launch.
2:37 pm: Q: Companies progress fee has been extraordinarily spectacular for a number of quarters. How a lot is coming from put in base progress versus higher monetization of the prevailing base? How do you see that going ahead?
A: Mixture of various components, set up base progress is essential, as a result of we now have extra prospects. We’re seeing this constantly for a lot of quarters, we see continued progress within the degree of engagement that our prospects have with our ecosystem, we now have extra transacting accounts each quarter, extra folks utilizing the ecosystem, each free and paid parts. We see paid accounts rising double digits for a lot of quarters now. Our paid subscriptions on our platform are rising robust double digits as nicely. Clearly, the rising degree of engagement helps us each from an ARPU standpoint and a quantity standpoint.
As you have seen over the past a number of years, we launch new companies and we have launched many new companies pretty just lately. Funds, Apple TV+, Apple Arcade, Health+, we’re offering extra alternatives for purchasers to work together with the ecosystem. And we have completed a superb job bettering the standard of those companies. Launching new reveals and new video games on a regular basis and I believe you’ll proceed to see that going ahead. Very proud of the 14% progress that we had this quarter.
In case you take a look at efficiency of Companies a 12 months in the past, it obtained somewhat more difficult within the second half of the fiscal 12 months, however despite that we delivered a degree of progress higher than we have 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 progress from Apple Intelligence being the bigger contributor or these partnerships over time?
A: The way in which I take a look at it, Apple Intelligence is the on-device processing and personal cloud compute. Numerous that can be issues with a private context, after which for world data, we’re integrating with ChatGPT initially and that can be targeted on world data. The monetization mannequin, I do not need to get into the phrases of the industrial agreements as a result of they’re confidential, however I see each elements as being essential. Individuals need each.
2:42 pm: Q: You had margin progress over the past a number of years and a bit extra flat. Are there different headwinds in addition to FX which are limiting upside maybe?
A: International trade is incremental on a 12 months over 12 months foundation and is exterior 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 completely 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 affect on gross margin. We simply launched an iPad in order that’s one of many components. We would like all our merchandise to achieve success, so we all the time take 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 maintain listening to about this improve in silicon content material for AI edge gadgets, Luca you discuss rising commodity prices, how ought to we take into consideration margins for brand spanking new AI gadgets, and do any Apple Intelligence options want extra {hardware} than we now have right this moment?
A: When it comes to the necessities to run Apple Intelligence, there are system necessities and there are silicon necessities, so from an iPhone standpoint, the iPhone 15 Professional and Professional Max will run Apple Intelligence and the successor merchandise. In case you take 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 along with every of these.
From a gross margin standpoint, we do not present any colour for the quarter, 45.5-46.5, basically broadly according to 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 this planet and that continues to be the case. The macro financial components have been within the press too, I am not an skilled on these, I can solely inform you what we’re seeing. We have been happy that the enterprise confirmed enchancment from the primary half of the 12 months.
2:47 pm: Q: Builders are simply getting their fingers 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, making an attempt to get a way…
A: In case you take a look at how we have deployed Apple Intelligence, we have considered it as the entire apps you utilize each day. Notes, Mail, Messages and all the remaining. There’s been a deep degree of fascinated by the way it impacts these apps. That is going to floor Apple Intelligence in a manner that’s pure to the consumer 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 nicely. 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 it is going to be superb.
2:49 pm: Q: It appears like, with Companies being robust and FX easing, you are saying product income may be flat with the quarter subsequent 12 months. What are the places and takes in that outlook with Apple Intelligence stoking demand going ahead?
A: We’ve got supplied… we expect we’ll be rising firm income at a state that’s just like what we reported. 5%, despite 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 just like the primary three quarters of the fiscal 12 months. We aren’t going into the opposite classes, there’s quite a lot of good math that you are able to do from what we have given you. Take note, on Mac we’ll have a difficult examine from a 12 months in the past on condition that we had a full-quarter affect of the MacBook Air 15-inch a 12 months 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 maintain 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 doubtlessly be a part of iOS 19 subsequent 12 months?
A: We’ll begin with US English this fall and add extra performance, options, and languages and areas protection over the following 12 months. We gave a time-frame and we’re monitoring to that.
2:52 pm: Q: Are you seeing any affect from modifications made to the European app retailer guidelines?
A: We’ve got seen a superb degree of adoption from builders on these modifications, we’re in ongoing discussions with the European Fee on how to make sure full compliance with the DMA. On the whole, our outcomes for the Companies enterprise and the App Retailer have been fairly good. To supply a body of reference, the share 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, fascinated by the rollout, are you embedding the regulartory side in it and the way ought to we take into consideration timing?
A: We’re partaking with the regulatory our bodies and we’re transferring as quick as we will. Our goal is all the time to get options on the market for everybody. We’ve got 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: Once you take a look at Wearables, House and Equipment, we now have a tough launch examine. Final 12 months we had the continued advantage of the AirPods Professional, the Watch SE, and the primary Watch Extremely. It is vital to maintain that in thoughts. In case you take a step again and take 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 report 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 these items roll out?
A: We have elevated R&D over time, we have been investing in AI and ML for years. We have redeployed sure abilities onto AI and ML, and the expansion is form 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 may count on that we are going to proceed to speculate and improve it 12 months on 12 months.
2:58 pm: Q: Once we take a look at the free money circulate margins for the primary 9 months, they’re up materially. What, within the companies combine or value controls, what’s driving structural larger free money circulate margins throughout the enterprise?
A: I am glad you seen that. We’re fairly happy with that reality. We additionally elevated our return to shareholders, a report quarter for us. An enchancment within the topline helps, margin growth that we have had over the past 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 some other place and we pay as we go. On the whole, we attempt to run the corporate effectively. We expect capital effectivity is an effective factor. We’re happy that our free money circulate is doing nicely this 12 months.
2:59 pm: The decision has accomplished. Count on the following quarterly earnings name in late October.