APPLE INC (AAPL) Earnings Summary for Q4 FY2024

Key Metrics

• Revenue: $94.9 billion (up 6% yoy)
  • Products Revenue: $70 billion (up 4% yoy)
    • iPhone Revenue: $46.2 billion (up 6% yoy)
    • Mac Revenue: $7.7 billion (up 2% yoy)
    • iPad Revenue: $7 billion (up 8% yoy)
    • Wearables, Home and Accessories Revenue: $9 billion (down 3% yoy)
  • Services Revenue: $25 billion (up 12% yoy)
• Gross Margin:
  • Overall Gross Margin: 46.2%
  • Products Gross Margin: 36.3% (up 100 basis points qoq)
  • Services Gross Margin: 74% (unchanged qoq)
• Operating Expenses: $14.3 billion (up 6% yoy)

Forward guidance

1. Revenue Guidance: Expect December quarter total company revenue to grow low- to mid-single digits year-over-year.
2. Services Revenue Growth: Anticipate Services revenue to grow at a double-digit rate similar to fiscal year 2024.
3. Gross Margin Projection: Forecast gross margin to be between 46% and 47% for the December quarter.
4. Operating Expenses: Project operating expenses to be between $15.3 billion and $15.5 billion.
5. Other Income & Expense: Expect other income and expense to be around negative $250 million, excluding potential impacts from minority investments.
6. Tax Rate Estimate: Anticipate a tax rate of around 16%.
7. Dividend Declaration: Declared a cash dividend of $0.25 per share, payable on November 14, 2024, to shareholders of record as of November 11, 2024.

Key takeaways

• Positives:
  • Tim Cook highlighted a record revenue of $94.9 billion, up 6% year-over-year, with iPhone growth across all geographic segments, indicating strong global demand.
  • Services revenue reached an all-time high of $25 billion, up 12% year-over-year, showcasing robust customer engagement and a growing installed base, with over 1 billion paid subscriptions.
  • The introduction of Apple Intelligence is expected to drive future growth, with Cook noting, "We believe it's a compelling upgrade reason," and early adoption rates are promising, with 18.1 adoption twice as fast as 17.1.
  • The launch of new products, including the M4 chip for Macs and the Apple Vision Pro, positions Apple well for the holiday season, with Cook stating, "We have the best lineup we've ever had."
  • Strong customer satisfaction metrics across product lines, with iPhone satisfaction at 98%, suggests brand loyalty and potential for repeat purchases.
• Negatives:
  • Luca Maestri mentioned a one-time tax charge of $10.2 billion, which could impact net income perception despite strong operational performance.
  • Wearables, Home, and Accessories revenue declined 3% year-over-year, indicating potential challenges in this segment.
  • Cook acknowledged supply constraints for the iPhone 16 Pro models, which could limit sales potential, stating, "We believe that soon we'll be out of constraint," but uncertainty remains.
  • Maestri noted that while commodity prices are generally declining, NAND and DRAM prices are expected to rise, which could pressure future gross margins.
  • The macroeconomic outlook remains uncertain, with guidance for low- to mid-single-digit revenue growth in the upcoming quarter, suggesting cautious optimism.

Peer Summary

• Microsoft Corp: Strong demand for AI-driven solutions is evident, with cloud revenue growing 22% and Azure's growth at 31-32%. Nadella noted, "Customers are using our products in five different ways," indicating diverse applications and robust engagement, which may reflect a competitive edge in services.
• Amazon.com Inc: AWS is experiencing a reacceleration in growth at 19.1%, driven by demand for cloud services and AI capabilities. Jassy stated, "AWS continues to be a customer's partner of choice," highlighting competitive strength in cloud computing.
• Alphabet Inc: Google Cloud revenue is projected to grow 35%, with Pichai emphasizing "extraordinary momentum" in AI, suggesting strong market demand for AI-enhanced services.
• Dell Technologies: The shift towards AI is significant, with enterprise customers increasingly adopting AI solutions. Clarke noted, "Enterprise remains a significant opportunity for us," indicating a growing market segment.
• HP Inc: The introduction of next-gen AI PCs is seen as a growth opportunity, with Lores stating, "We expect next-generation AI PCs to represent around 50% of shipments in 2027," reflecting a trend towards AI integration in personal computing.