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Apple (AAPL) Beats Q3 Earnings Estimates, Revenues Up Y/Y
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Apple (AAPL - Free Report) reported third-quarter fiscal 2024 earnings of $1.40 per share, which beat the Zacks Consensus Estimate by 4.48% and increased 11.1% year over year.
Net sales increased 4.9% year over year to $85.78 billion and beat the Zacks Consensus Estimate by 1.59%. Unfavorable forex hurt net sales by 230 basis points (bps).
iPhone Sales Decline Offset by Services Growth
iPhone sales decreased 0.9% from the year-ago quarter to $39.27 billion and accounted for 45.8% of total sales. iPhone sales beat the Zacks Consensus Estimate by 1.43%.
Overall, product sales (71.8% of sales) climbed 1.6% year over year to $61.56 billion.
Services revenues grew 14.1% from the year-ago quarter to $24.21 billion and accounted for 28.2% of sales. The figure beat the consensus mark by 0.89%.
Apple now has more than 1 billion paid subscribers across its Services portfolio, more than double what it had four years ago. Paid subscriptions grew double-digits year over year in the reported quarter.
Geographic Details
America’s sales increased 6.5% year over year to $37.68 billion and accounted for 43.9% of total sales. The figure beat the Zacks Consensus Estimate by 3.53%.
Europe generated $21.88 billion in sales, up 8.3% on a year-over-year basis. The region accounted for 25.5% of total sales. Europe’s sales beat the consensus mark by 6%.
Greater China sales decreased 6.5% from the year-ago quarter to $14.73 billion, accounting for 17.2% of total sales. The figure lagged the Zacks Consensus Estimate by 3.03%.
Rest of the Asia Pacific generated sales of $6.39 billion, up 13.5% year over year. The region accounted for 7.4% of total sales. The figure beat the consensus mark by 4.66%.
Japan’s sales of $5.1 billion increased 5.7% year over year, accounting for 6.9% of total sales. The figure beat the consensus mark by 3.11%.
Mac & iPad Sales Up, Wearables Decline
Non-iPhone revenues (iPad, Mac and Wearables) increased 6.5% year over year on a combined basis.
Mac sales of $7 billion increased 2.5% from the year-ago quarter and accounted for 8.2% of total sales. The figure beat the Zacks Consensus Estimate by 1.24%.
iPad sales of $7.16 billion increased 23.7% year over year and accounted for 8.3% of total sales. The figure beat the Zacks Consensus Estimate by 4.05%.
Wearables, Home and Accessories sales decreased 2.3% year over year to $8.1 billion and accounted for 9.4% of total sales. The figure beat the consensus mark by 7.77%.
Operating Details
Gross margin of 46.3% expanded 170 bps on a year-over-year basis. The gross margin contracted 30 bps sequentially due to an unfavorable product mix.
Products’ gross margin contracted 130 bps sequentially to 35.3%. Services’ gross margin was 74%, down 60 bps sequentially.
Operating expenses rose 6.8% year over year to $14.33 billion due to higher research & development expenses, which increased 7.6% year over year. Selling, general & administrative expenses increased 5.8% year over year.
As a percentage of revenues, research & development expenses, as well as selling, general & administrative expenses, increased 20 bps and 10 bps, respectively.
Operating margin expanded 140 bps on a year-over-year basis to 29.6%.
Balance Sheet
As of Jun 29, 2024, cash & marketable securities were $153.04 billion compared with $162.34 billion as of Mar 30, 2024.
Term debt, as of Jun 29, 2024, was $98.31 billion, down from $102.59 billion as of Mar 30, 2024.
Apple returned nearly $32 billion in the reported quarter through dividend payouts ($3.9 billion) and share repurchases ($26 billion).
Guidance
Apple expects the September quarter’s (fourth-quarter fiscal 2024) revenues to grow at the same rate as of June quarter on a year-over-year basis. Unfavorable forex is expected to hurt revenues by 1.5%.
For the Services segment, Apple expects a double-digit growth rate similar to the first three quarters of fiscal 2024.
Gross margin is expected to be 45.5-46.5% in the fourth quarter of fiscal 2024. Operating expenses are expected to be between $14.2 billion and $14.4 billion.
Zacks Rank & Stocks to Consider
Apple currently carries a Zacks Rank #3 (Hold).
Year to date, AAPL shares have returned 13.4% compared with the Zacks Computer and Technology sector’s rise of 17.2%.
Image: Bigstock
Apple (AAPL) Beats Q3 Earnings Estimates, Revenues Up Y/Y
Apple (AAPL - Free Report) reported third-quarter fiscal 2024 earnings of $1.40 per share, which beat the Zacks Consensus Estimate by 4.48% and increased 11.1% year over year.
Net sales increased 4.9% year over year to $85.78 billion and beat the Zacks Consensus Estimate by 1.59%. Unfavorable forex hurt net sales by 230 basis points (bps).
iPhone Sales Decline Offset by Services Growth
iPhone sales decreased 0.9% from the year-ago quarter to $39.27 billion and accounted for 45.8% of total sales. iPhone sales beat the Zacks Consensus Estimate by 1.43%.
Overall, product sales (71.8% of sales) climbed 1.6% year over year to $61.56 billion.
Services revenues grew 14.1% from the year-ago quarter to $24.21 billion and accounted for 28.2% of sales. The figure beat the consensus mark by 0.89%.
Apple Inc. Price, Consensus and EPS Surprise
Apple Inc. price-consensus-eps-surprise-chart | Apple Inc. Quote
Apple now has more than 1 billion paid subscribers across its Services portfolio, more than double what it had four years ago. Paid subscriptions grew double-digits year over year in the reported quarter.
Geographic Details
America’s sales increased 6.5% year over year to $37.68 billion and accounted for 43.9% of total sales. The figure beat the Zacks Consensus Estimate by 3.53%.
Europe generated $21.88 billion in sales, up 8.3% on a year-over-year basis. The region accounted for 25.5% of total sales. Europe’s sales beat the consensus mark by 6%.
Greater China sales decreased 6.5% from the year-ago quarter to $14.73 billion, accounting for 17.2% of total sales. The figure lagged the Zacks Consensus Estimate by 3.03%.
Rest of the Asia Pacific generated sales of $6.39 billion, up 13.5% year over year. The region accounted for 7.4% of total sales. The figure beat the consensus mark by 4.66%.
Japan’s sales of $5.1 billion increased 5.7% year over year, accounting for 6.9% of total sales. The figure beat the consensus mark by 3.11%.
Mac & iPad Sales Up, Wearables Decline
Non-iPhone revenues (iPad, Mac and Wearables) increased 6.5% year over year on a combined basis.
Mac sales of $7 billion increased 2.5% from the year-ago quarter and accounted for 8.2% of total sales. The figure beat the Zacks Consensus Estimate by 1.24%.
iPad sales of $7.16 billion increased 23.7% year over year and accounted for 8.3% of total sales. The figure beat the Zacks Consensus Estimate by 4.05%.
Wearables, Home and Accessories sales decreased 2.3% year over year to $8.1 billion and accounted for 9.4% of total sales. The figure beat the consensus mark by 7.77%.
Operating Details
Gross margin of 46.3% expanded 170 bps on a year-over-year basis. The gross margin contracted 30 bps sequentially due to an unfavorable product mix.
Products’ gross margin contracted 130 bps sequentially to 35.3%. Services’ gross margin was 74%, down 60 bps sequentially.
Operating expenses rose 6.8% year over year to $14.33 billion due to higher research & development expenses, which increased 7.6% year over year. Selling, general & administrative expenses increased 5.8% year over year.
As a percentage of revenues, research & development expenses, as well as selling, general & administrative expenses, increased 20 bps and 10 bps, respectively.
Operating margin expanded 140 bps on a year-over-year basis to 29.6%.
Balance Sheet
As of Jun 29, 2024, cash & marketable securities were $153.04 billion compared with $162.34 billion as of Mar 30, 2024.
Term debt, as of Jun 29, 2024, was $98.31 billion, down from $102.59 billion as of Mar 30, 2024.
Apple returned nearly $32 billion in the reported quarter through dividend payouts ($3.9 billion) and share repurchases ($26 billion).
Guidance
Apple expects the September quarter’s (fourth-quarter fiscal 2024) revenues to grow at the same rate as of June quarter on a year-over-year basis. Unfavorable forex is expected to hurt revenues by 1.5%.
For the Services segment, Apple expects a double-digit growth rate similar to the first three quarters of fiscal 2024.
Gross margin is expected to be 45.5-46.5% in the fourth quarter of fiscal 2024. Operating expenses are expected to be between $14.2 billion and $14.4 billion.
Zacks Rank & Stocks to Consider
Apple currently carries a Zacks Rank #3 (Hold).
Year to date, AAPL shares have returned 13.4% compared with the Zacks Computer and Technology sector’s rise of 17.2%.
Shopify (SHOP - Free Report) , CACI International (CACI - Free Report) and Dell Technologies (DELL - Free Report) are some better-ranked stocks that investors can consider in the broader sector, each carrying a Zacks Rank #2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Shopify shares have declined 25.4% year to date. SHOP is set to report second-quarter 2024 results on Aug 7.
CACI International shares have gained 43.2% year to date. CACI is set to report fourth-quarter fiscal 2024 results on Aug 8.
Dell Technologies shares have gained 41.7% year to date. DELL is set to report second-quarter fiscal 2025 results on Aug 29.