Apple announced first-quarter fiscal results on Thursday that exceeded forecasts, with revenue hiking 16% year-over-year.
Company shares rose more than 1% during after-hours trading.
Below are the results compared to Wall Street expectations, based on LSEG consensus predictions for the quarter ending in December:
- EPS: $2.84 compared to $2.67 forecasted
- Revenue: $143.76 billion versus $138.48 billion projected
This is how Apple fared compared to LSEG consensus predictions:
- iPhone revenue: $85.27 billion against $78.65 billion projected
- Mac revenue: $8.39 billion compared to $8.95 billion forecasted
- iPad revenue: $8.60 billion against $8.13 billion estimated
- Wearables, Home and Accessories revenue: $11.49 billion against $12.04 billion estimated
- Services revenue: $30.01 billion versus $30.07 billion predicted
- Gross margin: 48.2% compared to 47.5% estimated
Finance chief Kevan Parekh indicated that Apple anticipates revenue this quarter will grow between 13% and 16% year-over-year, roughly translating to between $107.8 billion and $110.66 billion. Analysts surveyed by LSEG predicted $104.84 billion. Apple also mentioned anticipated limitations in iPhone supply during this period.
Additionally, Apple expects its Services segment to show a year-over-year growth rate akin to the 14% seen in the December quarter.
The company revealed a net income of $42.1 billion, or $2.84 per share, compared to $36.33 billion, or $2.40 per share, in the same quarter last year.
Total iPhone revenue spiked by 23% year-over-year to $85.27 billion, a result attributed to robust sales of the iPhone 17 models introduced in September.
“The demand for iPhone was simply amazing,” Apple CEO Tim Cook shared with CNBC’s Steve Kovach.
This impressive growth marks a turnaround from the holiday quarter last year, when Apple recorded a minor decline in iPhone sales.
Cook stated Apple now has an active installed base of 2.5 billion iPhones, Macs, and other devices, an increase from 2.35 billion reported in January last year. This figure is closely monitored as it indicates the potential market for Apple services and software across the company’s platforms.
Apple observed particularly strong results in China, including Taiwan and Hong Kong. Sales in this area soared by 38% during the quarter, reaching $25.53 billion. Cook credited the robust performance in the region to iPhone sales.
“We achieved an all-time high for upgraders in mainland China, and we saw double-digit growth among switchers,” Cook noted. Upgraders refer to existing iPhone users purchasing newer models, while switchers denote new customers who had prior devices from different brands.
In China, Apple “experienced a boost that exceeded our expectations,” Cook mentioned, emphasizing that it was “product-driven.”
Apple’s sales of Mac laptops fell short of Wall Street expectations, declining by 7% year-over-year. The company launched an updated MacBook Pro with a new M4 chip in November.
The iPad segment saw a 6% increase year-over-year to $8.6 billion in revenue, surpassing expectations. Cook observed that half of those who purchased an iPad during the quarter were first-time buyers.
The company encompasses AirPods, Apple Watch, Vision Pro, and other accessories under the Wearables, Home and Accessories category. Sales in this category dropped by 2% on an annual basis, falling short of Wall Street forecasts.
Apple’s services sector, which includes subscriptions such as Apple TV and iCloud along with advertising revenue from licensing deals with Google, AppleCare warranties, and other products, grew by 14% year-over-year, reaching $26.34 billion in sales. Cook mentioned that Apple TV’s viewership surged by 36% in December compared to the previous year.
Earlier this month, the firm announced it would collaborate with Google to integrate its Gemini AI model into Apple Intelligence software. Apple has invested significantly less in artificial intelligence than others in the industry, like Meta and Microsoft, which have pledged hundreds of billions towards AI infrastructure.
“We have, unquestionably, the best platforms for AI around,” Cook asserted.
Apple recorded capital expenditures of $2.37 billion for the quarter, down from $2.94 billion during the same time last year. Meanwhile, research and development expenses rose to $10.89 billion from $8.27 billion in the prior year’s quarter.
“AI will necessitate additional investment beyond our usual product roadmap expenditure,” Parekh remarked.
All of Apple’s products, such as the iPhone, Mac, and iPad, require substantial storage and memory, raising concerns regarding the company’s strategy to manage rising component costs amidst a global surge in memory prices tied to an AI-related shortage.
“We are in a supply chain mode to accommodate the current high levels of customer demand we’re facing,” Cook stated. “At this time, it’s tough to gauge when supply and demand will reach equilibrium.”
Cook added that one of the challenges lies in the advanced chip manufacturing required for Apple’s processors. He noted that memory prices had minimal impact in the recently concluded quarter, but the company foresees a more substantial effect in the ongoing period.
“We are continuing to observe significant market price increases for memory,” Cook confirmed.
Parekh reported that Apple spent nearly $32 billion in the quarter on share buybacks and dividends.
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