Zinger Key Points
- Apple reported above-consensus results for the third quarter but investors could fret over the lighter revenues for most products.
- Apple shares have gained 47.6% year-to-date, capitalizing on the improvement in fundamentals and the tech rally.
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Apple, Inc. AAPL announced fiscal year third-quarter results that came in ahead of expectations, propelled by strong Service sector growth. The company also said its installed devices of active bases rose to a record. While Mac sales exceeded expectations, the rest of the product categories, including the iPhone came in slightly shy of estimates.
Apple’s Key Q3 Metrics: Cupertino, California-based Apple reported third-quarter earnings per share, or EPS of $1.26 on revenue of $81.8 billion.
Analysts, on average, estimated EPS of $1.19 on revenue of $81.7 billion for the quarter.
Apple’s fiscal third quarter is typically the slowest for the company, given it comes ahead of the back-to-school season and buyers push back purchases of key hardware products in anticipation of the launch of newer iterations.
Third-quarter gross margin came in at 44.52%, nearly flat with the previous quarter’s 44.26%. A year-ago, the metric was at 43.26%.
How EPS/Revenue Compare With Prior-Year Periods:
| Q3’23 | Q3’22 | Q2’23 | |
| EPS | $1.26 | $1.20 | $1.52 |
| Revenue | $81.80B | $82.96B | $94.84B |
Ahead of the earnings, analysts called for at least in-line to higher results for the quarter, premising their expectations on higher iPhone shipments amid demand recovery in China and a favorable mix shift, pushing up the average selling price. They also expected an acceleration in Service revenue growth.
Commenting on the results, CEO Tim Cook said, “We are happy to report that we had an all-time revenue record in Services during the June quarter, driven by over 1 billion paid subscriptions, and we saw continued strength in emerging markets thanks to robust sales of iPhone.”
CFO Luca Maestri said the company’s installed base of active devices reached an all-time high in every geographic segment.
How iPhone, Mac And Other Products Fared:
| | Q3’23 | Consensus* | Q2’23 | Q3’22 |
| iPhone | $39.67B | $40.04B | $51.33B | $40.67B |
| Mac | $6.84B | $6.34B | $7.17B | $7.38B |
| iPad | $5.79B | $6.39B | $6.67B | $7.22B |
| Wearables, Home & Accessories | $8.28B | $8.38B | $8.76B | $8.08B |
| Services | $21.21B | $20.74B | $20.91B | $19.06B |
*via Morgan Stanley report
See Also: Everything You Need To Know About Apple Stock
How Various Geographies Performed:‘
| | Q3’23 | Q2’23 | Q3’22 |
| Americas | $35.38B | $37.78B | $37.47B |
| Europe | $20.21B | $23.95B | $19.29B |
| Greater China | $15.76B | $17.81B | $14.60B |
| Japan | $4.82B | $7.18B | $5.45B |
| Rest of Asia-Pacific | $5.63B | $8.12B | $6.15B |
Shareholder Return: Apple returned over $24 billion to shareholders during the quarter, said Maestri. The company announced a common stock dividend of $0.24 per share, payable on Aug. 17, to shareholders on record as of Aug. 14.
Forward Outlook: Wedbush analyst Daniel Ives said he expects a cautious September quarter guidance from Apple, given the next iteration of flagship product, the iPhone will likely launch by mid- to late-September.
Apple will likely provide more details on the financial outlook on the earnings call scheduled for 5 p.m. EDT. Cook & Co might need to defend or address concerns about various issues, including their future prospects, the economic recovery in China, their focus on emerging markets, and the Vision Pro mixed-reality headset that the company announced in June, among other matters.
Apple Stock: Apple shares have risen about 47.6% so far this year, outperforming the Nasdaq 100’s 40.4% gain. The S&P 500 Index, meanwhile, has gained a more modest 17.3%.
JPMorgan’s Samik Chatterjee Wednesday announced a 2024 price target of $220 for Apple share.
After settling Thursday’s regular session at $191.17, down 0.73%, the Apple stock fell an incremental 0.66% to $189.90 in after-hours trading, according to Benzinga Pro data.
Photo: Shutterstock
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