Apple reported optimistic quarterly earnings, with CEO Tim Cook reassuring markets about the company’s future.
Apple reported better-than-expected quarterly earnings for its second fiscal quarter: the period between January and March 2024. The Cupertino firm is going through a rough period as competition from China increases, eating into iPhone sales from the world’s largest consumer market.
Revenues for the quarter came in at $90.75 billion, more than the $90.01 billion expected by Bloomberg-polled analysts. Mac and Services revenues also topped estimates at $7.5 billion vs $6.86 billion and $23.9 billion vs $23.27 billion.
Services revenue reached its all-time high, up from the $20.91 billion in the same quarter last year. Apple’s services include its streaming service Apple TV, one of the most popular on the planet with an estimated 25 million subscribers worldwide.
iPhone sales dropped 10% year-on-year, though revenues only slightly missed market expectations at $45.96 billion vs $46 billion. iPhone sales represent almost exactly half of Apple’s entire business revenues.
However, CEO Tim Cook reassured markets pointing to the $5 billion extra iPhone revenues last year after several COVID-delayed shipments. “If you remove that $5 billion from last year’s results, we would have grown this quarter on a year-over-year basis,” Cook told CNBC.
Total margins met market estimates at 46.6%. Apple’s stock is up 6.45% for the day after dropping 0.78% year-to-date.
Looking at the future
The main challenge for Apple in its immediate future will be China. The country represents Apple’s second-largest market, though competition from local firms has increased rapidly. Moreover, the Chinese Communist Party (CCP) heavily discourages the purchase of iPhones, going as far as banning their use by party members, some 100 million people.
Total sales in Greater China, an area that includes Taiwan, Hong Kong, and Singapore, fell by 8%. However, Cook stated iPhone sales grew in the last quarter, “which may come as a surprise to some people,” he said. “I feel good about China,” Cook added, “I think more about long term than to the next week or so.”
Apple will also likely release a new iPad model in the next quarter, which should boost overall sales.
The company is also expected to integrate generative AI into its phones and PCs. Apple currently lags in the AI race behind rival tech giants Microsoft and Google.
Analysts currently view AI as a niche market, and Apple typically takes a wait-and-see approach before proposing a solution. They used the same strategy with the Apple Vision, though its sales have yet to take off.
Tim Cook is very positive about future Apple Vision sales, saying they’re “only scratching the surface.”
