Apple reported first-quarter fiscal 2024 earnings of $2.18 per share, exceeding the Zacks Consensus Estimate by 4.31% and marking a solid 16% increase from the previous year.
Revenues witnessed a 2.1% year-over-year rise, reaching $119.58 billion, surpassing the Zacks Consensus Estimate by 1.66%.
The sales of products, constituting 80.7% of revenues, remained nearly unchanged from the previous year at $96.46 billion, with strong iPhone sales offsetting declines in iPad and Wearables, Home and Accessories categories. The 13-week quarter in December 2023, as compared to the 14-week quarter in the year-ago period, impacted top-line growth.
iPhone sales, amounting to $69.7 billion and accounting for 58.3% of total sales, surpassed the Zacks Consensus Estimate by 1.54%, driven by robust demand for iPhone 15 models.
Services revenues grew 11.3% to $23.12 billion, representing 19.3% of sales, although this figure was slightly below the consensus mark.
Expanding Subscriber Base
Apple’s Services now boast over 1 billion paid subscribers, more than double the number from four years ago. Subscriptions experienced double-digit growth year over year in the reported quarter.
Geographic Performance
Sales in America surged 2.3% year over year to $50.43 billion, surpassing the Zacks Consensus Estimate by 1.21%.
European sales climbed 9.8%, reaching $30.4 billion, while the Asia Pacific region (excluding Greater China) saw a 6.6% increase to $10.16 billion. In Japan, sales surged 15% to $7.77 billion.
Despite strong growth in several emerging markets, sales in Greater China declined 13% to $20.82 billion.
Mac Thrives, iPad & Wearables Struggle
Non-iPhone revenues, including iPad, Mac and Wearables, recorded a collective decline of 12.6% year over year.
Mac sales grew 0.6% to $7.78 billion, driven by robust demand for M3-powered MacBook Pro models.
iPad sales, however, dropped 25.3% to $7.02 billion, while Wearables, Home and Accessories sales fell 11.3% to $11.95 billion.
Operating Performance
The gross margin expanded to 45.9%, marking a 290-basis-point increase year over year. Operating margin improved to 33.8%.
Furthermore, Apple’s cash and marketable securities amounted to $172.58 billion, while term debt stood at $106.04 billion as of December 30, 2023.
Guidance and Market Position
For the second quarter of fiscal 2024, Apple foresees revenues and iPhone revenues similar to the year-ago quarter, adjusting for additional sales generated due to pent-up demand for iPhone 14 and iPhone 14 Pro Max.
In addition, the company anticipates double-digit growth in its Services segment and expects a gross margin of 46% in the upcoming quarter.
Despite fervently positive developments and a robust financial standing, Apple currently carries a Zacks Rank #3 (Hold), reflecting its market standing and potential.
While Apple has displayed enviable growth, it has experienced a 3% stock decline over the last six months, underperforming the broader Computer & Technology sector’s return of 12.4%.
For investors considering potential stocks, Shopify, BlackLine, and Pinterest are currently primed in the broader sector, each holding a Zacks Rank #1 (Strong Buy) at present.
Shopify and BlackLine are set to report their fourth-quarter 2023 results on February 13, while Pinterest is scheduled to report its results on February 8.