Apple reported a revenue and income beat for its fiscal fourth-quarter earnings on Thursday as Wall Road seemed for early indicators of how the brand new iPhone 16 is promoting with Apple Intelligence.
General iPhone demand continued to be robust, with income rising 6% 12 months over 12 months to $46.2 billion, beating analyst estimates, although the corporate continued to face headwinds in China. The corporate has confronted heavy competitors from Chinese language firms reminiscent of Huawei, Oppo, and Xiaomi.
The corporate additionally teased some early knowledge factors on iPhone 16 demand, which launched on September 20 towards the top of the quarter.
Whereas the vacation quarter will reveal way more about how the gadgets are promoting, Prepare dinner mentioned in an interview with CNBC that iPhone 15 gross sales have been “stronger than 14 within the year-ago quarter, and 16 was stronger than 15.”
Prepare dinner additionally mentioned Apple Intelligence — a key set of AI options that the corporate is closely advertising and marketing the iPhone 16 on — was a compelling cause for shoppers to improve. Consumer adoption of iOS 18.1, which launched within the US on Monday and included the primary Apple Intelligence options, was twice the speed of iOS 17.1 a 12 months in the past.
The Apple CEO mentioned he is already receiving notes from clients praising the brand new well being and listening to help options that lately launched for AirPods Professional 2.
Apple’s iPad, wearables, and companies divisions missed analysts’ income estimates. The companies enterprise, which noticed file income, hit a brand new milestone with a $100 billion run charge.
Gross sales in China, an essential marketplace for Apple, have been down 12 months over 12 months to $15.03 billion. Analysts had estimated $15.8 billion.
“We’re more than happy that our lively put in base of gadgets reached a brand new all-time excessive throughout all merchandise and all geographic segments, because of our excessive ranges of buyer satisfaction and loyalty,” Prepare dinner mentioned in an announcement accompanying the earnings launch.
Trying to the vacation quarter, Apple mentioned it anticipated gross sales development within the low to single digits. The corporate is planning to launch new Apple Intelligence options in December. Prepare dinner mentioned he is been utilizing early variations of the software program and it is “altering my each day life.”
Prepare dinner declined to touch upon the election on an earnings name with analysts. When requested about attainable tariffs tied to the election outcomes and any anticipated affect on Apple, which manufactures lots of its gadgets within the nation, Prepare dinner mentioned he would punt on the query. He additionally mentioned he did not need to touch upon the DOJ’s antitrust lawsuit filed in opposition to Apple in March.
“I’ll save that for one more day,” he mentioned.
Talking about AI investments and analysis and growth spending, CFO Luca Maestri — who was on his ultimate earnings name for Apple earlier than transitioning to a brand new position— mentioned that Apple had been investing closely in R&D over the previous a number of years. The corporate had additionally reallocated a few of its inside sources towards AI, he added.
The “degree of depth towards AI has elevated so much,” the CFO mentioned.
Apple’s inventory was down round 2% in after-hours buying and selling instantly following the analyst name.
And that is wrap!
Apple wraps the decision after a lot dialogue about how its AI efforts will form the upcoming months for the corporate.
The top of the decision additionally concludes CFO Maestri’s participation in future earnings calls.
The inventory was buying and selling down round 2% as the decision ends.
Apple says it is “very completely satisfied” when requested about companies.
The recurring portion of Apple’s companies — suppose subscriptions like Apple TV+ — is rising sooner than the transactional companies, Maestri tells analysts.
Apple’s companies enterprise hit a $100 billion run-rate, a brand new milestone.
Prepare dinner is requested about DOJ’s antitrust grievance in opposition to Apple, which was filed in March.
Prepare dinner says he would not need to speculate on an ongoing authorized case. “I’ll save that for one more day,” he says.
Analyst asks about AI spending expectations on account of Apple Intelligence.
Maestri says Apple has been investing closely in R&D over the past a number of years, and its R&D development has been “vital” over that point.
Apple has additionally reallocated a few of its sources towards AI, he provides.
The “degree of depth towards AI has elevated so much,” Maestri says. You won’t see the total extent of it due to inside reallocation of Apple’s engineering base throughout the firm, he provides.
Analysts are curious concerning the staggered Apple Intelligence rollout globally and any affect on demand cadence.
Prepare dinner and Maestri inform analysts that the rollout of Apple Intelligence will take longer than with previous software program updates that Apple sometimes launches globally, as the corporate mentioned at WWDC.
“It is clearly, as you level out, a special cadence, if you’ll, than we’d usually do,” Prepare dinner says in response to an analyst’s query.
“By way of the demand curve, what we consider is that it is a compelling cause for upgrading,” Prepare dinner says. “That is each my private expertise and suggestions that I am getting. We’ll see. We’re not projecting past the present quarter, clearly — we simply do not do this.”
Prepare dinner is requested concerning the election and attainable tariffs, which may affect Apple.
The Apple CEO says he would not need to speculate and that he’ll punt on the query.
Prepare dinner talks Apple’s China income.
Prepare dinner says China income was comparatively flat 12 months over 12 months.
The CEO says a key part is the sequential enchancment in overseas alternate. “That helped us out. As you understand, it has been a headwind that we have been reporting for a time frame,” Prepare dinner says.
“What else is occurring there may be that the put in base of lively gadgets reached an all-time excessive,” he says. “We had the Prime 2 top-selling smartphones in city China,” Prepare dinner says, referencing a third-party report. He additionally factors to the extent of recent clients shopping for Mac and iPad being “effectively over 50%.”
“A number of constructive indicators there,” Prepare dinner provides.
“So far as stimulus, it is a clear focus of the group there,” Prepare dinner says. “However I am not an economist and do not need to ad-lib on the impact of it.”
Prepare dinner says he is utilizing future Apple Intelligence options.
Prepare dinner says upcoming software program releases for iOS and Apple Intelligence are “altering my each day life.” He says he is excited concerning the well being options — together with the sleep apnea characteristic.
Prepare dinner is requested about early iPhone 16 demand and Apple Intelligence.
Apple “could not be extra excited” for its upcoming AI options, Prepare dinner says it is a “compelling improve cause.”
Prepare dinner mentioned that iOS 18.1, which comes with Apple Intelligence, is being adopted twice as quick as 17.1.
So far as iPhone 16 demand, that is as particular as Prepare dinner appears keen to get.
Apple opens the decision to analyst questions.
Prepare dinner and Maestri will now reply questions from Wall Road analysts.
CFO offers some steering for the vacation quarter.
Apple would not difficulty full steering for the next quarter, however Apple’s CFO does present some shade about what the corporate is anticipating for the vacation quarter.
Gross sales to develop within the low- to mid-single digits
Companies income to develop much like what it did in fiscal 2024
Gross margin between 46% and 47%
Tax charge to be round 16%
Macs hit an set up base file this quarter, CFO says.
Amazon
Mac’s put in base reached an all-time excessive, with about half of the purchasers this quarter being new to Macs, Maestri says.
Prepare dinner shouts out the ultimate earnings name for Apple’s outgoing CFO, who’s transferring to a brand new position.
On the finish of his ready remarks, Prepare dinner takes a second to say that this would be the ultimate earnings name from CFO Luca Maestri, who’s transitioning into a special position starting in January.
Prepare dinner thanks Maestri for “shaping Apple as we all know it at the moment.” Maestri will proceed reporting to Prepare dinner in a brand new position as head of Apple’s info methods and expertise and real-estate growth.
His successor within the CFO position will probably be Kevan Parekh.
Prepare dinner says he is already getting notes from Apple AirPods Professional 2 customers concerning the new listening to help characteristic.
Prepare dinner says he is already getting suggestions calling the listening to take a look at and listening to help options on the AirPods Professional 2 “life-changing.”
“We consider this may make a significant distinction in person’s lives,” Prepare dinner says.
Apple Intelligence is bringing a “new period,” Prepare dinner says.
“Apple Intelligence marks the start of a brand new chapter for Apple innovation,” Prepare dinner says.
The brand new iPhone 16, iPad, and Mac lineups get a shoutout for his or her compatibility with AI.
Prepare dinner confirms extra Apple Intelligence options are dropping in December.
Prepare dinner says ChatGPT integration, a extra conversational Siri, and extra localized English choices are coming in December. And, extra Apple Intelligence will roll out in “the approaching months.”
Prepare dinner begins with ready remarks highlighting income information for the September quarter.
He additionally shouts out an all-time income file in India through the quarter.
And we’re off! Apple’s name with analysts begins.
Apple’s fiscal fourth-quarter earnings name kicks off with opening remarks from Apple CEO Tim Prepare dinner and CFO Luca Maestri. That is anticipated to be Maestri’s final name as he steps down from the CFO position.
Analyst reacts: Apple displaying ‘resilience’ amid market headwinds.
Analyst Jacob Bourne at Emarketer, a sister firm to Enterprise Insider, mentioned that Apple’s earnings “show its resilience within the face of market headwinds, with iPhone demand enhancing in China the place premium fashions gross sales surpassed expectations.”
“The staggered rollout of Apple Intelligence may curtail a few of the system improve cycle’s momentum, however the mixture of sturdy companies income development and wholesome iPhone 16 demand positions Apple effectively for the vacation season,” Bourne mentioned.
“Apple is prioritizing execution over pace — a technique that might show to be both prudent or probably pricey relying on how rapidly rivals advance their AI capabilities. A key query is whether or not Apple’s cautious AI rollout technique, whereas probably dulling the vacation gross sales potential, is perhaps advantageous by making certain a greater person expertise in the long term.”
Tim Prepare dinner provides an early indicator of iPhone 16 gross sales in an interivew.
The Apple CEO tells CNBC that iPhone 15 gross sales have been “stronger than 14 within the year-ago quarter, and 16 was stronger than 15.”
Apple stories 4th-quarter revenue beat, however inventory falls 1% after hours.
Apple CEO Tim Prepare dinner.Justin Sullivan/Getty Photographs
Apple inventory dropped about 1% in after-hours buying and selling after the corporate reported a revenue beat in its fiscal fourth quarter.
Listed here are the outcomes:
Fourth Quarter
Income: $94.93 billion vs estimate of $94.36 billion
Merchandise income: $69.96 billion vs estimate of $69.15 billion
iPhone income: $46.22 billion vs estimate of $45.04 billion
Mac income: $7.74 billion vs estimate of $7.74 billion
iPad income: $6.95 billion vs estimate of $7.07 billion
Wearables, dwelling and equipment: $9.04 billion vs estimate of $9.17 billion
Service income: $24.97 billion vs estimate of $25.27 billion
Higher China income: $15.03 billion vs estimate of $15.8 billion
Adjusted EPS: $1.64 vs estimate of $1.60
Complete working bills: $14.29 billion vs estimate of $14.35 billion
Gross margin: $43.88 billion vs estimate of $43.44 billion
Money and money equivalents: $29.94 billion vs estimate of $26.04 billion
Value of gross sales: $51.05 billion vs estimate of $50.81 billion
Complete present property: $152.99 billion vs estimate of $145.08 billion
Complete present liabilities: $176.39 billion vs estimate of $139.88 billion
Supply for analyst estimates: Bloomberg
Apple inventory drops 1.34% heading into the corporate’s earnings report.
Markets Insider
Apple inventory traded decrease on Thursday, down 1.34% to $227.13 at 3:01 p.m. Jap Time.
The inventory decline got here amid a broader sell-off in mega-cap tech shares following earnings stories from Microsoft and Meta Platforms, with shares of each tech companies down about 5%.
The Nasdaq 100 traded about 2.5% decrease whereas the S&P 500 was down 1.5% Thursday afternoon.
Financial institution of America tells traders to ‘look previous the iPhone 16 noise.’
With some conflicting views on Wall Road about iPhone 16 demand in current weeks, Financial institution of America mentioned traders ought to “look previous the iPhone 16 noise to affect of Apple Intelligence.”
“Opposite to each cycle the place all of the {hardware}/software program performance is kind of static by way of the course of the cycle, we view the cycle as extra dynamic with extra materials software program updates that will increase the worth to the person,” Financial institution of America analyst Wasmi Mohan mentioned in a be aware final week.
Mohan mentioned iPhone demand to select up over the subsequent few months as Apple’s AI options grow to be extra sturdy and expects the corporate to promote 80 million iPhone items through the vacation season.
Mohan is inspired by a barely greater common promoting value for iPhones as shoppers overwhelmingly proceed to gravitate in direction of the costlier Professional fashions.
Financial institution of America charges Apple at “Purchase” with a $256 value goal.
Goldman sees upcoming AI software program for the iPhone as a power.
Miguel Candela/SOPA Photographs/LightRocket by way of Getty Photographs
Goldman Sachs mentioned it sees “upside to consensus income and EPS pushed by outperformance in iPhone and Companies” in a be aware final week.
Goldman analyst Michael Ng expects the corporate to report $1.61 in earnings per share and $94.5 billion in income, which might characterize year-over-year development of 6%.
Like different analysts, Ng is concentrated on the affect of AI and the entire software program options Apple is ready to launch within the subsequent few months.
“Though Apple Intelligence has but to be a requirement driver, we’re inspired by the rollout of Apple Intelligence options with iOS 18.1 (Week of October 28, contains Writing Instruments, notification summaries, Clear Up in Pictures), iOS 18.2 (at present in beta for est. December launch, contains Genmoji, Picture Playground, ChatGPT), and iOS 18.4 (est. March 2025 launch, extra superior Siri, personalization, on-screen consciousness),” Ng mentioned.
Goldman Sachs charges Apple at “Purchase” with a $275 value goal.
Wedbush expects iPhone 16 power to catapult Apple to $4 trillion valuation.
Wedbush analyst Dan Ives is not budging from him bullish view on Apple heading into the corporate’s monetary outcomes.
He argues that the iPhone is on the verge of a supercycle as shoppers improve their gadgets to get entry to Apple Intelligence options, and Apple will grow to be the primary $4 trillion firm in 2025.
“We anticipate a robust iPhone efficiency for the September quarter and anticipate a comparatively bullish December iPhone demand commentary from Prepare dinner & Co. regardless of most of the bears lately yelling hearth in a crowded theater on the power of iPhone 16 gross sales,” Ives mentioned in a be aware on Sunday.
Ives says that bearish views on Apple fail to understand its put in base of 1.5 billion iPhones that can finally should be changed, in addition to the rising Companies enterprise that helps monetize the huge person base, and the potential for Apple to be the gatekeeper of AI applied sciences for a big group of shoppers.
Wedbush charges Apple at “Outperform” with a $300 value goal.
JPMorgan expects Apple to beat outcomes however provide underwhelming steering.
An Apple Retailer in Towson, Maryland.Andrew Harnik by way of Getty Photographs
JPMorgan expects Apple to report a robust fourth-quarter earnings report that can seemingly beat income and revenue estimates however that it’ll additionally disappoint with weaker-than-expected steering for the vacation quarter.
“Promote-through for iPhone 16 collection began off slower than iPhone 15, and whereas momentum has improved in current weeks, the magnitude of the development continues to be placing volumes modestly beneath final 12 months,” JPMorgan analyst Samik Chatterjee mentioned in a Monday be aware.
Like many analysts on Wall Road, Chatterjee is in search of proof that AI options will drive a bump in iPhone gross sales.
JPMorgan charges Apple at “Chubby” with a $265 value goal.
Apple’s consensus fourth-quarter income estimate is $94.36 billion.
4th quarter
Income estimate: $94.36 billion
Merchandise income estimate: $69.15 billion
IPhone income estimate: $45.04 billion
Mac income estimate: $7.74 billion
IPad income estimate: $7.07 billion
Wearables, dwelling and equipment estimate: $9.17 billion
Service income estimate: $25.27 billion
Higher China rev. estimate: $15.8 billion
EPS estimate: $1.60
Adjusted EPS estimate: $1.60
Working money circulation estimate: $34.66 billion
Complete working bills estimate: $14.35 billion
Gross margin estimate: $43.44 billion
Money and money equivalents estimate: $26.04 billion
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