Apple earnings live updates: Stock falls after earnings beat on China weakness
Date: 2024-10-31
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Apple reported fiscal fourth-quarter earnings that beat analyst profit and revenue estimates.
iPhone revenue beat estimates while revenue from Apple's Services business missed estimates.
Revenue from China misses estimates, however. Apple stock dropped about 1% following the results.
Apple reported a profit and revenue beat for its fiscal fourth-quarter earnings after the market close on Thursday.
Revenue for Apple's iPhone business beat analyst estimates, while its iPad, wearables, and services division missed analysts' revenue estimates.
"We are very pleased that our active installed base of devices reached a new all-time high across all products and all geographic segments, thanks to our high levels of customer satisfaction and loyalty," Apple CEO Tim Cook said in a statement accompanying the earnings release.
However, revenue from China, a key market for the company, was lower than expected at $15.03 billion versus estimates of $15.8 billion.
The stock dropped about 1% immediately following the results.
Apple's earnings call with analysts kicked off at 5 p.m. ET.
Macs hit an install base record this quarter, CFO says.
Amazon
Mac's installed base reached an all-time high, with about half of the customers this quarter being new to Macs, Maestri says.
Cook shouts out the final earnings call for Apple's outgoing CFO, who is moving to a new role.
At the end of his prepared remarks, Cook takes a moment to say that this will be the final earnings call from CFO Luca Maestri, who is transitioning into a different role beginning in January.
Cook thanks Maestri for "shaping Apple as we know it today." Maestri will continue reporting to Cook in a new role as head of Apple's information systems and technology and real-estate development.
His successor in the CFO role will be Kevan Parekh.
Cook says he's already getting notes from Apple Airpods Pro 2 users about the new hearing aid feature.
Cook says he's already getting feedback calling the hearing test and hearing aid features on the AirPods Pro 2 "life-changing."
"We believe this will make a meaningful difference in user's lives," Cook says.
Apple Intelligence is bringing a "new era," Cook says.
"Apple Intelligence marks the beginning of a new chapter for Apple innovation," Cook says.
The new iPhone 16, iPad, and Mac lineups get a shoutout for their compatibility with AI.
Cook confirms more Apple Intelligence features are dropping in December.
Cook said ChatGPT integration, a more conversational Siri, and more localized English options are coming in December. And, more Apple Intelligence will roll out in "the coming months."
Cook begins with prepared remarks highlighting revenue records for the September quarter.
He also shouts out an all-time revenue record in India during the quarter.
And we're off! Apple's call with analysts begins.
Apple's fiscal fourth-quarter earnings call kicks off with opening remarks from Apple CEO Tim Cook and CFO Luca Maestri. This may be Maestri's last call as he steps down from the CFO role.
Analyst reacts: Apple showing 'resilience' amid market headwinds.
Analyst Jacob Bourne at Emarketer, a sister company to Business Insider, said that Apple's earnings "show its resilience in the face of market headwinds, with iPhone demand improving in China where premium models sales surpassed expectations."
"The staggered rollout of Apple Intelligence could curtail some of the device upgrade cycle's momentum, but the combination of robust services revenue growth and healthy iPhone 16 demand positions Apple well for the holiday season," Bourne said.
"Apple is prioritizing execution over speed — a strategy that could prove to be either prudent or potentially costly depending on how quickly competitors advance their AI capabilities. A key question is whether Apple's cautious AI rollout strategy, while potentially dulling the holiday sales potential, might be advantageous by ensuring a better user experience in the long run."
Tim Cook gives an early indicator of iPhone 16 sales in an interivew.
The Apple CEO tells CNBC that iPhone 15 sales were "stronger than 14 in the year-ago quarter, and 16 was stronger than 15."
Apple reports 4th-quarter profit beat, but stock falls 1% after hoursApple CEO Tim Cook.
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Apple stock dropped about 1% in after-hours trading after the company reported a profit beat in its fiscal fourth quarter.
Here are the results:
Fourth Quarter
Revenue: $94.93 billion vs estimate of $94.36 billion
Products revenue: $69.96 billion vs estimate of $69.15 billion
iPhone revenue: $46.22 billion vs estimate of $45.04 billion
Mac revenue: $7.74 billion vs estimate of $7.74 billion
iPad revenue: $6.95 billion vs estimate of $7.07 billion
Wearables, home and accessories: $9.04 billion vs estimate of $9.17 billion
Service revenue: $24.97 billion vs estimate of $25.27 billion
Greater China revenue: $15.03 billion vs estimate of $15.8 billion
Adjusted EPS: $1.64 vs estimate of $1.60
Total operating expenses: $14.29 billion vs estimate of $14.35 billion
Gross margin: $43.88 billion vs estimate of $43.44 billion
Cash and cash equivalents: $29.94 billion vs estimate of $26.04 billion
Cost of sales: $51.05 billion vs estimate of $50.81 billion
Total current assets: $152.99 billion vs estimate of $145.08 billion
Total current liabilities: $176.39 billion vs estimate of $139.88 billion
Source for analyst estimates: Bloomberg
Apple stock drops 1.34% heading into the company's earnings report.
Markets Insider
Apple stock traded lower on Thursday, down 1.34% to $227.13 at 3:01 p.m.
The stock decline came amid a broader sell-off in mega-cap tech stocks following earnings reports from Microsoft and Meta Platforms, with shares of both tech firms down about 5%.
The Nasdaq 100 traded about 2.5% lower while the S&P 500 was down 1.5% Thursday afternoon.
Bank of America tells investors to 'look past the iPhone 16 noise'.
With some conflicting views on Wall Street about iPhone 16 demand in recent weeks, Bank of America said investors should "look past the iPhone 16 noise to impact of Apple Intelligence."
"Contrary to every cycle where all the hardware/software functionality is more or less static through the course of the cycle, we view the cycle as more dynamic with more material software updates that increases the value to the user," Bank of America analyst Wasmi Mohan said in a note last week.
Mohan said iPhone demand to pick up over the next few months as Apple's AI features become more robust and expects the company to sell 80 million iPhone units during the holiday season.
Mohan is encouraged by a slightly higher average selling price for iPhones as consumers overwhelmingly continue to gravitate towards the more expensive Pro models.
Bank of America rates Apple at "Buy" with a $256 price target.
Goldman sees upcoming AI software for the iPhone as a strength.
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Goldman Sachs said it sees "upside to consensus revenue and EPS driven by outperformance in iPhone and Services" in a note last week.
Goldman analyst Michael Ng expects the company to report $1.61 in earnings per share and $94.5 billion in revenue, which would represent year-over-year growth of 6%.
Like other analysts, Ng is focused on the impact of AI and all of the software features Apple is set to release in the next few months.
"Although Apple Intelligence has yet to be a demand driver, we're encouraged by the rollout of Apple Intelligence features with iOS 18.1 (Week of October 28, includes Writing Tools, notification summaries, Clean Up in Photos), iOS 18.2 (currently in beta for est. December release, includes Genmoji, Image Playground, ChatGPT), and iOS 18.4 (est. March 2025 release, more advanced Siri, personalization, on-screen awareness)," Ng said.
Goldman Sachs rates Apple at "Buy" with a $275 price target.
Wedbush expects iPhone 16 strength to catapult Apple to $4 trillion valuation.
Wedbush analyst Dan Ives isn't budging from him bullish view on Apple heading into the company's financial results.
He argues that the iPhone is on the verge of a supercycle as consumers upgrade their devices to get access to Apple Intelligence features, and Apple will become the first $4 trillion company in 2025.
"We expect a strong iPhone performance for the September quarter and expect a relatively bullish December iPhone demand commentary from Cook & Co. despite many of the bears recently yelling fire in a crowded theater on the strength of iPhone 16 sales," Ives said in a note on Sunday.
Ives says that bearish views on Apple fail to appreciate its installed base of 1.5 billion iPhones that will eventually need to be replaced, as well as the growing Services business that helps monetize the massive user base, and the potential for Apple to be the gatekeeper of AI technologies for a large group of consumers.
Wedbush rates Apple at "Outperform" with a $300 price target.
JPMorgan expects Apple to beat results but offer underwhelming guidance.An Apple Store in Towson, Maryland.
Andrew Harnik via Getty Images
JPMorgan expects Apple to report a strong fourth-quarter earnings report that will likely beat revenue and profit estimates but that it will also disappoint with weaker-than-expected guidance for the holiday quarter.
"Sell-through for iPhone 16 series started off slower than iPhone 15, and while momentum has improved in recent weeks, the magnitude of the improvement is still putting volumes modestly below last year," JPMorgan analyst Samik Chatterjee said in a Monday note.
Like many analysts on Wall Street, Chatterjee is looking for evidence that AI features will drive a bump in iPhone sales.
JPMorgan rates Apple at "Overweight" with a $265 price target.
Apple's consensus fourth-quarter revenue estimate is $94.36 billion.
4th quarter
Revenue estimate: $94.36 billion
Products revenue estimate: $69.15 billion
IPhone revenue estimate: $45.04 billion
Mac revenue estimate: $7.74 billion
IPad revenue estimate: $7.07 billion
Wearables, home and accessories estimate: $9.17 billion
Service revenue estimate: $25.27 billion
Greater China rev. estimate: $15.8 billion
EPS estimate: $1.60
Adjusted EPS estimate: $1.60
Operating cash flow estimate: $34.66 billion
Total operating expenses estimate: $14.35 billion
Gross margin estimate: $43.44 billion
Cash and cash equivalents estimate: $26.04 billion
Cost of sales estimate: $50.81 billion
Total current assets estimate: $145.08 billion
Total current liabilities estimate: $139.88 billion
