Apple has returned to its growth trajectory.
On February 2nd, Apple announced its first quarter results for the fiscal year 2024 as of December 30th, 2023. Revenue for the quarter was $119.6 billion, a year-on-year increase of 2%, and an expected $117.91 billion. This also means that Apple has returned to growth after four consecutive quarters of revenue decline. The net profit was 33.916 billion US dollars, an increase of 13% compared to the same period last year's 29.998 billion US dollars.
Last year's fourth quarter was the full financial quarter for the launch of the Apple iPhone 15 series, with iPhone revenue of $69.7 billion during the period, higher than the expected $68.55 billion, an increase of nearly 6%. This is a positive signal for the iPhone 15 model.
Apple achieved growth in all markets except Greater China this fiscal quarter, but revenue in Greater China decreased by 13% to $20.82 billion, a year-on-year decrease exceeding the expected $23.5 billion.
Apple CEO Tim Cook stated that "Apple's revenue growth this quarter was mainly driven by iPhone sales, and revenue from its services business reached a historic high." He also emphasized that some of the company's growth rates were actually "significantly accelerated" compared to the previous quarter, as the December quarter was one week less than the first quarter of last year, due to Apple's corporate calendar approach.
For Apple's performance, its stock price fell by more than 3% in post market trading.
IPhone revenue growth of 6% exceeded expectations
IPhone sales revenue accounts for more than half of Apple's total revenue, so how iPhone sales have a decisive impact on Apple's overall performance.
Apple's revenue from the iPhone in the first quarter was $69.702 billion, an increase of nearly 6% compared to $65.775 billion in the same period last year, exceeding analyst expectations.
The fourth quarter of 2023 was the first full quarter for the launch of Apple's new iPhone 15 series. However, due to Apple's own corporate calendar, the fiscal quarter was only 13 weeks, one week less than the same period last year, but still achieved good growth.
According to statistics from third-party organizations, Apple led other competitors in market share in the fourth quarter of last year (corresponding to Apple's first fiscal quarter), ranking first.
Canalys' report shows that Apple led the world with a market share of 24% in the fourth quarter. According to IDC's data, Apple's iPhone sales in the fourth quarter were 80 million units, with a market share of 24.7%.
Apple CFO Luca Maestri said that Apple expects iPhone sales in the March quarter to be similar to last year's revenue of $51.33 billion.
Another very important hardware product line of Apple, Mac, is also recovering. The first quarter sales increased by less than 1% to $7.7 billion, in line with expectations. The product line decreased by nearly 34% year-on-year in the previous fiscal quarter.
In 2024, the overall PC market is expected to recover and grow again, which is good news for Mac.
However, Apple's iPad sales continued to decline, dropping by 25% to $7.02 billion in the quarter, slightly lower than Wall Street's expectations. Apple did not release a new iPad in 2023, which is the first time in the history of the product.
Cook said that the performance of the iPad was "not surprising to us", "if you remember, in the quarter when we launched the iPad Pro and the 10th generation a year ago, the iPad faced very difficult competition."
Wearable devices, including AirPods headphones and Apple Watch, also performed poorly, with sales down 11% year-on-year to $11.95 billion.
Some analysts also suggest that Apple may release new versions of the iPad and Mac in March this year, which will help increase future sales of these two product lines.
The EU accounts for approximately 7% of Apple's global app store revenue
Apple's massive user base has led investors to have high expectations for Apple's service revenue. This quarter, Apple's service business revenue increased by 11% to $23.11 billion, but still slightly below expectations.
Investors closely monitor the growth of Apple's service business, which includes subscription services such as Apple Music, warranty, search license revenue, as well as payment for Apple Pay and Apple advertising.
Apple said it has 2.2 billion active devices in use, and many analysts say this data can help them predict the growth of Apple's services business. Last year, the number of active devices in the same period was 2 billion. Cook attributes service growth to products such as advertising, cloud services, payments, and the Apple App Store. He said that Apple has over 1 billion paying users, including apps subscribed through the app store.
Apple's service revenue is also influenced by policies and regulations around the world. On January 26th, Apple announced that in order to meet the requirements of the European Union's Digital Markets Act (DMA), Apple will begin adjusting its iOS and App Store rules in the European market from March 2024. EU developers operating under new business terms will have the option to launch app applications through the App Store or third-party markets, or use alternative payment methods through the app application.
Apple users in the EU region will be able to download apps from third-party app stores for the first time, and future iPhone buyers will also see a new menu for downloading other browsers such as Chrome and Firefox, replacing Apple's built-in Safari browser.
At this financial report communication meeting, Maestri revealed important data about the importance of Apple's App Store business in the European Union: the EU market accounts for approximately 7% of Apple's global App Store revenue.
Cook also stated that it is difficult to accurately estimate the impact of the new regulations on developers and consumers, so the company will closely monitor the development of the situation and make relevant adjustments in a timely manner.
Greater China revenue decreased by 13%
Apple has achieved sales growth in all regions except Greater China, which has decreased by nearly 13% compared to the same period last year. This may raise concerns about the decline in demand for Apple in its third largest market. The Greater China region is the largest market for Apple's iPhone, so the performance of the iPhone is highly anticipated.
Overall, the Apple iPhone performs well in the China region. According to IDC's data, Apple's market share in the fourth quarter of last year was 20%, a year-on-year decline of 2.1%, ranking first in market share, and its decline was less than that of other competitors.
However, in the fourth quarter of last year, Apple's other regional markets achieved growth, with only the Greater China market experiencing a double-digit decline. The financial report shows that the revenue of the Greater China region during the period was 20.819 billion US dollars, a 13% decrease from 23.905 billion US dollars in the same period last year. Analysts expect it to be $23.5 billion.
The revenue of the Americas department was $50.43 billion, compared to $49.278 billion in the same period last year, a year-on-year increase of 2.23%; The revenue of the European department was 30.397 billion US dollars, compared to 27.681 billion US dollars in the same period last year, a year-on-year increase of 9.81%; The revenue of the Japanese department was 7.767 billion US dollars, compared to 6.755 billion US dollars in the same period last year, a year-on-year increase of 14.98%; The revenue of other regions in the Asia Pacific region was $10.162 billion, compared to $9.535 billion in the same period last year, a year-on-year increase of 6.58%.
Cook attributed part of the performance of the Greater China market to the US dollar exchange rate. He also emphasized that among the top six best-selling smartphones in the Chinese urban market, Apple accounted for four.
Regarding the rapid development of Generative Artificial Intelligence (AIGC), Cook stated that Apple has invested significant time and effort in driving its development in the field of artificial intelligence, and will announce specific details later this year. "This type of technology, along with other technologies that shape the future, including AI, will continue to invest a lot of time and effort."