Despite a year-over-year fall in iPhone sales, Apple (AAPL) surpassed analysts’ forecasts on both the top and bottom lines when it revealed its third quarter profits on Thursday after the bell.
Wall Street was keeping a close eye on Apple’s performance in its most significant market—China. The business has battled to reclaim market share from domestic competitors like Huawei, but it hasn’t lived up to the hype in the area.
Following the story, Apple shares saw minimal movement in pre-market trade on Friday, falling by less than 1%.
Apple’s Greater China revenue peaked at $14.7 billion. Bloomberg surveyed analysts who projected revenue of $15.2 billion. For the same period last year, Apple reported $15.7 billion in revenue from China. Against estimates of $38.9 billion, total iPhone sales came in at $39.2 billion, which was less than the $39.6 billion Apple recorded in the third quarter of 2023.
Apple CFO Luca Maestri told Josh Lipton of Yahoo Finance that the company’s sales are typically increasing in the area despite the miss. Furthermore, Maestri stated that sales were higher than in the first half of the year and that Apple is witnessing record upgrades in the nation.
Apple reported $1.40 profits per share (EPS) for the quarter on $85.5 billion in revenue. EPS of $1.35 and $84.4 billion in revenue were what analysts were predicting, according to estimates aggregated by Bloomberg. At the same time last year, Apple reported $81.7 billion in revenue and $1.26 in earnings per share.
Despite a challenging start to the year, Apple’s shares have increased by about 18.6% year to date. This can be partially attributed to the company’s performance at the Worldwide Developer Conference in May, where it unveiled its Apple Intelligence software.
Revenue from services topped $24.2 billion. Wall Street was predicting $23.9 billion in revenue for the segment. Thanks in part to the company’s new iPad Pro line, Apple’s iPad sales exceeded $7.1 billion, exceeding the $6.6 billion analysts had projected.
Mac’s revenue surpassed $6.8 billion in the sector the previous year, coming in at $7 billion. However, compared to Apple’s $8.2 billion figure from the previous year, wearables sales fell to $8 billion.
Additionally, Apple is getting ready to release its much awaited Apple Intelligence program later this autumn. Mark Gurman of Bloomberg claims that the program, which runs on Apple’s generative AI technology, will be available for iPhones, iPads, and Macs at some point in October.
Regarding Apple Intelligence’s possible impact on iPhone sales in the upcoming year, analysts are divided; while some predict the software will start a new sales supercycle, others have more pessimistic views for how the technology would affect Apple’s bottom line.
Crucially, Apple Intelligence is limited to iPhone 15 Pro and later models, almost ensuring that consumers who are eager to get the technology would have to upgrade to a new, more potent phone as soon as it becomes available.
In either case, Apple must make sure Apple Intelligence has the features that entice users to use the product if it hopes to make it a success.