Apple exceeded revenue and earnings per share (EPS) expectations in its fiscal first-quarter report, despite a 13% sales decline in China, a crucial market for the company. The iPhone maker’s shares dipped slightly by over 1% in after-hours trading following the announcement.
In the quarter ending December 30, Apple reported an EPS of $2.18, outperforming the LSEG consensus estimate of $2.10, with total revenue reaching $119.58 billion against expectations of $117.91 billion. This performance signifies a turnaround for Apple, marking a 2% sales growth in the December quarter and ending a year-long trend of annual revenue declines.
Detailing product performance, iPhone sales led with $69.70 billion, surpassing estimates of $67.82 billion. This reflects a nearly 6% increase, significant as it represents the first full quarter of sales for the iPhone 15 models. Mac sales also saw a slight increase to $7.78 billion, just above the $7.73 billion forecast.
However, iPad revenue fell 25% to $7.02 billion, missing the expected $7.33 billion. The “Other Products” category, including AirPods and Apple Watch, exceeded forecasts with $11.95 billion in revenue. The services segment, crucial for Apple’s growth, increased 11% to $23.11 billion, albeit slightly below the $23.35 billion projection.
Apple’s gross margin for the quarter was reported at 45.9%, higher than the 45.3% estimate, with net income up 13% from the previous year to $33.92 billion. Despite these gains, Apple did not offer guidance for the current quarter.
Apple CEO Tim Cook, in a statement to CNBC’s Steve Kovach, emphasized the significance of the quarter’s growth rates, noting, “It’s important to keep in mind that last year, we had 14 weeks in the quarter. This year we had 13,” highlighting the operational calendar’s impact on year-over-year comparisons.
Cook also addressed the company’s services growth, attributing it to various sectors including advertising, cloud services, payments, and the App Store. He stated, “We’re four out of the top six top-selling smartphones in urban China,” despite the overall sales decline in the region.
He further explained the situation in China, saying, “If you look at the 13 and then you do a double click to look at Mainland China and look at constant currency, the dollar is very strong versus the RMB. And so that -13 goes to a mid-single digit number.”
The Q1 earnings call comes on the eve of the launch of Apple Vision Pro tomorrow, the company’s first spatial computer.
