Apple (NASDAQ:AAPL) has reported its fourth-quarter fiscal 2023 earnings of $1.46 per share, surpassing the Consensus Estimate by 5.04%, and marking a 13.2% increase YoY.

While the net sales saw a decrease of 0.7% YoY to $89.498 billion, this figure still beat the Consensus Estimate by 0.52%. Unfavorable forex exchange rates affected revenues negatively by approximately 200 basis points (bps).

Specifically, iPhone sales witnessed a 2.8% increase from the previous year, amounting to $43.805 billion, constituting 48.9% of total sales. However, this figure fell short of the Consensus Estimate by 0.97%.

Conversely, services revenues climbed by 16.3% YoY, reaching $22.31 billion and accounting for 24.9% of sales. This result exceeded consensus expectations by 4.53%.

Apple can now boast over 1 billion paid subscribers across its services portfolio, nearly doubling its subscriber base from three years ago. Both transacting and paid accounts displayed double-digit YoY growth during the reported quarter.

A closer look at the top-line details reveals that sales in America increased by 0.8% YoY, amounting to $40.115 billion and contributing 44.8% of total sales. Europe generated sales of $22.463 billion, a decline of 1.5% YoY, making up 25.1% of total sales. Meanwhile, Greater China witnessed a 2.5% decrease in sales from the previous year, totaling $15.084 billion, or 16.9% of total sales. Lastly, sales in the rest of the Asia Pacific reached $6.331 billion, marking a 0.7% decline YoY, and making up 7.1% of total sales. Japan’s sales were $5.505 billion, falling 3.4% YoY and accounting for 6.2% of total sales.

Regarding product sales, they constituted 75.1% of overall sales and experienced a 5.3% decrease YoY to $67.184 billion. Non-iPhone revenues, including iPad, Mac, and Wearables, fell by 17.5% collectively. iPad sales reached $6.443 billion, a 10.2% decrease YoY and constituting 7.2% of total sales, exceeding the Zacks Consensus Estimate by 10.04%. Mac sales amounted to $7.61 billion, marking a substantial 33.8% decrease from the previous year and accounting for 8.5% of total sales, falling short of the Zacks Consensus Estimate by 8.1%. Wearables, Home, and Accessories sales totaled $9.322 billion, dropping 3.4% YoY, and accounting for 10.4% of total sales, surpassing consensus estimates by 1.05%.

The gross margin expanded to 45.2%, marking a 290 bps increase YoY. Furthermore, it rose by 70 bps sequentially due to cost savings and a shift towards services, favorable in terms of the mix.

In the products category, the gross margin expanded to 36.6%, a sequential growth of 120 bps. Services’ gross margin reached 70.9%, marking a 40 bps sequential increase.

Operating expenses saw a 1.9% YoY increase to $13.46 billion, primarily due to higher research and development expenses, up by 8.1% YoY. Selling, general, and administrative expenses decreased by 4.5% YoY. The operating margin expanded 250 bps YoY, reaching 30.1%.

In terms of the balance sheet, as of September 30, 2023, cash and marketable securities totaled $162.099 billion, compared to $167.08 billion as of June 30, 2023. Term debt amounted to $105.103 billion as of September 30, 2023, down from $105.29 billion on June 30, 2023.

Apple returned almost $25 billion in the reported quarter through dividend payouts ($3.8 billion) and share repurchases ($15.5 billion).

Looking ahead, Apple expects that the December quarter in the first quarter of fiscal 2024 will see revenues similar to those of the same quarter the previous year. Apple predicts that iPhone revenues will grow on an absolute basis year-over-year, while Mac revenues will accelerate significantly compared to the September quarter. Revenue growth is expected to decelerate significantly YoY for both iPad and Wearables, Home, and Accessories due to different product launch timing. Apple anticipates that gross margin will fall between 45% and 46% in the first quarter of fiscal 2024, with operating expenses ranging between $14.4 billion and $14.6 billion.

Featured Image: Pexels

Please See Disclaimer