Apple sales rise 6%, company seeing early iPhone 16 demand

Apple’s fiscal fourth-quarter results beat Wall Street expectations for revenue and earnings per share, but net income slumped after the company paid a one-time charge as part of a tax decision in Europe.

Apple shares fell as much as 2% in extended trading on Thursday.  

Here’s how the iPhone maker did versus LSEG consensus estimates for the quarter ending Sept. 28:  

Earnings per share: $1.64, adjusted, versus $1.60 estimated 
Revenue: $94.93 billion vs. $94.58 billion estimated 
iPhone revenue: $46.22 billion vs. $45.47 billion estimated 
Mac revenue: $7.74 billion vs. $7.82 billion estimated 
iPad revenue: $6.95 billion vs. $7.09 billion estimated 
Other Products revenue: $9.04 billion vs. $9.21 billion estimated 
Services revenue: $24.97 billion vs. $25.28 billion estimated 
Gross margin: 46.2% vs. 46.0% estimated 

Overall iPhone revenue grew 6%, in the first sign of how the iPhone 16 is faring in the market. Apple’s newest devices came out Sept. 20, giving Apple about a week of new product sales in the quarter. It’s still Apple’s most important product, accounting for nearly 49% of the company’s overall sales.  

Sales of the iPhone 15 were “stronger than 14 in the year-ago quarter, and 16 was stronger than 15,” Apple CEO Tim Cook told CNBC’s Steve Kovach.  

Cook said the company was looking forward to Apple Intelligence, the AI system for iPhones and Macs that started to roll out this week as part of the iOS 18.1 update.  

“We’re getting great feedback from customers and developers already and a really early stat, which is only three days worth of data: Users are adopting iOS 18.1 at twice the rate that they adopted 17.1 in the year-ago quarter,” Cook said. 

Apple said on a call with analysts that it expects “low to mid-single digit” sales growth during the December quarter. It also signaled that it expects services growth to be about the same as its growth rate for the past year, which was 12.87%.

Apple reported $14.73 billion, or 97 cents per share, in net income during the quarter, versus $22.96 billion, or $1.47 per share, in the year-ago period. Apple’s adjusted earnings per share, after removing the one-time tax charge, were up 12% on an annual basis.  

Revenue rose about 2% for the full fiscal year to $391.04 billion. Quarterly revenue in the September period was up 6%. Its cash pile now stands at $156.65 billion.

During the quarter, Apple paid a one-time income tax charge of $10.2 billion to resolve a long-running case dating back to 2016 over how the company handled taxes in Ireland.

Apple’s iPad business had the strongest growth of any of Apple’s hardware lines with an 8% increase in sales to $6.95 billion. Part of the sales were from pent-up demand. Apple released new iPad Pro and Air models in May after going through all of 2023 without releasing new iPads.  

Apple’s Mac business rose 2% on an annual basis to report $7.74 billion in revenue during the quarter, which includes back-to-school laptop sales. Cook told CNBC that the growth was driven by sales of the company’s MacBook Air, which was updated with new chips in the spring. 

Apple’s services business — which includes online subscriptions such as iCloud, Google search revenue, and AppleCare warranties for Apple hardware — remains a juggernaut and grew 12% on an annual basis to nearly $25 billion in sales. However, Apple’s services revenue came in under LSEG consensus expectations.  

The company reports its AirPods headphones, Homepod speakers and Apple Watch sales in a category it calls Other Products or wearables. That unit’s revenue came in light versus forecasts at $9.04 billion, which was down 3% year over year. The company released new Apple Watch and AirPods models during the quarter alongside the new iPhones.  

Apple’s results in China are closely watched by investors as it is the company’s third-largest region after the Americas and Europe. Apple also faces renewed competition from local Chinese handset makers such as Huawei. Apple’s revenue in China, Taiwan, and Hong Kong was down slightly year over year at $15.03 billion. 

The company said it spent $29 billion on share repurchases and dividends during the quarter.

Apple wraps up a busy week of earnings for the top tech companies. Alphabet on Tuesday reported better-than-expected results, driven by cloud growth. Microsoft issued disappointing guidance on Wednesday, leading to the stock’s steepest sell-off in two years, while Meta beat estimates but warned of significant acceleration in its infrastructure expenses next year. Amazon reported strong growth in its AWS cloud business on Thursday.  

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