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Apple has announced its financial results for the fiscal third quarter of 2024, ending on June 29. The company reported a record June quarter revenue of $85.8 billion, reflecting a 5 per cent year-over-year increase. Quarterly earnings per diluted share rose by 11 per cent to $1.40.
“Today Apple is reporting a new June quarter revenue record of $85.8 billion, up 5 per cent from a year ago,” stated Tim Cook, Apple’s CEO. “During the quarter, we were excited to announce updates to our software platforms at our Worldwide Developers Conference, including Apple Intelligence, a personal intelligence system that puts powerful, private generative AI models at the core of iPhone, iPad, and Mac. We very much look forward to sharing these tools with our users, and we continue to invest significantly in the innovations that will enrich our customers’ lives, while leading with the values that drive our work.”
Strong Growth in Services Sector
The earnings report highlighted significant growth in Apple's services sector, which contributed $24.2 billion to the overall revenue, marking an increase from $21.2 billion in the same quarter last year. This growth was underscored by strong performances across all geographical segments, including the Rest of Asia Pacific, which saw an increase in net sales to $6.39 billion from $5.63 billion.
Apple’s strong performance in the Indian market contributed to this growth in the Rest of Asia Pacific region, as the company continues to expand its presence in the region. The increased demand for iPhones, iPads, and other Apple products in India has been a significant factor in the revenue boost for the Rest of Asia Pacific segment. In the earnings call Luca Maestri noted that it had a record quarter for the Mac driven by the M3 MacBook Air in many markets including India.
Notable Increase in iPad Sales
The company’s iPad division saw a notable increase of 23.6 per cent due to the recent launch of the latest iPad Pro and iPad Air tablets, following several quarters of soft sales. This, combined with strong performances in services and Mac sales, contributed to Apple’s quarterly revenue of $85.8 billion, up 5 per cent from the year-ago quarter. Meanwhile, iPhone and wearables revenue remained relatively flat as consumers anticipate a new wave of products.
Tim Cook noted that the iPhone 15 has done better than the iPhone 14 on the earnings call despite overall revenue being down by 1 per cent year on year.
By the time Apple reports its next earnings, the company will have introduced the iPhone 16, iPhone 16 Plus, iPhone 16 Pro, and iPhone 16 Pro Max. Among other improvements, the Pro models will have slightly larger displays, while the standard iPhones will incorporate the Action Button that debuted last year. These devices are expected to arrive in September, along with new AirPods and refreshed Apple Watch hardware. Additionally, Apple is rumoured to be working on updates for its MacBook Pro and Mac mini, likely to feature the M4 chip later this year.
Upcoming Software Releases and AI Integration
On the software front, Apple is currently in the midst of public betas for its forthcoming iOS 18, iPadOS 18, tvOS 18, macOS Sequoia, and watchOS 11 releases. For the iPhone, iPad, and Mac, these updates will introduce generative AI features, including some integrations with OpenAI’s ChatGPT. The company plans to roll out the Apple Intelligence suite of software capabilities with iOS 18.1.
“What we’ve done is we’ve redeployed a lot of people on to AI that were working on other things,” Apple CEO Tim Cook told a business news television channel in the US. “Certainly embedded in our results this quarter is an increase year over year in the amount we’re spending for AI and Apple Intelligence.”
According to the latest Counterpoint Research report, Apple’s global sales remained flat but recorded strong year-over-year growth in Europe and Latin America, which compensated for low upgrade rates in the US and share loss in China following Huawei’s rise. However, Apple saw improvement in sales in China during the 618 shopping festival where it offered attractive discounts. In H2, the new iPhones with Apple Intelligence are expected to drive upgrade demand.
Another Counterpoint Research report noted that Apple retained the number of spots on the list of top-selling smartphones in H2 with its four iPhone models. However, the placement of iPhones on the list weakened. While the iPhone 14 series and iPhone 13 had captured all the top four spots in Q2 2023, the iPhone 15, iPhone 15 Pro Max, and iPhone 15 Pro took the top three spots respectively this quarter. The iPhone 14 could only manage the sixth spot. Apple’s contribution to the top 10 in terms of total sales volume and sales share declined year-over-year in Q2 2024. However, the Pro series’ sales volume and share grew, demonstrating, together with a fall in the ranking of the older-generation iPhone, a shift of demand towards higher-end smartphones.
Luca Maestri, Apple’s CFO, remarked, “During the quarter, our record business performance generated EPS growth of 11 per cent and nearly $29 billion in operating cash flow, allowing us to return over $32 billion to shareholders. We are also very pleased that our installed base of active devices reached a new all-time high in all geographic segments, thanks to very high levels of customer satisfaction and loyalty.”
Apple's performance is reflected in its net income of $21.4 billion for the quarter, compared to $19.9 billion a year ago. The company's operating income also saw an increase, reaching $25.4 billion from $23 billion last year. This growth is primarily driven by strong product sales amounting to $61.6 billion and an upswing in service revenue.
Revenue by Product Category:
In addition to the financial achievements, Apple's board of directors declared a cash dividend of $0.25 per share of the Company’s common stock, payable on August 15, 2024, to shareholders of record as of the close of business on August 12, 2024.
Key Financial Highlights:
For the Indian market, Apple’s performance in the Asia Pacific region highlights the increasing importance of this segment, contributing significantly to the company's overall revenue growth.
