Benzinga - by Shanthi Rexaline, Benzinga Editor.
Apple, Inc. (NASDAQ:AAPL) reported fourth-quarter results that exceeded estimates Thursday, with better-than-expected Services and iPad revenue. The company’s Services revenue rose to a record and so did its active installed base of devices, while iPhone revenue was slightly shy of estimates.
Apple’s Key Q4 Metrics: Cupertino, California-based Apple reported fourth-quarter earnings of $1.46 per share, ahead of the consensus estimate of $1.39 per share. This marked an increase from the year-ago quarter’s $1.29 per share and the previous quarter’s $1.26 per share. The year-over-year earnings per share growth was at 13.18%.
Revenue of $43.805 billion for the iPhone came in underneath expectations. The Street was expecting a figure of $44 billion, according to CNBC.
Apple’s year-over-year revenue decline streak continued for a fourth quarter straight quarter amid a volatile consumer spending environment. The top line came in at $89.5 billion compared to the $90.15 billion the tech giant reported a year ago and the $81.8 billion in revenue in the preceding quarter.
Analysts, on average, expected revenue of $89.28 billion.
Ahead of the results, Morgan Stanley’s Erik Woodring said Apple would likely report in line to better-than-expected September quarter results thanks to mid-single-digit year-over-year iPhone revenue growth and accelerating Services revenue growth.
The fourth-quarter gross margin was at 45.17% compared to the guidance of 44%-45%. It also rose from the third quarter’s 44.52%.
The installed base of active devices rose to a record across all product categories and all geographies. The metric, according to Deepwater Asset Management Managing Partner Gene Munster, is the central thesis to Apple being a consumer staples company.
“Today Apple is pleased to report a September quarter revenue record for iPhone and an all-time revenue record in Services,” said CEO Tim Cook.
Apple Shareholder Returns: CFO Luca Maestri said the company returned over $25 billion to its shareholders and continued to invest in its long-term growth plans.
Apple declared a cash dividend of 24 cents per share, payable on Nov. 16 to shareholders of record as of Nov. 13.
Apple Segmental Performance: Apple Services revenue came in at a record $22.31 billion, up 16.29% year-over-year and 5.19% higher than in the third quarter. iPhone revenue also rose both year-over-year and sequentially.
The rest of the product categories reported quarter-over-quarter revenue growth both year-over-year declines.
Apple Segmental Performance: Apple Services revenue came in at a record $22.31 billion, up 16.29% year-over-year and 5.19% higher than in the third quarter. iPhone revenue also rose both year-over-year and sequentially.
The rest of the product categories reported quarter-over-quarter revenue growth but year-over-year declines.
| Product Category | Q4’23 | Consensus* | Y-o-Y Change | Q-o-Q Change |
| iPhone | $43.81B | $44B | +2.77% | +10.43% |
| Mac | $7.61B | $8.5B | -33.84% | +11.32% |
| iPad | $6.44B | $6.14B | -10.19% | +11.26% |
| Wearable, Home & Accessories | $9.32B | $9.4B | -3.40% | +12.53% |
| Services | $22.31B | $21.42B | +16.29% | +5.19% |
*Street Account via CNBC
Breaking down the results by geography, North America outperformed, with both year-over-year and sequential comparisons showing growth. China, which is a key market for Apple, was the only region reporting a double revenue decline. The softness may have been due to competitive pressure from Huawei, which launched its own well-received smartphone.
| Geographies | Q4’23 | Y-o-Y Change | Q-o-Q Change |
| North America | $40.11B | +0.77% | +13.37% |
| Europe | $22.46B | -1.46% | +11.18% |
| Greater China | $15.08B | -2.50% | -4.28% |
| Japan | $5.51B | -3.42% | +14.19% |
| Rest of Asia Pacific | $6.33B | -0.66% | +12.45% |
Apple’s Outlook: Morgan Stanley’s Woodring sounded caution regarding the outlook for the December quarter, which encompasses the key holiday sales season. Apple will likely guide to a revenue range that is both below normal seasonality and the consensus expectations, he added. The analyst blamed the potential softness on iPhone supply shortages and uneven consumer spending,
Munster said Apple will likely guide on the earnings call for 5% year-over-year growth in first-quarter revenue.
Consensus estimates call for revenue for $122.97 billion for the first quarter.
Woodring sees iPhone growth trending below seasonality in the first quarter. He also noted headwinds for Mac demand from an uneven consumer recovery. App Store revenue will likely remain strong but it will be unlikely to offset the more challenging product setup, the analyst said.
Apple launched a M3-powered new MacBook Pro and iMac late Monday. Following the “Scary Fast” event, Oppenheimer analyst Martin Yang said, “Overall, we’re underwhelmed by the incremental upgrades, puzzled by a much shortened MacBook Pro release cycle, and disappointed by the lack of new information regarding Apple Silicon for AAA gaming.”
AAPL Stock: Apple stock has gained 37.25% year-to-date, underperforming the “Magnificent Seven,” a moniker given to the biggest mega-cap stocks. It has, however, outperformed the S&P 500 and the Nasdaq Composite indices. These major averages have gained 12.46% and 27.02%, respectively, so far this year.
The average analyst price target for Apple stock, according to data compiled by TipRanks, is $203.35, suggesting roughly 14.5% upside potential. Woodring has an Overweight rating and $210 price target for the stock.
After settling Thursday’s regular trading session up 2.07% at $177.57, Apple stock was down 0.91% to $175.95 in after-hours trading, according to Benzinga Pro data.
Read Next: Trading Strategies For Apple Stock Heading Into Q4 Earnings
Photo courtesy of Apple.
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