Apple has reported first-quarter earnings that surpassed expectations, with revenue soaring 16 per cent on an annual basis.
Finance chief Kevan Parekh said overnight Thursday in the US that Apple expects March-quarter revenue to rise between 13 per cent and 16 per cent on an annual basis, which would be equivalent to between $US107.8 billion ($152.8b) and $US110.66b.
Analysts polled by LSEG are expecting $US104.84b in second-quarter revenue. Apple said it expects constrained iPhone supply during the quarter.
Apple also said it expects its Services to have a year-over-year growth rate similar to the 14 per cent in the December quarter.
The company reported $US42.10b in net income, or $US2.84 per diluted share, versus $US36.33b, or $US2.40 per diluted share, in the year-ago period.
Overall iPhone revenue surged 23 per cent on an annual basis to $US85.27b in revenue, which the company attributed to strong sales of the iPhone 17 models, which were released in September.
“The demand for iPhone was just simply staggering,” Apple chief executive Tim Cook told CNBC’s Steve Kovach.
The strong growth is a reversal from the holiday quarter last year, when Apple reported iPhone sales that declined slightly.
Cook said Apple now has an active base of 2.5 billion iPhones, Macs and other Apple devices in use, up from 2.35 billion announced in January last year. That number is closely watched because it signals how big the addressable market is for Apple’s services, as well as for software on the company’s platforms.
Apple saw particularly strong results in China, including Taiwan and Hong Kong. Sales in the region surged 38 per cent during the quarter to $US25.53b. Cook said that the performance in the region was driven by iPhone sales.
“We set an all-time record for upgraders in mainland China, and we saw double digit growth on switchers,” Cook said. Upgraders refers to current iPhone users who bought newer models, and switchers means new customers who previously had phones from different brands.
In China, Apple “saw a lift that, frankly, was much greater than we thought we would see,” Cook said, adding that it was “product-driven”.
Apple’s sales of Mac laptops came up short of Wall Street expectations, and fell 7 per cent on an annual basis. The company released an updated MacBook Pro laptop with a new M4 chip in November.
The iPad business grew 6 per cent in the quarter on an annual basis to $US8.6b in revenue, beating expectations. Cook said that half of the people who bought an iPad during the quarter had not previously owned one.
The company reports AirPods, Apple Watch, Vision Pro and other accessories in a category called Wearables, Home and Accessories. Those sales fell 2 per cent on an annual basis, and missed Wall Street estimates.
Apple’s services business includes subscriptions such as Apple TV and iCloud as well as advertising revenue from licensing agreements with Google, AppleCare warranties and other offerings. It grew 14 per cent on an annual basis to $US26.34b in sales. Cook said Apple TV’s viewership rose 36 per cent in December on an annual basis.
Earlier this month, the company announced it would partner with Google to use its Gemini AI model to power Apple Intelligence software. Apple has spent much less on artificial intelligence technology than its peers, such as Meta and Microsoft, which have committed to spending hundreds of billions on AI infrastructure.
“We have absolutely the best platforms in the world for AI,” Cook said.
Apple spent $US2.37b on capital expenditures during the quarter, down from $US2.94b in the same period last year. But research and development expenses increased to $US10.89b from $US8.27b in the year-ago period.
“AI is going to require incremental investment on top of our normal product roadmap investment,” Parekh said.
All of Apple’s devices, including the iPhone, Mac and iPad use a lot of storage and memory, raising questions about how the company plans to handle increased component costs as memory prices around the world are surging because of an AI-related shortage.
“We’re in a supply chain mode to meet the very high levels of customer demand we’re currently constrained,” Cook said. “At this point, it’s difficult to predict when supply and demand will balance.”
Cook added that one of the constraints was with the advanced chip manufacturing needed for Apple’s processors. He also said that memory prices had a minimal impact during the quarter, but the company expects a bigger effect during the current quarter.
“We do continue to see market pricing for memory increasing significantly,” Cook said.
Parekh said that Apple spent nearly $US32b in the quarter on share repurchases and dividends.
CNBC
https://thewest.com.au/business/cnbc/apple-sales-surge-on-simply-staggering-iphone-demand-c-21471521
