Apple reported a fall in sales over the past quarter due to the high base effect and a few product launches a year ago. Apple anticipates a return to growth in the current quarter and is optimistic about stimulating growth through the forthcoming product launch event and a developer conference.
Apple's financial results for the second quarter of fiscal 2024 (October 2023 to September 2024) show that its net sales declined by 4.31% to US$90.75 billion, with profit falling by 2.17% to US$23.64 billion. Except for Europe, Apple witnessed sales fall across geographies, including an 8% fall in Greater China.
Apple CEO Tim Cook said that Apple reported an all-time revenue record in Services, and was thrilled to launch Apple Vision Pro, adding that the company is looking forward to an exciting product announcement next week and an incredible WWDC in June.
Apple CFO Luca Maestri said that Apple's active installed base of devices reached a new all-time high across products and geographics. Maestri said at the earnings call that Apple expects June quarter revenue to grow low-single digits year-on-year, with Services continuing to grow at a double-digit rate. iPad revenue is also expected to grow double-digit, implying a new iPad launch on May 7.
Business performances
Cook said at the earnings call that Apple set an all-time revenue record in Services, which reported a 14% growth in sales over the past year.
iPhone sales experienced a setback in the March quarter of 2023 due to a nearly US$5 billion impact because of COVID-related disruptions in the supply chain during the preceding December quarter of 2022, which prompted the need to replenish iPhone inventory channels and fulfill pent-up demand in the subsequent quarter. According to Cook, iPhone sales would have shown growth during that period without this one-time effect.
Mac sales grew by 4% to US$7.5 billion thanks to the new 13 and 15-inch MacBook Air, powered by the M3 chip. iPad revenue for the March quarter was down 17% to US$5.6 billion due to the high base effect of the M2 iPad Pro launched a year ago. The Wearables, Home, and Accessories revenue was down 10% year-on-year for similar reasons as Apple introduced the new AirPods Pro, the Watch SE, and the first Watch Ultra in 2023.
Vision Pro and AI performances remain to be seen
Apple launched the Vision Pro in early February 2024. Cook said it has been wonderful to hear from people who now get to experience the magic of spatial computing, and it's great to see the enthusiasm from the enterprise market as to the product, with more than half of the Fortune 100 companies having bought Vision Pro to explore innovative usages.
Cook did not elaborate on Apple's AI strategy but only said the company believes in AI's transformative power and promise and that Apple has advantages that will make a difference.
Cook said that despite the 8% fall in sales in Greater China, Apple still saw iPhone shipment growth in some markets, including China. Furthermore, Apple set revenue records in more than a dozen countries and regions, including Latin America and the Middle East, Canada, India, Spain, and Turkey.
Bloomberg Intelligence released a note saying that the sales fall of 8% in Greater China was lower than their estimates of 11%. On top of that, the low-single-digit growth in the fiscal third quarter may point to some stabilization in sales. However, with competition escalating, Apple might not experience immediate relief.
Apple financial summary (US$m) | ||||||
Financial | 2QFY23 | 3QFY23 | 4QFY23 | 1QFY24 | 2QFY24 | YoY for 2QFY24 (%) |
Net sales | 94,836 | 81,797 | 89,498 | 119,575 | 90,753 | -4.31 |
Gross profit | 41,976 | 36,413 | 40,427 | 54,855 | 42,271 | 0.7 |
Operating income | 28,318 | 22,998 | 26,969 | 40,373 | 27,900 | -1.48 |
Net income | 24,160 | 19,881 | 22,956 | 33,916 | 23,636 | -2.17 |
Source: Apple, May 2024
Apple sales by geography (US$m) | ||||||
Geography | 2QFY23 | 3QFY23 | 4QFY23 | 1QFY24 | 2QFY24 | YoY for 2QFY24 (%) |
Americas | 37,784 | 35,383 | 40,115 | 50,430 | 37,273 | -1.35 |
Europe | 23,945 | 20,205 | 22,463 | 30,397 | 24,123 | 0.74 |
Greater China | 17,812 | 15,758 | 15,084 | 20,819 | 16,372 | -8.08 |
Rest of Asia Pacific | 8,119 | 5,630 | 6,331 | 10,162 | 6,723 | -17.19 |
Japan | 7,176 | 4,821 | 5,505 | 7,767 | 6,262 | -12.74 |
Source: Apple, May 2024
Apple sales by business (US$m) | ||||||
Business | 2QFY23 | 3QFY23 | 4QFY23 | 1QFY24 | 2QFY24 | YoY for 2QFY24 (%) |
Products | 73,929 | 60,584 | 67,184 | 96,458 | 66,886 | -9.53 |
iPhone | 51,334 | 39,669 | 43,805 | 69,702 | 45,963 | -10.46 |
Wearables, Home & Accessories | 8,757 | 8,284 | 9,322 | 11,953 | 7,913 | -9.64 |
Mac | 7,168 | 6,840 | 7,614 | 7,780 | 7,451 | 3.95 |
iPad | 6,670 | 5,791 | 6,443 | 7,023 | 5,559 | -16.66 |
Services | 20,907 | 21,213 | 22,314 | 23,117 | 23,867 | 14.16 |
Source: Apple, May 2024
