Third Quarter | Apple’s Net Profit Rises Above Expectations

(San Francisco) Apple Inc. reported a 7.8 percent increase in net profit to $21.45 billion in the third quarter of its fiscal year, beating market expectations despite a year-over-year decline in iPhone sales.


Between April and June, the group’s turnover reached 85.78 billion dollars, once again exceeding market expectations, which were instead counting on sales of around 84.4 billion dollars, according to the Bloomberg agency, thanks in particular to an increase in the sale of services.

Over the first nine months of its staggered financial year, the group achieved a turnover of 296.1 billion dollars, which represents a modest increase of around 0.8% over one year.

A figure particularly watched by American investors, earnings per share reached $1.40 for the quarter, compared to $1.26 a year earlier, again above expectations.

There is still one area of ​​concern, however, as sales in China, a strategic market for Apple, fell by 6.5% over the quarter. The decline is less severe than in the first six months of the financial year.

The American group is benefiting in particular from the good performance of its services, which have enabled it to compensate for the drop in iPhone sales over the year, which nevertheless remains its driving force in terms of turnover.

“We are seeing an increase in customer engagement […] as well as double-digit growth in paid subscriptions. We now exceed one billion paid subscriptions across all services,” said CEO Tim Cook in a call with analysts.

The Services, which include the App Store, the platforms streaming Music and video (Apple TV+), as well as remote data storage, generated revenues of more than $24 billion, $3 billion better than a year earlier.

This segment now accounts for more than 28% of the company’s revenues.

And the group hopes to generate even more revenue in the future, particularly when it begins to integrate artificial intelligence (AI) into its products, even if it is moving slowly in this segment compared to other major groups in the digital sector.

Waiting for the iPhone 16

This caution is not, however, going to displease the markets now, as the enormous investments made by Microsoft and Google in this area are slow to bear fruit, leading analysts to question the size of the sums involved.

Having been late to the game, Apple is now seen as having a more reassuring approach, even though the technology is expected to be integrated into the iPhone 16, which is scheduled for release next September.

“Apple’s more cautious approach to AI could prove strategic,” said Jacob Bourne, an analyst for Emarketer, “the delayed launch of Apple Intelligence could ultimately allow for a more successful launch, coinciding with the launch of a cheaper iPhone SE.”

This delay in ignition also allows the Cupertino group to already integrate the evolution of the legislation in this area. It thus committed on July 26 to follow certain rules aimed at limiting the risks linked to generative AI.

And according to Tim Cook, the integration of Apple Intelligence into its iPhones should “be an additional reason” to encourage owners of older models to renew their device by opting for the iPhone 16.

“We’re really optimistic about the level of value this will bring to users,” he said.

Meanwhile, smartphone sales have remained disappointing for several quarters now.

But “we anticipate new signs of stabilization” in sales, which could in particular pick up with the arrival of the iPhone 16 supported by AI, WeBush analysts estimated in a note.

“We expect first iPhone 16 shipments to be close to 90 million units,” particularly driven by the recovery in China, “which remains the cornerstone for Apple,” they added.

According to data from Canalys, global iPhone sales increased by 6% in the second quarter of 2024, allowing Apple to maintain its second place in volume behind Samsung, even if the Chinese Xiaomi is quickly closing in.

Among other Apple devices, Macs and iPads saw their sales increase over a year, while accessories, smartwatches, headphones and other home products were down.


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