Earnings report sharing/Apple's revenue and EPS beat expectations? What about the stock price!

$Apple(AAPL.US) announced its Q4 2024 earnings after the market closed on October 31st. The data showed that both revenue and EPS exceeded market expectations, but sales in Greater China once again fell short. The stock price dropped nearly 2% after hours. So, what other data is there? Let’s take a look together!

Q4 2024

Revenue increased 6% year-over-year to $94.93 billion, up from $85.78 billion last quarter, beating market expectations of $94.58 billion;

Breakdown by category:

-> IPHONE, up 6% year-over-year to $46.22 billion, up from $39.296 billion last quarter, beating market expectations of $45.47 billion;

-> Wearables, down 3% year-over-year to $9.042 billion, up from $8.097 billion last quarter, missing market expectations of $9.21 billion;

-> MAC, up 2% year-over-year to $7.744 billion, up from $7.01 billion last quarter, missing market expectations of $7.82 billion;

-> IPAD, up 8% year-over-year to $6.95 billion, up from $7.16 billion last quarter, missing market expectations of $7.09 billion;

-> Services, up 12% year-over-year to $24.972 billion, up from $24.21 billion last quarter, missing market expectations of $25.28 billion;

EPS increased 12% year-over-year to $1.64, beating market expectations of $1.60;

Gross margin was 46.2%, slightly lower than last quarter's 46.3% but slightly higher than market expectations of 46.1%;

Net profit decreased 36% year-over-year to $14.74 billion, down from $21.45 billion last quarter;

Future Expectations

As usual, there is no specific guidance for the next quarter, but Apple hinted at low to mid-single-digit percentage growth in revenue, implying a growth range of 1-6%. Using the midpoint, revenue is expected to reach around $123.8 billion;

Gross margin is expected to be around 46%-47%, higher than market expectations of 45.9%;

Summary

While overall revenue this quarter exceeded expectations, a breakdown by product category shows that only IPHONE sales outperformed, with the other four major categories falling short. IPHONE accounted for 49% of revenue, performing better than the expected $45.47 billion. The IPHONE 16 showed stronger sales performance in the same cycle compared to the IPHONE 15, especially the PRO series. This quarter marked the end of two consecutive quarters of decline for IPHONE.

Compared to the same period last year, only wearables saw a 3% decline, while all other categories grew. Services showed strong growth, up 12% year-over-year, driven by over 1 billion paid subscribers. Additionally, active Apple devices reached record highs across all regions and product lines. The growing user base suggests that the high-margin services segment could become a key driver of future growth. Annualized services revenue has now reached $100 billion, with subscriptions accounting for an increasing share and growing faster than one-time fees.

The IPAD business also performed well this quarter, improving from a 17% decline last year to an 8% increase this quarter, driven by new product launches and updates. Demand is strong in both mature and emerging markets.

However, MAC and wearables underperformed. Wearables sales declined for the fifth consecutive quarter, though Apple noted that over half of WATCH buyers were new customers, indicating potential for growth. MAC sales may get a boost from the expected launch of the M4 chip with AI features in late October.

By region, only Greater China continued to decline, though the year-over-year drop narrowed to 0.3%, with revenue at $15.03 billion, missing market expectations of $15.8 billion. Apple attributed the weakness to challenges in non-IPHONE products in China, citing increasing competition. However, over 50% of MAC and IPAD buyers in China were new customers, and more than 75% of WATCH buyers were new, signaling some positive trends. Japan and the rest of Asia returned to growth, with year-over-year increases of 8% and 17%, respectively. The Americas grew 4%, while Europe grew 11%.

Finally, on AI, Apple reiterated its commitment to integrating AI across its products, with the full impact expected after the fall launch of APPLE INTELLIGENCE. Early feedback on IOS 18.1 has been positive, with adoption rates twice as high as IOS 17.1 at the same point last year. More features and languages are expected by December and April, respectively.

What do you think? Share your thoughts in the comments!

If you liked this, feel free to like, share, and comment. Most importantly, happy investing!