The Apple SEARS reportWe were shown a familiar scene last week. Despite the company’s astounding sales and profitability, experts quickly focused on the drawbacks. However, a deeper examination of Apple’s financial situation shows that the business is doing much better than some analysts would have you believe.
Apple reported $89.5 billion in revenue last week when it released its quarterly report, an astounding amount by any measure. However, despite the fact that Apple’s Q4 revenue of $90.1 billion was somewhat less than previous year, some were quick to call the company’s earnings announcement disappointing. Furthermore, a lot of people saw right away that Apple’s revenue had decreased during the previous four quarters.
The tepid guidance Apple provided for the upcoming holiday quarter, as stated by Apple CFO Luca Maestri, was another point of contention for analysts. He stated, “We expect our December quarter total company revenue to be similar to last year.” Finally, Mark Gurman of Bloomberg recently stated that Apple needs a growth engine and that the Vision Pro won’t be able to provide that need.
It makes sense that after reading everything above, you would think that the sky is falling. The commentators declare that Apple has peaked. We have repeatedly witnessed this tale unfold. However, a deeper examination of Apple’s finances reveals that business is doing better than you might imagine.
The iPhone is doing just fine
To begin with, during the most recent quarter, Apple broke the previous record for revenue from the iPhone. Additionally, Apple representatives disclosed that there were limited supplies of the iPhone 15 Pro and iPhone 15 Pro Max at launch. Put another way, Apple could have easily made even more money during the quarter from the iPhone.
Numerous sources have also indicated that sales of the iPhone 15 aren’t as high as those of its predecessor. Tim Cook refuted this idea, saying that sales of the iPhone 15 are actually higher than those of the iPhone 14.
Cook claimed that when comparing the iPhone 15 during that time frame to the iPhone 14 during the same quarter last year, the iPhone 15 performed better.
Why the tepid holiday quarter guidance if iPhone sales are strong?
You may be asking why Apple’s projection for the upcoming Christmas quarter didn’t impress analysts, given the rapid growth in iPhone sales. In fact, the decline in Apple shares following the company’s earnings release was caused by Apple’s announcement that earnings for the Christmas period would remain unchanged. For context, analysts had projected that Apple’s revenue would expand by roughly 5% annually.
What is happening, then? If we delve a little more, we see that Apple’s 2023 Christmas quarter is one week shorter than its 2022 counterpart. Maestri also notes that Q1 2024 will span the customary 13 weeks, as opposed to the 14 weeks of the December quarter in 2022.
And what is the weekly revenue of Apple? a boatful. In the fourth quarter of the previous year, Apple reported $117.2 billion in revenue. That’s $8.37 billion every week for a duration of 14 weeks. Should Apple’s revenue estimates for the current quarter align with $117.2 billion, this implies that the company will make more money over a 13-week period this quarter than it did the previous year.
Services continue to impress and set records
Apple critics have been yelling for years that the company depends too much on the iPhone. There was no end to the demands for Apple to vary its sources of income. And Apple eventually responded to such requests. Apart from the money it gets from the iPad, Mac, Apple Watch, and AirPods, Apple’s services segment brings in an incredible sum of money.
Apple achieved an all-time high of $22.3 billion in services-based revenue for the most recent quarter. Additionally, the revenue from services is roughly equal to the total revenue from the wearables segment, the iPad, and the Mac.
In other words, Apple has positioned itself to weather a future decline in iPhone sales.
The Vision Pro may not be a revenue game-changer, but that s okay
The cost of Apple’s Vision Pro will be high. Nobody is expecting Apple to move millions of devices at $3,500 any time soon. Therefore, it’s okay if the Vision Pro doesn’t change the game right away. Maybe in the next years, Apple will be able to make a significant profit from the Vision Pro. However, since Apple offers a plethora of other products, the possibility that the Vision Pro will just be a niche product isn’t a reason for alarm in the interim.
As the corporation has no problem with a delayed build, Apple does not require Vision Pro to be an immediate hit. Consider the iPhone, for instance. Initially, the iPhone was only available through AT&T for years, which clearly had an impact on early sales. Look at the Apple Watch as well. Sales of the smartphone started to soar after debut, but it wasn’t a game-changer right away.
Will the Vision Pro experience the same thing? It’s too soon to say. However, there’s no reason to be concerned about the idea that Apple won’t see a significant boost in income from the Vision Pro at launch.