Apple's overall revenue in Q3 is better than expected, mainly due to strong sales of iPads, but the decline in performance in the Chinese market exceeded market expectations. Apple attributed the main reason for the decline in sales in the Chinese market to the appreciation of the US dollar and said that its core business is actually healthier than before. In the Q3 ending on June 29, Apple's overall sales increased by 5% to $85.8 billion, higher than analysts' expected $84.5 billion. However, the Greater China region disappointed with a 6.5% drop in sales to $14.7 billion, lower than the expected $15.3 billion. Despite an improvement compared to a drop of 8.1% in the previous quarter, the decline in performance in the Chinese market exceeded analysts' expected decline of 2.4%. Apple is facing pressure in the Chinese market as local competitors such as Huawei introduce competing products.
On August 1, Eastern Time, Thursday, Apple released its financial report for the third quarter of the 2024 fiscal year (the second quarter of the calendar year). The company's overall revenue is better than expected, mainly due to strong sales of iPads, but the decline in performance in the Chinese market exceeded market expectations.
The report shows that in the Q3 ending on June 29, Apple's overall sales increased by 5% to $85.8 billion, higher than analysts' expected $84.5 billion. However, the Greater China region disappointed with a 6.5% drop in sales to $14.7 billion, lower than the expected $15.3 billion. Visible Alpha's data shows that despite an improvement compared to a drop of 8.1% in the previous quarter, the decline in performance in the Chinese market exceeded analysts' expected decline of 2.4%. Apple is facing pressure in the Chinese market as local competitors such as Huawei introduce competing products. Apple attributed the main reason for the decline in sales in the Chinese market to the appreciation of the US dollar and said that its core business is actually healthier than before. Apple CFO Luca Maestri said that if the impact of exchange rates is excluded, sales in the Chinese market only dropped by less than 3%.
(Source: Company website)
Despite an improvement compared to a drop of 8.1% in the previous quarter, the decline in performance in the Chinese market exceeded analysts' expected decline of 2.4%. Apple is facing pressure in the Chinese market as local competitors such as Huawei introduce competing products.
Apple attributed the main reason for the decline in sales in the Chinese market to the appreciation of the US dollar and said that its core business is actually healthier than before. Apple CFO Luca Maestri said that if the impact of exchange rates is excluded, sales in the Chinese market only dropped by less than 3%.
Apple CEO Tim Cook said during the financial results conference call that he remains confident in the long-term development of China.
Apple's earnings per share in Q3 were $1.40, exceeding market expectations of $1.35; gross margin was 46.3%, higher than the expected 46.1%.
Apple's most important product, the iPhone, generated $39.3 billion in revenue in Q3, slightly lower than the same period last year, but higher than Wall Street's expected $38.81 billion. Q3 is usually the weakest quarter for Apple's earnings because many customers are waiting for the next generation of iPhones, which will be introduced in the fall.
iPad revenue was $7.16 billion, up 24% year-on-year, far exceeding expectations of $6.61 billion, mainly due to the long-awaited release of new models. After a period of decline in the tablet product line, Apple released major upgrade products in May, including the iPad Pro with the M4 chip and the faster and larger iPad Air. Cook said that about half of customers who purchased iPads are new users, indicating that the tablet market is not yet saturated.
Cook said that about half of customers who purchased iPads are new users, indicating that the tablet market is not yet saturated.
Mac revenue was $7.01 billion, up 2.5% year-on-year, slightly lower than the expected $7.02 billion; wearable devices, home and accessories revenue was $8.1 billion, down 2.3% year-on-year, higher than expected $7.79 billion; service revenue was $24.21 billion, up 14% year-on-year, higher than expected $24.01 billion.
Apple stated that it maintains its dividend at $0.25 and spent $32 billion on dividends and share buybacks this quarter.
Regarding the market expectations for "Apple Intelligence", Cook said that although it is not yet certain about the impact of "Apple Intelligence" on revenue, Apple has been increasing its investment in this business. He revealed that Apple has transferred many people who were previously engaged in other work to the artificial intelligence (AI) department. Some analysts predict that the newly introduced AI features will significantly boost iPhone sales. Earlier reports stated that the release date of "Apple Intelligence" will be later than expected, and Apple will push software upgrades including "Apple Intelligence" to users before the end of October, instead of releasing it together with the iOS 18 and iPadOS 18 operating systems in September.
Some analysts predict that the newly introduced AI features will significantly boost iPhone sales. Earlier reports stated that the release date of "Apple Intelligence" will be later than expected, and Apple will push software upgrades including "Apple Intelligence" to users before the end of October, instead of releasing it together with the iOS 18 and iPadOS 18 operating systems in September.
Apple expects overall sales in the fourth quarter (ending in September) to be roughly equivalent to the third quarter, slightly higher than analysts' expectations.