Apple Inc. has been known for its numerous revenue records, but it seems that the company is now approaching a milestone that investors won’t be thrilled about.
The fiscal third-quarter results released by Apple on Thursday revealed that the macroeconomy is still impacting consumer spending, and this has taken a toll on iPhone, Mac, and iPad sales. While Apple experienced a surprising revenue increase in China, overall iPhone sales saw a decline of over 2%, amounting to $39.7 billion. Additionally, the total revenue dropped by 1%.
Despite these challenges, Apple’s services segment emerged as the star of the company’s business. This segment, which includes various elements of recurring revenue, outperformed expectations by recording an 8% increase in revenue during the June quarter.
Apple has decided to discontinue the practice of providing traditional financial guidance alongside its earnings. However, the company’s executives indicated that the overall performance in the September quarter is likely to be similar to that of the June quarter. This may have come as a slight surprise to Wall Street since analysts were projecting a flat year-over-year revenue for the September quarter, while the June quarter saw a decline of 1% in revenue.
Chief Financial Officer Luca Maestri addressed this outlook during a discussion with analysts. He stated that they expect the September-quarter’s year-over-year revenue performance to be comparable to that of the June quarter, provided that the macroeconomic conditions do not worsen beyond their current projections. Maestri also mentioned that both iPhone and services revenue are expected to accelerate in the September quarter. However, this growth will be counterbalanced by double-digit revenue declines in the Mac and iPad.
According to Maestri, the Mac business faces particularly tough comparisons.
Apple Anticipates iPhone 15 Launch in September Quarter
Apple’s highly anticipated smartphone, the iPhone 15, is expected to hit the market sometime in the September quarter. However, some individuals on Wall Street expressed disappointment as the newest iPhone may not offset a significant drop in the Mac business. Consequently, Apple shares experienced a 2% decline during after-hours trading.
Amit Daryanani, an analyst at Evercore ISI, acknowledged concerns surrounding sub-seasonal growth in the September quarter. He believes that macroeconomic worries could impact the success of a new iPhone launch. Despite this, Daryanani maintains a positive outlook and predicts strong demand for the iPhone, suggesting that supply will play a crucial role in driving sales performance during the September and December periods.
Wedbush Securities analyst Dan Ives noted that Apple’s forecast involves various factors. He emphasized that iPhone and services sales were in line with expectations for the September quarter, while iPads and Macs experienced double-digit declines.
Amidst speculation on Wall Street about a possible delay in the iPhone 15 launch until October, Ives predicts that the iPhone 15 will be available in mid-September. He also anticipates that iPhone revenue will range between low to mid-$40 billion. The FactSet consensus for September-quarter iPhone revenue currently stands at $44.4 billion.
Although investors had high hopes for Apple’s fiscal 2023, it seems that this year may not yield record-breaking results. Wall Street is unlikely to remember this year as one for celebration.