Ten charts to understand Apple's latest earnings
Apple FY2023 Q2 Earnings Summary:
Revenue $94.836B, down 2.5% year over year, the first back-to-back quarterly declines since 2019; FX impact 5 points, constant-currency revenue still grew year over year; net income $24.16B, down 3.4% year over year, also the first back-to-back quarterly declines since 2019.
Global active installed base of iPhone, Mac, iPad, and Apple Watch hit a new high, exceeding 2B devices, of which iPhone surpassed 1B.
iPhone revenue $51.3B, up 2% year over year, a record for the quarter; South Asia, India, Latin America, and Middle East markets stood out, with India, Indonesia, Turkey, and UAE revenue doubling year over year; iPhone share in mainland China increased.
Services revenue $20.9B, up 5% year over year, another all-time high; constant-currency growth was double-digit; services gross margin 71% this quarter. Paid subscriptions topped 975M, a new high. App Store, Music, iCloud, and payment revenue hit all-time highs; Apple Care and TV revenue hit quarterly records; digital advertising and gaming remained weak. Services hit an all-time high in Greater China and quarterly records in Americas, Europe, and Rest of Asia Pacific.
Mac revenue $7.2B, down 31% year over year; iPad revenue $6.7B, down 13% year over year, demand weak.
Wearables, Home and Accessories revenue $8.8B, down 1% year over year; wearables revenue hit quarterly records in Greater China and the US.
Greater China revenue $17.8B, down 3% year over year, underperforming total Apple revenue growth for the fifth consecutive quarter; constant-currency revenue grew year over year. Greater China operating margin 42.3%, down slightly both year over year and sequentially. Only Europe and Rest of Asia Pacific posted year-over-year revenue growth, with Rest of Asia Pacific up 15%.
Apple is accelerating its push in emerging markets; Mexico, Indonesia, Philippines, Saudi Arabia, Turkey, and UAE hit all-time revenue records; Brazil, Malaysia, India, Australia, Canada, Spain, and Switzerland hit quarterly records. Cook again expressed strong confidence in India (two Apple Stores opened) and the rise of India's middle class; Apple enterprise services continue to grow.
Guides Q3 revenue growth in line with Q2 (down 3% year over year), FX impact 4 points; services revenue expected up 5% year over year; gross margin 44%-44.5%. Announced $90B buyback program, dividend raised 4%, with further annual increases planned.
After TSMC and Qualcomm reports, the market worried about Apple, but strong emerging-market performance delivered a decent result. The emerging-market thesis I've emphasized since the August 2022 FY22 Q3 earnings piece is accelerating into revenue, and the view that 'emerging markets will inevitably undergo consumption upgrade' keeps being validated.
Friends ask: with the phone market so weak and iPhone volumes seemingly soft, why is Apple's result okay? Apple's earnings again highlight the importance of global markets—when the West dims, the East shines.
Apple formula: AAPL = installed base × customer engagement. Both core metrics keep growing (active installed base 2B+ × paid subscribers 975M+).