Ten charts to understand Apple's latest earnings
Apple FY2024 Q2 Earnings Summary:
Revenue $90.753B, down 4.3% year over year; net income $23.636B, down 2.2% year over year, ending two consecutive quarters of double-digit year-over-year growth; EPS up 0.7% year over year.
Global active installed base across all products and regions hit a record high (devices using Apple services within 90 days counted as active; figure not updated this quarter, last quarter was over 2.2B).
iPhone revenue $46B, down 10% year over year; excluding the $5B impact from last year's iPhone supply constraints, iPhone revenue would have been flat year over year; iPhone active installed base at a record high.
Services revenue $23.9B, up 14% year over year, record high for the sixth consecutive quarter; Services gross margin 74.6%, a record high; Services transacting accounts and paid accounts at record highs, up double digits year over year; global paid subscribers up high double digits, >1B.
iCloud/payments/video revenue at record highs; Apple TV+ amassed nearly 2,100 nominations and 480 major awards in 4 years.
Mac revenue $7.5B, up 4% year over year, Mac active installed base at a record high; iPad revenue $5.6B, down 17% year over year, fifth consecutive quarter of double-digit year-over-year decline, iPad active installed base at a record high.
Wearables revenue $7.9B, down 10% year over year, third consecutive quarterly decline; Apple Watch active installed base at a record high; over half of Fortune 100 purchased Vision Pro.
Greater China revenue was $16.4B, down 8% year over year, third consecutive quarterly decline; Greater China operating margin 40.9%, only above Americas; only Europe grew year over year this quarter, other Asia-Pacific regions saw the largest declines.
Apple continues to gain share in many global markets; LatAm, Middle East, Canada, India, Spain, Turkey revenue hit period records, Indonesia revenue hit an all-time high.
EU App Store sideloading took effect in March; last quarter EU App Store revenue accounted for 7% of company App Store revenue; impact to be monitored.
Guided Q3 revenue up low single digits year over year, FX headwind 2.5 points, Services growth consistent with H1, iPad up double digits; gross margin 45.5%-46.5%; implies Q3 revenue up ~3% year over year, net income up ~5% year over year, EPS growth faster; repurchased $23.5B this quarter, dividends $3.7B.
Announced $110B buyback program, dividend increased 4%.
Overall Apple's earnings were mediocre; aside from the $110B massive buyback, results (revenue YoY -4%, net income YoY -2%) cannot compare with the other three giants: Microsoft (revenue YoY +17%, net income YoY +20%), Google (revenue YoY +16%, net income YoY +57%), Amazon (revenue YoY +13%, net income YoY +229%). Microsoft, Google have AI, Amazon has AWS, Apple only has the $110B buyback.
Apple's core growth formula: AAPL = active installed base * customer engagement (active installed base @ record high * paid subscribers @ high double-digit growth).
Although both sides of Apple's core growth formula are still growing, management did not update specific numbers this quarter. The Apple flywheel now shows clear device-side weakness, with services approaching 30% of revenue; future growth headroom bears watching. While Greater China weakness is currently offset by emerging market growth elsewhere, whether those emerging markets will soon hit a ceiling is also a question.