Apple sales rise 5%, topping estimates as iPad and Services revenues jump

Apple
reported
fiscal
third-quarter
earnings
on
Thursday
that
beat
Wall
Street
expectations,
with
overall
revenue
rising
5%.
 

Apple
shares
were
flat
in
extended
trading.

Here’s
how
Apple
did
versus
LSEG
consensus
estimates
for
the
quarter
ended
June
29: 

• 
  EPS:
  $1.40
  vs.
  $1.35
  estimated 
• 
  Revenue:
  $85.78
  billion
  vs.
  $84.53
  billion
  estimated 
• 
  iPhone
  revenue: $39.30
  billion
  vs.
  $38.81
  billion
  estimated 
• 
  Mac revenue: $7.01
  billion
  vs.
  $7.02
  billion
  estimated 
• 
  iPad
  revenue: $7.16
  billion
  vs.
  $6.61
  billion
  estimated 
• 
  Wearables,
  Home,
  and
  Accessories
  revenue:
  $8.10
  billion
  vs.
  $7.79
  billion
  estimated 
• 
  Services
  revenue: $24.21
  billion
  vs.
  $24.01
  billion
  estimated 
• 
  Gross
  margin:
  46.3%
  vs.
  46.1%
  estimated 

Apple
expects
similar
overall
revenue
growth
in
the
current
quarter,
company
finance
chief
Luca
Maestri
said
on
a
call
with
analysts.

Apple
also
expects
Services
to
grow
at
about
the
same
rate
as
the
previous
three
quarters,
which
was
about
14%.
The
company
sees
operating
expenditures
between
$14.2
billion
and
$14.4
billion
in
the
current
quarter,
Maestri
added,
with
gross
margin
of
between
45.5%
and
46.5%.

Apple
reported
$21.45
billion
in
net
income
during
the
quarter,
versus
$19.88
billion,
or
$1.26
per
share, 
in

the
year-ago
period.
 

Apple’s
most
important
business
remains
the
iPhone,
which
accounted
for
about
46%
of
the
company’s
total
sales
during
the
quarter.
While
the
tech
giant
beat
LSEG
estimates,
the
product
line
still
declined
about
1%
year
over
year,
to
$39.29
billion
in
revenue.
 

“On
a
constant
currency
basis,
we
grew
year
on
year.
And
so
that’s
sort
of
how
we
look
at
it
from
an
operational
point
of
view,”
Apple
CEO
Tim
Cook
told
CNBC’s
Steve
Kovach.
 

Cook
said
that
while
Apple
can’t
yet
speak
to
the positive
sales
impact
from
its
newly
announced
Apple
Intelligence
service
until
it
starts
shipping
to
customers
later
this
fall,
he
said
the
company
has
boosted
spending
to
get
the
service
ready.
 

“What
we’ve
done
is
we’ve
redeployed
a
lot
of
people
on
to
AI
that
were
working
on
other
things,”
Cook
said.
“From
a
data
center
point
of
view,
as
you
know,
we
have
a
hybrid
approach.
So,
we
both
have
our
own
and
we
partner
with
people.
And
so
that
capex
would
be
in
the
partners’
financials,
and
we
would
be
paying
expense.” 

“Certainly
embedded
in
our
results
this
quarter
is
an
increase
year
over
year
in
the
amount
we’re
spending
for
AI
and
Apple
intelligence,”
Cook
added.
 

Apple
showed
strongest
growth
in
its
iPad
division,
which
grew
nearly
24%
year
over
year
to
$7.16
billion
in
sales.
It
released
new
iPads
during
the
quarter
for
the
first
time
since
2022,
which
spurred
a
wave
of
upgrades. 

Cook
said
that
about
half
of
iPad
buyers
are
first-time
buyers,
suggesting
the
tablet
market
is
not
yet
saturated. 

Apple’s
Mac
division
reported
$7
billion
in
sales,
up
about
2%
from
the
year-ago
quarter.
 

Apple
Watch
sales,
headphones
such
as
Beats
or
AirPods,
and
HomePod
home
speakers
are
reported
under
“Wearables,
Home,
and
Accessories.”
Sales
in
the
catch-all
category
declined
2%
to
$8.10
billion
during
the
quarter.
 

“A
whopping
two-thirds
of
the
Apple
Watch
buyers
were
new
to
the
product.
So,
we’re
still
growing
that
base
significantly,”
Cook
said.
 

The
Services
business
is
the
most
important
growth
category
for
Apple
and
includes
hardware
warranties,
revenue
from
Google,
monthly
cloud
storage
subscriptions,
and
the
company’s
content
subscriptions,
such
as
Apple
TV+.
The
company
reported
$24.21
billion
in
Services
sales,
up
14%
and
in
line
with
Apple’s
forecast and
LSEG
estimates. 

Apple
said
in
a
statement
that
it
had
more
active
devices
in
each
of
its
regions
than
it
ever
had
before,
without
providing
a
specific
number.
The
active
device
count
is
important
because
it
signifies
a
group
of
existing
customers
to
which
it
can
sell
its
profitable
services.
Apple
said
in
February
that
it
had
2.2
billion
active
devices.
 

The
company
said
it
had
1
billion
paid
subscriptions,
which
includes
subscriptions
to
iPhone
apps
through
Apple’s
App
Store.
 

However,
Apple
sales
declined
6%
to
$14.72
billion
in
greater
China,
a
region
that
also
includes
Taiwan
and
Hong
Kong.
Apple
is
under
pressure
in
mainland
China
as
local
rivals
such
as
Huawei
introduce
competing
products.
 

“I
don’t
know
how
every
chapter
of
the
book
reads,
but
we’re
very
confident
in
the
long
term,”
Cook
said
on
a
call
with
analysts.

Apple
said
it
spent
$32
billion
on
dividends
and
share
repurchases
during
the
quarter.