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Apple Beats Q1 Revenue and Earnings Estimates Amid China Sales Drop, Shares Dip 3% in Early Trading

Fernanda T
Latest News
February 02 2024 3:47AM

The technology behemoth Apple (NASDAQ:AAPL) unveiled its quarterly outcomes following the market closure on Thursday, surpassing revenue and earnings expectations for the first quarter, yet facing a significant downturn in sales within China, one of the firm’s crucial markets. Apple’s shares are witnessing a 3% decrease in Friday morning’s trading activities.

  • Earnings per share (EPS): $2.18 vs. estimated $2.10
  • Revenue: $119.58 billion vs. estimated $117.91 billion
  • iPhone revenue: $69.70 billion vs. estimated $67.82 billion
  • Mac revenue: $7.78 billion vs. estimated $7.73 billion
  • iPad revenue: $7.02 billion vs. estimated $7.33 billion
  • Revenue from other products: $11.95 billion vs. estimated $11.56 billion
  • Services revenue: $23.12 billion vs. estimated $23.35 billion
  • Gross margin: 45.9% vs. estimated 45.3%

Although Apple exceeded expectations in most aspects, a 13% decline in sales in China was a point of concern. This market faced increasing competition from local companies, such as Huawei, and the decline was partly attributed to the strength of the dollar against the RMB (Chinese yuan).

Tim Cook, Apple’s CEO, highlighted that this December quarter had one less week compared to the previous fiscal year’s first quarter due to Apple’s corporate calendar. He also pointed to the steady growth of the company’s services business, which saw an 11% increase during the quarter, reaching $23.11 billion in revenue. Apple reported having 2.2 billion active devices in use, marking an increase from the previous year, which is seen as a positive indicator for the continued growth of the company’s services.

iPhone sales, boosted by the launch of the iPhone 15, grew nearly 6% to $69.70 billion but slightly fell short of revised expectations. Mac sales saw a less than 1% increase, recovering from a tough previous quarter. However, iPad sales continued their decline, dropping 25% during the quarter due to the absence of a new model launched in 2023.

Apple’s wearables business, which includes popular items like AirPods and Apple Watch, also faced challenges, recording an 11% year-on-year sales decline, amounting to $11.95 billion in revenue. This decline was attributed to a patent dispute with the medical device company Masimo, which led to a temporary removal of Apple Watches from Apple stores in December.

Overall, Apple remains a significant force in the technology market, reporting a net profit of $33.92 billion for the quarter, a 13% increase from the same period last year. The company also announced that it spent nearly $27 billion on dividends and share buybacks during the quarter. While facing challenges in certain markets, Apple maintains its solid stance and is gearing up to continue innovating and expanding its services in the upcoming quarters.