Apple reported a record revenue of $94.9 billion for the September quarter, marking a 6% increase year-over-year. This growth is attributed to strong iPhone sales, significant advancements in services, and geographic segment revenue records in the Americas, Europe, and the rest of Asia Pacific.

Apple’s Q4 2024 performance highlighted growth driven by product innovation and AI integration, resulting in record revenue. Despite the impact of a one-time $10.2 billion tax charge on net income, the focus on enhancing user experience through AI positions Apple for future growth. However, the cautious holiday quarter outlook suggests Apple will need to navigate market challenges and seize emerging opportunities.

Key Takeaways

• Apple’s services reached an all-time revenue record, growing by 12% year-over-year. The platform now boasts over 1 billion paid subscriptions, reflecting double-digit growth and highlighting the increasing significance of recurring revenue streams for the company.

• Apple continues to highlight its move into the enterprise market. Notable mentions of enterprise adoption include Nvidia’s choice of Mac for its employee program and Novartis selecting iPhone 16 for its standard mobile device. Additionally, UC San Diego Health’s testing of spatial computing apps on Apple Vision Pro in clinical trials showcases Apple’s penetration and innovation in enterprise solutions.

• Apple ended the quarter with significant cash reserves and continued its shareholder return program, declaring a cash dividend and engaging in open market repurchases.

  What’s Significant

• One-Time Tax Charge: Net income was impacted by a $10.2 billion tax charge due to a European Union ruling, resulting in a net income of $14.7 billion.

• During the earnings call, invest analysts were curious about Apple’s AI strategy and how it could boost future growth. CEO Tim Cook shared that Apple Intelligence features have been well-received, with adoption rates doubling compared to last year’s updates. That said, there were also some concerns about the holiday quarter, with revenue expected to grow only in the low to mid-single-digit range.

• A potential concern around CaPex growth for 2025 was also called out during the call, with Luca Maestri confirming that investment in AI will continue to occur but that Apple is not quite like other players as only Apple Intelligence workloads use Apple’s Private Cloud Compute.
• Apple highlighted its progress towards carbon neutrality with the introduction of a carbon-neutral Mac and the option for a carbon-neutral Apple Watch, reflecting its continued commitment to environmental sustainability.

Financial Performance:

• Revenue: $94.9 billion, a 6% increase year-over-year.
• Net Income: $14.7 billion, impacted by a $10.2 billion tax charge.
• Earnings Per Share (EPS): Adjusted EPS, excluding the tax charge, stood at $1.46, aligning with analyst expectations.

Business Highlights:

• iPhone 16 Series: Launched in September, the iPhone 16 lineup has seen strong initial sales, contributing to a 5.5% increase in iPhone revenue, totaling $46.2 billion.
• Services Segment: The services division achieved a record $24.97 billion in revenue, reflecting an 11.9% year-over-year growth, driven by increased subscriptions and service offerings.
• Geographical Performance:Sales in China experienced a slight decline of 0.3%, possibly due to the fact that Apple Intelligence is rolling out in 2025 might delay iPhone upgrades.
• In the recent quarter, Apple’s Mac revenue increased by 2% year-over-year, reaching $7.7 billion, largely driven by the MacBook Air with the M3 chip, which attracted many first-time Mac users, with half of its buyers being new to the platform.  Meanwhile, the iPad segment also saw a robust 8% increase in revenue, totaling $7 billion.
• Revenue for Apple’s category encompassing wearables and accessories totaled $9 billion, reflecting a 3% decline year-over-year. Despite this, the launch of the all-new Apple Watch Series 10 has continued to attract new customers, with over 75% of buyers being new to the Apple Watch.

Outlook:

Apple’s outlook for the December quarter is cautiously optimistic, projecting low to mid-single-digit revenue growth year-over-year and expecting double-digit growth in services revenue. Tim Cook said he is optimistic about easing supply constraints on thei Phone 16 lineup that the company experienced in October. Cook also called out Apple Intelligence as an upgrade driver across the product families of Mac, iPad and iPhone.The staggered release of Apple Intelligence across different regions introduces complexity into forecasting future upgrade cycles, both from a market expectation and production standpoint. This phased approach, while ensuring quality and regional relevancy of features, suggests a meticulous strategy by Apple to balance innovation rollout with operational execution.

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