Apple (AAPL) 1 Feb 242024 Q1 Earnings call transcript

Good day, and welcome to the Apple Q1 Fiscal Year 2024 Earnings Conference Call. Today's call is being recorded.

At this time, for opening remarks and introductions, I would like to turn the call over to Suhasini Chandramouli, Director of Investor Relations. Please go ahead.

Thank you for joining us.

Apple's Luca Cook, Maestri. is followed he'll today CFO, by first CEO, and Tim be Speaking After questions from we'll analysts. that, open the call to

revenue, including, to of XX weeks, including regarding you'll discussion whereas expenses, call I conditions income quarter from materially impact the or we without quarter Before those information and and to year the forward-looking operating limitation, note gross reporting remind and ago today that forecast. that risks a other our like involve business macroeconomic of uncertainties and results margin, included we're XX trends allocation results the may our the Please capital everyone will hear included to future of turning today statements statements, actual of during on company's reported differ consist expense, the that weeks. over taxes, the business would operations. These outlook, potential Tim, some cause

in risk as today, along which For more the they update no SEC to filed the information, associated discussed XX-K with Form made. report only date Form statements, please recently the any obligation X-K and with speak refer factors annual on forward-looking of filed release. Apple's the assumes Apple press to are the most

I'd remarks. now to over like introductory to turn Tim for the call

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over I'll that, it With turn to Luca.

afternoon, everyone. good X% year. was you, Tim, quarter and billion, Thank December for up last the from Revenue $XXX.X

favorable track. Products limited second, an by with and year-over-year. markets, very and of by a performance sequentially, During compared a over iPad Europe less a XX.X%, customer represents margin this all impact rest loyalty up billion, offset points gross very $X.XX, segments partially we driven gross in records portfolio. mix, an provided had across products active pleased guidance up was operating basis When factory performance our of partially Operating XX.X%, factors of all from favorable set challenging all-time expenses XXX flow developed the we X of to satisfaction, also exchange. foreign of year. December more sequential Europe, take that billion customer in the last across headwind and the and margin versus by and mix. up $XX.X margin billion from exchange. cash Pacific. Company year-over-year. range sequentially, set was iPhone of up rest points records with and in markets growth ago, Thanks first, year acceleration this point points now billion offset Products all-time basis entire foreign and We of offset unique revenue our basis year, that quarter leverage net flat of year these total last majority results: was base driven affected our and record revenue active shutdowns up last the X.X the our COVID-related from quarter XX in year strong installed is strong supply. revenue unparalleled Asia sales in continue revenue devices billion, X income XX.X%, we emerging X% percentage account revenue and up and $XX.X devices. Services was X quarter. a additional XX% very Americas, quarter. quarter; levels Home up at this Services XX% and the leverage our the emerging an driven the by and of week performance of Pacific Diluted week was iPhone, new X record by to Wearables, week estimate our to geographic the growth set double-digit at by mix, with to across strength Accessories resulted We September billion. factors was in and extra Asia see for into was to markets, all-time and both gross compares Services $XX.X last $XX.X the the XXX year, due emerging We're were and midpoint we and last we in billion, of $X.X $XX.X Net record, EPS all-time a strong had

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cash turn Let billion. decreased paper leaving and debt billion, our marketable the by us commercial of ended quarter total return and with billion program. We position in me capital We to now securities. cash $XXX $XXX with $X

at As the the net $XX goal and a result, our time quarter, net neutral remains cash billion over cash unchanged. becoming end of was, of

Apple equivalents shares. through billion dividends market of shareholders, $XX we XXX including and During million in $X.X to and the billion open returned quarter, $XX.X billion nearly repurchases

X shares an in settlement final million retired also ASR. of our additional XXth the We

quarter. to of provide at return usual, report we update when capital As we program results this the an end will our

the call. are we outlook, review be doesn't And on move like includes macroeconomic the from of to are projecting quarter, quarter. basis. we year-over-year current today into of beginning a about worsen of for to revenue the to that information expect that foreign headwind we the points forward-looking assumes what color outlook the percentage we X a exchange referred Suhasini The today I'd ahead the providing types As at March our which

faced a factory able supply and revenue year's from a due the As the iPhone our year channel significant similar a Pro and demand a the reminder, constraints. Pro to to on close in XX quarter quarter COVID-XX March shutdowns. ago, were We total billion Max to in And the ago, to iPhone the we from fulfill inventory revenue, year. this quarter's to last added December March pent-up constraints we quarter estimate March and XX that significant revenue revenue year last ago. impact be remove When year impact total we to both we $X expect this replenish company

Services December similar expect our For a we we double-digit rate what quarter. to the growth reported in business,

XX%. margin expect between XX% We to and be gross

to between $XX.X We be billion billion. expect and OpEx $XX.X

OI&E and We around potential be expect of around to be our to the mark-to-market any million, investments, rate minority from $XX excluding tax impact XX%.

our shareholders share XXXX. Finally, cash common of Directors a February as of record XX, on payable today, per stock of to Board of XXXX, February declared of has dividend XX, $X.XX

that, open With the let's call questions. to

[Operator Operator, the we Luca. have Thank may you, Instructions] first please? question,

We'll take Stanley. and with Erik Morgan our go question ahead from first Woodring

unpackage on with December of for have and think Services Obviously, and were maybe I your can And the the a outperformance. March bit we the quarter? underlying about Services clarify December of just bit of likely you, versus some your then the margin for the we what have then gross some nice here. would and nice should quarter be. maybe implies in follow-up, if really outperformance those A I drivers you higher-margin businesses us? And how a then X, the March record the you in growth please. a expectations. can congrats puts drivers different sources quarter, in quarter Luca, But to takes quarter the start speak

Erik, the question. Thanks, for

Let's start with December quarter. the

in records Europe the Asia Americas, As billion all-time with rest and up we in Pac. $XX.X of said, for is us, an the all-time record XX%,

and performance the year, we XX% we reported. was is that all stronger so for all-time because and for have had we revenue very So categories advertising last pretty geographically an the quarter -- cloud, had is for Store strong broad-based underlying stronger week payments, App for than for the records and across and XX% AppleCare. Obviously, for Services than it the video December records extra

well to I both digits. think new we important. the paid And double ecosystem subscriptions growth entire which all-time very and and is accounts, paid to is grow doing accounts continue see transacting because continue in obviously strong highs

reference, mentioned more to around the the billion is platform. This that remarks quarter, we around paid of category our so a double prepared double subscriptions December as is so the March report we during ago, Services have more there. will grow than had we will what I we that I when different subscriptions obviously quarter. continue only We Just guidance years to months. number digits don't What at across for on X X a paid reported in significant provide the color than all that similar the percentage we very growth said the services we X more provide

more months, XX users monetization might Okay. onboard cohort see new to detail from to a the a even terms in or or all geographic last past if cohorts. their record how about could to how bit over were certain products Tim, installed might differ you And share new cohorts the this geos. products either past skew trends nice from meaning base of I'm wondering your high, really representation look different you reach then, against and again, able

key have us. a area markets Yes. are Erik, been very of I say for emerging strength -- would

hit and revenue If look in grew, at revenue terms, quarter India a double record. grew December quarter the you digits it, strong in

Latin record, theme the to from across had markets as And we records the emerging America with the consistent pretty hit a and several regions Indonesia like quarters well. other that The Middle been also has year of other quarterly East.

I a there. And job doing like so very emerging markets, we're and very, feel great important,

with Ng from Sachs. is question next Our Goldman Mike

I just as have X well. questions

Services. on First

similar help that March for implemented why pricing potentially Any of outlook faster, additional should quarter. are. uplifts the a on as December that And just quick a comp, I given think there quarter quarter, of would in terms the Apple the were your last great rate some also won't services double-digit some winter on quarter wondering growth the I'm what why December and headwind have thoughts be obviously the the I for be that week from had One it of follow-up. -- extra Just in March the a then select assumptions not

see March essentially point is the points quarter, of We'll in the One December quarter. couple quarter and for that foreign flat foreign us expect we to a things. the exchange how was develops. mentioned I fact negative X would the exchange that Yes. we in of

So December. you've got the bit for at compares there. of progression of headwind business than slightly when you compares few a Services a then March last more difficult our the the the are And over quarters, look for

upcoming efforts also good hear about any announcements second Great. And investments then my be just would very helpful. ecosystem? Pro. so about the question, also on hear maybe Vision Could the customer to was Vision of the thoughts some potential the AI, into of it enterprise was interesting there to about to talk support some you developer Pro it And

Yes.

of are incredibly in has demos are opportunities Luca I've There his about merchandising opening mentioned are service seen map. several very collaboration, enterprise Walmart are There cool the center app. excited command applications. the from field are several different We firms apps. Vision companies. has that of kind There but collaboration things. SAP applications Pro. over with Really really gotten for behind this multiple all This far. remarks, that there efforts doing center, are a design control it enterprise, so forward people it and a think to right companies where many years is SAP will great that across bring we us so looking really, to from of it obviously has We're I been now. for took whole be Apple. And tomorrow. to of effort company things about in many in be a and, excited more are couldn't of course, opportunity

which have as In alluded would guess a focus, internally is I work terms lot AI, of your going of generative on before. to I've we

has work front always about not and and to get you of to do if talk out been in then will, Our MO, work ourselves.

going year. later we're we'll that But talking that about as we're got so well. And to hold excited some to this be incredibly that about we've things this

of Bank Our next America. question Wamsi with is Mohan from

X questions had I well. as

lengthening, Curious First concerns still on thinking around the in the And weaker the beat competition about performance intensifying. in December I despite cycles have saw given you China. what there a replacement follow-up. revenues iPhone overall, been you're you cycle XX iPhone, China quarter. And have how

as Underneath mentioned were performance that It's world, Pacific. there, of rest remarks. We and happy opening Tim. in all-time with the the Asia strong we performance. up parts several records we in with had in really X% Europe of We're

to emerging so quarter set As some and well several in reactions America spectacular the iPhone. we India Indonesia, records I've East, we earlier, in markets really December from Latin mentioned did broad-based particularly Middle to and and

We worldwide the for And our all-time high, base with set devices. all-time an also, hit the iPhone -- importantly, upgraders. installed consistent a new record overall

there's so hit his iPhone the in of Luca top X all comments opening Australia. top out of in top the models and urban And lot for X and and that were XX%. satisfaction China X X customer smartphone in the good and X of things. the iPhones XX U.K. level U.S. in Japan mentioned this And out a

XX over so and the iPhone that you same iPhone XX XX of look announcement the time, is some September, shipment XX. since it this is compare including and you If of at in to QX, period iPhone iPhone outselling of

particularly And good is exciting and the about record hitting a we feel us. so very upgraders for that,

a Great. product of your how starting a introductions. would a And the point wondering, at eclipse which something could think product's just to the over And relative price maybe success Vision revenue But you're of there as new And potentially which decade, the like category. the measure in we adoption similar? that's It's last just over in Apple you Vision iPad most launching as you an probably entirely Pro Pro other, a curve higher it's would time? the over way point look time? price and much follow-up, most obviously, Pro Vision could is

excitement the in of in tomorrow an product their gotten I many own able And compare journey, customers we incredibly proud want wait check couldn't has be starting one Each up so developers people stores any from demo to that amount can't and tomorrow U.S. We've units. that to I in that to it to until its it to internally. the unit we're incredible -- to would excited out. wouldn't pick are say for more of and so from be just our want particular.

familiar see the we'll Wearables that And category you're with. results so report it the of and in

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And I so the store myself. see and we're incredibly the tomorrow reaction for excited about wait be in can't it. to

Amit with from is Evercore. Daryanani question next Our

bit well. as X little have right talk about could are what now. you a first, I I seeing you guess, was China hoping I in

think geographic places down a was digits that of else growing. I double everything while from basis, few was one the

a competitive a you are So of I'm there from perspective from discussing you'd seeing demand spend bit in time perspective China. hoping a more and importantly what

Yes.

you and Mainland, If an we I digits iPhone. a at of you been in which iPhone constant more operational focus it of lot mid-single at on interest look were of view, think in down China currency, look the so has

other that year-over-year. the was it so And drove contraction larger the things

in On full had brand in Also, the December urban China, top growth were -- the on note the for the we models have the put smartphone a China. IDC X upgraders in seen solid X news of just you and year may we year-over-year out we that top and for that Mainland quarter. good side, had

with contract. some not there's good news to prefer along so obviously, -- we'd And

you updates? And some your then bit of the it there. broader just follow-up, key And are the touch DMA to what Luca, financially enough. Can implementation you folks see fair as Store impact statement? all, or on App Europe it Fair then Apple post a in around implemented of the have changes P&L any the significant having Services net you of do a

Yes.

add in new calendar marketplaces, stores will. the can or to March, you for alternate we capabilities so last quarter, opportunities, include changes some to a are -- announced announced of banking fiscal would Let it. alternate quarter. effect wallet first We things the then me comments bit last and a for of little We're in answer in Luca and Europe app NFC beginning that if week Those billing of opening be number month try the also the some of both that second apps.

of are And announced. these some so we that the things

think terms we've we to as our best that we about get our are regulation. the fall providing things the to the done that ecosystem tried as you privacy, on over supply But we the security going really people of close maximum about what If past -- we're majored years with is because the we've in can. short -- of love need usability. we've that comply and to could of to And amount

developers of make, And terms the in do to predicting will that that precision. difficult choices with very users it's and so

see And so happens what in we'll March.

Tim And be on be that said, Amit, to these in will that March. depend choices going Yes. as will lot we're are changes A the implementing made.

the to the App Store EU of our Just keep revenue. context, to roughly changes in apply it market, X% represents which global

good really a to That's Perfect. have. perspective

question next Aaron Fargo. Our from with Wells is Rakers

specifically. as I X I I product as question ask remarkable bit little gross to we're in margins first a guess trends want seeing your just and more, just have unpack imagine. you'd well maybe that the

we So I'm seeing any you curious the on of place, gross in the this quarter, like from thinking that purchase guess and you forward? there that as kind I that let's you're about looking into think say, last we through? about as put quarter March forward, just flowing environment a how are margin and were year pricing obligations benefits And component ago look component the

Yes.

then X a mix. increased in side, obviously products the primary maybe favorable significant make increase. for On comment say on would gross margins basis the sequentially total are side, products XXX of the I'll a I company, increase the points, so very our the and components a

did obviously It's a case, negative on we course, impact very increased biggest had very significant quarter with the leverage dynamics effect. We And points, very did favorable sequentially year also mix. improvement. the due leverage, the well basis more from where for foreign similar Services of And we the in we had a exchange, get to us so XXX models. well. our side We course. of high-end iPhone but and net-net, this very Of partial offset

the XX.X% of at so up the effect is the XX% combined And which level, X sequentially. total the company gave businesses us

remarks margins the is heard quarter. XX%, that of You've my are results from we to guiding prepared to which compared additional of XX% the an strong already total December company to very gross margin expansion

to then you ask. kind and this AI your some to excitement And about going generative just we the second of around year. was Tim, I that Okay. think later alluded question should announcements maybe

to intensity the table CapEx of move tech more AI, down for to the One seen has of capital stands expenditures generative look AI that to things consider forward, year. as we of you that about curious, the actually generative some there should platform a out some at me given other just we've Apple that in things something we set I'm this the your really come kind make last is investments to as for companies? is large lean from

development. underinvest product making the investments software question, in development, Aaron. our We've we so are all always throughout we the the I'll development, are will take necessary services that said never business,

appropriate rest every in And so invest us the continue the the to and of store level. we business area And for what's the we're for at year. of excited will about in very

with Our TD question next is from Cowen. Krish Sankar

of them. I X have

gross billion is And highlighted along and a the total company for of conversions. now. silicon going margins, are conversions, it Mac And costs obviously, be but done understand you've year, the some I path, last inflationary deflationary and in the looks it's you to right like of revenue product commodity the question. some $X Luca, a strong for one impact this is clarification same revenue? First or March quarter, that The

to much out there I margin trying a So to is And just the more gross squeeze Tim. follow-up side. for how I'm on then juice figure have

-- situation. the $X was Max factory year XX The the had as The billion, shutdown question the because of of around COVID-XX on Pro supply Yes. Pro ago, to first part the disruption a we and this the so iPhone due billion. I of $X mentioned,

there And pent-up was demand. essentially, so

they the As got it we we with associated also quarter. fulfilled. during quarter, fill exited the March And did channel the December

$X to billion close mentioned the I is entirely So to that iPhone. related

the we foreign and situation, side, product which I gross strong very very guiding commodity of we good And takes services exchange and it. account On is obviously, expansion quarters, had and everything last before, that levels few which guidance, outcome the are that this I'll and at obviously, over happy is And is the the on, going the very gross to obviously into is XX% said the of is are we've environment, the now and we're with mix. repeat margin which XX%, what high margin. to

it Pro, And enterprise. follow-up get the it as think the or Apple going it's enterprise, still have more I been how Apple comments enterprise-focused et then about of be into has very kind Macs, historically, interesting And be a do Tim. into to for of was company. to more consumer-centric on your Vision a think Tim, And penetrating now we future. hear also with consumer-centric cetera, to the I'm you Would curious future?

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Our with is UBS. David from next question Vogt

have I X well. as questions

appreciate the can But of some kind you time flat. I the names that strength maybe markets Luca, spend Americas? and the call. relatively India like Obviously, was the Tim and emerging you So the in other on on listed that

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the part your of Americas. first about take question me Let

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from Our Research. Melius with is Reitzes last question Ben

Two questions if them can in. sneak I

Just wanted to clarify on China, Tim.

there can a you with I in it given growth we that know thought you there's quarter, think market. saw something what and last Obviously, recently was we Is wondering kind still that some concerns feel quarter. quick the the you're that if And resume of just that, I'm future? point still have Then the prospect. to can I where a growth in you upbeat market follow-up. about that

about XX Ben, good hitting during and I years, very a we've and base growth good installed And in I watermark the new the the for the been I in quarter. long upgraders number, high China -- am feel in about China -- over very year-over-year term. a about remain optimistic

in of? going thesis And is know have I your huge do and you're it's edge in going talk on AI, take about terms smartphones that but to something processing believe and yours of advantage you AI a you -- plans, can like are in and apps, guys the to a Great. believer just devices that AI you AI role not and

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Thanks contact These financial of contact for by Josh additional will enter at again and telephone. replay X Thank XXX-XXXX. for followed Time questions you, the at replays call Chandramouli, replay additional me, will today. by XXXXXXX (XXX) code available for is press apple.com/investor Members The webcast X the Apple p.m. and approximately Podcasts, via pound on (XXX) with Pacific right. the us. available telephone can Ben. on a today's questions Rosenstock weeks joining confirmation number with XXX-XXXX, as (XXX) be Please XXX-XXXX. of be sign. can A analysts Suhasini All

participation. does again, do today's Once We conclude appreciate your this conference.