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Late last week, Apple reported record quarterly revenues from iPhone sales, and an all-time revenue record for its services business. This helped the company beat analyst expectations, and the stock price has risen by 6% this month.
Group revenue for the September quarter was $89.5 billion, down less than 1% from the previous year. Of Apple's overall iPhone sales of $43.8 billion, those in China fell by 2.5% to $15.1 billion. That softness is a concern and arises from a more competitive market there and some government scrutiny.
Apple CEO Tim Cook said iPhone 15 sales outperformed the iPhone 14 during a one week overlap right at the end of the September quarter. Demand for the Pro and Pro Max models is strong, despite supply constraints. We shall see how the 15s sell this festive season. The lads in the Vestact office have all arranged their upgrades, via MTN.
The Mac and iPad businesses both experienced declines. However, Cook expressed optimism about the Mac's prospects in the December quarter due to new products and the 'scary fast' M3 chip.
Apple's services unit grew sales by about 16% to $22.3 billion. This was the most positive part of the results announcement. As Michael pointed out here recently, a significant portion of the services unit's revenue comes from a deal with Google, where Google pays Apple to be the default search engine on Apple's Safari browser. This arrangement is estimated to be worth around $19 billion to Apple in the current year. Holy Moses, that's a lot of money!
Apple now has over 1 billion paying subscribers to their services products. These include people signed up for their own products like Apple Cloud and Apple Music, as well as subscribers to third-party services available on the App Store that charge users on a recurring basis. This is high-quality annuity income that binds users to the Apple ecosystem.
Almost every Vestact client owns Apple shares, and it's always top of our buy list when new customers arrive. It remains an attractive investment, generating outsized cash flows and splendid returns for shareholders. It's a bargain at the current share price, just below $180 per share.
You will find more infographics at Statista