Last Thursday, Apple held its earnings call for the fiscal first quarter of 2024 ending December 30, 2023, where Tim Cook and CFO Luca Maestri shared details about Apple's performance, recent product sales, services growth, and more. Apple recorded total quarterly revenues of $119.6 billion, an increase of 2% year over year. Here are the highlights from this earnings call.
Tim Cook provided insights into Apple's AI endeavors, noting that Apple is actively working on generative AI, and expressing his excitement about the upcoming developments. Although there is a significant amount of internal work underway, Tim Cook stressed Apple's strategy and approach in completing the work before discussing it publicly.
In contrast to other tech giants, such as Microsoft, Apple has maintained a conservative approach to its AI initiatives. During the discussion, Cook acknowledged Apple's tireless efforts in developing generative AI technologies and AI as a whole. Additionally, earlier this year, Bank of America analysts upgraded their price targets for Apple, citing potential benefits from integrating AI capabilities into iPhones, and Cook stated that specific details regarding the company's AI initiatives will be revealed. Apple later this year.
Apple Vision Pro glasses
Luca Maestri, Apple's chief financial officer, revealed that major companies, including Walmart, Nike, Vanguard, Stryker, Bloomberg and SAP, are preparing to develop Vision Pro applications for both customers and employees. Maestri expressed his enthusiasm for the innovative possibilities in various fields, from everyday productivity to collaborative product design and comprehensive training within the enterprise sector.
Tim Cook emphasized Apple's keen interest in Vision Pro's enterprise capabilities. He cited examples such as Walmart, which is developing an impressive commerce app. He highlighted the diverse range of applications created by different companies, including collaboration and design tools, field service applications, control center/command center solutions, and more. Cook acknowledged the collective effort made by many individuals across Apple, which has contributed to the advancement of Vision Pro over several years.
Balancing compliance with security, reliability and ease of use in the EU
Tim Cook addressed recent amendments made by Apple in response to the Digital Markets Act (DMA), which is set to take effect this month and will affect iPhones in the European Union (EU). Cook highlighted Apple's strong commitment to privacy, security and ease of use, but acknowledged that complying with regulations would result in restrictions on the maximum level of services the company can provide.
Luca Maestri, Apple's chief financial officer, specified that the amendments will particularly affect users in the European Union market, which accounts for about 7% of global App Store revenues. This demonstrates Apple's proactive approach to aligning its operations with regulatory requirements while ensuring a continued focus on user privacy and security.
Apple maintains its optimism amid declining sales in China
Cook stated that Apple witnessed remarkable strength in emerging markets during the fourth quarter, with strong double-digit growth in different regions. There were record sales in Malaysia, Mexico, the Philippines, Poland and Turkey, with also record sales in the December quarter in India, Indonesia, Saudi Arabia and Chile.
This positive performance in emerging markets contrasts with declining sales in China. Despite this, Cook confirmed that Apple was the leading smartphone seller in China in 2023, with iPhones taking four of the top six spots as the best-selling smartphones in urban China.
Cook stressed Apple's long-standing presence in China, spanning 30 years, and expressed continued optimism about the Chinese market in the long term.
Facing concerns about declining iPhone sales in China, some analysts have suggested that strong sales in other regions could offset any losses in the Chinese market.
Apple's profits in the services sector
In the services field, Apple achieved remarkable financial achievements, as the services category reached an unprecedented record of revenues of $23.1 billion, showing remarkable growth from $20.7 billion in the same quarter of the previous year. Paid subscriptions grew by double digits year over year.
Notably, Apple achieved all-time revenue records in advertising, cloud services, payment services, and video. In addition, the December quarter saw record performance in the App Store and Apple Care, which strengthened Apple's success and influence in the services sector.
◉ The wearables, home and accessories category saw revenue decline, reaching $12 billion, down from $13.4 billion last year.
◉ Mac sales are almost flat at $7.8 billion (compared to $7.7 billion last year), but iPad sales have declined significantly as Apple has not released any new models in 2023. iPad revenues amounted to $7 billion, Down from $9.4 billion last year.
◉ Apple now has more than 2.2 billion active devices worldwide, including iPhones, iPads, and Macs.