Apple returned to revenue and profit growth in the June quarter, driven by upgraded iPad sales and a thriving services business that beat challenges in the Chinese market and declining iPhone sales.
The company’s net profit in the 2024 fiscal third quarter, which ended on June 29, jumped 7.8 per cent annually to more than $21.4 billion.
Revenue during the April-June period jumped 5 per cent to $85.8 billion, beating analysts’ average estimate of $84.5 billion.
It was the company's record for sales in the June quarter.
Apple’s net profit and revenue dropped 2.2 per cent and 4 per cent, respectively, in the fiscal second quarter.
Industry experts welcomed the company’s growth in earnings and said Apple has been more comfortable than ever over the past year as the world's largest company by market cap.
"It's an incredibly solid quarter for Apple, which validates the company's turnaround towards becoming the leading player in the AI-to-consumer space,” Thomas Monteiro, senior analyst at Investing.com, told The National.
After the earnings announcement, Apple stock rose 0.64 per cent to $219.75 a share in after-hours trading on Thursday.
It closed 1.68 per cent down at $218.36, giving the company a market value of $3.29 trillion.
Its stock has surged almost 18 per cent since the start of the year.
Cautious guidance for September quarter
Apple predicts about the same total revenue growth in the September quarter as the last quarter, which was 5 per cent, chief financial officer Luca Maestri said on an analysts’ call.
The company anticipates its services division to grow at nearly 14 per cent. It expects the current quarter’s operating expenses to hover between $14.2 billion and $14.4 billion, Mr Maestri said.
Dwindling iPhone sales
The company's premier product, the iPhone, faced stiff competition in China from local brands such as Huawei and Xiaomi, leading to another quarter of declining sales.
They dropped almost 1 per cent to nearly $39.3 billion in the quarter from the year before, but they exceeded analysts’ estimates of $38.8 billion.
They accounted for nearly 46 per cent of the company's total revenue in the last quarter.
The company’s total revenue from its services division grew more than 14 per cent annually to almost $24.2 billion, while revenue from wearables, and home and accessories products dropped 2.3 per cent annually to more than $8 billion.
It was an all-time revenue record in the company’s services division.
Revenue from iPads and computers increased more than 12.1 per cent to pass $14.1 billion.
Apple launched new iPads during the quarter for the first time since 2022, prompting a surge in upgrades.
Falling share in China
Apple slipped out of the top five smartphone retailers in China during the last quarter, as competition from local brands increased, according to a Canalys report.
Its market share in China dropped to 14 per cent in the June quarter, from 16 per cent in the prior year period when it was the third-largest smartphone seller in China.
The company’s overall sales, which include revenues from products and services, in the Greater China market (China, Hong Kong and Taiwan) dropped 6.5 per cent to $14.7 billion in the last quarter.
Falling sales in China have proved Apple chief executive Tim Cook wrong when he said in May: “I feel good about China. I think more about long term than to the next week or so.”
Americas region led Apple’s sales. It accounted for nearly 44 per cent of the company's total third-quarter revenue, with more than $37.7 billion.
It was followed by Europe, which added $21.9 billion – up 8.3 per cent annually – to the company’s revenue.
Japan and the rest of the Asia Pacific market added more than $11.5 billion to Apple’s third-quarter sales, an annual jump of almost 10 per cent.
Apple said its board of directors had declared a cash dividend, payable on August 15, of $0.25 for each share of the company’s common stock.
Why is Apple excited about artificial intelligence?
In the last quarter, Apple announced various updates to its software platforms, including Apple Intelligence – a personal intelligence system that puts generative AI models at the core of iPhone, iPad and Mac.
“We very much look forward to sharing these tools with our users, and we continue to invest significantly in the innovations that will enrich our customers’ lives, while leading with the values that drive our work,” Mr Cook said.
The new technology will be integrated into the company’s latest operating systems for iPhones, iPads and Macs that are expected to be launched tp the public next month.
It will harness the power of in-house silicon chips to understand and create language and images, in addition to taking action across apps.
Apple numbers should look “even better once the AI features hit the market in the quarters ahead”, Mr Monteiro said.
"On the margins side, the company also looks poised to keep improving in the fourth quarter and beyond, particularly due to its push on the chips side.”
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Jimmy Grewal owns a rare collection of 250 Apple Mac computers and products. Andy Scott / The National -
From left, the Apple I, Apple II, Apple Lisa, Macintosh 512k computers. Cody Combs / The National -
The collection includes a rare Apple Computer 1. Andy Scott / The National -
The Apple Computer 1 computer was signed by Apple co-founder Steve Wozniak. The National -
The Apple-1 is still in working order. Antonie Robertson / The National -
The Apple II (serial #92), signed by Steve Wozniak, has no vents on the casing, making it very rare. The National -
The Apple Lisa, which predates the Macintosh. The National -
The Macintosh 512k. Cody Combs / The National -
Apple's first attempt at a laptop, the Macintosh Portable, from 1989. It weighed 7kg but its battery lasted from six to 12 hours. Cody Combs / The National -
The Macintosh PowerBook Duo, which was released in 1992. The National -
The collection includes various coloured Apple iMac desktop computers. Andy Scott / The National -
There are also original iPhones and iPods. Andy Scott / The National -
The collection has Apple Mac computers from various years. Cody Combs / The National -
Some of Apple's first attempts at 'tower' Macintosh computers. Cody Combs / The National -
Also in Mr Grewal's collection is an Apple Interactive Television Box from 1994 that was never released. Cody Combs / The National -
This is a rarely used early rendition of the Apple logo. It was signed by Apple co-founder Steve Wozniak, and the often forgotten co-founder Ron Wayne. Cody Combs / The National -
An Apple dot matrix printer, first introduced in 1982. Cody Combs / The National -
The first Apple LaserWriter, manufactured in 1985, is one of several Apple printers in Mr Grewal's collection. Cody Combs / The National
