Apple reports 11% jump in Q4 profit on strong iPhone business

Apple’s net profit jumped 10.7 per cent on an annual basis in its 2023 fiscal fourth quarter, despite a yearly drop in total sales.

The Cupertino-based company’s net profit in the period that ended on September 30 surged to more than $22.95 billion. It was 15.6 per cent up on a quarterly basis.

The profit was driven by a surge in iPhone sales and services business.

However, revenue of the company dropped almost 1 per cent on an annual basis to nearly $89.49 billion during the quarter, exceeding analysts’ estimates of $89.28 billion. This was the company's fourth consecutive quarter that saw a yearly decline in sales.

“Apple delivered an underwhelming quarter, despite a slight beat on iPhone sales and another strong performance in its services business,” Jesse Cohen, senior analyst at Investing.com, told The National.

“Investors were left wanting more from Apple, which is held to a higher standard than every other tech company … disappointing quarter proves it’s not immune to the challenges facing the tech industry at large.”

Apple did not issue official guidance about future revenue and profits. The company stopped offering guidance at the start of the Covid-19 pandemic because of uncertainty in business.

“We now have our strongest line-up of products ever heading into the holiday season, including the iPhone 15 line-up and our first carbon neutral Apple Watch models, a major milestone in our efforts to make all Apple products carbon neutral by 2030,” said Tim Cook, Apple’s chief executive.

The company’s diluted earnings per share surged 13.1 per cent year-on-year to $1.46, exceeding estimates of $1.39.

The company’s stock, which has surged almost 42 per cent since the start of the year, was trading 0.72 per cent less at $176.30 a share in after-market hours on Thursday.

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Apple’s market value topped $3 trillion in June, anchoring its position as the world's most valuable company. It stood at $2.78 trillion at market close on Thursday.

iPhone sales account for about 49 per cent of the company's total revenue.

Smartphone sales surged nearly 2.7 per cent to more than $43.80 billion in the quarter from the prior year period, missing analyst estimates of $43.81 billion.

The company’s total revenue from its services division grew about 16.3 per cent annually to more than $22.31 billion, while revenue from wearables, home and accessories products dropped 3.4 per cent annually to more than $9.32 billion.

Revenue from iPads and computers dropped almost 25 per cent to more than $14 billion.

Apple’s sales in the Americas region accounted for more than 44 per cent of the company's total fourth-quarter revenue, with more than $40.11 billion.

It was followed by Europe and the Greater China market (China, Hong Kong and Taiwan), which added $22.46 billion and $15.08 billion, respectively, to the company’s revenue.

An Apple iPhone 15 advertisement is seen as it officially went on sale across China at an Apple Store in Shanghai. Reuters

Japan and the rest of the Asia Pacific market added more than $11.83 billion to Apple’s fourth-quarter sales, an annual drop of 2 per cent.

“Apple’s worrying China sales figures indicate demand for its high-end iPhones is slowing more than expected in the face of rising competition from local companies, including Huawei,” Mr Cohen said.

“The big question is if this is just a blip, or signs of a bigger shift among consumers as rising interest rates and a weaker economic backdrop discourage consumers from making pricey purchases.”

Apple’s cash and cash equivalents surged 26.7 per cent annually to $29.96 billion as of September 30. The company also returned more than $25 billion to its shareholders during the quarter.

“During the September quarter, our business performance drove double digit EPS [earnings per share] growth … while [we] continuing to invest in our long-term growth plans,” said Luca Maestri, Apple’s chief financial officer.

“Our active installed base of devices has again reached a new all-time high across all products and all geographic segments.”

Mr Maestri said that Apple is expecting its December quarter revenue to be similar to the same quarter last year but he did not share any specific numbers.

Apple said its board of directors had declared a cash dividend, payable on November 16, of $0.24 for each share of the company’s common stock.

Earlier this week, Apple unveiled a host of new products, including a new iMac and the latest in the MacBook Pro line-up, at a live-streamed event.