Apple's Q4 2023 Earnings Call Takeaways

[MacRumors]

Apple today held an earnings call for the fourth fiscal quarter of 2023 (third calendar quarter), with Apple CEO Tim Cook and Apple CFO Luca Maestri sharing details on recent product sales, services growth, Apple's future plans, and more.

We've highlighted the most interesting takeaways from Apple's earnings call.

Services

Apple's quarterly revenue was down one percent year over year at $89.5 billion, but services revenue hit a new all-time revenue record. Services revenue was $22.3 billion, up 16 percent from $19.2 billion in the year-ago quarter.

Across all of 2023, Apple's services category brought in $85 billion, up from $78 billion in 2022.

App Store, advertising, iCloud, AppleCare, payment services, and video hit all-time revenue records, while Apple Music saw an all-time revenue record for the September quarter.

iPhone Sales

iPhone revenue was up during the quarter, coming in at $43.8 billion, up from $42.6 billion in the year-ago quarter. iPhone revenue was down for the year, though, at $200.6 billion, down from $205.5 billion last year.

Apple's iPhone revenue set a September quarter revenue record.

According to Apple CEO Tim Cook, the iPhone 15 models sold better than the iPhone 14 models, but supplies of the iPhone 15 Pro and Pro Max were constrained, which impacted Apple's total iPhone revenue.

Cook said that Apple is "working hard" to make more iPhone 15 Pro and Pro Max devices, and that the company expects to reach supply/demand balance at the end of the holiday quarter. iPhone revenue is expected to grow year-over-year in the December quarter.

Mac Sales

Mac sales were way down in Q4 2023, with Macs bringing in $7.6 billion, down 34 percent $11.5 billion in the year-ago quarter. Mac revenue for all of 2023 was $29.4 billion, down from $40.2 billion in 2022.

Last year, September Mac sales were up because of supply chain issues in June, a situation that Apple could not compete with this year. Cook expects Mac revenue to improve next quarter thanks to the October introduction of the M3 Macs, and he said that the negative 34 percent growth should not be seen as representative of the underlying performance of the Mac.

iPad Sales

iPad sales did not fare quite as badly as Mac sales, but iPad revenue was also down. The iPad category brought in $6.4 billion, down from $7.1 billion in the year-ago quarter. Apple has not released any new iPads this year, so the drop in iPad revenue does not come as a surprise.

Across 2023, iPad revenue came in at $28.3 billion, down from $29.3 billion in 2022. Apple CFO Luca Maestri said that year over year performance for the iPad will "decelerate significantly" because of changes in product launch timing. Apple last year launched a new iPad Pro during the December quarter, and no new iPads are planned in 2023.

Wearables, Home and Accessories

Wearables revenue dropped as well, coming in at $9.32 billion for the quarter, down from $9.65 billion in the year-ago quarter. Wearable revenue for 2022 was at $39.9 billion, down from $41.2 billion last year.

Year over year revenue for the wearables category is expected to drop in the December quarter.

Research and Development Spending

Apple spent a total of $30 billion on research and development in 2023, up from $26.3 billion in 2022. Apple CEO Tim Cook said that Apple's increased spending is due to Vision Pro, AI, machine learning, and silicon investments.

Active Install Base

Apple CFO Luca Maestri said that Apple's active installed base of devices has hit a new all-time high across all products and all of Apple's geographic segments.

Vision Pro

Apple CEO Tim Cook was asked whether he thinks the Vision Pro launch and consumer education process will ultimately be similar to the AirPods and Apple Watch, but he said no, because of the purchasing experience.

"I would say no. There's never been a product like the Vision Pro, so we're purposely bringing it out in our stores only so we can really put a great deal of attention on the last mile of it. We'll be offering demos in the stores and it'll be a very different process than a normal grab-and-go kind of process."

Cook went on to say that Apple is seeing a "tremendous amount of excitement around Vision Pro." Cook has tested some of the apps that developers are working on, and he claims that some "real blow away kind of things are coming out."

The Vision Pro will be sold solely in the United States to begin with, and Cooks comments suggest that customers might be required to visit a retail store to make a purchase. Apple's Vision Pro website says that the headset will be available for purchase both online and in retail stores, but Apple could ask customers to come to a retail store to pick up an online purchase in order to ensure a proper fit.

Bloomberg's Mark Gurman recently said that Apple will assemble Vision Pro headsets for customers in its stores, giving each user the appropriate headband, light seal, and prescription lenses if necessary.

Generative AI

Cook was asked how Apple might be able to monetize generative AI, which he of course declined to comment on, but he said that Apple is "investing quite a bit" in AI and that there are going to be product advancements that involve generative AI in the future.

Apple silicon

An analyst asked Cook if it would ever be feasible for Apple to purchase "from the industry." Cook said that Apple silicon is "at the heart of the primary technologies" that Apple likes to control in its devices, and so he does not see the company "going back to buying off of the shelf."

"I am happier today than I was yesterday than I was last week that we made the transition that we've made and I see the benefit every day of it," said Cook.

Apple's Search Deal With Google

Cook was asked to comment on its web search partners, with a specific focus on the ongoing antitrust lawsuit that Google is facing from the U.S. Department of Justice.

Cook said that Apple has "important relationships" with its web sear partners, but that he would not get into "commercial relationships" on the call. Cook said that he sees them "as important" and that Apple makes "decisions that we feel are in the best interests of our users."

Read More

A more complete picture of Apple's earnings on a per-category basis can be found in our full live blog.

Article Link: Apple's Q4 2023 Earnings Call Takeaways

 

[frownface]

Apple is doomed

Not surprised at the results , lots of people were waiting for usbc to make a jump and naturally that weighed on 14 sales.

Bit of an eye opener to see how poorly ipad sales are doing compared to even watch sales these days though.

"decisions that we feel are in the best interests of our users."

Funny way to spell shareholders.

 

[RickDEGH]

Everything that goes up must come down, unless Apple find ways to generate new interest in their products. I’m certainly not that excited anymore. Perhaps it’s just age.

 

[MilaM]

I'm wondering how much of that services revenue is actually from the Google search deal and if it might go away because of the current litigation.

 

[MilaM]

Everything that goes up must come down, unless Apple find ways to generate new interest in their products. I’m certainly not that excited anymore. Perhaps it’s just age.

I feel the same. Was also wondering if it's just age. On the other hand I think technology fatigue is real and not necessarily generational.

 

[StellarVixen]

Tim, I think it’s time to go. For the past 10 or so years, you managed to keep the Apple at the top and kept the users more or less happy post Steve (and made shareholders very happy). This to me is obvious sign that someone else should take your seat. Someone with newer ideas. Someone bolder. You cannot generate more profits by playing it safe. Data doesn’t lie

 

[Imperial926]

My feeling is that the customer no longer comes first. Superficially they may seem to but a look through the hardware product line soon establishes that Apple produce purely what they want to sell whilst considering how it connects to lucrative services. After premature failure of a number of products and the deliberate policy of making the once simple replacement of items like batteries so difficult I no longer feel valued as a customer. What do I therefore do? I hang on to stuff as long as possible.

 

[4odomi]

Apple today held an earnings call for the fourth fiscal quarter of 2023 (third calendar quarter), with Apple CEO Tim Cook and Apple CFO Luca Maestri sharing details on recent product sales, services growth, Apple's future plans, and more.

We've highlighted the most interesting takeaways from Apple's earnings call.

Services

Apple's quarterly revenue was down one percent year over year at $89.5 billion, but services revenue hit a new all-time revenue record. Services revenue was $22.3 billion, up 16 percent from $19.2 billion in the year-ago quarter.

Across all of 2023, Apple's services category brought in $85 billion, up from $78 billion in 2022.

App Store, advertising, iCloud, AppleCare, payment services, and video hit all-time revenue records, while Apple Music saw an all-time revenue record for the September quarter.

iPhone Sales

iPhone revenue was up during the quarter, coming in at $43.8 billion, up from $42.6 billion in the year-ago quarter. iPhone revenue was down for the year, though, at $200.6 billion, down from $205.5 billion last year.

Apple's iPhone revenue set a September quarter revenue record.

According to Apple CEO Tim Cook, the iPhone 15 models sold better than the iPhone 14 models, but supplies of the iPhone 15 Pro and Pro Max were constrained, which impacted Apple's total iPhone revenue.

Cook said that Apple is "working hard" to make more iPhone 15 Pro and Pro Max devices, and that the company expects to reach supply/demand balance at the end of the holiday quarter. iPhone revenue is expected to grow year-over-year in the December quarter.

Mac Sales

Mac sales were way down in Q4 2023, with Macs bringing in $7.6 billion, down 34 percent $11.5 billion in the year-ago quarter. Mac revenue for all of 2023 was $29.4 billion, down from $40.2 billion in 2022.

Last year, September Mac sales were up because of supply chain issues in June, a situation that Apple could not compete with this year. Cook expects Mac revenue to improve next quarter thanks to the October introduction of the M3 Macs, and he said that the negative 34 percent growth should not be seen as representative of the underlying performance of the Mac.

iPad Sales

iPad sales did not fare quite as badly as Mac sales, but iPad revenue was also down. The iPad category brought in $6.4 billion, down from $7.1 billion in the year-ago quarter. Apple has not released any new iPads this year, so the drop in iPad revenue does not come as a surprise.

Across 2023, iPad revenue came in at $28.3 billion, down from $29.3 billion in 2022. Apple CFO Luca Maestri said that year over year performance for the iPad will "decelerate significantly" because of changes in product launch timing. Apple last year launched a new iPad Pro during the December quarter, and no new iPads are planned in 2023.

Wearables, Home and Accessories

Wearables revenue dropped as well, coming in at $9.32 billion for the quarter, down from $9.65 billion in the year-ago quarter. Wearable revenue for 2022 was at $39.9 billion, down from $41.2 billion last year.

Year over year revenue for the wearables category is expected to drop in the December quarter.

Research and Development Spending

Apple spent a total of $30 billion on research and development in 2023, up from $26.3 billion in 2022. Apple CEO Tim Cook said that Apple's increased spending is due to Vision Pro, AI, machine learning, and silicon investments.

Active Install Base

Apple CFO Luca Maestri said that Apple's active installed base of devices has hit a new all-time high across all products and all of Apple's geographic segments.

Vision Pro

Apple CEO Tim Cook was asked whether he thinks the Vision Pro launch and consumer education process will ultimately be similar to the AirPods and Apple Watch, but he said no, because of the purchasing experience.Cook went on to say that Apple is seeing a "tremendous amount of excitement around Vision Pro." Cook has tested some of the apps that developers are working on, and he claims that some "real blow away kind of things are coming out."

The Vision Pro will be sold solely in the United States to begin with, and Cooks comments suggest that customers might be required to visit a retail store to make a purchase. Apple's Vision Pro website says that the headset will be available for purchase both online and in retail stores, but Apple could ask customers to come to a retail store to pick up an online purchase in order to ensure a proper fit.

Bloomberg's Mark Gurman recently said that Apple will assemble Vision Pro headsets for customers in its stores, giving each user the appropriate headband, light seal, and prescription lenses if necessary.

Generative AI

Cook was asked how Apple might be able to monetize generative AI, which he of course declined to comment on, but he said that Apple is "investing quite a bit" in AI and that there are going to be product advancements that involve generative AI in the future.

Apple silicon

An analyst asked Cook if it would ever be feasible for Apple to purchase "from the industry." Cook said that Apple silicon is "at the heart of the primary technologies" that Apple likes to control in its devices, and so he does not see the company "going back to buying off of the shelf."

"I am happier today than I was yesterday than I was last week that we made the transition that we've made and I see the benefit every day of it," said Cook.

Apple's Search Deal With Google

Cook was asked to comment on its web search partners, with a specific focus on the ongoing antitrust lawsuit that Google is facing from the U.S. Department of Justice.

Cook said that Apple has "important relationships" with its web sear partners, but that he would not get into "commercial relationships" on the call. Cook said that he sees them "as important" and that Apple makes "decisions that we feel are in the best interests of our users."

Read More

A more complete picture of Apple's earnings on a per-category basis can be found in our full live blog.

Link: Apple's Q4 2023 Earnings Call Takeaways

Gate this, gate than and yet we get a 2.5 months wait time.
Ones again the best efforts of Android Bots, could not noble the iPhone 15 sales 🤣
Considering the economic climate -1% is an unbelievable result 😳

 

[webkit]

I'm wondering how much of that services revenue is actually from the Google search deal and if it might go away because of the current litigation.

It might go away but it may also open the door for Apple to get into the search engine business which could generate a decent amount of revenue for the company. Whether or not that is even part of Apple's plan remains to be seen.

It will also be interesting to see how much AI shakes up the search engine market going forward.

 

[erikkfi]

A great quarter, tons and tons of money, but perhaps not enough to satisfy the avaricious machine of capitalism that demands endless, significant year-over-year growth.

 

[WarmWinterHat]

I'm wondering how much of that services revenue is actually from the Google search deal and if it might go away because of the current litigation.

21%, if we use the $18 billion figure, as of FY2021, from the Google antitrust case.

 

[jjudson]

Wait til the headset implosion…

 

[Fuzzball84]

Apple is doomed

Not surprised at the results , lots of people were waiting for usbc to make a jump and naturally that weighed on 14 sales.

Bit of an eye opener to see how poorly ipad sales are doing compared to even watch sales these days though.




Funny way to spell shareholders.

There has been no big innovation on iPads except for the release of 2018 iPad Pros, the Air 4, Apple Pencil and Magic Keyboard.

For most people, they do 99 percent of what most iPad buying people want.

M1, M2… what’s the point of these in iPad if the OS is the same as a decade ago in terms of what it can do.

 

[goonie4life9]

Apple starting to see the limits of the “clear upgrade path by making iterative updates,” and “release everything at the same time” approaches.

 

[Lioness~]

My feeling is that the customer no longer comes first. Superficially they may seem to but a look through the hardware product line soon establishes that Apple produce purely what they want to sell whilst considering how it connects to lucrative services. After premature failure of a number of products and the deliberate policy of making the once simple replacement of items like batteries so difficult I no longer feel valued as a customer. What do I therefore do? I hang on to stuff as long as possible.

Tim, I think it’s time to go. For the past 10 or so years, you managed to keep the Apple at the top and kept the users more or less happy post Steve (and made shareholders very happy). This to me is obvious sign that someone else should take your seat. Someone with newer ideas. Someone bolder. You cannot generate more profits by playing it safe. Data doesn’t lie

The customers have never been 1st for Tim, it has always been the shareholders.
But he got a very good legacy and company that Steve built up, to take over, that's pretty much it.

Tim himself don't have ideas about the product line, that's what he have the department chiefs too.
That's the difference between him and Steve.
Steve was an innovator himself, Tim is just a beancounter.

 

[spartan1967]

Everything that goes up must come down, unless Apple find ways to generate new interest in their products. I’m certainly not that excited anymore. Perhaps it’s just age.

I think Apple's best avenues for innovation is the Watch & foldable iPhones. I certainly am not investing in overpriced goggles just to take myself away from the real world.

 

[Howyalikdemapls]

Cook has tested some of the apps that developers are working on, and he claims that some "real blow away kind of things are coming out."

Typo?

 

[Aston441]

Make one of the cores on the M4 iteration x86 compatible, and bring the BootCamp people back. Yes, we were only a few percent, but that few percent of us, just bought a new PC instead of a new Mac, just like I did two months ago.

ETA: either that, or make an official deal with MS to get official copies of Windows running on ARM.

 

[Surf Monkey]

I think it’s time for caretaker CEO Tim Cook to step down and for Apple to be lead by a visionary again. An innovator. Under Cook Apple has become stagnant, predictable and boring. Vision Pro isn’t going to reignite the magic.

 

[Surf Monkey]

The customers have never been 1st for Tim, it has always been the shareholders.
But he got a very good legacy and company that Steve built up, to take over, that's pretty much it.

Tim himself don't have ideas about the product line, that's what he have the department chiefs too.
That's the difference between him and Steve.
Steve was an innovator himself, Tim is just a beancounter.

It’s more than that. The departure of Jony Ive and the subsequent failure of Cook to replace him with another top flight designer figures in too. Some would argue that Scott Forestall’s unceremonious severance left the company short another key innovation focused player. It’s true. Cook is about operations, not innovation.

 

[JamesHolden]

Everything that goes up must come down, unless Apple find ways to generate new interest in their products. I’m certainly not that excited anymore. Perhaps it’s just age.

I feel the same. Tech, in general, just doesn't get me very excited any more. It's not just Apple. I was a lot more excited in the 80s and 90s, even 00s. The last 10+ years, though? Less excited every year. I think we're so saturated in tech these days that it has all started to feel very ordinary, even mundane. Another update. Faster. Better camera. Round corners. Square corners. Yawn. I'm a bit surprised by my own reaction to Vision Pro. Even though it looks very impressive, I don't find it exciting.

 

[Ctrlos]

Not that Apple are in any sort of precarious position but I do wonder if they don't put too much faith in the iPhone?

Assuming services are piggy backing it's most popular device, that little glass sandwich makes up 70% of their overall revenue.

If things did go south they would do so rather quickly. We've seen from Blackberry, Nokia and a hundred other companies over the years that the top dog doesn't always stay there forever.

 

[Nismo73]

Still seems weird going into Christmas buying season without some new iPad. I know they're still fast enough, but still..

 

[JamesHolden]

I think it’s time for caretaker CEO Tim Cook to step down and for Apple to be lead by a visionary again. An innovator. Under Cook Apple has become stagnant, predictable and boring. Vision Pro isn’t going to reignite the magic.

I find comments like this very out of touch with reality. Who in tech is doing mad innovative work? Who would you rather see running Apple? Where is this "visionary" going to come from? What company is producing better, more innovative products than Apple?

As much as people love to lionize Jobs, he nearly destroyed Apple the first time around and he practically ran NeXT into the ground too. Had Apple not chosen NEXTSTEP, the legacy/myth of Steve Jobs would be very different.

Cook is far more than a caretaker. During his tenure Apple launched the Watch, got into Services bigtime, transitioned to Apple Silicon, and plenty more. A lot has happened under Cook. Calling him a caretaker is insulting. He's the most successful CEO in the history of business. He may not be a tech visionary, but that doesn't mean he has no vision. He certainly knows how to surround himself with great people.

So, again, I ask....who is more innovative than Apple? If you find Apple "stagnant, predictable, and boring", what company excites you? What industry figure do you think should be running Apple? Who do you think will do a better job than Cook?

I don't know if Vision Pro will "reignite the magic" (I think you and I share a similar opinion on Vision Pro), but it is a very interesting piece of technology. I'm not sure people will want it, but that doesn't mean it isn't quite groundbreaking.

 

[majus]

Perhaps this will motivate Apple to bring some updates to market a few months sooner.