What to Expect From Apple's Earnings — First Revenue Decline Since 2019?

[MacRumors]

Apple is set to report its earnings results for the first quarter of its 2023 fiscal year tomorrow at 1:30 p.m. Pacific Time. Apple CEO Tim Cook and Apple CFO Luca Maestri will discuss the results on a conference call for investors a half hour later.

Keep reading for some key things to know about the quarter, including a recap of products announced, revenue expectations, and more.

New Products During Quarter

Apple's first quarter ran from September 25 through December 31, according to the company's 2023 fiscal calendar. Apple released a handful of new products during this period, including updated iPad and Apple TV models:

• 11-inch iPad Pro (4th generation) and 12.9-inch iPad Pro (6th generation)
• iPad (10th generation)
• Apple TV 4K (3rd generation)
• iPhone 14 Plus (pre-orders began in September)

First Revenue Decline Since 2019?

On average, Apple is estimated to report revenue of $121.2 billion for the quarter, according to Yahoo Finance. This would be down around 2% from $123.9 billion in the year-ago quarter and represent Apple's first revenue decline since 2019.

In November, Apple issued a rare warning to investors about iPhone 14 Pro supply constraints:

COVID-19 restrictions have temporarily impacted the primary iPhone 14 Pro and iPhone 14 Pro Max assembly facility located in Zhengzhou, China. The facility is currently operating at significantly reduced capacity. As we have done throughout the COVID-19 pandemic, we are prioritizing the health and safety of the workers in our supply chain.

We continue to see strong demand for iPhone 14 Pro and iPhone 14 Pro Max models. However, we now expect lower iPhone 14 Pro and iPhone 14 Pro Max shipments than we previously anticipated and customers will experience longer wait times to receive their new products.

We are working closely with our supplier to return to normal production levels while ensuring the health and safety of every worker.

Conference Call

Apple's CEO Tim Cook and CFO Luca Maestri will hold a conference call at 2:00 p.m. Pacific Time tomorrow to discuss the company's first quarter earnings results. The call should be around one hour long and will include a Q&A segment with analysts.

A live audio stream of the conference call will be available on Apple's Investor Relations page, and a recording will be available at a later time for replay.

Investors will be listening for any potential commentary surrounding the economy as concerns persist about a recession in the U.S. and other countries.

What's Next

Apple's second quarter of fiscal 2023 began January 1 and runs through April 1. The quarter has already included orders for updated 14-inch and 16-inch MacBook Pro models, updated Mac mini models, and a new HomePod.

Apple has not provided guidance since the start of the COVID-19 pandemic, but analysts currently expect Apple to post sub-1% year-over-year growth in Q2 2023.

AAPL is currently trading slightly below $143, down around 20% from a 52-week high of $179.61.

Article Link: What to Expect From Apple's Earnings — First Revenue Decline Since 2019?

 

[WiiDSmoker]

They’ll blame supply, but they should blame their insanely high prices, especially in Europe.

 

[Dulcimer]

Maybe they’ll reconsider their product strategy of incrementally adding features like WiFi 6E and a periscope lens years after the competition.

 

[sw1tcher]

I guess it'd be asking for too much for Apple to give us a bigger dividend increase than their usual 4.5%-6.5% that we've been getting for the past few years what with their record profits and revenue during the pandemic years. From 2018 and earlier we saw increases of 10% and more.

 

[TheYayAreaLiving 🎗️]

Apple announcing WWDC 2023 date would be stellar!!!

 

[contacos]

Can anyone explain to me how the Second Quarter starts in January when the year 2023 starts in January? Shouldn’t we currently be in the 1st quarter or is that another weird American thing like putting the month before the day? Seriously wondering, no shade. Stock stuff is too complicated to me, tried EFTs for a while but failed miserably

 

[WiiDSmoker]

Can anyone explain to me how the Second Quarter starts in January when the year 2023 starts in January? Shouldn’t we currently be in the 1st quarter or is that another weird American thing like putting the month before the day? Seriously wondering, no shade. Stock stuff is too complicated to me, tried EFTs for a while but failed miserably

Fiscal year doesn’t always equal calendar year

 

[HobeSoundDarryl]

The pattern with most companies lately is to report a revenue decline but a profit hit or record. In other words: “We sold less but net profited more.”

Apparently, sellers are immune from the pinch of “inflation.” Or inflation (and “supply chain”) is a great corporate excuse to fatten margins by passing on ALL higher costs to consumers… and then some. 💰💰💰

 

[TriBruin]

Can anyone explain to me how the Second Quarter starts in January when the year 2023 starts in January? Shouldn’t we currently be in the 1st quarter or is that another weird American thing like putting the month before the day? Seriously wondering, no shade. Stock stuff is too complicated to me, tried EFTs for a while but failed miserably

For some companies the Fiscal year is different from a calendar year. Since many companies budget for Fiscal years, it might be better for the company to budget during the spring or summer instead fall/winter. I don't know the specifics of Apple but it seems that Winter is usually a very busy time for them (new product releases, O/S updates, Christmas selling season, and holiday shutdowns.) It is probably better for their financial team to budget during the summer.

 

[icanhazapple]

"First Revenue Decline Since 2019?"

Raising prices has consequences.

 

[UltimateSyn]

Apple announcing WWDC 2023 date would be stellar!!!

What? This post is about their Earnings Call. WWDC is announced in March or April, and never during an Earnings Call.

 

[mrochester]

Can anyone explain to me how the Second Quarter starts in January when the year 2023 starts in January? Shouldn’t we currently be in the 1st quarter or is that another weird American thing like putting the month before the day? Seriously wondering, no shade. Stock stuff is too complicated to me, tried EFTs for a while but failed miserably

I believe Apple’s fiscal year is roughly as follows:

Q1 = October - December
Q2 = January - March
Q3 = April - June
Q4 = July - September.

The fiscal year can be defined just about any way a company pleases. In the UK our fiscal year tends to be April - March.

 

[sw1tcher]

Can anyone explain to me how the Second Quarter starts in January when the year 2023 starts in January? Shouldn’t we currently be in the 1st quarter or is that another weird American thing like putting the month before the day? Seriously wondering, no shade. Stock stuff is too complicated to me, tried EFTs for a while but failed miserably

As noted by WiiDSmoker, there's fiscal year and calendar year. Apple's fiscal year isn't the same as a calendar year.

Fiscal Year: What It Is and Advantages Over Calendar Year

A fiscal year (FY) is a 52- or 53-week or 12-month period used by a company or government for budget and accounting purposes and as a schedule for financial statements.

www.investopedia.com

EFTs? Do you mean ETFs? Hoping you didn't mean NFTs because a majority of people failed miserably with that 🤣

 

[sw1tcher]

"First Revenue Decline Since 2019?"

Raising prices has consequences.

It has more to do with the fact that people bought what they needed during the pandemic years and don't feel the need to replace what they bought 2 years later hence the decline in PC and smartphone shipments

https://forums.macrumors.com/threads/pc-shipments-saw-their-largest-decline.2376688/

iPhone Shipments Suffered Double-Digit Drop Over Holiday Quarter, Says IDC

Worldwide smartphone shipments suffered their worst quarterly drop on record over the holiday period, according to IDC, and Apple was not immune to...

www.macrumors.com

Then there's the worry about a recession and people shifting their spending towards traveling and doing stuff vs buying physical discretionary items.

 

[WiiDSmoker]

It has more to do with the fact that people bought what they needed during the pandemic years and don't feel the need to replace what they bought 2 years later hence the decline in PC and smartphone shipments

https://forums.macrumors.com/threads/pc-shipments-saw-their-largest-decline.2376688/

iPhone Shipments Suffered Double-Digit Drop Over Holiday Quarter, Says IDC

Worldwide smartphone shipments suffered their worst quarterly drop on record over the holiday period, according to IDC, and Apple was not immune to...

www.macrumors.com

Then there's the worry about a recession and people shifting their spending towards traveling and doing stuff vs buying physical discretionary items.

That is absolutely a huge point to be made here. Spending habits during these years were unprecedented for gadgets and hobbies.

 

[compwiz1202]

"First Revenue Decline Since 2019?"

Raising prices has consequences.

But add when consumers are getting pounded with insane price increases for needs. Probably could have made a killing if they raised prices when we were fat on stimulus checks.

 

[PauloSera]

The question is how long can they get away with blaming supply when they should be blaming poor value? The products are ridiculously overpriced and are not advancing at the same rate as their prices.

 

[ss2cire]

im perfectly fine with a revenue drop. they are still super profitable. I don't get why everyone (meaning investors) expect a company to always make huge profits Y/Y. As long as it's profitable and they are making products I and others want to buy (and can afford), then who cares if they made 1% profit vs 500% profit (though 500% would be nice...)

 

[mrochester]

The question is how long can they get away with blaming supply when they should be blaming poor value? The products are ridiculously overpriced and are not advancing at the same rate as their prices.

I guess once the supply issues are resolved, if revenue still drops.

 

[compwiz1202]

im perfectly fine with a revenue drop. they are still super profitable. I don't get why everyone (meaning investors) expect a company to always make huge profits Y/Y. As long as it's profitable and they are making products I and others want to buy (and can afford), then who cares if they made 1% profit vs 500% profit (though 500% would be nice...)

And it's not that they want high profits. They always want highER.

 

[mrochester]

And it's not that they want high profits. They always want highER.

Yes shareholders demand ever growing profits. We’d need to get rid of that expectation to ‘fix’ that problem. But you’d have downsides too.

 

[contacos]

As noted by WiiDSmoker, there's fiscal year and calendar year. Apple's fiscal year isn't the same as a calendar year.

Fiscal Year: What It Is and Advantages Over Calendar Year

A fiscal year (FY) is a 52- or 53-week or 12-month period used by a company or government for budget and accounting purposes and as a schedule for financial statements.

www.investopedia.com

EFTs? Do you mean ETFs? Hoping you didn't mean NFTs because a majority of people failed miserably with that 🤣

Yes ETFs 🤣 see! I didn’t get far

 

[PauloSera]

I guess once the supply issues are resolved, if revenue still drops.

The only source for the supply issues is Apple themselves. The only source for the alleged supply issues being the reason for selling less product at higher prices is...Apple themselves.

So again I ask...how long can get away with that.

 

[mrochester]

The only source for the supply issues is Apple themselves. The only source for the alleged supply issues being the reason for selling less product at higher prices is...Apple themselves.

So again I ask...how long can get away with that.

Well they can’t lie about it so any reason not to believe them?

 

[Realityck]

Related

Apple's expected to post its first revenue decline since 2019 on Thursday

Apple reports December quarter earnings on Thursday, and there are a lot of factors pointing to the company's first year-over-year revenue decline since 2019.

www.cnbc.com

The smartphone market saw an 18% decline in shipments in the fourth quarter, according to IDC, the worst decline ever recorded by the market research firm. The PC market fell 28% in the fourth quarter, according to the company. But many investors believe that Apple is outperforming its competitors even in a contracting market.

Analysts will also watch to see if the strong dollar continues to hurt Apple, given that so much of its sales are overseas. During the December quarter, the British pound, the Canadian dollar and the Japanese yen all weakened compared to the dollar. Apple management previously said the strong dollar would be a 10 percentage point drag on sales growth.

It certainly was a tough quarter for the whole industry. But if Apple still fares better then most that is considered a win by Wall Street.