Apple Reports Record Q3 2024 Financial Results: An Analysis

Apple has just dropped its financial results for the third quarter of 2024, and the numbers are looking great. With new records and impressive growth, it's clear Apple is on a roll.

Key Financial Highlights

• Revenue: Apple pulled in $85.8 billion this quarter, a 5% bump from last year.
• Earnings Per Share (EPS): EPS hit $1.40, which is up 11% from the same time last year.
• Operating Cash Flow: They raked in nearly $29 billion in operating cash flow.
• Shareholder Returns: Apple gave back over $32 billion to shareholders this quarter.

CEO Tim Cook's Statement

Tim Cook, Apple's CEO, was pretty pumped about the results and talked about the company's dedication to innovation and customer satisfaction:

“Today Apple is reporting a new June quarter revenue record of $85.8 billion, up 5 percent from a year ago. During the quarter, we were excited to announce incredible updates to our software platforms at our Worldwide Developers Conference, including Apple Intelligence, a breakthrough personal intelligence system that puts powerful, private 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.”

CFO Luca Maestri's Statement

Apple's CFO, Luca Maestri, highlighted the company's strong financial health and efficiency:

“During the quarter, our record business performance generated EPS growth of 11 percent and nearly $29 billion in operating cash flow, allowing us to return over $32 billion to shareholders. We are also very pleased that our installed base of active devices reached a new all-time high in all geographic segments, thanks to very high levels of customer satisfaction and loyalty.”

Dividend Declaration

Apple's board of directors has announced a cash dividend of $0.25 per share of the company’s common stock. This will be paid on August 15, 2024, to shareholders who are on record as of August 12, 2024.

Innovations and Developments

iPhone Performance

The iPhone 15 models are doing better than the iPhone 14 models, with the installed base hitting an all-time high. Tim Cook is excited about the iPhone 16 and the new Apple Intelligence feature, which he believes will be a strong reason for users to upgrade.

Apple Intelligence

Apple Intelligence, the new generative AI system, is a big deal this quarter. Cook anticipates widespread adoption by developers, enhancing various applications. The rollout will be staggered, with some functions introduced throughout the year and initial availability limited to U.S. English. ChatGPT integration with Siri is expected by the end of the year. Apple is heavily investing in AI and machine learning.

iPad Sales

The new M4 iPad Pro and M2 iPad Air have pushed iPad sales up, bringing in $7.2 billion, a 24% increase from last year.

Services Revenue

Apple hit a new record in services revenue at $24.2 billion, up from $21.2 billion last year. Paid subscriptions are at an all-time high, surpassing one billion. Maestri pointed out the growth in customer engagement and improvements in service quality and content, especially for Apple TV+ and Apple Arcade.

Other Product Revenue

• iPhone Revenue: Dropped by 1% to $39.3 billion.
• Mac Revenue: Up by 2% to $7 billion.
• Home, Accessories, and Wearables: Down by 2% to $8.1 billion.

Regulatory Compliance (EU) and Future Outlook

Digital Markets Act (DMA)

Apple is working with the European Commission on DMA compliance. Maestri reported positive feedback from developers about the changes. However, Apple Intelligence features won't be available in the EU when iOS 18, iPadOS 18, and macOS Sequoia launch.

September Quarter Expectations

Apple expects revenue for the September quarter to grow year-over-year at a similar rate to the June quarter. Services revenue is expected to grow in double digits. The gross margin is anticipated to be between 45.5% and 46.6%. Mac revenue might face challenges due to last year's full quarter impact of the 15-inch MacBook Air.

Summary of Apple's Q3 2024 Earnings Call

I'm having fun abusing the Apple Intelligence Beta, so here's a summary of the transcript

Introductory Remarks

The call began with Suhasini Chandramouli, Director of Investor Relations, providing an overview and introducing CEO Tim Cook and CFO Luca Maestri.

Tim Cook's Insights

Tim Cook highlighted Apple's record revenue and earnings for the June quarter, driven by strong performance in various regions and the introduction of Apple Intelligence. He discussed the significant updates unveiled at the Worldwide Developers Conference and the positive reception of the new iPhone 15 models. Cook emphasized the transformative potential of Apple Intelligence and its foundational privacy features. He also touched on the excitement surrounding Apple Vision Pro and its growing developer community.

Luca Maestri's Financial Breakdown

Luca Maestri provided a detailed financial overview, noting the all-time high in active device installations and record revenue from services. He discussed the impact of foreign exchange and product mix on gross margins, operating expenses, and the company's strong cash flow. Maestri also shared expectations for the September quarter, including growth projections and potential challenges.

Question-and-Answer Session

During the Q&A session, analysts inquired about various topics:

• iPhone Replacement Cycles: Tim Cook noted the strong performance of the iPhone 15 models and expressed optimism about the compelling upgrade reasons provided by Apple Intelligence.
• China Market Dynamics: Cook discussed the challenges and improvements in the China market, emphasizing the record install base and strong upgraders.
• Apple Intelligence and Services: Analysts explored the potential impact of Apple Intelligence on the services business, with Cook and Maestri highlighting the anticipated developer adoption and user engagement.
• Gross Margin Trends: Luca Maestri explained the factors influencing gross margins, including product mix, commodity costs, and foreign exchange impacts.
• Regulatory Considerations: Tim Cook addressed the regulatory complexities in the EU and China, noting ongoing engagements to ensure compliance before rolling out Apple Intelligence features.

Conclusion

Apple's Q3 2024 results show the company's strength and focus on innovation. The strong financial performance, coupled with new updates like Apple Intelligence, sets Apple up for continued growth and customer engagement. With the staggered rollout of Apple Intelligence and a strategic focus on expanding services and device capabilities, Apple is well-positioned for the future.

The company's dedication to privacy, user experience, and technological advancement remains a core part of its strategy. Stay tuned for more updates as Apple continues to shape the future of technology and user interaction.