MacDailyNews presents live notes from Apple’s Q324 Conference Call with analysts starting at 2pm PT / 5pm ET today, August 1, 2024.
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Apple’s live conference call webcast will begin at 2pm PT / 5pm ET here.
Apple today posted quarterly revenue of $85.777 billion (vs. $81.797 billion YoY), up 5 percent year over year, and quarterly earnings per diluted share of $1.40 (vs. $1.26 YoY), up 11 percent year over year.
For the quarter, analysts’ consensus estimates (per LSEG) called for Apple to report revenue of $84.53 billion and EPS of $1.35, both of which Apple beat.
Live notes:
• End of call.
• AAPL After hours: $219.45, +$1.09 (+0.50%) @ 5:59 PM EDT
• In general, we try to run the company efficiently
• Margin expansion obviously helps; that’s driving better operating cash flow
• Luca: We are very please with that, thank you for noticing that
• Q: Higher free cash flow?
• Cook: AI and ML investment will require investment YoY
• Q: Apple Intelligence require investment in data centers, R&D, etc.?
• Cook: If you look at Wearable for the trailing 12 months, it’s grown almost $40 billion
• Cook: Wearables face a tough compare, so keep that in mind
• Q: Wearables sluggishness?
• Cook: Our objective is to move as fast as we can and get Appel Intelligence to everyone as soon as possible
• Q: Apple Intelligence and different countries regulatory issues (example: China)?
• Luca: We’ve introduced changed to the App Store in the EU to comply with the DMA; in general, our results for the App Store have been pretty good; percentage of the App Store revenue from the EU is about 7% in total
• Q: EU’s DMA effects?
• Cook: Rollout U.S. English in the fall and then proceed with more features and ore languages as we proceed through the next year
• Q: Apple Intelligence feedback from developers this week in very positive; will most of the AI features coming in iOS 18, or will some wait until iOS 19?
• Luca: We think company revenue will grow similar to June quarter, despite currency headwinds; Services will grow double-digits at a rate similar to the first three fiscal quarters; Mac will face a tough compare
• Q: Guidance (outlook) seems flattish, why?
• Cook: I think developers will incorporate Appel Intelligence in a broad array of app; it’s a profound, amazing technology
• Cook: All of the apps that you use every day, Apple Intelligence can be used in all of them
• Q: Apple Intelligence effect on apps; what categories?
• We were pleased the market shows improvement from the first half of the year
• Cook: Competitive environment is the most competitive in the world
• Q: China weakness?
• Any Mac or iPad with an M series Apple Silicon will run Apple Intelligence
• Cook: iPhone 15 pro and Pro Max and forthcoming iPhones will run Apple Intelligence
• Q: Requirements to run Apple Intelligence?
• AAPL After hours: $218.80, +$0.44 (+0.20%) @ 5:42 PM EDT
• Luca: Foreign exchange continues to be a headwind; within the product business, our products have different margin profiles, so the mix impacts gross margin
• Gross margins and foreign exchange headwinds?
• Won’t get into the monetization aspect
• For world knowledge, it’s ChatGPT initially
• Cook: Its the on-device processing and the Private Cloud Compute
• Q: Apple Intelligence partnerships monetization opportunities?
• We continue to invest in Apple TV+, Apple Arcade, etc.
• We continue to add to Services and improve existing offerings
• We see paid accounts growing double-digits and we’ve seen that for many, many quarters now
• Luca: We see continued growth with the level of interaction of the Apple ecosystem
• Q: Installed base of active devices?
When you’re caught flat-footed like Tim Cook’s Apple, you pop into scramble mode to try to catch up. Early on, you hit it with a big marketing flourish (WWDC24) in order to buy some more time. Then you dribble out features as they get finished & actually exist. Classic vaporware. https://t.co/I1J4y3aDNy pic.twitter.com/fLKvxGj4G3
— MacDailyNews (@MacDailyNews) July 31, 2024
• Cook: Apple Intelligence rollout has begun; languages beyond U.S. English will rollout over the course of the year; ChatGPT by the end of the calendar year; so Apple Intelligence is a staggered launch
• Q: Apple Intelligence launch methodology?
• Cook: We are very excited about Apple Intelligence and its another compelling reason for an upgrade; the carriers would have to answer about promotions
• Q: U.S. carrier promos?
• Cook: Very limited time frame; too early to tell
• Q: Shift in demand to iPhone 15 Pro models due to Apple Intelligence?
• We’ve seen some increased on memory, but the rest of the commodities, we see a continuous decline; were well-positioned
• Luca: 46.3%, down 30 basis points sequentially driven by product mix; YoY, were up significantly (with foreign exchange remaining a headwind)
• Q: Gross margin color?
• Cook: We can’t wait to see what developers do with it
• Cook: We started the rollout this week with developers and we couldn’t be more excited
• Q: Apple Intelligence impact on Services?
• We’re very confident in China in the long term
• Vast, vast majority of customers buying Apple Watch are new to the product
• Majority of customers buying Mac and iPad in China are new to the quarter
• iPhone 15 vs. iPhone 14 since each launched, the 15 is outperforming the 14
• iPhone in greater China set an install base record; set an all-time record for upgraders in China
• Cook: 6.5% decline YoY; over 50% of that is currency related
• Q: China market?
• We are very excited about Apple Intelligence; a compelling reason to upgrade
• iPhone 15 is performing better than iPhone 14
• iPhone in general grew in constant currency
• Cook: Install base hit an all-time high during Q324
• Q: iPhone 15 performing better than iPhone 14?
• The dividend is payable on August 15, 2024 to shareholders of record as of the close of business on August 12, 2024
• Apple’s board of directors has declared a cash dividend of $0.25 per share of the company’s common stock
• Tax rate of 16.5%
• Outlook for Q424: revenue to grow YoY at a rate similar to June quarter; Services to grow double-digits
• $53 billion net cash
• $101 billion total debt
• $153 billion in cash and marketable securities
• Luca touts enterprise adoption of Apple products
• AAPL After hours: $212.88, -$5.48 (-2.51%) @ 5:20 PM EDT
• Paid subscriptions: “well over one billion”
• Transacting and paid accounts both reached an all-time high
• Apple Services continues to grow
• Apple Watch U.S customer satisfaction: 97%
• Apple Watch: 2/3rds of buyer during the quarter were new to the product
• iPad U.S. customer satisfaction: 97%
• iPad installed base hit an all-time high in Q324
• Mac U.S customer satisfaction: 96%
• iPhone revenue: $39.296 billion
• Services revenue: $24.213 billion
• Wearables, Home and Accessories revenue: $8.097 billion
• Mac revenue: $7.009 billion
• iPad revenue: $7.162 billion
• AAPL After hours: $214.62, -$3.74 (-1.72%) @ 5:16 PM EDT
• 74.0% Services gross margin
• 35.3% Products gross margin
• 46.3% compnay gross margin
• $24.2 billion, up 14% YoY
• Installed base of active deivces reached an all-time high
• $61.6 billion revenue in products
• Apple CFO Luca Maestri: We’re very please to announce record revenue for June quarter
• Cook touts Apple’s commitment to renewable energy
• AAPL After hours: $216.20, -$2.16 (-0.99%) @ 5:13 PM EDT
• Everything Apple does is privacy-focused
• Cook touts accessibility; eye-tracking for iPhone and iPad and more
• Apple Vision Pro demos in Apple Retail stores are onging
• Retail: First-even Malaysia location opened in Q324
• Coming this fall: U.S. National Park hikes and other Apple Maps improvements
• Tap to Pay on Phone expanded to several new countries
• Cook touts Apple TV+ series and movies (including The Morning Show, Slow Horses, and Severance)
• Services revenue $24,213 billion
• Cook touts life saving features of Apple Watch
• Wearables, Home and Accessories revenue of $8.097 billion, down 2% YoY
• iPad revenue of $7.162 billion, up 24% YoY
• Cook: “Macs are the best personal computers for AI.”
• Mac revenue of $7.009 billion, up 2% YoY
• Cook touts iOS 18 and, again, Apple Intelligence
• iPhone: $39.3 billion, down 1% YoY. On a constant currency basis, iPhone grew YoY
• Cook touts Apple Vision Pro and new immersive content coming soon
• Apple will continue to invest strongly in AI
• Cook touts Apple Intelligence
• Cook: Q324 results are better than we expected
• Apple CEO Tim Cook: Apple is reporting new June quarter revenue and EPS records of $85.8 billion (up 5 percent year over year) and $1.40 (up 11 percent year over year), respectively
• Call begins.
• AAPL After hours: $219.89, +$1.53 (+0.70%) @ 4:56 PM EDT
• AAPL After hours: $219.21, +$0.85 (+0.39%) @ 4:42 PM EDT
