- Tech giant beats Q3 revenue and earnings forecasts
- Expects revenue growth to ‘accelerate’ in fiscal Q4
- Stock has recovered about half of 2022 losses
Tech colossus Apple (AAPL:NASDAQ) expects revenue growth to accelerate on a year-over-year basis in the fourth quarter (to 30 Sep) as more than $40 billion in iPhone sales in Q3 to 30 June showed impressive resilience to inflation.
Yes, there will be foreign exchange hits, around 600 basis points in Q4 the company estimates, as the dollar surges against other currencies, but this is a huge lift for investors in the world’s largest company.
Most analysts thought Apple’s expensive premium handsets would come under greater pressure given the strain on household budgets, yet so far that has not been the case.
The company posted record Q3 revenue of $83 billion, up 2% year on year, with quarterly earnings per diluted share of $1.20. This beat Wall Street’s expectations of $82.81 billion and $1.16 per share, but was still lower than the EPS of $1.30 it posted in fiscal Q3 last year.
iPhone revenue came in at nearly $40.7 billion, compared with $39.6 billion in Q3 2021, and Services increased to $19.6 billion from Q3 2021’s $17.5 billion.
‘This quarter’s record results speak to Apple’s constant efforts to innovate, to advance new possibilities, and to enrich the lives of our customers,” said Tim Cook, Apple’s CEO.
‘As always, we are leading with our values, and expressing them in everything we build, from new features that are designed to protect user privacy and security, to tools that will enhance accessibility, part of our longstanding commitment to create products for everyone.’
MANAGING THE CHALLENGES
Cook and his team claimed, with some justification, that Apple’s June quarter results continued to demonstrate the tech giant’s ability to manage itself effectively despite the challenging operating environment.
‘We set a June quarter revenue record and our installed base of active devices reached an all-time high in every geographic segment and product category,’ said Luca Maestri, Apple’s finance chief.
‘During the quarter, we generated nearly $23 billion in operating cash flow, returned over $28 billion to our shareholders, and continued to invest in our long-term growth plans,’ added Maestri.
Service revenues also continued to grow thanks to Apple’s App Store. Apple has more than 825 million paying subscribers across its Services portfolio, which includes Apple TV+, Apple Arcade, Apple News+, Apple Card, Apple Fitness+ and Apple One. For example, Apple TV+ won worldwide rights to broadcast Major League Soccer for 10 years, starting in 2023.
Maestri anticipates the Services business to still show growth but decelerate from the rate seen in the June quarter.
Ahead of Wall Street’s reopening later today, Apple shares were trading more than 2% higher at $161.01, and the stock has now clawed back about half the losses it ran-up earlier in the year. Apple stock began 2022 at around $182.
