Apple AAPL showcased robust performance in the third-quarter fiscal 2024, reporting earnings of $1.40 per share, surpassing the Zacks Consensus Estimate by 4.48% and marking an 11.1% increase year over year.
Net sales soared 4.9% annually to $85.78 billion, outperforming the Zacks Consensus Estimate by 1.59%. The impact of unfavorable forex rates was evident, dragging net sales by 230 basis points (bps).
Shift in iPhone Sales and Rise in Services Revenue
iPhone sales saw a minor dip of 0.9% from the previous year, totaling $39.27 billion and contributing to 45.8% of total sales. However, iPhone sales exceeded the Zacks Consensus Estimate by 1.43%.
Product sales, comprising 71.8% of total sales, climbed 1.6% year over year to $61.56 billion. On the other hand, Services revenues jumped 14.1% from the prior year to $24.21 billion, accounting for 28.2% of total sales and surpassing the consensus by 0.89%.
Geographic Insights
Apple witnessed sales growth in America by 6.5% to $37.68 billion, representing 43.9% of total sales and surpassing the Zacks Consensus Estimate by 3.53%.
Europe, with sales of $21.88 billion, experienced an 8.3% rise from the previous year, contributing 25.5% of total sales, outperforming consensus by 6%. Conversely, Greater China saw a 6.5% decline in sales, falling to $14.73 billion, while the rest of the Asia Pacific region and Japan displayed growth trends.
Mac & iPad Sales Growth, Wearables Slight Decline
Non-iPhone revenues from Mac, iPad, and Wearables surged 6.5% collectively.
Mac sales hit $7 billion, rising 2.5% from the previous year, while iPad sales soared 23.7% to $7.16 billion. Wearables, Home, and Accessories sales slightly decreased by 2.3% to $8.1 billion.
Evaluating Operational Performance
The gross margin expanded to 46.3%, showing a 170 bps increase year over year. Operating margin also saw a rise to 29.6%.
While product gross margin contracted sequentially, operating expenses surged by 6.8% annually to $14.33 billion due to higher research & development and selling expenses. Research & development and selling expenses rose slightly as a percentage of revenues.
Insight into Financial Position
By the end of June 29, 2024, Apple’s cash & marketable securities stood at $153.04 billion compared to $162.34 billion from the previous quarter. Term debt decreased as well.
The company emphasized a return of almost $32 billion through dividend payouts and share repurchases in the reported quarter.
Guidance for the Future
Apple projects revenue growth similar to the third quarter for the fourth quarter of fiscal 2024, albeit negatively impacted by forex. The Services segment foresees a double-digit growth rate and specific estimates for gross margin and operating expenses have been provided.
Analyst Rank & Alternate Stock Choices
Apple retains a Zacks Rank #3 (Hold). The report shares comparative performance figures and mentions other well-performing stocks in the sector.
Investors can consider Shopify, CACI International, and Dell Technologies, each carrying a Zacks Rank #2 (Buy) at present and displaying varied year-to-date trends. Each of the mentioned stocks presents a unique investment opportunity as per analysts.
