EPS of $1.40 increased by 10.2% from previous year
Gross margin of 46.3%
Net income of 21.45B
""We are very pleased to report a new June quarter revenue record of $85.8 billion, up 5% year-over-year... Services revenue reached an all-time record of $24.2 billion, up 14% year-over-year."" - Luca Maestri
In Q3 2024, Apple Inc (AAPL) reported robust financial performance, achieving revenue of $85.8 billion, representing a 5% increase year-over-year. The continued success of the iPhone 15 lineup and an all-time record in services revenue, which totaled $24.2 billion and increased 14%, highlighted Apple’s resilient market position despite global economic challenges. Tim Cook, Apple’s CEO, emphasized the optimistic potential of Apple Intelligence, a new AI initiative, positioning it as a key driver for future growth. Overall, the results signal a healthy trajectory for Apple as it integrates innovative technologies and expands its services offerings.
Key Performance Indicators
Revenue
85.78B
QoQ: -5.48% | YoY:4.87%
Gross Profit
39.68B
46.26% margin
QoQ: -6.13% | YoY:8.97%
Operating Income
25.35B
QoQ: -9.13% | YoY:10.24%
Net Income
21.45B
QoQ: -9.26% | YoY:7.88%
EPS
1.40
QoQ: -8.50% | YoY:10.24%
Revenue Trend
Margin Analysis
Key Insights
Q3 2024 revenue was $85.8 billion, up 5% YoY, with product revenue at $61.6 billion and services revenue at $24.2 billion.
iPhone revenue totaled $39.3 billion, a slight decline of 1% YoY.
iPad reported a remarkable 24% increase in revenue, reaching $7.2 billion, attributed to the launch of the new iPad Pro and iPad Air models.
Gross profit margin stood at 46.3%.
Operating income was $25.4 billion, with a margin of 29.6%.
Financial Highlights
Revenue Performance:
- Q3 2024 revenue was $85.8 billion, up 5% YoY, with product revenue at $61.6 billion and services revenue at $24.2 billion.
- iPhone revenue totaled $39.3 billion, a slight decline of 1% YoY.
- iPad reported a remarkable 24% increase in revenue, reaching $7.2 billion, attributed to the launch of the new iPad Pro and iPad Air models.
Profitability Metrics:
- Gross profit margin stood at 46.3%.
- Operating income was $25.4 billion, with a margin of 29.6%.
- Net income reached $21.4 billion, marking a significant 11% growth in EPS to $1.40.
Balance Sheet Highlights:
- Total assets of $331.6 billion, with $66.7 billion in stockholders' equity.
- Cash and equivalents were $25.6 billion.
- Total debt of $101 billion, resulting in a net cash position of approximately $52 billion.
Cash Flow Dynamics:
- Operating cash flow recorded at $28.9 billion and free cash flow of $26.7 billion, demonstrating strong cash generation capabilities, essential for future investments and shareholder returns.
Income Statement
Metric
Value
YoY Change
QoQ Change
Revenue
85.78B
4.87%
-5.48%
Gross Profit
39.68B
8.97%
-6.13%
Operating Income
25.35B
10.24%
-9.13%
Net Income
21.45B
7.88%
-9.26%
EPS
1.40
10.24%
-8.50%
Key Financial Ratios
currentRatio
0.95
grossProfitMargin
46.3%
operatingProfitMargin
29.6%
netProfitMargin
25%
returnOnAssets
6.47%
returnOnEquity
32.2%
debtEquityRatio
1.52
operatingCashFlowPerShare
$1.89
freeCashFlowPerShare
$1.75
dividendPayoutRatio
18.2%
priceToBookRatio
48.27
priceEarningsRatio
37.53
Net Income vs. Revenue
Expense Breakdown
Management Commentary
Innovation and AI Positioning:
Tim Cook remarked, "We believe that Apple Intelligence will transform how users interact with technology, from writing tools to image playground... We are incredibly optimistic about the extraordinary possibilities of AI and its ability to enrich customers' lives." This highlights Apple’s commitment to integrating advanced AI capabilities within its ecosystem.
Market Dynamics and Product Performance:
Luca Maestri stated, "Products revenue was $61.6 billion, up 2% year-over-year, driven by the launch of the new iPad Pro and Air... customer satisfaction on the iPhone 15 family continues to be extremely high, with 98% reported."
These quotes underscore the high demand and customer loyalty associated with Apple’s latest products, mitigating slight declines in iPhone revenue with exceptional growth in other product categories and services.
"We are very pleased to report a new June quarter revenue record of $85.8 billion, up 5% year-over-year... Services revenue reached an all-time record of $24.2 billion, up 14% year-over-year."
— Luca Maestri
"The installed base hit an all-time high during the quarter and so we were very happy about that. iPhone in general grew in constant currency."
— Tim Cook
Forward Guidance
Management anticipates revenue growth in the September quarter to align closely with Q3 levels, with continued double-digit growth expected in services. Key areas to monitor include the rollout of Apple Intelligence and upcoming product launches. They project gross margin will range between 45.5% and 46.5%, and operating expenses are expected to be between $14.2 billion and $14.4 billion, reflecting careful cost management and strategic investment in innovation. The projected foreign exchange headwinds of 1.5% year-over-year are noted risks to revenue growth in the next quarter.
Competitive Position
Company
Gross Margin
Operating Margin
Return on Equity
P/E Ratio
AAPL Focus
46.26%
29.60%
32.20%
37.53%
LPL
12.40%
-1.18%
-4.84%
-4.04%
SNEJF
32.10%
12.20%
4.98%
2.27%
PCRFY
30.40%
5.84%
2.65%
7.36%
SONO
48.30%
3.17%
0.80%
121.93%
Gross Profit Margin
Operating Profit Margin
Return on Equity
P/E Ratio Comparison
Investment Outlook
In conclusion, investor sentiment towards Apple remains strong given its impressive revenue growth, strategic positioning around AI technology, and consumer loyalty. The company's focus on innovation, particularly with the introduction of Apple Intelligence, combined with healthy financial metrics and a solid balance sheet, underline a positive long-term investment thesis. However, investors should remain vigilant regarding competitive pressures and macroeconomic factors that could influence the company's growth trajectory.
Key Investment Factors
Growth Potential
Apple’s integration of AI and expansion in innovative product lines—such as the Vision Pro, alongside significant growth in services—indicates robust growth potential as markets continue to evolve.
Profitability Risk
Potential risks include global economic uncertainty, increasing competition in the smartphone market, and currency fluctuation impacts on revenue. Additionally, regulatory compliance in various regions could pose challenges.
Financial Position
Apple maintains a strong financial position, characterized by substantial cash reserves and a manageable debt load, providing flexibility for future investments and returns to shareholders.
SWOT Analysis
Strengths
Strong brand loyalty and recognition
Leading position in the technology sector with innovative product offerings
Robust financial performance with high revenue growth rates across services
Weaknesses
Dependence on iPhone sales, which can fluctuate based on market conditions
Challenging comparisons due to prior successful product launches
Opportunities
Expansion of services and subscription offerings tied to the growing device ecosystem
Capitalizing on advancements in AI and machine learning through Apple Intelligence
Potential for increased international sales as markets mature
Threats
Intensifying competition from other technology companies in consumer electronics
Global economic fluctuations impacting consumer spending
Regulatory scrutiny in various markets affecting operational flexibility