"'Apple Intelligence marks the beginning of a new chapter for Apple innovation and redefines privacy and AI by extending our groundbreaking approach to privacy into the cloud.' - Tim Cook, expressing optimism about the future impact of AI on Apple's product ecosystem." - Tim Cook
Apple Inc (AAPL) Financial Results Q4 2024: Resilient Growth Amid Innovation and Strategy Shift
Executive Summary
In Q4 2024, Apple Inc reported revenue of $94.9 billion, marking a 6% increase from the previous year, driven by strong iPhone and Services performance. The iPhone segment set a new revenue record of $46.2 billion, underscoring Apple's resilient market presence and strategic focus on innovation. The Services segment also experienced significant growth, achieving an all-time record of $25 billion, reflecting increased engagement across Apple's ecosystem. Despite a notable income tax charge of $10.2 billion reducing net income to $14.736 billion, management expressed optimism about future revenue growth aided by new initiatives like Apple Intelligence. Upcoming product launches and strong ecosystem fundamentals position Apple favorably for the holiday season and beyond.
Key Performance Indicators
Revenue
94.93B
QoQ: 10.67% | YoY:6.07%
Gross Profit
43.88B
46.22% margin
QoQ: 10.59% | YoY:8.54%
Operating Income
29.59B
QoQ: 16.72% | YoY:9.72%
Net Income
14.74B
QoQ: -31.29% | YoY:-35.81%
EPS
0.97
QoQ: -30.71% | YoY:-34.01%
Revenue Trend
Margin Analysis
Key Insights
**Revenue**: $94.9 billion, +6.07% YoY, and +10.67% QoQ.
**Net Income**: $14.736 billion, -35.81% YoY, -31.29% QoQ after a one-time tax charge.
**EPS**: $0.97, -34.01% YoY, -30.71% QoQ.
Financial Highlights
- Revenue: $94.9 billion, +6.07% YoY, and +10.67% QoQ.
- Gross Profit: $43.879 billion, +8.54% YoY, +10.59% QoQ.
- Operating Income: $29.591 billion, +9.72% YoY, +16.72% QoQ.
- Net Income: $14.736 billion, -35.81% YoY, -31.29% QoQ after a one-time tax charge.
- EPS: $0.97, -34.01% YoY, -30.71% QoQ.
- Gross Margin: 46.2%, stable, indicative of strong operational efficiency.
- Operating Cash Flow: $26.811 billion, a record for September quarter.
Income Statement
Metric
Value
YoY Change
QoQ Change
Revenue
94.93B
6.07%
10.67%
Gross Profit
43.88B
8.54%
10.59%
Operating Income
29.59B
9.72%
16.72%
Net Income
14.74B
-35.81%
-31.29%
EPS
0.97
-34.01%
-30.71%
Key Financial Ratios
currentRatio
0.87
grossProfitMargin
46.2%
operatingProfitMargin
31.2%
netProfitMargin
15.5%
returnOnAssets
4.04%
returnOnEquity
25.9%
debtEquityRatio
1.87
operatingCashFlowPerShare
$1.77
freeCashFlowPerShare
$1.58
dividendPayoutRatio
25.8%
priceToBookRatio
60.69
priceEarningsRatio
58.63
Net Income vs. Revenue
Expense Breakdown
Management Commentary
1. Innovation Strategy: Tim Cook stated, 'This has been an extraordinary year of innovation at Apple...and in June, we announced Apple Intelligence, a remarkable personal intelligence system.' This reflects Apple's commitment to integrating AI into its product offerings.
2. Market Demand: Luca Maestri emphasized, 'iPhone revenue was $46.2 billion, up 6% year-over-year, and a September quarter record in total and across several markets.' This highlights Apple's competitive edge across various geographic segments.
3. Services Expansion: Maestri mentioned, 'Services revenue reached an all-time record of $25 billion, up 12% year-over-year,' suggesting a robust growth trajectory in this crucial segment.
'Apple Intelligence marks the beginning of a new chapter for Apple innovation and redefines privacy and AI by extending our groundbreaking approach to privacy into the cloud.' - Tim Cook, expressing optimism about the future impact of AI on Apple's product ecosystem.
— Tim Cook
'Operating cash flow was very strong at $26.8 billion, a new September quarter record.' - Luca Maestri, underscoring Apple's operational efficiency and solid cash generation.
— Luca Maestri
Forward Guidance
Management expects low- to mid-single-digit revenue growth for the December quarter, driven by ongoing momentum in Services. They project Services revenue to continue its double-digit growth trend. Gross margin guidance for next quarter is slightly lower at 46-47%, which reflects anticipated commodity pressures, including increasing NAND and DRAM prices. Management also indicated sustained investments in R&D to support Apple Intelligence's rollout, which they believe will enhance product appeal and market positioning.
Competitive Position
Company
Gross Margin
Operating Margin
Return on Equity
P/E Ratio
AAPL Focus
46.22%
31.20%
25.90%
58.63%
LPL
10.80%
1.78%
0.81%
20.87%
SNEJF
23.70%
6.21%
2.49%
4.34%
PCRFY
29.00%
3.26%
0.99%
18.19%
SONO
40.30%
-27.20%
-12.40%
-7.05%
Gross Profit Margin
Operating Profit Margin
Return on Equity
P/E Ratio Comparison
Investment Outlook
Apple Inc’s strong financial performance, combined with strategic innovations in AI and an expanding Services division, creates a favorable investment outlook. Management's focus on product launches and enhancements positions the company to capture market share during the upcoming holiday season. However, investors should monitor global supply chain dynamics and regulatory developments which may impact future growth trajectories. Overall, Apple remains a strong player in technology with resilient operational fundamentals.
Key Investment Factors
Growth Potential
Apple's commitment to innovation through new product releases, especially in AI-driven technologies like Apple Intelligence and the integration of advanced capabilities across all devices, presents significant growth potential in both the hardware and services segments.
Profitability Risk
Risks include potential market saturation in key products like iPhone, exposure to global supply chain disruptions, and reliance on a few high-revenue segments. Additionally, regulatory scrutiny in key markets poses a risk to operational flexibility.
Financial Position
Apple maintains a strong financial position with $157 billion in cash and marketable securities, net cash of $50 billion, and a robust operating cash flow of $26.8 billion. Total debt amounts to $107 billion, reflecting strategic management of capital resources for ongoing investments and shareholder returns.
SWOT Analysis
Strengths
Strong brand loyalty and customer satisfaction (98% for iPhone 15 family).
Diverse and expanding product portfolio including hardware, software, and services.
Robust cash flow and financial reserves allowing for strategic investments.
Weaknesses
Heavy reliance on iPhone as the primary revenue driver.
Exposed to supply chain risks impacting production and delivery of new products.
Opportunities
Expansion of Services revenue through enhanced customer engagement and new offerings.
Growth potential in emerging markets and increased adoption of devices among new customers.
Threats
Intense competition in consumer electronics and technology sectors.
Regulatory pressures from governmental bodies in major markets.