Apple came in well above Wall Street estimates in its first earnings report since it announced that CEO Tim Cook would be stepping down. The $4-trillion tech company reported $111.2 billion of revenue in the three months to the end of March, up 17 per cent year-on-year. The company forecast sales will rise 14 per cent to 17 per cent in the period running through June.
The outgoing CEO said during the earnings call that India represents a “huge opportunity”, noting it is the world’s second largest smartphone market and third largest PC market. Despite strong recent performance, Apple still holds only “a modest share”. Cook pointed to a growing middle class, a strong product lineup, and the fact that most buyers across iPhone, Mac, iPad, and Watch categories are new to those products — suggesting significant room to expand the installed base. “Net-net, I’m over the moon excited about India,” he said.
iPhone revenue jumped 22 per cent year-on-year to $57 billion. Total revenue from China reached $20.5 billion, up 28 per cent on a year ago.
“iPhone grew double digits in the majority of markets we track, including the US, Latin America, Greater China, Western Europe, India, Japan and South-East Asia,” said Kevan Parekh, Apple CFO.
Mac revenue also increased, growing to $8.4 billion, helped by the launch of the affordable MacBook Neo laptop in March. iPad revenue rose to $6.9 billion, while wearables, home and accessories brought in $7.9 billion. Services, which includes TV and music streaming, the App Store, iCloud subscriptions, and other digital offerings, generated revenue of $31 billion last quarter.
John Ternus, who will take over as CEO on September 1, will have to tackle rising costs. Cook said that for the June quarter, “we expect significantly higher memory costs”.
The tech industry is faced with a global memory crunch that is forcing many companies to boost prices and reduce output. “Beyond the June quarter, we believe memory costs will drive an increasing impact on our business, and we will continue to evaluate this,” said the outgoing CEO.
Apple’s main supply constraints involve processors rather than memory chips, which has primarily affected the Mac Mini and Mac Studio, both popular for running artificial intelligence models. “We are not at the point where we are saying this is going to end anytime soon,” Cook said.
The company announced a share buyback of $100 billion and declared a cash dividend of 27 cents per share, up 4 per cent.
Cook said Apple could seek a refund on Donald Trump’s levies following the Supreme Court’s ruling against the emergency duties. “We plan to reinvest any amount we receive back into US innovation and advanced manufacturing,” Cook said.
