Apple (AAPL +2%) is trading modestly higher after reporting Q3 results last night. The company posted a 4.9% year-over-year revenue increase to a new June quarter record of $85.78 billion, surpassing expectations. Apple expects Q4 revenue growth to be similar, indicating slight upside. The iPhone 16 is anticipated to be unveiled next month.
- iPhone: Revenue slightly exceeded estimates, declining 1% year-over-year to $39.30 billion. The June quarter is typically slower as consumers await the next iPhone, usually announced in September. The iPhone set June quarter records across several countries, with the active install base reaching an all-time high in every geographic segment. iOS 18 will bring significant changes.
- Mac: Sales rose 2.4% year-over-year to $7.01 billion. The latest M3-powered MacBook Air models are popular, especially in emerging markets like Latin America, India, and South Asia. Apple sees the MacBook Air as ideal for students and small business owners during the back-to-school season.
- iPad: Revenue jumped 23.6% year-over-year to $7.16 billion, rebounding from a decline in the March quarter. The new 11-inch and 13-inch iPad Air models performed well, and the iPad Pro with the M4 chip pushed the boundaries of power-efficient performance.
- Wearables: Revenue fell 2.3% year-over-year to $8.10 billion. The Apple Watch and AirPods faced tough comparisons against previous year's launches. However, nearly two-thirds of Apple Watch buyers were new customers, driving the install base to a new all-time high.
- Services: Revenue rose 14.1% year-over-year to a record $24.21 billion, with paid subscriptions at an all-time high. Apple achieved revenue records in most Services categories, including advertising, cloud, and payment services. Apple TV+ productions continue to be popular.
Overall, this was a solid quarter for Apple, despite FX headwinds. iPhone sales showed nice upside, although the June quarter is seasonally slow. Services were a highlight, and iPad sales bounced back strongly. However, Greater China revenue was down 6.5% year-over-year, impacted by FX. Despite recent pullbacks, Apple's stock is up significantly (+25%) since the March quarter report in early May. We are pleased to see Apple trading higher, especially amid weakness in other mega-cap tech names.
