A few days ago, Apple released the results for its 2024 fiscal second quarter (which ran from December 31, 2023, to March 30, 2024) and held a call with analysts to discuss the results. Unlike Apple's Q1 which contains all of the holiday sales, Apple's Q2 is usually not a particularly interesting quarter. Two years ago, Apple set a new Q2 record of $97.3 billion. Last year, earnings in this quarter were $94.8 billion. This year, earnings were $90.8 billion. However, if you look at multiple quarters over the last few years—which is easy to do using the graphs prepared by Jason Snell of Six Colors—the big picture is that Apple revenue rose in late 2020 into 2021 as people upgraded equipment during the pandemic, then Apple reached a new higher-than-even plateau in 2022 that has stayed roughly even since then, without dropping back down to the early 2020 and earlier levels. Suffice it to say that Apple's revenue is just fine. If you want to get all of the nitty-gritty details, you can download the audio from the conference call from iTunes, or you can read a transcript of the call prepared by Jason Snell of Six Colors. Apple's official press release is here. Here are the items that stood out to me.
iPhone
- iPhone revenue for the quarter was just shy of $46 billion, lower than the record $51.3 billion this time last year. Apple explained that the results one year ago were particularly high (about $5 billion higher than normal) because of pent-up demand from the prior quarter (the 2022 holiday season) when there were COVID-related supply disruptions for the iPhone 14 Pro and iPhone 14 Pro Max. Apple says that if you ignore that bump from a year ago, the total company revenue would have grown from 2023 Q2 to 2024 Q2.
- Apple CFO Luca Maestri said that the "iPhone active install base grew to a new all-time high in total and in every geographic segment, and during the March quarter, we saw many iPhone models as the top-selling smartphones around the world."
iPad
- iPad revenue for the quarter was $5.6 billion, lower than the $6.7 billion in 2023 Q2, $7.6 billion in 2022 Q2, and $7.8 billion in 2021 Q2. Of course, one might argue that it is amazing that there was significant iPad revenue at all in 2023 since no iPads were announced last year. I'll be interested in learning what iPad revenue is in 2024 Q3 and Q4 in light of the new iPads being announced tomorrow.
- Over half of iPads sales were to people who had not previously owned an iPad.
Other
- Cook said that there has been great enthusiasm for the Apple Vision Pro, and he noted that more than half of the Fortune 100 companies have bought units and are "exploring innovative ways to use it to do things that weren't possible before, and this is just the beginning." As expected for a brand new device of this nature, there is not one single thing that people are doing, and instead people are kicking the tires on all sorts of ideas. Cook said: "People are using it for many different things in the enterprise, and that varies from field service, to training, to health care related things like preparing a doctor for pre-op surgery or advanced imaging, control centers, and so it's an enormous number of different verticals, and our focus is on growing that ecosystem and getting more apps and more and more enterprises engaged, and the event that we had recently, I can't overstate the enthusiasm in the room. It was extraordinary, and so we’re off to a good start, I think, with enterprise."
- Here is some anecdotal data on Apple Vision pro adoption. I work for a large law firm of around 300 attorneys, and to my knowledge, I am the only one in my law firm with an Apple Vision Pro. Also, a week ago, I gave a presentation at a large technology conference sponsored by the Virginia State Bar Association—so that was an audience with a special interest in technology—and of the attorneys in my session, I was the only one who had purchased an Apple Vision Pro. Don't get me wrong: if anyone asks me, I actually tell them not to buy an Apple Vision Pro because it is still such early days. On the other hand, if they ask me if I enjoy using my Apple Vision Pro, my answer is a very enthusiastic yes, and it is going to be so amazing when this type of advanced technology becomes more common.
- Cook acknowledged the fact that Apple will have a product announcement on May 7, saying that "we're getting ready for an exciting product announcement next week that we think our customers will love," and he also mentioned the upcoming WWDC conference in June.
- Once again, Cook emphasized that AI will play an important role in Apple's future. "We continue to feel very bullish about our opportunity in generative AI. We are making significant investments, and we're looking forward to sharing some very exciting things with our customers soon. We believe in the transformative power and promise of AI, and we believe we have advantages that will differentiate us in this new era, including Apple’s unique combination of seamless hardware, software, and services integration, groundbreaking Apple Silicon with our industry-leading neural engines, and our unwavering focus on privacy, which underpins everything we create."
- There is a lot that makes up the services category for Apple. It includes Apple TV+, the App Store, the money that Apple makes from Google to use Google as the default search engine in Safari, and much more. But this is a killer category for Apple. For example, in this past quarter, Apple services revenue was an all-time high of $23.9 billion. Better yet, Cook said that about 75% of that was profit.
- Speaking of Apple TV+, Cook announced that the compay would launch a movie called "Wolves" later this year "which reunites George Clooney and Brad Pitt."
- Masestri said that almost two-thirds of Apple Watch sales in the past quarter were to people buying their first Apple Watch. This is consistent with what I am seeing: I'm amazed to see so many people around me in different parts of my life wearing an Apple Watch.
