Apple’s Q1 2024 Returns to Revenue Growth on Strong iPhone and Services Performance

Reporting on its Q1 2024 financial results, Apple has announced profits of $33.9 billion ($2.18 per diluted share) on revenues of $119.6 billion. The company’s revenues were up 2% compared to the year-ago quarter, and profits rose by 16% (see Apple Q1 2023 Revenues Slowed by Exchange Rates, COVID, and Inflation, 3 February 2023). Apple executives made a point of noting that this quarter’s results were based on 13 weeks of activity compared to 14 weeks in last year’s first quarter. That’s good news compared to the four fiscal quarters of slight revenue drops in 2023, and the results make Q1 2024 Apple’s second-highest quarter ever in both revenues and profits behind only Q1 2022.

The largest wedges in the quarterly revenue pie chart were once again the iPhone, which accounted for 58% of Apple’s revenues, and Services, which posted an all-time record and was 19% of the quarter’s revenue; together, the two categories contributed 77%. Of the remaining segments, the Mac held its ground at about 7% of the mix, but the iPad and Wearables both dropped, each accounting for 2% less of the pie than they did last year (see “Apple Q1 2023 Revenues Slowed by Exchange Rates, COVID, and Inflation,” 3 February 2023).

iPhone

The iPhone performed particularly strongly. Even though its performance trailed the 2022 record high, Apple still brought in $69.7 billion in iPhone revenues, up 6% from 2023. Although the iPhone 15 line was a relatively minor evolutionary update, Apple claimed that its customer satisfaction reached 99% and said the number of iPhone upgraders hit an all-time high.

Mac

The first quarter of 2024 saw the introduction of the M3-equipped versions of the 24-inch iMac, the 14-inch MacBook Pro, and the 16-inch MacBook Pro, helping drive Mac revenues slightly higher than last year’s first quarter results—less than 1%—even though (as Tim Cook again emphasized) this year’s first quarter was a week shorter than the same quarter last year.

iPad

It’s hard to say that the iPad is struggling, given that it still brought in $7 billion in revenue. Nonetheless, that was a 25% drop from the product’s “difficult compare” to 2023’s revenues, which were unusually high because of the late 2022 release of the M2 iPad Pro models and Apple catching up with pent-up demand from previous supply disruptions due to factory shutdowns. But it was also the lowest iPad revenue number since 2020. Because Apple released no new iPads last year, it seems likely that the next new model will boost iPad revenues significantly.

Wearables

As with the iPad, a “difficult compare” with last year’s results in the Wearables category led to an 11% drop in revenues, even including sales from the just-released Apple Watch Series 9 and Apple Watch Ultra 2 models. In coming quarters, Apple’s new Vision Pro will be included in the Wearables category, but given its small initial production run, it can’t make a big revenue difference for a while. Nonetheless, Apple emphasized the interest enterprise customers are expressing in the device. When pressed by an analyst, Cook refrained from comparing the likely sales trajectory of the Vision Pro to any previous Apple product, saying that “each product has its own journey.”

Services

Once again, the Services category was a bright spot in Apple’s revenue picture, notching an 11% increase year-over-year, the highest of Apple’s reporting segments. With 2.2 billion Apple devices now in the installed base, the company’s opportunity to provide those devices with services bodes well for continued growth in this category.

Regional Results

Revenues from Greater China were down 13% year over year, but the rest of the world helped compensate for that downturn, with Cook expressing pleasure at Apple’s performance in emerging markets, such as Latin America and the Middle East. The Americas squeezed out a revenue increase of 2% compared to the one-week-longer quarter a year ago. Even better, the Europe and Asia-Pacific region revenues hit all-time records, up 10% and 7%, and revenues were up 15% in Japan.

Looking Ahead

Although Apple continues to be highly profitable and has returned to growth, the company has its work cut out for it in the months ahead, what with slowing sales in China and the unknown effect of Apple’s grudging efforts to meet the new EU app distribution requirements (see “The EU Forces Open Apple’s Walled Garden,” 29 January 2024). On the plus side, new iPads will surely emerge later this year to bolster that segment, and it seems likely that Apple’s iPhone and Services segments will continue to perform well.