Apple’s Q3 2024 Record Revenues Surprise Tim Cook

Reporting on its Q3 2024 financial results, Apple has announced quarterly earnings of $21.45 billion, with revenues of $85.8 billion, a “new June quarter record and better than we had expected,” according to Apple CEO Tim Cook. The company’s revenues were up 5% compared to the year-ago quarter (see “Apple Q3 2023 Earnings Down 1% on Exchange Rates,” 4 August 2023).

The quick summary: Apple’s Services and iPad segments increased significantly compared to last year, with Services up 14% and iPad up 24%. The Mac was also up about 2%, but the iPhone fell 1% and Wearables dropped 2%. Internationally, nearly all geographic segments reported modest increases apart from Greater China, which posted somewhat lower results compared to last year.

Despite its year-over-year decline, the iPhone continues to dominate Apple’s revenue mix, with Services occupying an ever-larger piece of the pie and Mac, iPad, and Wearables sharing the remaining slots.

iPhone

Though iPhone revenues were down 1%, Apple took pains to note that they would have been up if not for currency issues, presumably mainly in Greater China, where half of the year-over-year decline was attributed to exchange rates. Nonetheless, iPhone revenues set Q3 records in the United Kingdom, Spain, Poland, Mexico, Indonesia, and the Philippines. More importantly, the iPhone installed base hit an all-time high, which helped drive Services growth.

Mac

The 2% year-over-year increase in Mac sales last quarter was driven by sales of the new M3 MacBook Air (see “New M3 MacBook Air Models Can Drive Two Displays,” 4 March 2024). Mac sales posted Q3 records in Latin America, India, and South Asia. Apple also noted that half of MacBook Air customers are new to the platform, increasing the size of the active installed base and helping drive Services growth.

iPad

Although last quarter seemed to portend a nadir in iPad sales due to Apple’s failure to release any new models in 2023, the same could not be said for this quarter. Sales of the tablet rose nearly 24% thanks to the release of the 11-inch and 13-inch iPad Air, along with the M4-based iPad Pro (see “Apple Unveils New iPad Air, iPad Pro, Apple Pencil Pro, and Magic Keyboard,” 7 May 2024). Just as with the Mac, half of iPad purchasers are new customers.

Wearables

The Wearables segment’s revenues declined by roughly 2% in the quarter. Apple attributed the drop to “a difficult compare against prior-year launches of the AirPods Pro second generation, the Watch SE, and the first Watch Ultra.” It’s unclear how this continues to affect the Q3 2024 results, given that those products all appeared in September 2022 (see “Second-Generation AirPods Pro Add H2 Chip, Touch Control, Enhanced Case,” 7 September 2022, and “Apple Watch Series 8 and Apple Watch Ultra Expand Health, Safety, and Connectivity Features,” 7 September 2022). Nevertheless, this slight decline is countered by high customer satisfaction ratings, and even with no new products in this category, nearly two-thirds of Apple Watch sales are to first-time purchasers.

Unsurprisingly, Apple said nothing quantitative surrounding the Vision Pro, although Tim Cook gave it a laudatory paragraph in which he noted it was available in more countries. They include Australia, Canada, China mainland, France, Germany, Hong Kong, Japan, Singapore, and the United Kingdom. That will boost Vision Pro revenues, though it’s still far too rarified of a product to stand out in Apple’s financials.

Services

The Services segment continues to bring home the bacon for Apple, flaunting 14% year-over-year growth, with both paid accounts and paid subscriptions showing double-digit growth. Apple said paid accounts have doubled over the last four years, and the Services segment hit all-time records in advertising, cloud, and payment services. The company didn’t explain what “cloud” means; perhaps iCloud+?

Regional

The increases in Apple’s regional revenue figures are hardly dramatic, but with the exception of Greater China, Apple is performing well in all its international markets. In Greater China, revenues dropped 6.5%, but Cook said, “If you look at it on a constant currency basis, we declined by less than 3%. So over 50% of the decline year over year is currency-related. That is an improvement from the first half of the fiscal year.” After that, Cook reeled off a series of positive statistics about Apple’s sales in China, ending with, “We continue to be confident in the long-term opportunity in China. I don’t know how every chapter of the book reads, but we’re very confident in the long term.”

Apple’s next financial quarter will reflect new iPhone releases and the initial rollout of the much-anticipated Apple Intelligence features, which require an M-series chip on the Mac and iPad, or an A17 Pro on the iPhone. Although numerous analysts tried to get Tim Cook to predict how demand for Apple Intelligence would drive upgrades and thus affect Apple’s revenues, Cook steadfastly refused to be drawn into any speculation. Nonetheless, it seems obvious that having marquee features of Apple’s 2024 operating systems unavailable on older hardware will encourage upgrades. Those upgrades won’t necessarily happen immediately, though, since Apple Intelligence features will roll out slowly over the next year. As a result, Apple expects the next quarter’s financial results to look much like this quarter’s figures.

In short, Apple is staying the course and playing a long game: not a bad strategy to attract those looking for a safe place to put their investment dollars.

Now that you’ve read our summary of Apple’s latest financial results, we’re curious: Do you find these quarterly financial roundups sufficiently interesting that we should keep doing them? In “LittleBITS: Should We Continue Covering Apple Financials?” (2 August 2024), Adam explains why we’re asking and links to a poll where you can register your opinion.