Apple’s latest earnings results, released Tuesday, show three bright spots that helped keep Apple’s business buoyant in the last quarter: accessories, services, and investments in emerging markets.
The company reported $19.8 billion in net income on $81.8 billion in net sales during the three-month period. A roughly 4% decline in product sales was offset by services adoption, and weaknesses in some markets were mitigated by sales records elsewhere.
However, while revenue actually grew year-over-year, foreign exchange fluctuations reduced that number by 4%, the company said.
Perhaps more telling, the company said its gross margin hit 44.5%, a new record for the June quarter that also reflects the growing contribution of the company’s high-margin (70.5%) services business.
Apple, a company with better leadership
Frankly, the results testify to spookily great management with excellent foresight.
On the strength of the Apple Watch, AirPods, and other accessories; the launch of Apple Music and other services; and the company’s major investments of time and energy in India and other emerging markets, Apple has built a moat to protect it in challenging times.
The “tough compares” company execs talked about during the post-results news analyst call would seem a great deal tougher if the company had not made those investments. They account for the following bright spots:
Emerging markets are growing for Apple
June quarter revenue hit records in India, Indonesia, Mexico, the Philippines, Poland, Saudi Arabia, Turkey, the UAE, France, the Netherlands, and Austria. It also set records in Greater China. The company said sales performance at its new retail stores in India have exceeded expectations.
“I think if you look at it, it’s the second largest smartphone market in the world,” said Apple CEO Tim Cook about India. “And we ought to be doing really well there and where I’m really pleased with our growth there, we still have a very, very modest and low share in the smartphone market. And so, I think that it’s a huge opportunity for us. And we’re putting all of our energies in making that occur.”
Most recently, Morgan Stanley analyst Erik Woodring predicted India may generate $40 billion in revenue for Apple in the coming five years.
Services support the entire business
Apple said it now holds 1 billion paid subscriptions and 2 billion active devices. Services generated $21.2 billion, up 8% year-on-year.
Don’t neglect that services are one of the flagship strategies to emerge from Apple since Cook took the helm. In 2017 he promised to double the size of that part of its business by 2021, and in fact exceeded that. In 2016, services accounted for $24.3 billion for the entire year; it now nearly hits that number in three months.
Cook confirmed that some Apple services set new revenue records during the quarter and pointed to the $10 billion saved in Apple Card Savings since launch a few weeks ago.
Engagement…
2023-08-04 17:00:03
Original from www.computerworld.com rnrn