Setting the Stage for Apple’s FY4Q23 Earnings
Welcome to a new week. For today's update, we will kick off my Apple earnings preview with an overview of the setup heading into Thursday’s release. The plan is to continue the earnings preview on Wednesday.
As a reminder, Apple's "Scary Fast" online product event will take place tonight at 8 pm ET. We will talk about the announcements tomorrow.
Setting the Stage for Apple’s FY4Q23 Earnings
The setup heading into Apple earnings on Thursday is trending a tad positive. FY4Q results are notorious for being noisy quarters as supply issues cloud underlying demand for iPhone and Apple Watch. This was especially true this year as iPhone 15 Pro and Phone 15 Pro Max were in short supply at the end of September. The iPad and Mac will also likely fuel some ugly headlines with tough year-over-year compares. However, my expectation includes enough variables moving in the right direction to get Apple over its 4Q23 earnings expectations bar.
Margins remain impressive. Management guided close to a 11-year quarterly high for gross margin percentage.
Services revenue is trending stronger. Apple has been seeing growth in advertising, cloud services, and the App Store. The impact from price increases in 2022 for Music and TV+ will also help results. When considering Apple’s entire business, Services (and probably Apple Watch) come across as having the most impressive momentum.
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