Initial Thoughts on Apple’s 4Q24 Earnings
Hello everyone. There’s a lot to say regarding Apple’s earnings. In this special Friday edition of Above Avalon Daily, we will go over my initial thoughts. The discussion will continue on Monday.
Initial Thoughts on Apple’s 4Q24 Earnings
Heading into Thursday, expectations facing Apple were a tad elevated versus what the market was needing to hear over the summer. Despite those higher expectations, Apple’s underlying business performance had positioned the company well to not disappoint. That’s pretty much exactly how Apple’s 4Q24 earnings release played out. Revenue and adjusted EPS were spot on to my estimates. Looking ahead at 1Q25 guidance, we can call Apple’s commentary as good. There was no need to add a disclaimer or asterisk to that either.
Looking at Apple’s performance at a very high level:
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Reading Between the Lines of Apple’s 1Q24 Earnings Q&A With Analysts
In today’s update, we will focus on Apple’s 1Q24 earnings Q&A session with analysts.
After recapping each question-and-answer exchange that occurred on the call between Apple and sell-side analysts, we will go over Neil’s response to the exchange. Let’s go beyond what was talked about on the call with the ninth installment of reading between the lines of Apple's earnings Q&A with analysts.
NOTE: The following earnings call questions (“Q (Sell-Side Firm)”) and answers (“Cook” or “Luca”) have been cut, summarized, paraphrased, and rearranged for clarity. To read the full question and answer exchanges, Seeking Alpha offers a written transcript here.
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Payment is hosted by MoonClerk and secured by Stripe. Apple Pay and other mobile payment options are accepted. After signup, use this link to update your payment information and membership status at any time.
An audio version of this update is available to members who have the podcast add-on attached to their membership. More information about the podcast add-on is found here. Special Inside Orchard bundle pricing is available for Above Avalon members. Additional membership customization is available via the Financial Models add-on.
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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