Apple Year in Review 2023 (Financial Strategy)
As we close out 2023, there is value in taking time to recap the past 12 months. For Apple, one way of recapping the past 12 months is to look at the company from two perspectives: products and financials. In yesterday’s update, we recapped Apple's product strategy. Today, we will analyze Apple’s financial trends in FY2023.
An Above Avalon membership is required to read this update. Members can read the full update here. (Members: Daily Updates are accessible via the archive. If you haven’t logged into the archive before, fill out this form to receive an invite.)
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.
Apple Facing Apple Watch Ban in U.S., Apple Year in Review 2023 (Product Strategy)
We kick off the update with Neil’s thoughts on Apple facing an Apple Watch Series 9 and Ultra 2 import and sales ban in the U.S. The discussion then turns to reviewing Apple’s 2023. As we close out the year, there is value in taking time to recap the past 12 months. For Apple, one way of accomplishing this is to look at the company from two perspectives: products and financials. We will begin with Apple's product strategy as the financials follow product successes and failures.
An Above Avalon membership is required to read this update. Members can read the full update here. (Members: Daily Updates are accessible via the archive. If you haven’t logged into the archive before, fill out this form to receive an invite.)
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.
Netflix Releases Engagement Report, Takeaways From Netflix’s Data Dump, EU Close to Ruling Against Apple in Spotify Probe
We kick off the update with Netflix’s new report on engagement. After examining 18,000+ lines of data, Neil goes over his observations and takeaways regarding Netflix’s report. The discussion then turns to the EU getting close to ruling against Apple’s anti-steering provision.
An Above Avalon membership is required to read this update. Members can read the full update here. (Members: Daily Updates are accessible via the archive. If you haven’t logged into the archive before, fill out this form to receive an invite.)
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.
Google Losses Antitrust Case to Epic Games, GM Digging Deeper CarPlay Hole, Anti-Apple Brigade Forms in EU
We begin today’s update with Google losing the antitrust case brought by Epic Games. There were significant differences between Epic Games v. Google and Epic Games v. Apple. The update then turns to more craziness from GM regarding its decision to ditch CarPlay. We conclude with a look at Apple competitors wanting to team up to “push for open digital ecosystems” in the EU. Neil discusses why the group should rename themselves the Anti-Apple Brigade - EU Edition.
An Above Avalon membership is required to read this update. Members can read the full update here. (Members: Daily Updates are accessible via the archive. If you haven’t logged into the archive before, fill out this form to receive an invite.)
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.
Google Faked Its Gemini AI Demo, CNBC Pumped Alphabet Stock Due to Gemini Demo, Generative AI Demos Are Lacking
We kick off the update with Neil’s thoughts on Google’s Gemini demo and the discovery of the demo being faked. The discussion then looks at how the Gemini demo led to craziness, including CNBC pumping Alphabet shares solely because of a six-minute video. We conclude with why Neil thinks generative AI demos have been lacking to date.
An Above Avalon membership is required to read this update. Members can read the full update here. (Members: Daily Updates are accessible via the archive. If you haven’t logged into the archive before, fill out this form to receive an invite.)
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.
Apple to Support RCS, The Real “Why” Behind iMessage’s U.S. Superiority, EU Leaning Against Regulating iMessage
We kick off the update with Neil’s thoughts on Apple announcing it will support RCS (rich communication services). The discussion then turns to why iMessage is so strong in the U.S. The narrative involving blue and green messages is incomplete. The update concludes with the latest developments involving the EU and iMessage regulation.
An Above Avalon membership is required to read this update. Members can read the full update here. (Members: Daily Updates are accessible via the archive. If you haven’t logged into the archive before, fill out this form to receive an invite.)
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.
More on Apple Share Buyback vs. Market Cap, Thoughts on Apple and a $4 Trillion Market Cap, Thursday Q&A
There is one question that was carried over from last week’s Thursday Q&A that we will address today. What does the current Mac upgrade cycle look like? In addition, there were a few incoming questions regarding Apple’s market cap and buyback. We will tackle those questions first.
An Above Avalon membership is required to read this update. Members can read the full update here. (Members: Daily Updates are accessible via the archive. If you haven’t logged into the archive before, fill out this form to receive an invite.)
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.
AAPL Closes Above $3 Trillion for Second Time, Apple’s Recent Stock Price Strength, Apple Valuation Update
Today's update begins with Neil’s thoughts on Apple closing above a $3 trillion market capitalization for the second time. We then look at Apple’s recent stock price strength and what may be behind the move higher. The update concludes with an examination of AAPL valuation metrics (forward P/E, EV/FCF, and free cash flow yield).
An Above Avalon membership is required to read this update. Members can read the full update here. (Members: Daily Updates are accessible via the archive. If you haven’t logged into the archive before, fill out this form to receive an invite.)
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.
Introducing the Financial Models Add-on for Above Avalon Membership
For the past few years, Above Avalon members have been customizing their memberships with optional add-ons. In 2020, the Podcast add-on was launched with the option to listen to the updates in podcast form. The add-on was later enhanced to include reports in audio form. To date, nearly 600 episodes have been recorded. In early 2021, Inside Orchard, which compliments my Apple-focused analysis with broader thoughts on the technology industry, was positioned as the second add-on for members. To date, 125 Inside Orchard essays and podcast episodes have been published.
One of the most requested features from Above Avalon members has been access to more of the financial models that I (Neil Cybart) use to analyze Apple and derive my financial estimates.
I am excited to announce a new membership add-on dedicated to Apple financial modeling.
Details
Designed for anyone with an interest in Apple’s financials and product strategy, the Financial Models add-on provides access to three of my Apple installed base models (iPhone, iPad, and Apple Watch). This is the first time that my installed base models have been made available to others.
The models are built in Excel but also usable in Numbers. While the models include my estimates and assumptions, all inputs can be adjusted to reflect your own assumptions. The add-on also includes the ability to reach out to me with questions about the models.
A general rule with financial models is that the best ones are constantly being improved. As new information becomes available, the installed base models will be updated.
The models, which have been built over the course of years, make it possible to estimate:
Device unit sales.
The number of devices in the wild over time.
Percent of device sales going to new users vs. existing users by year.
Product upgrade cycle length.
The upgrade path that users take.
And more…
The preceding metrics will be of interest to everyone from AAPL investors modeling Apple’s financials to Apple competitors and suppliers needing to better understand the marketplace.
Pricing
The Financial Models add-on can be attached to an Above Avalon membership for $850 per year. Instead of needing to spend thousands of dollars on a financial data subscription or send trading volume to a broker in return for research access, you will find ease and value with the Financial Models add-on. I am confident the value found with just one installed base model will far exceed the add-on’s price. Subscribers will receive seamless online access to my installed base models at any time.
Group Pricing. If you have a friend or co-workers interested in utilizing the Financial Models add-on, take advantage of special group rates. Fill out this online form and indicate you are interested in subscribing to the Financial Models add-on at the group rate.
Signing Up
The Financial Models add-on can be attached to an Above Avalon membership for $850/year. If you need to become a member, fill out the following payment form which includes the Financial Models add-on:
Already an Above Avalon member? Attach the Financial Models add-on to your membership for $850/year by filling out this payment form.
Payment is hosted by MoonClerk and secured by Stripe. Apple Pay is accepted. Paid invoice receipts are available upon request. The full charge associated with purchasing the Financial Models add-on will go through at signup. At your next membership renewal, your charge will include a pro-rated amount for the add-on. For members who have specific payment/invoice requirements dictated by their employer, please reach out to me with that information.
Already an Above Avalon member subscribed to “The Works”?, Fill out this online form to get the Financial Models add-on at the special $700 bundle price. Once your request has been processed, a customized coupon will be emailed to you to use with the online payment form.
If you aren’t an Above Avalon member, take advantage of special bundle pricing found with the Financial Models by signing up for an Ultra membership. Receive all three add-ons at a $150 discount. This amounts to getting the Podcast and Inside Orchard add-ons for free.
Above Avalon membership ($200 per year)
+ Podcast add-on ($100 per year)
+ Inside Orchard add-on ($50 per year)
+ Financial Models add-on ($700 per year - $150 off)
Total: $1,050 per year
Accessing the Models
Once payment has gone through, you will receive an email containing a personalized link to the installed base models. This personalized link tied to your membership will remain active as long as the add-on is attached to your membership.
You will also be able to access the models via the Above Avalon payer portal (accessed via "Member Login" over at AboveAvalon.com). A new “Digital Package” tab will appear that will bring you to your personalized download page. There are no new logins or passwords required.
Questions about the Financial Models add-on can be addressed to me using this contact form.
Apple Opens Chip Lab to Press for First Time, Why Now?, Apple Announces Amkor Partnership in U.S.
Today's update will take us into Apple Silicon territory. Apple opened its chip lab to the press for the first time. We discuss why Apple decided now is the time for such exposure. We will then go over some Apple news on the U.S. manufacturing front with the company announcing an expanded partnership with Amkor.
An Above Avalon membership is required to read this update. Members can read the full update here. (Members: Daily Updates are accessible via the archive. If you haven’t logged into the archive before, fill out this form to receive an invite.)
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.
Apple Discussing Apple TV+ and Paramount+ Bundle, Verizon Announces Netflix and Max Bundle, Combatting Video Streaming Churn, Above Avalon Gifts (2023)
We kick things off with Neil’s thoughts on an Apple TV+ / Paramount+ streaming bundle. The discussion then turns to Verizon unveiling a Netflix and Max streaming bundle. We look at these developments from the perspective of companies attempting to combat video streaming churn.
Above Avalon Gifts are now available for the 2023 holiday season. The full list of exclusive gift options available to members are found at the end of the update and here.
An Above Avalon membership is required to read this update. Members can read the full update here. (Members: Daily Updates are accessible via the archive. If you haven’t logged into the archive before, fill out this form to receive an invite.)
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.
The Inside Story of Huawei’s Kirin 9000S Chip, NASCAR Announces New Media Rights Deal, Thursday Q&A
Hello everyone. Happy Thursday. We kick today’s update off with a closer look at Huawei’s new system on a chip. The discussion then turns to takeaways from the latest sports right deal involving NASCAR. The update concludes with the latest round of Thursday Q&A and the question: How does Apple’s Vision Products Group fit within Apple’s organization, and what does it mean for the future?
An Above Avalon membership is required to read this update. Members can read the full update here. (Members: Daily Updates are accessible via the archive. If you haven’t logged into the archive before, fill out this form to receive an invite.)
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.
Apple to Exit Goldman Sachs Partnership, Apple’s Problem With Banks, Apple’s Solution
Hello everyone. In today's update, we will go over the big Apple / Goldman Sachs news. Neil looks at what the news means and doesn’t mean. In addition, the discussion includes a look at Apple’s major problem with banks and possible solutions management can pursue to overcome the problem.
An Above Avalon membership is required to read this update. Members can read the full update here. (Members: Daily Updates are accessible via the archive. If you haven’t logged into the archive before, fill out this form to receive an invite.)
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.
Sonos FY4Q23 Earnings, Sonos Discloses New Installed Base Data, Sonos’ Product Roadmap for 2024
Happy Tuesday. Today’s update will be dedicated to discussing Sonos. The company reported earnings a few days prior to the Thanksgiving break. Sonos is on a path to being a more direct competitor to Apple.
Let’s jump right in.
Sonos FY4Q23 Earnings
Two weeks ago, Sonos reported FY4Q23 earnings (July through September).
Sonos is feeling the impact of the consumer gadget recession. Revenue was down 3.5% to $305M as the number of products sold were down 8% and speaker registrations were down 13%. The 500 basis point gap between products sold and registrations is due to channel inventory fill. This means quarterly results were boosted by Sonos putting speakers into the channel ahead of the holidays. The stronger revenue total (-3.5%) versus products sold (-8%) was due to higher speaker ASP.
The following exhibit shows Sonos speaker sales on a TTM.
An Above Avalon membership is required to continue reading this update. Members can read the full update here. 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.
(Members: Daily Updates are accessible by logging into Slack. If you haven’t logged into Slack before, fill out this form to receive an invite.)
Above Avalon Membership
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.
Special Inside Orchard bundle pricing is available for Above Avalon members. Additional membership customization is available via the Podcast and Financial Models add-ons.
More on the Mac, Judging Mac Sales, Assessing Mac Success
Hello everyone. It feels good to be back in the swing of things.
As it turned out, the OpenAI saga reached something of a temporary lull right before Thanksgiving last week. Sam Altman was reinstated as CEO but with a new board not of his preference (Adam D'Angelo, Larry Summers, Bret Taylor). In going back over last Monday’s update, there isn’t much that needs to be changed or updated. Some of the latest reporting, which appears to be accurate, had Altman recently trying (unsuccessfully) to make inroads in gaining board control. Such action would likely have played a role in the subsequent boardroom drama. As we discussed, the “we are moving to Microsoft” development was then a negotiation tactic on Altman’s part. If there are any new twists and turns that jump out at me, we will revisit the subject.
Two quick notes:
Last week, a new Above Avalon Report, "The State of the Mac," was published. As a reminder, an audio version of the report was also recorded and released to members with the podcast add-on attached to their membership. To get the add-on, fill out this form.
Above Avalon Gifts will go live on Monday, December 4th. More information will be available at that time.
Today’s update will cover some of the member feedback and questions that came in about the report.
More on the Mac
For the past 18 to 24 months, Mac and iPad results have led to some head-scratching.
Revenue growth rates for both product categories have been all over the place. On a quarter-to-quarter basis, it may be difficult to make sense of it all. Supply interruptions, combined with channel inventory shifts and different product launch timing have added noise to the mix. However, looking at unit sales on an annual basis, things become clearer to see. iPad unit sales were down 7% in 2023 (my estimate) while Mac unit sales were down an adjusted 10% or so (my estimate). Actual Mac unit sales were down closer to 25% due to one-time issues at the end of FY2022 / start of FY2023.
In what will likely catch many people off guard, Mac unit sales in 2023 were at the same level as they were in the mid-2010s, years before the Apple Silicon transition. Even after we adjust sales to reflect one-time factors, we are looking at a sales run rate that is just 10% higher than 2014 to 2017 sales. This leads to an obvious question: Why hasn’t Apple Silicon led to stronger Mac sales?
An Above Avalon membership is required to continue reading this update. Members can read the full update here. 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.
(Members: Daily Updates are accessible by logging into Slack. If you haven’t logged into Slack before, fill out this form to receive an invite.)
Above Avalon Membership
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.
Special Inside Orchard bundle pricing is available for Above Avalon members. Additional membership customization is available via the Podcast and Financial Models add-ons.
The State of the Mac (Above Avalon Report)
An examination of Apple’s oldest product category.
Written by Neil Cybart - November 21st, 2023
Three years into the Mac’s Apple Silicon transition, the product category has never been stronger. It’s a stark difference from where the Mac was a decade ago. And yet, Mac sales are back to the same level as they were pre-Apple Silicon. This report reflects on where the Mac has come from and where it is going as Apple heads into spatial computing.
The Mac’s Past
The 2010s represented a complicated decade for the Mac. While Apple never lost its optimistic and upbeat tone with the Mac, the product category experienced a few highs but also the lowest of lows.
The best way of describing Apple’s old approach with the Mac (pre-2017) was aggressiveness in getting users to shift to mobile devices. (For this Report, we won’t go over Mac strategy pre-iPhone).
Apple was seeing unprecedented demand for iPhone and iPad with strong installed base growth. Even though Apple was continuing to add new users to the Mac installed base, the rates were not at the same level as what was unfolding with its mobile siblings.
In the early and mid 2010s, a going theory on display with Apple’s product development strategy was that many Mac users would eventually migrate to iPad (and iPhone). These Mac users were not developers and had no need for pro Mac software. Instead, they were sticking with the Mac for other reasons, including familiarity. Based on subsequent Apple disclosure, parts of that theory proved correct. In early 2017, Apple said 70% to 85% of Mac users weren’t relying on professional Mac software. This group was thought to be a prime target market for the iPad.
The implications of this Mac mindset went far. As workflows migrated from the Mac to iPad, the Mac line would be winnowed down to essentially three models: the MacBook, iMac, and Mac Pro. At least, that was the theory. Although this goal wasn’t directly telegraphed in ad campaigns or commercials, Apple’s actions with the Mac spoke volumes. The Mac mini went years without an update. The now infamous butterfly keyboard debacle was ultimately Apple trying to make MacBooks as thin as possible (keys stability was positioned as another selling point). Other new ideas included the Touch Bar and the 12-inch MacBook form factor. The takeaway wasn’t that Apple gave up with the Mac or was losing interest (far from it). Some of the Mac features were clearly inspired by the success seen with Apple's mobile devices. Instead, Apple appeared to be struggling with understanding what users, especially those with pro workflows, were looking for in a Mac.
An Above Avalon membership is required to continue reading this report. Members can read the full report here. An audio version of this report is available to members who have the podcast add-on attached to their membership. More information about the podcast add-on is found here.
(Members: Reports are accessible by logging into Slack. If you haven’t logged into Slack before, fill out this form to receive an invite.)
Above Avalon Membership
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.
Special Inside Orchard bundle pricing is available for Above Avalon members. Additional membership customization is available via the Podcast and Financial Models add-ons.
Member Privileges and Benefits
Receive Exclusive Daily Updates. The cornerstone of Above Avalon membership is access to Neil Cybart’s exclusive daily updates about Apple. Updates are sent via email and go over current news and developments impacting Apple, its competitors, and the industries Apple plays in (or will play in). Approximately 200 daily updates are published throughout the year. Sample daily updates can be viewed here, here, and here.
Receive Exclusive Reports. Members have access to Neil’s reports, which are in-depth examinations of Apple's business, product, and financial strategy.
Customization Options. Members have the option of attaching various add-ons to their membership to customize their membership to their liking. Podcast, Inside Orchard, and Financial Models add-ons can be attached and then later removed seamlessly online.
Access Neil’s Earnings Model. Members have access to Neil’s working Apple earnings model (an Excel file that also works in Numbers). The model is fully functional and adjustable and provides the ability to alter earnings drivers.
Email Priority. Receive priority when it comes to having email questions and inquiries answered. Neil personally answers all inquiries, including customer service matters related to your membership.
Archive Access. Read 1,500+ daily updates and reports that have been previously sent to members. The Above Avalon member archive is unmatched in the marketplace in terms of the sheer amount of Apple analysis found in one location. The daily updates archive can be viewed here while the reports archive is available here.
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The OpenAI Saga, AI Shortcomings and Apple’s Opportunity
Happy Monday.
The tech news flow had no interest in taking a breather ahead of Thanksgiving this year.
In today’s update, we will talk about the OpenAI situation which is still unfolding as of Monday afternoon. There are some connections to Apple when it comes to the broader AI space.
Let's jump into today's update.
The OpenAI Saga
There are some tech news stories that simply need time to pass before taking a deep dive into them. That applies to OpenAI, the AI start-up responsible for kicking off the generative AI buzz/hype cycle with ChatGPT. Some of the OpenAI drama ends up being irrelevant to these updates. However, there is enough here, especially with Microsoft’s involvement that would be of interest to Apple. Once more time passes, we can revisit the takeaways.
Here’s a very quick recap of what happened.
This past Friday, OpenAI's board fired co-founder and CEO Sam Altman. As part of the board’s decision, co-founder Greg Brockman, who was Open AI’s chairman and president, was booted off the board. He quit instead. This kicked off something of a social-media fueled frenzy involving Altman and Brockman trying to return to OpenAI via an employee and investor uprising. Instead, both announced they would head to Microsoft. OpenAI employees are now pledging to do the same.
Here are a few of my prevailing thoughts:
1) Blindspot. In what may end up being the biggest lesson from this drama, Sam Altman had a major blindspot in terms of not having firm control over the OpenAI board. While there is an unusual governance hierarchy at play when it comes to the OpenAI board and its responsibilities (described below), Altman should have known that the possibility of being fired existed. This was not a Black Swan event, although most will say it was. The fact that the OpenAI board was not reinforced after key departures (Reid Hoffman etc.) to be closely aligned with Altman was a huge mistake on his part.
An Above Avalon membership is required to continue reading this update. Read the full update here.
This update is also available in audio form to members via the Podcast add-on. Attach the add-on to your membership here.
Meta 3Q23 Earnings, Meta Hints at Sluggish Quest 3 Sales
Hello everyone. Meta reported earnings back on October 25th, a few weeks after the company’s Connect conference (discussed in greater detail here). When looking at the competitive landscape, Meta has become one of Apple’s top competitors. Accordingly, we continue to fully cover the company’s business performance and strategy. Let’s jump right in.
Meta 3Q23 Earnings
Meta’s reported 3Q23 numbers were strong.
23% revenue growth
143% operating income growth
168% EPS growth
Much of this strength was expected. Revenue exceeded the midpoint of management’s guidance by just 3%, boosted by a FX tailwind.
Meta continues to see stabilization in its core business of monetizing user attention via advertising. This is the third consecutive quarter that showed such stabilization. A very easy year-over-year compare is certainly helping Meta. The company had a tough 2022. The stronger dollar is helping as well. However, there is legitimate improvement found within Meta’s core business, such as better Reels monetization.
In what is still difficult to get one’s mind around, Meta’s employee count at quarter end was down 24% year-over-year. This is obviously helping to cut expense growth and boost operating margins.
An Above Avalon membership is required to continue reading this update. Members can read the full update here. 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.
(Members: Daily Updates are always accessible by logging into Slack. If you haven’t logged into Slack before, fill out this form to receive an invite.)
Above Avalon Membership
Payment is processed and secured by Stripe. Apple Pay and other mobile payment options are accepted. Special Inside Orchard bundle pricing is available for Above Avalon members.
More information about Above Avalon membership, including the full list of benefits and privileges, is available here.
Disney FY4Q23 Earnings, Another Disney Bomb at the Box Office
Happy Tuesday. In today’s update, we will go over Disney's earnings. The discussion will also cover the latest box office developments.
Disney FY4Q23 Earnings
Disney’s legacy business performance was fine in FY4Q23 (July through September). Bob Iger spent months talking down expectations for those businesses to the point of there not being too many negative surprises. At this point, the lack of implosions would lead to a sigh of relief on Wall Street.
While Disney’s linear TV business is shrinking (revenue down 9% last quarter), the assets are kicking off roughly the same amount of cash. Linear Networks generated $805M of operating income, unchanged from last year. Disney benefited from a one-time gain in FY4Q23 related to its A&E investment.
ESPN saw similar results to last year with flat revenue of $3.5B while operating income was up 16% to $987M due to the non-renewal of the Big Ten.
An Above Avalon membership is required to continue reading this update. Members can read the full update here. 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.
(Members: Daily Updates are always accessible by logging into Slack. If you haven’t logged into Slack before, fill out this form to receive an invite.)
Above Avalon Membership
Payment is processed and secured by Stripe. Apple Pay and other mobile payment options are accepted. Special Inside Orchard bundle pricing is available for Above Avalon members.
More information about Above Avalon membership, including the full list of benefits and privileges, is available here.
Apple Demos More Vision Pro Spatial Videos, 3D Movie Icon Appears on Apple TV, Humane Ai Pin vs. Spatial Photos/Videos
Hello everyone. Welcome to a new week. We do have a few CY3Q23 earnings reports to go over. However, today’s update will take a spin through Vision Pro land.
Apple Demos More Vision Pro Spatial Videos
Over at Daring Fireball, here’s John Gruber:
“Yesterday Apple released developer beta 2 of iOS 17.2, the first version of iOS to include support for capturing spatial video with iPhone 15 Pro models. Today came the public beta, enabling the same feature. Apple invited me to New York yesterday, not merely to preview capturing spatial video using an iPhone, but to experience watching those spatial videos using a Vision Pro.
The experience was, like my first Vision Pro demo back at WWDC in June, astonishing…
My demo yesterday was expressly limited to photography in general, and spatial video in particular, and so my demo was, per Apple’s request, limited to the Photos app in VisionOS. It was tempting, at times, to see where else I could go and what else I could do. But there was so much to see and do in Photos alone that my demo — about 30 minutes in total wearing Vision Pro — raced by.”
The full post made for an interesting read, especially if you want the details regarding how Apple is implementing spatial videos via iPhone 15 Pro. For example, the iPhone 15 Pro needs to be held horizontally “to put the two capturing lenses on the same plane. The iPhone uses the main (1×) and ultra wide (0.5×) lenses for capture when shooting spatial video, and in fact, Apple changed the arrangement of the three lenses on the iPhone 15 Pro in part to support this feature.”
When Apple announced this past September that the iPhone 15 Pro and 15 Pro Max would be able to capture spatial video, my assumption was that iPhone videos
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