My 2Q24 Apple Estimates, Expectations for Apple's 3Q24 Guidance, My Updated Apple Earnings Model


Happy Wednesday. One quick thing before we get to the second half of my earnings preview.

Financial Models Add-on. As a reminder, members now have access to my iPhone, iPad, and Apple Watch installed base models with the Financial Models add-on. These models make it possible to estimate device unit sales, the number of devices in the wild over time, product upgrade cycle length, percent of device sales going to new users versus existing users by year and more. For those of you who purchased the Financial Models add-on, all installed base models have been updated ahead of earnings. You can access the models at any time by logging into your Above Avalon membership account here and going to the Digital Package tab (shown below). My earnings model has also been uploaded so that it will always be available in the same tab for easy access.

 
 

The Financial Models add-on is designed to be a perfect companion for AAPL investors wanting to take a deep dive into Apple’s financials as well as Apple competitors and suppliers needing to better understand the marketplace dynamic. For pricing information and to purchase the add-on, check out this page.


My 2Q24 Apple Estimates 

Here are my granular estimates for Apple’s 2Q24:

  • Revenue: $91.9B (consensus: $90.0B)

  • Overall gross margin: 46.9% (guidance: 46% to 47%)

  • Gross margin (HW): 37.4%

  • Gross margin (Services): 74.6%

  • EPS: $1.59 (consensus: $1.50)

  • iPhone revenue:

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Apple Announces May Product Event, Apple Vision Pro Sales Noise, A Few Suggestions for Apple

Hello everyone. We will begin today’s update with some words on Apple’s upcoming product event. The discussion will then turn to Apple Vision Pro.

Apple Announces May Product Event

Yesterday, Apple sent out invites to a product event taking place virtually on May 7th.

 
 

Based on the event invite artwork, it’s safe to say we are going to see a new Apple Pencil and some iPad updates. Rumors point to Apple updating the iPad Pro and iPad Air segments of the iPad line.

Tim Cook’s tweet about the event hints at an Apple Pencil update.

 
 


Last October, Apple unveiled an Apple Pencil with a USB-C charging port which had fewer features than the Apple Pencil (2nd gen). Apple didn’t call the new pencil Apple Pencil (3rd gen). Instead, it’s Apple Pencil (USB-C). This would suggest that we may see a true 3rd gen Apple Pencil next month. For much more on Apple Pencil strategy, check out the October 17th update where we take a deep dive into all things Apple Pencil.

Taking a step back, expectations for this

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Choose either a monthly or annual 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. Contact me with any questions. 

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An audio version of the newsletter 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-ons.

Apple Acquires AR Headset Maker Mira, Vision Pro Supply Constraints, Apple and Disney M&A Chatter Grows

Hello everyone. We will talk about three Apple-related news items that came out in the past week.

Apple Acquires AR Headset Maker Mira

Here's The Verge:

“Apple has acquired Mira, a Los Angeles-based AR startup that makes headsets for other companies and the US military, according to a posts from the CEO’s private Instagram account yesterday seen by The Verge and a person familiar with the matter. Apple confirmed the acquisition.

The news comes just one day after Apple unveiled the Vision Pro, a $3,499 mixed reality headset that the company has billed as a new ‘spatial’ computing platform. It’s unclear how much Apple paid for Mira, which raised about $17 million in funding to date. Jony Ive, Apple’s former design chief, was an advisor to the startup at one point, according to two former employees who requested anonymity to speak without the company’s permission.

Apple sent The Verge its typical statement it gives when it buys a company: ‘Apple buys smaller technology companies from time to time, and we generally do not discuss our purpose or plans.’”

This has all the makings of being primarily a talent acquisition. It is certainly possible that Apple also got its hands on some patents. However, Mira’s focus on being a design-led, scrappy startup piecing together smartphone components and $15 fish bowls to come up with an AR headset with a visor-like shield speaks more to ingenuity and ideas being their most valuable asset.

Mira’s CEO and co-founder, Ben Taft, is all-in on AR while showing heavy skepticism of the metaverse/VR.

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