Apple’s Installed Base Growth, Apple's Paid Subscriptions Growth, A More Effective Apple Growth Narrative for Wall Street

Last Friday’s update kicked off our Apple 1Q24 earnings review. When it comes to Apple’s financial story, trends are tracking close to Neil’s expectations. For today, we will take a closer look at one takeaway from earnings: Apple’s ecosystem growth.

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Initial Impression From Apple’s 4Q23 Earnings, Key Numbers From Apple 4Q23, About Apple’s 1Q24 Guidance

Hello everyone. Welcome to a special Friday edition of the Daily Update. We will begin our Apple’s earnings review. The discussion will be purposely kept broad for now. Next week, we will dive into some of the nitty gritty. Let’s jump right in.

Initial Impression From Apple’s 4Q23 Earnings

Apple’s financial performance is trending very close to our existing assumptions. Underlying demand for Apple hardware appears to be down low single digits driven by slowing upgrading trends, especially with the iPad, Mac, and AirPods. Mostly offsetting HW weakness, Services revenue momentum continues to build with growth re-accelerating despite Apple working with a much larger base.

While Apple’s 1Q24 guidance may have disappointed some, when excluding one-time factors including calendar year differences and COVID supply issues, Apple guided to roughly flat revenue growth. Meanwhile, Apple’s 45% to 46% gross margin guidance was stellar. The Apple story remains firmly intact heading into 2024 and Apple’s most important product launch in nearly a decade with Vision Pro.

Key Numbers From Apple 4Q23

Here are Apple’s reported 4Q23 results versus my expectations with brief commentary for each item.

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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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Apple 1Q23: By the Numbers, The FX Factor, My Apple Earnings Theory (Daily Update)

Hello everyone. Today's special Friday edition of the Daily Update will be focused on reviewing Apple's earnings. The idea is to keep things broad and look at the big picture. We also examine how Apple’s results compared to Neil’s expectations. The earnings discussion will continue next week. Let's jump right in.

Apple 1Q23: By the Numbers

We knew 1Q23 was going to be a noisy quarter for Apple. Along those lines, we didn’t get too many surprises. Results were all over the place. iPhone results missed my estimate by $5.0B while iPad beat by $1.5B.

Heading into earnings, the questions were found with Apple’s 2Q23 guidance. This is where management commentary

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