Apple recently reported its Q3 2024 earnings, exceeding expectations on key financial metrics. The company’s revenue reached $94.93 billion, surpassing the forecast of $94.58 billion, while earnings per share were $1.64, above the expected $1.60. However, a one-time tax payment in Europe impacted net profit, resulting in a 2% drop in Apple’s shares. Strong interest in the new iPhone 16 line also marked this quarter’s performance, underscoring Apple’s ongoing product demand.
iPhone Drives Revenue Growth
iPhone sales continue to be pivotal to Apple’s revenue, which grew by 6% year-over-year to $46.22 billion—higher than analysts’ estimates of $45.47 billion. This increase is largely attributed to demand for the iPhone 16, launched on September 20. Apple CEO Tim Cook highlighted that iPhone 15 sales in the last quarter outpaced iPhone 14’s performance in the same period last year, and demand for iPhone 16 appears even stronger. Overall, iPhone sales represent nearly 49% of Apple’s total revenue, reinforcing the product’s key role in Apple’s portfolio.
Tim Cook also emphasized the growing importance of AI features within Apple’s ecosystem. The recent iOS 18.1 update brought Apple Intelligence AI tools to Mac and iPhone devices, and user adoption has accelerated, with twice as many users upgrading compared to the previous year. Cook noted positive feedback from both users and developers on these advancements, further integrating AI into the Apple experience.
Mixed Results in Other Segments
Apple forecasts modest revenue growth in Q4, expecting service revenue growth to remain at last year’s 12.87%. During Q3, net income reached $14.73 billion, or 97 cents per share, down from $22.96 billion, or $1.47 per share, in the prior year. Adjusted for the one-time tax expense, earnings per share saw a 12% annual increase. The services segment, which includes iCloud, Google search advertising revenue, and AppleCare, reached $24.97 billion, a 12% year-over-year increase but slightly under the projected $25.28 billion.
Among hardware, iPad sales saw the strongest growth, rising by 8% to $6.95 billion, driven in part by pent-up demand following new iPad releases in May. Mac revenue increased by 2% to $7.74 billion, boosted by the popular MacBook Air models with new chipsets. In contrast, “Other Products,” covering AirPods, HomePods, and Apple Watch, saw a 3% decline in revenue to $9.04 billion, falling short of expectations. Despite updates to Apple Watch and AirPods alongside the new iPhone lineup, these products saw lower-than-expected sales, adds NIXsolutions.
Revenue from mainland China, Taiwan, and Hong Kong dipped by 1% to $15.03 billion, reflecting challenges from rising local competition, especially from Huawei, in this strategically vital market. Apple remains focused on reinforcing its position here, but increasing competition signals potential hurdles.
Strategic Investments and Future Outlook
In Q3, Apple allocated $29 billion to share buybacks and dividends, part of its strategy to enhance shareholder value. Its financial reserves now stand at $156.65 billion, giving it flexibility amid growing competition and economic uncertainties. Moving forward, Apple plans to focus on advancements in AI and services. However, with intensifying competition in Asia, Apple may need to explore new strategies and innovations to retain its market position in an evolving tech landscape.
We’ll keep you updated on Apple’s strategic developments and how they adapt to emerging challenges across global markets.