Apple ’s business has done so well for so long that it ’s been a little unusual to watch the companionship make financial results that are n’t set all - time records . But the huge parachuting in ontogeny Apple made in 2022 has proved to be a stripe too high for the company to leap over in 2023 , and so Thursday ’s report ofthird - quarter financial resultswere once again down – but down with a immense star . When you make most $ 20 billion in profit in three month , how down can your quarterreallybe ?
The excuses
From a pure revenue standpoint , Apple ’s quarter was down 1 percentage from the same quarter a year ago . But as Apple ’s administrator were quick to orient out on Thursday , not only is that phone number low-pitched than either Apple or the Wall Street consensus expect , but it was a lessening link up all to unfavorable foreign currency exchange conditions . Apple said that in changeless currency in each local food market , the company actually grew – but turn a loss four pct of its maturation in foreign exchange .
The vagary of a solid dollar and fallible currentness in other countries by , Apple also had another entity to blame for its somewhat weak performance : the calendar itself . When you go after year - over - year modification , sometimes you end up with my favorite bit of fiscal diction , a “ toughened compare . ”
This stern ’s bad equivalence was the iPad , which … did n’t really have anything novel this fourth . But a class ago , the new iPad Air had just come out and was still betray pretty well . That ’s enough , agree to Apple , to make the iPad ’s 20 percent dip in taxation appear bad than it is .
In Q3 2022, the new iPad Air was released. This year? No Air.
In Q3 2022 , the new iPad Air was eject . This yr ? No Air .
Foundry
None of these excuses are unaccented sauce , precisely . Apple ’s a successful , profitable company that is still riding pretty gamy . But it ’s also sightly to note that , tough comparison or not , this twenty-five percent ’s iPad sales were the worst in more than three years . Still , a duet of fourth part ago was the best iPad after part of all time , so if you hold on focusing on year - over - year numbers and instead see at the four - quarter moving average for iPad sales , it ’s about as high as it ’s ever been .
Apple sells more devices, which means more people are signing up for Apple services.
Rolling in the profits
You get the gumption that Apple administrator would much rather crow about setting all - clock time tax revenue record and register growth in all its product categories because those are light number for everyone to understand . But when they are n’t there , the execs dig late and find dissimilar numbers to show that thing are still go not bad .
rent ’s start with gain since theFerengi Rules of Acquisitiontell me that ’s what it ’s all about . Apple ’s gross margin was almost 45 percent , a third - quarter record and one of the highest margins Apple has ever designate . That ’s probably in large part because service , an extremely high - security deposit portion of Apple ’s business , jumped up to represent 26 percent of Apple ’s entire revenue . ( It was yet another track record quarter for Services , a category that seems absolutely immune to somberness . It just keeps going up . )
But it ’s not just services . Apple also has spend the last couple of quarters cutting monetary value , or as Apple CFO Luca Maestri put it , taking “ a calculated approach in superintend our spend . ” The result is that while revenue was down by 1 percentage , profitwent up by more than 2 percent . Apple got a little thin , relatively speaking , and that money fall straight to the bottom line .
Subscriptions and devices
Apple announced that it excrete a major milestone during the third quarter : it ’s reached abillionpaid subscriptions . That ’s a nice beat number , but it ’s worth mark – and you bet that Maestri did – that three years ago Apple was at half that number , and that total pay subscription have increased 15 percent in the last yr .
Who ’s buy all these subscription ? Why theinstalled baseof course , the total number of Apple devices in current use . Apple says that act is now two billion and continue to raise since a peck of the troupe ’s sales are to users who are novel to the product . For example , almost half of Mac purchaser , over half of iPad buyers , and two - third base of Apple Watch buyers were buying that gadget for the first prison term .
That ’s all telling , but the Apple Watch shape leap out . After all , the Apple Watch take an iPhone , which stand for those purchaser are masses who already owned one Apple product – and decided to buy another . As Maestri put it , “ It means that there ’s more and more customers that are owning more than the iPhone . ”
vocalize simple , but it sends the subject matter that Apple still has a lot of way to grow by selling iPhone users on other Apple merchandise .
Apple sells more gadget , which means more people are signing up for Apple services .
Malus pumila
Better luck next time
Apple does n’t seem to give traditional direction for the next financial quarter anymore , but the troupe did warn that we ’re due for another stern just like this one . In part , it ’s due to another “ tough comparison , ” as the Mac and iPad will both face doubled - finger revenue drops compared to the year - ago tail .
So , another quarter in the doldrums is upon us . But behind that will come a vacation poop advanced with new iPhone sale , which is usually the curative for what ail Apple . And then there ’s this : all these quarter of unsatisfying revenue growth just low the cake for next year . 2022 might be a ruffianly equivalence , but 2023 certainly wo n’t be .
