A few days ago, Apple released the results for its 2023 fiscal second quarter (which ran from January 1, 2023, to April 1, 2023) and held a call with analysts to discuss the results. Unlike Apple's Q1 which contains all of the holiday sales, Apple's Q2 is usually not a particularly interesting quarter. This time last year, Apple set a new Q2 record of $97.3 billion. This year, earnings were $94.8 billion, down 3% from last year, but that was still better than what Apple said it had been anticipating and it was the second-highest Q2 ever for Apple. If you want to get all of the nitty gritty details, you can download the audio from the conference call from iTunes, or you can read a transcript of the call prepared by Jason Snell of Six Colors. Apple's official press release is here. If you want to see some great charts that make it easier to put the financial information in perspective, check out this post on Six Colors. Here are the items that stood out to me.
iPhone
- iPhone revenue for the quarter was $51.3 billion, a record for a fiscal second quarter.
- Apple CFO Luca Maestri said that the strong iPhone sales were in part because of "very strong performance in emerging markets, from South Asia and India to Latin America and the Middle East." Apple CEO Tim Cook said that another factor was folks who wanted to purchase an iPhone in the prior financial quarter but because of limited supply deferred their purchase to this most recent quarter.
- Cook also said that there are well over a billion iPhones in active use. He also said that if you add the other Apple devices that are in active use, including Macs and iPads, Apple has over two billions devices in active use.
iPad
- iPad revenue for the quarter was $6.7 billion, which was less than 2022 Q2 ($7.6 billion) and 2021 Q2 ($7.8 billion). But last year saw a boost because Apple introduced the iPad Air with an M1 chip, whereas there was no new iPad announced in 2023 Q2.
- Over half of the people who purchased a iPad during the quarter were purchasing their first iPad.
Other
- Although Apple does not reveal specific information about Apple Watch sales, Apple said that the entire category of Wearables, Home, and Accessories saw revenue of $8.8 billion, the same as last year. Apple also said that the number of people using an Apple Watch increased to a new high this past quarter with two-third of the people who purchased an Apple Watch in the past quarter getting their very first Apple Watch. That is certainly consistent with what I see; I now see lots of people wearing Apple Watches almost everywhere that I go.
- Apple services revenue rose to a record $20.9 billion. That accounts for the App Store, Apple Music, iCloud, Payment Services, Apple TV+, etc.
- Maestri said that Apple's mobile gaming revenue, which was elevated during "the COVID years," is now in a bit of a slowdown.
- Apple opened its first two stores in India: one in Mumbia, one in Delhi. Cook said that in India there "are a lot of people coming into the middle class, and I really feel that India is at a tipping point, and it’s great to be there. ... But what I do see in India is a lot of people entering the middle class. And I’m hopeful that we can convince some number of them to buy an iPhone. And we’ll see how that works out. But right now it’s working out well." As Jason Snell of Six Colors noted, this is similar to what Cook was saying about China ten years ago, although Cook emphasized that each country is different.
- When asked about what Apple thinks about the emergence of AI, Cook said: "I do think it’s very important to be deliberate and thoughtful in how you approach these things. And there’s a number of issues that need to be sorted, as is being talked about in a number of different places. But the potential is certainly very interesting. And we’ve obviously made enormous progress integrating AI and machine learning throughout our ecosystem, and we’ve weaved it into products and features for many years, as you probably know. You can see that in things like fall detection and crash detection and ECG. These things are not only great features, they’re saving people’s lives out there. And so it’s absolutely remarkable. And so we view AI as huge and we’ll continue weaving it in our products on a very thoughtful basis."
- Cook said that Apple views its banking services as similar to its fitness services because much like Apple wants to help people live a more healthy life, it wants people to have better financial health.
- When asked of corporate use of Apple devices, Cook said that the enterprise business is growing and added: "We have been focusing a lot on BYOD programs. And we’ve seen more and more companies that are leaning into those and giving employees the ability to select, which is placed to our benefit, I believe, because I think a lot of people want to use a Mac at work or an iPad at work ... but we’re certainly primarily a consumer company in terms of our revenues, obviously."
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