MacDailyNews presents live notes from Apple’s Q424 conference call

MacDailyNews presents live notes from Apple’s Q424 Conference Call with analysts starting at 2pm PT / 5pm ET today, October 31, 2024.
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Apple’s live conference call webcast will begin at 2pm PT / 5pm ET here.
Apple today posted an all-time fourth quarter revenue record of $94.9 billion, up 6% year over year, and quarterly diluted earnings per share of $0.97. Diluted earnings per share was $1.64, up 12% year over year when excluding the one-time charge recognized during the fourth quarter of 2024 related to the impact of the reversal of the European General Court’s State Aid decision.
For the quarter, analysts’ consensus estimates (per LSEG) called for Apple to report revenue of $94.93 billion and diluted EPS of $1.60, both of which Apple beat.
Live notes in reverse chronological order:
• Thank you, Luca and all the best in your new role!
• End of conference call.
• We look after the business first and then if we have excess cash we return it to the shareholders
• Luca: OpEx has gone up over the years and gross margin expansion; we think about all of the areas where we can deploy cash
• Q: Net neutral cash position goal?
• For us, we’re more focused on being best vs. being the most (quality over quantity)
• Cook: We have lots of opportunity and we’ll continue to invest in Services and adding new features
• Q: Components of Apple One bundle; which are strong and which are weaker?
• Cook: I’ll not speculate andsave that for another day
• Q: DOJ impact on Google payments for Safari default search engine?
• Cook: It’s tough to answer because we’ve been constrained on iPhone 16 Pro supplies, so we’ll have to wait to see
• Q: iPhone mix?
• Cook: AI is on iPhone, iPad, and Mac; we have release a lot of AI APIs and developers will take advantage of that and what that does to services, I’ll not forecast, but, for the ecosystem, it will be great for the users
• Q: Could Apple Intelligence benefit Services revenue in the future?
• Luca: We have seen increase due to AI and, do to reallocations, you may not see that in the total R&D figure
• Q: Apple R&D?
• Cook: Won’t speculate.
• Q: Apple prepared for potential tarrifs that may come with U.S. presidential election results?
• Cook: We are moving as fast as possible with Apple Intelligence when ensuring quality
• Cook: Localized English comes next, then we will add more languages in April and then more as we step thru the year
• Cook: We started with U.S. English
• Q: Staggered rollout of AI?
• Cook: We believe Apple Intelligence is an impetus for product upgrades
• Cook: It’s clearly a different type of rollout than we would normally do; it will roll out over time; we are executing well
• Q: Will Apple Intelligence affect traditional demand cadence?
• Luca: We are not providing that color; we are very early in the cycle and the AI rollout happens over time and staggered in geographies
• Q: Could product revenue be down during quarter? If so, which product line(s)?
• Luca: Our active installed base of devices reached a new all-time high across all products and all geographic segments
• Over 50% new to Mac and iPad in China; 75% new to Apple Watch in China
• Cook: In China our installed base of active devices reached an all-time high
• Cook: There was a sequential improvement in foreign exchange; it’s been a headwind that we’ve been reporting for a period of time
• Cook: We were relatively flat YoY in mainland China
• Q: Growth rates in geographic areas? iPhone growth in China?
• Subscriptions continue to grow strong double digits
• Recurring in nature is growing faster than the transactional piece
• Luca: We are very, very happy to be at a run rate of $100 billion; we have a very diversified portfolio
• Q: Services rapid growth?
• Cook: I tune out the noise; if not, it would be deafening
• Cook: This was an exciting week for Macintosh; we have the strongest lineup we’ve ever had going into the holiday season
• Cook: The AirPods Pro 2 as hearing aids is a big impact
• Cook: Apple Intelligence is changing my daily life
• Cook: I could not be more excited about AI and the rollout.
• Q: Why low to mid single digit reveneue growth overall?
• Apple Intelligence will roll out over time
• Luca: We are not providing that level of color today
• Q: In fiscal Q125 (holiday Q424) how do you think of iPhone in China?
• Apple is very happy with its strong gross margins
• Luca: gross margins are a factor of many variables. On commodities, both for Q424 and Q125, most commodities will move down in price except for RAM and DRAm which we expect to increase
• Q: Commodity prices impact on gross margins?
• Cook: This year we did it quickly in iPhone 16/Plus; iPhone 16 Pro/Max were supply constrained in October; Apple hopes to get into balance this month
• Cook: We clearly had cases during COVID where there were disruptions; in a more regular environment our desire is to get into supply/demand balance ASAP
• Cook: Apple believes that Apple Intelligence will be a compelling feature for product sales
• Q: iPhone 16 demand vs. past years?
• Luca: AI is a hybrid model for Apple; a mix of homegrown and third-party providers; we are making all of the capacity need for Apple Intelligence features as they come online
• Q: CapEx outlook?
• In 2025, more Apple Intelligence languages will roll out in April and more features as well
• More Apple Intelligence features are coming in the future; it will be quite a software quarter
• Cook: The iOS 18.1 adoption is twice as fast as iOS 17.1, so there seems to be excitement for Apple Intelligence
• Cook: We’re getting positive feedback
• Cook: First set of Apple Intelligence feature in U.S English released this week for iPhone, iPad and Mac
• Q: Apple Intelligence contribution to iPhone performance?
• Apple’s board of directors has declared a cash dividend of $0.25 per share of the Company’s common stock. The dividend is payable on November 14, 2024 to shareholders of record as of the close of business on November 11, 2024.
• Apple expects: 46-47% gross margin
• Apple expects: Revenue to grow low to mid single digits YoY; Service to grow double digits
• Apple has $157 billion cash. otla debt of 107 b net cash $50 billion during quarter
• Apple products continue to grow in the enterprise
• Apple Card is now 5 years old
• Paid subscriptions are well over 1 billion – over double the number of just 4 years ago
• 96% customer satisfaction in America for Apple Watch
• Apple Watch installed base reached a new all-time high
• iPad satisfaction is 97% in America
• iPad installed base reached another all-time high
• 95% customer satisfaction for Mac in America
• Customers love the performance of Apple Silicon on Mac; now with M4 chips!
• 98% iPhone satisfaction rate in America
• iPhone active installed base grew to a new all-time high
• Quarterly diluted earnings per share of $0.97. Diluted earnings per share was $1.64,1 up 12 percent year over year when excluding the one-time charge recognized during the fourth quarter of 2024 related to the impact of the reversal of the European General Court’s State Aid decision
• Our record business performance during the September quarter drove nearly $27 billion in operating cash flow, allowing us to return over $29 billion to our shareholders
• Apple’s active installed base of devices reached a new all-time high across all products and all geographic segments.
• $25 billion services revenue during Q424
• $70 billion products revenue during Q424
• Apple reported a new September quarter revenue record of $94.9 billion, up 6 percent from a year ago
• Luca: Serving as Apple CFO has been a real privilege
• Cook lauds Luca Maestri – a truly exceptional CFO
• Cook: We have the best lineup of products ever as we close out the calendar year
• AAPL After hours: $224.10, -$1.81, (-0.80%) @ 5:12 PM EDT
• Apple opened two new Apple retail stores during the quarter
• This month Apple marked 10 years of Apple Pay
• Cook promotes Apple TV+ series, movies, MLS Season Pass, etc.
• Services revenue: $24.930 billion (vs. $22.314 billion YoY)
• Cook talks up Apple Vision Pro and visionOS apps and spatial film features
• Cook touts Apple Watch Series 10, watchOS 11, AirPods 4 and AirPods Pro 2 hearing aid features
• Wearables, Home and Accessories revenue: $9.042 billion (vs. $9.322 billion YoY)
• Cook lauds iPad lineup and the new iPad mini
• iPad revenue: $6.950 billion (vs. 6.443 billion YoY)
• Cook promotes new Macs with M4 chips
• Mac revenue: $7.744 billion (vs. $7.614 billion YoY)
• Cook touts iPhone 16 family
• iPhone revenue: $46.222 billion (vs. $43.805 billion YoY)
• Cook touts Apple Intelligence and future feature releases
• And this week, we released our first set of features for Apple Intelligence, which sets a new standard for privacy in AI and supercharges our lineup heading into the holiday season.
• During the quarter, we were excited to announce our best products yet, with the all-new iPhone 16 lineup, Apple Watch Series 10, AirPods 4, and remarkable features for hearing health and sleep apnea detection.
• Cook: Today Apple is reporting a new September quarter revenue record of $94.9 billion, up 6 percent from a year ago
• Apple CEO Tim Cook and CFO Luca Maestri present along with Kevan Parekh, Apple’s Vice President of Financial Planning and Analysis, who will become CFO after Luca transitions from his role on January 1, 2025.
• Conference call begins
• AAPL After hours: $222.57, -$3.34, (-1.48%) @ 4:56 PM EDT
• AAPL After hours: $223.70, -$2.21, (-0.98%) @ 4:50 PM EDT
• AAPL After hours: $223.11, -$2.80, (-1.24%) @ 4:44 PM EDT
• Apple CFO Luca Maestri in statement: Apple’s “active installed base of devices reached a new all-time high across all products and all geographic segments.”
• Sales of the iPhone 15 were “stronger than 14 in the year-ago quarter, and 16 was stronger than 15,” Apple CEO Tim Cook told CNBC’s Steve Kovach.
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