Apple Expects 'Deceleration' in Holiday Quarter Revenue from Sept. Quarter
Supplies of iPhone 14 Pro and 14 Pro Max, which launched in September, are “going to be constrained for a little while,” said CEO Tim Cook on the company’s Thursday Q4 FY ’22 earnings call. The company is “working very hard to try to remedy that.” Silicon-related supply constraints “were not significant” for Apple in Q3, but logistics costs haven’t returned to pre-pandemic levels, and certain semiconductors are adding inflationary pressure, Cook said.
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Apple Chief Financial Officer Luca Maestri didn’t give a Q1 ‘FY ’23 revenue outlook on the company’s Thursday call due to “continued uncertainty,” but the company expects year-on-year revenue in the December quarter to “decelerate” from the September quarter. Gross margin is projected at 42.5%-43.5% vs. 43.8% in Q1 FY ’22 and 42.3% last quarter.
Maestri's “insights” for a revenue slowdown in Q4 include an expected 10 percentage point impact from foreign exchange pressure. Services are expected to grow, but they likely will be affected by the macroeconomic environment in foreign exchange, digital advertising and gaming, he said.
Mac sales hit an all-time high in the September quarter on the launch of the MacBook Air and MacBook Pro, Cook said. Apple lost factory output for the Mac for a “significant portion” of the June quarter, and it filled the backlog in the September quarter, Cook said. For fiscal Q1 ending in December, Mac has a “very challenging compare” vs. the holiday quarter last year and is expected to “decline substantially,” Maestri said.
On Apple’s announced price increases last week (see 2210260047) for Apple Music, Apple TV+ and the Apple One bundle, Cook noted the cost of licensing music increased “so we are paying more for music.” On Apple TV+, the service had “only a few shows” when it launched three years ago at $4.99 a month. “We were at the beginning,” Cook said, saying the company is focused on originals and “priced it quite low.” The streaming service has more content now, and the company raised the price “to represent the value of the service" at $6.99 monthly, Cook said.
IPhone sales advanced 10% to $42.6 billion in the September quarter, and wearables grew 10% year on year to $9.7 billion. The iPad was the only category not showing growth, slipping from $8.3 billion to $7.2 billion due to timing: Last year’s iPad Pro began selling in September vs. October this year, Cook said.
Revenue in Apple’s September quarter ended Sept. 24 was $90.1 billion, up 8% despite 600 basis points of negative foreign exchange rate impact, said Maestri. Shares closed 7.6% higher Friday at $155.74.