MacDailyNews presents live notes from Apple’s Q422 conference call

MacDailyNews presents live notes from Apple’s Q422 Conference Call with analysts starting at 5pm EDT / 2pm PDT today, October 27, 2022.

Apple today will provide live audio streaming of its Q422 Results Conference Call. This stream is best experienced on an iPhone 7 or later, iPad (5th generation or later), or iPod touch (7th generation) using Safari on iOS 12 or later; or a Mac using Safari on macOS Mojave 10.14 or later. Streaming to your TV requires an AirPlay 2–capable device, or via AirPlay to an Apple TV (2nd generation or later) with the latest Apple TV software or tvOS. Other platforms may also be able to access the stream using recent versions of Chrome, Firefox, or Microsoft Edge (MSE, H.264, and AAC required).

Apple’s live conference call webcast will begin at 5pm EDT / 2pm PDT today here.

Apple today posted an all-time quarterly revenue record of $90.1 billion (vs. $83.360 billion billion YOY), up 8 percent year over year, and quarterly earnings per diluted share of $1.29 (vs. $1.24 YOY), up 4 percent YoY.

For the quarter, analysts’ consensus estimates (per Refinitiv) called for Apple to report EPS of $1.27 per share on revenue of $88.90 billion.

Live notes from Apple’s Q422 Conference Call in reverse chronological order:

• End of conference call.
• AAPL After hours: $145.89, +1.09 (+0.75%) @ 05:58PM EDT

• Cook: We avaerge about one per month in fiscal year 2022; we are constantly looking at acquisitions
• Q: Acquisitions?

• Luca: Apple expects to decelerate from September quarter’s 8% YoY growth rate in December quarter
• Q: December quarter growth>

• In spite of the strong dollar, Apple has nonetheless seen very strong performance in India, Indonesia, Mexico, Vietnam, etc.
• Apple hedges currencies to try to achieve margin stability
• Luca: Foreign exchange (strong dollar) is a significant factor affecting Apple
• Certain silicon components have inflationary pressure as well
• Cook: Apple is focused on taking care of their employees; there is clearly wage inflation and logistics inflation
• Q: Inflation and labor issues?

• Cook: Our ad business is not large
• Cook: We focus on privacy first. Any ad business will preserve customer privacy
• Q: Digital advertising?

• Cook: Ended Sept. quarter, Apple exited below target range on iPhone; similar to the past
• Q: Channel inventory for iPhone this year vs. previous years?

• The engine for services growth is there and foreign exchange headwinds are a temporary thing.
• Paid accounts in increasing; More than 900 million paid subs and growing very quickly
• Apple very happy in continued growth of installed base
• Luca: Foreign exchange can affect Services and Products differently, depending on geography
• Q: Services impacted more than products by foreign exchange?

• Cook: New Macs, backorders, and channel fill were all key contributors to record Mac sales this quarter
• Q: Mac channel fill vs. backorders?

• Foreign exchange and Russia closure were headwinds in Wearables
• Cook: AirPods Pro launch contributed to Wearables results
• Cook: Wearables grew 10%; Apple Watch was a contributor; especially the new models (SE, Series 8, Ultra); Ultra remains supply constrained
• Q: What drove the strong wearables result this quarter?

• Apple sees nothing unusual in CapEx over the next 12 months
• Luca: CapEx has been fairly stable over time; 3 major buckets: manufacturing tools, data center costs, office facilities worldwide
• Q: CapEx?

• Cook: Music licensing costs increased. Apple TV+ was priced initially based on the library build out; more content now makes it more valuable
• Q: Services; Apple Music, Apple TV+, Apple One price increases?

• AAPL After hours: $142.88 -1.93 (-1.33%) @ 05:38PM EDT

• iPad products launched later than last year (October 2022 vs. September 2021) which is why iPad sales contracted
• Cook: Mac had best quarter in history, helped by M2 MacBook Air and had a backlog of demand due to supply constraints in prior quarter
• Q: Mac and iPad sales divergence?

• We expect Q123 (calendar 4th quarter) margin to be affected by the strong dollar, but Apple sees commodities performing well for the company, helping to offset headwinds
• Luca: We just set a September quarter record despite currency headwinds (strong dollar)
• Q: Gross margin hit due to 10 basis points of currency hit?

• Cook: We feel very good about how we performed in Q4
• Apple is constrained on iPhone 14 Pro and iPhone 14 Pro Max which makes the mix unknown
• Cook: iPhone grew 10% in Q4, customer demand was strong and better than Apple expected
• Q: iPhone demand?

• AAPL After hours: $140.64, -4.16 (-2.87%) @ 05:29PM EDT

• Dividend is payable on November 10, 2022 to shareholders of record as of the close of business on November 7, 202
• Apple’s board of directors has declared a cash dividend of $0.23 per share of the company’s common stock

• Apple continues to work to become net cash neutral over time
• $120 billion total debt
• Appel ended quarter with $169 billion in cash and marketable securities

• AAPL After hours: $148.11, +3.31 (+2.29%) @ 05:25PM EDT

• Apple set new records in the enterprise for iPhone, iPad, and Mac
• Apple grew 8% over the past 4 quarters; dilutes EPS grew 9%
• Apple continues to invest strongly in Services business
• More than 900 million pad subs, up 155 million over the last 12 months
• Continued install base growth bodes well for Apple Services

• AAPL After hours: $145.77, +0.97 (+0.67%) @ 05:22PM EDT

• 2/3rds of Apple Watch buyers were new to the product
• Nearly half of iPad buyers were new to iPad
• iPad install base reached record high
• Nearly half of Mac buyers were new to Mac
• Mac revenue up 25% year over year
• Grew Android to iPhone switchers (upgraders) double digits
• India set new all-time iPhone revenue record
• Significant foreign exchange headwinds
• All-time record revenue records for cloud services
• Extremely strong customer satisfaction and loyalty
• Quarterly earnings per diluted share of $1.29, up 4 percent year over year
• Quarterly record revenue of $90.1 billion, up 8 percent year over year
• Apple CFO Luca Maestri: We are ver pleased to report quarterly record results

• Cook promotes Apple’s dedication to environmental issues
• Cook touts Apple’s support of code academies across America
• Apple Retail Stores are ready for the holiday season
• Apple Card ranked higher for mid-sized credit cards by JD Power
• Apple Fitness+ now available to iPhone users, even those without an Apple Watch
• Apple TV 4K hits stores next week
• Cook: Apple TV+ productions continue to earn accolades

• AAPL After hours: $142.55, -2.25 (-1.55%) @ 05:10PM EDT

• Cook talks up Apple Watch Ultra, AirPods Pro 2, Apple Music, and more
• 10th gen. iPad and M2 iPad Pros are not available in stores
• Cook lauds iPhone 14 family and iPhone 14 Pro models
• Cook touts Apple innovation and teamwork for yearly revenue record of $394 billion
• Silicon-related supply constraints were not significant during the quarter
• Record number of Android to iPhone switchers (upgraders)
• More than 900 million paid subscriptions
• Cook: Apple set an all time quarterly record revenue for Mac.

Quarterly net sales by category:

• iPhone: $42.626 billion (vs. $38.868 billion YoY)
• Services: $19.188 billion (vs. $18.277 billion YoY)
• Mac: $11.508 billion (vs. $9.178 billion YoY)
• Wearables, Home and Accessories: $9.650 billion (vs. $8.785 billion YoY)
• iPad: $7.174 billion (vs. $8.252 billion YoY)

Annual net sales by category:

• iPhone: $205.489 billion (vs. $191.973 in 2021)
• Services: $78.129 billion (vs. $68.425 billion in 2021)
• Mac: $40.177 billion (vs. $35.190 billion in 2021)
• Wearables, Home and Accessories: $41.241 billion (vs. 38.367 billion in 2021)
• iPad: $29.292 billion (vs. $31.862 billion in 2021)

• This December quarter will end on December 31, 2022 and include an extra week (14 weeks) vs. the Q122 13-week quarter.
• Conference call begins.

• AAPL After hours: $144.50, -0.30 (-0.21%) @ 04:58PM EDT
• AAPL After hours: $144.00, -0.80 (-0.55%) @ 04:56PM EDT
• AAPL After hours: $142.91, -1.89 (-1.31%) @ 04:47PM EDT