MacDailyNews presents live notes from Apple’s Q123 conference call

MacDailyNews presents live notes from Apple’s Q123 Conference Call with analysts starting at 2pm PT / 5pm ET today, February 2, 2023.

MacDailyNews presents live notes from Apple’s Q123 conference call

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Apple’s live conference call webcast will begin at 2pm PT / 5pm ET here.

Apple today posted quarterly revenue record of $117.2 billion (vs. $123.9 billion YOY), down 5 percent year over year, and quarterly earnings per diluted share of $1.88 (vs. $2.10 YOY).

For the quarter, analysts’ consensus estimates (per Refinitiv) called for Apple to report EPS of $1.94 per share on revenue of 121.19 billion.

Live notes:

• AAPL after hours: $148.53,-$2.29 (-1.52%) @ 06:08PM EST

• End of conference call

• Over the long run, Apple has a big market and low share, so the company is well-positioned in the personal computer market
• Cook: Some softening in product (Mac and wearables), the least in iPhone, and some softening in services (despite upside surprise)
• Softening macro affecting what?

• Apple is seeing sustained growth in Services
• Luca: Primarily the increased level of engagement in Apple Pay, Apple Music (very strong), etc.
• Q: Why were Services a surprise to the upside?

• Cook: “I am very bullish on India.”
• Cook: Apple did fairly wel thru COVID in India; even more bullish now. Apple is investing in India
• Q: Apple now entering a situation of even more opportunity in India post-COVID, new networks, etc.?

• Apple made it easier for customers to get engaged and added more services
• Paid accounts tend to grow over time
• Luca: Over the last 7 years, Apple has doubled the installed base
• Installed base vs. Services growth

• iPhone has become so integral into people’s lives; people are willing to stretch to get the best they can afford
• Apple is happy to now be able to ship Pro iPhones to the demand
• The product innovations speak for themselves
• Cook: iPhone 14 Pro and iPhone 14 Pro Max have been extremely strong
• Q: iPhone Pro vs. non-Pro models vs. prior years?

• Cook: We are all-in on being TSMC’s largest customer in Arizona
• Q: Elasticity of demand relative to small price increases in products?

• Apple grew iPhone market share around the world despite supply chain challenges
• Apple is taking what they learned in Chia years ago and using that in India
• India is a hugely exciting market for Apple; the company is focused on India
• Cook: Apple set quarterly record in India in Q123 despite headwinds
• Q: Emerging markets? India?

• Apple continues to launch new services over time which contributes to the growth
• Apple Pay started in the U.S. It is now in over 70 markets; keeps growing
• Level of engagement continues to grow; both transacting and paid accounts grew double digits in the quarter
• Luca: Installed base is the engine for Services growth; it is growing very nicely
• Q: Services growth?

• Cook: Difficult to estimate
• Q: What have consumers done when faced with iPhone supply constraints in the past?

• AI will continue to affect every product and service Apple has
• Cook: AI is a major focus of Apple
• Q: AI?

• Luca: Component costs, 50 basis points of foreign exchange headwinds in much less than 250 basis points YoY
• Q: Why such strong march quarter gross margin guidance?

• Cook: In Q123, Apple estimates iPhone would have grown during the quarter without the supply shortages due
• Cook: Difficult to estimate iPhone demand destroyed vs. deferred
• Cook: iPhone channel inventories below target range as company exited Q123
• Q: iPhone channel inventories? iPhone demand destroyed or deferred?

• Apple saw strong double digit growth in emerging markets (India, Brazil, for just two examples; bodes well for the future)
• Cook: Installed base in now over 2 billion active devices; up over 150 million YoY
• Q: 2 billion in active devices installed base? Can you break out iPhone?

• China opening started in December and Apple saw increased foot traffic in retail stores and demand
• Cook: Decline 7% YoY, but actually grew on a constant currency basis in China
• Q: China demand?

• Forign exchange is a negative of about 50 basis points sequentially
• Luca: Apple has historically had strong margins, this will continue in March
• Q: March margin guidance of 43.5-44.5%?

• Apple is currently at decent inventory levels across all products
• The last 3 years have been a difficult time with COVID, silicon shortages; Appel has overall had a resilient supply chain
• Supply chain is now at a point where Apple needs it to be; “The problem is behind us.”
• Cook: Supply was disrupted from early Nov. thru most of Dec.
• Q: Supply chain disruptions? Inventory levels?

• The dividend is payable on February 16, 2023 to shareholders of record as of the close of business on February 13, 2023
• Apple’s board of directors has declared a cash dividend of $0.23 per share of the company’s common stock

• Mac and iPad expected to decline double digits YoY due to challenging compares and macroeconomic headwinds
• Luca: “For iPhone, we expect our March quarter year-over-year revenue performance to accelerate relative to the December quarter year-over-year revenue performance.”
• Apple expects March quarter to be similar to December quarter

• Apple ended Q123 with $165 billion in cash and marketable securities
• $3.8 billion in dividends and 19 billion in buybacks during the quarter
• Returned over $25 billion to shareholders during the quarter

• Enterprise: Continued adoption of Apple’s services for business

• Growth is coming from every major product category and geographic segment
• Apple Pay set purchases record over the holiday season
• Paid subscriptions now exceed 935 million
• Services revenue: $20.766 billion

• Active installed base in Wearables, Home, and Accessories (especially Apple Watch) is at an all-time high and growing
• Wearables, Home, and Accessories revenue: $13.482 billion

• Active installed base in iPad is at an all-time high and growing
• iPad revenue: $9.396 billion

• Active installed base in Mac is at an all-time high and growing
• Mac revenue: $7.735 billion

• Active installed base in iPhone is at an all-time high and growing
• iPhone revenue: $65.775 billion

• AAPL after hours: $144.60, -$6.22 (-4.12%) @ 05:18PM EST

• 43% overall gross margin (37% products gross margin and 70.8% services gross margin)
• Apple returned over $25 billion to shareholders during the quarter while continuing to invest in our long-term growth plans
• Apple generated $34 billion in operating cash flow
• Apple faced a very difficult macroeconomic environment in Q123
• Apple grew total company revenue on a constant currency basis
• Faced significant iPhone 14 Pro and iPhone 14 Pro Max supply constraints in November and into December
• Luca: We faced very difficult currency headwinds

• Cook touts Apple’s charitable endeavors

• 100% recycled gold in the plating of multiple HomePod circuit boards
• Apple is committed to the environment
• Cook touts Apple privacy and security
• Apple celebrated 25 years of the Apple Online Store during Q123

• Cook touts Apple Fitness+ and Apple Business Connect
• Cook: Ted Lasso will return this spring
• Cook touts MLS Season Pass and Apple TV+

• Apple now has 935 million paid subscriptions
• Apple set a new all-time Services revenue record
• Cook: Apple now has more than 2 billion active devices in its growing installed base (doubled in the last 7 years)
• Cook touts Freeform app for iPhone, iPad, and Mac

• AAPL after hours: $144.99, -$5.83 (-3.87%) @ 05:08PM EST

• Cook touts new HomePod, Apple Watch Series 8, and Apple Watch Ultra
• Wearables down 8% YoY driven by foreign exchange headwinds and macroeconomic environment
• iPad revenue grew 30% due to favorable compare vs significant iPad supply constraints last year
• Cook touts the M2 and M2 Pro and the new Mac mini and MacBook Pro models
• Apple is confident of the Mac future
• Mac revenue was faced with a difficult compare due to M1 MacBook pro being announced last year
• iPhone down 8% YoY. On a constant currency basis, sales were flat YoY

• China’s COVID shutdowns impacted supply during the quarter
• Cook blames inflation, war in eastern Europe for macroeconomic malaise
• Apple grew YoY in terms of constant currency
• 800 basis points currency impact
• I’m proud of the way we have navigated the challenges of the past several years
• Cook: Good afternoon.

• Please note that comments made during this call may include forward-looking statements that are subject to risks and uncertainties, and that actual results may differ materially from these forward-looking statements.
• For more information on the factors that could influence results, please refer to Apple’s SEC filings.
• December quarter spanned 14 weeks. March quarter will span 13 weeks, as usual.
• Conference call begins

• AAPL after hours: $145.41, -$5.41 (-3.59%) @ 4:54PM EST

• Apple CEO Tim Cook said three factors impacted the results: A strong dollar, production issues in China affecting the iPhone 14 Pro and iPhone 14 Pro Max, and the overall macroeconomic environment. – CNBC

• AAPL after hours; $145.26, -$5.56 (-3.69%) @ 4:41PM EST


  1. What’s the last Apple product you were excited about? For me it was the Apple Watch, 8 years ago… I don’t expect to be wowed like that every year but the software and services are stale, they leave obvious things out intentionally to include in a year or two (iPad OS is infamous for trailing iOS by 1-2 years). I love my M1 MBP but that’s basically what an MBP should have been 3-4 years ago, without the unnecessary butterfly keyboard fiasco and touchbar/usb-c only interlude, no blaming Intel for that. You can’t expect the goose to lay golden iPhone sales forever, the new design-by-committee approach doesn’t bode well either.

  2. AAPL is, seemingly, more focused on media productions for “innovation.” If one was just to use an anecdotal barometer per what articles are posted on MDN, Apple’s media interests seems the most vigorous.

    With that said, the latest Mac mini is a ground breaker in a lot of ways, but the major: price/value. I do not recall a product with such a price/value surprise. It’s not really a innovation…although the “M-series” is an industry groundbreaker for consumers.

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