Apple Q3 2023 Earnings: Will a drop in iPhone sales affect Apple's share price?
Apple Q3 2023: Highlights
- Apple declared a cash dividend of $0.24 per share.
- Quarterly earnings per diluted share of $1.26, up 5% YoY.
- A 2.45% drop in iPhone sales, which account for nearly half of total revenues.
- All-time revenue record in Services during the June quarter, driven by over 1 billion paid subscriptions.
- Generated strong operating cash flow of $26 billion, and returned over $24 billion to shareholders.
Apple’s share price dropped 2% in after-market hours on Aug 3, 2023, after the company announced its quarterly earnings. This was mainly due to the weaker-than-expected sales of Apple’s iPhone which further underwhelmed investors.
Apple customers stayed out of upgrading their current models due to recession risks, a slowing economy, and fewer jobs. Data showed the number of Americans filing for unemployment benefits rose for the week ended Jul 28, 2023, as labor conditions remain tight.
For a more detailed analysis of Apple share price and Apple financials, click here.
Apple Q3 2023: Total Sales
Apple’s Net sales/revenue fell 1% YoY to $81.8 billion during the May-July quarter compared to the corresponding quarter last year. This was majorly due to Apple product sales which saw a 4% drop. Whereas this quarter saw an all-time-high revenue record in Apple services sales which include Apple TV+, Apple Pay, iCloud storage, Apple Arcade, Apple Music, etc. by 8% driven by over 1 billion paid subscriptions.
| Q3 2022 | Q3 2023 | YoY % change | |
| Product | $63.4 billion | $60.6 billion | -4% |
| Services | $19.6 billion | $21.2 billion | 8% |
| Total Sales | $82.9 billion | $81.8 billion | -1% |
Apple Q3 2023: Net Sales by Category
| Categories | Q3 2022 | Q3 2023 | YoY % change | % contribution to total sales |
| iPhone | $40.7 billion | $39.769 billion | -2.45% | 49% |
| Mac | $7.4 billion | $6.8 billion | -7.34% | 8% |
| iPad | $7.2 billion | $5.8 billion | -19.84% | 7% |
| Wearables, Home, and Accessories | $8.1 billion | $8.3 billion | 2.47% | 10% |
| Services | $19.6 billion | $21.2 billion | 8.21% | 26% |
Apple Q3 2023: Net Sales by Geography
| Geographies | $ value | % contribution to total sales |
| Americas | $35.4 billion | 43% |
| Europe | $20.2 billion | 25% |
| Greater China | $15.8 billion | 19% |
| Japan | $4.8 billion | 6% |
| Rest of Asia Pacific | $5.6 billion | 7% |
Apple Q3 2023: Operating Expenses jump on higher AI development spends
R&D expenses have increased by nearly 10% YoY this quarter. This depicts the focus on research across a variety of AI technologies including generative AI. In fact, Apple Chief Executive Officer Tim Cook told Reuters in an interview that the ‘increased R&D spending was in part driven by work on generative artificial intelligence’. Apple is therefore working towards new AI features in its products.
For instance, the ‘iPhone's ability to transcribe voice mail messages in real time’.
| Q3 2022 | Q3 2023 | YoY % change | |
| R&D | $6.8 billion | $7.4 billion | 9.5% |
| Sales, general and administrative | $6 billion | $5.9 billion | -0.7% |
| Operating Expenses | $12.9 billion | $13.4 billion | 4.8% |
Apple Q3 2023: Net Profit
Apple’s net profit increased slightly this quarter. This indicates the strong performance in the Apple service sector which offset the drop in iPhone sales.
| Q3 2022 | Q3 2023 | YoY % change | |
| Net Profit | $19.4 billion | $19.9 billion | 0.02% |
Apple Q3 2023: Share Price Performance
| 1 month | 6 months | 1-year | 5-years |
| -0.084% | 25.99% | 15.29% | 268.48% |
(As on Aug 3, 2023)
This is not investment advice. Investments in the securities market are subject to market risk, read all the related documents carefully before investing. Past performance is not indicative of future returns.