Apple on Monday reported higher-than-expected overall sales during John Ternus’s first quarter at the helm. iPhone revenue likewise came in ahead of consensus.
That’s the good news. The bad news is, Greater China sales missed again, underscoring the company’s struggles to regain momentum in a market defined by stiff competition and consumer preferences colored by nationalism.
The top-line was $114.5 billion, about a billion ahead of the Street. That translates to 11.7% growth, the slowest since last year’s September quarter.
As the figure reminds you, sales growth was the briskest in years over the preceding two reporting periods.
The company rolled out a slew of “new” products over the past several weeks, including a hugely-expensive foldable iPhone, a smart home assistant that’s almost indistinguishable design-wise from an iMac released 23 years ago, a jacket pocket-sized iPad and a touchscreen MacBook Pro.
I suppose that stuff bodes well for revenue going forward. But I’d quibble with the characterization of those products as “new” (hence the scare quotes). They aren’t. Not in the sense that the original iPhone was new. But you do what you can. Steve’s dead. Still.
To the point about Greater China sales, $17.54 billion was a meaningful miss. Consensus wanted $18.75 billion. Recall that Apple missed estimates for China sales last quarter too. At some point, they need to start outperforming there again.
Everything else was fine. iPhone revenue was $57.58 billion versus $56.49 billion seen. Services sales of $31.573 billion were bang in line. iPad was a miss at $6.229 billion versus $6.83 billion expected, but Mac sales of $10.792 billion beat by a billion.
I’m never sure what to say about Apple’s quarters. I mean, they’re all obviously (objectively) great. You can nitpick — see the China miss — but you’re always splitting hairs. Overall sales were a September-quarter record, so were iPhone sales, so was net income, so was EPS and just on and on. Services revenue was an all-time high for any quarter.
As CFO Kevan Parekh politely noted, Apple generated $28 billion in operating cash flow last quarter and promptly returned — wait for it — $28 billion to shareholders. Customers, Parekh went on, are pretty satisfied with the company’s products and offerings by the look of things. As usual, the installed base hit another all-time high for every product category and across every region in which the company sells.
I’ll say what I always say, even as it grates on the nerves of the “never Applers” among you: This is quite simply the best-run company in the history of modern capitalism, bar none and with no caveats.
The only “problem” right now is that the stock price fully reflects the near flawless execution. Apple trades at 35x on a forward multiple which, I must admit, is pricey as hell when you’re “only” growing the top-line by 12%.
