Apple: Barely Holding On, Reliant on India for Salvation?

Apple (AAP$Loews(L.US)) Beijing time in the early morning of August 4, 2023, U.S. stocks after the release of the third quarter of fiscal year 2023 results (as of June 2023). *1, overall performance: a steady" machine king " *. <span class =" security-tag "type =" security-tag "counter_id =" ST/US/AAPL "name =" Apple "trend =" 0 ">$ Apple.US This quarter achieved revenue of $81.8 billion, down 1.4 percent year-over-year, exceeding Bloomberg's consensus expectation ($81.53 billion) * *. The decline in revenue was mainly dragged down by insufficient downstream demand for hardware products. **Apple's gross margin was 44.5 percent, up 1.2pct YoY, in line with Bloomberg consensus expectations (44.4 percent) * *. Among them, the software gross margin remained above 70% for 8 consecutive quarters. * * 2, iPhone: The average price stands firm at $900. **The global mobile phone market fell nearly 10% in the quarter, while Apple's iPhone business performed significantly better than the industry. * * Dolphin Jun estimated that Apple's mobile phone shipments declined slightly this quarter, with the average price rising steadily at $900 * *; * 3. Other Hardware Except iPhone: Mac Is the Only Exceeding Expectation * *. **Although the Mac business declined, it was significantly better than expected, mainly due to the unexpected recovery of the PC industry. **iPad continues to be weak, with revenue slipping below $6 billion for the quarter. Hardware products such as wearables returned to positive year-on-year growth this quarter, showing signs of stabilization and recovery. Software Services revenue for the quarter was $21.2 billion, exceeding Bloomberg's consensus forecast of $20.75 billion. **Even with weak hardware shipments, the software side continues to grow. The retention of users has led to a steady increase in the scale of users.! **Overall view: Apple's earnings this time was slightly better than expected. * * Looking directly at the data, Apple's revenue and net profit for the quarter exceeded market expectations. **But actually from an operational perspective, the company is primarily a small outperformance on the revenue side. **In the case of sluggish overall demand in the electronic terminal market, * *. In the market's low expectations, the company finally slightly exceeded expectations * *. Although Apple's overall performance is significantly better than the overall weak industry, it is undeniable that it is also under downward pressure. And. **Combined with previous Intel and AMD results, the Mac's outperformance this quarter further validates that the PC market is expected to be the first to start picking up * *. With the de-stocking of the PC industry chain, incremental demand for replenishment is expected in the last two quarters. * * Apple's share price rose from a low of $120 to around $200, which also includes some recovery expectations. **** With the advancement of the Indian market and the occupation of consumers' minds, it is expected to further expand its influence in the Indian market and have the opportunity to bring new increments to the company in the future * *. Dolphin Jun's specific analysis of Apple's financial report is detailed below: * * 1.'s overall performance: stable "machine king" * * * 1.1 revenue side: in the third quarter of fiscal year 2023 (I .e. 2Q23), Apple achieved revenue of US $81.8 billion, down 1.4 percent from a year earlier, * *. For the decline in revenue this quarter, it was mainly dragged down by insufficient downstream demand for hardware products.! From both hardware and software: 1. **Apple's hardware business grew by -4.4 percent in the quarter. **The decline in hardware this quarter was mainly due to the overall decline in iPad, Mac and iPad business. 2. * * Apple's software business grew 8.2 percent in the quarter, continuing to grow in single digits. The software business has a certain degree of risk resistance..! By region: **Apple continued to decline in the Americas market this quarter, * *. The Americas region, Apple's biggest source of revenue, fell 5.6 percent in the quarter. While * * Europe grew year-on-year for the second consecutive quarter, Greater China also achieved year-on-year growth of 7.9 per cent in the quarter. Income growth in major regions is beginning to show signs of improvement. * *! **1.2 gross margin: 44.5 percent gross margin for Apple in Q3 FY2023, up 1.2pct YoY, * * * *. **The company's gross margin continued to pick up in the quarter, with the higher gross margin software business accounting for an increase, structurally pulling up the company's overall gross margin. Dolphin Jun split the gross profit margin of software and hardware: * * Apple's gross profit margin of software continued to stand above 70% this quarter. The market is still most concerned about the level of gross margin on the hardware side, with Apple's hardware gross margin falling to 35.4 percent this quarter. * *! ! **1.3 Operating Profit: Apple's operating profit in the third quarter of fiscal 2023 was $23 billion billion, down 0.3 percent year-over-year. **The decline in Apple's operating profit in the quarter was mainly due to an increase in expenses. **Apple's operating expense rate for the quarter was 16.4 percent, up 1pct from a year earlier. **Sales and administrative expense rates and research and development expense rates both increased year-over-year due to the decline in revenue in the quarter.! ! * * 2. iPhone: Average price stands firm at $900 * * * * iPhone revenue in the third quarter of fiscal year 2023 was $39.7 billion, down 2.4 percent from a year earlier, * * * *. * * The global mobile phone market fell by nearly 10% this quarter, and the decline in the company's mobile phone business was significantly better than the overall market performance.! Dolphin Jun looks at the main growth sources of iPhone business in this quarter from the perspective of volume and price: * * 1) iPhone shipments: * * According to data from market research institutions, the global smartphone market fell 10% year-on-year in the second quarter of 2023. **With its product strength, Apple's market share continued to increase from 16% to 17%. The company's shipments fell only about 3% this quarter, significantly better than the industry level * *; * * 2) Average iPhone Shipping Price: * * Combined with iPhone business revenue and shipments, * * The average iPhone shipping price continued to grow year on year in this quarter, reaching about US $923. * * Driven by the shipment of medium and high-end machines, the overall water level of the average iPhone shipment price has risen and has stabilized above US $900.! ! * * 3. hardware other than iPhone: Mac is the only one that exceeds expectations * * * 3.1Mac business * * * Mac business revenue in the third quarter of fiscal year 2023 was $6.8 billion, down 7.3 percent from a year earlier, and was the only one that exceeds expectations on the hardware side ($6.36 billion). **Mac business continued to decline this quarter, mainly due to weak industry demand. * According to IDC, global PC shipments fell 13.4 percent in the quarter, while Apple's shipments grew 10.3 percent in the quarter. * *! * * 3.2 iPad business * * * * iPad business revenue in the third quarter of fiscal year 2023 was $5.8 billion, down 19.8 percent year-on-year, below Bloomberg's consensus forecast of $6.33 billion. **Weak overall demand downstream of the iPad has led to a continued decline in the company's revenue from this business.! 3.3 Other Hardware such as Wearables **Revenue from Other Hardware such as Wearables in the third quarter of fiscal year 2023 was $8.3 billion billion, up 2.5 percent year-over-year, * * * *. **Apple's wearables and other hardware businesses once again achieved positive growth this quarter. With the recovery of market economic activities, the demand for wearable devices has begun to increase to a certain extent.! 4. SOFTWARE SERVICES: CONTINUED GROWTH **Q3 FY2023 Software Services revenue of $21.2 billion, up 8.2 percent YoY, * * * *. **Dolphin Jun believes that the growth rate of Apple's software service revenue has fallen from double digits in the past to single digits, which is mainly affected by both volume and price. ① Volume aspect : This is due to Apple's software and hardware integration model, when the previous quarterly high growth of hardware is no longer, will also affect the Apple software server user growth rate * *;② Price aspects: Under the influence of the macroeconomic background, it affects consumers' willingness to pay for services to a certain extent. **However, the software business is already more risk-resistant than the declining hardware business. **In software services, the most interesting is the gross margin level of software services. **Software services gross margin achieved 70.5 percent in the quarter and remained above 70 percent for the eighth consecutive quarter. * * In the overall downturn of the Internet advertising industry, Apple can still maintain a gross profit margin of more than 70%, which still shows the importance of Apple occupying the hardware entrance.! * * Dolphin Investment Research Apple History Articles Retrospect: * * * Earnings Season * * May 5, 2023 Earnings Review "Apple: Reversals Against Wind Is the Real" Machine King "" May 5, 2023 Call "Apple Reversals Against Wind, Does It All Rely on India and Other Emerging Markets? (Apple FY2023Q2 Call)" February 3, 2023 Financial Report Review "Apple: Thunder wrapped around the body, finally came out" February 6, 2023 Call "Limited Demand Impact, Guidance to Continue Confidence (Apple FY2023Q1 Call)" October 28, 2022 Call "Apple: Not High Season," King of Roll "Can't Escape Recession (FY2022Q4 Call Conference)" Financial Report Review on October 28, 2022 "Apple: The Only Giant Who Didn't Lie Down, How Long Can It Last?" July 29, 2022 Call "Only iPhone Business Shame, How Will Management Explain (Apple Call)" July 29, 2022 Financial Review "Slightly Increased iPhone Has Been Apple's Last" fig leaf "" April 29, 2022 Call "Multi-factor Trouble, apple Gives Weak Guidance (Call Minutes)" April 28, 2022 Earnings Review "Apple, which makes crazy money, should worry about growth! | Earnings Season "January 28, 2022 Call" Apple: Supply Crisis Eases, Innovation Lights Real Technology (Call Minutes) "January 28, 2022 Earnings Review" Apple's Hard Power, Sweet and Fragrant | Read Earnings "October 29, 2021 Call" What Did Apple Management Communicate After Performance Expectations Fell? "Financial Report Review on October 29, 2021" Expected to be Empty, Apple's Answer Paper is Embarrassed "Management's Interpretation (with Complete Q & A)](https://longbridgeapp.com/news/41413283)" Financial Report Review on July 28, 2021 "Apple: Definition of Excellent" on July 28, 2021, pentathlon Exceeds Expectations "April 29, 2021 Telephone Conference" Minutes of Apple 2021Q2 Performance Meeting "April 29, 2021 Financial Report Review" [Excellent Companies Always Exceeds Expectations, Apple in the New Fiscal Season Is Hard Enough!] (https://longbridgeapp.com/news/34578989) "April 25, 2021 Earnings Outlook" Will Apple's new quarter earnings continue to explode after the first quarter of the domineering side? "Depth December 29, 2022" Semiconductor Avalanche? Only after the worst drop will there be real flexibility "November 11, 2022" Good performance also falls, is Apple really sweet? "June 17, 2022" Consumer Electronics "Ripe", Apple Hard, Xiaomi Suffers "June 6, 2022" U.S. Stock Shock, Are Apple, Tesla, Avida Killed by Wrong? "February 28, 2022" [Apple: Pass on Cost Pressure, Serve You!] (https://longbridgeapp.com/news/56609825) "December 6, 2021" Apple: Two-wheel drive is getting weak, "Lame" Hardware Needs Continuance of Big Single Products Live Broadcast September 8, 2022 "Apple 2022 Fall Conference" April 29, 2022 "Apple (AAPL.US) 2022 Second Quarter Results Call" January 28, 2022 "Apple (AAPL.US) 2022 First Quarter Results Call" October 29, 2021 "Apple (AAPL.US) Fourth Quarter 2021 Results Call" October 19, 2021 "Apple October New Product Launch" September 15, 2021 "Apple 2021 Fall Launch" July 28, 2021 "Apple (AAPL.US) Third Quarter 2021 Results Call" April 29, 2021 "Apple (AAPL.US) Second Quarter 2021 Results call April 21, 2021 Apple Spring New Product Launch Risk Disclosure and Statement in this article: Dolphin Investment Research Disclaimer and General Disclosures