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Apple shares rose on Thursday after sales for the first three months of 2024 exceeded analysts’ downside expectations, even as sales in China fell from a year earlier.
The company on Thursday reported revenue of $90.75 billion for the past quarter, down 4% from a year ago but slightly above consensus estimates of $90.3 billion. Apple also announced an additional $110 billion in stock buybacks and raised its quarterly dividend by 4%.
Services revenue, which includes the App Store, Apple TV, and Apple Pay, showed strong growth again, increasing 14% to $23.9 billion, a record high. In contrast, revenue from the company’s most famous product, the iPhone, was $46 billion, compared to his $51.3 billion a year earlier. Diluted earnings per share were $1.53, compared with the consensus estimate of $1.50, down from last year’s $1.52.
Shares rose more than 7% in after-hours trading. Apple’s stock price has fallen about 7% this year, once again losing its place as the world’s most valuable publicly traded company to Microsoft.
“I think the biggest takeaway is that the business is strong and is poised for accelerated growth over the next three quarters,” said Gene Munster of Deepwater Asset Management. “That’s why stocks are going up.”
Munster said the buybacks exceeded his $90 billion estimate and predicted Apple’s “confidence” for the rest of the year.
Apple had a rocky start to the year, with the cancellation of a long-standing car project, increasing pressure from antitrust enforcement officials in the U.S. and EU, and a drop in iPhone sales in China.
Net sales in Greater China for the quarter were $16.3 billion, compared with $17.8 billion in the same period last year.
There are signs of danger in the company’s China operations. Domestic iPhone sales fell 19% year-on-year in the first three months of this year, according to a report by Counterpoint Research last month, and market research firm International Data Corp. said the company is trailing China’s Samsung in the global smartphone market. It was reported that he had been deprived of the top spot. As the overall market recovered, rivals such as Xiaomi and Huawei also posted profits.
Apple’s chief financial officer, Luca Maestri, told the Financial Times that China is “the most competitive smartphone market in the world,” even as the number of Apple devices in operation has reached a “record high.” Regardless, he said, iPhone sales remain strong.
The $110 billion share buyback signaled that the company was “very comfortable with where we are.” [and] We have great confidence in what we have in store for our customers,” Maestri said, adding that it will be a “very busy period” in terms of new products. The company launched the Vision Pro headset in February and plans to announce new iPad models at an event in May.
Apple is also under intense pressure from regulators on both sides of the Atlantic. The U.S. Department of Justice filed an antitrust lawsuit against the tech giant in March. That same month, the EU launched an investigation into Apple over possible non-compliance with digital market laws. It also fined Apple 1.8 billion euros over rules governing competing music streaming services in its App Store.
Analysts are hopeful that Apple could boost sales of smartphones and laptops by unveiling long-awaited generative artificial intelligence features, possibly at its developer conference in June. CEO Tim Cook has promised to share more details about the company’s work in the AI space later this year.
“We are very bullish about the opportunity in generative AI,” Maestri said.
