01—Abstract
Summary
Summary of the 10-Q filed May 3, 2024. Cited figures are marked; the original filing is the authoritative source.
Apple Inc. reported total net sales of $90.75 billiona for the second quarter of fiscal year 2024, a decrease of 4% compared to the prior year's quarter.
This decline was primarily driven by a 10% drop in iPhone sales, which fell to $45.96 billionb, and a 17% decrease in iPad sales. However, the Services segment continued its strong growth trajectory, increasing by 14% year-over-year to $23.87 billion, demonstrating its growing importance to Apple's overall revenue. Despite the overall revenue dip, Apple's profitability remained robust.
Net income for the quarter was $23.64 billionc, with diluted earnings per share at $1.53, flat compared to the prior year's quarter on a per-share basis due to a reduction in outstanding shares. The company also announced an increase in its quarterly cash dividend to $0.25 per share and authorized an additional $110 billion share repurchase program, signaling confidence in its financial strength and commitment to returning capital to shareholders. Apple's strong Services performance and ongoing capital return initiatives are key points for investors to consider.
02—Key points
Key Highlights
- Total net sales decreased by 4% year-over-year to $90.75 billion, impacted by lower iPhone and iPad sales.
- Services revenue continued to be a strong performer, growing 14% year-over-year to $23.87 billion, highlighting the increasing contribution of recurring revenue streams.
- iPhone sales declined 10% year-over-year to $45.96 billion, primarily due to lower sales of Pro models.
- iPad sales saw a significant decrease of 17% year-over-year to $5.56 billion.
- Gross margin percentage improved to 46.6% from 44.3% in the prior year's quarter, driven by higher Services gross margin.
- Apple announced an increase in its quarterly cash dividend to $0.25 per share and authorized an additional $110 billion share repurchase program.
- Net income was $23.64 billion, with diluted EPS remaining at $1.53, reflecting a substantial capital return program that reduced the share count.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in Q2 FY2024, Apple Inc. kept $0.26.
- Revenue$90.75B100.0%
- Cost of revenue−$48.48B53.4%
- Gross profit$42.27B46.6%
- Operating costs−$14.37B15.8%
- Operating income$27.90B30.7%
- Interest, other & tax−$4.26B4.7%
- Net income$23.64B26.0%
04—Financials
Financial Highlights
Figures from 10-QQ2 FY2024filed May 3, 2024Financial Statements
| Revenue | $90.75B |
| Cost of Revenue | $48.48B |
| Gross Profit | $42.27B |
| R&D Expenses | $7.90B |
| SG&A Expenses | $6.47B |
| Operating Expenses | $14.37B |
| Operating Income | $27.90B |
| Net Income | $23.64B |
| EPS (Basic) | $1.53 |
| EPS (Diluted) | $1.53 |
| Shares Outstanding (Basic) | 15.41B |
| Shares Outstanding (Diluted) | 15.46B |
05—Questions
Frequently Asked Questions
What drove the overall sales decline in the second quarter?
The overall sales decline of 4% to $90.75 billion was primarily driven by a 10% decrease in iPhone net sales and a 17% decrease in iPad net sales, which more than offset the strong growth in the Services segment.
How is the Services segment performing, and why is it important?
The Services segment showed robust growth, increasing by 14% year-over-year to $23.87 billion. This segment is increasingly important as it provides a more stable and recurring revenue stream, contributing to overall profitability and offsetting some of the cyclicality in hardware sales.
What is Apple doing to return capital to shareholders?
Apple continues its significant capital return program. The company announced an increase in its quarterly cash dividend to $0.25 per share and authorized a massive new share repurchase program of up to $110 billion. This reflects confidence in future cash flows and a commitment to enhancing shareholder value.
What are the key risks or legal challenges Apple is facing?
Apple is facing significant regulatory scrutiny and legal challenges, including investigations and lawsuits related to antitrust concerns in the US (Department of Justice) and Europe (Digital Markets Act) concerning its App Store practices. These could potentially lead to fines or require changes to business practices.
06—Continue