Apple Inc. (NASDAQ: AAPL) will report fiscal Q4 2023 results on Thursday, November 2, 2023. Here are the key numbers that we’re watching.
Figure 1: Apple – consensus expectations for Q4, past earnings surprises, revisions, and CAGR
Source: Visible Alpha consensus (October 30, 2023). “Previous Surprises” indicate the direction that specific line items beat or missed. “Consensus Revisions” show the trajectory of line items from a given date.
Apple Q4 Earnings Preview
According to Visible Alpha consensus, total revenues expected for Q4 have come down from the beginning of the year, from $95.4 billion to $89.5 billion, driven by decreased optimism about Apple’s new iPhone. Since August, total expected iPhone unit sales have come down from 52 million to 50 million, driven by debate among analysts about the performance of the new iPhone. Expected Q4 iPhone units range from 45.5 million to 54.5 million, with most of the 9 million unit difference explained by a 7 million unit variance in estimates for the iPhone 15 specifically, ranging from 19 million to 26 million units.
While iPhone sentiment has come down, expectations for the high-margin Services segment and for total operating profit have remained consistent all year. Gross margin for the Services segment is over 70%, significantly higher than the 36% gross margin for Products. It will be interesting to hear what the Company says in the earnings release about growth in Services and if this is enough to offset any sluggishness in iPhone sales.
The stock has traded down -12% (as of the October 27 market close) since last quarter’s July release, but is up nearly 30% year to date. Could the Q4 release provide the next positive catalyst for the stock?
Figure 2: Apple consensus estimates
Source: Visible Alpha consensus (October 30, 2023). Stock price data courtesy of FactSet. Apple’s current stock price is as of the market close on October 27, 2023.