Apple’s Q3 2024 Results
Apple (transcript, MacRumors, MacStories, ArsTechnica):
The Company posted quarterly revenue of $85.8 billion, up 5 percent year over year, and quarterly earnings per diluted share of $1.40, up 11 percent year over year.
[…]
“During the quarter, our record business performance generated EPS growth of 11 percent and nearly $29 billion in operating cash flow, allowing us to return over $32 billion to shareholders,” said Luca Maestri, Apple’s CFO. “We are also very pleased that our installed base of active devices reached a new all-time high in all geographic segments, thanks to very high levels of customer satisfaction and loyalty.”
And now, here’s what you’ve all been waiting for: the charts…
Apple’s Services and iPad segments increased significantly compared to last year, with Services up 14% and iPad up 24%. The Mac was also up about 2%, but the iPhone fell 1% and Wearables dropped 2%. Internationally, nearly all geographic segments reported modest increases apart from Greater China, which posted somewhat lower results compared to last year.
Another quarter, another record-setting total for Apple’s Services line—$24.2 billion in revenue. And yet, the more I looked at that number, the more I started to ask myself some fundamental questions about Apple’s business, today and in the future.
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Apple’s Services line is powered by less glamorous businesses. The company’s cut of App Store revenue, AppleCare support subscriptions, Google’s payment for being the preferred search engine in Safari, Apple’s cut of Apple Pay transactions, and iCloud services are all a part of the category, and most of them contribute more to Services revenue than Reese Witherspoon and Adam Scott do.
[…]
Without good hardware and software, Apple’s services would be irrelevant. I hope everyone in a position of authority at Apple understands that. Services are a way to help make Apple’s hardware even more profitable than it already was. But services can never, ever take precedence over Apple’s hardware. If Apple ever begins to see its hardware as merely a vessel for selling more subscription services, the game will be over.
There are certainly areas where it seems like that’s how it sees software. And, to me at least, even Apple’s hardware business is just the way to access software (from both Apple and third-party developers). Software is what truly matters.
It would be disappointing if Apple sees its hardware products increasingly as vehicles for recurring revenue.
I just want to see Apple Services revenue broken out!
- Google search deal
- App Store games commision
- App Store apps commision
- AppleCare
- Apple Music
- iCloud
- Else
The growth must be games, Music, and iCloud?
This is the launch year of Apple’s Vision Pro, but from their first six months of financial statements you wouldn’t know it. Much like their first-party software support, it’s just crickets and tumbleweed.
Tim Cook says ‘we’ll see what the developers do’ with Apple Intelligence, omitting the fact developers currently have essentially nothing they can do … APIs for summarisation and the like are simply non-existent in the iOS 18 SDK.
Right now, as a developer, you can make your text fields compatible with rich image attachments for Genmoji support, and that’s about it. In-app actions for Siri with app intents are the first real ‘advanced’ integration point, which is a ‘next year’ thingy.
Warren Buffett’s Berkshire Hathaway slashed its stake in tech giant Apple by nearly 50%, according to Berkshire’s second quarter earnings report released on Saturday.
Berkshire Hathaway disclosed its holdings in Apple were valued at $84.2 billion at the end of the quarter, dropping from 790 million shares to 400 million shares. The sharp selloff is notable for Buffett, who is known for holding onto stocks for long periods of time.
That timing thing is pretty important because even though Buffett didn’t specifically say why he’s unloading Apple’s stock, he has indicated in the past that he plans to hold onto the company’s shares “unless something really extraordinary happens.”
Previously:
Update (2024-08-07): John Gruber:
But another way to look at it is that services are just another form of software. Software that runs not on the personal computing devices Apple sells to customers, but which run on servers in the cloud. And, importantly, is sold to users via lucrative recurring subscriptions. Content often isn’t what we think of as software (like say music, movies, and TV shows) but content from the App Store is. But the key is that it’s all stuff that the users of Apple’s devices consume on those devices. Apple’s core business is designing, engineering, producing, and selling those devices. Services are just a huge, and growing, part of what users do and consume on those devices.
To extend Kay’s axiom for today’s world, I suspect Apple’s leadership sees things this way: People who are really serious about device platforms should make their own services. Viewed that way, Apple’s success with services is no more a distraction from their core business than their success with their own chain of retail stores has been. It’s just a necessary evolution.
I see this as more of a “success hides problems” situation. Do you look at the profit number going up? Or at the pattern that the software that touches Apple’s services businesses tends to be less reliable and well designed, often even regressing?
Also, stuff like CloudKit and the App Store are certainly more “core” than original TV content, though Tim Cook seems far more excited about improving the latter.
Previously:
- Google Search and Ads Monopoly
- Scaling Back Apple TV+ Content
- The Apple Services Experience Is Not Good Enough
3 Comments RSS · Twitter · Mastodon
> “ he has indicated in the past that he plans to hold onto the company’s shares “unless something really extraordinary happens.”
Like Apple being unable to get billions from Google and therefore its services revenues potentially going down in the near future?
https://www.nasdaq.com/articles/us-antitrust-win-google-guilty-search-market-monopoly
Gruber is wrong: when I disabled iCloud Backup again because I could no longer justify paying those prices, my iPhone started prompting me for my passcode every time I plugged it in, reducing both security and user experience.
But he, and all clueful Apple people, have already worked out that (A) services are *not* software and (B) once rentierism succeeds hardware and software in revenues and growth potential, Apple will most assuredly cease to become worthy of anyone's time, compared to other similar ventures. Paradoxically Apple will have made themselves open to competition from below, and all those platitudes Gruber loves so much about Apple being held back by petty bureaucratic jealousies and the tall tree and all that Libertarian merritocracy nonsense will simply no longer apply because all of the value that matters in Apple's ecosystem comes from its hardware and the software (mandatory) that runs on it.
@Sebby
Services should work well and be designed well and should have all those nice touches like good software of yore, but Apple's software doesn't even benefit from all those things and clearly Apple's services is more rent extraction and not slavishly designed to be the most elegant and useful to the customer base. So yeah, you are right. :)
