Apple's year ends with surging services, a billion subscribers, and a view of generation next

Hardware (other than iPhones) is not so hot, but 'emerging markets' are getting Apple fever

Apple has posted revenue of $383.3 billion – or about $12,000 per second – for the year, cracked the billion-subscriber barrier, and welcomed increased demand for its goods and services in new markets.

The full year revenue result was down $11 billion year-on-year, and Q4 revenue of $89.5 billion was about $700 million lower than for the corresponding quarter in 2022.

But 2023's final quarter saw services revenue reach an all-time high of $22.3 billion, with annual payments reaching $85.2 billion.

By contrast, combined sales of Macs, iPads, wearables, accessories and home electronics brought in $23.3 billion for the quarter and $97 billion for the year.

iPhones alone brought in $200 billion – down from $205 billion in the previous financial year. However, the smartphone delivered its best-ever Q4 revenue, at $43.8 billion.

Apple blamed the product sales declines on an "uneven macroeconomic environment" and noted that, if not for exchange rate shifts, its numbers would have improved.

But overall the fruit stand was chuffed by its numbers, pointing to fat margins of over 40 percent.

Execs see sunny days ahead, with emerging markets like India, Indonesia, Turkey, Vietnam, and Chile producing all-time record revenue across fiscal 2023. More Apple Stores are on the way to such markets to further accelerate spending. Revenue from Greater China dipped a little, but CEO Tim Cook was unfussed – he noted Apple had the top four selling phones in urban China last year. Urban China is rather richer than rural China.

The iGiant also recorded its highest-ever installed base of active devices, across all products and all geographic segments, but didn't enumerate the achievement. Execs see all those active devices as likely to boost services adoption and revenue.

New customers continue to flood in, with the majority of iPad and Apple Watch sales going to first-time buyers. Cook observed that two out of three college students use a Mac – another likely future source of repeat purchases and services revenue.

Another new source of Mac buyers is Indonesia's "superapp" provider GoTo, which made the PCs an option for staff machines. Starbucks just refreshed its Mac fleet, with 10,000 M2 Macbooks handed to store managers.

The debut of M3 silicon is predicted to boost Mac sales next quarter. Revenue guidance is for a one percent dip year on year, but calendar quirks mean Apple's Q1 for 2024 will be a week shorter than last year's so management sees nothing to worry about.

Supply chain issues could yet be a worry. CFO Luca Maestri admitted Apple is "constrained today on iPhone 15 Pro and iPhone 15 Pro Max."

CEO Cook assured those listening that Apple is constantly optimizing its supply chain, and that it will remain global.

Investors weren’t thrilled by the above, peeling about $3.50 off the price of Apple shares, which ended the day around $171.50 apiece after touching $175 during the day.

Clearly, however, Apple is in almost no danger. It has over $500 billion of assets on its balance sheet, is enormously profitable with annual net income of $97 billion, and is comfortably the largest tech vendor on the planet in terms of revenue. ®

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