Wired
As can be seen from the transcripts handed over by Apple for the third quarter of fiscal year 2022 (March 27, 2022 – June 25, 2022), Apple’s “money printing” rate has declined in the third fiscal quarter.
According to the financial report, Apple’s total revenue in the third fiscal quarter was US$83 billion, a year-on-year increase of only 2%; net profit was US$19.4 billion, a year-on-year decrease of 11%. Although the average daily profit is 200 million US dollars (about 1.5 billion yuan), it is the worst performance in a year.
Specific to the subdivision sector, the iPhone has become the “Dinghaishenzhen” of Apple’s hardware, and its revenue has been unrivaled and has maintained steady growth. Other hardware products other than mobile phones performed poorly, ushering in varying degrees of decline.
On the whole, the impact of macro-environmental changes such as epidemic blockade, inflation panic, and chip shortage on the consumer electronics industry cannot be underestimated. Even if it is stronger than Apple, it is still affected to a certain extent. Apple’s “soft rice” is no longer as delicious as it used to be. Although the software service business leads the growth rate, it is a “general from a short man”, which is not as amazing as before.
However, Apple CEO Cook remained optimistic: “Although the company’s current growth is somewhat weak, in terms of the overall outlook, we expect quarterly revenue growth to accelerate through September.”
The status of the iPhone in Apple’s “Tianzi No. 1” is unstoppable
According to the financial report data, Apple’s iPhone revenue in the third fiscal quarter reached 40.7 billion US dollars, a year-on-year increase of 3%, and the revenue in various business segments accounted for 49%.
The iPhone 13 series, known as the “Thirteen Fragrances”, remained popular in the second half of the release cycle, which pushed Apple’s mobile phone sales to a peak again.
According to market research firm Strategy Analytics, the global sales of the iPhone in the second quarter of 2022 (that is, Apple’s third fiscal quarter) reached 48 million units, and the market share reached a record 16%.
The brilliant record of the iPhone has a lot to do with Apple taking the initiative to participate in the domestic 618 shopping festival and launching strong discounts. According to Strategy Analytics estimates, Apple accounted for half of the 14 million smartphones sold during the 618 shopping festival, generating $6.3 billion in revenue.
It is worth mentioning that Apple’s enthusiasm for participating in the “price war” this year has been unprecedented. Starting from July 29, Apple has started a 4-day summer discount campaign, with a maximum discount of 600 yuan.
Such an operation is considered by everyone to make way for Apple’s upcoming autumn conference and the iPhone 14. Cook, however, said the iPhone price cut “has nothing to do with clearing inventory.”
Hardware products other than mobile phones ushered in Waterloo in the fiscal third quarter. Wearables and other products revenue was $8.1 billion, down 8% year-over-year; Mac revenue was $7.4 billion, down 10% year-over-year; iPad revenue was $7.2 billion, down 2% year-over-year.
Among them, the Mac business was the worst. Although Apple’s only hardware release in the third fiscal quarter was the two MacBooks equipped with M2 chips unveiled at WWDC22, they did not drive sales because they were not on sale during the statistical period. In this regard, Cook’s explanation is the impact of supply chain restrictions.
“Soft rice” is not fragrant anymore
When hardware products fail, the “soft rice” in the apple bowl is not fragrant.
Apple’s services business includes revenue from software such as Apple Music, Apple TV+, Apple News, iCloud, and the App store.
According to the financial report data, Apple’s service business revenue in the third fiscal quarter was 19.6 billion US dollars, ranking second in revenue share, with a year-on-year increase of 12%, which is the fastest growing business.
However, this is also the worst growth rate for Apple’s services business in recent years. Cook said that the service business has been affected by the macroeconomic downturn, especially the digital advertising business.
Freezing three feet is not a day’s cold. From the data changes, it can be found that Apple’s service business, which has maintained rapid growth in the past, is falling back to the regular growth space. This is definitely bad news for Apple, which has been focusing on the service business as its key transformation direction.
In addition, the global market is increasingly regulated by Apple Store and Apple Music, the key elements of Apple’s service business, and various anti-monopoly investigations are emerging one after another, making Apple’s “soft meal” very uneasy.
Of course, there is still some good news for Apple’s software services business, which is that the user scale and user payment intentions of this business are constantly expanding.
Apple CFO Maestri said on the third-quarter earnings conference call that Apple now has more than 860 million paying subscribers, an increase of 160 million in the past 12 months. While Apple doesn’t break out the number of subscribers for each service, Maestri said services like Apple TV+ and Apple Arcade have seen strong growth.
In the long run, Apple’s transformation from a hardware manufacturer to a service provider will not stop, because with the enrichment of hardware product lines, Apple’s ecological scale will continue to expand, bringing more fertile ground for the growth of the service business.
At present, Apple is concentrating on entering a huge number of new markets such as big health, AR, and automobiles. These future layouts have given the market more tolerance for the short-term downturn of Apple. The world’s leading investment institutions, including Morgan Stanley and JPMorgan Chase, all have green eyes on Apple. It is expected that Apple will perform better than other technology giants in the challenging macro environment.
After the financial report was released, Apple’s stock price also ushered in two consecutive rises, with an increase of 0.36% and 3.28% respectively. As of the close of trading on July 30, Apple’s stock price was $162.51, with a market value of $2.62 trillion.
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