Apple Earnings Preview: Growth & $4T Milestone

14-01-25

Apple is due to report its earnings on January 30th, 2025. A firm favourite amongst long-term tech investors, the company has consistently outperformed market expectations, beating estimates 15 times in the past 17 quarters. 

During its previous announcement on October 31st, 2024, Apple returned over $29 billion to shareholders during the quarter and showcased strong performance across various segments. Key highlights include: 

Financial Performance: 

• Revenue: Achieved a record $94.9 billion, marking a 6% increase year-over-year. 

• Earnings Per Share (EPS): Reported diluted EPS of $0.97. Excluding a one-time charge related to the reversal of the European General Court’s State Aid decision, the non-GAAP diluted EPS was $1.64, reflecting a 12% increase year-over-year. 

• Operating Cash Flow: Generated nearly $27 billion, underscoring robust operational efficiency. 

Product and Service Highlights: 

• New Product Launches: Introduced the iPhone 16 lineup, Apple Watch Series 10, and AirPods 4, featuring advancements in hearing health and sleep apnoea detection. 

• Apple Intelligence: Released the first set of features for Apple Intelligence, enhancing AI capabilities with a focus on user privacy. 

• Active Installed Base: Reached a new all-time high across all products and geographic segments, indicating strong customer satisfaction and loyalty. 

Dividend Announcement: 

• Cash Dividend: Declared a dividend of $0.25 per share, payable on November 14, 2024, to shareholders of record as of November 11, 2024. 

Apple is also approaching an unprecedented milestone with a potential $4 trillion market cap. This achievement reflects the market’s confidence in the company’s ability to sustain growth and drive innovation. With shares trading near $243.36, the possibility of reaching this landmark highlights the significant investor enthusiasm surrounding Apple’s future. 

Apple’s product ecosystem remains unmatched, with the iPhone continuing to be a dominant revenue generator. The upcoming integration of advanced AI capabilities, such as Apple Intelligence, into products like the iPhone 15 Pro and beyond is expected to enhance user experiences. These developments are poised to solidify Apple’s competitive advantage and expand its market share in consumer technology. 

The services segment, including the App Store, Apple Music, iCloud, and more, has been a consistent performer. The App Store alone has exceeded revenue expectations, demonstrating Apple’s ability to capitalize on recurring revenue streams. This diversification away from hardware reliance strengthens the company’s financial stability. 

Apple’s ventures into artificial intelligence (AI) and augmented reality (AR) position the company at the forefront of next-generation technology. The rumoured AR/VR headsets and their deep integration into Apple’s ecosystem could open new markets and revenue streams, aligning with growing trends in immersive technology. 

Despite economic challenges, Apple maintains a loyal customer base willing to pay premium prices for high-quality products. Initiatives like iPhone discounts in China reflect Apple’s strategic agility in maintaining sales momentum in competitive markets. 

The chart above shows Apple’s performance over the past year. Source: Google.

If you believe that Apple will continue outperforming market expectations at its upcoming earnings call on January 30th, you may consider purchasing an out-of-the-money call option. 

The contents of this article are for general information purposes only. Nothing in this article constitutes advice to any person and any investments and/or investment services referred to therein may not be suitable for all investors. If you’re unsure whether any investment is right for you, you should contact an independent financial adviser. For more information, please see IMPORTANT DERIVATIVE PRODUCT TRADING NOTES.