The operator introduces the Apple Q4 Fiscal Year 2023 Earnings Conference Call and turns it over to Suhasini Chandramouli, Director of Investor Relations. CEO Tim Cook and CFO Luca Maestri will be speaking and answering questions from analysts. Forward-looking statements and risk factors are mentioned. Tim Cook announces that Apple has achieved an all-time revenue record in India and September quarter records in several other countries.

Apple's iPhone revenue exceeded expectations, setting a September quarter record and achieving record sales in various markets. The company also set an all-time revenue record in services, despite facing challenges such as foreign exchange headwinds. Apple has continued to invest in the future, manage for the long-term, and deliver groundbreaking innovations, such as the highly anticipated Apple Vision Pro. The iPhone 15 lineup has received positive reviews and features a stunning design, powerful cameras, and the intuitive Dynamic Island. Mac revenue was down from the previous year due to market conditions and supply disruptions.

Apple has recently unveiled their next generation of M3 chips and a new lineup of MacBook Pro and iMac models. The company's iPad revenue for the September quarter was $6.4 billion and it continues to be a popular choice for students and creatives. The wearables, home, and accessories category also saw a revenue of $9.3 billion, with the Apple Watch Series 9 and Ultra 2 offering new features for a healthier and more convenient experience. Apple's commitment to sustainability is evident in their first-ever carbon-neutral products. The integration of hardware, software, and services in Apple's ecosystem provides a seamless and unparalleled user experience.

Apple introduced new updates to their software, including personalized contact posters and new face time features in iOS 17, new tools for customization in macOS Sonoma and iPadOS 17, and a new look in watchOS 10. This has resulted in record-breaking revenue for their services, including the App Store, AppleCare, iCloud, and Apple Music. They also continue to offer a variety of services such as Apple News+, Fitness+, and Apple Arcade, as well as producing impactful shows and movies on Apple TV+. Their partnership with Major League Soccer has also been successful, with subscriptions to MLS Season Pass exceeding expectations.

Apple is excited for the MLS playoffs and has been finding ways to connect with more customers. They have opened new stores in various countries and are expanding their online presence. The company is also committed to their values, including safeguarding user privacy and being environmentally friendly. They have made their first carbon-neutral products and plan to make their entire lineup carbon neutral by the end of the decade. They are also working with suppliers to use clean energy and investing in entrepreneurs focused on creating a greener future.

Apple's third impact accelerator class is supporting a diverse group of innovators in the field of green technology and clean energy. The company is driven by a sense of possibility and a strong belief in their purpose. Despite a small decrease in revenue compared to last year, Apple saw growth in all geographic segments on a constant-currency basis. iPhone sales reached a September quarter record, driven by strength in emerging markets. The company's Services revenue also set a record, with growth accelerating from the previous quarter. The performance in Services was strong across all regions, with record revenue in the Americas, Europe, and rest of Asia-Pacific, and a September quarter record in Greater China.

In the September quarter, the company's gross margin reached a record high of 45.2%, driven by leverage and favorable mix. iPhone revenue also reached a new record at $43.8 billion, with strong performance in various markets. Mac revenue, however, decreased by 34% due to challenging market conditions and a difficult comparison to the previous year's quarter. The company remains confident in their Mac lineup and is excited about the new products powered by their M3 chips.

The company's installed base for Mac and iPad is at an all-time high, with a large number of new customers being attracted to the products. Customer satisfaction for both products is high. Wearables, Home and Accessories revenue was slightly down, but Apple Watch continues to expand its reach and has high customer satisfaction. Services had a great quarter with record revenue, driven by growth in all categories and geographic segments. The company's installed base of active devices continues to grow, and customer engagement with services is increasing. Paid subscriptions have also shown strong growth, with over 1 billion currently on the platform.

Apple continues to improve and expand its services, such as Apple TV+ and Apple Arcade, as well as offering additional storage options on iCloud. The company also highlights its success in the enterprise market, with businesses like Starbucks and GoTo investing in Apple products for their employees. Apple also reports a strong cash position and a goal of becoming net cash-neutral. In the last quarter, the company returned nearly $25 billion to shareholders through dividends and share repurchases. Overall, Apple's annual revenue for fiscal year 2023 was $383 billion.

Apple's revenue grew on a constant-currency basis despite a volatile macroeconomic environment, with improved performance each quarter. Emerging markets saw record revenue and double-digit growth. Apple is expanding its presence in these markets and offering affordability programs. The outlook for the December quarter assumes no worsening of the macroeconomic outlook and a negative impact from foreign exchange. Despite one less week than the previous year, Apple expects similar total revenue and growth in iPhone and Mac revenue.

The company expects a decrease in revenue growth for the iPad and Wearables, Home and Accessories categories due to different product launch timings. The Services business is expected to continue strong double-digit growth. Gross margin is expected to be between 45-46%, OpEx between $14.4-$14.6 billion, and OI&E around negative $200 million. The company's tax-rate is expected to be around 16%. The Board of Directors has declared a cash dividend of $0.24 per share. The first question from an analyst is about the demand for storage in iPhones and the impact on iCloud usage and financial considerations. Tim Cook responds to the question.

The speaker discusses the recent changes in iPhone Pro Max sales and notes a significant increase in Mac sales expected for the upcoming quarter due to a factory disruption last year. They also mention that the demand for the iPhone 15 in China has been positive.

During the current product cycle, Apple's revenue in Greater China was down 2% due to a 6% impact from foreign exchange rates. However, iPhone sales set a September quarter record in mainland China, while Mac and iPad sales were lower due to factory disruptions in Q3. Services also grew during the quarter. The company had the top four selling phones in urban China last year and is optimistic about future interactions with customers and employees. As for gross margin, Apple has been experiencing strong levels, with a record 45.2% in the September quarter and a projected 45-46% for Q1. This is affected by various factors, including commodity prices and product mix.

The company has seen growth in services and a drag from foreign exchange. They are confident about the coming year and their gross margin guidance reflects this. The iPhone 15 Pro and Pro Max are currently constrained, but they expect to be in supply demand balance by the end of the quarter, which is reflected in their guidance. The company is at the forefront of innovation in hardware, software, silicon, and services, and is investing in longer-term projects.

The speaker is asking about the company's capital intensity for fiscal year '24 and whether there will be a step-up or similar capital intensity compared to previous years. The speaker also asks about notable moving pieces in this area. The response is that the company's investments are focused on tooling and equipment for manufacturing plants, data centers, and facilities. These investments are shared with partners and suppliers, which may lead to variability in capital intensity. The company plans to make all necessary investments to continue innovating. The next question shifts to the US market and asks about the return to growth in iPhone sales and the level of promotion from US carriers.

During a conference call, Tim Cook and Luca Maestri were asked about the impact of product versus services mix on gross margins in the upcoming quarter. Cook stated that it was too early to predict the iPhone cycle and upgrade rates in the U.S., especially with constraints on the Pro and Pro Max models. Maestri explained that the December quarter typically has a heavy focus on product sales due to the holiday season, and the impact of services on gross margins is not as significant. He also mentioned that improved costs and mix on the product side will be partially offset by foreign exchange. The weakness in iPad and Wearables is not expected to have a significant impact on the margin trajectory in the December quarter.

Apple's Services business had a strong quarter in September, with significant growth in all geographic and product categories. The company set records for the App Store, advertising, cloud, video, AppleCare, payments, and saw a September quarter record for Music. This growth is attributed to the increasing number of customers in the ecosystem and higher engagement. The company continues to add content and features, such as TV+ shows and new games on Apple Arcade, to further drive growth. Additionally, Vision Pro is expected to be launched in early 2024.

The speaker is asked about the launch and consumer education of a new product, the Vision Pro, and how it compares to other products like AirPods and Apple Watch. They mention the excitement from developers and the unique features of the Vision Pro. The speaker also discusses the company's plans to bring the product to market and the potential for monetizing their efforts in generative AI.

Tim Cook discusses the importance of AI and machine learning in Apple's products, from small features like Personal Voice to lifesaving features like fall detection. He also mentions their investment in generative AI and how it will lead to advancements in their products. In response to a question about their move to in-house chips, Cook explains that it has been both economically profitable and strategically necessary for providing the best consumer experience. He does not rule out the possibility of working with chip vendors in the future.

Tim Cook, CEO of Apple, emphasizes the importance of owning primary technologies in their products, specifically silicon. He believes that this transition has allowed them to build products they couldn't before and sees the benefits every day. In regards to China, they set an iPhone revenue record in the September quarter and gained market share despite the market contracting. Cook views China as a crucial market for Apple's future success. In terms of Services, they had a strong quarter and play a significant role in distributing research partner's products.

Luca Maestri, Apple's Chief Financial Officer, was asked about the company's relationships with research partners and how they may be impacted by recent scrutiny. Maestri stated that these relationships are important and that Apple makes decisions in the best interest of their users. He also addressed the company's gross margin, stating that it has improved over the last four quarters despite declining revenue. He attributed this to cost reductions and the launch of new products, which tend to have higher costs initially but improve over time. The company's guidance for December reflects these factors.

The company's gross margin profile is influenced by the mix of products sold, with different products having different margin profiles. The company has been successful in offering more affordability solutions to customers, leading to margin expansion. The company does not provide guidance for future quarters due to various factors affecting gross margins, but is pleased with the current trajectory. In India, the company had an all-time revenue record and sees it as an exciting market with a lot of potential for growth. There is a lot of headroom for the company to increase its market share in India, as it currently has low share in a large market.

Tim Cook discusses Apple's supply chain, which is global and continually being optimized. The company has invested in advanced manufacturing in the US, and is constantly tweaking the chain when something doesn't work. They are also investing in other regions of the world.

During the investor call, Tim Cook and Luca Maestri discussed the impact of the extra week in the fiscal year and supply chain disruptions on iPhone sales. Maestri mentioned that when normalized for these factors, they still expect growth in iPhone sales. In response to a question about the increase in R&D spending, Cook stated that it is due to a combination of factors such as Apple Silicon, new products like Vision Pro, and content to support new services.

Apple's R&D investments in areas such as Vision Pro, AI, ML, and silicon transition are driving their competitive edge. These investments are also contributing to the company's gross margin expansion. Apple measures and increases customer lifetime value by looking at metrics such as the active device installed base, daily engagement in the ecosystem, and the transition from free to paid accounts. They pay close attention to these metrics to ensure that customers remain with the company over time.

The speaker discusses how the company tracks customer behavior and adds new services over time to increase revenue. They mention the progress made in payments and the growth of their Services sector. A replay of the call will be available and contact information for follow-up questions is provided.

This summary was generated with AI and may contain some inaccuracies.