Apple's CEO, Tim Cook, and CFO, Luca Maestri, began the Apple Q3 Fiscal Year 2024 Earnings Conference Call with introductory remarks. The call was recorded and will include forward-looking statements. Cook announced that Apple had achieved a new June quarter revenue record of $85.8 billion, with EPS growing double digits to $1.40. They also set quarterly revenue records in multiple countries and regions, and an all-time revenue record in services. Cook also mentioned the success of the Worldwide Developers Conference and the unveiling of game-changing updates across their platforms.

Apple Intelligence is a new technology that builds on years of innovation in AI and Machine Learning. It will enhance user interaction with technology through features such as writing tools, image playground, and improved Siri. Privacy is a top priority, with on-device processing and private cloud compute. ChatGPT is also being integrated into Apple devices. Apple is committed to investing in AI and unlocking its full potential. Apple Vision Pro is also gaining popularity, with a wide range of spatial apps and content available. It is being used in both personal and enterprise settings to enhance creativity and productivity.

In this paragraph, the speaker discusses how each innovation from Apple is unlocking new ways of working, learning, and tapping into human potential. They then go on to share details about the company's June quarter results, including iPhone revenue and the positive feedback on the iPhone 15 lineup. They also mention the new features coming to the iPhone with iOS 18, such as the redesigned Photos app and the introduction of Apple Intelligence. The speaker then moves on to discuss Mac revenue and the popularity of the M3-powered MacBook Air. They also highlight the importance of security and privacy in their products. Finally, they mention the strong performance of iPad revenue, which was 24% higher year-over-year.

Apple had a successful quarter with the launch of the new iPad Air and iPad Pro, powered by the M series of Apple silicon. The company also saw a decline in revenue for wearables, home, and accessories. The Apple Watch continues to offer powerful AI features for users' health and safety. In services, Apple set an all-time revenue record with a majority of the categories seeing record revenues. Apple TV+ productions are receiving critical acclaim and the company is looking forward to new seasons of popular shows.

Apple has received 72 Emmy Award nominations and has expanded their Tap to Pay feature on iPhone to more countries. They have also announced updates to their services and opened their first retail location in Malaysia. The company values accessibility and privacy, and has introduced new features to cater to users with different needs.

In the sixth paragraph, the article discusses Apple's dedication to ensuring the security of user data and their progress in minimizing data collection and using renewable energy. The company also emphasizes their focus on innovation and their record-breaking revenue in the June quarter, driven by the launch of new products and growth in services revenue.

In the June quarter, the company's gross margin was 46.3%, near the high end of their guidance range. This was driven by a favorable mix shift towards services and cost savings, partially offset by a different mix within products. Operating expenses were at the low end of the guidance range and net income and operating cash flow were both at record highs. iPhone revenue was down 1% year-over-year, but grew on a constant currency basis and set records in several countries. The Mac also had a strong performance, with revenue up 2% year-over-year and reaching an all-time high in the installed base. Customer satisfaction for both the iPhone and Mac remains high.

iPad revenue increased by 24% due to the popularity of the new iPad Pro and iPad Air. The iPad install base is at an all-time high, with many new customers purchasing iPads. The wearables, home, and accessories category saw a decline, but the Apple Watch continues to attract new customers and has a high satisfaction rate. Services revenue reached a record high of $24.2 billion, driven by the growth of active devices and increased customer engagement. Paid subscriptions also showed strong growth, with over 1 billion paid subscriptions across the platform. Apple is constantly working to improve the quality and variety of its services.

Apple had a successful quarter with new content on Apple TV+, games on Apple Arcade, and updates for iCloud, Apple Pay, Apple Cash, and Apple Music. Many businesses are using Apple products to increase productivity, including USAA and American Express. Boston Children's Hospital and Lufthansa are using Apple Vision Pro for innovative training experiences. Apple has a strong cash position and returned over $32 billion to shareholders. The outlook for the September quarter assumes stable macroeconomic conditions, but foreign exchange may continue to be a challenge.

Apple expects their total company revenue to grow at a similar rate as the previous quarter, with double digit growth in services revenue. They also anticipate a gross margin between 45.5% and 46.5%, OpEx between $14.2 billion and $14.4 billion, and OI&E around negative $50 million. The tax rate is expected to be around 16.5%. The Board of Directors has declared a cash dividend of $0.25 per share of common stock. Tim Cook mentioned that the installed base of iPhones hit an all-time high and the iPhone 15 is performing better than the iPhone 14 in terms of sales. He also mentioned that the 15 is doing better than the 14 in the same number of weeks from launch.

In this paragraph, Tim Cook discusses the upgrade rates for Apple products and the company's performance in the China market. He mentions that it is difficult to predict upgrade rates mid-cycle, but that the new Apple Intelligence feature will provide value and potentially lead to more upgrades. Cook also notes that sales in China decreased by 6% but improved on a constant currency basis, with over 50% of the decline being currency related. He mentions that the iPhone installed base set a record and that the 15 family is outperforming the 14 family in terms of sales. Cook also highlights the importance of gaining new customers in China.

Tim Cook and the Apple team are confident in the long-term opportunity in China, with the majority of customers in Mainland China buying Apple products for the first time. During the quarter, iPad sales returned to growth in Greater China. The launch of Apple Intelligence this week is expected to have a positive impact on services, as it will enable developers to take their apps to the next level. There has been some component price inflation and mix, but the team is managing it well and is confident in the current component environment's impact on margins.

The speaker discusses the company's performance in the June quarter and their outlook for the September quarter. They mention a slight decrease in margin due to a shift in product mix, but overall, they are pleased with their high levels of gross margin. They also mention the impact of foreign exchange and commodity prices. When asked about demand for the new iPhone models with Apple Intelligence, they state that it is too early to tell as the announcement was made in June.

During the earnings call, Mike Ng asks Tim Cook about the promotional environment for Apple's channel partners in the US, particularly in light of the expected strong smartphone upgrade cycle. Tim Cook responds by expressing excitement about Apple Intelligence and its potential as a reason for consumers to upgrade. He also mentions that the rollout of Apple Intelligence will be staggered, with some features already available to developers and others coming later in the year.

Apple's Services growth rates have been impressive for several quarters, and it seems to have accelerated recently. The growth is a combination of factors, including a larger installed base, increased engagement, and the launch of new services like Apple TV+ and Fitness+. Apple continues to invest in improving the quality and content of these services, which contributes to the growth in both ARPU and volume.

Apple CEO Tim Cook and CFO Luca Maestri discussed the company's 14% growth in Services this quarter, which exceeded expectations despite challenging comparisons to the previous year. They also announced partnerships with OpenAI and ChatGPT for Apple Intelligence, but did not disclose details about the monetization models. Cook sees both on-device processing and world knowledge as important aspects for the company's growth. In response to a question about gross margins, Maestri noted a 150 basis point increase in product gross margins on average for calendar year 2023.

During 2024, there were minimal changes in gross margins compared to the previous year, despite facing foreign exchange headwinds. This is due to the unpredictable nature of foreign exchange rates and the varying margin profiles of different products. The recent launch of the iPad may also impact gross margins, but the company's focus is on overall gross margin dollars rather than percentage. Additionally, the state of commodity markets can also affect gross margins, but the company is confident in their current position. The next question is from Krish Sankar, who congratulates the company on their strong results and asks a question to Luca or Tim.

The speaker asks about the increasing silicon content and commodity costs for AI edge devices and how it will affect margins. Tim Cook responds by saying there are system and silicon requirements for Apple Intelligence and that the gross margin for the current quarter is in line with the previous quarter. The speaker then asks about the weakness in China and Tim Cook attributes it to the highly competitive market and macroeconomic factors.

Tim Cook and Krish Sankar discuss the recent improvements seen in the business and their excitement for the deployment of Apple Intelligence in various apps. They believe that developers will be able to use this technology in a natural and exciting way, and are looking forward to seeing what they do with it. David Vogt also asks about the potential impact of Apple Intelligence on different product categories, but Luca does not provide a full answer in his prepared remarks.

Atif Malik asked a question to Tim about the early days of a new product launch. Luca Maestri provided information about the company's projected revenue growth for the next quarter, stating that they expect to see similar growth rates as the previous quarter despite some foreign exchange headwinds. He also mentioned that the Mac and iPad categories may have challenging comparisons due to previous product launches.

Developers who have tried the iOS 18.1 beta version this week have given positive feedback on Apple Intelligence software features such as notification summary and reduced interruption focus. There is a staggered launch planned for these features, with US English being rolled out in the fall and more functionality and languages to be added over the next year. Some changes have been made to comply with the DMA rules in Europe, but the impact on the Services business and App Store revenue has been minimal. The next question is about the impact of Apple Intelligence on the company.

The speaker discusses the regulatory aspect of the company's staggered launch and the timelines for rollout, mentioning engagement with regulatory bodies in the EU and China. They also mention the acceleration of the Wearables category, attributing it to difficult launch comparisons and overall growth in the past 12 months.

During a Q&A session, Tim Cook and Luca Maestri addressed questions about Apple's investment in innovation, specifically regarding the rollout of new features and the potential impact on R&D and CapEx. Cook stated that the company has been investing in AI and ML for years and has increased R&D spending while also redeploying certain skills. Maestri noted that free cash flow margins have increased and the company has also increased its return of capital to shareholders.

The company has seen an improvement in their top-line which has led to margin expansion and better operating cash flow. They have a hybrid model for investments and prioritize capital efficiency. The company is pleased with their free cash flow this year. A replay of the call will be available for two weeks. Press and financial analysts can contact specific individuals for further questions. The conference has now concluded.

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