What we’ll be looking for in Apple’s Q1 results


Apple will reveal its first quarter results for the 2023 fiscal year this week. We’ll be watching to see how Apple is faring amid the cross-currents plaguing the world economy.

Here’s what to keep in mind when the results are released Thursday afternoon.

Hardware sales are important, but not the whole story

We all expect some bad news around iPhone sales, but how bad? While supply chain problems had some effect on availability, there are differences in some economies that mean smartphone sales fell across the board. But numerous data points tell us Apple fared better than most.

As we close in on the fiscal details, the recent hubbub around Apple’s hardware sales — iPhone, iPad, and Mac — is that while the company experienced some challenges, it hasn’t suffered to the same extent competitors have, and is seeing its actual market share in every sector climb.

In other words, Apple is outperforming competitors. But to what extent?

Two data points may be of interest: How many Android switchers joined the iPhone community in the last three months, and how many major enterprise/government Mac deployments took place? Those data points represent conversion, which in the Apple-plex means an extension of the Faith — that’s why Apple pointed out that over half of the iPads sold in Q4 22 went to people new to the platform.

You cannot save your way toward recovery

While every other tech firm seems set on cutting numbers, Apple’s track record during economic weakness has customarily been to keep its hard-won employees on board, rather than indulging in mass sackings. 

Look, Apple didn’t hire at anything like the rate of other tech firms during the pandemic, and Apple CEO Tim Cook has consistently stressed the company’s belief that you invest your way to prosperity.

Mass firings are never a good look for global corporations following years of eye-watering profits, so will Apple really make like others (you know who) in the valley and try to run its cloud-based services on a shoestring budget and human sweat. Or does it plan to invest in the long-term?

One thing I do expect is that hiring will continue to be highly strategic, and the product release cadence may shift slightly.

The strategic significance of services

Make no mistake, the current inclement financial weather is precisely what Apple’s services segment is designed to protect the company against.

It’s not just smart business to increase average revenue per unit, but also a great tool to provide some financial stability in difficult times.

With Apple making a range of content investments to boost its services, and as it stands on the precipice of entering what is expected to be another multi-billion-dollar market that relates to those media offerings, the health of Apple’s services segment will be very much on people’s minds.

Where is Apple with the supply chain shift?

We all know Apple has been making huge investments in India. Initially, it seemed thids was solely aimed at opening the world’s second biggest smartphone market. But the strategy changed and now it’s also about maximizing manufacturing there.

Estimates vary, but the company is thought to be working toward manufacturing around 25% to 50% of its products in India in the next few years.

While I can still recall mockery from some quarters when Cook began to invest in India, I doubt those people are laughing now. If nothing else, the burgeoning services segment and India journey show what a highly strategic leader can achieve when working with an entity that has already become phenomenally successful.

One more question: Will Apple slow hardware introductions as it puts new manufacturing facilities in position to support future growth?

What will we learn about the international outlook?

What will Apple’s international sales data tell us about individual markets? While we all know the UK economy is collapsing with the weight of Brexit, are other territories seeing recovery? Perhaps Apple’s internationally sourced data will provide a sign of the shifting realities of economic recovery in a post-COVID, post-global age?

We’ve already heard that the luxury market in China is recovering quickly, and the Biden administration seems to be delivering solid results for the US economy. Even mainland Europe, despite the war in Ukraine, appears to be turning things around. And in India (see above), there’s been a shift in consumer buying habits to favor premium smartphones.

What happens now?

Combining all these factors will drive whatever guidance Apple does provide for its year ahead — not to neglect that company management also have something up their sleeve to help drive interest in the coming year.

Apple’s AR glasses may not sell tens of millions of units, but they’ll certainly help keep the brand in the public eye, which should help prop up its business across all its other lines.

At time of writing Apple is expected to report roughly $121.5 billion (the prediction goes lower and higher, depending on whom you read) in revenue for $1.95 GAAP per share. The results arrive Thursday after US financial markets close.

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Copyright © 2023 IDG Communications, Inc.


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