According to the report, Apple’s third-quarter net revenue was $82.959 billion, an increase of 2% compared with $81.434 billion in the same period last year; net profit was $19.442 billion, a decrease of 11% compared with $21.744 billion in the same period last year. Among them, Apple’s third-quarter net revenue in Greater China was US$14.604 billion, compared with US$14.762 billion in the same period last year, a year-on-year decrease of 1%.
Following the earnings release, Apple management held a conference call with CEO Tim Cook, CFO Luca Maestri and Investor Relations (Senior) Director Tejas Gala and answered analyst questions.
The following is the main content of the analyst Q&A session of the conference call:
Evercore analyst Amit Daryanani: I have two questions. Let me ask Luca a question on gross profit margin. You seem to imply that the company’s gross profit margin in the fourth fiscal quarter will decline by 130 to 140 basis points sequentially. Can you talk about the positive and negative factors that have contributed to the change in gross profit margin? In particular, what role does the exchange rate play?
Luca Mastri: Our forecast for the gross profit margin for the fourth quarter is 41.5%-42.5%. The reason for the quarter-on-quarter decline is the exchange rate issue you mentioned, as well as the sales ratio of each product. The latter Partial degree of resolution can be obtained by lever adjustment. We expect the impact of exchange rate on the quarter-over-quarter change (gross margin) to be 50 basis points, which is roughly similar to the same period last year, but in fact (foreign currency against the US dollar) exchange rate fell by 130 basis points compared to the same period last year, so the exchange rate issue is obvious to us. There is an impact, but our response is still very effective.
Amit Daryanani: Another question for Tim, there is a lot of concern right now about the macroeconomic outlook, high inflation shocks and slowing consumer demand, but we don’t seem to see much of that in Apple’s earnings and outlook. Impact, is the company seeing recession and inflation concerns have an impact on consumer demand? Also, could the decline in the company’s wearables sales be interpreted as the first sign of softening consumption?
Tim Cook: I’m not an economist, so I can only try to answer your question from a corporate business perspective. The macroeconomic headwinds did have some impact on the company’s third-quarter performance, and one of the most obvious factors was the exchange rate, which Luca also mentioned, and the exchange rate dragged down 300 basis points of revenue growth.
In terms of product categories, except for exchange rates, the macroeconomic impact of the iPhone in the third fiscal quarter was not obvious; the Mac and iPad were greatly affected by the shortage of supply, so there was not enough supply to judge the real demand situation; As you and Luca said, wearables and home products are indeed affected by the macroeconomic environment; in terms of the service business, some businesses are indeed affected, such as the digital advertising business. The impact is very obvious. It can be seen that the impact of the company’s various departments is not the same, and considering the many challenges the company has experienced this fiscal quarter, we are still very satisfied with the results we can achieve.