Q1-2024 Revenue Analysis

The first quarter holds significant importance for Apple, coming right after the release of new iPhones and other products, coinciding with the holiday season. This quarter establishes the trajectory for the company's performance throughout the year. In this report, we examine Apple's Q1 performance and the primary factors driving revenue. Here are our key takeaways:

1.     Revenue figures in 2024 Q1

Apple Inc. witnessed a rebound in Q1 of 2024, marking the end of a streak of four consecutive quarters with declining revenue. The 2% revenue growth in Q1 of 2024 is a welcome improvement following a challenging 2023; however, revenues remain $4.5 Bn lower compared to the levels seen in Q1 of 2022.

	2024-Q1	2023-Q1	2022-Q1	2021-Q1	2020-Q1	2019-Q1	2018-Q1
Q1 Revenues ($ Bn)	119.58	117.15	123.95	111.44	91.82	84.31	88.29
YoY Growth (%)	2.1%	-5.5%	11.2%	21.4%	8.9%	-4.5%	12.7%

 

2.     Which segments are driving growth?

In Q1 2024, Apple’s revenue growth was driven by the iPhone and Services categories contributing ~77% of the revenue. Higher net sales of iPhone 15 models during the quarter, and the increasing adoption of subscription-based services significantly contributed to this growth.

A)    iPhone Devices

Following a decline in the previous Q1, there was a growth in Q1 of 2024 propelled by robust sales of the new iPhone models. However, despite this improvement, the revenue remains $2 Bn below the level seen in Q1 of 2022. iPhone sales fell short of analyst expectations, primarily due to a decline in the Chinese market.

	2024-Q1	2023-Q1	2022-Q1	2021-Q1	2020-Q1	2019-Q1	2018-Q1
iPhone ($ Bn)	69.70	65.78	71.63	65.60	55.96	51.98	61.10
YoY Growth (%)	6.0%	-8.2%	9.2%	17.2%	7.6%	-14.9%	NA
% of sales	58.3%	56.1%	57.8%	58.9%	60.9%	61.7%	69.2%

 

B)    iPad Devices

The iPad segment saw its most significant decline in the last five Q1 periods, characterized by alternating growth cycles since 2022. Factors such as modest updates in new Generation models, high pricing, and feature limitations in the iPad mini line are believed to have contributed to the decline in sales.

	2024-Q1	2023-Q1	2022-Q1	2021-Q1	2020-Q1	2019-Q1	2018-Q1
iPad ($ Bn)	7.02	9.40	7.25	8.44	5.98	6.73	5.76
YoY Growth (%)	-25.3%	29.6%	-14.1%	41.1%	-11.2%	16.9%	NA
% of sales	5.9%	8.0%	5.8%	7.6%	6.5%	8.0%	6.5%

 

C)    MacBook Devices and Wearables

Revenue growth for MacBook remains stagnant, showing only a 0.6% increase after the sharp decline in the previous Q1. The Wearables segment saw its second consecutive decline in Q1. This decline can be attributed in part to the ongoing patent dispute with Masimo, which temporarily halted Apple Watch sales and led to the removal of the Blood-Oxygen tool.

	2024-Q1	2023-Q1	2022-Q1	2021-Q1	2020-Q1	2019-Q1	2018-Q1
Mac ($ Bn)	7.78	7.74	10.85	8.68	7.16	7.42	6.82
YoY Growth (%)	0.6%	-28.7%	25.1%	21.2%	-3.5%	8.7%	NA
% of sales	6.5%	6.6%	8.8%	7.8%	7.8%	8.8%	7.7%
Wearables, Home & Accessories ($ Bn)	11.95	13.48	14.70	12.97	10.01	7.31	5.48
YoY Growth (%)	-11.3%	-8.3%	13.3%	29.6%	37.0%	33.3%	NA
% of sales	10.0%	11.5%	11.9%	11.6%	10.9%	8.7%	6.2%

 

D)    Services

The segment continues to demonstrate robust growth, driven by revenues generated from Apple Music, Apple TV+, and iCloud. The Services segment benefits from the expanding base of active devices, which now exceeds 2.2 Bn. Moreover, the rise in customer engagement with Apple's services is reflected in the growth of transacting accounts and paid accounts, reaching record levels.

	2024-Q1	2023-Q1	2022-Q1	2021-Q1	2020-Q1	2019-Q1	2018-Q1
Active Devices (Bn)	2.20	2.00	1.80	1.65	1.50	1.40	1.30
YoY Growth (%)	10%	11%	9%	10%	7%	8%	13%
Services ($ Bn)	23.12	20.77	19.52	15.76	12.72	10.88	9.13
YoY Growth (%)	11.3%	6.4%	23.8%	24.0%	16.9%	19.1%	NA
% of sales	19.3%	17.7%	15.7%	14.1%	13.8%	12.9%	10.3%

3.     Which Geographies are driving growth?

This quarter saw positive growth returning to the Americas, Europe, and Japan markets, while China experienced a decline for the second consecutive Q1. Sales in the ROA region saw positive growth, driven by emerging markets like Malaysia, the Philippines, India, and Indonesia.

	2024-Q1	2023-Q1	2022-Q1	2021-Q1	2020-Q1	2019-Q1	2018-Q1
Americas ($ Bn)	50.43	49.28	51.50	46.31	41.37	36.94	35.19
YoY Growth (%)	2.3%	-4.3%	11.2%	11.9%	12.0%	5.0%	NA
% of sales	42.2%	42.1%	41.5%	41.6%	45.1%	43.8%	39.9%
Europe ($ Bn)	30.40	27.68	29.75	27.31	23.27	20.36	21.05
YoY Growth (%)	9.8%	-7.0%	8.9%	17.3%	14.3%	-3.3%	NA
% of sales	25.4%	23.6%	24.0%	24.5%	25.3%	24.2%	23.8%
Greater China ($ Bn)	20.82	23.91	25.78	21.31	13.58	13.17	17.96
YoY Growth (%)	-12.9%	-7.3%	21.0%	57.0%	3.1%	-26.7%	NA
% of sales	17.4%	20.4%	20.8%	19.1%	14.8%	15.6%	20.3%
Japan ($ Bn)	7.77	6.76	7.11	8.29	6.22	6.91	7.24
YoY Growth (%)	15.0%	-5.0%	-14.2%	33.1%	-9.9%	-4.5%	NA
% of sales	6.5%	5.8%	5.7%	7.4%	6.8%	8.2%	8.2%
Rest of Asia Pacific ($ Bn)	10.16	9.54	9.81	8.23	7.38	6.93	6.85
YoY Growth (%)	6.6%	-2.8%	19.3%	11.5%	6.5%	1.1%	NA
% of sales	8.5%	8.1%	7.9%	7.4%	8.0%	8.2%	7.8%

4.     Will Apple revenues hit $400 Bn in FY 2024?

We have examined the historical significance of Q1 sales in contributing to annual revenues over the past six years. Analysis reveals that before the onset of COVID-19, Q1 sales typically represented approximately 33% of total annual revenues. However, the increasing share of service revenues, which has nearly doubled from around 10% in 2018 to approximately 19% in 2024, has led to a slight decrease in the quarterly contribution to annual revenues to about 31%. This shift can largely be attributed to the less cyclical nature of service revenues.

	2024-Q1	2023-Q1	2022-Q1	2021-Q1	2020-Q1	2019-Q1	2018-Q1
Q1 Revenues	119.58	117.15	123.95	111.44	91.82	84.31	88.29
FY Revenues	390.77	383.29	394.33	365.82	274.52	260.17	265.60
Q1/FY	30.6%	30.6%	31.4%	30.5%	33.4%	32.4%	33.2%

Our estimates suggest that in line with recent years, Apple is projected to generate around $390 Bn in revenues in FY 2024. This aligns with the expectations of street analysts, whose consensus estimates range between $387 Bn to $391 Bn.

Therefore, reaching the $400 Bn mark remains a formidable challenge, which could potentially be achieved with an annual growth rate of 5-6%. However, this may prove to be a daunting task unless Apple introduces innovative advancements later in the year.