The quarter and the guide
Results: June quarter revenue and earnings were essentially in line with expectations with overall revenue down 1.5% y/y compared to down 2.5% in March. I view these results as respectable given the broader smartphone market was down closer to 20% in the quarter, and that includes the help of the iPhone. Excluding the iPhone, I believe the overall market would have been down closer to 25% y/y.
Gross margin and profits were slightly better than expectations.
Guidance: Shares of AAPL traded down about 2% after the earnings call given September quarter guidance, excluding the impact of FX, calls for revenue to be down 3.5% y/y. The company will benefit from a 2% y/y FX tailwind, so factoring in FX, revenue in September will be down about 1.5% y/y compared to Street expectations of up 1% y/y.
- iPhone and Services growth in September will accelerate, and Mac and iPad will be down-double digits from difficult comps last year with new Macs and new iPads.
- September quarter gross margins are expected to be flat from June. This is a positive development given over the past two years gross margin has dipped by about 1% sequentially from June to September.