What to expect from Apple's quarterly earnings report | Cult of Mac

What to expect from Apple’s quarterly earnings report

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Some analysts think Apple will beat earnings expectations, but others are doubtful.
Some analysts think Apple will beat earnings expectations, but others are doubtful.
Photo: Ed Hardy/Cult of Mac

Apple’s next quarterly earnings report and call with analysts take place on Thursday. (It’s Q3 for Apple’s fiscal year despite being Q2 on your calendar.) And the company has already warned it may take an up to $8 billion revenue hit for several reasons.

As usual, after the fiscal results come out and the stock market closes for the day, Apple CEO Tim Cook and CFO Luca Maestri will talk with financial analysts on a public call about the results and future expectations.

Apple quarterly earnings may take a revenue hit of up to $8 billion

Apple didn’t provide revenue guidance for the June quarter in its previous earnings report. That has become the norm during the pandemic.

But the Cupertino tech giant did warn that global supply constraints and COVID-19 lockdowns in China could sap between $4 billion and $8 billion in revenue in the June quarter.

China’s zero-tolerance policies have prompted several lockdowns and factory closures throughout Apple’s supply chain this year. Apple made due as well as it could, shifting production, but the iPhone maker still expects to take a pretty heavy hit.

And this won’t be the first one. It took a $6 billion hit for the same reasons in the last quarter 2021. And it missed Wall Street expectations for that quarter — quite the rarity for the financial juggernaut.

After modest expectations and good results last quarter, analysts believe Apple will report June quarter revenues of about $82 billion and earnings-per-share of $1.16. Many put a 12-month stock-price forecast at $200, though some aim a little lower, at $180 to $185.

Apple’s expectations

Despite its stance of withholding most revenue guidance, Apple noted it expects gross margins between 41.5% and 42.5% and operating expenses between $11.1 billion and $11.3 billion.

While pandemic-related hardware challenges continue, Apple said it thinks the overall business, including individual segments such as Services, to keep enjoying double-digit growth in the June quarter.

In the hardware department, analysts indicate demand for the iPhone 13 and iPhone 13 Pro remains unusually strong for this time of year. In particular, iPhone keeps growing in popularity in China, selling well despite smartphone downturns.

New devices will be counted

The June quarter is the first full one in which new devices like the Mac Studio, Studio Display and third-generation iPhone SE have been available.

And although Apple also rolled out new MacBook Air and MacBook Pro models with M2 chips during the quarter, only the MacBook Pro shipped during it. But it came out toward the end of the quarter, so it may not have a big impact on numbers.

Despite supply constraints, many analysts remain confident Apple will outperform or match expectations in the June quarter. But other doubt Cupertino can overcome the unusually hard hit and may post results lower than expectations.

Q3 2022 versus Q3 2021

In 2021’s June quarter, Apple reported a record-breaking $81.4 billion in revenue with strong growth across all product segments.

That quarter was also the full first quarter of availability for products like the M1 iPad Pro, updated Apple TV 4K and AirTag trackers.

But Apple suffered less from supply constraints in the year-ago quarter and there was no serious concern of a revenue shortfall to the tune of up to $8 billion.

Apple’s Q3 earnings report should be out on Thursday, July 28, at about 1:30 p.m. PT with the earnings call to follow at 2 p.m. PT.