Financial Associated Press, April 28 (Editor Shi Zhengcheng) On Friday morning, Beijing time, Apple, the world's largest market capitalization, will announce the second fiscal quarter report of fiscal 2022. Because of Apple's deep business moat, many media outlets have also given the company the heavy responsibility of supporting the confidence of technology stocks.
This confidence is also reflected in the volatility of stock prices. Apple's cumulative decline year-to-date accumulation of 11.71% is not only significantly better than the NASDAQ, which has fallen into a bear market, but even slightly better than the retracement of the S&P 500 index.
(Apple Weekly Chart, Source: TradingView)
The growth rate of service revenue determines the quality of financial reports
Apple's financial report composition is relatively simple, only product sales and service, and hardware sales have significant seasonal characteristics. After hitting a record high of $123.9 billion in revenue just last quarter, overall growth is expected to continue to slow this fiscal quarter.
Analysts are currently giving a consensus estimate of $94.4 billion (+5.3% year-over-year), with services revenue expected to rise to $19.8 billion, up 17.15% year-over-year.
(Apple's quarterly revenue shows cyclical fluctuations, source: company financial report, financial association)
While that expectation means analysts believe that hardware sales in the second fiscal quarter will only be the same as last year at best, for Apple, the steady growth of service revenue is more about profitability. After all, the gross profit margin of the App Store, advertising, music, and Apple TV+ is obviously much higher than that of hardware products such as the iPhone.
Studies have pointed out that Apple's App Store gross margin is 78%, while the search advertising business is even higher. Because of this, it is reasonable to rumor that Apple is studying the launch of "subscription-based hardware services" in the market.
So after iPhone sales slowed down in 2015, Apple began to shift its focus to the server side. In the past four years, only in 2021, the iPhone 13 hot sales have driven product revenue growth more than service revenue. Analysts currently expect Apple's product sales revenue growth rate to be only 5.7% in fiscal 2022, but the growth rate of service revenue will remain at 17.2%.
(Comparison of Apple's quarterly product and service revenue growth, source: TradingView)
Pay attention to management risk profiles
Apple CEO Tim Cook said at a press conference last fiscal quarter that supply chain tension was the most important problem facing the company at that time, and the situation was expected to improve in the first three months of this year. But there is no doubt that Cook's words were made before the outbreak of this round of Russian-Ukrainian conflict. Online shopping site Burga expects that losing the Russian market alone could cost the consumer electronics giant $1.14 billion in revenue.
Apple's performance outlook for the current quarter has also attracted much attention because of the epidemic factor. According to Consumer Intelligence Research, the four iPhone 13 models accounted for 75% of the company's overall sales in March this year, and whether it can maintain market heat in the subsequent quarters needs to be marked with a question mark.
At the same time, Apple's China supply chain is also affected by the recent epidemic, although it will not involve the results released tomorrow, but it may lead to management downward revision of financial guidance.
In addition, due to the frequent reports of "Apple cutting orders" and analyst expectations in the past period of time, the management's statement on sales expectations tomorrow is expected to affect the global "Apple Chain" enterprises.