Apple’s Chief Financial Officer Luca Maestri challenges investors’ concerns 8% decline in China’s revenueGiven that sales are increasing in other emerging markets.
“When we start looking at places like India, Saudi, Mexico, Turkey, Brazil… and Indonesia, the numbers are getting bigger, and we are very happy because these are the markets where we have market share [currenttly] Less,” Maestri said during Apple’s second-quarter earnings call on Thursday.
Revenue in China declined to $16.37 billion during the second quarter
“The population is large and growing, and our products are really making great strides in those markets,” Maestri added. “The level of excitement around the brand is very high.”
One thing Maestri said is verifiable: The populations in emerging markets are indeed large and growing. But according to available data, Apple’s growth in those areas is not as rosy a picture as the executive tried to paint.
Net sales in the U.S. — which would include places like Brazil and Mexico — declined slightly to $37.3 billion from $37.8 billion year-over-year, according to Apple’s Q2 2024 report, Sales in the “rest of Asia Pacific region”, which would include emerging markets such as India and Vietnam, declined 17% from $8.1 billion in the second quarter of 2023 to $6.7 billion as of March 31.
To play devil’s advocate, Apple’s declining sales in those regions may be more related to pricing rather than product promotion.
Maestri said Apple has introduced several financing solutions and trade-in programs that “lower the affordability threshold”, so customers can purchase in the top product range.
“This is very valuable to us in developed markets, but especially in emerging markets where affordability issues are more pronounced,” Maestri said.
Still, pointing to a ray of hope that emerging markets may not be enough to sway investors to settle down. China is Apple’s third-largest market, and it has become a battlefield of fierce competition with domestic companies like Oppo and Xiaomi dominating the market. According to Counterpoint ResearchHuawei has seen a massive turnaround in the country after being completely isolated from the US sanctions. The company’s phone sales increased nearly 70% from the previous year, while Apple’s sales fell 19%. In September 2023, Beijing imposed sanctions On iPhone for government officials in the workplace, echoing US action against Huawei.
China and emerging markets aren’t the only things that will weigh on Apple’s balance sheet this quarter. The company also reported a 10% decline in iPhone sales across all markets. Apple’s slow adoption of AI compared to competitors like Google and Microsoft has also likely played a role in slowing iPhone sales.
Despite the unimpressive hardware figures, Apple still managed to beat Wall Street’s expectations. This also increased the stock more than 10% In after-hours trading, growth in services revenues and a massive stock buyback of $110 billion were highlighted – both a jump on last year’s $90 billion purchases.
Investors on the call tried to get some more details from Maestri and Apple CEO Tim Cook about its upcoming generative AI launch, which Apple has teased over the past few months, but executives only said that announcements were imminent.
We’ll keep an eye on Apple’s Worldwide Developers Conference for more news.
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