Apple is set to report earnings after the market close Tuesday for its fiscal first quarter — the period CEO Tim Cook already warned could disappoint.
Here’s what Wall Street is expecting:
- EPS: $4.17, according to Refinitiv consensus estimates
- Revenue: $83.97 billion, according to Refinitiv consensus estimates
- Services revenue: $10.87 billion, according to Refinitiv consensus estimates
Apple is reporting numbers for its December quarter under a new structure, offering gross margin figures for its services and products segments and withholding unit sales numbers for its most popular products like the iPhone. The new structure, announced in November, has dented the stock and left some analysts grasping for growth metrics.
The company is expected to post strong numbers in its services segment, a catch-all category that includes Apple Pay, Apple Music and iCloud storage. Wall Street expects revenue in the division to top $10 billion, marking a 27 percent year-over-year increase.
Gross margin for the segment, reported for the first time this quarter, could exceed 60 percent according to some projections. Apple’s gross margin for its overall business hangs around 38 percent.
Earlier this month, Cook warned that headwinds in China would drag results lower. China accounts for Apple’s second largest source of revenue by country, behind the U.S., and has been posting annual growth for the past several quarters.
Apple reported China revenues of $17.96 billion a year ago, and $11.41 billion in its fiscal fourth quarter. A year-over-year decline this quarter would be the first period without annual growth in the market since June 2017.
Cook’s warning earlier this month of weaker iPhone sales in China rubber-stamped a months-long conversation around shrinking smartphone sales and market saturation.
Investors will get only minimal insight on that front this quarter, since Apple won’t break out unit sales for the iPhone or its other major product lines. But Wall Street will undoubtedly be looking for even modest growth in products revenue.
Last quarter, Apple reported year-over-year growth of roughly 30 percent in both iPhone and Other Products revenue, which includes the Apple Watch, the HomePod smart speaker and accessories like the AirPods. Revenue for the Mac grew 3 percent year over year during the September quarter, and revenue for the iPad fell 15 percent year over year.
This is a developing story. Please check back for updates.
WATCH: Here’s why Apple makes up only 1 percent of India’s smartphone market share
