Apple’s Chief Financial Officer Luca Maestri sought to reassure investors during the company’s second-quarter earnings call on Thursday. Despite an 8% decline in China revenue, Maestri pointed to robust growth in emerging markets as a potential offset.
“When we start looking at places like India, like Saudi, like Mexico, Turkey, Brazil…and Indonesia, the numbers are getting large, and we’re very happy because these are markets where our market share is [currently] low,” Maestri remarked.
He emphasized the significant and growing populations in these emerging markets, noting the increasing popularity of Apple products within these regions.
However, it is worth noting that Apple’s growth in these regions may not be as rosy as Maestri’s comments suggest. According to available data, net sales in the Americas, including Brazil and Mexico, experienced a slight year-over-year decline from $37.8 billion to $37.3 billion. Sales in the “rest of Asia Pacific,” which encompasses emerging markets like India and Vietnam, also saw a 17% drop from $8.1 billion to $6.7 billion.
Maestri acknowledged the potential impact of pricing on Apple’s sales in emerging markets, emphasizing the introduction of financing solutions and trade-in programs to enhance affordability. Nevertheless, the potential of emerging markets may not be sufficient to fully mitigate investor concerns.
China remains Apple’s third-largest market, and competition has intensified with domestic companies like Oppo and Xiaomi gaining market share. Counterpoint Research reported a significant surge in Huawei’s phone sales in the country, with an increase of almost 70% year-over-year, while Apple’s sales declined by 19%. The Chinese government’s ban on the iPhone for government officials in the workplace has further impacted Apple’s presence in the market.
Beyond emerging markets, Apple also reported a 10% drop in iPhone sales across all markets. The company’s slow adoption of AI compared to competitors like Google and Microsoft may have also contributed to the slowdown in iPhone sales.
Despite these challenges, Apple managed to surpass Wall Street expectations and triggered a stock hike of over 10% in after-hours trading. This was driven by an increase in services revenue and a substantial $110 billion stock buyback, exceeding last year’s $90 billion purchase. Investors eagerly await Apple’s Worldwide Developer Conference for further announcements, particularly regarding the upcoming launches of generative AI products that the company has hinted at in recent months.
