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Apple held its fiscal third quarter 2024 (second calendar quarter) earnings call today, where Apple reported its best June quarter to date with revenues above expectations. Apple CEO Tim Cook and Apple CFO Luca Maestri provided some insights into Apple's performance, iPad sales, services growth, AI initiatives, and more.

iPhone performance

Apple CEO Tim Cook said the iPhone 15 models are outperforming the iPhone 14. The installed base hit a record high in the June quarter.

As for the iPhone 16, Apple CEO Tim Cook said the company is "very excited" about Apple Intelligence and the level of value Apple will provide to users. Cook said Apple Intelligence provides "another compelling reason to upgrade."

Apple Intelligence

Regarding Apple Intelligence, Cook said that Apple can't wait to see what great things developers do with Apple Intelligence. Cook expects that developers will widely adopt Apple Intelligence in their applications, and its capabilities will be applicable to many types of applications.

He confirmed that Apple plans to roll out Apple Intelligence features in phases, and it is expected that ChatGPT and Siri integration will be available before the end of this year.

iPad Sales

Apple's iPad sales grew significantly this quarter, thanks to the launch of the M4 iPad Pro and M2 iPad Air. iPad revenue was $7.2 billion, up 24% from $5.8 billion in the same period last year.

Service income

Apple's service revenue increased significantly to $24.2 billion, up from $21.2 billion in the same period last year, setting a new record. Paid subscriptions hit a record high, with paid subscriptions for various services exceeding 1 billion. New records were set in advertising, cloud and payment services.

Maestri said Apple is seeing continued growth in customer engagement with its ecosystem. Apple is doing a "very good job" of improving the quality of its services and increasing the amount of content available. Apple plans to continue adding new Apple TV+ and Apple Arcade content.

Other product revenue

iPhone revenue fell 1% ($39.3 billion), Mac revenue grew 2% ($7 billion), and home, accessories and wearables revenue fell 2% ($8.1 billion).

Digital Markets Act

Maestri said Apple is continuing to discuss its DMA compliance with the European Commission. Apple has seen "great acceptance" from developers for the changes, and overall, the performance of the services business and the App Store has been "quite good so far."

He reiterated that the App Store accounts for 7% of Apple's total revenue in the EU.

September Quarter

Apple said it expects September quarter revenue to grow year-over-year at a similar pace to the June quarter. Services revenue is expected to grow double-digit, similar to the rest of the year. Gross margins are expected to be 45.5% and 46.6%.

Maestri said Mac results will be challenged compared to a year ago as the entire fall 2023 quarter for the 15-inch MacBook Air was impacted.