Apple is set to announce its Q1 2020 earnings results on Tuesday, giving investors and analysts their first solid look at the company’s performance during the crucial holiday sales period, as well as a better understanding of how well the iPhone 11 has sold in its first few months of availability.
Here’s what analysts are expecting out of Q1 2020 as compiled by Bloomberg, and where Apple (AAPL) was during the same quarter last year: Revenue: $88.37 billion expected versus $84.31 billion in Q1 2019 Earnings per share: $4.55 expected versus $4.18 in Q1 2019 The large year-over-year jump in expected revenue is a result of improved sales in China, which saw a significant slowdown for Apple in 2019, prompting CEO Tim Cook to issue a rare guidance revision ahead of the company’s Q1 2019 earnings report. Importantly, analysts increasingly believe iPhone 11 sales outperformed their previous estimates, which may have helped Apple beat expectations in the quarter. “We believe the company is poised to handily beat Street expectations in light of a strong holiday season with pent-up demand catalyzing iPhone 11 purchases across the board,” Wedbush’s Dan Ives wrote in an analyst note. “Our recent Asia checks around iPhone 11 units look robust and coupled with ‘jaw dropping’ AirPods momentum should lead to clear upside in the upcoming results with strong March guidance also likely on the horizon,” he added. It’s not just Ives, either. Jeffrey Kvaal at Nomura’s Instinet said that Apple’s iPhone sales could increase 1% compared to Q1 2019. “Healthy iPhone 11 shipment times, an improving China, and an unexpectedly competitive U.S. market bolster our consensus view of 67mn iPhones in F1Q,” Kvaal wrote in his own note. Of course, much of Apple’s growth as of late has been attributed to demand for the company’s AirPods lineup and Apple Watch, as well as the continued expansion of its service business, and both are expected to be in the spotlight when the company announces its earnings. In fact, Gene Munster of Loop Ventures believes Apple’s services and wearables businesses combined will make up 30% of the company’s total revenue in 2020. Much of the discussion around Apple, however, has to do with the expectation that it will launch a 5G-capable iPhone lineup in September. That device could spur a sales supercycle for Apple, which would result in a major increase in the number of users upgrading their old phones to the newer 5G models. Some, including Kvaal, however, believe the supercycle argument is overblown, and might not pan out the way other analysts suggest. “The incremental utility to the consumer seems limited as well,” Kvaal notes. “Consumers can already consume as much video as they would like and new 5G applications seem some distance off.”
