Apple's June 28 earnings are coming, and the company has already warned about up to an $8 billion revenue hit from various factors. Here's what to expect from the iPhone maker during its Q3 2022.
The company will report its fiscal results for its thirds quarter, which corresponds to the second calendar quarter of the year, on July 28 before conducting a call with analysts. Apple CEO Tim Cook and CFO Luca Maestri will offer color on the results and expectations for the future.
As has been typical during the pandemic, Apple did not provide formal revenue guidance for the June quarter during its previous earnings report. However, Apple did warn of a potential $4 billion to $8 billion revenue hit because of supply constraints and strict Covid-19 lockdowns in China.
In 2022, zero-tolerance policies in China led to multiple lockdowns and factory closures throughout Apple's supply chain. Although Apple compensated for some of the lockdowns, the Cupertino firm is still expecting them to have a significant effect on its June quarter earnings.
Apple's supply situation has been fluid during the pandemic, with past constraints contributing to revenue hits around $6 billion in the last quarter of 2021. During that quarter, Apple missed Wall Street expectations.
Analysts are expecting Apple to report revenue around $82 billion and earnings-per-share of $1.16 in the June quarter.
Though it didn't provide revenue guidance, Apple did say it expects gross margins between 41.5% and 42.5% and operating expenses between $11.1 billion and $11.3 billion.
Despite the hardware challenges, Apple said it expected its entire business, as well as individual segments like Services, to continuing seeing double-digit growth in the June quarter.
On Apple's hardware, multiple reports and analyst comments indicate that demand for the iPhone 13 and iPhone 13 Pro is still unusually strong for this time of year. Apple's iPhone is also continuing to gain ground in China and is selling well despite smartphone downturns.
The June quarter will also be the first full quarter of availability for new devices like the Mac Studio, Studio Display, and third-generation iPhone SE.
Apple also announced new MacBook Air and MacBook Pro models with M2 chips during the quarter, but only the latter device shipped during it. However, the MacBook Pro won't likely have a significant effect on Mac shipments, given that it debuted toward the end of the quarter.
Many analysts, such as Morgan Stanley's Katy Huberty, are optimistic that Apple will outperform in the June quarter despite ongoing macro and supply constraints.
Q3 2022 compared to Q3 2021
In the year-ago June quarter, Apple reported a record-shattering $81.4 billion in revenue with strong growth across its product segments.
Like this June quarter, Q3 2021 was also the full first quarter of availability for products like the M1 iPad Pro, updated Apple TV 4K, and AirTag tracking accessory. Given price points and the potential stagnant growth of Apple's tablets, the company's spring hardware could drive greater sales than in Q3 2022.
However, Apple was not as supply constrained in the year-ago quarter. Covid lockdowns in China had a major impact on Apple's supply chain, and the $4 billion to $8 billion revenue hit is not an insignificant headwind.
