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Apple (AAPL +2%) is trading modestly higher after reporting Q3 (Jun) results last night. The headline numbers were roughly as expected with a nice EPS beat. Revenues rose 4.9% yr/yr to a new JunQ record of $85.78 bln, which was better than expected and a nice bounce back following a revenue decline in Q2. On the call Apple said it expects Q4 (Sep) yr/yr revenue growth to be similar to Q3, which implies slight upside. Looking ahead, Apple is expected to unveil iPhone 16 next month.

• iPhone performed well with revenue being a bit better than street estimates. Revenue declined 1% yr/yr to $39.30 bln vs $38.8 street ests. JunQ is typically a slower quarter for iPhone sales as consumers await the next generation of iPhone, which is usually announced in September. iPhone set JunQ records across several countries and the iPhone active install base grew to a new all-time high in every geographic segment. Looking ahead, iOS 18 will usher in some big changes.
• Mac sales rose 2.4% yr/yr to $7.01 bln. Apple says customers are loving the latest M3-powered 13-inch and 15- inch MacBook Air. Mac saw a particularly strong performance in emerging markets with JunQ records for Mac in Latin America, India and South Asia. With back to school season upon us, Apple sees MacBook Air as the perfect companion for students and small business owners.
• iPad revenue jumped 23.6% yr/yr to $7.16 bln, a nice bounce back following a decline in MarQ. During the quarter, Apple unveiled the all-new 11-inch and 13-inch iPad Air, which performed well. And with the new iPad Pro, Apple says it pushed the boundaries of power efficient performance with the remarkable M4 chip.
• Wearables revenue was down 2.3% yr/yr at $8.10 bln. Watch and AirPods continue to face a difficult compare against prior year launches of the AirPods Pro 2nd generation, the Watch SE and the first Watch Ultra. Apple Watch continues to attract new customers with almost two-thirds of customers purchasing an Apple Watch during the quarter being new to the product, sending the Apple Watch install base to a new all-time high.
• Services revenue rose a healthy 14.1% yr/yr to an all-time record of $24.21 bln with paid subscriptions at an all-time high. Apple achieved revenue records in the majority of its Services categories, including advertising, cloud and payment services. Apple TV+ productions are a hit with audiences on screens large and small.

Overall, this was a solid but not spectacular quarter, partly because Apple was facing FX headwinds. iPhone sales showed nice upside, but JunQ is a seasonally slow quarter ahead of its typical September launch, so it's less important than usual. Services were a bright spot and iPad bounced back in a big way, fueled by new product launches. However, China was weak with Greater China down 6.5% yr/yr (less than -3% CC) with FX being a big headwind. The silver lining is that China improved from 1H. Finally, even with its recent pullback, the stock is still up significantly (+25%) since its MarQ report in early May. As such, we are pleased to see Apple trading higher, especially given the recent weakness in other mega cap tech names.