Apple to report Q1 earnings as global smartphone sales growth slows

Apple (AAPL) is set to release its Q1 earnings after the closing bell on Feb. 2, and investors and analysts are looking to see just how much COVID lockdowns in China impacted iPhone sales during the holiday season.

Here’s what analysts are expecting from the company, as compiled by Bloomberg, compared to how Apple performed in the same quarter last year.

Revenue: $121.1 billion expected versus $123.9 billion in Q1 2022
Adj. Earnings per share: $1.94 expected versus $2.10 in Q1 2022
iPhone revenue: $68.3 billion expected versus $71.6 billion in Q1 2022
Mac revenue: $9.72 billion expected versus $10.8 billion in Q1 2022
iPad revenue: $7.7 billion expected versus $7.2 billion in Q1 2022
Wearables: $15.3 billion expected versus $14.7 billion in Q1 2022
Services: $20.4 billion expected versus $19.5 billion in Q1 2022

Apple has outperformed much of its Big Tech cohort over the last 12 months, with shares off just 16% as of Wednesday afternoon, compared to Microsoft (MSFT), which is off 18%, and Google parent Alphabet (GOOG, GOOGL), which is off 25%. But it hasn’t been without its own issues.

Throughout November and December, Apple faced significant headwinds from COVID lockdowns and worker protests at manufacturer Foxconn’s facility in Zhengzhou, China. The plant, which employs 200,000 workers, produces the bulk of Apple’s iPhone 14 Pro and iPhone 14 Pro Max handsets.

The iPhone 14 Pro and iPhone 14 Pro Max, which start at $999 and $1,099, respectively, are two of Apple’s most important devices. Their steeper prices help boost the average iPhone selling price, driving higher revenues for the tech giant.

According to IDC’s Worldwide Quarterly Mobile Phone Tracker, shipments of Apple’s iPhone fell 14.9% year-over-year, from 85 million units in Q4 2021 to 72.3 million units in Q4 2022.

Apple CEO Tim Cook speaks during an product launch event in San Francisco, Wednesday, March 7, 2012. Apple is expected to reveal a new iPad model at Wednesday’s event in San Francisco. (AP Photo/Jeff Chiu) — Apple CEO Tim Cook. (AP Photo/Jeff Chiu)

But it’s not just the iPhone that’s faced trouble, though. During Apple’s Q4 earnings call, Apple CFO Luca Maestri said that Apple expects nearly 10 percentage points of negative year-over-year impact from foreign exchange headwinds.

What’s more, he said he expects Mac revenue to “decline substantially year over year. Services revenue, meanwhile, is expected to grow, but face foreign exchange headwinds, as well.

According to UBS analyst David Vogt, Apple’s second quarter could also face difficulties.

“Although we believe the market is sufficiently cautious on December quarter results, we believe there is modest downside risk heading into the March outlook,” he wrote in a recent investor note. “While we don’t expect the resumption of detailed guidance typical of Apple earnings prior to Covid, we expect the commentary to be cautious regarding product demand across the board.”

Despite the potential for slowing sales, Apple has still managed to avoid large scale layoffs, unlike its peers including Microsoft, Google, and Amazon (AMZN).

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