AAPL Q3 2022 will be tough, says company, for five reasons

Analysts – and investors, of course – wanted to hear yesterday’s Q2 earnings, but they were even more eager to get any clues to how AAPL Q3 2022 numbers might look.

The company reported record revenue for fiscal Q2, despite component shortages, but the company warned that things could get tougher in the current quarter …

Apple yesterday reported Q2 revenue of $97.3B. That’s not only a new Q2 record but higher than even the most bullish of analysts had expected. The consensus forecast among the institutional analysts was $95.51B – and even JP Morgan, which came closest, was under at $96.43B.

However, Apple did also reveal that it expected significant supply-chain headwinds in the current quarter. Chief financial officer Luca Maestri warned that component shortages would be “substantially larger” this quarter.

Supply constraints caused by COVID-related disruptions and industrywide silicon shortages are impacting our ability to meet customer demand for our products. We expect these constraints to be in the range of $4 billion to $8 billion, which is substantially larger than what we experienced during the March quarter.

But the CFO also warned that three other factors would hurt the company’s Q3 revenue:

The COVID-related disruptions are also having some impact on customer demand in China. With respect to foreign exchange, we expect it to be a nearly 300 basis point headwind to our year-over-year growth rate. Additionally, we paused all sales in Russia during the March quarter. This will impact our year-over-year growth rate by approximately 150 basis points. Specifically related to services, we expect to continue to grow double digits but decelerate from our March quarter performance due to some of the factors I just described.

Finally, CEO Tim Cook said that the company was also monitoring sales very closely, to see what impact inflation would have on demand. While Apple doesn’t expect this factor to be as significant as those mentioned above, it’s likely to have some impact.

So all-in, that’s five factors likely to reduce Q3 revenue:

• Component shortages
• COVID-19 disruption in China
• Exchange rate weaknesses
• Loss of Russian sales
• Inflation reducing consumer spending power

While the supply constraints are temporary, Cook did admit that some sales might be lost permanently, because customers who needed something quickly would buy competitor products.

Photo: Adam Nowakowski/Unsplash