Apple's earnings report is just hours away — and it all comes down to iPhone momentum

Apple is scheduled to report its September-quarter earnings, with investors primarily focused on indicators of sustainable iPhone demand. While analysts, such as Rosenblatt's Barton Crockett, suggest a successful iPhone 17 launch based on wireless carrier upgrade trends, there is a noted concern that stronger sales of cheaper base models could lead to a negative mix impact on revenue per unit.

Analysis

Apple (AAPL) is scheduled to release its September-quarter earnings, with market focus primarily on indicators of sustainable iPhone demand, particularly for the recently launched iPhone 17. The company's practice of not disclosing granular iPhone model performance or unit sales necessitates a reliance on external data points for demand assessment. The iPhone 17's contribution to the fiscal fourth quarter will be partial, given its mid-September release.

Rosenblatt analyst Barton Crockett notes a successful iPhone 17 launch, supported by wireless carrier reports indicating a wave of upgrades. However, a significant concern arises from the observed stronger demand for cheaper base models, which could lead to a negative mix impact on average revenue per unit, potentially offsetting robust unit sales.

This potential revenue mix dilution contributes to a cautious market sentiment, with a general sentiment score of -0.1 for AAPL. The initial sales trajectory and product mix of the iPhone 17 are crucial for projecting future revenue and assessing overall company fundamentals, despite its limited impact on the reported quarter.

Key Decisions for Investors

• Investors should closely monitor Apple's commentary on average selling prices (ASPs) and product mix, as strong unit sales of cheaper iPhone models could dilute overall revenue growth.
• Scrutinize Apple's guidance for the December quarter, which will provide a more comprehensive view of iPhone 17's demand and mix trends, offering critical insights into future revenue trajectory.
• Evaluate ongoing wireless carrier reports and upgrade cycle data for further indications of iPhone demand strength and any shifts in consumer preference towards higher-margin models.