Tech giant Apple (AAPL 0.75%) is scheduled to report its fiscal fourth-quarter results on Thursday. Wall Street will undoubtedly be watching the report closely. After all, the company's approximately $2.7 trillion market cap is big enough to influence major market indexes like the S&P 500; Apple represents about 7% of the index. So investors will be watching the report for both company-specific insight and to get a window into the overall economy.
While the company's fiscal fourth-quarter financial performance will definitely be important, investors may pay even closer attention to another metric: management's guidance for its fiscal first-quarter revenue. The company's commentary about the important holiday quarter will provide a timely checkup on how Apple's new products are faring with customers, as well as some clues about consumers' willingness to open their wallets this shopping season.
Can Apple's top-line trends keep improving?
On the surface, tech giant Apple's recent top-line performance has been disappointing. But a close look shows some reasons for investors to be upbeat.
For instance, Apple's fiscal third-quarter revenue fell 1% year over year. Yet revenue actually increased 3% year over year when adjusted for the foreign exchange headwinds the company faced during the period.
Additionally, Apple's revenue trend in fiscal Q3 improved compared to the fiscal second quarter. Revenue fell 3% year over year in fiscal Q2 and gained just 2% year over year when adjusted for foreign exchange headwinds.
So the question going into the fiscal fourth quarter is whether Apple's revenue trends can keep improving. Going into the quarter, management said it expected its revenue performance for the period to be similar to fiscal Q3. But Apple's revenue guidance is typically conservative. So you could speculate that the company's internal expectations may be for revenue trends to continue improving.
Holiday quarter guidance: What to look for
With this backdrop, investors have a better basis to think about what management could guide for when it comes to the important holiday quarter. In general, revenue trends seem to be improving, albeit slowly. So, investors are likely hoping management will guide for a year-over-year revenue growth rate in the low single digits for fiscal Q1.
Analysts, on average, expect Apple to return to growth in fiscal Q1. The consensus forecast for the quarter is revenue of $123 billion, up 5% year over year. Such a significant uptick in growth during a tough macroeconomic environment would likely impress Wall Street and shareholders, as it would suggest the company's new products are resonating with customers.
Of course, much of the guidance Apple provides for fiscal Q1 when it reports earnings after market close on Thursday will depend on how well Apple's recently launched iPhone models are selling. Typically accounting for well over half of Apple's revenue during the holiday quarter each year, strong demand and supply of iPhone 15 and 15 Pro may be the most important pieces to a good holiday quarter. But a robust suite of other new products beyond iPhone should help, too.
