Apple's key earnings report is coming up Tuesday.
The company is set to report fiscal first-quarter results after the closing bell, four weeks after it lowered revenue projections for the period, pouring cold water on the stock. Earlier this month, Apple adjusted revenue estimates to $84 billion, down from a previously stated range of $89 billion to $93 billion. Shares tanked 10 percent but have since clawed their way back to trade essentially flat for 2019. Its share price Tuesday morning also was little changed.
The company will be disclosing some metrics for the first time, and omitting others when it reports results for the December quarter. Any surprises in the first-of-its-kind report out of Apple could shift the stock, which has seen unusual volatility in recent months.
Shares have lost 30 percent of their value since the company's last earnings report in November. The company's market valuation is now more than $250 billion less than the record $1 trillion it reached in August.
Here's what investors will be focusing on when Apple reports:
China
This is the number CEO Tim Cook warned us about.
Revenue realized in Greater China — a traditionally strong growth market for Apple — could take a hit this quarter, amid an economic pullback. Cook cited global trade tensions and weaker-than-expected iPhone sales in China as contributing to the projected revenue shortfall.
Apple reported China revenues of $17.96 billion a year ago, and $11.41 billion in its fiscal fourth quarter (which is typically much lighter than its first quarter). A year-over-year decline this quarter would be the first period without annual growth in the market since June 2017.
Thus far, Apple has largely avoided a major financial impact of a U.S.-China trade war, despite a supply chain rooted deeply in China and a reliance on global markets for sustained growth. Apple is unlikely to escape unscathed this quarter.
Services margin
Here's where Apple could really shine.
The company has been touting its services revenue — a catch-all segment that includes the App Store, Apple Care, Apple Music and iCloud storage fees — as its next growth driver. But the segment accounted for just 16 percent of total revenue in the last quarter.
Apple has said it will report services margin for the first time during its first-quarter update, shedding new light on the segment's prospects.
Product revenue
Apple may be offering new metrics for its services segment this quarter, but it's holding back in another key area.
The company announced last quarter it would stop reporting unit sales and revenue for the iPhone, iPad and Mac. That means investors won't have the typical benchmark for growth they've come to rely on.
Apple will report overall revenue and gross margin for its products segment, but it'll take some back-of-the-envelope math to suss out any patterns from previous quarters.
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