Tim Cook at Apple Event
Apple reported a blowout quarter on Wednesday, announcing companywide sales up 54% higher than last year, and significantly stronger profits than Wall Street expected.
Apple stock rose over 4% at one point in extended trading.
Apple reported double-digit growth in every single one of its product categories, and its most important product line, the iPhone, was up 65.5% from last year. Its Mac and iPad sales did better, with its computers up 70.1% and iPad sales growing nearly 79% on an annual basis.
Apple said it would increase its dividend by 7% to $0.22 per share and authorized $90 billion in share buybacks, which is significantly higher than last year’s $50 billion outlay and 2019’s $75 billion.
Here’s how Apple did versus Refinitiv estimates:
- EPS: $1.40 vs. $0.99 estimated
- Revenue: $89.58 billion vs. $77.36 billion estimated, up 53.7% year-over-year
- iPhone revenue: $47.94 billion vs. $41.43 billion estimated, up 65.5% year-over-year
- Services revenue: $16.90 billion vs. $15.57 billion estimated, up 26.7% year over year
- Other Products revenue: $7.83 billion vs. $7.79 billion estimated, up 24% year-over-year
- Mac revenue: $9.10 billion vs. $6.86 billion estimated, up 70.1% year-over-year
- iPad revenue: $7.80 billion vs. $5.58 billion estimated, up 78.9% year-over-year
- Gross margin: 42.5% vs. 39.8% estimated
Apple did not issue official guidance for what it expects in the quarter ending in June. It hasn’t provided revenue guidance since the start of the pandemic, citing uncertainty. This is Apple’s second quarter in a row with double-digit growth in all product categories.
Apple has said in the past months that its business has been boosted by the pandemic as consumers and businesses bought computers to work and entertain themselves while at home. But Apple’s strong results in the quarter suggest that the trend may persist as more economies open up.
Or, as Apple CEO Tim Cook said in a statement: “This quarter reflects both the enduring ways our products have helped our users meet this moment in their own lives, as well as the optimism consumers seem to feel about better days ahead for all of us.”
Mac sales were up 70%, and Cook said that the result was “fueled by” the company’s introduction of its Mac laptops that used its own M1 chips for longer battery life, instead of processors sold by Intel. iPad sales were up nearly 79% year-over-year.
Neither of those results include iPad Pro or iMac models the company announced in March, which are expected to drive additional demand.
“We’re seeing strong first-time buyers on the Mac … it continues to run just south of 50%,” Cook told CNBC’s Josh Lipton. “And, in China, it’s even higher than that … it’s more around two-thirds. And that speaks to people preferring to work on the Mac.”
Apple’s iPhone also reported strong results this quarter, quelling fears that the current annual cycle could slow down. Last year, Apple released iPhones with a new exterior design and 5G support, which many investors believed could prompt a major upgrade cycle, which this quarter’s results indicate.
In greater China, which includes the mainland, Hong Kong, and Taiwan, Apple’s revenue increased over 87% year-over-year to $17.73 billion, although the comparison is to a quarter last year in which China was largely shut down in the early days of the pandemic. Every other geographical category, including the Americas and Europe, were also up on an annual basis.
Apple’s high-margin services business, including iCloud, App Store, and subscriptions like Apple Music, also showed 26.7% growth.
One metric that Apple uses to show the growth in services is the number of subscriptions it has, which not only include its own subscriptions like Apple One, but also subscriptions through its App Store.
“We now have over 660 million paid subscriptions across the services on the platform, and that’s up 40 million from the previous quarter, which is an acceleration from 35 million,” Cook told CNBC.
However, Apple’s App Store has been challenged by lawmakers and companies that say it costs too much and has too much power. A closely-watched trial with Fortnite maker Epic Games over App Store policies kicks off next week.
“The App Store has been an economic miracle. Last year, the estimates are that there was over a half a trillion dollars of economic activity because of the store. And, so, this has been just an economic gamechanger for not only the United States, but several countries around the world. And, we’re going to go in and tell our story. And we’ll see where it goes. But, we’re confident,” Cook told CNBC.
Apple’s gross margin was also unusually elevated for the company. Most quarters, it tends to be in the 38% to 39% range, but in the quarter ending in March, Apple reported 42.5% margins.
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