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Apple's (AAPL) Q1 Earnings Beat, iPhone & Services Aid Top Line
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Apple (AAPL - Free Report) reported first-quarter fiscal 2021 earnings of $1.68 per share that beat the Zacks Consensus Estimate by 19.2% and jumped 34.4% year over year.
Net sales increased 21.4% year over year to $111.4 billion, which surpassed the Zacks Consensus Estimate by 8.7%.
Services, along with iPad, Wearables and Mac, continued their momentum in the quarter under review. Services (14.1% of sales) revenues grew 24% from the year-ago quarter to $15.76 billion.
Product sales (85.9% of sales) increased 21% year over year to $95.68 billion. Non-iPhone revenues grew 30% on a combined basis, despite supply constraints on iPad, Mac and Apple Watch throughout the quarter.
Apple achieved double-digit growth and new all-time records in each of its five geographic segments. The company’s installed base of active devices passed 1.65 billion in the reported quarter.
Americas sales increased 11.9% year over year to $46.31 billion and accounted for 41.6% of total sales.
Europe generated $27.31 billion in sales, up 17.3% on a year-over-year basis. The region accounted for 24.5% of total sales.
Greater China sales surged 57% from the year-ago quarter to $21.31 billion, accounting for 19.1% of total sales.
Japan sales soared 33.1% year over year to $8.29 billion, accounting for 7.4% of total sales.
Rest of the Asia Pacific generated sales of $8.23 billion, up 11.5% year over year. The region accounted for 7.4% of total sales.
iPhone Sales Increase Y/Y
iPhone sales increased 17.2% from the year-ago quarter to $65.59 billion and accounted for 58.9% of total sales. The robust year-over-year growth was driven by strong demand for the iPhone 12 family.
Markedly, iPhone’s active installed base is now more than 1 billion.
Apple quoted a recent survey report from 451 Research which stated that customer satisfaction was 98% for the iPhone 12 family in the reported quarter.
Services Momentum Continues
Services maintained momentum in the reported quarter. Apple set quarterly record for the App Store, Cloud Services, Music, advertising, AppleCare and payment Services.
Apple TV+, Apple Arcade, Apple News+, Apple Card, Apple Fitness+ and Apple One bundle also contributed to overall growth. These new services continue to add users, content and features.
Apple now has more than 620 million paid subscribers across its Services portfolio, up 35 million sequentially and 140 million year over year.
iPad & Mac Jump on Strong Demand
iPad sales of $8.44 billion jumped 41.1% year over year and accounted for 7.6% of total sales. Sales grew strong double digits in every geographic segment, including an all-time record in Japan.
Mac sales of $8.68 billion increased 21.2% from the year-ago quarter and accounted for 7.8% of total sales. The year-over-year growth was driven by strong adoption of the new MacBook Air, MacBook Pro and Mac Mini powered by Apple’s brand-new M1 chip.
Apple quoted a recent survey report from 451 Research which stated that overall consumer satisfaction was 94% for iPad and 93% for Mac in the quarter under review.
Wearables’ Robust Performance
Wearables, Home and Accessories sales increased 29.6% year over year to $12.97 billion and accounted for 11.6% of total sales.
Moreover, Apple Watch’s adoption rate grew rapidly. Notably, more than 75% of customers who purchased Apple Watch during the reported quarter were first-time customers.
Operating Details
Gross margin expanded 140 bps on a year-over-year basis to 39.8%. Moreover, gross margin increased 160 bps sequentially due to higher sales and a strong revenue mix.
Products’ gross margin expanded 530 bps sequentially to 39.8%, driven by leverage and mix. Services’ gross margin was 68.4%, up 150 bps sequentially.
Operating expenses rose 11.9% year over year to $10.79 billion due to higher research & development (R&D), and selling, general & administrative (SG&A) expenses which increased 16% and 8.4%, respectively.
Operating margin expanded 220 bps on a year-over-year basis to 30.1%.
Balance Sheet
As of Dec 26, 2020, cash & marketable securities were $195.57 billion compared with $191.83 billion as of Sep 26, 2020.
Term debt, as of Dec 26, 2020, was $107.04 billion, up from $101.56 billion as of Sep 26, 2020.
Apple returned $30 billion in the reported quarter through dividend payouts ($3.6 billion) and share repurchases ($24 billion).
Guidance
Apple didn’t provide revenue guidance, given the uncertainty around the impact of the coronavirus pandemic. However, management expects revenues to grow year over year.
Moreover, Apple expects Wearables, Home and Accessories’ year-over-year growth to decline in the first quarter. Further, Services are expected to face tough year-over-year comparison.
Gross margin is expected to be much similar to what was reported in the December quarter. Operating expenses are expected between $10.7 billion and $10.9 billion.
Moreover, while Littelfuse is set to report its quarterly results on Feb 3, both Kulicke and Soffa, and Knowles are scheduled to report the same on Feb 4.
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Apple's (AAPL) Q1 Earnings Beat, iPhone & Services Aid Top Line
Apple (AAPL - Free Report) reported first-quarter fiscal 2021 earnings of $1.68 per share that beat the Zacks Consensus Estimate by 19.2% and jumped 34.4% year over year.
Net sales increased 21.4% year over year to $111.4 billion, which surpassed the Zacks Consensus Estimate by 8.7%.
Services, along with iPad, Wearables and Mac, continued their momentum in the quarter under review. Services (14.1% of sales) revenues grew 24% from the year-ago quarter to $15.76 billion.
Product sales (85.9% of sales) increased 21% year over year to $95.68 billion. Non-iPhone revenues grew 30% on a combined basis, despite supply constraints on iPad, Mac and Apple Watch throughout the quarter.
Apple Inc. Price, Consensus and EPS Surprise
Apple Inc. price-consensus-eps-surprise-chart | Apple Inc. Quote
Strong China & Japan Aid Top-Line Growth
Apple achieved double-digit growth and new all-time records in each of its five geographic segments. The company’s installed base of active devices passed 1.65 billion in the reported quarter.
Americas sales increased 11.9% year over year to $46.31 billion and accounted for 41.6% of total sales.
Europe generated $27.31 billion in sales, up 17.3% on a year-over-year basis. The region accounted for 24.5% of total sales.
Greater China sales surged 57% from the year-ago quarter to $21.31 billion, accounting for 19.1% of total sales.
Japan sales soared 33.1% year over year to $8.29 billion, accounting for 7.4% of total sales.
Rest of the Asia Pacific generated sales of $8.23 billion, up 11.5% year over year. The region accounted for 7.4% of total sales.
iPhone Sales Increase Y/Y
iPhone sales increased 17.2% from the year-ago quarter to $65.59 billion and accounted for 58.9% of total sales. The robust year-over-year growth was driven by strong demand for the iPhone 12 family.
Markedly, iPhone’s active installed base is now more than 1 billion.
Apple quoted a recent survey report from 451 Research which stated that customer satisfaction was 98% for the iPhone 12 family in the reported quarter.
Services Momentum Continues
Services maintained momentum in the reported quarter. Apple set quarterly record for the App Store, Cloud Services, Music, advertising, AppleCare and payment Services.
Apple TV+, Apple Arcade, Apple News+, Apple Card, Apple Fitness+ and Apple One bundle also contributed to overall growth. These new services continue to add users, content and features.
Apple now has more than 620 million paid subscribers across its Services portfolio, up 35 million sequentially and 140 million year over year.
iPad & Mac Jump on Strong Demand
iPad sales of $8.44 billion jumped 41.1% year over year and accounted for 7.6% of total sales. Sales grew strong double digits in every geographic segment, including an all-time record in Japan.
Mac sales of $8.68 billion increased 21.2% from the year-ago quarter and accounted for 7.8% of total sales. The year-over-year growth was driven by strong adoption of the new MacBook Air, MacBook Pro and Mac Mini powered by Apple’s brand-new M1 chip.
Apple quoted a recent survey report from 451 Research which stated that overall consumer satisfaction was 94% for iPad and 93% for Mac in the quarter under review.
Wearables’ Robust Performance
Wearables, Home and Accessories sales increased 29.6% year over year to $12.97 billion and accounted for 11.6% of total sales.
Moreover, Apple Watch’s adoption rate grew rapidly. Notably, more than 75% of customers who purchased Apple Watch during the reported quarter were first-time customers.
Operating Details
Gross margin expanded 140 bps on a year-over-year basis to 39.8%. Moreover, gross margin increased 160 bps sequentially due to higher sales and a strong revenue mix.
Products’ gross margin expanded 530 bps sequentially to 39.8%, driven by leverage and mix. Services’ gross margin was 68.4%, up 150 bps sequentially.
Operating expenses rose 11.9% year over year to $10.79 billion due to higher research & development (R&D), and selling, general & administrative (SG&A) expenses which increased 16% and 8.4%, respectively.
Operating margin expanded 220 bps on a year-over-year basis to 30.1%.
Balance Sheet
As of Dec 26, 2020, cash & marketable securities were $195.57 billion compared with $191.83 billion as of Sep 26, 2020.
Term debt, as of Dec 26, 2020, was $107.04 billion, up from $101.56 billion as of Sep 26, 2020.
Apple returned $30 billion in the reported quarter through dividend payouts ($3.6 billion) and share repurchases ($24 billion).
Guidance
Apple didn’t provide revenue guidance, given the uncertainty around the impact of the coronavirus pandemic. However, management expects revenues to grow year over year.
Moreover, Apple expects Wearables, Home and Accessories’ year-over-year growth to decline in the first quarter. Further, Services are expected to face tough year-over-year comparison.
Gross margin is expected to be much similar to what was reported in the December quarter. Operating expenses are expected between $10.7 billion and $10.9 billion.
Zacks Rank & Other Stocks to Consider
Currently, Apple has a Zacks Rank #2 (Buy).
Littelfuse (LFUS - Free Report) , Kulicke and Soffa (KLIC - Free Report) and Knowles (KN - Free Report) are better-ranked stocks worth considering from the broader computer and technology sector. All the three stocks flaunt a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Moreover, while Littelfuse is set to report its quarterly results on Feb 3, both Kulicke and Soffa, and Knowles are scheduled to report the same on Feb 4.
Looking for Stocks with Skyrocketing Upside?
Zacks has just released a Special Report on the booming investment opportunities of legal marijuana.
Ignited by referendums and legislation, this industry is expected to blast from an already robust $17.7 billion in 2019 to a staggering $73.6 billion by 2027. Early investors stand to make a killing, but you have to be ready to act and know just where to look.
See the pot stocks we're targeting >>