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Net sales increased 28.8% year over year to $83.36 billion, which lagged the Zacks Consensus Estimate by 2.5%. Supply chain constraints hurt revenues roughly by $6 billion due to industry-wide silicon shortages and COVID-related manufacturing disruptions.
iPhone and Services maintained momentum in the reported quarter. iPhone sales increased 47% from the year-ago quarter to $38.87 billion and accounted for 46.6% of total sales. iPhone sales were driven by strong demand for the iPhone 12 family of devices. Apple stated that iPhone 13 has witnessed strong customer response.
Services revenues grew 25.6% from the year-ago quarter to $18.28 billion and accounted for 21.9% of sales.
Apple TV+, Apple Arcade, Apple News+, Apple Card, Apple Fitness+ and the Apple One bundle contributed to overall growth. These new services continue to add users, content and features.
Apple now has more than 745 million paid subscribers across its Services portfolio, up 45 million sequentially and 160 million year over year.
Strong China & Americas Aid Top Line
Americas sales increased 19.9% year over year to $36.82 billion and accounted for 44.2% of total sales.
Europe generated $20.79 billion in sales, up 23% on a year-over-year basis. The region accounted for 24.9% of total sales.
Greater China sales surged 83.3% from the year-ago quarter to $14.56 billion, accounting for 17.5% of total sales.
Japan sales increased 19.3% year over year to $5.99 billion, accounting for 7.2% of total sales.
Rest of the Asia Pacific generated sales of $5.19 billion, up 25.7% year over year. The region accounted for 6.2% of total sales.
Top-Line Details
Product sales (78.1% of sales) surged 29.8% year over year to $65.08 billion. Non-iPhone revenues (iPad, Mac and Wearables) grew 10.6% on a combined basis.
iPad sales of $8.25 billion climbed 21.4% year over year and accounted for 9.9% of total sales. Customer demand for the iPad Pro was very strong in the reported quarter.
Mac sales of $9.18 billion increased 1.6% from the year-ago quarter and accounted for 11% of total sales. Sales benefited from strong demand for Apple’s M1-powered MacBook Air.
Both Mac and iPad continue to gain rapid adoption from enterprise customers. Apple stated that SAP (SAP - Free Report) has already deployed Macs to tens of thousands of its employees to date and is planning to offer the latest M1 Mac. France’s national railway company, SNCF, has provided iPads to its drivers in order to manage their entire daily workflow and train operations. This is helping the company lower its energy and maintenance costs.
Wearables, Home and Accessories sales increased 11.5% year over year to $8.79 billion and accounted for 10.5% of total sales.
Apple Watch’s adoption rate continues to grow rapidly. More than 75% of customers who purchased Apple Watch during the reported quarter were first-time customers.
Operating Details
Gross margin expanded 400 basis points (bps) on a year-over-year basis to 42.2%. However, gross margin decreased 110 bps sequentially, driven by higher costs and unfavorable mix of products.
Products’ gross margin contracted 170 bps sequentially to 34.3%. Services’ gross margin was 70.5%, up 70 bps sequentially.
Operating expenses rose 14.9% year over year to $11.39 billion due to higher research & development (R&D), and selling, general & administrative (SG&A) expenses, which increased 16% and 13.8%, respectively.
Operating margin expanded 570 bps on a year-over-year basis to 28.5%.
Balance Sheet
As of Sep 25, 2021, cash & marketable securities were $190.52 billion compared with $193.64 billion as of Jun 26, 2021.
Term debt, as of Sep 25, 2021, was $118.72 billion, up from $113.79 billion as of Jun 26, 2021.
Apple returned $24 billion in the reported quarter through dividend payouts ($3.6 billion) and share repurchases ($20 billion).
Guidance
Apple did not provide revenue guidance for the first quarter of fiscal 2022, given the uncertainty around the impact of the coronavirus pandemic. The company expects supply chain constrains to hurt top-line in a much larger way as compared with fourth-quarter.
Apple expects revenues for each product category to grow on a year-over-year basis, except for iPad, which is expected to decline year over year due to supply constraints. Services growth rate is expected to decline as compared with the fourth quarter.
Gross margin is expected between 41.5% and 42.5% in the first quarter. Operating expenses are expected between $12.4 billion and $12.6 billion.
Image: Bigstock
Apple (AAPL) Q4 Earnings In Line, Chip Shortage Hurts Top-Line
Apple (AAPL - Free Report) reported fourth-quarter fiscal 2021 earnings of $1.24 per share that was in line with the Zacks Consensus Estimate and jumped 70% year over year.
Net sales increased 28.8% year over year to $83.36 billion, which lagged the Zacks Consensus Estimate by 2.5%. Supply chain constraints hurt revenues roughly by $6 billion due to industry-wide silicon shortages and COVID-related manufacturing disruptions.
iPhone and Services maintained momentum in the reported quarter. iPhone sales increased 47% from the year-ago quarter to $38.87 billion and accounted for 46.6% of total sales. iPhone sales were driven by strong demand for the iPhone 12 family of devices. Apple stated that iPhone 13 has witnessed strong customer response.
Services revenues grew 25.6% from the year-ago quarter to $18.28 billion and accounted for 21.9% of sales.
Apple Inc. Price, Consensus and EPS Surprise
Apple Inc. price-consensus-eps-surprise-chart | Apple Inc. Quote
Apple TV+, Apple Arcade, Apple News+, Apple Card, Apple Fitness+ and the Apple One bundle contributed to overall growth. These new services continue to add users, content and features.
Apple now has more than 745 million paid subscribers across its Services portfolio, up 45 million sequentially and 160 million year over year.
Strong China & Americas Aid Top Line
Americas sales increased 19.9% year over year to $36.82 billion and accounted for 44.2% of total sales.
Europe generated $20.79 billion in sales, up 23% on a year-over-year basis. The region accounted for 24.9% of total sales.
Greater China sales surged 83.3% from the year-ago quarter to $14.56 billion, accounting for 17.5% of total sales.
Japan sales increased 19.3% year over year to $5.99 billion, accounting for 7.2% of total sales.
Rest of the Asia Pacific generated sales of $5.19 billion, up 25.7% year over year. The region accounted for 6.2% of total sales.
Top-Line Details
Product sales (78.1% of sales) surged 29.8% year over year to $65.08 billion. Non-iPhone revenues (iPad, Mac and Wearables) grew 10.6% on a combined basis.
iPad sales of $8.25 billion climbed 21.4% year over year and accounted for 9.9% of total sales. Customer demand for the iPad Pro was very strong in the reported quarter.
Mac sales of $9.18 billion increased 1.6% from the year-ago quarter and accounted for 11% of total sales. Sales benefited from strong demand for Apple’s M1-powered MacBook Air.
Both Mac and iPad continue to gain rapid adoption from enterprise customers. Apple stated that SAP (SAP - Free Report) has already deployed Macs to tens of thousands of its employees to date and is planning to offer the latest M1 Mac. France’s national railway company, SNCF, has provided iPads to its drivers in order to manage their entire daily workflow and train operations. This is helping the company lower its energy and maintenance costs.
Wearables, Home and Accessories sales increased 11.5% year over year to $8.79 billion and accounted for 10.5% of total sales.
Apple Watch’s adoption rate continues to grow rapidly. More than 75% of customers who purchased Apple Watch during the reported quarter were first-time customers.
Operating Details
Gross margin expanded 400 basis points (bps) on a year-over-year basis to 42.2%. However, gross margin decreased 110 bps sequentially, driven by higher costs and unfavorable mix of products.
Products’ gross margin contracted 170 bps sequentially to 34.3%. Services’ gross margin was 70.5%, up 70 bps sequentially.
Operating expenses rose 14.9% year over year to $11.39 billion due to higher research & development (R&D), and selling, general & administrative (SG&A) expenses, which increased 16% and 13.8%, respectively.
Operating margin expanded 570 bps on a year-over-year basis to 28.5%.
Balance Sheet
As of Sep 25, 2021, cash & marketable securities were $190.52 billion compared with $193.64 billion as of Jun 26, 2021.
Term debt, as of Sep 25, 2021, was $118.72 billion, up from $113.79 billion as of Jun 26, 2021.
Apple returned $24 billion in the reported quarter through dividend payouts ($3.6 billion) and share repurchases ($20 billion).
Guidance
Apple did not provide revenue guidance for the first quarter of fiscal 2022, given the uncertainty around the impact of the coronavirus pandemic. The company expects supply chain constrains to hurt top-line in a much larger way as compared with fourth-quarter.
Apple expects revenues for each product category to grow on a year-over-year basis, except for iPad, which is expected to decline year over year due to supply constraints. Services growth rate is expected to decline as compared with the fourth quarter.
Gross margin is expected between 41.5% and 42.5% in the first quarter. Operating expenses are expected between $12.4 billion and $12.6 billion.
Zacks Rank & Stocks to Consider
Currently, Apple has a Zacks Rank #2 (Hold).
Similar-ranked stocks in the broader technology sector are Trimble (TRMB - Free Report) and Cognex (CGNX - Free Report) . You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Trimble and Cognex are set to report their quarterly earnings on Nov 3 and Nov 4, respectively.