Apple Inc. posted its highest quarterly revenue total yet as the new iPhone 12 powered the company to its first $100-billion quarter in sales.
The smartphone giant generated revenue of $111.4 billion in its fiscal first quarter, up from $91.82 billion a year earlier and far ahead of the FactSet consensus forecast, which called for $103.27 billion.
Shares of Apple AAPL, -0.77% were off 2.8% in after-hours trading Wednesday following the report and earnings call.
Though Apple’s newest line of iPhones was only available for part of the holiday quarter, the company still grew the smartphone business sharply, recording $65.60 billion in sales for the category compared with $55.96 billion a year earlier. Analysts were modeling $59.53 billion in iPhone sales.
“We’ve done very, very well, both on units and on pricing,” Chief Financial Officer Luca Maestri said. He pointed to what was likely “pent-up demand for 5G iPhones” in China as one of the high points in the quarter.
Apple’s China revenue surged to $21.31 billion from $13.58 billion with iPads, Macs, and wearables all exceeding the average performance at the company. Apple saw a record number of people upgrading their iPhones in China during the quarter.
Overall, Apple reported net income of $28.76 billion, or 1.68 a share, up from $22.24 billion, or $1.25 a share, in the year-prior period. Analysts expected $1.42 a share in earnings.
Apple continued to benefit from strong demand for products that could help in remote work and schooling settings. The company saw iPad revenue climb to $8.44 billion from $5.98 billion as Mac revenue increased to $8.68 billion from $7.16 billion. Analysts had been projecting $7.38 billion in iPhone sales and $8.68 billion in Mac sales.
Roughly half of the customers who purchased Macs or iPads in the quarter were new to those products.
The services business grew as well, reaching $15.76 billion in the December quarter, up from $12.72 billion. Sales from Apple’s wearables, home and accessories category climbed to $12.97 billion from $10.01 billion. The FactSet consensus called for $15.17 billon in services revenue and $11.49 billion for the wearables category.
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Apple didn’t offer traditional guidance in its earnings release, in line with how it’s acted in prior pandemic-affected quarters, though Maestri told investors to expect accelerating overall revenue growth in the March quarter.
He cautioned that the services category faces tougher comparisons in the period given heightened services adoption at the start of the pandemic last year. Apple also anticipates decelerating growth in the wearables category relative to the December period given a return to “typical” AirPod channel inventory levels coming off a holiday quarter, whereas the March 2020-quarter inventories were unusually high due to earlier supply constraints.
Demand for iPhones was “very strong” entering the March-ending quarter, Maestri said. The company has some supply constraints that it expects to resolve as the period wears on, he said.
Analysts tracked by FactSet are modeling $74.05 billion in March-quarter sales and 91 cents in earnings per share for the period.
Chief Executive Tim Cook said that carrier subsidies could continue to benefit iPhone sales, calling them “a win across the board” and predicting “quite a bit of competition in the [U.S.] market” going forward.
Cook also defended the company’s future potential in response to an analyst’s question on whether there were still meaningful organic growth opportunities left for Apple.
“We see lots of opportunity,” he said, pointing to traction for the relatively young wearables category that he believes is still in its “early stages.” Cook is also upbeat about the potential in emerging markets, in enterprise settings and with unspecified future product categories.
Shares of Apple have gained 7.6% in the week leading up to this earnings report, its largest one-week gain prior to earnings since at least 2011, according to Dow Jones Market Data.
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Apple shares typically rise in the week and month leading up to earnings, but they’ve historically fallen in the week and month following a report. Over the past 10 years, Apple shares have dropped 1.9% on average in the week after an earnings report and fallen 2.5% in the month after a report, per Dow Jones Market Data.
Shares have gained 84% over the past year as the Dow Jones Industrial Average DJIA, -2.05%, of which it is a component, has risen about 6%.
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