Apple (AAPL) records record sales, easily exceeds estimates

Apple Inc. (AAPL) recorded record revenue in the quarter ended December 31, 2020, which is the company’s first fiscal year 2021 quarter, exceeding analyst estimates and also representing huge gains year on year. Earnings per share (EPS) was $ 1.68, 19.1% better than the $ 1.41 consensus estimate and 34.4% higher than the $ 1.25 figure obtained in the same period in last year.

Total revenue was $ 111.44 billion, exceeding the consensus estimate of $ 103.28 billion by 7.9% and representing an increase of 21.4% over the $ 91.82 billion recorded in the same previous year. This is the first time that Apple has recorded $ 100 billion or more in quarterly sales.

Wide base force

Apple’s record performance was driven by a large increase in revenue. “Our business performance in the December quarter was fueled by double-digit growth in each product category, which generated record revenue in each of our geographic segments and a historic record for our installed base of active devices,” he said. Luca Maestri, Chief Financial Officer (CFO) at Apple.

The revenue figures and year-on-year percentage increases by product category, along with the margins by which they exceeded (or lost) estimates, were:

• iPhone: $ 65.60 billion, up 17.2%, surpassing the 9.7% estimate
• Mac: $ 8.68 billion, up 21.2%, estimate lost 0.1%
• iPad: $ 8.44 billion, up 41.1%, exceeding the estimate by 13.1%
• Wearables, home and accessories: US $ 12.97 billion, up 29.6%, surpassing the 8.4% estimate
• Services: US $ 15.76 billion, up 23.9%, exceeding the estimate of 6.5%

Quarterly revenue records were established in the iPhone, Wearables and Services categories.

Cutting data by region, revenue numbers and percentage increases year on year were:

• Americas: $ 46.31 billion, up 11.9%
• Europe: $ 27.31 billion, up 17.4%
• Greater China: $ 21.31 billion, up 56.9%
• Japan: $ 8.29 billion, up 33.3%
• Rest of Asia-Pacific: $ 8.23 ​​billion, up 11.1%

Apple CEO Tim Cook believes the results could have been even more impressive had it not been for the closing of Apple Stores precipitated by COVID-19. As he told CNBC: “Taking stores out of the equation, especially for iPhones and wearables, there is an obstacle to sales.” Cook also indicated that Apple’s total installed base for iPhones is more than 1 billion, up from previous 900 million, while the total active installed base for all Apple products is now 1.65 billion.

Increased capital return for shareholders

Apple returned $ 28.39 billion to shareholders through share buybacks and dividends in the first quarter of fiscal year 2021, representing an increase of 17.1% over the same period last year.Apple’s operating cash flow of $ 38.76 billion was a quarterly record, and CFO Maestri indicated that “we maintain our goal of achieving a neutral net cash position over time”.

Significance for investors

The large revenue gains reported by Apple are certainly an indicator of strength. In fact, as noted above, CEO Tim Cook opined that certain categories of product sales could have been even greater, had it not been for the closure of Apple Stores in response to COVID-19.

However, a key unanswered question is the extent to which the COVID-19 blockages spurred sales to people forced to work from home or spend more leisure time at home. It is possible that the events of 2020 created unique quantum leaps in the underlying drivers of Apple’s sales, to a degree that may not be replicable as 2021 progresses.