Apple Inc.’s shares fell more than 3% in the extended trades after a cautious executive outlook obscured $ 100 billion quarterly revenue for the first time.
Although the company has not provided an official forecast for the fourth consecutive quarter, executives said sales growth for AirPods and other wearables will slow in the current quarter. They also warned that Services sales in the period will face more difficult comparisons with the previous year.
“It was an extremely strong quarter. What is probably weighing on the stock at the moment is that they did not give guidance, ”said Shannon Cross of Cross Research.
Sales jumped 21% to $ 111.4 billion in the period ended December 26, the company reported on Wednesday in a declaration. Analysts, on average, expected $ 103.1 billion, according to data compiled by Bloomberg. Earnings were $ 1.68 per share, also exceeding Wall Street estimates.
Apple’s expectations have soared with suggestions for a new iPhone “super cycle”, where millions of existing users update old devices. The company also recently introduced other new devices, including an updated Apple Watch, and increased demand for iPads, Mac computers and consumer services that work and study at home during the pandemic. The stock jumped more than 20% in the past three months, closing Wednesday at $ 142.06 in New York.
Revenue was driven by the iPhone 12, the first line of the iPhone to include four new models and 5G features. Handset sales were $ 65.6 billion, easily exceeding Wall Street’s estimates of $ 60.3 billion. Consumers were attracted by the 5G features, especially in China, and the updated camera features of the Pro models.
“This strength in iPhone sales provides evidence for Apple bulls that another iPhone super cycle may be on the cards,” Dan Morgan, senior portfolio manager at Synovus Trust Company. The last super cycle occurred with the iPhone 6 in 2014 and the launches since then have “sense more like ripples as opposed to a wave, ”he added.
In a conference call with analysts, CEO Tim Cook and CFO Luca Maestri were confident about the iPhone business. They said that the more expensive models of the iPhone 12 Pro and iPhone 12 Pro Max with better cameras sold particularly well. Executives also highlighted strong sales in China, saying there was a pent-up demand for iPhones with 5G capacity.
Apple also said that the number of active devices exceeded 1.65 billion in the first fiscal quarter, which includes more than 1 billion active iPhone users. Cook added that Apple had the highest number of updaters ever during the period and noticed that switching from other smartphones was also strong.
In addition to the iPhone, Apple reported iPad sales of $ 8.44 billion, exceeding projections of $ 7.58 billion. The company launched a redesigned iPad Air and a faster base model during the quarter. Mac sales were $ 8.68 billion, missing estimates of $ 8.86 billion. This is despite Apple launching a new MacBook Pro, Mac mini and MacBook Air during the quarter.
“They probably had supply restrictions during the quarter. There are still significant delays in shipping some models, ”said Cross.
The influx of new hardware purchases has also led to strong growth in the service segment, which includes the App Store, iTunes, Apple Music and iCloud. The company recorded $ 15.8 billion in services in the quarter, exceeding estimates of $ 14.9 billion.
The company highlighted the strong growth in subscriptions to iCloud, Apple Music and the App Store, but did not provide details on the performance of TV +, its new video streaming service. The company recently extended the free trials of TV + for several more months.
Apple launched four major new products in the quarter in the Wearables, Home & Accessories segment: the Apple Watch Series 6, the Apple Watch SE, the HomePod speaker and the AirPods Max headphones. These devices have given Apple its best quarter so far for this segment, with revenue of US $ 12.97 billion. Analysts estimated $ 11.84 billion.
Apple saw significant growth in all major regions, including Greater China, where sales jumped to $ 21.3 billion from $ 13.6 billion a year ago. The company posted revenue of $ 46.3 billion in the Americas region, about $ 5 billion more than in the same period last year.
(Updates with CEO and CFO comments on more expensive iPhones in the ninth paragraph.)