American tech companies keep adding record numbers to their earnings despite the crippling impact of the pandemic on the global economy. Smartphone maker Apple has joined others to post earnings that beat estimates.
Apple reported strong fiscal third-quarter earnings on Tuesday, crushing Wall Street expectations. Every one of Apple’s major product lines grew over 12% on an annual basis.
Apple stock was slightly up in extended trading. CNBC has the report.
Overall, Apple’s sales were up 36% from the June quarter last year. iPhone sales increased nearly 50% on an annual basis.
Here’s how Apple did versus Refinitiv estimates:
EPS: $1.30 vs. $1.01 estimated
Revenue: $81.41 billion vs. $73.30 billion estimated, up 36% year-over-year
iPhone revenue: $39.57 billion vs. $34.01 billion estimated, up 49.78% year-over-year
Services revenue: $17.48 billion vs. $16.33 billion estimated, up 33% year-over-year
Other Products revenue: $8.76 billion vs. $7.80 billion estimated, up 40% year-over-year
Mac revenue:$8.24 billion vs. $8.07 billion estimated, up 16% year-over-year
iPad revenue: $7.37 billion vs. $7.15 billion estimated, up 12% year-over-year
Gross margin: 43.3% vs. 41.9% estimated
Apple did not provide formal guidance for the sixth quarter in a row and has not since the beginning of the Covid-19 pandemic.
Apple also had a strong quarter in its Greater China region, which includes Taiwan and Hong Kong in addition to the mainland. Apple reported $14.76 billion in sales in the region, up 58% from the same quarter last year, although it was an easy comparison given that China was in stages of lockdown during the quarter.
Americas sales were up nearly 33% year-over-year to $39.57 billion.
Apple’s quarter ending in June is typically one of its slowest of the year, but the company has benefitted from work-at-home and remote schooling trends that have boosted sales of its premium computers.
Last year’s June quarter was a company record for sales even despite lockdowns around the world, so Apple is growing even compared to a strong basis from a year ago.
Cook mentioned that the success was not just because of people upgrading their old iPhones, but also Android customers buying their first iPhone.
“We saw a very strong double digit increases in both upgraders and switchers during the quarter,” Cook said.
Apple’s quarter could have been even better if it had not grappled with supply shortages likely linked to the global chip shortage, which mostly affected its Mac and iPad sales.
“The shortage primarily affected Mac and iPad,” Apple CEO Tim Cook told CNBC’s Josh Lipton. “We had predicted the shortages to total $3 to $4 billion. But we were actually able to mitigate some of that, and we came in at the lower than the low end part of that range.”
Apple’s services business also shook off investor fears that its rate of growth could slow as more people go back to work and spend less on online services and apps. Services was up 33% year-over-year, an acceleration from last quarter’s 26.7% growth rate.
While Apple’s services business includes many products and Apple does not break down how it’s composed, Cook told CNBC that the company set records in music, video, cloud services, advertising and payments.
“It’s clear that our long running investment in our services strategy is succeeding,” Cook told CNBC.
Apple now has 700 million paid subscribers, up 150 million year-over-year, Cook said. Apple’s subscriber figure includes customers subscribed to an app through Apple’s App Store billing.
Cook also said that Apple pushed back its return to its campus headquarters from September to at least October because of the Covid-19 situation.
“I’ve been really pleased with what we’ve been able to accomplish in this fully remote mode,” Cook said.
Apple declared a dividend of $0.22 per share of stock. In a statement, Apple said that it spent $29 billion on shareholder return during the quarter. Apple CFO Luca Maestri told CNBC that the company has bought back almost $450 billion in stock in recent years.