Apple Quarterly Report: Pandemic Hit iPhone & Watch, Help Sell More iPad & Mac
Currently, 75% of Apple-branded stores around the world remain open, but their closure during the period of self-isolation has negatively affected iPhone and Watch sales. On the other hand, iPads and Macs hit quarterly revenue records, and services brought Apple a record high in self-isolation.
Having raised $ 59.7 billion in the second calendar quarter, Apple exceeded analysts’ expectations, its shares after the close of trading rose in price by more than 6%. The increase in revenue in the annual comparison was 11%, earnings per share increased by 18% to $ 2.58. As Tim Cook, the head of the company admitted in an interview with Bloomberg, the financial results in the smartphone category exceeded the company’s own expectations: revenue from iPhone sales increased by 1.7% to $ 26.4 billion. Analysts’ consensus on the eve of the quarterly report mentioned the amount of about $ 21, 3 billion, so for the height of the pandemic, the sales results of smartphones of this brand were impressive.
Cook admitted that the closure of brand stores negatively affects the sales of smartphones and wearable devices. Again, self-isolation has spurred demand for tablets and laptops, so iPad revenue rose 31% to an eight-year high of $ 6.58 billion from a projected value of no more than $ 4.88 billion. Mac demand increased by 21.6 %, providing the company with record revenue of $ 7.08 billion against the forecasted $ 6.06 billion. About half of the buyers of Mac and iPad in the last quarter never had such Apple devices.
The new iPhone SE has been well received by customers, not only helping to bolster revenue amid store closures and a general decline in global smartphone demand but has also helped increase the number of users moving from Android to Apple iOS. If in the first weeks of April the situation with iPhone sales was difficult, then in May and June sales volumes began to grow.
The “other products” category, which includes AirPods and Apple Watch, increased revenue by 16.8% last quarter to $ 6.45 billion. This result also exceeds the expectations of analysts, who called the amount of no more than $ 6 billion in their forecasts. The company’s profit margin remained at 38%, in this respect it is in line with analysts’ expectations. As Tim Cook explained at the reporting conference, in the category of wearable devices, revenue growth has slowed, but still measured in double digits. In absolute terms, wearable revenue reached a record high for this period of the year. Three-quarters of Apple Watch buyers in the last quarter purchased such a device for the first time.
The service category increased revenue by 14.9% to $ 13.16 billion. Self-isolation contributed to an increase in demand for applications and all kinds of subscriptions. In the end, the company was able to achieve its goal of doubling revenue in the service sector, set in 2016, six months earlier than planned. At the end of the year, Apple’s revenue in the services sector will be able to exceed $ 50 billion. In this segment, not everything was going well: advertising and device repair services brought Apple less money in a pandemic, and the filming of the show in Los Angeles had to be suspended. But the number of paid subscribers has reached 550 million people, and by the end of the year, it will conquer the milestone of 600 million. The record for the number of registered Apple devices was updated, a similar record was set in the iPhone, Mac, and iPad segments.
Apple CFO Luca Maestri for the second time in a row refused to give a forecast for the coming quarter, and at the same time said that the September announcement of new iPhone models in terms of the start of shipments of commercial products will be delayed by several weeks. In other categories, Apple expects to see significant year-on-year revenue growth, including the service category.