Apple has delivered outstanding fiscal first quarter results. The Apple Maven covered the company’s earnings event via live blog, don’t forget to check it out!
Today, we review some of the takeaways. Below is a list of Apple’s three key accomplishments in the holiday quarter, counting down to what I believe was most impressive on earnings day.
3. iPhone sales spike
Sure, iPad sales were up an impressive 41% – the highest growth rate of any product segment in the holiday quarter, by far. But keep in mind that tablets accounted for only 9% of Apple’s total revenues in fiscal 2020.
Among all of Apple’s businesses, what impressed me the most was the iPhone. Growth of 17% was absolutely stunning for a product that already generates a whopping $150 billion in sales per year, on average.
The success of the iPhone in fiscal first quarter can be credited to the delayed launch of the iPhone 12, in 2020. The Cupertino company seems to have figured out exactly what consumers wanted, and pent-up demand turned into lots of dollars in the pocket.
2. Margins expand fast
Apple delivered earnings per share of $1.68, a number that topped consensus estimate by the widest margin ever. One of the keys to such impressive bottom-line performance was margins.
In the holiday quarter, gross and operating margin expanded by 140 and 220 basis points, respectively. The main driver of margin expansion was scale: fixed and other operating costs did not grow nearly as much as revenues, which in turn increased a respectable 21%.
The other piece of the puzzle was the revenue mix. High-end iPhones and services carry better margins. Both performed very well in the fiscal first period.
1. China comes back to life
It is impossible not be amazed by revenue growth in Greater China: 57% year-over-year.
The region once accounted for one-fourth of Apple’s total revenues, but the proportion dropped to only 15% in fiscal 2020. For a moment, it looked like what was once a growth engine had become a huge disappointment for the Cupertino company.
With the launch of the iPhone, first and foremost, China is back in the game. It helps that the 5G network infrastructure in the country is farther along than it is in developed regions, like the US and Europe.
I am still running a poll in which I ask: “which Big Tech stock will come out of earnings week the strongest?” Don’t forget to leave your opinion below.
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