It is finally time for Apple to report fiscal fourth quarter earnings. As usual, the Apple Maven will comment on the Cupertino company’s results in real time, via live blog, starting around 3:55 p.m. EST on October 28. Join us!
For a quick review of what to expect from Apple, check out our preview recap. The live blog starts below. Don’t forget to refresh your browser, especially around and after the end of this Thursday’s trading session, to see the updates.
(Read more from the Apple Maven: Buckle Up For Apple’s Earnings Day: Here’s What To Know)
Live blog starts here!
(Please refresh your browser for updates below)
3:09 p.m. PST: Thanks for joining us today for this live blog! Enjoy the rest of your day and week!
3:08 p.m. PST: Apple stock is trading in after-hours down -3.6%. Right after guidance, shares reacted well, but have now declined once again. Considering how well AAPL traded during the regular session, the stock is only down -1.1% for the day.
3:05 p.m. PST: Otherwise, the quarter was not terrible for the Cupertino company. The management team keeps talking about "enthusiastic demand". All major segments saw YOY growth, all of them in the double digits ex-Mac. Greater China is recovering very strongly from the 2015-2019 slump. Margins look solid.
3:03 p.m. PST: As it turns out, Apple is not immune to the global supply chain crisis. Maybe some had become too comfortable in thinking that Apple had the partnerships in place and the purchasing power to weather the issues unscathed. This is probably true to a great extent, but it does not mean that Apple will not disappoint slightly on their product sales.
3:01 p.m. PST: This was a highly atypical quarter for Apple, as it failed to top consensus expectations for both revenues and EPS. If you have been an Apple investor for less than five years, this quarter must have felt very different. The culprit was the supply chain.
3:00 p.m. PST: And that's the end of the earnings call! Ok, let me briefly recap...
3:00 p.m. PST: Question on brand-new services, how is success measured? Tim says that Apple looks at the usual metrics, including churn, ARPU, etc. The company does not and will not share the information with the public at that level of detail.
2:58 p.m. PST: Question on pricing, could the company choose to lower prices as it did for the iPhone in China? Tim says that Apple looks at a number of different things to make this type of decision, there is no formula. Decision is made region by region.
2:57 p.m. PST: Question on gross margin, shouldn't new product costs hit opex rather than COGS? Luca says that there is always some margin compression after product transitions. He also mentions the unfavorable mix towards products vs. higher-margin services.
2:53 p.m. PST: Question on iPhone mix. Tim says that it is too early to talk in this environment of constrained supply. Again, he did not elaborate further.
2:52 p.m. PST: Question on Apple's ability to capture missed sales, should that be expected this time? Tim says that some people buy some products as gifts, and those sales could be missed. But this is not always the case. Tim did not elaborate further.
2:50 p.m. PST: Clarification on supply chain impact to fiscal Q1 revenues of more than $6 billion. Tim says that this number implies that supply chain problems are proportionately less impactful than they were in fiscal Q4, since the holiday period is so much larger from a revenue perspective.
2:47 p.m. PST: Question on cost management amid supply chain issues. Tim says that thoughts are baked into margin guidance. Substantial increase in freight cost.
2:46 p.m. PST: Question on demand for iPhone 13, upgrades, switching activity, etc. Tim says it is too early to talk iPhone 13, but says that iPhone grew double digits for upgraders and switchers in September quarter.
2:44 p.m. PST: Question on the ad business and Apple's new policies on tracking. Tim says that the feedback from customers has been overwhelmingly positive. Apple wants to give the decision to share data to users. Follow-up question on gaming restrictions for children.
2:42 p.m. PST: Question on carrier partnerships, will they continue to be a key piece at driving and meeting demand? Tim highlights the mutual benefits of having carriers be a key contact point in the 5G upgrade process.
2:40 p.m. PST: Question on supply chain at a higher level and how to manage the partner network. Tim does not see issues on Apple's part, company keeps working with suppliers. Apple is also reducing lead and cycle times.
2:37 p.m. PST: Question on App Store, how to balance regulatory scrutiny vs. the fact that users seem to prefer to pay through Apple's platform? Tim Cook reinforces the need to ensure security first and foremost. Apple is working on explaining how it ensures privacy and security though its App Store.
2:35 p.m. PST: Question on how to track demand ex-supply impact and on channel inventory. Tim says that channel inventory is below target, which is expected in this environment. Regarding demand, Apple looks at backorders at carriers, store inventory, channel orders, etc. Tim seems pretty confident about demand being strong.
2:32 p.m. PST: Question on guided gross margin, why flat sequentially, given op synergies and leverage? Luca says that product launches come with higher cost structure. YOY, he reminds that margins are getting much better.
2:31 p.m. PST: Question on supply chain again, how comfortable is Apple on the trajectory? Tim says that company has made progress on COVID-19 disruptions. In terms of chip shortage, it is happening primarily in legacy nodes, where Apple competes with many other companies for components. Hard to predict demand projections into 2022 with much accuracy.
2:29 p.m. PST: Question on recurring revenues and bundle offers. Tim points out that the iPhone was the first product to be sold through monthly payment plans. More demand for this kind of payment arrangement. Apple will give customers what they want.
2:28 p.m. PST: Q&A starts. First question on supply chain problems. Tim Cook says that impact is across the product portfolio, but reinforces that demand is very strong.
2:26 p.m. PST: Stock performing a bit better now, -2.5%.
2:25 p.m. PST: Here's outlook! No revenue guidance, only directional comments. Supply constraint impact should be larger than $6 billion (as discussed here earlier). Each segment will see revenues higher, except iPad. Service growth should decelerate. Gross margin 41.5% and 42.5%. Opex $12.4 billion to $12.6 billion. Other expenses $50 million. Tax rate of 16%.
2:23 p.m. PST: Cash balance of $191 billion, including marketable securities. Net cash of $66 billion, as Apple heads towards net cash neutral over time.
2:22 p.m. PST: Paid subscriptions climbing fast.
2:20 p.m. PST: Back to services, all-time record across nearly all sub-segments, and September quarter record for App Store.
2:19 p.m. PST: iPad also suffered from supply issues. But here, revenue growth of 21% looked pretty solid vs. expectations and tough comps.
2:18 p.m. PST: Last five quarters for the Mac has been the best five-quarter period of sales ever.
2:17 p.m. PST: "Enthusiastic" reaction to the iPhone 13 by customers.
2:17 p.m. PST: Op leverage and mix credited for some margin lift, partially offset by higher costs.
2:16 p.m. PST: Services has set all-time record. September quarter record in all segments and categories.
2:15 p.m. PST: Revenue record for a September quarter, despite larger than expected supply constraints. Strong growth across geo segments.
2:14 p.m. PST: CFO Luca Maestri is up.
2:13 p.m. PST: The CEO talks about sustainability.
2:11 p.m. PST: As he talks about the education vertical, Tim is about to wrap up his piece and hand the mic over to the CFO.
2:09 p.m. PST: Apple stock keeps bouncing around -3.5%. I think partial guidance, coming up in the next 10-15 minutes, could help to nudge share price higher or lower than this.
2:08 p.m. PST: "Growing customer enthusiasm and satisfaction". Not a surprise, Tim Cook is more excited about the business opportunities than concerned about the supply issues.
2:06 p.m. PST: The CEO now recaps Apple's new products and services.
2:06 p.m. PST: Tim talks about high demand for Apple's new products, from iPhone to iPad to Watch.
2:05 p.m. PST: Services better than expected. Indeed, segment revenues here looked great.
2:04 p.m. PST: Demand was robust, but component shortages caused $6 billion headwind to sales -- as we reported here earlier.
2:03 p.m. PST: "It's an honor to know that what we make matters", says Mr. Cook.
2:03 p.m. PST: Tim has the microphone. He reminds everyone of the challenges presented by COVID-19, but also optimistic about what's ahead.
2:01 p.m. PST: Call has started! Disclaimers first, followed by CEO Tim Cook; CFO Luca Maestri; then Q&A.
2:00 p.m. PST: AAPL stock down -3.6% to start the earnings call. With Amazon also down just about as much, I'm not feeling good about the stock market's performance tomorrow!
1:58 p.m. PST: Ok, the earnings call starts in 2 minutes. Stay with us!
1:58 p.m. PST: If not for a highly atypical "other expense" of over $500 million (we may hear more on this during the earnings call), I estimate that Apple would have topped EPS consensus by about 3 cents. Not fantastic, but it says something about the company's ability to protect the bottom line from top-line pressures.
1:56 p.m. PST: Also, it's impressive that opex climbed by only 15% when revenues grew 29%. This is some serious operating leverage at play! AAPL investors should feel good about it.
1:54 p.m. PST: Looking elsewhere around the P&L, gross margin was 42.2%. This was substantially better than the comparable quarter last year. Possible drivers: heavier mix of higher-end devices; positive mix in services. I think that high margin is great news in an environment of tough supply chain dynamics.
1:51 p.m. PST: China was a sore subject for Apple for years. The region seems to be coming back to life in the past few quarters. Trailing twelve-month growth has been a whopping 70%.
1:49 p.m. PST: Here's something absolutely impressive... check out the growth in Greater China revenues: 83%!
1:47 p.m. PST: Apple investors hope that all of this will be temporary, and any unmet demand through December 2021 will only mean higher demand in calendar 2022. This is roughly what happened to the iPhone 12 last year.
1:46 p.m. PST: Tim Cook told CNBC that, in the important holiday quarter, the impact to revenues from the supply chain problems should be larger than this quarter's $6 billion. That's not very encouraging.
1:45 p.m. PST: It is clear that the focus on attention during the earnings call today will be the supply chain crisis. Apple was widely expected to handle it way better than anyone else -- I certainly thought so. But clearly, even the Cupertino company has been suffering from it.
1:43 p.m. PST: Chart below clearly shows where the bulk of the problem was vs. expectations... iPhone revs grew "only" 47% vs. 57% consensus. Services, unaffected by supply problems, grew nearly 26% YOY, better than expected.
1:39 p.m. PST: With AAPL stock down -5% in after hours, let me plug in some numbers here.
1:37 p.m. PST: "The chip shortage will linger on", Tim Cook told CNBC. Not much of a surprise, but it's never encouraging to hear.
1:35 p.m. PST: Since the top-line miss was $1.6 billion, the supply chain issue probably accounts for all the downside vs. estimates, and then some!
1:34 p.m. PST: CNBC brings commentary from CEO Tim Cook... he says "very strong performance, despite larger than expected supply constraints, which we estimate to be around $6 billion".
1:33 p.m. PST: The last time that Apple missed on revenues was back in March 2017. The last time that the company did NOT beat on EPS was in December 2018.
1:31 p.m. PST: Let's see... EPS of $1.24 is in line. Revenue is $83.36. Wow, a top-line miss? It's been a while...
1:30 p.m. PST: AAPL down almost -4% in after hours!
1:30 p.m. PST: And here we go! AAPL is moving... lower! Uh-oh!
1:28 p.m. PST: Quick look at AAPL stock in after-hours trading... down -0.3%. I believe this to be minor spillover from Amazon's tough earnings report, delivered about half an hour ago.
1:26 p.m. PST: Ok, let's take one deep breath! Apple's earnings release should be out in a matter of 5 minutes!
1:25 p.m. PST: Below are the expected revenue growth numbers by segment.
1:22 p.m. PST: Could the Mac segment benefit from the many new, M1-equipped devices that Apple has launched in the past several quarters? The most recent product announcement happened earlier in October -- too late for any demand to be reflected in fiscal Q4's financial results.
1:18 p.m. PST: Unlike the iPhone, the Mac and iPad segments are already up against tough comps in fiscal Q4. Expected revenue growth for these segments are only 3% and 5%, respectively.
1:16 p.m. PST: The iPhone sales number to beat this quarter is $41.6 billion. This would represent an impressive 57% increase YOY. I think that the stock will be particularly sensitive to this segment.
1:14 p.m. PST: This is the case primarily because of the iPhone 12. The device was late to hit the market last year, and demand fell off ahead of the 2020 holiday season. The sales headwinds proved to be just a timing issue.
1:13 p.m. PST: The chart below helps to understand why Apple's numbers are expected to be so strong this time. Notice how comps are as easy as they will be through fiscal Q3 of next year, by a mile and a half.
1:10 p.m. PST: To reiterate, revenue growth expectations are 31.3%. The earnings number to beat is $1.24.
1:09 p.m. PST: Ok, so we are about 20-25 minutes away from looking at Apple's financial results. Above are a few thinks to keep in mind.
1:08 p.m. PST: Should Apple investors be worried about Amazon's reported numbers? I would say not much. There's definitely some overlap across both companies (think online sales, holiday shopping season, maybe supply chain challenges). But still, let's wait for Apple's earnings report to draw any conclusion.
1:05 p.m. PST: According to Yahoo Finance, Apple shares are also down in after hours, -0.6%. Could be a bit of "sympathy selloff".
1:03 p.m. PST: Big Tech in the news! Amazon has just reported earnings, and... oops! Double miss on revenues and EPS! Light guidance too. That stock is down a good -3%.
1:02 p.m. PST: Apple ended the trading session up strongly: +2.5%! The stock is getting very, very close to all-time highs... will tomorrow be the day?
1:00 p.m. PST: Here's the closing bell! I'm ready!!
12:59 p.m. PST: How well will Apple perform on earnings day? Chime in below!
12:58 p.m. PST: To listen to the fiscal fourth quarter earnings call, use this link.
12:57 p.m. PST: Historically, the press release comes out around 30 minutes after the closing bell. The earnings call begins at 2 p.m. PST (Cupertino, California time).
12:55 p.m. PST: Hello, everyone! Welcome to our live blog! It's almost time for Apple to report earnings...
10:21 a.m. PST: Ok, I am checking out for now, but will be back around 12:55 p.m. PST (almost 4 p.m. East Coast time) to start our live blog! Stay tuned...
10:20 a.m. PST: In addition to the below, remember that Wall Street expects total company revenue growth of 31.3% and EPS of $1.24 (representing a 70% increase in the bottom line).
10:17 a.m. PST: Also, our friends at Seeking Alpha have shared revenue consensus estimates for each segment. Keep these in mind to compare against actual results. Products $68.72 billion and Service $17.57 billion; iPhone $41.60 billion; Mac $9.31 billion; iPad $7.16 billion; and Wearables $9.28 billion.
10:14 a.m. PST: Hello, everyone! I just wanted to pop in quickly and look at AAPL stock's price action this Thursday, ahead of the earnings report. Shares are up an impressive +2.3%, well ahead of the S&P 500. It looks like traders and investors are getting optimistic about the results. Of course, keep in mind: this also means that it will take even more to move the stock higher in after-hours trading. See below.
3:00 a.m. PST: Today is Apple’s earnings day! We will be back later for a look at late morning market action, and then again ahead of the closing bell for full analysis of Apple’s results and earnings call. Stay tuned!
Apple reports fiscal Q4 earnings this Thursday, October 28, after the closing bell. What do you expect of the tech giant?
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(Disclaimers: this is not investment advice. The author may be long one or more stocks mentioned in this report. Also, the article may contain affiliate links. These partnerships do not influence editorial content. Thanks for supporting The Apple Maven)