Welcome to another edition of the Apple Maven’s earnings preview series – we started the countdown a few days ago. As a reminder, I have already covered a few topics of conversation regarding Apple’s upcoming earnings day:
Today, I will talk about the iPad, Apple’s unlikely shiny star in this challenging 2020.
A look at last quarter’s numbers
Before moving on to fiscal fourth quarter, let’s first look at the performance of the iPad last quarter. The graph below shows revenue growth by major segment. Simply put, the iPad stole the show last time, posting sales growth of 31%. This number would have been impressive without any context, but it looked even better considering that the tablet space has been in its mature life stage for years.
Clearly, the iPad has been a beneficiary of the stay-at-home economy. During the fiscal third quarter earnings call, CEO Tim Cook even explained that the strength in the iPad (and Mac) came, in part, from relative weakness in the iPhone and wearables. This is easy to understand, since consumers have been much less on-the-go this year than usual.
The Apple Maven’s expectations
I have little doubt that the iPad will do well once again in fiscal fourth quarter. At a macro level, COVID-19 continues to be disruptive to the “old lifestyle”. This is particularly good news for Apple and the iPad in the current back-to-school season. As a caveat, it is possible that some strength in iPad sales that would have otherwise happened in the most recent quarter may have been pulled forward into the fiscal third period.
At a company-specific level, the better news is that Apple has prepared an interesting lineup ahead of this year’s holiday season. The iPad Pro was launched in March, while the new iPad Air and 8 generation model came out in September. While these last two were released at the very end of the quarter, the week and a half of out-of-the-gate sales may have been enough to lift the segment’s top line by an extra one or two percentage points.
Read more from the Apple Maven:
(Disclaimers: 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)