It is finally time for Apple to release its fiscal third quarter results! The company has delivered a double beat on revenue and earnings each quarter since early 2017. Will the company pull it off once again? And what will happen to Apple stock price, currently at an all-time high?
The Apple Maven will analyze the results and the conference call, as it does every quarter. Tune in to our live coverage, which starts at 4 p.m. EST, on July 27. The earnings release should come out around 4:30 p.m. EST, and the call is scheduled to kick off at 5:00 p.m. ET.
Ahead of earnings, feel free to check out our series of earnings preview articles on thestreet.com/apple. Below is a summary of the key topics of conversation. To skip the preview, scroll straight down to the "Live Coverage Starts Here!" section for real time insights.
(Read more from the Apple Maven: Chat With Wedbush’s Dan Ives: The iPhone Is Underestimated)
Previewing Apple’s Q3 earnings
- Wall Street is, once again, expecting a blowout quarter. Analysts see Apple’s revenues climbing 23% year-over-year, the second largest year-over-year increase of the past 20 quarters, at least. Meanwhile, earnings per share are projected to rise by more than 55%.
- The iPhone will certainly be a front-and-center segment. Most analysts seem highly optimistic about smartphone sales, following an outstanding post-holiday quarter. However, I have pointed out that research shop Canalys reported unimpressive iPhone shipment in fiscal Q3.
- PC sales have likely been robust across the industry in the most recent quarter. The question is whether Apple has experienced similar strenght. Research firm IDC sees Mac shipments up 10% year-over-year, which is lower than the peer group average.
- Were I to make a bet, I believe that iPad sales will impress. Apple comes into fiscal Q3 with a new iPad Pro, the first of its tablets to be equipped with the M1 chip. A combination of refreshed product portfolio and lingering stay-at-home trends will likely lead to a good quarter for this segment.
- In the past five years, it has made sense to hold Apple stock ahead of earnings, since returns have been much better in the two weeks after the event. This time, however, AAPL share price has already rallied about 11% in the month leading to earnings week.
For reference, below is how each of Apple’s product/service and geographic segments performed last quarter, in the post-holiday period.
Live coverage starts here!
3:00 a.m. EST: Please stand by for our live coverage Apple’s fiscal Q3 report! Refresh your browser for updates below, if it does not do so automatically.
12:06 p.m. EST: Hello, all! Below is a quick mid-day check on market activity:
12:09 p.m. EST: It has been a pretty ugly day for the equities markets, particularly for the tech-rich Nasdaq (and the small-cap Russell 2000). Apple, Amazon, not even Tesla and its strong earnings report last evening have been able to sidestep bearishness.
12:11 p.m. EST: I will check back in in a few hours, when we approach the closing bell.
12:13 p.m. EST: By the way, here's an update on the Apple Maven's blog coverage... starting at 4:20 p.m. EST, I will be chatting live with TheStreet's Katherine Ross! More detail on how to catch our conversation soon. Stay tuned!
3:45 p.m. EST: Hello, everyone! We are counting down to the closing bell! Apple stock recovered a bit through the session, although it still trades lower about -1.7% at this moment.
4:00 p.m. EST: This is it, everyone! The closing bell has rung! It's almost time for Apple's earnings!
4:01 p.m. EST: As a reminder, Apple usually releases its report around 4:30 p.m. EST, conference call to start at 5 p.m. EST.
4:03 p.m. EST: Before Apple, the market will hear from Visa, Alphabet, Starbucks and others. I am particularly interested in Microsoft.
4:04 p.m. EST: Once again, not a great day for Apple stock or for the equity markets in general. Still, AAPL has been up nearly 10% for the past month, nearly 20% for the past two months.
4:05 p.m. EST: Could this be a bad set up for traders, as the bar has been set high for Apple this quarter? Or will the Cupertino company impress once again and invite bulls back in? We will find out in less than 30 minutes.
4:07 p.m. EST: Quick housekeeping item... if this page is not updating automatically for you, don't forget to hit the refresh button.
4:10 p.m. EST: Apple down slightly in after-hours trading... Microsoft down more sharply!
4:12 p.m. EST: Microsoft is in with another killer all-around beat, as usual! But also as usual, the stock is not really finding its way up: -2.5% in after-hours trading.
4:13 p.m. EST: Still on Microsoft, the company usually provides guidance during the earnings call... so there's more to come for them tonight!
4:15 p.m. EST: Ok, so the Apple Maven takes a quick break now to connect with Katherine Ross for a live on Instagram. See below, and check us out there! I'll be back here soon...
Check out below and don't forget... I will be chatting with Katherine Ross live on Instagram, starting at 4:20 p.m. EST!
4:50 p.m. EST: Alright, everyone... I'm back! Lovely chatting with you all on Instagram with Katherine Ross.
4:51 p.m. EST: Apple stock down minimally in after-hours trading, time for me to plug in some numbers!
4:54 p.m. EST: As you all know, strong beat on top and bottom lines! The iPhone was, indeed, a highlight in the quarter: $39.6 billion vs. consensus of $34.6 billion. About 2/3 of the revenue beat vs. consensus came from here.
4:56 p.m. EST: Wearables had its best quarter of growth since the start of the pandemic: 36%. Not a surprise, as people start to leave their homes.
4:57 p.m. EST: Shout out to services segment as well... 33% growth is head and shoulders above anything that I remember seeing in the past 3 years at least!
4:58 p.m. EST: All geographic segments were up at least 28%, with Greater China through the roof: 58%! Outstanding quarter for Apple.
4:59 p.m. EST: As I told Katherine Ross, the stock is not up after such results only because of the rally leading to earnings week. Gains must have been front-loaded a bit.
5:00 p.m. EST: Ok, time for the earnings call! Let's do it!
5:02 p.m. EST: Disclaimers first... CEO Tim Cook will be next, as usual.
5:03 p.m. EST: Tim Cook: "strong quarter of double-digit growth across segments".
5:04 p.m. EST: Optimism, renewed hope. But "progress made is not progress guaranteed", says the CEO.
5:05 p.m. EST: Very strong growth in iPhone, every geo segment. Early innings of 5G, says Cook.
5:06 p.m. EST: Strong performance in Mac and iPad, with good results in new M1-equipped devices.
5:07 p.m. EST: Tim Cook going down the list of products and services. So far, no mention of weakness in the business at all. I am sure analysts will dive deeper in Q&A.
5:08 p.m. EST: Topic is the App Store. Developer ecosystem called "an incredible engine of prosperity". As you probably know, this has been a hot topic of discussion lately, with Epic Games battle and more.
5:10 p.m. EST: Tim Cook talks about health applications. Meanwhile, I look at the company's P&L. What a great quarter! Gross margin 1.3 percentage points above the company's guidance (mid point), opex below guidance.
5:13 p.m. EST: CFO Luca Maestri will come up soon. Note that guidance for fiscal Q4 was not provided in the earnings report. I expect "partial guidance", as we say last quarter. This could be an after-hours share price mover.
5:14 p.m. EST: CFO is up. Record quarter is reemphasized.
5:15 p.m. EST: Services is a June record in each geo segment. Wow.
5:16 p.m. EST: Product gross margin down a bit, but really not much. Not a surprise, given the disruptions in supply chain.
5:17 p.m. EST: iPhone 12 performing well. Active installed base at all-time high. Survey of consumers suggest 97% satisfaction.
5:18 p.m. EST: App Store and Apple Pay at June record, other major services at all-time record. Smaller services (Fitness, etc.) ramping up.
5:19 p.m. EST: Wearables and home setting records too. New Apple TV 4K being shipped this quarter. Watch doing well, 75% of buyers are new to the product.
5:20 p.m. EST: Mac having its top 4 quarters ever in the last 4 quarters. Growth of 16% does not look better, on the surface, because comps were tough.
5:21 p.m. EST: iPad great too. Same deal: "low" growth of 12%, but on top of last year's 31% growth. Impressive.
5:23 p.m. EST: By the way, Apple stock still down -1% in after hours. No good reason, really. Just a needed pullback after a strong 2-month rally, in my view.
5:23 p.m. EST: CFO reviewing cash flow and cash position.
5:25 p.m. EST: Here's guidance!! No revenue outlook, only directional comments. If COVID-19 impact does not worsen, double-digit growth in sales, but lower than 36% of June quarter (due to FX at 3 percentage points of drag, services going back to "normal", and supply constraints greater this time on iPhone and iPad).
5:27 p.m. EST: Gross margin 41.5% to 42.5%; Opex $11.3 billion to $11.5 billion; Other income zero; Tax rate 16%.
5:28 p.m. EST: My first impression: guidance was a bit iffy. Not terrible whatsoever, but "supply constraints being greater in the September quarter, particularly on iPhone and iPad" could fuel minimal amounts of bearishness regarding iPhone 13 launch.
5:30 p.m. EST: Q&A, supply constraints. Will they spill into holiday quarter, and what are the cost implications? Tim Cook say he is paying more for freight than he would like. CEO does not want to predict how long issues might last, will keep working on mitigation.
5:31 p.m. EST: Question on R&D and innovation in a tough environment. Tim Cook seemed comfortable in his answer.
5:33 p.m. EST: Question on iPhone cycle: consumer preferences, etc. Tim Cook says quarter was strong for switchers and upgraders. Results were strong around the world. Feeling confident about the future of iPhone.
5:34 p.m. EST: Question on China. Incredible quarter, says Tim Cook. Strong response to 12 Pro and 12 Pro Max. This seems consistent with my expectations. Other products and services also did well, per the CEO.
5:37 p.m. EST: Question on gross margin, puts and takes. CFO Maestri mentions cost savings and high mix of services as positives. Going forward, different mix expected, which is reflected in the guidance for the September guidance (i.e. 130 basis points lower sequentially).
5:38 p.m. EST: Question on services, installed base vs. ARPU. Luca says that service's success is a mix of both. CFO also makes a good point on "quantity" of services: more of them being launched in the recent past.
5:41 p.m. EST: Question about "pandemic benefit". CFO Maestri says that he does not have full visibility on the net impact to impact. Parts of the business benefited, others were hurt (e.g. store closures, certain services like Apple Care). My impression: hard to imagine Apple not having benefited, on a net basis, given the outstanding results across all segments recently. But this is up for debate, of course.
5:43 p.m. EST: Question on iPhone trends in the next year. Tim Cook says that he is not trying to predict next cycle -- but mentions growing installed base, customer loyalty, geographic breadth, quality of product, etc.
5:45 p.m. EST: Question on installed base of 1 billion-plus for iPhone. How old is it? How does it impact upgrade to 5G? Tim Cook says that question is hard to answer. Reinforces that Apple did well with switchers and upgraders. Reminds that 5G penetration is still quite low around the world.
5:46 p.m. EST: By the way, Apple stock in after-hours went from -1% to -2% after partial guidance. It has stabilized there.
5:48 p.m. EST: Question on silicon development and production. Tim says that Apple will only bring it in house if it can be done better. CEO seems excited about the M1 powering the Mac and now the iPad.
5:50 p.m. EST: Question on normalized growth rate for services. Luca hints at going back to pre-pandemic quarters for a sense. Feel confident about strong double digits.
5:52 p.m. EST: Question on supply constraints on iPhone, what is the choke point? Tim Cook mentions shortages are consistent with industry, legacy nodes.
5:54 p.m. EST: Call is starting to wind down, last couple of questions. Let me reemphasize my impressions:
5:55 p.m. EST: The quarter was outstanding. Results across the board were better than guidance, better than consensus. Any concern over demand for Apple's products or services coming out of thick of pandemic were, once again, put to rest.
5:56 p.m. EST: Bears might hang on to the fact that September will see more supply chain disruptions. Could this be a problem for the iPhone 13's launch? Hard to tell, but here's what we know: Apple has been executing very well amid this still challenging environment.
5:58 p.m. EST: Question on cost savings, are they tactical? Luca suggests it was structural, nothing abnormal.
5:59 p.m. EST: Question on services, what is driving the margin changes? Luca mentions large portfolio, very different individual margins. Different mix played a role this quarter.
6:00 p.m. EST: Question on China and regulatory risk. Tim Cook reminds that region grew strongly in fiscal Q3. Economy is looking good coming off COVID-19.
6:01 p.m. EST: And that's a wrap! Apple impressed again this quarter, even if share price might suggest some post-earnings softness. This is understandable, given how strong the stock looked ahead of the print (4-8 weeks prior).
6:04 p.m. EST: Thanks for your time! I will see you all later!