Apple Inc (AAPL.O) delivered massive quarterly results Thursday, reporting revenue increases in every category and region, as consumers who worked and learned from home during the COVID-19 pandemic turned to their products and services.
The report exceeded Wall Street expectations, with even long-eclipsed categories such as iPads and Macs getting a boost. Shares rose a whopping 6% in long-term trading after the results.
The fiscal third quarter results, including iPhone sales that were about $ 4 billion above analyst expectations, came on the same day that U.S. gross domestic product collapsed 32.9% year-on-year last quarter, the worst economic performance of the country since the Great Depression.
Luca Maestri, Apple’s Chief Financial Officer, also confirmed supply chain rumors that the new line of iPhones, usually released in late September, would be delayed by a few weeks.
But executives predicted continued strong performance of the company’s products.
Other major tech companies Amazon.com Inc (AMZN.O) and Facebook Inc (FB.O) also released results that surpassed Wall Street targets and pushed their stocks up.
With 60% of its revenue coming from international markets, the Cupertino, California-based company posted iPhone revenues of $ 26.42 billion, $ 4 billion above analyst expectations, according to Refinitiv’s IBES data.
In an interview with Reuters, CEO Tim Cook said that after April hiccups, sales started to pick up again in May and June, aided by what he called a “strong” launch for the $ 399 iPhone SE introduced in April.
“I think the economic stimulus that was present – and I’m not just focused on the US, but in a broader sense – was a help,” Cook told Reuters.
Continued growth in services and accessories also showed the sustainability of the company’s brand, prompting investors to view it as a relative safe haven and boosting stock prices since March.
The company saw strong sales in the greater region of China, where aggressive pricing during a Christmas buying season in June and the cheaper iPhone SE model released in April helped drive sales 2% to $ 9.33 billion.
“China remains a key ingredient in Apple’s recipe for success as we estimate that about 20% of iPhone upgrades will come from this region in the coming year,” Daniel Ives of Wedbush Securities said in a note.
Apple also announced a 4-for-1 stock split and said it wanted to keep stocks accessible to a wide variety of investors. Shares shot above $ 400 for the first time on Thursday, although they had been proportionally higher before a 7 for 1 split in 2014.
Apple’s revenue and earnings in the third quarter were $ 59.69 billion and $ 2.58 per share, compared to analyst expectations of $ 52.25 billion and $ 2.04 per share.
Revenue in its services segment, which also includes offerings such as iCloud and Apple Music, increased 14.8% to $ 13.16 billion, compared to analyst expectations of $ 13.18 billion. Cook told Reuters that Apple has 550 million paid subscribers on its platform, up from 515 in the previous quarter.
Revenue in the wearables segment that includes the Apple Watch increased 16.7% to $ 6.45 billion, compared to estimates of $ 6.0 billion.
Apple did not provide a fiscal forecast for the fourth quarter.
Apple benefited from trends in work and distance learning and reported revenue in its iPad and Mac segments of $ 6.58 billion and $ 7.08 billion, ahead of expectations of $ 4.88 billion and $ 6.06 billion.
“Both had some very important product announcements in late March, early April,” Cook told Reuters. “You combine that with home work and distance learning, and it has really produced very strong results.”
But the global smartphone market has stagnated even before the new coronavirus caused it to contract, and Apple has relied heavily on the growth of its service business, where the company’s biggest revenue growth was during the fiscal third quarter. The largest part of that business is the App Store, where Apple generates commissions between 15% and 30% on some sales.
On Wednesday, Cook faced questions from U.S. lawmakers about Apple’s practices with regard to the store, which have come under fire from independent app developers who claim the rules and unpredictable approval process put them at a disadvantage against the iPhone maker.
Apple delivered excellent quarterly results and reported revenue increases in every category and region as consumers who worked and learned from home during the COVID-19 pandemic turned to its products and services.
Most important part
- Apple delivered chattering quarterly results on Thursday.
- The report exceeded Wall Street expectations, with even long-eclipsed categories such as iPads and Macs getting a boost.
- Apple did not provide a fiscal forecast for the fourth quarter.