Apple reported its largest single quarter in terms of revenue ever, with sales growing over 11% despite supply challenges and the lingering effects of the pandemic.
Apple beat analyst estimates for sales in every product category except iPads. Profit was also higher than expectations. Apple stock rose over 2% in extended trading.
Here is how Apple did in its first fiscal quarter versus Refinitiv consensus estimates:
Apple again did not provide official guidance about expectations for the current quarter. Apple hasn’t provided guidance since the start of the Covid-19 pandemic, citing uncertainty.
It was another strong showing for Apple in its most important quarter of the year which includes holiday sales. Every one of Apple’s product lines grew year-over-year from last year, except for iPad sales, despite management warnings from October that supply issues could hurt the company’s sales.
″“Our biggest issue is chip supply, it’s chip supply on legacy nodes,” Apple CEO Tim Cook told CNBC’s Julia Boorstin. “And we’re doing okay on the leading edge stuff.”
Cook added that the December quarter was worse than Apple’s September quarter in terms of supply issues, but that he is projecting the March quarter to improve. Leading edge chips are the powerful processors at the heart of a phone, while “legacy node” chips are the other, less sophisticated parts that run functions like driving displays or managing power.
Apple released new iPhone models in September, and this quarter was the first full quarter of iPhone 13 sales, giving investors a preview of how competitive the devices are in the market. Sales were up 9% annually to $71.63 billion, although they are growing slower than Apple’s overall business.
Cook said that Apple was proud of the 9% increase in iPhone sales. “That’s despite having supply constraints during the quarter,” Cook said.
Services, which include iCloud, Apple Music, search licensing and App Store fees, continued growing strongly, rising 25% annually to $19.52 billion. Services is Apple’s most profitable business unit and its rise contributed to Apple’s higher-than-expected gross margin.
Apple’s other products category, which includes Apple Watch and AirPods, was up 13% year-over-year. This quarter included sales from Apple’s latest Series 7 watch, which has a larger screen, and new AirPods.
Macs had the strongest growth of any of Apple’s hardware lines, growing 25% over last year to $10.85 billion. In October, Apple launched new MacBook Pro models starting at $1,999 that were well-received and featured a new Apple chip instead of an Intel chip.
iPads were the most notable disappointment. Sales shrunk from last year, and missed analyst estimates, but it was likely because Apple could not make enough iPads and prioritized other devices. Apple warned in October that it expected iPad sales to decline because of supply constraints.
Cook also told CNBC that Apple was seeing inflationary pressure.
“I think everybody’s seeing inflationary pressure,” Cook said. “There’s no two ways about that.”