iPhone sales, supply chain commentary and potential updates to active device counts will be among the things closely watched as Apple reports earnings and hosts its quarterly call.
Currently, the consensus among analysts polled by FactSet is for Apple to report revenue of $119 billion (up 7% annually) and GAAP EPS of $1.90 (up 13%) for its seasonally huge December quarter.
Apple hasn’t been providing formal sales guidance since the start of the pandemic, but has been sharing informal commentary on its calls about its quarterly sales expectations. The FactSet consensus for Apple’s March quarter revenue stands at $90.17 billion (up 1%).
Eric Jhonsa, Real Money’s tech columnist, will be live-blogging Apple’s report, which is expected to arrive at 4:30 P.M. Eastern Time, along with a conference call with management that’s scheduled for 5:00. Please refresh your browser for updates.
6:04 PM ET: Apple's call has ended. Shares are up 5% after-hours to $167.10 after Apple comfortably beat December quarter estimates on the back of 11% Y/Y revenue growth.
iPhone sales (+9% Y/Y) beat consensus by more than $4B. Mac (+25%), Services (+24%) and Wearables, Home & Accessories (+13%) sales also beat expectations, while iPad (-14%) missed.
On its call, Apple guided for revenue to grow Y/Y again in the March quarter, but (as expected) at a slower rate than in the December quarter amid tougher comps and a 2-point forex headwind. The company also disclosed that there are now more than 1.8B Apple devices in active use, a Y/Y increase of 150M.
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5:58 PM ET: A question about Apple's healthcare vision.
Cook: There aren't days that go by without me getting a note about how a Watch health alert saved someone. We're doing a lot today. But my sense has been that there's more here. We're changing people's lives and in some cases saving lives.
5:54 PM ET: A question about Services mix, and one about how much Services growth is coming from new Services customers vs. existing ones.
Cook: If you look at the size of our base and the size of our Services businesses, we still have a lot of room to grow.
Maestri: The more engaged customers are with our services, the more likely they are to remain with Apple long-term. We closely track those metrics. We care both about landing new customers and driving growth among existing customers.
5:51 PM ET: A question about long-term iPhone growth expectations.
Cook: iPhone is now an integral part of more lives than ever. We saw a record number of upgraders and double-digit growth in switchers last quarter. And we're still in the early innings of 5G. We maintain a very optimistic view on iPhone long-term.
5:50 PM ET: A question about March quarter sales expectations.
Maestri: We expect strong sales in the March quarter, just with slower growth than in the December quarter. We're very pleased with the way the business is growing right now.
5:47 PM ET: Cook: Apple Card has a great runway ahead of it. And the growth of Apple Pay has been stunning. There's still a lot of room to take share from cash.
5:46 PM ET: A question about Apple TV+ growth.
Cook: We don't share subscriber numbers for Apple TV+. We had 785M paid subs across our ecosystem. TV+ content has won 200 awards. We feel very good about where we are competitively.
5:44 PM ET: A question about inflationary pressures.
Cook: We're seeing inflation. It's factored into our gross margin guidance. Logistics costs are very elevated, I hope a portion of that is transitory.
5:43 PM ET: A question about the Chinese macro environment and local channel inventories.
Cook: Our sales grew strongly in China. I'll leave the macro commentary to others. We saw double-digit growth in iPhone switchers, and had the top-4 selling phones in urban China.
5:41 PM ET: A question about Apple's burgeoning R&D spend.
Cook: We try to announce things when they're close to ready and try to maintain an element of surprise. In terms of where we invest, we look at areas that are at the intersection of hardware, software and services. That brings out the best in Apple. We've been ramping our R&D spend even more than before. There's quite a bit of investment going into things that aren't on the market right now.
5:39 PM ET: Cook is asked about the expected dollar impact of supply constraints in the March quarter. He declines to give a figure, but reiterates the impact is expected to be smaller than in the December quarter.
5:38 PM ET: A question (amid rumors of Apple AR/VR headsets in the works) about Apple's metaverse efforts.
Cook: We saw a lot of potential in this space, and are investing accordingly. There are now more than 14K ARKit-enabled apps in the App Store.
5:37 PM ET: A question about supply chain issues.
Cook: Our biggest supply chain issues have involved chip shortages. Our supply chain teams have been doing good work given the chip issues.
5:36 PM ET: A question about Services growth.
Maestri: We're seeing strong momentum across many different Services businesses (App Store, music, video, ads, etc.). Also seeing higher engagement across them.
5:34 PM ET: Cook notes Mac sales set records in a number of regions. Also notes that about 6 out of 10 Mac sales in China were to first-time buyers.
5:33 PM ET: Apple has pared its AH gains a bit following Maestri's commentary, but is still up 3.2%. It's worth noting that the pre-earnings consensus was for just 1% Y/Y March quarter revenue growth, so guiding for slower growth than the December quarter's 11% (amid tougher comps and forex headwinds) wasn't a surprise.
5:31 PM ET: A question about iPhone/iPad component availability.
Cook: We had more than $6B worth of supply constraints last quarter. Constraints will remain in the March quarter, but will be smaller. The challenge is with legacy chip manufacturing process nodes.
5:28 PM ET: First question is about the sustainability of gross margin strength and the role that mix is playing.
Cook: We don't comment on mix, but we saw strong demand across the iPhone family. External data suggests we're gaining share. And we were supply-constrained during the quarter.
Maestri: Services is accretive to Apple's company-wide margin. Services margin growth will depend on the performance of different businesses. Our March quarter company gross margin guide is strong.
5:25 PM ET: The Q&A session is starting.
5:25 PM ET: Time for guidance commentary. Maestri says Apple expects to achieve solid Y/Y revenue growth in the March quarter, but at a slower rate than the December quarter's. A tough annual comp (caused in part by iPhone launch timings) is said to be a headwind. Also, forex is expected to be a 2-point headwind to revenue growth.
Services revenue is expected to grow at a slower pace. Gross margin is expected to be in a range of 42.5% to 43.5%.
5:20 PM ET: Maestri: M1 Macs have become the preferred choice for Macs among enterprise customers.
5:19 PM ET: Paid accounts for Apple's digital product stores grew double-digits Y/Y. And there are now 785M paid subscriptions across Apple's ecosystem (up 40M Q/Q).
5:18 PM ET: Over 2/3 of Apple Watch buyers during the quarter were first-time buyers.
5:17 PM ET: About half of all iPad buyers during the quarter were first-time buyers.
5:16 PM ET: Maestri says the vast majority of Apple's Mac sales are now from M1-powered devices. Also notes Mac sales were supply-constrained.
5:16 PM ET: Maestri: We set all-time installed base records in each product and geographic segment. Product gross margin rose Q/Q thanks to both operating leverage and product mix. Services gross margin grew due to mix.
5:14 PM ET: Maestri: Total product revenue rose 9% Y/Y in spite of major supply constraints. iPad supply constraints were especially pronounced.
5:13 PM ET: CFO Luca Maestri is now talking.
5:12 PM ET: A little more PR work: Cook goes over Apple's efforts to support HIV prevention, become carbon neutral, etc.
5:10 PM ET: Cook goes over Apple's services efforts and reiterates (amid ongoing legal/regulatory battles over App Store fees) Apple has paid developers more than $260B since the App Store's launch. Also says Apple's retail operations set a revenue record.
5:07 PM ET: Cook: We're still in the early innings with our health work.
5:05 PM ET: Cook does a bit of PR work, thanking COVID front-line workers and Apple employees and going over Apple's broader product strategy.
5:03 PM: Cook says Apple's active device installed base is now above 1.8B. That's up from 1.65B+ a year ago.
5:02 PM ET: Tim Cook is talking.
5:01 PM ET: The call is starting. Apple's IR chief is going over the safe-harbor statement.
5:00 PM ET: Apple is up 4.5% AH heading into its call.
4:59 PM ET: Apple's call should be starting any minute. Here's the webcast link, for those looking to tune in.
4:58 PM ET: Apple ended the December quarter with $202B in cash and marketable securities, and $118B in debt. The company has said for a while it aims to eventually become net cash neutral.
4:57 PM ET: Apple continues dialing up its R&D spend: On a GAAP basis, it rose 22% Y/Y to $6.3B. SG&A spend rose 15% to $6.45B.
4:55 PM ET: Apple's repurchases of common stock (as stated on its cash-flow statement) totaled $20.5B in the December quarter. That follows $20B worth of buybacks in the September quarter.
4:53 PM ET: Sales by geographic segment:
Americas - $51.5B (+11% and above a $49B consensus)
Europe - $29.75B (+9% and above a $29.16B consensus)
Greater China - $25.78B (+21% and above a $23.33B consensus)
Japan - $7.11B (-14% and below an $8.18B consensus)
Rest of Asia-Pac - $9.81B (+19% and above an $8.57B consensus)
4:46 PM ET: Here's the earnings release.
4:45 PM ET: Apple is now up 3.5% AH. Chip suppliers such as Qualcomm, Skyworks and Qorvo are also trading higher.
4:44 PM ET: Though the iPhone beat will get the most attention, Mac and Services had pretty strong beats of their own. The iPad softness fits the broader slowdown that's been seen in the tablet market, following a pandemic-driven surge.
4:41 PM ET: Revenue by product segment:
iPhone - $71.63B (+9% and above a $67.57B consensus)
Mac - $10.85B (+25% and above a $9.88B consensus)
iPad - $7.25B (-14% and below an $8.19B consensus)
Wearables, Home & Accessories - $14.7B (+13% and above a $14.36B consensus)
Services - $19.52B (+24% and above an $18.67B consensus)
4:38 PM ET: Boosting EPS: Apple had a GAAP gross margin of 43.8%, up from 39.8% a year ago and above its guidance of 41.5%-42.5%.
4:35 PM ET: Geographically, Apple topped estimates for the Americas, Europe, Greater China and Rest of Asia-Pac. Japan was the only region that missed.
4:34 PM ET: Mac, Services and Wearable, Home and Accessories revenue also beat consensus. iPad was the only segment that missed.
4:32 PM ET: iPhone revenue of $71.63B (+9% Y/Y) comfortably beats a $67.57B consensus.
4:31 PM ET: Shares are up 2.1% after hours to $162.59.
4:30 PM ET: Results are out. Revenue of $123.9B beats a $119B consensus. EPS of $2.10 beats a $1.90 consensus.
4:27 PM ET: As a reminder, Apple's report is expected to be published at 4:30 PM ET.
4:24 PM ET: Also keep an eye out for any updates Apple shares for its active device counts. A year ago, Tim Cook disclosed that there are more than 1B iPhones and more than 1.65B Apple devices overall in active use.
4:20 PM ET: During its October call, Apple forecast that supply constraints would have a $6B impact on its December quarter sales. Any commentary its shares on the call about the supply chain impacts it expects going forward will get attention.
4:18 PM ET: Consensus estimates for Apple's revenue segments:
iPhone - $67.57B (+3% Y/Y)
iPad - $8.19B (-3%)
Mac - $9.88B (+14%)
Wearables, Home & Accessories - $14.36B (+11%)
Services - $18.67B (+18%)
4:14 PM ET: Apple closed down 0.3% today, amid a 1.4% drop for the Nasdaq. Shares are down 10% this month thanks to a broader tech selloff, but remain up 12% over the last 12 months.
4:13 PM ET: The FactSet consensus is for Apple to post December quarter revenue of $119B and GAAP EPS of $1.90. For the March quarter (Apple hasn't been sharing formal sales guidance lately, but has been providing some informal guidance commentary on its call), the revenue consensus is at $90.17B.
4:11 PM ET: Hi, this is Eric Jhonsa. I'll be live-blogging Apple's December quarter earnings report and call.
