Apple posts blowout third quarter, with sales up 11% despite coronavirus disruptions

Earnings

Apple reported a historically strong quarter on Thursday, including $59.7 billion in revenue and double-digit growth in its products and services segments, blowing away analyst estimates in a period deeply impacted by the coronavirus pandemic. The company also announced it plans to give investors three additional shares of Apple per share they own at the end of August as part of a 4-1 stock split

Apple saw widespread retail closures during the quarter, especially in the United States, but previously touted both work-from-home trends and strong online sales as delivering a boost to overall operations. The company declined to issue guidance for the second quarter in a row, most likely due to uncertainty from the pandemic. 

Apple shares gained more than 5% in extended trading following the report. 

Here’s how the company did for the quarter ended June 27 compared with analysts’ expectations based on Refinitiv consensus estimates:

  • EPS: $2.58 vs. $2.04 est.
  • Revenue: $59.69 billion vs. $52.25 billion est.
  • iPhone revenue: $26.42 billion vs. $22.37 billion est.
  • Services revenue: $13.16 billion vs. $13.18 billion est.

“In uncertain times, this performance is a testament to the important role our products play in our customers’ lives and to Apple’s relentless innovation,” CEO Tim Cook said in a statement. 

Apple’s business is highly seasonal, and its revenue was the highest the company has ever reported in its third quarter, typically the slowest of the year for Apple. Revenue was up nearly 11% year over year, and every major product line saw year-over-year growth. Services were up 14.85% year over year, and Cook said that Apple had hit its internal goal to hit $50 billion in annual services sales.

“We are proud to announce that we have achieved our goal of doubling our fiscal 2016 services revenue six months ahead of schedule,” Cook said based on a preliminary transcript of the call provided by FactSet.

Here’s how the company fared by product line, compared with expectations based on Refinitiv consensus estimates:

  • iPad revenue: $6.58 billion vs. $4.88 billion est.
  • Mac revenue: $7.08 billion vs. $6.06 billion est.
  • Other Products revenue: $6.45 billion vs. $6 billion est.
  • Gross margin: 38.0% vs. 38.0% est.

Many of Apple’s products can be useful to people who are quarantined at home during the ongoing pandemic. While iPhone sales only rose 1.66% year over year, other product categories saw huge growth. iPad sales were up over 31% and other products, including AirPods and Apple Watch, were up 16.74%.

Cook said that the Mac and iPad results were in spite of the fact that Apple did not have enough stock to meet demand on a call with analysts, and that they were boosted by the work-from-home trend.

“It definitely has boosted Mac and iPad. We see both of those likely picking up share and, in addition, being a tool of choice for their productivity,” Cook told CNBC’s Josh Lipton. 

Apple’s stock split is the company’s fifth in its history. It previously split on a 7-1 basis in 2014, and a 2-1 basis in 2005, 2000, and 1987. Apple also declared a $0.82 cash dividend payable on August 13. 

Apple said that it had $193.817 billion in cash on hand, which is up from the company’s fiscal second quarter.

This is breaking news. Please check back for updates. 

Correction: This story has been updated to correct that Apple’s Wearables, Home and Accessories category revenue rose 16.74% during the company’s third quarter. 

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