MacDailyNews presents live notes from Apple’s Q121 conference call

MacDailyNews presents live notes from Apple’s Q121 Conference Call with analysts starting at 5pm ET / 2pm PT today, January 27, 2021.

Apple's Q121 conference call. Image: Apple logoApple today will provide live audio streaming of its Q121 Results Conference Call. This stream is best experienced on an iPhone, iPad, or iPod touch using Safari on iOS 10 or later; a Mac using Safari on macOS Sierra 10.12 or later; or a PC using Windows 10 and Microsoft Edge. Streaming to Apple TV via AirPlay requires an Apple TV (2nd generation or later) with the latest Apple TV software or tvOS. Other platforms may also be able to access the stream using recent versions of Chrome or Firefox (MSE, H.264, and AAC required).

Apple’s live conference call webcast will begin at 5pm ET / 2pm PT today here.

Apple today posted all-time record revenue of $111.4 billion, up 21% year over year, and quarterly earnings per diluted share of $1.68, up 35%.

For the quarter, Refinitiv consensus estimates expected Apple to post revenue of $103.28 billion and EPS of $1.41.

Live notes from Apple’s Q121 Conference Call in reverse chronological order:

• AAPL After hours: $138.05 -$4.01 (-2.82%) @ 6:01PM EST

• End of conference call.

• We have share in evrry market, headroom left, even in developed markets
• Cook: We will open Apple Retail Stores in India in the future
• Cook: We opened the India online store to greta reaction helping Apple to double sales in India
• Cook: There are several market, India is one, where our share is quite low, but improving
• Q: India efforts?

• Outside the U.S., subsides are not used everywhere
• Cook: Subsidies always help. In U.S. we expect a lot of carrier competition, so subsidies will continue
• Q: iPhone subsidies?

• We had supply issues for iPhone 12 Pro/Max in December quarter, but we think we can solve those in March quarter
• We are seeing a very high level of interest for iPhone 12 Pro and iPhone 12 Pro Max
• Luca: iPhone revenue grew 17% YOY, margins grew du to strong mix
• Q: iPhone ASPs?

• We expect to have a great quarter in China, but the compare is challenging due to COVID YOY
• Luca: The March quarter is the strongest in China in March quarter due to Chinese New Year
• Q: Downloads in China

• Cook: It’s going well. We do it in a very privacy-focused manner. It’s been growing nicely
• Q: App Store search advertising business?

• Cook: It’s working, but we’ve just gotten started
• We want to make services easier to subscribe to
• Cook: It’s really too early. Just started into the quarter, so we have less than a quarter
• Q: Apple One bundle performance?

• Some places, 5G hasn’t even gotten started yet (Latin America, Europe)
• Cook: 5G in the world currently is a patchwork quilt
• Q: iPhone sales in Europe where 5G buildout lags China and the U.S.?

• Mac has lost of headroom to grow in the personal computer market
• iPad growth has been phenomenal. Part of it is work- and learning-from home, but it’s also the product itself
• Cook: M1 gives Mac a new growth trajectory Apple hasn’t had for awhile; we’re partly through the trasisiton. We’re excited about Mac
• Cook: New to iPad and new to Mac are still around 50%, so install base is expanding
• Q: iPad growth rates? How much is replacement vs. new customers?

• Commodity market is relatively benign
• Luca; We’ve had a very strong mix of products across the board in every product category, so the mix is very good
• Luca: We have a certain level of fixed costs, high sales help margin expansion
• Q: Gross margins at 39.8%?

• Cook: We have new things that we’re not goingn to talk about, but we see lots of opportunity
• Apple is growing strongly in the enterprise
• In emerging markets, like India, we have a huge amount of opportunity. Much headroom available Apple to grow
• On wearables, we’ve broghught this thing from zero to a Fortune 120 company, no small feat, but we’re still in the early stages in wearables
• We have a huge install base
• We just set an all-time services record
• Cook: We have the strongest product portfolio we’ve ever had and a strong pipeline of future products
• Cook: We give some color on current quarter, but not beyond that
• Q: Growth for Apple? Acquisitions?

• We expect sequential progression to be typical of pre-COVID seasonality
• Demand, especially for iPhone 12 Pro and Pro Max models, was very high
• Luca: December performance, Apple had a very steep ramp as COVID delayed launches
• Q: iPhone channel inventory? Above seasonal iPhone growth expected in Q221?

• Strength was in App Store, Apple Music
• COVID negatively affected advertising
• Luca: Services strong across the board. COVID negatively affected AppleCare (due to stores being closed), even though AppleCare set an all-time record
• Q: Services?

• China was sort of beyond COVID, very much in the recovery stage
• Other products did well also in China: iPad, Mac, and Wearables
• Cook: 5G is China is well-established, so the market was waiting for 5G iPhones
• Cook: Switchers and upgraders up in China YOY and record # of upgraders in China
• Q: Sequential growth? China market back to “normal?”

• Cook: iPhone 12 family saw both switchers and upgraders increase YOY. Largest number of upgraders Apple has ever seen during Q121
• Q: Switchers?

• As we look ahead, we are very optimistic. We believe iPhone 12 – all models – will come into suppyl/demand balance sometime during the current quarter
• Luca: iPhone 12 Pro and iPhone 12 Pro Max were particularly strong; demand was high and supply constrained
• Luca: iPhone was one of the major factors why we exceeded our own internal expectations for Q121
• Q: What drove iPhone growth?

• Apple has really good upside (headroom) in terms of market share in a number of areas
• Apple wants to work of things where hardware, software, and services intersect
• Cook: The framework Apple uses: We ask ourselves if this is a product or service we’d want to use and if the market is large enough
• If some currencies remain weaker, that could be a tailwind
• Luca: Mix was strong. We launched many new products in the fall. Some currencies still weaker than dollar vs. YOY
• Q: Gross margins, headwinds, tailwinds?

• AAPL After hours: $139.75, -$2.31 (-1.63%) @ 5:25PM EST

• The dividend is payable on February 11, 2021 to shareholders of record as of the close of business on February 8, 2021
• Apple’s Board of Directors has declared a cash dividend of $0.205 per share of the Company’s common stock

• Tax rate will be around 17%
• Gross margin will be similar to Q121
• No guidance range due, but Apple believes growth will accelerate while following previous sequential patterns

• $24 billion in buybacks during the quarter
• $84 billion net cash
• $112 billion total debt
• $196 billion in cash and securities

• Business are replacing desk phones with Apple iPhones
• Both Mac and iPad are incredibly relevant products for Apple and users
• iPad also showed strong sales performance
• Mac: Strong demand for M1 Macs

• Apple Watch: Nearly 75% of customer purchasing during the quarter are new to the product
• Apple Wearbles now the size of a Fortune 120 company
• Nearly 90% of U.S. stores now accept Apple Pay
• Apple Music recently released its biggest upgrade ever
• Over 650 million paid subscribers
• Paid accounts increased double-digits in each of Apple’s geographic segments
• New services are continuing to add users, content, and features
• Services: $15.761 (vs. $12.715 YOY)
• Luca reiterates: Active installed base of iPhones is now over 1 billion
• iPhone 12 demand was very strong

• iPhone: $65.597 (vs. $55.957 YOY)
• EPS: $1.68 (vs. $1.25 YOY)
• 68.4% Services gross margin
• 35.1% products gross margin
• AAPL After hours: $141.50 -$0.56 (-0.39%) @ 5:15PM EST
• 39.8% gross margin
• Luca reiterates: Installed base surpassed 1.65 billion devices worldwide
• December quarter record for Mac revenue
• Apple CFO Luca Maestri: We set the all-time revenue record this quarter: Revenue: $111.4 billion (vs. $91.819 YOY)

• Apple looks forward to working in communities around the world to help in recovery
• Cook talks challenges of recovering from COVID-19 lockdowns
• Apple ahead of schedule to invest $350 billion in the U.S. economy
• Apple commits $35 million to accelerate and grow minority business
• Apple supports equality and HBCUs

• Apple had the highest level of FaceTime calls this Christmas as families were separated
• Apple had a record number of device activations during the last week of the quarter
• Apple continues to lead on privacy
• Cook: Tomorrow is International Privacy Day
• The App Store Small Business program reduced the commission to 15% for business earning under $1 million per year

• Cook: “We feel very optimistic about where we are headed”
• Apple’s deep integration of hardware, software, and services is unmatched
• Cook: Customers are loving Fitness+ paired with Apple Watch

• Educational districts worldwide are deploying Apple devices, including the largest iPad deployments ever in Germany and Japan
• iPad and Mac sales reflect their importance to users during remote working and learning during pandemic
• Customer reception to 5G iPhones has been enthusiastic
• Active installed base of iPhones is now over 1 billion
• Installed base surpassed 1.65 billion devices worldwide

• Apple is doubly aware of the challenges facing communities as we recover from COVID-19 shutdowns
• All accomplished during the CIVD-19 pandemic
• All-time revenue records in each of Apple’s geographic areas
• Apple CEO Tim Cook: Thanks Apple team members worldwide for a very strong quarter

• AAPL After hours: $141.74, -$0.32 (-0.23%) @ 4:58PM EST
• AAPL After hours: $141.94, -$0.12 (-0.08%) @ 4:48PM EST
• AAPL After hours: $142.06, $0.00 (0.00%) @ 4:43PM EST

Apple Q121 results:
• Revenue: $111.4 billion (vs. $91.819 YOY)
• EPS: $1.68 (vs. $1.25 YOY)
• iPhone: $65.597 (vs. $55.957 YOY)
• Services: $15.761 (vs. $12.715 YOY)
• Wearables, Home and Accessories revenue: $12.971 (vs. $10.010 YOY)
• Mac: $8.675 (vs. $7.160 YOY)
• iPad: $8.435 (vs. $5.977 YOY)

• AAPL Jan. 27 close: $142.06, -$1.10 (-0.77%) @ 4:00PM EST

3 Comments

  1. Investors are hammering Apple hard with shares plunging -4% in very heavy selling in the pre-market. Analysts are not happy with these results and so investors are rushing to the exits, selling shares hard.

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