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