MacDailyNews presents live notes from Apple’s Q221 Conference Call with analysts starting at 5pm EDT / 2pm PDT today, April 28, 2021.
Apple’s live conference call webcast will begin at 5pm EDT / 2pm PTD today here.
Apple today posted all-time record second quarter revenue of $89.6 billion, up 54% year over year, and quarterly earnings per diluted share of $1.40 (vs. $0.64 YOY).
For the quarter, Refinitiv consensus estimates expected Apple to post revenue of $77.36 billion and EPS of $0.99.
Live notes from Apple’s Q221 Conference Call in reverse chronological order:
• End of conference call.
• Apple will never underinvest in its business
• A lot of Apple TV+ production is U.S. based
• Apple’s commitment to U.S. suppliers grows over time
• Apple has invested in job creation at Apple
• Q: Investment plans for $430 billion in U.S. over the next five years?
• We’re very pleased with results in India, Russian, Middle East
• iPad and Mac grew very strongly in Europe as the continent was affected by prolonged COVID-19 lockdowns
• Luca: We had 56% growth in Europe; results better than our expectations
• Q: Performance by geography?
• Cook: People should be able to choose if they want to be tracked or not
• Cook: ATT puts the user in control; feedback from users has been tremendous
• Q: Any initial feedback on App Tracking Transparency (ATT) from developers?
• Cook: As Retail Stores get fully back up to speed, accessory sales will do even better
• People like to see and try on Apple Watch / bands
• Cook: We get a lot of benefits from our Retail Stores
• Q: Accessories attach rate for Apple Watch and AirPods?
• Cook: App Store curation is very important for privacy and security
• Cook: We are flexible on App Store; we continue to learn and refine
• Cook: If we feel that more disclosure would help, we’d move in that direction
• Q: Regulatory scrutiny?
• About 2/3rd of customers in China are new to iPad and new to Mac
• Apple has the top 2 bestselling smartphones in urban China
• Especially pleased with response to iPhone 12 family in China
• Cook: Set Q2 record in China
• Q: Which hardware and services drove China?
• Cook: We don’t predict, but the $3B – $4B hit due to semiconductor shortage will affect primarily Mac and iPad
• Q: With economy reopening, what do youexpect for Mac and iPad for 2H?
• Cook: We did not have a material supply shortage in Q2
• Q: Semiconductor supply?
• Cook: Most of the issues are on legacy nodes (many other companies also use, so it’s very difficult to know when it will ease)
• Q: Semiconductor supply, when will it ease?
• Cook: We’re really happy with the iPhone 12 family results
• Cook: iPhone 12 is the most popular, iPhone 12 and 12 Pro Max saw very strong sales as well
• Q: iPhone mix?
• Last three quarters of Mac have been the best three quarters ever for Mac, so demand is very high
• Luca: Supply constraint is due to the worldwide semiconductor shortages
• Luca: Normal seasonality will be higher due to component shortages and iPhone demand/supply balance
• Q: Supply constraints?
• Cook on pricing: We try to give the customer a great value.
• Cook: To date, Apple TV+ content has received 352 award nominations with 98 wins
• Cook: Apple TV+ is going very well. Philosophy is to create high quality original content
• Q: Product pricing? Apple TV+?
• Luca: We wish we had more inventory on Mac and iPad, but it is what it is
• Luca: Q3 will be affected by iPhone reaching supply/demand balance in Q2 and $3B – $4B hit due to component shortages (affecting Mac and iPad, primarily)
• Q: Inventory?
• Work-from-home overall, for business worldwide, will remain to some extent, even post-COVID
• Cook: Mac demand and iPad demand feels very strong right now
• Component shortages in Q3 affect primarily the iPad and the Mac
• Results were fabulous acrodd the board
• Keep in mind that the compare in to COVID-19 shutdown quarters
• Cook: If you look at the different products: iPhone has great momentum
• Q: This was an unbelievable quarter, is it sustainable?
• Cook: 5G cycle is important and we are int he early days of it.
• Cook: It is difficult this early into the cycle, but we are clearly happy with the direction
• Cook: We are clearly seeing strong performance to new-to-iPhone (switcher) and iPhone upgraders
• Q: Replacement cycle for iPhone?
• Apple feels “very good” about the Services segment
• AppleCare returned to growth as Retail Stores reopened
• Luca: Better than expected in Q2, stronger across the board; COVID drove usage
• Q: What’s driving Services?
• Margins driven by cost savings, strong mix, especially on iPhone, and foreign exchange was favorable 90 basis points
• Luca: Similar, slightly lower levels, for Q3
• Q: 42.5% Gross margin, what’s driving that?
• 5G penetration is still low, so there is a lot of headroom for 5G upgrades ahead
• Cook: We saw double-digit increase in upgraders and new to iPhone customers during the quarter
• Q: Refreshing iPhone base and attracting new customers?
• Q&A
• $3B – $4B impact due to supply constraints in Q321
• No revenue guidance due to COVID-19 uncertainty
• Apple continues to plan for dividend increases over the coming years
• The board of directors has also authorized an increase of $90 billion to the existing share repurchase program
• The dividend is payable on May 13, 2021 to shareholders of record as of the close of business on May 10, 2021
• Apple’s board of directors has declared a cash dividend of $0.22 per share of the Company’s common stock, an increase of 7 percent
• Net cash $83 billion
• Total debt $122 billion
• Apple ended quarter with $204 billion in cash and marketable securities
• Apple continues to see growth in the enterprise
• 451 Research: U.S. Customer Satisfaction for iPad is 94%
• 451 Research: U.S. Customer Satisfaction for Mac is 91%
• M1 Macs saw strong reception
• Mac set records around the world
• Mac: $9.102 billion (vs. $5.351 billion YOY)
• Apple Watch continues to extend reach with over 75% of buyers new to the category
• Apple Arcade received it’s biggest update ever
• Apple now has over 660 million paid subscriptions across all Services
• Paid acounts increased double digits in each of Apple’s geographic segments
• Apple subscription services continue to grow
• 451 Research: U.S. Customer Satisfaction for iPhone 12 family is over 99%
• iPhone 12 family saw strong demand
• iPhone: $47.938 billion (vs. $28.962 billion YOY)
• International sales accounted for 67 percent of the quarter’s revenue.
• Installed base of active devices reached new all-time record in each of Apple’s major product categories
• Luca: All-time record for Services
• Cook on COVID-19: “We can have confidence that the ending will be a good one.”
• Cook warns of challenge of emerging from the various responses to COVID-19 around the world
• Apple will invest $430 billion in American economy over the next 5 years, including a new North Carolina campus
• Apple looks forward to WWDC 2021
• Cook recaps Apple’s myriad environmental efforts
• Apple TV+ continues to reap award nominations, especially Ted Lasso
• Cook touts App Tracking Transparency privacy controls for users
• Cook recaps recent announcements, such as Apple Card Family
• Services: $16.901 billion (vs. $13.348 billion YOY)
• Cook talks up AirTag and Find My network
• The last three quarters have each been records for mac sales
• Fueled by the M1, the Mac set an new all-time quarterly revenue record
• Wearables, Home and Accessories revenue: $7.836 billion (vs. $6.284 billion YOY)
• iPad: $7.807 billion (vs. $4.368 billion YOY)
• Apple set new quarterly record in every geographic segment
• Tim Cook: “Apple is proud to report another strong quarter.”
• International sales accounted for 67 percent of the quarter’s revenue
• Apple reported Q221 record revenue of $89.6 billion, up 54 percent year over year
• Awaiting start of conference call
• AAPL After hours: $137.85, +$4.27 (3.20%) @ 4:52PM EDT
• AAPL After hours: $137.95, +$4.37 (3.27%) @ 4:44PM EDT