MacDailyNews presents live notes from Apple’s Q122 conference call

MacDailyNews presents live notes from Apple’s Q122 Conference Call with analysts starting at 5pm ET / 2pm PT today, January 27, 2022.

Apple's Q321 conference call. Image: Apple logoApple today will provide live audio streaming of its Q122 Results Conference Call. This stream is best experienced on an iPhone 7 or later, iPad (5th generation or later), or iPod touch (7th generation) using Safari on iOS 12 or later; or a Mac using Safari on macOS Mojave 10.14 or later. Streaming to your TV requires an AirPlay 2–capable device, or via AirPlay to 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, Firefox, or Microsoft Edge (MSE, H.264, and AAC required).

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

Apple today posted an all-time quarterly revenue record of $123.945 billion (vs. $111.439 billion YOY), up 11 percent year over year, and quarterly earnings per diluted share of $2.10 (vs. $1.68 YOY).

For the quarter, analysts’ consensus estimates expected Apple to post revenue of $118.66 billion with EPS of $1.89.

For some perspective, General Motors is No.49 on the Fortune 500 with annual revenue of $122.485 billion. Apple just surpassed that, reporting revenue of $123.945 billion in a span of 90-odd days.

Live notes from Apple’s Q321 Conference Call in reverse chronological order:

• AAPL After hours: $167.25, +$8.03 (+5.04%) @ 5:58PM EST

• End of conference call

• Cook: Already with Apple Watch, we are helping improve lives and sometimes even saving them
• Cook: There is a lot we’re doing in health care, but feel there is more there; won’t talk pipeline
• Cook: I get notes about Apple Watch alerting users and alerting emergency contacts and personnel
• Q: Apple vision of health care in the future?

• Cook: We love shows like “Ted Lasso” that may have a good message and make viewers happy
• Cook: We don;t make purely financial decisions about content; we try to find great content
• Q: Apple TV+ content?

• Luca: In products, we care a lot about upgraders and about switchers; existing and new customers
• Luca: It’s important that our subscribers are engaged on our Services platforms; that’s why we continue to improve the quality and quantity of Services
• Cook: We have 785 million subs, but there is still a lot of room for growth there; there’s a lot more green field in front of us
• Q: Total iOS installed base relationship to Services

• Cook: We maintain a very optimistic view of iPhone long term
• Cook: We are still in the early innings of the 5G wave
• Strong upgrades and double-digit switchers to iPhone during the December quarter
• Cook: iPhone has become an integral part of people’s live and the actibve install base is at a record
• Q: After two very good years, how sustainable is iPhone growth?

• Given the difficult compare, we are very happ with the way the business is going right now
• Luca: YOY the March quarter expected to be a revenue record and solid growth YOY; significant supply constraints, but less than December
• Q: Seasonality for March quarter? Versus last March quarter?

• Cook: Apple Card has a great runway ahead of us; the growth of Apple Pay has been absolutely stunning
• Q: Future for individual services?

• Cook: We’ve been honored with many awards for Apple TV+ content and we feel really good about Apple TV+
• Cook: We don’t give out subscriber numbers for single services; we have 785 million subscribers, + 165 million over last year
• Q: Apple TV+ subscriber growth?

• Cook: We are seeing inflation and it’s factored into our op-ex and gross margin; logistics is very elevated right now
• Supply chain crunch costs?

• All that as iPhone was constrained during the quarter
• Apple had the top 4 selling smartphones in China in December
• We are seeing impressive record sales, upgraders, and and switchers in iPhone in China
• Cook: Our sales are 21% in China in the December quarter
• Q: China and the macro environment there?

• Cook: There are areas that have more than piqued our interest and we are investing strongly in things that are in the pipeline
• Cook: We decide to invest in areas that are at the intersection of hardware, software, and services
• Cook: We announce things when they are ready or close to ready and try to keep an element of surprise there
• Q: R&D resource allocation?

• Cook: The supply issues are still challenging and frustrating, however the March quarter supply issues are better than December quarter
• Cook: March quarter supply constraints will be less than the December quarter
• Q: Supply chain issues?

• Cook: We are always exploring new and emerging technologies; we have over 14,000 ARKit apps in the App Store today
• Q: Metaverse?

• Cook: Our supply chain is very good, very fast, overall; I don’t see fundamental changes needed
• Cook: Largets issue is chip shortage on legacy nodes
• Q: Is Apple rethinking supply chain geographic exposure?

• 785 million paid subs are up 165 million in the last year alone
• The installed base is growing
• Luca: We did better than we were expecting this quarter, despite supply constraints
• Luca: Set all-time revenue record in every geo
• Cook: Mac sales will be to education, business, creative, and in all geographic markets
• Customer satisfaction for Mac is “off the charts.”
• M1, M1 Pro, M1 Max is driving record Mac sales
• Cook: The Mac is growing in many geos worldwide
• Cook: The Mac set al all-time revenue record of $10.9 billion; last 6 quarters for the Mac have been the top 6 revenue quarters all-time
• Q: Macintosh opportunities?

• Cook: iPad faced very significant constraints (legacy node chips); overall, we do see an improvement in the March quarter
• Cook: Generally, the challenge is on legacy node chip fabs; it’s a supplier capacity issue
• Cook: We will have less supply constraints in the March quarter
• Q: Did Appel prioritize iPhone over iPad during quarter? If so, will this be alieviated this quarter

• Luca: Services portfolio is very broad. The gross margin will be influences by the rapid growth of the different businesses within the portfolio.
• Cook: We don’t comment directly on mix. We saw strong demand across the iPhone 13 family around the world. We seem to be gaining smartphone share. we were constrained during the quarter.

• Q: Impressive margins. Product gross margins benefitting from strong mix – how sustainable is this? On Services gross margins, where are the particularly favorable mixes?

• Apple expects 16% tax rate
• Apple expects gross margin between 42.5% – 43.5%

• Apple expects solid revenue growth for the fiscal 2022 year and expects to set a March quarter revenue record despite supply constraints

• Apple retired 30 million shares during the quarter
• $27 billion returned to shareholders during the quarter
• $80 billion net cash
• $123 billion debt
• Apple ended the quarter with $203 billion in cash and marketable securities

• Apple this quarter announced Apple Business Essentials, an all-new service that brings together device management, 24/7 Apple Support, and iCloud storage into flexible subscription plans for small businesses with up to 500 employees
• 785 million paid subscriptions across all services
• Paid accounts grew double digits across all geos
• Installed base has reached a new all-time high across all geos
• Wearables performed strongly, Over 2/3rd of Apple Watch buyers are new to Apple Watch

• iPad down 14% due to severe supply constraints

• Last 6 quarters have been the best for Mac in history
• Mac: 25% growth driven by strong demand, despite supply constraints, for M1-powered MacBook Pro

• New all-time high in iPhone active install base
• iPhone revenue grew 9% YOY despite supply constraints

• 72.4% Services gross margin
• 38.4% products gross margin
• 43.8% overall gross margin in Q122
• Installed base of active Apple devices: 1.8 billion
• All-time quarterly revenue record of $123.945 billion
• Apple CFO Luca Maestri: Please to report all-time revenue record results, an 11% YOY increase

• Cook: Apple will continue to innovate every day

• Apple employees giving program, in the last decade, have raised nearly $725 million to charities
• Retail saw highest quarterly revenue in history despite COVID-19 limitations and store closures

• iPhone revenue: $71.628 billion
• Services revenue: $19.516 billion
• Wearables, Home and Accessories revenue: $14.701 billion
• Mac revenue: $10.852 billion
• iPad revenue: $7.248 billion

• 20 award wins and over 890 nominations for Apple TV+ since launch
• Apple has paid App Store developers more than $260 billion since launch
• Services set another all-time revenue record
• Customers are responding strongly to Spatial Audio with Dolby Atmos
• Cook gets notes from people who credit Apple Watch with saving their lives
• Despite supply constraints, iPad continues to sell strongly
• Cook: All-time Mac sales record
• AAPL After hours: $167.15, +$7.93 (+4.98%) @ 5:04PM EST
• Cook: The company posted an all-time revenue record of $123.9 billion, up 11 percent year over year, and quarterly earnings per diluted share of $2.10

• AAPL After hours: $164.33, +$5.11 (+3.21%) @ 4:55PM EST
• AAPL After hours: $164.72, +$5.50 (+3.45%) @ 4:47PM EST

2 Comments

  1. -2/3 of Watch buyers this quarter were new Watch buyers.
    -10% paid subscriptions growth(largely Music and ATV+?). 785 million total paid subscriptions.
    -40% of iPad buyers were new iPad users.
    -Wow, Shopify getting a plug from Apple for using Macs.
    -200 Billion in cash, 120 billion in debt.

    The bad news revenue growth for March quarter, “revenue to decelerate”. Wall Street won’t like that short term.

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