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