MacDailyNews presents live notes from Apple’s Q222 Conference Call with analysts starting at 5pm EDT / 2pm PDT today, April 28, 2022.
Apple today will provide live audio streaming of its Q222 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 EDT / 2pm PDT today here.
Apple today posted an all-time quarterly revenue record of $97.3 billion (vs. $89.584 billion billion YOY), up 9 percent year over year, and quarterly earnings per diluted share of $1.52 (vs. $1.40 YOY).
For the quarter, analysts’ consensus estimates expected Apple to post revenue of $93.89 billion with EPS of $1.43.
Live notes from Apple’s Q222 Conference Call in reverse chronological order:
• AAPL After hours: $157.06 -$6.58 (-4.02%) @ 5:59PM EDT
• End of conference call.
• Cook: Apple is constantly making tweaks to where production occurs around the globe
• Cook: Inflation affects. Apple is focused on speed right now (both ocean and air) and hopes to see efficiency improve in the future
• Q: Freight?
• Luca: Vast majority of Services is currently to consumers. Apple does recognize enterprise opportunity. Apple recently launched Apple Business Essentials to the enterprise. Good opportunities to grow
• Q: How much of Services is consumer vs. enterprise?
• Cook: COVID disruptions is hopefully transitory and hopefully improve over time
• Cook: We are working hard on Mac. Delays due to China COVID disruptions and silicon shortages
• Q: Mac lead times lengthening?
• Cook: We look for strategic acquisitions. We don’t discount something larger if the opportunity presents itself
• Q: Apple looking for acquistions?
• Most Mac and iPad models are supply constrained because demand is strong for both
• Demand for all products is solid; demand for iPhone 13 family is strong
• Russia sales stoppage is 150 basis points impact
• Luca: We do not guide to a specific revenue number. COVID-related disruptions and silicon shortages are the cause of the forecast $4B-$8B hit in June quarter
• Q: June quarter revenue to grow despite supply impacts?
• Luca: Too early to tell
• Q: Services affected in China due to COVID restrictions?
• Luca: Recently, constraints in Q2 were limited to silicon shortages; going forward, it’s the COVID restrictions in China (assembly) that are affecting the guidance
• Q: $4B – $8B supply constraint hit?
• Growth rate for June quarter will be less than the 17% seen in March quarter
• Apple plans to add new Services going forward as well
• 825 million paid subscriptions, up 165 million over the past 12 months alone
• Level of engagement on Services continues to grow
• Luca: We feel really great about the Services momentum thanks to installed base of active devices continues to grow very nicely
• Q: Apple Services longer term?
• When you look at iPhone as a total, we could not be happier with iPhone 13 family which have powered the line ($120 billion is 1H22)
• Cook: We view that data as sensitive and will not share
• Q: New iPhone SE vs. older SE reception?
• AAPL After hours: $157.30 -$6.34 (-3.87%) @ 5:41PM EDT
• Cook: Don’t want to try to predict that
• Q: Supply issues to ease when?
• Silicon rolls off the fab and into a final assembly plant very quickly
• Apple does not want to hold a ton of inventory, but work on cycle times appropriately
• Supply chain has bee very resilient. Legacy node silicon crunch is the main issue
• Cook: Apple’s supply chain is truly global; will probably be doing even more in the U.S. as chip fabs come online in America
• Q: Apple navigating many challenges over the past few years; will Apple reconsider its supply chain, inventory, etc.?
• Americas did quite well last quarter; the U.S. is the major geography in there; quite strong last quarter
• We were happy with iPhone growth last quarter, especially with the YoY compare
• Cook: It will affect all product categories; Apple will allocate resources to minimize effect on customers
• Q: $4B-$8B hit affect with products?
• Cook: Current quarter guidance includes component costs; Apple is doing a reasonable job navigating a challenging environment
• Q: Inflation costs in components?
• Cook: Difficult to answer about unannounced products; $4B- $8B hit is due to Shanghai corridor closures (almost all are reopened); COVID is difficult to predict
• Q: Where are the supply constraints?
• Cook: We can recapture some percentage of delayed demand
• Q: Demand affected by supply constraints
• Overall Apple felt very good about the performance around the world
• iPhone launch times YoY made a difference
• Japan and Asia Pacific affected by foreign exchange
• China was a record
• Americas were better than expectations
• Luca: Europe was good. Grew 5% even after pulling Russia sales during Q2
• Q: geographies?
• AAPL: After hours: $159.02 -$4.62 (-2.82%) @ 5:27PM EDT
• On positive front, factories are now back running
• In Q3, Apple sees a $4 billion – $8 billion hit due to Shanghai corridor COVID lockdowns
• Cook: In Q2, the silicon legacy nodes were supply constrained
• Cook: For Q2, the restrictions in China had not started, yet
• Q: China COVID lockdowns impact on supply chain
• Cook: Our main focus is on the supply side
• Cook: Everybody is seeing inflation
• Cook: We are monitoring daily sales closely; inflation was evident in gross margin last quarter and assumed in guidance given this quarter
• Q: Consumer spending due to inflation, rising interest rates, etc. – demand impact?
• The dividend is payable on May 12, 2022 to shareholders of record as of the close of business on May 9, 2022
• Apple’s board of directors has declared a cash dividend of $0.23 per share of the company’s common stock, an increase of 5 percent
• 16% tax increase expected.
• Apple expects to grow double-digits, but decelerate in the current quarter
• Supply constraints will impact Apple’s ability to meet demand; Apple expects $4 billion – $8 billion hit
• $0.23 dividend declared; increases planned in years going forward
• $90 billion in repurchases authorized
• $123 billion in debt
• $193 billion in cash and marketable securities
• Luca gives examples of Apple products and services being deployed in the enterprise worldwide
• 825 million paid subscribers across Services, up 165 million over the last 12 months
• Apple Services: User base hit all-time high during the quarter
• Apple Watch: Over 2/3rd of purchasers are new to the product
• Wearables, Home and Accessories up 12% YoY
• iPad customer response – very strong – all time high iPad user base
• March quarter record for upgraders; more than half of Mac buyers were new to the product
• Mac saw 15% YoY growth driven by strong demand for Apple Silicon Macs
• iPhone revenue grew 5% YoY, thanks to strong customer response to iPhone 13 and launch of new iPhone SE
• All time high in installed user base
• iPad remained significantly supply constrained during the quarter
• Luca: Pleased with record business results for the March quarte
• Apple is committed to being a force for good in the world
• Apple is seeing supply chain disruptions, but has great confidence in the compan’s team
• Apple has hired more women than ever into leadership roles
• Apple is making to become carbon neutral across supply chain and products by 2030
• Cook thanks Apple team members
• Apple opened new retail store in UAE and South Korea this quarter
• Apple Wallet beginning to add digital state IDs and Driver’s Licenses
• Cook talks various Apple Services: Apple TV+, Apple Fitness+, etc.
• CODA won the Academy Award for Best Picture, the first streaming service to do so
• Incredible enthusiasm for Apple Services
• Services: $19.821 billion (vs. $16.901 billion YoY)
• Wearables, Home and Accessories: $8.806 billion (vs. $7.836 billion YoY)
• iPad: $7.646 billion (vs. $7.836 billion YoY)
• iPhone: $50.570 billion (vs. $47.938 billion YoY)
• Mac: $10.435 billion (vs. $9.102 billion YoY)
• AAPL After hours: $163.76 +$0.12 (+0.07%) @ 5:05PM EDT
• Incredible customer response to M1 Macs, despite supply constraints
• Apple Silicon is pushing the boundaries of what we thought possible
• Apple is monitoring COVID disruptions in China
• Apple is donating to support Ukraine
• Apple CEO Tim Cook: Apple is proud to report another record quarter, better than we anticipated
• Start of conference call
• AAPL After hours: $164.10 +$0.46 (+0.28%) @ 4:59PM EDT
• AAPL After hours: $165.80 +$2.16 (+1.32%) @ 4:57PM EDT
• AAPL After hours: $165.54 +$1.90 (+1.16%) @ 4:50PM EDT
• AAPL After hours: $166.50 +$2.86 (+1.75%) @ 4:46pm EDT
• AAPL After hours: $167.00 +$3.36 (+2.05%) @ 4:40pm EDT
• Awaiting start of conference call
