The results of each Apple financial quarter somehow keep topping the one before. This time, the big news is that revenue blew past $100 billion for the first time, buoyed by record-breaking sales of iPhone and other products.
But there’s more to Apple’s announcement than a parade of figures. Here’s what all those number mean for the company, and for users, based on what Apple’s top brass told investors on Wednesday.
Record after record falls
As he rattled off Apple’s Q1 2021 numbers, Chief Financial Officer Luca Maestri said “all-time record” so often it became almost boring. He also tossed out the word “billion” with unnerving frequency.
Apple’s products revenue? It hit an “all-time record of $95.6 billion,” Maestri said. Services? An “all-time record of $15.8 billion.” And he didn’t stop there. “Net income, diluted earnings per share, and operating cash flow were all-time records,” Maestri said.
In product category after product category, in region after region, Apple laid waste to its previously phenomenal numbers. On and on it went as records big and small fell to Cupertino’s astonishingly good holiday quarter.
Apple even saw the “highest volume of FaceTime calls ever this Christmas,” according to CEO Tim Cook. -Lewis Wallace
Over a 1 billion iPhone users
Even with a late start due to pandemic-related delays, the iPhone 12 lineup sold well, allaying some fears from recent years about the (completely predictable) plateau in smartphone sales. And last quarter’s 17% year-over-year surge in iPhone revenue helped Apple achieve another breathtaking milestone: a stunning 1 billion iPhone users.
That’s one iPhone for every 7.8 people on the planet right now. About 13% of all humanity is an iOS user.
“Our active installed base of iPhones is now over 1 billion,” Cook said. “The customer response to the new iPhone 12 models’ unprecedented innovation — from world-class cameras to the great and growing potential of 5G — has been enthusiastic.”
Extending the growth in Apple users to other types of computers, Cook said, “We hit a new high watermark for our installed base of active devices — with growth accelerating — as we passed 1.65 billion devices worldwide during the December quarter.” Of course, there’s a lot of overlap, with many people owning an iPhone and a Mac and/or iPad.
This is more than bragging rights. The more iPhone, Mac and iPad users there are, there more software, services and accessories Apple can sell them. And not just Apple — third-party developers too. Plus, users benefit from a big ecosystem. -Lewis Wallace/Ed Hardy
Apple has plenty of hardware growth potential
While sales of iPhone might plateau in the coming years, that’s not likely to happen with other high-profile computers. Plenty of consumers are buying their first Apple laptops, tablets or desktops, with “around half of the customers purchasing Mac and iPad during the quarter being new to that product,” noted Maestri. “The active installed base for both products continues to grow nicely and set new all-time highs.”
The iPad has now been on the market for 11 years and demand is still growing so much that half the customers are buying their first one, not a replacement. They helped push iPad quarterly revenue up a whopping 41% percent year-over year. And all those Mac buyers switching from Windows or another OS contributed to macOS revenue expanding in a 21% year-over-year increase.
The CFO went on the namecheck the new M1-powered Macs by saying these high-performance computers are helping the company grow its share of the enterprise market. -Ed Hardy
Apple wearables would be a Fortune 120 company
When people think of Apple’s top products, they think of iPhone, Mac and iPad. But the company is bringing in more from wearables and accessories than many of us might realize. In the December quarter, revenue from AirPods, Apple Watch, and other peripherals totaled $13.0 billion. That’s more than either Mac or iPad in the same quarter. And it’s a new record, of course.
AirPods are seemingly everywhere, but some people underestimate the contribution the Apple Watch adds to Cupertino’s bottom line. This device makes up about a third of all smartwatches sold. And the cheapest model is $199, so it’s no surprise Apple enjoys the lion’s share of the revenue. -Ed Hardy
Services continue to slay
Cook’s decision to concentrate on growing Apple services looks increasingly canny. With so many iPhones, Macs and iPads in people’s hands, the company continues to mint money via subscription services.
And Apple’s just getting started, according to Maestri.
“The key drivers for our services growth all continue to move in the right direction,” he said. “First, our installed base growth has accelerated and is at an all-time high across each major product category. Second, the number of both transacting and paid accounts on our digital content stores reached a new all-time high…. Third, base subscriptions continued to grow nicely and we exceeded our target of 600 million paid subscriptions before the end of calendar, 2020.”
As for the recently introduced Apple One subscription bundles that offer several services at a discount? Cook said “it’s clear from the early going that it’s working.”
Cook also name-checked services as part of the holy trinity of Apple innovation. When the company goes looking for new products to create, the ones it’s interested in involve hardware, software and services -Lewis Wallace
Apple earnings preparing for post-COVID future
The pandemic won’t last forever, although it may seem that way. And Apple still isn’t ready to provide specific guidance on revenue or earnings for the current quarter — COVID-19 makes business too uncertain. But Maestri did predict that, “growth will accelerate on a year-by-year basis, and in aggregate follow typical seasonality on a sequential basis.”
But he also gave a post-COVID warning. He noted that revenue from Services like the App Store went up dramatically in the January-through-March 2020 quarter because of lockdowns. That’s not true for 2021. “So our services business faces a tougher year-over-year comparison,” said Apple’s CFO. -Ed Hardy