Apple today reported earnings for the first quarter of 2021. For the first time in its history, the company generated more than $100 billion in quarterly revenue on $111.4 billion in revenue and $1.68 in earnings per share.
Although Apple’s 5G iPhone was released later than normal, the iPhone business still performed well, with more than $65 billion in revenue and a 57 percent increase in sales in China in particular. “We have two of the top three smartphones sold in China,” Apple CEO Tim Cook said in a post-earnings conference call. He also noted that there are now more than 1 billion active iPhone installs.
Apple crossed the $100 billion mark in its highest ever revenue quarter
Apple’s revenue rose 21% to $111.44 billion in the quarter ended Dec. 26, 2020. Earnings per share rose to $1.68 from $1.25.
IPhone revenue in China rose 57% to $21.31 billion in the quarter from $13.58 billion a year earlier, according to the results.
“We have two of the top three selling smartphones in Chinese cities, and many of Apple’s other products and services are selling well,” Mr. Cook said on a conference call. He noted that Apple’s iPhone sales in China come from both switching from rival Android devices and upgrading devices from existing customers. “Upgrade users, in particular, have created a historical record in China,” Cook noted.
Apple’s strong quarterly results were helped by record sales of iPads, iPhones, Macs and services. Tim Cook said Apple now has 1.65 billion active installed users, up from 1.5 billion a year ago. Apple’s total number of active users includes the iPhone, iPod Touch, iPad, Mac, Apple TV and Apple Watch models in use worldwide.
Sales of the iPhone also reached a milestone during the quarter, with Cook revealing that the number of active iPhone users had grown from 900 million in 2019 to 1 billion.
Mac, iPad sales hit new records
Sales of Apple’s Mac laptops and iPads were also strong during the quarter, driven by consumers working, studying and playing from home during the outbreak.
Mac sales reached $8.68 billion in the quarter, matching analysts’ expectations of $8.69 billion. Apple broke a nearly 15-year partnership with Intel in November with the release of its first laptops and desktops with home-designed processor chips. IPad sales were $8.44 billion, compared with analysts’ expectations of $7.46 billion.
Sales of Macs and iPads continued to grow, with Apple reaching an all-time new quarterly revenue record for the Mac category thanks to a 21% year-over-year increase.
Revenue in Apple’s Mac category was $8.7 billion in the first quarter of 2021, up from $7.2 billion in the same period last year, and above the previous quarterly record of $7.4 billion set in the first quarter of 2019. According to Apple CFO Luca Maestri, the growth was driven by new M1 Macs, which include the MacBook Air, 13-inch MacBook Pro, and Mac Mini.
Apple’s revenue in the “iPad” category was $8.4 billion, up 41 percent from $6 billion in the same period last year. According to Tim Cook, Apple’s chief executive, sales of iPads and Macs were limited this quarter, holding back sales to some extent.
Apple’s iPad and Mac sales will continue to grow strongly as its products continue to iterate. Rumors of a new iPad this spring, as well as some major updates to the iMac and MacBook Pro, could boost sales.
Services revenue grew sharply, with more than $620 million spent on paid services
Apple’s service categories include App Store, Mac App Store, Apple Music, Apple Pay, AppleCare, Apple TV +, Apple Arcade, Apple News+, Apple Fitness, and more. These services saw significant growth in the first fiscal quarter of 2021.
The services division reported revenue of $15.8 billion, up from $12.7 billion in the same period last year. Apple currently has more than 620 million paying customers and aims to reach 600 million by the end of 2020.
In late 2020, Apple introduced the “Apple One” service bundle, which paired services like Apple Music, Apple Arcade, and Apple TV + at a lower price, and introduced Apple Fitness + at $9.9 a month. AppleOne’s family bucket business reported revenue of $15.76 billion, compared with analysts’ expectations of $14.8 billion.
In addition, the latest report shows that the App Store will generate over $64 billion in total revenue by 2020. That’s up from an estimated $50 billion in 2019. Apple does not confirm App Store sales figures, but the company said earlier this month that it had paid out $200bn to developers since 2008, a $45bn increase from the figure it provided in January 2020.
Wearables revenue beat expectations and may decline in the next quarter
Revenue from Apple’s wearable devices and accessories division, which includes the Apple Watch and AirPods product line, came in at $12.97 billion, compared with analysts’ expectations of $11.96 billion.
The 30% growth the category saw in the quarter was driven by demand for the Apple Watch, HomePod Mini, and all AirPods models.
All three subcategories in the wearables, home and accessories categories set new revenue records, according to Apple CEO Tim Cook, who said he was “excited about the way forward for these products.”
Apple CFO Luca Maestri said the company’s wearable business is now the size of a Fortune 120 company. The Apple Watch in particular continues to expand its reach, with 75 percent of Apple Watch purchases during the quarter being new to the product.
Maestri said Apple is excited about the future of the wearables category thanks to its integration of hardware, software and services, which allows the company to offer outstanding customer service. Looking ahead, however, Apple expects demand for wearable devices to decline from the first quarter, as most of the quarter’s growth was due to holiday sales.
While the iPhone 12 series is shipping a few weeks later than usual, more models and a new look appear to have tapped a backlog of demand for upgraded models, especially in China.
It was Apple’s best quarter ever in terms of revenue and profit, surpassing its previous highest quarterly revenue in fiscal 2020 and easily passing the $100 billion mark.
