Apple smashed Wall Street expectations for the first three months of 2021, reporting its highest-ever revenue for a March quarter and biggest-ever quarterly haul for the Services business.
The company posted revenue of $89.6 billion, up 54% on a surge of iPhone sales, for the quarter ended March 27. Net income more than doubled (up 110%) to $23.6 billion, translating into earnings per diluted share of $1.40.
Apple boasted revenue records in each of its geographic segments and double-digit growth in each product category — with the recently launched 5G-enabled iPhone 12 driving up sales of the company’s smartphone devices nearly 66%, to $47.9 billion. Gross margin of 42.5% for the quarter was Apple’s highest in nine years. Apple’s boffo results looked even better given the comparison with the year-earlier quarter, when sales were depressed at the front end of the COVID-19 pandemic.
Its Services segment revenue came in at $16.9 billion — an all-time record — up 27% year over year. Apple’s Services segment includes App Store, iCloud, Apple Pay and subscription services like Apple Music, Apple TV Plus, iCloud, Apple Arcade, Apple News Plus and Apple Fitness Plus.
Apple added 40 million net paid subscriptions in the March 2021 quarter, to reach 660 million total across its family of paid services, up 28% from a year ago, CFO Luca Maestri said on the earnings call. He didn’t break that down by individual service but Maestri said Apple TV Plus set an all-time quarterly record.
Tim Cook, Apple’s CEO, wouldn’t reveal the number of Apple TV Plus subscribers (no surprise there) but said, “We feel good about where we are.”
“As you know, the objective and the philosophy we have is to create high-quality content and be the most-desired platform for storytellers,” Cook said, citing the company’s recently inked multiyear deal with author and women’s rights activist Malala Yousafzai for Apple TV Plus.
Wall Street analysts on average expected revenue of $77.35 billion and earnings per share of 99 cents for the quarter, which is Apple’s Q2 of fiscal 2021.
Apple didn’t provide specific guidance for the June quarter. Maestri told analysts it expects “strong” double-digit year over year revenue growth for the current quarter, but a larger-than-usual decline sequentially because of supply-chain shortages.
Cook said the company saw a record number of iPhone “upgraders” in the first three months of the year. “This quarter reflects both the enduring ways our products have helped our users meet this moment in their own lives, as well as the optimism consumers seem to feel about better days ahead for all of us,” he said in announcing the results.
Apple is coming off its all-time record quarter at the end of of 2020, when it raked in a staggering $111.4 billion in sales, driven by its highest-ever sales of iPhones.
Next month, as part of an effort to boost services revenue, Apple is set to launch podcast subscriptions with initial partners including NPR, Luminary, QCode, Tenderfoot TV and Sony Music Entertainment. Apple will keep 30% of subscription fees for the first year and 15% in following years, in line with its App Store fees for in-app purchases. Spotify countered with its own podcast-subscription program, which lets creators keep all revenue until it kicks in a 5% free in 2023.
Also at last week’s “Spring Loaded” event, the company announced an upgraded version of the Apple TV 4K set-top, its first refresh of the product since 2017. The new $179 box features Apple’s A12 Bionic chip and brand-new remote that uses a click-pad for primary navigation. It now supports high frame rate HDR (high dynamic range) and Dolby Vision video to play back video at 60 frames per second.
Meanwhile, Apple on Monday said it would invest more than $430 billion in the U.S. over the next five years, a spending target up 20% over prior projections. As part of that, the company plans to expand its Culver City, Calif., outpost to more than 3,000 employees by 2026 as well as “dozens” of Apple TV Plus productions in 20 states over the same time span.
Apple, the world’s biggest tech company by revenue, currently has a market cap of more than $2.2 trillion.