Gene and Andrew discuss Apple’s results, which given the overall environment are memorable even by Apple quarter standards.
Bottom line:
Apple’s December quarter and March outlook are impressive on all metrics. We should not be surprised. When you build the best consumer tech in the world – things turn out that way.
Results:
- December revenue exceeded the Street by 5%, growing at 11% y/y. If not for the supply chain headwind, we estimate revenue would have grow at 18% y/y.
- Despite spikes in logistic costs, gross margin easily exceeded expectations at 43.8% vs the Street at 41.8%. We believe this was driven in part from upside in the higher margin Services segment along with lowering per unit product production costs.
- Services grew 24% y/y, compared to 20% in the September quarter.
- Strength came across all products and geographies with the exception of iPad which is being acutely impacted by supply constraints. Currently iPad lead times in six countries are running 40 days plus, compared to typical March quarter iPad lead times of same business day.
- The active device base grew 9% y/y to 1.8B, compared to 10% growth last year. This growth is impressive given its in the face of a growing law of large numbers headwind.
Guidance:
- CFO Luca Maestri implied March revenue will come in between $91.0-$94.0B, ahead of the $90.7B Street expectation. Guidance would have been even higher if not for a 3% FX and what we estimate to be a 4% supply chain headwind.
- What’s particularly impressive is that guidance is going up against staggering y/y comps including an iPhone comp of 66% and a Services comp of 27%. Those two segments account for about 70% of Apple revenue.
- They also guided up gross margin, expecting between 42.5% and 43.5%, compared to the Street at 42.1%. This is being doing while Apple maintaining pricing in an inflationary environment.