Apple Inc. reported record third-quarter revenue on demand for iPhones, iPads and services, bolstered by retail stores reopening globally and consumers embracing new 5G networks.
Sales grew 36% to $81.4 billion from a year earlier, the tech giant reported on Tuesday. Analysts were expecting revenue of $73.8 billion. The iPhone, Apple’s core product, generated $39.6 billion, beating projections of $34.6 billion. The third quarter is typically one of Apple’s slowest periods — with consumers holding out for new phone launches around September — but the 5G iPhone 12 appears to have helped the company buck that trend.
The results suggest that Apple is gaining momentum as the company navigates its way through the pandemic and readies a fresh iPhone lineup in the coming months. Still, parts shortages and a patchwork of Covid restrictions continue to weigh on its business.
“Our record June quarter operating performance included new revenue records in each of our geographic segments,” Chief Financial Officer Luca Maestri said in a statement. Apple continues to make significant investments to support long-term growth, he said.
Apple reported $7.37 billion in revenue for the iPad, topping expectations of $7.13 billion. Apple debuted new iPad Pro models in April, but the line was constrained due to problems building new screens for the larger models. For the Mac, Apple reported revenue of $8.24 billion, exceeding the $8 billion estimate.
Apple previously warned that third-quarter revenue would take a hit of $3 billion to $4 billion because of the chip shortage affecting some iPad and Mac components. The Cupertino, California-based company didn’t provide revenue guidance for the fourth quarter, continuing a trend it started when the COVID-19 pandemic first struck the company in 2020.
Services revenue reached $17.5 billion, above the $16.3 billion estimate. That business is heavily reliant on sales from in-app purchases and third-party app downloads, and Apple recently decreased the cut it takes for most apps to 15% from 30%. The company has launched a slew of new services in recent years, including Apple TV+ and Apple Arcade, but it hasn’t said how those are performing.
Apple also saw its wearables, home and accessories segment grow to $8.78 billion. That category includes the Apple Watch, AirPods, Apple TV, the HomePod and various other accessories. Apple hasn’t updated the AirPods earbuds since 2019, last year’s Apple Watch upgrades were minor, and this year’s Apple TV updates were focused on a faster processor and redesigned remote.
Earnings for the third quarter were $1.30 a share, compared with an estimate of $1.01 a share. The stock rose less than 1% on the news.
All of Apple’s retail stores reopened as of June, and the company has also started a hybrid program to help staff work from home or stores with more flexibility.
As economies have continued to reopen due to vaccines, demand for Apple devices has generally increased. However, with Covid cases again rising and the chip shortage continuing, challenges are expected to persist through the holiday season. The emergence of the Covid Delta variant has already led Apple to push back an employee office return mandate by at least a month, and it has maintained masking rules inside of retail stores.
--Bloomberg News
