Apple Posts Upbeat Q1 Results on Record Quarterly Sales

Apple Inc. (NASDAQ: AAPL) has posted outstanding Fiscal first-quarter 2022 results (ended December 25) driven by the strong customer response to its most innovative lineup of products and services in the company’s history. Remarkably, the tech giant recorded a current installed base of 1.8 billion active devices, a new all-time record.

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Markedly, sharing his plans for the metaverse, Apple CEO Tim Cook said, “We have over 14,000 AR Kit apps in the App Store which provide incredible AR experiences for millions of people today. So we see a lot of potential in this space and are investing accordingly.”

Following the company’s update, shares of the iPhone maker increased 5% in the extended trading session on Thursday.

Results in Detail

The record quarterly revenues of $123.9 billion topped analysts’ expectations of $118.28 billion and jumped 11% year-over-year. This increase reflected robust performances in most of its geographic segments (Americas, Europe, Greater China, Japan, and the Rest of Asia Pacific) and product categories, despite ongoing supply challenges fueled by the pandemic and chip shortages.

Apple posted earnings per share of $2.10 in the quarter, surpassing the Street’s estimate of $1.89. It recorded earnings of $1.68 per share in the same quarter last year.

Segmental Revenues

Services revenue came in at $19.5 billion, up 23.4% year-over-year, while Mac revenue grew 25.3% to $10.9 billion. Additionally, iPhone sales of $71.6 billion surged 9.1% from the same quarter last year.

Also, wearables, home, and accessories revenues jumped 13.1%, while iPad revenues recorded a 14.3% fall in the quarter. Notably, the company warned in September that iPad sales would be constrained in the December quarter due to supply-chain disruptions.

Gross margin stood at 43.8%, up 400 basis points year-over-year. At present, Apple has 785 million paid subscribers to its various service offerings.

Official Comments

CEO Tim Cook said, “We are doing all we can to help build a better world — making progress toward our goal of becoming carbon neutral across our supply chain and products by 2030, and pushing forward with our work in education and racial equity and justice.”

Outlook

Looking ahead, Apple CFO Luca Maestri said, “We expect to achieve solid year over year revenue growth and set a March quarter revenue record despite significant supply constraints, which we estimate to be less than what we experienced during the December quarter.”

Meanwhile, Maestri expects a fall in revenue growth in the March quarter, primarily due to two factors. Firstly, tough year-over-year comparisons due to different launch timings of the annual iPhone. Secondly, he anticipates foreign exchange rates to have a negative impact on growth.

Additionally, gross margin is forecast to be between 42.5% and 43.5% in the March quarter.

Capital Deployment Update

Apple’s board of directors announced a quarterly cash dividend of $0.22 per share of the company’s common stock. The dividend will be paid on February 10 to shareholders of record as of February 7. The company’s annual dividend of $0.88 per share reflects a dividend yield of 0.55%.

During the December quarter, the company returned around $27 billion to shareholders.

Wall Street’s Take

Following the upbeat first-quarter results, Piper Sandler analyst Harsh Kumar reiterated a Buy rating on the stock with a price target of $200 (25.61% upside potential).

Additionally, Kumar increased his EPS expectations for Fiscal 2022 and 2023. He now expects EPS of $6.14 in FY2022, up from $5.82, while FY2023 EPS estimates have been raised to $6.53 from $6.42.

Consensus among analysts is a Strong Buy based on 22 Buys, 4 Holds, and 1 Sell. The average Apple price forecast of $181.40 implies 13.93% upside potential from current levels. Shares have rallied 21.4% over the past year.

News Sentiment

News Sentiment for Apple is currently Positive based on 294 articles over the past seven days. 70% of the articles on AAPL have a Bullish sentiment, compared to a sector average of 61%.

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