Apple’s financial report in the first quarter shows that total revenue, iPhone and Mac revenue all hit new highs for the same period, service revenue hit record highs for five consecutive quarters, maintained a double-digit surge, maintained a gross profit margin of more than 40%, and revenue in China increased by more than 3% , The growth rate of more than 20% in the fourth quarter slowed down. On the conference call, it was warned that revenue in the second quarter could be reduced by as much as US$8 billion year-on-year due to the epidemic, withdrawal from Russia and high inflation all affected performance. Apple’s stock price, which had risen by more than 3% after the market, turned down and fell about 6% at one point.
The financial report shows that in the first quarter of this year, Apple created its best non-holiday quarter performance in more than 40 years. But even with stronger earnings and revenue growth than Wall Street expected, Apple acknowledged that it will not be able to escape the negative impact of continued supply chain disruptions from the pandemic and increased conflict between Russia and Ukraine. These negatives will continue to weigh on the company’s performance after growth slowed significantly in the first quarter compared to the end of last year.
Apple Chief Financial Officer Luca Maestri commented on the first quarter results, saying that the operating income of the service business in the quarter hit a record high, and the income of iPhone, Mac computers, wearable devices, home products and accessories all hit a record high in the same period of the first quarter. The strong operating performance generated more than $28 billion in operating cash flow for the company in the quarter, allowing the company to return nearly $27 billion to shareholders in the quarter.
Apple’s board of directors announced a cash dividend of $0.23 per share of common stock, increasing the dividend by 5% on May 12, and authorizing the company to expand the size of its current share repurchase program by $90 billion.
Apple has yet to provide quarterly guidance this time around, but warned on a post-earnings conference call. Apple CEO Tim Cook said that during the new crown pneumonia epidemic, supply chain disruptions, and the Russian-Ukrainian war, he could not survive alone. Multiple challenges in the second quarter, including supply constraints related to the outbreak, could reduce sales revenue by as much as $8 billion, Maestri said, and demand in the Chinese market was also affected by the outbreak.
Before the financial report was released, Apple’s stock price, which closed up more than 4%, fell by more than 1% after the market. During the conference call, the stock price turned down again, falling as much as 6% after the market.
The sharp drop in revenue and profit is still higher than expected, and the gross profit margin is more than 40%
After the U.S. stock market closed on Thursday, April 28, Eastern Time, Apple announced that in the second quarter of fiscal 2022, which ended on March 26, the first quarter of 2022 in the Gregorian calendar, both operating income and profit fell by 20% from the previous quarter. % or more, the growth rate is still higher than market expectations, maintaining a high gross profit margin of more than 40%, and the revenue also hitting a record high for the same period:
The operating income in the first quarter was US$97.278 billion, a year-on-year increase of 8.59%, a decrease of more than 21% from the record high revenue in the fourth quarter of last year. Analysts expected an increase of 4.9% year-on-year to US$93.98 billion, an increase of 11% year-on-year in the fourth quarter of last year.
Diluted earnings per share (EPS) in the first quarter was $1.52, an increase of 8.57% year-on-year, a 27.6% decrease from the record high EPS in the fourth quarter of last year, and analysts expected an increase of 2.1% year-on-year to $1.43, a year-on-year increase of 25% in the fourth quarter of last year .
Gross profit in the first quarter increased by 12% year-on-year to US$42.559 billion, with a gross profit margin of 42.5%, and analysts expected 39.8%.
iPhone revenue surpasses expectations, up more than 5%, services revenue continues to record high and soars by double digits
In terms of products, the revenue growth rate of Apple’s core hardware iPhone far exceeded market expectations, the revenue decline of iPad was significantly lower than expected, and the service business maintained a double-digit surge and continued to set a single-quarter record. Only wearable devices and The revenue of accessories was lower than expected, but maintained a high growth rate of more than 10%.
In the first quarter, the iPhone recorded a net sales revenue of US$50.57 billion, an increase of about 5.5% year-on-year, and a decrease of more than 29% from the record high set in the fourth quarter of last year. Analysts expected a year-on-year increase of 2.5% to US$49.16 billion. %.
In the first quarter, Mac revenue was US$10.435 billion, an increase of 14.6% year-on-year, and a decrease of 3.8% from the record high set in the fourth quarter of last year. Analysts expected an increase of 1.4% year-on-year to US$9.23 billion, and a year-on-year increase of 25% in the fourth quarter of last year.
In the first quarter, iPad revenue was US$7.664 billion, a year-on-year decrease of 2.06%, and an increase of 5.7% from the fourth quarter of last year. Analysts expected a year-on-year decrease of 7.9% to US$7.19 billion, a year-on-year decrease of 14% in the fourth quarter of last year.
In the first quarter, revenue from wearable devices, home products and accessories was US$8.806 billion, a year-on-year increase of 12.4%. Analysts expected a year-on-year increase of 14.6% to US$8.98 billion, and a year-on-year increase of 13% in the fourth quarter of last year.
The services business, which includes Apple TV+, Apple Arcade, Apple Music and iCloud subscriptions, recorded revenue of $19.821 billion in the first quarter, a record five consecutive quarters, and analysts expected $19.78 billion.
In the first quarter, service revenue increased by 17.3% year-on-year, the slowest growth rate since the third quarter of 2020, but slightly higher than analysts expected a growth rate of 17%, and an increase of 24% in the fourth quarter of last year.
The growth of revenue in China has slowed down significantly
In the first quarter, Apple’s performance in different regions was different. Compared with the previous quarter, Apple’s revenue growth in the Americas market was stronger, the revenue decline in Japan was significantly moderated, and the revenue growth in China and Europe was significantly slowed down. Income has turned from growth to decline. Among the regions, only the Americas’ revenue growth exceeded total revenue growth, reflecting the outstanding performance in the United States.
The revenue of Greater China in the first quarter was US$18.343 billion, an increase of nearly 3.5% year-on-year, and a year-on-year increase of nearly 21% in the fourth quarter of last year.
In the first quarter, revenue from the Americas was US$40.882 billion, an increase of 19.2% year-on-year, and an increase of more than 11% year-on-year in the fourth quarter of last year.
The European market revenue in the first quarter was 23.287 billion US dollars, a year-on-year increase of 4.6%, and an increase of nearly 9% in the fourth quarter of last year.
The Japanese market revenue in the first quarter was US$7.724 billion, a year-on-year decrease of 0.23%, and a year-on-year decrease of 14% in the fourth quarter of last year.
In the first quarter, the revenue from the Asia-Pacific market outside China and Japan was US$7.742 billion, a year-on-year decrease of 6.65%, and an increase of 19% in the fourth quarter of last year.
In the second quarter, revenue may be reduced by as much as $8 billion year-on-year due to the epidemic. Withdrawal from Russia and high inflation will affect performance
Since the outbreak of the epidemic in Europe and the United States in March 2020, Apple has not announced quarterly performance guidance, citing the uncertainty of the future. Guidance for the second quarter of this year was also not disclosed on Thursday, missing guidance for nine consecutive quarters.
On its post-Q4 earnings call in January, Apple said its growth was negatively impacted by “severe supply constraints.” Management expects these challenges to persist in the first quarter of this year, but the negative impact will be less than in the fourth quarter of last year, and supply chain shortages will improve early this year.
On Thursday’s post-earnings conference call, Apple executives said the company was not immune to the impact of the coronavirus pandemic, supply chain disruptions and the conflict between Russia and Ukraine. They again mentioned the impact of the epidemic and the supply side, as well as the expected negative impact of Russia and Ukraine and high inflation:
The outbreak is affecting the needs of some consumers. Revenues for the current second quarter will be impacted year-over-year by the COVID-19 outbreak, which could hit $4 billion to $8 billion in severity.
With the Western sanctions against Russia, Apple’s withdrawal from the Russian market will also have a negative impact on the second quarter’s performance growth.
Inflation issues definitely have a certain degree of impact on company performance. Although the sales in the United States in the first quarter were good, there are definitely many signs of inflation, and Apple is closely monitoring the price situation.
Apple said Mac computers are being held back by supply chain disruptions and silicon problems caused by the new crown epidemic. Apple’s supply chain has always been resilient, but chip manufacturing remains a problem.
Asked how to adjust Apple’s supply based on the current environment, Apple executives said that chip production/capacity could be expanded in the US. Cook declined to comment on how long the chip supply shortage will continue.
In terms of acquisitions, Cook said that although Apple has not made many major acquisitions so far, it does not rule out the possibility of major mergers and acquisitions in the future. Apple will continue to push ahead with smaller acquisitions in areas such as intellectual property.