Apple Earnings, October - December, 2021

Updates

January 28, 2022: Goldman Sachs analyst -- very negative about Apple. Lumps it in which all consumer electronics. Wow, what a doofus. Sure he says it's neutral, but has same old argument we hear from these analysts about Apple every quarter. Their bottom line argument: "we're not convinced Apple can keep growing." Truly amazing. 

January 28, 2022: Jim Cramer -- 

Apple (AAPL) strong on all but the most supplied constrained (Mac tab) ... Tim Cook spent most of the time talking about installed base of 1.8 billion. Looking at almost 800 million subscribers ... Card on fire. No defaults for bills (almost unheard-of). China abnormally STRONG—highest-ever market share. Beginning to get the value of lifetime sub and notion of delivery system for content …

January 28, 2022: transcript.

January 27, 2021: Jim Cramer --

Gross margins came in at 43.8%, well ahead of the 42% consensus, and are representative of a 399bps YoY improvement. These benefited from the growth in Services, which boast a higher-margin profile.<

• Driving that result was a 72.37% Services gross margin (+397bps YoY) and a 38.42% Products gross margin (+336bps YoY). Once again, we can see why the growth in Services is so important in terms of overall profitability.
• While Services represented 15.75% of sales, it represented 26.04% of gross income.

As we've noted previously, the combination of stronger profitability and the recurring nature of the Services results, investors are putting a higher value on the associated earnings stream. As the growth in services has expanded, so too has the company's valuation multiple.

Later, 6:12 p.m. CT: active devices set record. 

• record number of active Apple devices: 1.8 billion active devices, a new all-time record;

• has grown from 1.5 active billion devices in January, 2020 and 1.65 active billion devices in January 2021; demand is still there.

Original Post

MacRumors. Yahoo!Finance. 

Record quarterly revenue.  

On a per share basis the numbers are even better due to huge share buybacks.

• overall earnings/profit, up 20% year/year;
• earnings / share, up 25% year/year    .

Holy mackerel! See the graphic at MacRumors link. Best quarter ever, and not only that, the new record was not trivial.

• previous record: $110 billion
• this quarter, new record: $124 billion
• how many business days in a quarter? At five days a week? 65 days;
  
• $125 billion / 65 days = almost $2 billion / normal business day
  

Dividend: no change in dividend. 

Numbers out, headline: "Apple smashes Wall Street expectations with historic 1Q22 revenue."

• after numbers come out, shares up $3.07 / share; later, up as much as $5.68. / share; looks like will end up about $5 / share in the after hours. Wrong: now up over $7 share.
  
• beats top and bottom line
• cash hoard jumps: $202.6 billion from $190.5 billion; expect huge share buyback;
  
• EPS: $2.10 / share vs $1.89 / share estimate
  
• only iPad did not beat 
• $7.25 billion vs $8.18 estimate; huge supply chain problem;
  
• revenue beat: $123.95 billion vs %118.66 billion
• quarter year ago: $111.4 billion
• profit: $34.6 billion or $2.10 per share
• quarter year ago: $28.8 billion or $1.68 per share
  
• profit, total dollar profit, percent jump quarter-over-year-ago-quarter: 20% despite significant supply change shortages
• profit, per share, percent jump quarter-over-year-ago-quarter: 25% despite  
• profit per share increase y/y better than overall profit  y/y due to share buyback
• Apple bought back $20 billion shares
  
• revenue, percent jump quarter-over-year-ago-quarter: 11.3%
• so, profit per share
  
• margins: 43.8 vs forecast 41.7 estimate
  
• iPhone: $71.6 billion vs $68.34 billion;
  
• wearables: $14.7 billion vs 14.1 billion forecast;
• services: beat at $19.5 billion vs $18.6 billion
• waiting for guidance at conference call; probably won't be given; Apple seldom provides guidance;

Comments:

• huge
•  nothing broken
• firing on all cylinders
• March, 2022, should be better than December, 2021
• has not been said yet, but indications are this is the best quarter Apple has ever reported;
  

Other Apple-related news:

• Square Reader? New iPhone software could negate need for Square Reader attachment; link here.
• Face ID: will work with "mask on." Incredible. This will help women in the Mideast, also. Link here.
• Price cut: 64 GB wi-fi iPad Air for $539; down $60; link here.
  

Other earnings while waiting:

• Robinhood, down 15% on greater loss than expected.
• big slide; trading below $10; was $12.41 at the close;

************************************
Now, Fast Money

Apple:

• comments from correspondent on "Fast Money"

• grew 21% in China; all-time revenue record in China
• record number of "upgraders" in China
• expects supply constraints in March to be less than in most recent quarter

Guy:

• remarkable
• should trade back at all-time highs
• one nit-pick: services not as big a percent as one would liike

Karen:

• a lot to really like about this quarter;
• size of the beat was pretty impressive
• what is the "right" P/E
• right mix of hardware and software
• wants to stay long
• due to strange quarter, no real direct comparisons
  

BK:

• is valuation too high or too low? Doesn't know; says "price" too low;
• sentiment perspective: demand is still there; have probably reached passed recession worries;

Dan:

• huge divergence between APPL and NASDAQ
• AAPL trending up; NASDAQ trending down;
• AAPL makes up huge percent of top 100 NASDAQ stocks; imagine the NASDAQ without AAPL
  

Melissa:

• mentions Block (Square Reader); mentioned earlier;
• Block will get hit badly; down 5% today;
  
• Apple will take a lot of that Block business
• Apple doesn't let many other companies take the prime rib; lets them lick up scraps, crumbs