On Tuesday tech giant Apple Inc. reported impressive quarterly sales and profits that surpassed the expectations of analysts. The surge in sales and profits is a result of increased sales of the company’s 5G iPhones, and the fact that more consumers signed up for its subscription services.
The company reported total revenue of $81.43 billion – a figure that surpassed analysts’ expectation of $73.30 billion by 36.4 percent, according to IBES data from Refinitiv. Earnings for the tech giant was expected to be $1.01 per share but Apple reported earnings of $1.30 per share.
According to Apple’s CEO Tim Cook, Apple had its strongest sales growth from China. He said that customers in China are increasingly purchasing accessories, especially the Apple Watch, to go with their iPhones. In the fiscal third quarter ended June 26th, sales in China grew 58 percent to $14.76 billion. “It wasn’t just iPhone. We set a new quarterly record for Mac, for wearables, home, and accessories, and for services. It was our strongest geography”, Tim Cook said talking about the growth the company witnessed in China.
The company’s impressive results come in the heat of a global chip shortage, and somehow it seems to not have been affected.
Investors who were once worried that the company was over-dependent on the sale of its iPhones have taken the company’s valuation to almost $2.5 trillion. “Their main challenge now is keeping up the success to justify its +$2 trillion valuation”, Jesse Cohen, a senior analyst at Investing.com said.
The desire to own 5G devices seems to be the drive for the buying cycle which Apple (and even other phone makers) is experiencing. According to Apple, iPhone sales were $39.57 billion, which is up almost 50 percent from the previous year and beat analysts’ expectations of $34 billion.
According to Tim Cook, the iPhone 12 Pro and 12 Pro Max were strong sellers and helped push gross margins to 43.3 percent, beating estimates of 41.9 percent. Apple reported Services revenue of $17.49 billion that beat expectations of $16.33 billion. Apple now has 700 million subscribers across its various platforms, Tim Cook said. This figure is up from 660 million in the last quarter.
For sales of iPads and Macs, Apple reported $7.37 billion and $8.24 billion respectively. Analysts expected the figures to be $7.15 billion and $8.07 billion respectively.
Apple has also been at the center of some regulatory probes. A regulatory probe from the European Consumer Organization (BEUC) lobby group accused Apple of distorting competition in the music streaming market. The company’s practice of charging commissions of 15% to 30% to developers who sell in its App Store and requiring them to use Apple’s payment system could face scrutiny from regulators in the United States and Europe. The company also expects a ruling is in the coming months in an antitrust lawsuit filed against it by Epic Games.
Xiaomi Corp. also Overtook Apple Inc. in the second quarter of this year as the world’s second-largest smartphone vendor.