Apple (AAPL - Free Report) reported second-quarter fiscal 2021 earnings of $1.40 per share that beat the Zacks Consensus Estimate by 40% and jumped 118.8% year over year.
Net sales increased 53.6% year over year to $89.58 billion, which surpassed the Zacks Consensus Estimate by 15.4%.
Services, along with iPhone, iPad, Wearables and Mac, continued its momentum in the quarter under review. Services (18.9% of sales) revenues grew 26.6% from the year-ago quarter to $16.90 billion.
Product sales (81.1% of sales) surged 61.6% year over year to $72.68 billion. Non-iPhone revenues (iPad, Mac and Wearables) grew 54.6% on a combined basis.
Strong China & Japan Aid Top-Line Growth
Apple achieved new second-quarter records in each of its five geographic segments.
Americas sales increased 34.7% year over year to $34.31 billion and accounted for 38.3% of total sales.
Europe generated $22.26 billion in sales, up 55.8% on a year-over-year basis. The region accounted for 24.9% of total sales.
Greater China sales surged 87.5% from the year-ago quarter to $17.73 billion, accounting for 19.8% of total sales.
Japan sales soared 48.7% year over year to $7.74 billion, accounting for 8.6% of total sales.
Rest of the Asia Pacific generated sales of $7.54 billion, up 94.2% year over year. The region accounted for 8.4% of total sales.
iPhone Sales Increase Y/Y
iPhone sales increased 65.5% from the year-ago quarter to $47.94 billion and accounted for 53.5% of total sales. The robust year-over-year growth was driven by strong demand for the iPhone 12 family.
Apple quoted a recent survey report from 451 Research which stated that customer satisfaction was more than 99% for the iPhone 12 family in the reported quarter.
Services Momentum Continues
Services maintained momentum in the reported quarter. Apple set an all-time record for the App Store, Cloud Services, Music, video, advertising and payment Services.
Apple TV+, Apple Arcade, Apple News+, Apple Card, Apple Fitness+ and Apple One bundle also contributed to overall growth. These new services continue to add users, content and features.
Apple now has more than 660 million paid subscribers across its Services portfolio, up 40 million sequentially and 145 million year over year.
Apple continues to expand its Services offerings with the launch of Apple Pay in Mexico and South Africa. Moreover, Apple Arcade expanded offerings with the addition of new exclusive Arcade originals and two entirely new categories - App Store Greats and Timeless Classics.
iPad & Mac Jump on Strong Demand
iPad sales of $7.81 billion jumped 78.7% year over year and accounted for 8.7% of total sales.
Mac sales of $9.10 billion soared 70.1% from the year-ago quarter and accounted for 10.2% of total sales. The year-over-year growth was driven by strong adoption of the new Macs powered by M1 chip.
Apple quoted a recent survey report from 451 Research which stated that overall consumer satisfaction was 94% for iPad and 91% for Mac in the quarter under review.
Wearables’ Robust Performance
Wearables, Home and Accessories sales increased 24.7% year over year to $7.84 billion and accounted for 8.7% of total sales.
Apple Watch’s adoption rate continues to grow rapidly. Notably, more than 75% of customers who purchased Apple Watch during the reported quarter were first-time customers.
Operating Details
Gross margin expanded 410 bps on a year-over-year basis to 42.5%. Moreover, gross margin increased 270 bps sequentially due to a strong revenue mix, cost savings and favorable foreign exchange.
Products’ gross margin expanded 100 bps sequentially to 36.1%. Services’ gross margin was 70.1%, up 170 bps sequentially.
Operating expenses rose 11.1% year over year to $10.58 billion due to higher research & development (R&D), and selling, general & administrative (SG&A) expenses which increased 15.3% and 7.3%, respectively.
Operating margin expanded 870 bps on a year-over-year basis to 30.7%.
Balance Sheet
As of Mar 27, 2021, cash & marketable securities were $204.37 billion compared with $195.57 billion as of Dec 26, 2020.
Term debt, as of Mar 27, 2021, was $116.65 billion, up from $107.04 billion as of Dec 26, 2020.
Apple returned $23 billion in the reported quarter through dividend payouts ($3.4 billion) and share repurchases ($19 billion).
Moreover, Apple has expanded the existing share-repurchase program with an increase of $90 billion. The company also raised dividend by 7% to 22 cents per share.
Guidance
Apple did not provide revenue guidance, given the uncertainty around the impact of the coronavirus pandemic. However, management expects revenues to grow double digits year over year but decline sequentially. Supple constraint (primarily iPad and Mac) is expected to hurt second-quarter sales by $3-$4 billion.
Gross margin is expected between 41.5% and 42.5% in the March quarter. Operating expenses are expected between $11.1 billion and $11.3 billion.
Zacks Rank & Other Stocks to Consider
Currently, Apple has a Zacks Rank #2 (Buy).
Similarly-ranked stocks in the broader technology sector are AMETEK (AME - Free Report) , Cognex (CGNX - Free Report) and CDW Corporation (CDW - Free Report) . You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
AMETEK, CDW and Cognex are scheduled to report quarterly earnings on May 4, 5 and 6, respectively.
These Stocks Are Poised to Soar Past the Pandemic
The COVID-19 outbreak has shifted consumer behavior dramatically, and a handful of high-tech companies have stepped up to keep America running. Right now, investors in these companies have a shot at serious profits. For example, Zoom jumped 108.5% in less than 4 months while most other stocks were sinking.
Our research shows that 5 cutting-edge stocks could skyrocket from the exponential increase in demand for “stay at home” technologies. This could be one of the biggest buying opportunities of this decade, especially for those who get in early.
See the 5 high-tech stocks now>>
Zacks Names "Single Best Pick to Double"
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It’s a little-known chemical company that’s up 65% over last year, yet still dirt cheap. With unrelenting demand, soaring 2022 earnings estimates, and $1.5 billion for repurchasing shares, retail investors could jump in at any time.
This company could rival or surpass other recent Zacks’ Stocks Set to Double like Boston Beer Company which shot up +143.0% in little more than 9 months and NVIDIA which boomed +175.9% in one year.
Free: See Our Top Stock and 4 Runners Up >>
Apple (AAPL - Free Report) reported second-quarter fiscal 2021 earnings of $1.40 per share that beat the Zacks Consensus Estimate by 40% and jumped 118.8% year over year.
Net sales increased 53.6% year over year to $89.58 billion, which surpassed the Zacks Consensus Estimate by 15.4%.
Services, along with iPhone, iPad, Wearables and Mac, continued its momentum in the quarter under review. Services (18.9% of sales) revenues grew 26.6% from the year-ago quarter to $16.90 billion.
Product sales (81.1% of sales) surged 61.6% year over year to $72.68 billion. Non-iPhone revenues (iPad, Mac and Wearables) grew 54.6% on a combined basis.
Strong China & Japan Aid Top-Line Growth
Apple achieved new second-quarter records in each of its five geographic segments.
Americas sales increased 34.7% year over year to $34.31 billion and accounted for 38.3% of total sales.
Europe generated $22.26 billion in sales, up 55.8% on a year-over-year basis. The region accounted for 24.9% of total sales.
Greater China sales surged 87.5% from the year-ago quarter to $17.73 billion, accounting for 19.8% of total sales.
Japan sales soared 48.7% year over year to $7.74 billion, accounting for 8.6% of total sales.
Rest of the Asia Pacific generated sales of $7.54 billion, up 94.2% year over year. The region accounted for 8.4% of total sales.
iPhone Sales Increase Y/Y
iPhone sales increased 65.5% from the year-ago quarter to $47.94 billion and accounted for 53.5% of total sales. The robust year-over-year growth was driven by strong demand for the iPhone 12 family.
Apple quoted a recent survey report from 451 Research which stated that customer satisfaction was more than 99% for the iPhone 12 family in the reported quarter.
Services Momentum Continues
Services maintained momentum in the reported quarter. Apple set an all-time record for the App Store, Cloud Services, Music, video, advertising and payment Services.
Apple TV+, Apple Arcade, Apple News+, Apple Card, Apple Fitness+ and Apple One bundle also contributed to overall growth. These new services continue to add users, content and features.
Apple now has more than 660 million paid subscribers across its Services portfolio, up 40 million sequentially and 145 million year over year.
Apple continues to expand its Services offerings with the launch of Apple Pay in Mexico and South Africa. Moreover, Apple Arcade expanded offerings with the addition of new exclusive Arcade originals and two entirely new categories - App Store Greats and Timeless Classics.
iPad & Mac Jump on Strong Demand
iPad sales of $7.81 billion jumped 78.7% year over year and accounted for 8.7% of total sales.
Mac sales of $9.10 billion soared 70.1% from the year-ago quarter and accounted for 10.2% of total sales. The year-over-year growth was driven by strong adoption of the new Macs powered by M1 chip.
Apple quoted a recent survey report from 451 Research which stated that overall consumer satisfaction was 94% for iPad and 91% for Mac in the quarter under review.
Wearables’ Robust Performance
Wearables, Home and Accessories sales increased 24.7% year over year to $7.84 billion and accounted for 8.7% of total sales.
Apple Watch’s adoption rate continues to grow rapidly. Notably, more than 75% of customers who purchased Apple Watch during the reported quarter were first-time customers.
Operating Details
Gross margin expanded 410 bps on a year-over-year basis to 42.5%. Moreover, gross margin increased 270 bps sequentially due to a strong revenue mix, cost savings and favorable foreign exchange.
Products’ gross margin expanded 100 bps sequentially to 36.1%. Services’ gross margin was 70.1%, up 170 bps sequentially.
Operating expenses rose 11.1% year over year to $10.58 billion due to higher research & development (R&D), and selling, general & administrative (SG&A) expenses which increased 15.3% and 7.3%, respectively.
Operating margin expanded 870 bps on a year-over-year basis to 30.7%.
Balance Sheet
As of Mar 27, 2021, cash & marketable securities were $204.37 billion compared with $195.57 billion as of Dec 26, 2020.
Term debt, as of Mar 27, 2021, was $116.65 billion, up from $107.04 billion as of Dec 26, 2020.
Apple returned $23 billion in the reported quarter through dividend payouts ($3.4 billion) and share repurchases ($19 billion).
Moreover, Apple has expanded the existing share-repurchase program with an increase of $90 billion. The company also raised dividend by 7% to 22 cents per share.
Guidance
Apple did not provide revenue guidance, given the uncertainty around the impact of the coronavirus pandemic. However, management expects revenues to grow double digits year over year but decline sequentially. Supple constraint (primarily iPad and Mac) is expected to hurt second-quarter sales by $3-$4 billion.
Gross margin is expected between 41.5% and 42.5% in the March quarter. Operating expenses are expected between $11.1 billion and $11.3 billion.
Zacks Rank & Other Stocks to Consider
Currently, Apple has a Zacks Rank #2 (Buy).
Similarly-ranked stocks in the broader technology sector are AMETEK (AME - Free Report) , Cognex (CGNX - Free Report) and CDW Corporation (CDW - Free Report) . You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
AMETEK, CDW and Cognex are scheduled to report quarterly earnings on May 4, 5 and 6, respectively.
These Stocks Are Poised to Soar Past the Pandemic
The COVID-19 outbreak has shifted consumer behavior dramatically, and a handful of high-tech companies have stepped up to keep America running. Right now, investors in these companies have a shot at serious profits. For example, Zoom jumped 108.5% in less than 4 months while most other stocks were sinking.
Our research shows that 5 cutting-edge stocks could skyrocket from the exponential increase in demand for “stay at home” technologies. This could be one of the biggest buying opportunities of this decade, especially for those who get in early.
See the 5 high-tech stocks now>>
Zacks Names "Single Best Pick to Double"
From thousands of stocks, 5 Zacks experts each have chosen their favorite to skyrocket +100% or more in months to come. From those 5, Director of Research Sheraz Mian hand-picks one to have the most explosive upside of all.
It’s a little-known chemical company that’s up 65% over last year, yet still dirt cheap. With unrelenting demand, soaring 2022 earnings estimates, and $1.5 billion for repurchasing shares, retail investors could jump in at any time.
This company could rival or surpass other recent Zacks’ Stocks Set to Double like Boston Beer Company which shot up +143.0% in little more than 9 months and NVIDIA which boomed +175.9% in one year.
Free: See Our Top Stock and 4 Runners Up >>
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