Tech giant Apple Inc. released second-quarter financial figures for 2021 that soared past Wall Street predictions. Operating on a fiscal calendar concluding in September, their Q2 performance showed a remarkable $89.6 billion in revenue, an impressive 15.8 percent increase over the anticipated $77.4 billion, and marking a 53.6 percent leap from the same quarter the previous year.
The tech leader’s services portfolio generated $16.9 billion, outpacing predictions by 7.6% and showcasing earnings per share (EPS) at $1.40 — notably ahead of the expected $.99 by a considerable 41.4 percent margin.
Apple CEO Tim Cook emphasizes the balance between privacy and technological innovation, stating that it need not be a trade-off.
The surge in service revenue set an all-time high this quarter, boasting a 26.6 percent year-over-year increase. For the second quarter running, all of Apple’s product categories have seen double-digit growth. CFO Luca Maestri predicts continued double-digit growth into Q3 FY 2021 but cautions about potential impact from the global chip shortage.
With hardware sales reaching a plateau, Apple is aggressively expanding into services and software. Historically, iPhone sales have seen a downturn, as indicated by a nearly 7 percent drop during the March 2020 quarter, with other products like iPad and Mac stalling.
The pivot to services reveals much fatter profit margins, as evidenced by this quarter’s 70.1% service segment margin, juxtaposed against a 36.1% product segment gross margin.
Committing to return more capital to shareholders, Apple’s board has sanctioned $90 billion in stock buybacks, a jump from last year’s $50 billion, coupled with a 7% dividend boost to $0.22 per share. Apple stopped short of providing future guidance, but their stock has soared over 4% in after-hours trading, vastly outdoing the S&P 500’s return percentages.
According to CEO Tim Cook, Apple is attracting an influx of new Mac owners, likely fueled by the ongoing pandemic and the uptick in working from home, which has bumped up device sales. Cook casts the current success in a hopeful light, suggesting consumer optimism for the times ahead.
Macs and iPads witnessed a sales upshot of 70% and 79% respectively compared to last year. Apple’s service subscriptions also saw a significant boost, reaching 660 million — a climb of 40 million from the prior quarter.
The transition to in-house M1 chips for Macs, moving away from Intel, has been met with positivity for extended battery life, instigating strong sales dynamics. Anticipation surrounds the newer iPad Pro and iMac models, which are likely to encourage further demand.
Cook also noted that the percentage of first-time Mac purchasers continues to be robust, particularly in China, where the number climbs even higher. Despite any lingering concerns over saturated product sales cycles, Apple’s iPhone shows promise in some markets, banking on a fresh design and advanced 5G capabilities to incite a significant upgrade cycle among users.
