Apple reports record revenue for Q1 FY2022

Apple Reports Record Revenue of $123.9B for Q1 FY22

Despite supply chain constraints, Apple reported record revenue of $123.9B for Q1 FY22, driven by strong device and services revenue.

Despite supply chain constraints, Apple started its first quarter of fiscal year 2022 strong, driven by record device and services revenue. For the period ended December 25, 2021, Apple had total revenue of $123.9 billion, an 11% increase year-over-year and an all-time high for the tech company. The strong revenue growth was driven by record revenue highs for iPhones, Macs, Wearables and Services. The new iPhone 13 lineup was particularly popular.

Apple CEO Tim Cook commented on the company’s stellar first-quarter performance.

“This quarter’s record results were made possible by our most innovative lineup of products and services ever,” said Cook in a January 27, 2022 news release. “We are gratified to see the response from customers around the world at a time when staying connected has never been more important. We are doing all we can to help build a better world — making progress toward our goal of becoming carbon neutral across our supply chain and products by 2030, and pushing forward with our work in education and racial equity and justice.”

Quarterly highlights

Financial and operational highlights for the quarter include the following:

  • Apple reported net income of $34.6 billion, or $2.10 diluted earnings per share.
  • Product sales were $104.4 billion of the company’s total quarterly revenue, compared to $95.7 billion for Q1 FY21, a 9% increase year-over-year.
  • Services, including Apple’s subscription services, cloud services, music, video, advertising and payment srvices, represented $19.5 billion, compared to $15.8 billion for Q1 FY21.
  • Product sales now represent 84.3% of total revenue, and service revenue makes up the balance of 15.7% of total revenue. For Q1 FY21, product sales comprised 85.9% of total revenue, and service revenue was 14.1%.
  • iPhone sales made up the largest portion of product sales at $71.6 billion, a 9% increase year-over-year; followed by Wearables, Home and Accessories at $14.7 billion, a 13% increase year-over-year; Mac at $10.9 billion, a 25% increase year-over-year; and iPad at $7.2 billion, a 14% decrease year-over-year.
  • The company’s gross margin was 43.8% with products gross margin at 38.4% and services gross margin at 72.4%.
  • In the first two years of Apple TV+, the streaming subscription service’s shows and movies have received 200 awards and over 890 nominations, though Apple did not mention how many subscribers the service has.
  • Apple currently has an “installed base of active devices” of 1.8 billion.

Subscriptions

Though Apple didn’t release subscriber numbers by category, the company said paid subscription services are showing “very strong growth.” They currently have 785 million paid subscriptions across all services on the platform, an increase of 165 million over the last 12 months.

“…we’re adding new services that we think our customers will love, and we continue to improve the breadth and quality of our current service offerings,” said Lucas Maestri, chief financial officer, on the earnings call.

For example, Apple has added new content on Apple TV+, Fitness+ and Apple Arcade. They are also beta testing Apple Business Essentials, a new subscription service that will help small businesses manage their devices with 24/7 support, iCloud storage and end-to-end life cycle management of employee devices.

In terms of Apple TV+, on the earnings call, Cook said that the company’s focus is on quality content, not necessarily money.

“We don’t make purely financial decisions about the content. We try to find great content that has a reason for being, and we love shows like Ted Lasso and several of the others as well that have a reason for existing and they have a good message, and they make people feel good at the end of it,” said Cook. “But I don’t view that we have narrowed our universe of things we are selecting from. There is plenty to pick from out there, and I think we are doing a pretty good job of it as we speak.”

Apple TV+ is one of the company's popular subscription services which are helping drive record revenue.
Image courtesy of Apple

No revenue guidance

Maestri said the company would not be sharing revenue guidance because of the “continued uncertainty around the world.” However, he did say they expect solid revenue growth year-over-year, and they have adjusted their expectations to account for “significant supply constraints.” Apple estimates gross margin to be between 42.5% and 43.5%.

Insider Take

Whether you love or hate big tech, Apple has a huge corner on the technology market. Their innovative products – smartphones, tablets, smartwatches – are pricy but they are high-quality products that appeal to a range of customers, many of whom consider the latest Apple devices to be “must haves.” From a services perspective, in recent years, Apple has become very creative, moving beyond streaming music and TV to fitness and business-focused subscription services. Their dependence on device revenue remains strong, but they are slowing shifting more of their revenue to the services side of the house, including their subscription services which are growing in popularity. This will serve them well over the long term.

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