- Apple solidly beat analyst expectations for services revenue.
- Apple's services revenue has a higher profit margin and is more stable than products revenue.
- Although Apple achieved a September quarter record, revenue nonetheless came up short of analyst predictions.
|Apple Earnings Results|
|Metric||Beat/Miss/Match||Reported Value||Analysts' Prediction|
|Adjusted Earnings Per Share||Beat||$1.24||$1.21|
|Services Revenue (B)||Beat||$18.3||$17.6|
Source: Predictions based on analysts’ consensus from Visible Alpha
Apple (AAPL) Financial Results: Analysis
Apple Inc. (AAPL) reported financial results for Q4 FY 2021 that were mixed relative to analyst predictions. Adjusted earnings per share (EPS) came in at $1.24, ahead of analysts' predicted $1.21. On the other hand, revenue was somewhat below expectations: the company reported quarterly revenue of $83.4 billion relative to a predicted $84.2 billion.
Apple's fiscal year ends in September, meaning that this earnings report corresponds to its fiscal fourth quarter. The company has experienced dramatic growth in recent quarters, driven in large part by customers utilizing the tech giant's products and services while staying home for work, school, and leisure during the COVID-19 pandemic.
Apple Services Revenue
Apple outperformed expectations when it came to the key metric of services revenue. The company reported services revenue of $18.3 billion as compared with a predicted $17.6 billion for the quarter. Apple's services include the company's digital content stores and streaming services, such as its various App Store platforms, Apple Music, Apple Arcade, Apple News+, and Apple TV+, as well as cloud services, Apple Pay, and other offerings.
Services revenue is especially important as a sign of Apple's financial future because profit margins on services sales are significantly larger than on Apple's hardware profits. That means that each dollar of added service sales disproportionately boosts Apple's profits compared to hardware sales.
Apple's Outlook and Stock Performance
Apple did not provide forward guidance in its earnings report. Shares of Apple stock fell sharply in after-hours trading following the earnings release, dropping by about 4%. The company has provided one-year trailing total returns of 38.1%, slightly behind the S&P 500's total return of 40.5%.
Apple's next earnings report, for Q1 FY 2022, is expected to be on Jan. 25, 2022.