A few days ago, Apple released the results for its 2022 fiscal first quarter (which ran from September 26, 2021, to December 25, 2021, and did not actually include any days from calendar year 2022) and held a call with analysts to discuss the results. This is typically Apple's best quarter of the year because it includes holiday sales. This year, it was the best quarter in the history of the company, with an all-time revenue record of $123.9 billion, up 11% from the previous year. Apple CEO Tim Cook said that the quarter was even better than Apple had predicted at the beginning of the quarter. As impressive as this number is, the real reason that I report on Apple's quarterly earnings is not to report on the numbers but to share any interesting tidbits related to the iPhone or iPad that Apple executives mentioned during the financial call that Apple holds with analysts every quarter. There were a few such items this year, although fewer than in some other calls. If you want to get all of the nitty-gritty details, you can listen to the audio from the announcement conference call on the Apple website, or you can read a transcript of the call prepared by Jason Snell of Six Colors. Apple's official press release is here. Here are the items that stood out to me.
iPhone
- iPhone revenue for the quarter was $71.6 billion. This was an all-time record, a 9% increase from this time last year (which was a record $65.6 billion). Even so, Apple CFO Luca Maestri said that Apple was supply constrained on the iPhone during the past quarter, so there was demand for even more.
- Apple CEO Tim Cook noted that the iPhone was now 15 years old, stating: "A few weeks ago, we marked the fifteenth anniversary of the day Steve revealed iPhone to the world. We knew that we had the beginnings of something fundamentally transformative, though none of us could have predicted the incredible and meaningful impact it would have on all of our lives. The creative spirit that made the first iPhone possible has thrived to Apple every day since. We never stop creating. We never stop innovating."
- Even though the iPhone is already very popular, Cook said that it appears that the iPhone is gaining in worldwide market share. Cook also stated that the "iPhone has become an integral part of so many people's lives, now more than ever. And the active install base of iPhone continues to grow and is now at an all-time high. And during [the 2022 fiscal first quarter], as we had mentioned, we had a record number of upgraders and switchers, strong double digit, which I think speaks to the strength of the product. And that's all in addition to an enormous customer satisfaction rating of 98% and doing well throughout the" different parts of the world.
- To give you some context for the increase in iPhone revenue this past quarter, here is a chart showing the year-over-year percentage change since fiscal 2013 Q1, which is when Apple started reporting this type of revenue in this form. As you can see in this chart, Apple has had impressive iPhone revenue growth for five quarters in a row1. You have to go back to 2014-2015 to see revenue jumps like this, and of course, the iPhone is much bigger now than it was then.
iPad
- iPad revenue was $7.2 billion. This was down from a year ago when it was $8.4 billion, but Apple has warned that this was likely to happen because Apple said that it would be "supply-constrained." In other words, Apple wasn't able to get all of the parts that it wanted, so it wasn't able to keep up with demand for new iPads.
- One analyst asked whether the supply constraints for the iPad was due to Apple having a limited number of the parts that work in both the iPhone and iPad and Apple deciding to allocate more parts to the iPhone. Cook said that there was a little of that, but it was mostly because of what Cook calls "legacy nodes," the parts that are made by suppliers other than Apple and which are not the latest-and-greatest technology. These are the basic computer parts that lots of different manufacturers use in lots of different products. Cook said that he believes that these supply shortages are now starting to improve.
- Cook stated that even though Apple couldn't make as many iPad as it had hoped, demand remains strong: "Despite the constraints I mentioned earlier, our iPad lineup continues to be indispensable to tens of millions of people, from teachers and students to artists and creators. Customers are eager to get their hands on our ninth generation iPad, which features a beautiful display and double the storage capacity, as well as the new iPad mini with its ultraportable design."
- Even though the iPad has been on sale since 2010, Maestri said that about half of all iPad customers in the past quarter were purchasing their first iPad.
- Here is a chart to show the year-over-year percentage change in iPad revenue since fiscal 2013 Q1, which is when Apple started reporting this type of revenue in this form. After six quarters in a row in which iPad revenue was higher than the same fiscal quarter in the prior year, Apple has now had a quarter in which revenue dropped year-over-year. Time will tell whether this is a one-time thing due to supply constraints specific to the last quarter or whether this is the start of a return to a time period when iPad revenue growth was more modest or even negative.
Other
- Cook emphasized the health advantage of owning an Apple Watch, stating: "Nearly every day, I get notes from customers who share how a heart alert led to a life-saving appointment with a cardiologist. And more recently, I've been hearing from people who tell me that their Apple Watch saved their lives by calling 911 when they couldn't. As I've said, we're still in the early innings with our health work, but every day I am encouraged by our positive impact."
- Maestri said that over two-thirds of Apple Watch customers in the past quarter were purchasing their first Apple Watch. (The Apple Watch first went on sale in 2015.)
- Cook said that since the App Store first launched in 2008, Apple has paid developers more than $260 billion.
- Cook said that Apple is already carbon neutral in its own operations, and it hopes to be carbon neutral across its supply chain and the life cycle of its products by 2030.
- The current fiscal quarter ends in March, and Maestri predicted that it would be a record fiscal second quarter.