Apple reports Q4 revenue of $64.7B, up from $64.0B YoY, of which $50.1B came from products, $14.5B from services, and net income of $12.7B; stock down 3%+
Company revenue sets September quarter record Services and Mac revenue reach new all-time high — Apple today announced financial results …
Context & Ripple Effects
This closes an Apple fiscal year in which each quarter outgrew the last: July's $59.7B, up 11% YoY set up today's $64.7B September-quarter record. The mix keeps tilting toward services — $14.5B here versus $12.5B in last year's Q4, extending a record streak that runs back through 2019's $11.5B quarter.
The 3%+ stock drop despite records repeats a familiar pattern: the 2018 Q4 report also hit all-time-high services revenue and still sent shares down 4%+. The market is trading on what the number implies about the next iPhone cycle, not on the printed quarter.
First-order effects
- Products revenue slipped to $50.1B from $51.5B a year earlier while services grew ~16% to $14.5B — the growth engine on paper is no longer hardware, yet shareholders sold anyway.
- Mac and services both hit new highs per the company, meaning the shortfall versus investor expectations lands on the product side heading into the holiday quarter.
Second-order effects
- After a quarter like July's drove the stock up 6%, a down reaction to a record print tightens the bar for the December quarter, pressuring Apple to lean harder on services and App Store monetization to justify its valuation.
- Services' compounding share of revenue — from $10B in 2018 to $14.5B now — strengthens the recurring-revenue pitch Apple makes to investors, reshaping how analysts model a hardware company.
Third-order effects
- If every record quarter meets a selloff, Apple's narrative fully rotates from unit sales to installed-base monetization, making App Store economics and services margins the structural drivers of the stock rather than the iPhone lineup.
- The decoupling of reported results from market reaction points to a valuation regime where Apple is priced on forward ecosystem bets, raising the stakes on whatever comes after the hardware cycle.
The trend: Apple's earnings arc is rotating from iPhone-driven product cycles toward services-led growth, with market reactions increasingly keyed to future-cycle expectations rather than record prints.
Related: Apple · Mac · Apple reports Q3 revenue of $59.7B, up 11% YoY · Apple reports Q4 revenue of $62.9B with record services
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Discussion
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@markgurman
Mark Gurman
on x
Apple CFO Luca Maestri told @emilychangtv that Apple One is launching tomorrow and Fitness+ is launching this quarter.
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@jsnell
Jason Snell
on x
iPhone, what can you say — $AAPL had a good holiday quarter but it's been rough sledding since then. COVID can't have helped. With the new iPhones going on sale late I expect they'll enter a growth cycle for the next year. But this quarter was rough. https://twitter.com/...
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@scottwapnercnbc
Scott Wapner
on x
Hearing Tim Cook tell @CNBCJosh that the virus makes it too hard to give guidance highlights a big risk for the economy — that while we won't lock down again, businesses could decide to shut their stores for periods rather than risk their customers or employees getting sick.
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@jsnell
Jason Snell
on x
Another good iPad quarter for $AAPL. After a few years of scuffling, the product line seems to have stabilized at between $5B or $6B per quarter. https://twitter.com/...
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@neilcybart
Neil Cybart
on x
Apple just released 4Q20 earnings: $64.7 billion of revenue $0.73 earnings per share (EPS) My estimates were: $68.8 billion of revenue $0.80 EPS Results missed my expectations but came in slightly ahead of Wall Street (sell-side) consensus.
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@asymco
Horace Dediu
on x
iPhone demand was up “double digits” during quarter y/y measured through the launch date of last year's iPhones. The installed base is at all-time high, as expected.
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@jdalrymple
Jim Dalrymple
on x
Apple is clearly doomed.
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@sixcolorsevent
@sixcolorsevent
on x
Worth noting that the revenue is still a September quarter record (since it edged out last September's quarter, which itself was a record), and Services and Mac revenues were also all-time highs. (Love to see the Mac still hitting highs 30+ years into its life!)
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@caro_milanesi
Carolina Milanesi
on x
Really eager to see how the roll out of #AppleOne will work for current multi-services subscribers https://twitter.com/...
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@neilcybart
Neil Cybart
on x
- iPhone revenue: $26.4B (my estimate: $31.3B) - Services revenue: $14.5B (my estimate: $14.3B) - Wearables / Home etc.: $7.9B (my estimate: $7.7B) - Mac: $9.0B (vs. my $9.5B) - iPad: $6.8B (vs. my $6.1B) HUGE quarter for iPad and Mac. Good quarter for wearables. iPhone messy.
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@mattbirchler
Matt Birchler
on x
Apple set a new quarterly revenue record despite not having a new iPhone in the quarter for the first time since what, 2010? Damn! https://twitter.com/...
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@markgurman
Mark Gurman
on x
Apple beats Wall Street estimates with all-time Q4 with $64.7 billion in revenue, but China sales fall 29%. Macs ($9b) and Services ($14.5b) hit all-time records, but iPhone sales fell 21% on the iPhone 12 launch delay.
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@asymco
Horace Dediu
on x
Next quarter will be a monster for Apple. Non-iPhone growth was 25% in the fall quarter. With the iPhone 12 delayed demand the overall growth will probably be higher.
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@cnbcnow
@cnbcnow
on x
Apple now has $191.83 billion in cash on hand https://www.cnbc.com/...
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@markgurman
Mark Gurman
on x
Apple to Launch Apple One Services Bundles on Friday https://www.bloomberg.com/... https://twitter.com/...
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@benedictevans
Benedict Evans
on x
Apple is now at a run-rate of $20 billion annual spending on R&D.
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@neilcybart
Neil Cybart
on x
A $9B revenue quarter for Mac is remarkable. It's an all-time quarterly record for the product category, exceeding the previous record by 20%+. And that's prior to Macs powered by Apple Silicon.
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@neilcybart
Neil Cybart
on x
4Q20 iPhone results were going to messy with the delayed launch. The unknown was found with how iPhone sales would trend in Sept. with no flagship iPhone launch date. Apple's results suggests iPhone sales slowed materially in Sept. in anticipation of an unannounced iPhone event.
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@neilcybart
Neil Cybart
on x
A general theme from this Apple earnings call: Apple doesn't think things are going to return to normal anytime soon regarding the pandemic. Last quarter, the tone was more along the lines of “hopefully we will return to some level of normalcy in 2021.”
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@neilcybart
Neil Cybart
on x
iPhone demand was up double-digits prior to mid-September. (That's noteworthy.)
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@neilcybart
Neil Cybart
on x
Apple revenue for Greater China was down 29%. Revenue was up in every other reportable segment. (In my earnings preview, I raised the possibility of Apple reporting weak China results. 3rd-party sales data pointed to weak iPhone results in China. One likely culprit: iPhone SE.)
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@bzamayo
Benjamin Mayo
on x
I think Apple is doomed because they can't stream an earnings call webcast without it cutting out constantly.
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@iansherr
Ian Sherr
on x
@tim_cook Cook also praising the Apple Stores, and how they've responded to the crisis. “Their actions didn't just meet the moment, they'll make us a better company going forward.”
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@reneritchie
Rene Ritchie
on x
Apple Reports Fourth Quarter Results “The Company posted record September quarter revenue of $64.7 billion” https://www.apple.com/...
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@jsnell
Jason Snell
on x
And Wearables still throwing off 20+% year-over-year growth for $AAPL, pretty amazing story, even better growth than Services for a while now. https://twitter.com/...
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@neilcybart
Neil Cybart
on x
Tim Cook: 4Q20 results were ahead of our expectations and that includes iPhone. Demand for iPhone started to fall off in mid-September. (Looks like iPhone results really fell off a cliff at the end of the quarter.)
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@neilcybart
Neil Cybart
on x
Tim Cook: Consumers like to pay for hardware on a monthly basis via installment plans. That may look and feel like a subscription to some (although it is not truly a subscription). My reaction: Cook downplaying the idea of Apple moving into hardware as a subscription.
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@rsgnl
Joe Rossignol
on x
AAPL stock being down after today's earnings is pretty surprising to me. If I were an investor, I might see that as an opportunity to buy the stock. I could see Apple having a huge Q1 2021 holiday quarter given it includes all iPhone pre-orders. * Don't listen to me with your $
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@ashleymayer
Ashley Mayer
on x
Apple could give every American a million dollars. https://twitter.com/...
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@benedictevans
Benedict Evans
on x
(Also worth pointing out that quite a lot of the R&D spending behind an Apple product comes from its suppliers - TSMC and Sony, for example. Generalist economists sometimes make the mistake of only looking at one part of a value chain and presuming that's where all the R&D is)
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@jonerlichman
Jon Erlichman
on x
Apple's fourth quarter revenue: 2020: $64.7 billion 2019: $64.0 billion 2018: $62.9 billion 2017: $51.9 billion 2016: $46.8 billion 2015: $51.5 billion 2014: $42.1 billion 2013: $37.4 billion 2012: $35.9 billion 2011: $28.2 billion 2010: $20.3 billion 2009 $12.2 billion
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@neilcybart
Neil Cybart
on x
Tim Cook: iPhone channel inventory changes were wacky in China in 4Q20 which explains some of the weakness. (Yes, channel inventory changes are capable of impacting results.)
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@mattbirchler
Matt Birchler
on x
Is it weird I'm actually really pumped for Apple One? I already pay $15 for Music, $5 for Arcade, $5 for TV (in Feb), and $10 for iCloud. I'll save $5 just by signing up.
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@stevekovach
Steve Kovach
on x
Tim Cook tells @CNBCJosh: “...initial data points are really quite good” on iPhone 12 sales thanks to 5G and carrier promotions https://www.cnbc.com/...
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@asymco
Horace Dediu
on x
Apple Services gross margin is expanding as they are gaining leverage from scale. The margin is about 67%.
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@modestproposal1
Modest Proposal
on x
I still find it wild that Apple did $71B of EBIT in FY 2015 and 66B in FY 2020
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@jsnell
Jason Snell
on x
$AAPL chart notes: The Mac's been around for 36 years and this was its best quarter ever, at $9B in sales. Services hasn't been around nearly as long but managed its own record, $14.5B. https://twitter.com/...
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@chriskeall
Chris Keall
on x
Covid = iPhone delays, booming demand for Macs https://twitter.com/...
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@lgerbeaux
Lucas Gerbeaux
on x
@Techmeme @ldignan Makes sense. Innovation on the iphone front is too small. I still rock an iPhone 10 and it's just too good to justify getting anything else.