Apple reports Q3 revenue of $81.4B, up 36% YoY, net income of $21.7B, up from $11.2B YoY, Services sales of $17.4B, up from $13.2B YoY, iPhone sales of $39.6B

Revenue up 36 percent to new June quarter record — Services revenue reaches new all-time high

Apple 2021-07-28

Context & Ripple Effects

Apple’s June-quarter baseline had looked far more constrained in 2019: revenue was nearly flat, iPhone revenue declined, while Services still reached a then-record $11.5 billion. This report pairs a sharp iPhone rebound with Services at $17.4 billion, extending the earlier Services growth trajectory.

The follow-on coverage shows the scale of the comparison Apple created here: a year later, June-quarter revenue was $83 billion but growth had slowed to 2% and net income had fallen. Services nevertheless continued rising, reaching $19.5 billion in the subsequent holiday-quarter report.

First-order effects

Apple reports a substantially larger June-quarter profit pool, with $39.6 billion in iPhone sales and an all-time-high $17.4 billion in Services sales.
Services becomes a more consequential contributor to Apple’s reported growth than it was when its June-quarter record stood at $11.5 billion in 2019.

Second-order effects

Apple’s next June-quarter comparison is set against an exceptional 36% growth base, helping explain why the later $83 billion June quarter registered only 2% growth despite setting a revenue record.
The continued rise from this Services result to $19.5 billion in subsequent Services sales makes Services a steadier reporting lever alongside iPhone’s much larger but more cyclical quarterly revenue contribution.

Third-order effects

Apple’s earnings narrative increasingly rests on expanding revenue from its installed base as well as device cycles, a pattern reflected in the multi-year climb in Services revenue.
If Services continues to grow through periods of slower total revenue growth, Apple’s investor comparisons will place greater weight on revenue per active device rather than iPhone sales alone.

The trend: Apple is shifting toward a revenue-per-active-device model in which Services growth increasingly cushions the volatility of hardware-led comparisons.

Discussion

@asymco Horace Dediu on x
After Apple sucked in all the money in the universe for three quarters in a row, investors remain skeptical.
@joannastern Joanna Stern on x
Basically, the iPhone 12 is the iPhone that won't stop selling. Wonder how much the crazy carrier discounts played into this quarter's success. https://twitter.com/...
@asymco Horace Dediu on x
Apple installed base of active devices set new all-time records in all geographic segments. As a reminder: Apple crossed 1.65 billion devices in the December quarter and over 1 billion iPhones in use.
@neilcybart Neil Cybart on x
Apple reported a 43.3% gross margin. That is very strong for Apple. - 36.0% gross margin for Products (HW). - 69.8% gross margin for Services.
@kirkburgess Kirk Burgess on x
Apple Services GM: 69.8% Apple Products (hardware) GM: 36.0% Overall GM: 43.3% $AAPL
@tim Tim Bradshaw on x
Interesting detail from Apple's 10-Q: it expects “manufacturing purchase obligations” to be $38.2bn over next few months, up 26% on this time last year. Big jump, considering it only rose 2% June 2019-20. Locking in chip supply? or ramping something big and new coming this year? …
@backlon Dieter Bohn on x
Apple had a YoY increase of 36 percent. That is not a small number! https://www.theverge.com/...
@munster_gene Gene Munster on x
Investors will continue to debate next years growth rate and what to pay for it. It will decline from around 30% in 2021. We expect 7-9% vs. the Street at 3%. We believe Apple can maintain that growth until it steps into new product categories like AR, auto and wellness.
@asymco Horace Dediu on x
Apple earnings per share $1.30 vs $1.00 expected
@neilcybart Neil Cybart on x
I'm seeing some “why are Apple shares down on such strong results?” Keep in mind, Apple shares rose 20% in the seven weeks leading up to earnings. I talked about the situation and how the Wall Street expectations game works here: https://www.aboveavalon.com/ ... ($) https://twitt…
@davedelong Dave DeLong on x
More proof that remote *works* https://twitter.com/...
@jordannovet Jordan Novet on x
Microsoft just reported the fastest revenue growth since 2018 https://www.cnbc.com/...
@munster_gene Gene Munster on x
It's all about digital leverage. Apple continually improves its hardware + software + services ecosystem to deliver more value to customers (driving revenue growth) and more value for shareholders (via improving profitability).
@counternotions Kontra on x
Market's response to Apple's meh quarter is fully justified by Apple's noticeable absence in hyper-growth monopolies of the future like crypto, adTech, cloud computing, space tourism, food delivery, AI, social networks, synthetic meat and so on. Figures.
@bullandbaird Michael Antonelli on x
$AAPL wearables / home / accessories did $8.7B in the quarter. More than the Mac and iPad segments. @asymco @gruber
@rustybrick Barry Schwartz on x
Apple crushes it as well. https://twitter.com/...
@rex_woodbury Rex Woodbury on x
In honor of Apple's earnings today, a reminder that if Apple products were standalone companies they'd be bigger than almost every Fortune 500 company https://twitter.com/...
@slightlylate Alex Russell on x
But is it enough to fund development of a decent browser? 🤔🤔🤔 https://twitter.com/...
@kennwhite Kenn White on x
Apple reports record Q3 earnings: $81.4 billion revenue, up 36% YOY. Wall Street consensus estimate was $72.93B. Also, there are highly paid analysts that misproject single companies in their sectors by $9B over 3 months and still have jobs. https://www.apple.com/...
@asymco Horace Dediu on x
Apple net income is up 90%. Last quarter was above 100%. Mr. Market is sad.
@macrumors @macrumors on x
Apple Saw Double Digit Growth in iPhone Upgraders and Switchers in Q3 2021 https://www.macrumors.com/... by @julipuli https://twitter.com/...
@munster_gene Gene Munster on x
Apple crushed the June quarter, again. Exceeding Street revenue expectations by 11%. EPS was 30% higher than the Street. Thats digital leverage.
@snowden Edward Snowden on x
Apple today: “In 3 months, we spent $10 billion on dividends and $66b on stock buybacks.” Sure sounds like a good time to commit $10b to improving iOS security, since companies are selling iPhone hacks for less than your lunch money to actual murderers: https://www.washingtonpost…
@glennf Glenn Fleishman on x
Apple: we made more money than God Herself with nearly everybody working from home who normally works in an office Apple: everybody back to the office! https://www.apple.com/...
@jsnell Jason Snell on x
Here are Apple's record third-quarter financial results in Chart form: https://sixcolors.com/...
@neilcybart Neil Cybart on x
You can tell many Wall Street analysts still aren't quite sure *why* Apple is reporting such strong results.
@epro Emil Protalinski on x
$AAPL Q3 2021: - Revenue up 36% to $81.4 billion - Profit up 93% to $21.7 billion - iPhone up 50% - Mac up 16% - iPad up 12% - Wearables/Home/Accessories sales up 36% - Services up 33%
@munster_gene Gene Munster on x
Putting it together, I believe Apple's best days are still ahead.
@neilcybart Neil Cybart on x
Being off just by $1B for Apple's 3Q21 without any revenue guidance from management. I'll take that any quarter. 😎 👍
@neilcybart Neil Cybart on x
75% of people buying Apple Watch were new to the product. This percentage has been holding steady for a while now.
@mattrosoff Matt Rosoff on x
I don't understand why Apple $AAPL is down. All the numbers look strong. Perhaps investors were expecting even more strong. https://www.cnbc.com/...
@neilcybart Neil Cybart on x
Apple revenue in Greater China up a very strong 58%. That's the strongest revenue growth out of any reporting segment. The Apple ecosystem continues to gain momentum in China.
@cnbcnow @cnbcnow on x
EARNINGS: Apple Q3 EPS $1.30 vs. $1.01 Est.; Q3 Revs. $81.43B vs. $73.30B Est. • $AAPL https://www.cnbc.com/... https://twitter.com/...
@basicappleguy Basic Apple Guy on x
Analysts: The low estimate was $65.68B, while the high end was $77.15B." Apple: Hold my beer... $81.43 billion in revenue, 36% YoY!! 🤑 https://twitter.com/...
@mattrosoff Matt Rosoff on x
Another “wow” from $AAPL. https://twitter.com/...
@lamonicabuzz Paul R. La Monica on x
Apple beat on earnings and sales. By a lot. Record for services revenue. But $AAPL flat after hours so far.
@jonerlichman Jon Erlichman on x
Apple's third quarter revenue 2021: $81.4 billion 2020: $73.8 billion 2019: $53.8 billion 2018: $53.3 billion 2017: $45.4 billion 2016: $42.4 billion 2015: $49.6 billion 2014: $37.4 billion 2013: $35.3 billion 2012: $35.0 billion 2011: $28.6 billion 2010: $15.7 billion
@carolinehydetv Caroline Hyde on x
Apple - firing on all cylinders “new revenue records in each of our geographic segments, double-digit growth in each of our product categories, and a new all-time high for our installed base of active devices,” said Luca Maestri, Apple's CFO.
@neilcybart Neil Cybart on x
Apple saw very strong revenue growth in emerging markets especially India, Latin America, and Vietnam.
@stevekovach Steve Kovach on x
Here's what's sending $AAPL down 2%. Supply constraints expected to impact iPhones and iPads this quarter. https://www.cnbc.com/...
@barnejek @barnejek on x
Why are there Apple analysts? Largest company in the world and they destroy the consensus... Every. Single. Quarter. https://www.cnbc.com/...
@greengart Avi Greengart on x
AirPods and Apple Watches are a HUGE business. How big? Bigger than iPad. Bigger than Mac. https://twitter.com/...
@caro_milanesi Carolina Milanesi on x
The last four quarters have been the best ever for Mac thanks to the M1 - clearly why Windows OEMs are not underestimating the appeal #AAPL
@neilcybart Neil Cybart on x
The past four quarters for the Mac have been the best quarters ever for the product category. The Mac category is well-positioned to report some big growth numbers over the next few years.
@neilcybart Neil Cybart on x
Remember when some said Apple was late on 5G? https://twitter.com/...
@srussolillo Steven Russolillo on x
The chip shortage is about to hit the iPhone. “We're going to take it sort of one quarter at a time and, as you would guess, we'll do everything we can to mitigate whatever set of circumstances we're dealt.” — @tim_cook https://www.wsj.com/...
@maxwinebach Max Weinbach on x
Seems like Apple is selling lots of iPhone 12s But I still find it funny that doing BOGO deals would even increase sales figures on the iPhone 12 mini at some stores.
@maxwinebach Max Weinbach on x
I'm willing to bet it's because Apple effectively owns the 5nm TSMC node and nobody else has even bothered developing for it. https://twitter.com/...
@neilcybart Neil Cybart on x
Tim Cook (for the second time): We are in the very early innings of 5G. (Said another way, iPhone sales strength isn't just being driven by 5G due to the lack of 5G availability in so many regions.)
@tomwarren Tom Warren on x
It feels like the global chip shortage is starting to hit Big Tech more. Microsoft seeing the impact on Surface / Windows this Q, and now Apple is warning of impacts to iPhone / iPad for September Q https://twitter.com/...
@joshuaswingle Joshua Swingle on x
“The latest nodes, which we use in in several of our products, have not been as much of an issue. But the legacy nodes are where those supply constraints have done on silicon.” In other words, supply shortages are affecting older A-series chips. Not the latest ones. $AAPL
@neilcybart Neil Cybart on x
Apple is going to report record iPhone unit sales in FY2021. By my calculations, which could change slightly, Apple can see a 20% decline in iPhone unit sales growth over the next three months and still report an iPhone record.

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