Apple’s earnings crushed expectations. Why is the stock going down?

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Apple has set revenue records in every geographic region where it is active. Michael M. Santiago / Getty Images

Apple reported explosive results for its third fiscal quarter ending June 30, but the stock fell in late trading.

In premarket trading, Apple shares fell 1% to $145.28.

For the quarter, Apple (stock ticker: AAPL) reported revenue of $81.4 billion, up 36% from a year earlier, an increase driven especially by continued strong iPhone demand. The figure was about $10 billion more than Wall Street’s forecast of $72.9 billion.

Earnings came in at $1.30 per share, easily exceeding the one dollar that analysts had expected.

Revenue from iPhone sales came in at $39.6 billion, an increase of nearly 50%, well above street expectations of $34.2 billion.

In fact, the company has exceeded estimates in every product category. Mac revenue was $8.2 billion, up 16%, while iPad revenue was up 12%, to $7.4 billion. Revenue from wearables, home, and accessories was $8.8 billion, up 36%. Services revenue was $17.5 billion, up 33%. The company said it ended the quarter with more than 700 million paid subscribers across its portfolio of services, up more than 150 million from last year.

Revenues in the Americas amounted to $35.9 billion, up 33%, while revenue in Europe was $18.9 billion, up 34%, and revenue in Greater China was $14.8 billion, up 58%. Revenue in Japan was $5.5 billion, up 30%, and the rest of Asia was $5.4 billion, up 28%.

“This quarter, our teams built on a period of unparalleled innovation by sharing powerful new products with our users, at a time when using technology to connect people everywhere has never been more important,” Apple CEO Tim Cook said in a statement. since when”. “We continue to forge ahead with our work to infuse everything we make with the values ​​that define us – by inspiring a new generation of developers to learn to code, move closer to our 2030 environmental goal, and engage in the urgent work of building a more equitable future.”

Chief Financial Officer Luca Maestri said in a statement that the company posted revenue records in every geographic region, with double-digit growth in each product category. He said the company returned nearly $29 billion to shareholders this quarter in dividends and stock buybacks.

On a call with analysts, Maestri said the company would once again not provide detailed financial guidance given the ongoing uncertainty related to the pandemic. He said the company sees strong revenue growth in the September quarter, but at a lower level than in June, for three reasons.

The first, he said, foreign exchange issuance would be 3 percentage points less favorable. Second, he said services growth will be lower, after the June quarter benefited from an easy comparison to last year’s quarter, when ad revenue and Apple Care revenue were affected by the pandemic. And third, he said supply restrictions will be higher than they were in the June quarter, with a particular impact on iPhone and iPad sales.

The company had warned a quarter of a year ago that supply restrictions would reduce sales by $3 billion to $4 billion, but Maestri said the company was able to make adjustments and bring the impact down just below the lower end of that range.

Maestri noted that the company ended the quarter with net cash of $72 billion. The company repurchased $17.5 billion of stock in open market purchases this quarter.

Write to Eric J. Savitz at [email protected]

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