Apple Q4 - iPad, Mac, & Services Soar

Apple released its quarterly numbers showing record sales for iPads, Macs, and Services thanks behavioural changes from the pandemic. The iPhone 12 generation was released a month later than usual due to production and logistical challenges, also because of the pandemic, so iPhone sales fell due to the delay. Worry not! iPhone 12 sales and pre-orders are doing very well.

Revenues came in at $64.7 billion, up 1% and profits of $12.7 billion were achieved, both beating the street's expectations thanks to big demand for iPads, Macs, and Services. As noted above, iPhones revenues were down 21%, but revenues excluding the iPhone sales were up 25% year-on-year. Astounding!

The new iPhone 12 generation has 5G connectivity and we believe that this will be the catalyst for a massive surge in the holiday quarter numbers, hopefully beating the previous record of 231 million iPhones sold in 2015. There's currently over 900 million active iPhones on the Apple ecosystem, a number that could easily cross a billion soon.

Services, Macs and iPads had a record quarter with $14.5 billion, $9 billion and $6.8 billion respectively. Just as a reminder, Apple Services includes things like Apple Music, iCloud, AppleCare, the AppStore and now more recently, will feature the Apple One subscription bundle and the Fitness+ service which all debuted this past Friday.

Apple's fastest growing segment was the Wearables, Home and Other Products category, which brought in revenues of $7.9 billion - products like AirPods, HomePod and the Apple Watch fall under this category. This pandemic has shown how resilient Apple is as a luxury company, and shows how people still prefer strong, durable brands over the alternative.

Apple used to be a $2 trillion company, but with the recent market gyrations and panic about the second wave of Covid-19 it has gone to $1.89 trillion. The shares are up 45% for the year and we remain buyers of Apple shares at these levels. We expect iPhone sales to bounce back to double-digit growth driven mostly by the Chinese market.