Apple Q3 2021 Earnings Report: Revenue Soars, iPhone Sales Up 49.8%, Key Insights
Discover how Apple’s Q3 2021 earnings smashed expectations with record revenue growth and booming services income, highlighting a strong market position despite supply challenges.
Apple Inc. (AAPL) delivered an outstanding Q3 2021 financial performance, surpassing analyst predictions across earnings and revenue metrics.
Highlights to Know
- Services revenue outperformed analyst forecasts, driving higher profitability.
- Profit margins from services significantly exceed those from hardware sales.
- iPhone sales surged by 49.8% compared to the same quarter last year.
Source: Analyst consensus data from Visible Alpha
Detailed Financial Analysis of Apple (AAPL) Q3 2021
Apple’s Q3 FY 2021 earnings report revealed earnings per share (EPS) that doubled year-over-year, far exceeding market expectations. Total revenue climbed 36.4% year-over-year, reaching an all-time high for the June quarter. Services revenue also showed robust growth, beating estimates and contributing to the company’s strong profit margins. Following the announcement, Apple’s shares experienced a modest rise in after-hours trading. Over the past 12 months, Apple’s stock generated a total return of 55.9%, outperforming the S&P 500’s 35.9% return.
Note: Apple’s fiscal year ends in late September; this Q3 report corresponds to the calendar year’s second quarter.
Growth in Apple’s Services Segment
Apple’s services revenue increased by 32.9% year-over-year, marking its fastest expansion since Q3 FY 2018. This segment includes digital content platforms such as the App Store, Apple Music, Apple Arcade, Apple News+, and Apple TV+, alongside AppleCare, advertising, cloud services, Apple Card, and Apple Pay. The higher profit margins on services mean that growth in this area disproportionately enhances Apple’s overall profitability compared to hardware sales.
Despite this, hardware sales remain the largest revenue source, with iPhone sales alone accounting for 48.6% of total revenue and growing nearly 50% year-over-year.
Apple did not issue future guidance in this report, continuing its practice since the onset of the COVID-19 pandemic.
Insights from Apple’s Earnings Call
CEO Tim Cook highlighted ongoing supply chain challenges, particularly shortages in silicon chips, which are expected to impact iPhone and iPad sales in the upcoming September quarter. Additionally, Cook noted elevated freight costs affecting operations. The iPhone remains Apple’s primary revenue driver.
Apple’s next earnings release for Q4 FY 2021 is anticipated on October 27, 2021.
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