One Number Explains Why This Was Apple’s Most Impressive Quarter Ever | Livingsights

One Number Explains Why This Was Apple’s Most Impressive Quarter Ever

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Written by Suraj Jaiswal

It’s all about selling more of the right stuff.

Apple announced its quarterly results on Wednesday, and once again, the bottom line is that the world’s most valuable company made a lot of money. Surely that comes as no surprise to anyone. That’s the very reason it’s the most valuable company on earth.

What might come as a surprise is that this quarter was quite possibly Apple’s most impressive ever. In terms of pure numbers, the company posted its third-highest total revenue, behind only the last two holiday quarters. That’s saying something considering last quarter, Apple set a record for the most profit ever for a public company. 

I listened to the company’s earnings call, and there were plenty of interesting numbers thrown around. I’m going to go through a few of them, but honestly, there’s only one that matters–42.5 percent. That was Apple’s overall profit margin on everything it sold in the last quarter.

Here’s why it’s such a big deal:

The Mac just had its biggest quarter ever

Apple sold more Macs in the last quarter than has ever sold in a three-month period. That’s a pretty big deal considering that this isn’t typically the quarter you expect people to rush out and buy new computers. Of course, there’s a good reason–two actually. 

First, people are buying new laptops as they continue to adjust to working from home, or–in many cases–adapting to some form of hybrid work. Second, Apple rolled out a new version of its most popular Mac, the MacBook Air, which now features the M1 processor

The M1 is a big deal. Considering that’s the fastest and most efficient chip you can get in an ultraportable laptop, it’s really not that much of a surprise that Apple sold a lot of them. The fact that you can buy one in Apple’s entry-level laptop for less than a thousand dollars, without compromising on performance or battery life is quite a feat. 

Apple sold a lot of iPhones.

The only two segments of Apple’s business that didn’t set all-time records were iPhones and wearables. Still, Apple sold more iPhones than it ever has in a quarter that wasn’t a holiday. Part of that is probably due to the fact that the iPhone 12 series is the first to include 5G. It’s also partly due to the fact that Apple announced the iPhone a month later than usual.

On the company’s call with investors, Apple’s CFO, Luca Maestri pointed out that “due to the later launch timing and strong demand, iPhone only achieved supply-demand balance during the March quarter.” That’s a fancy way of saying that Apple was selling iPhones faster than they could make them. 

Services continue to grow in a big way.

Apple also had a record quarter for its services business, earning $17 billion compared with just over $13 billion a year ago. This quarter beat out even the holiday quarter when Apple earned just under $16 billion. 

Apple’s services segment includes the App Store, Apple Music, Apple TV+, Apple Fitness+, and Apple News+, as well as AppleCare. While Apple doesn’t break out specifics for each service, the reality is that the company’s focus on growing this part of its business is paying off in a big way. Services are almost always more profitable than products because they are far less expensive to sell, and that’s a big deal. 

Apple sold more of the right products.

This, it turns out, has a lot to do with that 42.5 percent margin. It means Apple sold more of the products (and services) that make it the most money. As Maestri explained Apple had a “really strong mix on iPhone but in general across all product categories.”

Even more impressive, Apple typically posts a margin somewhere around 37 to 39 percent. Last quarter, when it reported the highest profit ever, it was 39.8 percent. Maestri said he expects “slightly lower levels for June.” I could be wrong, but I interpret that to mean that the trend line for Apple is likely to continue in the same direction–selling more of its most profitable products. That’s impressive. 

News Source: Inc.