Apple reports 36% increase in third quarter revenue to $81.4bn

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Apple has today announced financial results for its fiscal 2021 third quarter ended June 26, 2021. The company posted a June quarter record revenue of $81.4bn, up 36% year-over-year.

“This quarter, our teams built on a period of unmatched innovation by sharing powerful new products with our users, at a time when using technology to connect people everywhere has never been more important,” said Tim Cook, Apple’s CEO. “We’re continuing to press forward in our work to infuse everything we make with the values that define us — by inspiring a new generation of developers to learn to code, moving closer to our 2030 environment goal, and engaging in the urgent work of building a more equitable future.”

“Our record June quarter operating performance included 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. “We generated $21bn of operating cash flow, returned nearly $29bn to our shareholders during the quarter, and continued to make significant investments across our business to support our long-term growth plans.”

Within product sales, iPhone sales rose 49.8% to $39.6bn, Mac and iPad sales were up 16.3% and 11.9% to $8.2bn and $7.4bn. Wearables, Home and Accessories also grew, rising from $6.5bn to $8.8bn. Services was the best performing division, with net sales rising 32.9% to $17.5bn.

The Americas is still the group’s biggest market, making up 44.0% of net sales at $35.9bn, up from $27.0bn last year. Greater China saw the biggest improvement overall, with net sales of $14.8bn up over 58%.

The higher sales meant that despite a 24.8% increase in cost of sales, a 20.2% increase in Research & Development spending, and other increased costs, operating profits jumped to $24.1bn from $13.1bn a year ago.

The higher profits in turn fed into free cash flow of $76.0bn, up from $54.6bn this time last year. Net debt was $60.1bn at the end of June, compared to $21.5bn at the end of September.

A quarterly dividend of $0.22 per share was announced.

The shares were broadly flat in after-hours trading.

Industry reaction

Sophie Lund-Yates, Senior Equity Analyst at Hargreaves Lansdown, spoke to Business Leader about the results.

The problem with being the best is you risk becoming a victim of your own success. That’s what we’ve seen from the reaction to Apple’s results, where despite an exceptional performance, the market’s response has been somewhat muted. The growth might be slower than last quarter, but you only have to look at the figures to appreciate Apple’s hardly in any trouble, quarterly revenues of over $81bn would put most businesses on the planet to shame. Almost any way you frame this picture, it looks good. That just goes to prove that heavy is the head that wears the crown.

Crucially, iPhone sales have steamed ahead again. These famous pieces of kit are responsible for a huge chunk of total revenue, which acts as a reminder that Apple is a hardware business, despite its foray into the world of Services. Services has made real progress this quarter, but Apple’s future still relies on shifting its gadgets and gizmos ahead of its software. To that end, the pandemic has been a bit of a hero. New working from home cultures have been cemented, meaning people were kitting themselves out with computers and gadgets. This should be a long-term trend that benefits Apple long into the future.

Apple is a resilient creature, its unbendingly loyal customer base means that there’s an element of revenue visibility other businesses simply don’t have. The powerful brand should also help it stand strong in the face of possible rising inflation. Most big-ticket items are quickly rubbed off shopping lists as money loses its value, but there’s an army of Apple fans who are likely to keep the next iPhone clearly in their sight. Apple’s huge success also means concerns over potential supply constraints don’t pack as much of a punch as they could. The group’s amassed enormous resources, meaning if things do get tough, it can wait it out. If the last eighteen months have taught us anything, it’s that Apple can hold its own amid disruption.

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