Apple delivered very atypical results for the fourth fiscal quarter. With challenges in the supply chain at the center of attention, the Cupertino-based company has failed to reach a consensus of expectations in terms of both revenue and EPS. The last time Apple lost revenue was in March 2017; and the last time that the company did not beat EPS in December 2018.
Such an unusual quarter pushed Apple shares (AAPL) – Download Apple Inc. report (AAPL). lower in after-hours trading, fell as much as 5% and calmed down to around -3.7%. Apple Maven cites two key conclusions from Apple’s fourth-quarter earnings day.
(Read more from Wall Street Memes: Live Blog: Follow Apple’s fiscal earnings in the fourth quarter)
1. All about the supply chain
The supply chain was the focus of Apple’s earnings day in the fourth quarter. The company faced greater supply constraints than expected, which are estimated to have reduced revenues by $ 6 billion. Revenue from the iPhone rose “only” 47% compared to 57% of the consensus. But the services segment, unaffected by supply problems, grew by almost 26% over the previous year, better than expected.
The chart below shows the growth compared to the same period last year by segments.
Figure 2: Apple’s FQ4 2021 revenue growth by major segments.
DM Martins Research
As it turned out, Apple is not immune to the global supply chain crisis. It may have become too pleasant for some to think that Apple has established partnerships and purchasing power to solve problems unharmed. This is probably largely true, but it doesn’t mean that Apple won’t occasionally disappoint by selling its products.
As for revenue guidelines, the company made guiding comments suggesting that the impact of supply constraints should be greater than $ 6 billion in the holiday quarter. Revenues will grow in every segment except the iPad.
2. Otherwise, it’s not a terrible quarter
Despite the atypical revenue shortfall, the quarter was not too bad for the Cupertino-based company. The management team talked a lot about the “enthusiastic demand” for products and services. All major segments recorded growth over the previous year – all of them, the former Mac, double-digit.
Greater China was at its peak as revenues rose 83% and boosted a strong recovery from the 2015-2019 decline. The region seems to be coming back to life in the last few quarters, and the remaining twelve-month growth is a staggering 70%. See the chart below:
Figure 3: Apple’s FQ4 2021 revenue growth by geo segment.
DM Martins Research
Looking elsewhere around P&L, gross margin reached 42.2%. This is significantly better compared to the comparable quarter last year. Possible drivers include a larger combination of higher-end devices and a positive combination of services. The reported high margin can be seen as good news in an environment of heavy supply chain dynamics.
Also, it is impressive that operating expenses increased by only 15% when revenues increased by 29%. This is an operating lever in the game and AAPL investors should feel good about it.
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(Disclaimer: This is not investment advice. The author may have one or more shares mentioned in this report. Also, the article may contain affiliate links. These partnerships do not affect editorial content. Thanks to The Apple Maven support)
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