Supply Chain Impact, Forex Headwinds, Margin Outlook And More: 6 Key Takeaways From Apple's Earnings Call

Apple, Inc. AAPL on Thursday reported better-than-expected quarterly results, hiked its dividend, and announced a $90 billion buyback. Ordinarily, this would have been a perfect trigger for a rally, but Apple's stock was languishing following the earnings report.

Here are six key takeaways from the company's earnings call that may have implications for its growth in the future:

Softness In iPad Sales: Among Apple's product categories, the iPad was the only one to see a year-over-year revenue decline. Apple's chief financial officer Luca Maestri said the device remained significantly supply-constrained during the quarter.

Margin Hit: Apple clarified that a seasonal loss of leverage and unfavorable forex impact hurt margin. The gross margin contracted 10 basis points from the previous quarter to 43.7%. The company expects a further contraction ahead and guided June-quarter gross margin to 42%-43%.

Mac Shines: Mac revenue of $10.4 billion represented a March quarter record and marked a 15% year-over-year growth. The upside was due to the strong demand for the M1-powered MacBook Pro, the company said. About half of Mac customers in the period were new to the product.

Related Link: Why Apple Has 'Little To Lose, A Lot To Gain' By Expanding Its Services To Android Devices 

Services Outperformance: Record revenues for the services business reflected a growing installed base and increased customer engagement. Paid subscriptions across various services rose to 825 million, the company said.

Impact From Supply Constraints: COVID disruptions in China and industry-wide chip shortages will have a $4 billion to $8 billion impact on June quarter results, Maestri said. While affecting the company's ability to meet demand, it is also hurting customer demand. The impact will be seen across product categories.

Apple sees forex shaving off 300 basis points from the year-over-year growth.

On a positive note, CEO Tim Cook said most of all the affected final assembly factories in Shanghai have now restarted.

Services Growth To Decelerate: Apple expects its services segment to continue to grow by double-digits but sees a deceleration in growth.

Apple stock closed shed 2.24% to $159.98 in after-hours trading on Thursday, according to BenzingaPro data.

Related Link: Camera Upgrades, Screen Size Bump, Possible Satellite Connectivity: What This Apple Analyst Sees In iPhone 14 Lineup


Posted In: iPadiPhoneLuca MaestriMacBookTim CookEarningsM&ANewsGuidanceTech