Apple Inc (Nasdaq: AAPL) reported better-than-anticipated fiscal 2022 second-quarter results as revenues grew by 9% on a y-o-y basis. The results have only temporarily erased investors’ worries about the crumbling macroeconomic situation impacting demand for premium electronic gadgets. Apple has issued a warning about lingering supply chain issues and the negative impact of COVID-19 on demand for its products in China. Overall, the stock ended Friday’s trading session at $157.65, down $5.99 or 3.66% from the prior close.
Cupertino, California-based Apple reported fiscal 2022 second-quarter revenues of $97.278 billion, compared with $89.584 billion in the comparable quarter last year.
For the quarter ended March 26, 2022, net income rose to $25.010 billion, or $1.52 per share, an increase from $23.630 billion, or $1.40 a share, in the quarter ended March 27, 2021.
Analysts surveyed by Refinitiv had anticipated the company to report earnings of 1.43 per share on revenues of $93.89 billion.
Commenting on the results, Tim Cook, Apple’s CEO, said, “This quarter’s record results are a testament to Apple’s relentless focus on innovation and our ability to create the best products and services in the world.”
Segment-wise,
- Products revenues rose by 6.50% y-o-y to $77.457 billion. Specifically, iPhone revenues increased 5.50% y-o-y to $50.57 billion in the March 2022 quarter, beating the consensus estimate of $47.88 billion and indicating that there is no sluggishness in the demand for iPhone 13.
- Services revenues, which include licensing fees, subscriptions, and extended warranties, were $19.821 billion, up 17.30% from last year. The reported figure surpassed the $19.72 billion anticipated by the market. During the last two years, services revenues used to eclipse Wall Street forecasts by a margin of 3% to more than 8%. However, the beat percentage was only 0.51% in March 2022 quarter.
Other products’ revenue jumped 12.37% to $8.81 billion, but missed the $9.05 billion anticipated by Refinitiv analysts. Mac revenue was $10.44 billion, an increase of 14.73% from last year. The reported figure was higher than the $9.25 billion forecast by economists. In spite of introducing new models containing the M1 chip, iPad revenue fell by 1.92% y-o-y to $7.65 billion, versus the $7.14 billion forecast by Refinitiv analysts. The company’s CEO, Tim Cook, stated that the iPad business faced considerable supply issues during the second quarter.
Apple reported a slight increase in the gross margin to 43.70% in 2Q 2022, from 43.10% in the similar period last year.
It came as no surprise that the Americas, which recorded a growth of 20% to $50.57 billion, once again clinched the credit of being the fastest-growing region. This was followed by a slower growth rate of 3.47% to $18.34 billion in Greater China, including Hong Kong and Taiwan.
Apple CFO Luca Maestri cautioned multiple issues faced by the company, including supply chain hurdles that could affect revenues by $4 billion to $8 billion. The company also highlighted the drop in demand for iPhones in China due to stringent lockdown enforced to contain COVID-19 infections.
Apple did not issue any guidance for the June quarter. Notably, Apple has not issued any revenue outlook since February 2020, highlighting global uncertainty linked to the pandemic.
The company’s Board has authorized a $90 billion worth share repurchase program. Last year, Apple spent $88.30 billion on share repurchases. Additionally, the company lifted its dividend by 5% to $0.23 per share.
The upbeat quarterly results coupled with caution over logistics issues and the Chinese demand slowdown are expected to keep the stock range-bound in the short term.
The historical price chart indicates that the stock of Apple is declining after facing resistance at 175 levels. The next support is anticipated only near 140. Additionally, the stochastics indicator has formed a lower high pattern. Therefore, we are anticipating the stock to remain in a downtrend in the short term.
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