Apple profit nearly doubles on record iPhone sales

Cupertino-based company delivered $39.57bn in iPhone revenue, about $5.6bn more than analysts’ predictions

Apple's revenue surged 36 per cent to $81.4 billion in the third quarter. Reuters

Apple’s net profit nearly doubled in its fiscal 2021 third quarter as the company earned record revenue in the June quarter.

The Cupertino-based company’s net profit in the period that ended on June 26, surged an annual 93.2 per cent to more than $21.7 billion. However, it was $1.9bn less than the quarter that ended on March 27.

Revenue surged 36 per cent on an annual basis to $81.4bn during the quarter, significantly exceeding analysts’ estimates of $73.3bn.

This was a record for June quarter sales for the iPhone maker but still $8.2bn less than the March quarter.

“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,” Tim Cook, Apple’s chief executive, said.

Mr Cook said the company saw a very strong double-digit increases in both “upgraders and switchers” during the quarter.

“We are 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,” Mr Cook added.

Earnings across all categories of products reported double-digit growth.

iPhone sales account for about 48 per cent of the company's revenue. Smartphone sales surged nearly 50 per cent to $39.5bn in the quarter from the year-earlier period, about $5.6bn more than analysts’ predictions.

The company’s total revenue from services grew about 33 per cent annually to $17.4bn, while revenue from wearables, home and accessories products increased almost 36 per cent yearly to more than $8.7bn.

Revenue from iPads and computers surged 14 per cent to $15.6bn.

Apple’s sales in the Americas region accounted for more than 44 per cent of the company's total third-quarter revenue and it earned $35.8bn in the region.

It was followed by Europe and the Greater China market (China, Hong Kong and Taiwan), which added $18.9bn and $14.7bn, respectively, to the company’s revenue.

Despite US-China trade issues, Apple managed to gain significant new ground in the Greater China market that saw an annual increase of almost 58 per cent.

Japan and rest of the Asia Pacific market added $11.8bn to Apple’s third-quarter sales, an annual increase of 29 per cent.

Apple generated $21bn of operating cash flow and returned about $29bn to its shareholders during the quarter.

“We continued to make significant investments across our business to support our long-term growth plans,” said Luca Maestri, Apple’s chief financial officer.

Traditionally, Apple’s June quarter is its slowest period, but this year it gained momentum thanks to remote schooling and working trends that added to the sales of its premium products.

Apple also struggled with Covid-induced supply chain disruptions, Mr Cook said.

“The shortage primarily affected Mac and iPad,” he told CNBC. “We had predicted the shortages to total $3bn to $4bn … but we were actually able to mitigate some of that and we came in at the lower than the low-end part of that range.”

In the April-June period, Apple spent $5.7bn on research and development, more than 7 per cent of its total revenue. It was up 20 per cent compared to the same period of the year prior.

Apple did not issue official guidance about future revenue and profits. The company stopped offering guidance at the start of the Covid-19 pandemic, due to uncertainty in business.

However, Mr Maestri said that the company expected double-digit annual growth in the current quarter.

Apple is expected to deliver 231 million iPhones in 2021 and 240 million next year, compared with , which 206 million units last year, investment bank Haitong International Securities said.

Global smartphone shipments are forecast to reach 1.38 billion units this year, up 7.7 per cent over 2020, the International Data Corporation reported. This trend is expected to continue into 2022, when year-on-year growth will be 3.8 per cent and shipments will total 1.43bn.