Apple Q3 earnings beat estimates despite Covid-19 pandemic

Tech giant’s shares rise more than 6% on stellar performance

Apple's App Store services saw a record demand during the Covid-19 pandemic. AFP 
Apple's App Store services saw a record demand during the Covid-19 pandemic. AFP 

Apple’s net profit increased 12 per cent year-on-year to $11.25 billion (Dh41.28bn) in the company's fiscal 2020 third quarter ended June 27, as earnings across all categories of products and in every geography surged.

The results topped analyst estimates and increased the share price by 6.44 per cent to $409.5 in trading after-hours.

iPhone sales grew 1.6 per cent to $26.42bn in three months from the year earlier period. Strong sales in other parts of the business, such as services and wearables, meant the US technology company posted quarterly revenue of $59.7bn, an increase of 11 per cent from the year-ago quarter.

“Apple’s record June quarter was driven by double-digit growth in both products and services and growth in each of our geographic segments,” Tim Cook, Apple’s chief executive, said.

“In uncertain times, this performance is a testament to the important role our products play in our customers’ lives and to Apple’s relentless innovation,” said Mr Cook.

Apple sold more iPhones, iPads and computers that led to a rise in earnings, according to Ipek Ozkardeskaya, senior analyst at Swissquote Bank.

“App Store services saw a record demand during the pandemic,” she added.

Ending speculations about the possible delay in the launch of the upcoming iPhone 12 series, Apple confirmed it is planning to launch the new iPhones later this year.

“Last year we started selling new iPhones in late September, this year we expect supply to be available a few weeks later,” said Luca Maestri, the company’s chief financial officer, in an earnings call with investors.

Apple, which has regularly launched new models every September, is facing production delays due to supply chain disruptions amid the coronavirus outbreak, Bank of America analysts said earlier this year.

According to Apple, its global sales – outside the US market – accounted for nearly 60 per cent of the company's total third-quarter revenue.

It gained more number of consumers in Europe that has been a stronghold for the company in the past. Its input grew more than 18.9 per cent year-on-year in the third quarter of this year, contributing $14.17bn of total sales.

Despite the US-China trade frictions, Apple managed to earn some new ground in the Greater China market (mainland China, Hong Kong and Taiwan), which contributed $9.32bn, an annual increase of almost 2 per cent.

“Our June quarter performance was strong evidence of Apple’s ability to innovate and execute during challenging times,” said Mr Maestri, adding, “Record business results drove our active installed base of devices to an all-time high in all of our geographic segments and all major product categories.”

The Cupertino-based company has also approved a four-for-one stock split to make the stock more accessible to a broader base of investors.

Apple CEO Tim Cook testifies remotely via videoconference during a U.S. House Judiciary Subcommittee on Antitrust, Commercial and Administrative Law hearing on "Online Platforms and Market Power" in this screengrab made from video as the committee meets on Capitol Hill, in Washington, U.S., July 29, 2020. U.S. House Judiciary Committee via REUTERS
Tim Cook, chief executive of Apple, testifies remotely through videoconference during a US congressional hearing in Washington on Wednesday. Reuters

“Each Apple shareholder of record at the close of business on August 24, will receive three additional shares for every share held … and trading will begin on a split-adjusted basis on August 31,” the company said.

This is Apple's first share split since 2014. Splitting their stocks is a tactic for firms to make it less expensive to buy individual shares, potentially attracting retail investors who make small trades.

Other major tech companies, including Amazon and Facebook, also posted soaring results that topped Wall Street targets, sending their shares up.

Published: July 31, 2020 11:43 AM


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