Apple Q1 profit surges 29% as iPhone and iPad sales soar

The Cupertino-based company crossed $100bn in quarterly revenue for first time in its history

Apple's revenue during the holiday quarter increased 21.4% to $111.4 billion. AP

Apple’s first quarter net profit surged a record 29 per cent year-on-year to $28.8 billion, as earnings across all product categories and every geography soared.

The iPhone manufacturer beat analysts’ estimates in its first fiscal quarter of 2021 that ended on December 26, by posting the biggest quarterly profit with sales during the period increasing 21.4 per cent to $111.4bn. This was the first time the company crossed $100bn in quarterly revenue.

Sales of iPhone grew 17.2 per cent year-on-year to $65.6bn in the quarter from the year earlier period. That surpassed the company's 2017 record when it sold $61bn worth of iPhones in the first quarter.

"It is not far from any of our minds that this result caps off the most challenging year any of us can remember," Tim Cook, Apple’s chief executive, said.

"These results show the central role that our products played in helping our users respond to these challenges," he added.

Apple crossed 1.65 billion active devices globally during the quarter. iPhones accounted for over 1 billion of those devices.

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"We are gratified by the enthusiastic customer response to the unmatched line of cutting-edge products that we delivered across a historic holiday season," said Mr Cook.

"This quarter for Apple wouldn’t have been possible without the tireless and innovative work of every Apple team member worldwide."

Despite record earnings, Apple's stock closed nearly 1 per cent down at $142.06 per share on Wednesday. It fell another 2 per cent in after-hours trading to $137.75 a share.

iPhones accounted for 60 per cent of the company’s total sales during the quarter. The company’s total revenue from services grew nearly 24 per cent annually to $15.76bn, while revenue from wearables, home and accessories products increased almost 30 per cent yearly to more than $12.97bn.

Revenue from iPads and computers surged 30.24 per cent to $17.11bn.

Customers wait in line outside an Apple Store to pick up the new 5G-enabled iPhone 12 in Brooklyn. Reuters

"Our December quarter business performance was fuelled by double-digit growth in each product category, which drove all-time revenue records in each of our geographic segments and an all-time high for our installed base of active devices," Luca Maestri, Apple’s chief financial officer, said.

"These results helped us generate record operating cash flow of $38.8bn," he added.

The company’s global sales – outside the US market – accounted for nearly 64 per cent of the company's total first-quarter revenue.

Despite the US-China trade war, the company gained massive ground in the Greater China market (mainland China, Hong Kong and Taiwan). The region's sales grew almost 57 per cent year-on-year in the first quarter of this year, contributing $21.31bn of total sales.

Apple returned more than $30bn to shareholders during the quarter, as it maintained its target of "reaching a net cash neutral position over time", said Ms Maestri.

Apple, whose shares have jumped more than 75 per cent over the last 12 months and by nearly 10 per cent since the start of this year, could be worth $200 per share in the next couple of years, according to US-based Loup Ventures.

Apple plans to produce up to 96 million iPhones in the first half of 2021, a 30 per cent year-on-year increase, after demand for its first 5G handsets surged amid the Covid-19 pandemic.

That, along with reports that Apple is planning to produce its first electric car in 2024 and is in early-stage talks with Hyundai, has propelled the company's shares.

In October, Apple entered the race of 5G smartphones with the launch of iPhone 12 series. The new phone line was delayed by almost a month due to the coronavirus-induced market disruptions.

Within two weeks of the launch, the iPhone 12 became the world’s best-selling 5G smartphone, surpassing Samsung and Huawei that launched rival models in 2019, according to industry data.

Apple produced nearly 199 million handsets last year, grabbing a market share of 16 per cent, according to Taipei-based market intelligence firm TrendForce.

South Korean manufacturer Samsung led the industry with almost 21 per cent market share, producing 263 million handsets. Chinese brand Huawei, with 170 million handsets, trailed at third spot.