Apple (AAPL) Easily Beats Q1 Earnings on Resilient iPhone Demand

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Ollie Martin
Updated: 29 Apr 2022

Key points:

  • Apple beat on Q1 earnings expectations, with revenue growth remaining strong
  • Shares gained around 3% before reversing on a warning about a potential supply-chain sales hit
  • Resilient demand for the iPhone continues, showing consumers are willing to pay more

Tech giant Apple (NASDAQ: AAPL) unsurprisingly delivered on its Q1 earnings after the closing bell on Thursday, with robust demand acting as a consistent catalyst for quarterly growth. At a time when tech stocks are associated with bearish sentiment, it's refreshing to see consumer demand outstrip lackluster fiscal confidence. Revenue grew nearly 9% year over year, waving off investor worries surrounding fears of a deteriorating macroeconomic environment. Clearly, everyone still wants the latest iPhone.

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Initially shares gained as much as 3.5%, but sharply reversed on an update from CFO Luca Maestri warning of future challenges, namely continued supply constraints related to Covid-19 – estimating a potential sales hit of between $4-8B. Tim Cook, Apple CEO, made a particular point in outlining that despite the company’s steadfast positioning, the tech giant is not immune to supply chain challenges. 

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The company reported EPS of $1.52, topping analyst expectations of $1.43. Revenue came in strong at $97.28B against $93.89 expected, up nearly 9% year over year. iPhone, Mac, Services and iPad revenue all beat quarterly expectations, despite iPad sales dwindling around 2% from last year. Apple continued by holding off on a Q2 forecast, citing continued uncertainty.

Furthermore, the company announced that its board of directors has authorized $90B in share buybacks, adding to last year's buyback spending of $88.3B. This was followed by an 5% increase in dividend to around 23% per share. 

Overall, it was a solid earnings release for Apple at a time when macro headwinds are wreaking havoc on normal growth metrics. The stand-out driver is the robust sales of the iPhone, suggesting consumers are still happy to pay more for the latest models. Moving forward, it will be interesting to see how the supply chain constraints mentioned by Luca Maestri will play into the company’s resilient revenue growth. 

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