✓ EPS 1.68 vs 1.42 expected | ⬆️ 35%
✓ Revenue $111.44B vs $103.27B | ⬆️ 21% Y/Y

𝗥𝗲𝘃𝗲𝗻𝘂𝗲 𝗕𝗿𝗲𝗮𝗸𝗱𝗼𝘄𝗻

All-time record revenue with double-digit growth in each product category!
where international sales accounted for 64% of the revenue

Revenue per category
☑️ iPhone $65.6B vs $59.86B consensus ⬆️ 17%
☑️ Mac $8.67B vs $8.68B consensus ⬆️ 21%
☑️ iPad $8.44 vs $7.61B consensus ⬆️ 41%
☑️ Wearables, Homes and Accessories $12.97B vs $11.91B consensus ⬆️ 30%
☑️ Services $15.76B vs 14.85B consensus

Apple keeps showing amazing gross margins
Product Gross Margin 35,1%
Services Gross Margin 68,4%

𝗔𝗽𝗽𝗹𝗲 𝗦𝗶𝗹𝗶𝗰𝗼𝗻

The M1 chip is groundbreaking. ARM has been trying to push its way to the Laptop world for years now, and Apple finally did it, ditching Intel in the way.
Me and my wife both own MacBook Air and MacBook Pro, and these are wonderful machines, and still, the 1st iteration, can’t wait for the next one!

Microsoft understands the power of the custom M1 chips and reportedly is also designing its own ARM-based processors for Azure servers and Surface PCs.

Although I’m a big fan of Ryzen, having my Gaming Windows Desktop and been very bullish over the years on Nvidia and AMD, and I’m paying close attention to these developments, as they might dictate where the chip market goes next.

𝗪𝗲𝗮𝗿𝗮𝗯𝗹𝗲𝘀?

If you’ve been living under a rock, the Wearables Apple business by itself is Fortune 120 company that keeps growing with Apple Watch, AirPods, and HomePods, and according to Tim – 𝘞𝘦 𝘢𝘳𝘦 𝘪𝘯 𝘵𝘩𝘦 𝘦𝘢𝘳𝘭𝘺 𝘴𝘵𝘢𝘨𝘦𝘴 𝘰𝘧 𝘵𝘩𝘰𝘴𝘦 𝘱𝘳𝘰𝘥𝘶𝘤𝘵𝘴.

The global focus on health, mindfulness, and fitness keeps pushing sales of both Apple Watch and services together, hand in hand.

𝟭.𝟲𝟱+ 𝗕𝗶𝗹𝗹𝗶𝗼𝗻 𝗔𝗰𝘁𝗶𝘃𝗲 𝗗𝗲𝘃𝗶𝗰𝗲𝘀 𝗮𝗻𝗱 𝗦𝗲𝗿𝘃𝗶𝗰𝗲𝘀

This pushed the number of active devices over 1.65B, 1B of those alone iPhones. This is a crucial metric as Apple continues to set itself as a Service company.

The company started shifting to services some years ago, and growing its user base is the most important factor that will propel services.
I’ve been working in e-commerce for a while now, and I can guarantee that Apple users love to spend money on their phones, much more when compared to Android users.

The company added 35M subscribers during December, 140 during 2020, totaling more than 620M paid subscriptions (just for fun, Netflix topped 195 during 2020Q3).

In the United States, 90% of stores are accepting Apple Pay. Even in Portugal, most banks already integrate with Apple Pay and I use this service on a daily basis for touchless payments experience.

𝗖𝗮𝘀𝗵 𝗮𝗻𝗱 𝘀𝗵𝗮𝗿𝗲𝗵𝗼𝗹𝗱𝗲𝗿𝘀

𝘛𝘩𝘦𝘴𝘦 𝘳𝘦𝘴𝘶𝘭𝘵𝘴 𝘩𝘦𝘭𝘱𝘦𝘥 𝘶𝘴 𝘨𝘦𝘯𝘦𝘳𝘢𝘵𝘦 𝘳𝘦𝘤𝘰𝘳𝘥 𝘰𝘱𝘦𝘳𝘢𝘵𝘪𝘯𝘨 𝘤𝘢𝘴𝘩 𝘧𝘭𝘰𝘸 𝘰𝘧 $38.8 𝘣𝘪𝘭𝘭𝘪𝘰𝘯. 𝘞𝘦 𝘢𝘭𝘴𝘰 𝘳𝘦𝘵𝘶𝘳𝘯𝘦𝘥 𝘰𝘷𝘦𝘳 $30 𝘣𝘪𝘭𝘭𝘪𝘰𝘯 𝘵𝘰 𝘴𝘩𝘢𝘳𝘦𝘩𝘰𝘭𝘥𝘦𝘳𝘴 𝘥𝘶𝘳𝘪𝘯𝘨 𝘵𝘩𝘦 𝘲𝘶𝘢𝘳𝘵𝘦𝘳 𝘢𝘴 𝘸𝘦 𝘮𝘢𝘪𝘯𝘵𝘢𝘪𝘯 𝘰𝘶𝘳 𝘵𝘢𝘳𝘨𝘦𝘵 𝘰𝘧 𝘳𝘦𝘢𝘤𝘩𝘪𝘯𝘨 𝘢 𝘯𝘦𝘵 𝘤𝘢𝘴𝘩 𝘯𝘦𝘶𝘵𝘳𝘢𝘭 𝘱𝘰𝘴𝘪𝘵𝘪𝘰𝘯 𝘰𝘷𝘦𝘳 𝘵𝘪𝘮𝘦
CFO Luca Maestri

The company ended the quarter with $196B cash and marketable securities but still $112B debt. Apple’s debt could be a concern, but given the company operating cash flow and the low interest on said debt, it is not a concern.

The company returned over $30B you said? Yes!
When some companies dilute their shares to raise capital, Apple keeps rewarding shareholders on a repurchase rampage, buying 200M shares on the path to reaching a net cash neutral position and returning $3.6B in dividends and equivalents. Although not a reason to own the stock, the companies Board of Directors has declared cash dividends of $0.205/share, 0.6% yield to be paid February 11th, that is not something to ignore for such a high-quality business.

𝗚𝘂𝗶𝗱𝗮𝗻𝗰𝗲

𝘎𝘪𝘷𝘦𝘯 𝘵𝘩𝘦 𝘤𝘰𝘯𝘵𝘪𝘯𝘶𝘦𝘥 𝘶𝘯𝘤𝘦𝘳𝘵𝘢𝘪𝘯𝘵𝘺 𝘢𝘳𝘰𝘶𝘯𝘥 𝘵𝘩𝘦 𝘸𝘰𝘳𝘭𝘥 𝘪𝘯 𝘵𝘩𝘦 𝘯𝘦𝘢𝘳 𝘵𝘦𝘳𝘮, 𝘸𝘦 𝘸𝘪𝘭𝘭 𝘯𝘰𝘵 𝘣𝘦 𝘨𝘶𝘪𝘥𝘦𝘥 𝘵𝘰 𝘢 𝘴𝘱𝘦𝘤𝘪𝘧𝘪𝘤 𝘳𝘦𝘷𝘦𝘯𝘶𝘦 𝘳𝘢𝘯𝘨𝘦.
However, the company provides some direction, assuming COVID-related impacts do not worsen the business.

𝗣𝗿𝗶𝗰𝗲 𝘁𝗮𝗿𝗴𝗲𝘁𝘀 𝗹𝗶𝘀𝘁𝘀

Morgan Stanley’s Katy Huberty, Outperform rating and raises the price from $152 to $164
Piper Sandler’s Harsh Kumar, Overweight rating but raises from $135 to $160
Evercore, Outperform rating and raises from $160 to $163

𝗢𝘁𝗵𝗲𝗿 𝗮𝘀𝗽𝗲𝗰𝘁𝘀

𝗪𝗼𝗿𝗹𝗱-𝘄𝗶𝗱𝗲 𝘀𝗮𝗹𝗲𝘀

The smartphone market declined 5.9% during 2020, comparing to the previous year, although sales have been picking up the pace and the momentum heading into 2021 is likely to remain strong.

One key momentum is the push on 5G with aggressive promotions and popularity of low to mid-priced phones.

Of the total sales of smartphones, during 2020, we can see the following distribution

Although Apple offers mid-end devices, it is still seen as a premium brand, having a very strong second-hand market, still, Samsung keeps the crown on this race!

More info: https://www.idc.com/getdoc.jsp?containerId=prUS47410621&source=content_type%3Areact%7Cfirst_level_url%3Anews%7Csection%3Amain_content%7Cbutton%3Abody_link

𝗠𝗮𝗿𝗴𝗶𝗻𝘀

Although Apple’s margins remain flat, it’s always interesting to compare these with competitors. Here are the numbers for 2020

𝗖𝘂𝘀𝘁𝗼𝗺𝗲𝗿 𝗟𝗼𝘆𝗮𝗹𝘁𝘆

451 Research measured customer satisfaction at 93% for Mac and 94% for iPad. This is a most wonderful metric, that keeps customers in the ecosystem, spending their dollars to get a full array of devices. I know I’ve started with the phone, and now? I have everything, and just LOVE the products!

𝗘𝗮𝗿𝗻𝗶𝗻𝗴𝘀 𝗖𝗮𝗹𝗹 𝗤/𝗔 𝘀𝗲𝗰𝘁𝗶𝗼𝗻

𝗪𝗵𝘆 𝘄𝗲𝗿𝗲 𝗺𝗮𝗿𝗴𝗶𝗻𝘀 𝘀𝗼 𝗵𝗶𝗴𝗵?

Very strong sales and mix with services pushed margins higher.
Note that this is something very hard for competitors like Samsung to capitalize on.

Forex exchanges did not play any role on margins, as 64% of the revenue is international and some currencies on emerging markets are still weaker against the dollar, when compared to a year ago, like Latin America, Russia, Turkey, and so on.

If the dollar remains weak or continues to weaken, that can actually become a tailwind for Apple!

𝗪𝗵𝗮𝘁 𝗻𝗲𝘄 𝗺𝗮𝗿𝗸𝗲𝘁𝘀 𝗺𝗶𝗴𝗵𝘁 𝗯𝗲 𝗮𝘁𝘁𝗿𝗮𝗰𝘁𝗶𝘃𝗲 𝗳𝗼𝗿 𝗔𝗽𝗽𝗹𝗲

Hinting the Apple Car that everyone is looking for more insider information, Tim actually commented that the company only develops products they would use themselves, with a pretty high bar and that has a big enough market to be in.

𝘳𝘦𝘲𝘶𝘪𝘳𝘦𝘮𝘦𝘯𝘵 𝘧𝘰𝘳 𝘩𝘢𝘳𝘥𝘸𝘢𝘳𝘦, 𝘴𝘰𝘧𝘵𝘸𝘢𝘳𝘦 𝘢𝘯𝘥 𝘴𝘦𝘳𝘷𝘪𝘤𝘦𝘴 𝘵𝘰 𝘤𝘰𝘮𝘦 𝘵𝘰𝘨𝘦𝘵𝘩𝘦𝘳 𝘣𝘦𝘤𝘢𝘶𝘴𝘦 𝘸𝘦 𝘣𝘦𝘭𝘪𝘦𝘷𝘦 𝘵𝘩𝘢𝘵 𝘵𝘩𝘦 𝘮𝘢𝘨𝘪𝘤 𝘳𝘦𝘢𝘭𝘭𝘺 𝘰𝘤𝘤𝘶𝘳𝘴 𝘢𝘵 𝘵𝘩𝘢𝘵 𝘪𝘯𝘵𝘦𝘳𝘴𝘦𝘤𝘵𝘪𝘰𝘯

Tim adds that there are both really good opportunities out there and the current portfolio still has a relatively low share in the big markets. Tim sees upsides in existing and new markets!

𝗶𝗣𝗵𝗼𝗻𝗲 𝗴𝗿𝗼𝘄𝘁𝗵 𝗲𝘅𝗰𝗲𝗲𝗱𝗲𝗱 𝗲𝘅𝗽𝗲𝗰𝘁𝗮𝘁𝗶𝗼𝗻𝘀 𝗱𝗲𝘀𝗽𝗶𝘁𝗲 𝘁𝗵𝗲 𝗹𝗮𝘁𝗲 𝗹𝗮𝘂𝗻𝗰𝗵

Supply constraints delayed deliveries for Pro and Pro Max models but the products are doing very well all around the world with China having a phenomenal customer response probably due to the very quick move to 5G, adding a very good outlook for the March quarter.

𝗨𝗻𝗱𝗲𝗿 𝘁𝗵𝗲 𝘀𝗽𝗼𝘁𝗹𝗶𝗴𝗵𝘁

Apple has been under the spotlight regarding abuse in its App Store, favoring its own apps when compared to third-party apps, the high 30% of all revenue generated from in-app purchases and privacy-focused changes on iOS, Facebook is said to be preparing an antitrust suit against Apple, let’s keep monitoring this situation.

𝗦𝗼… 𝗪𝗵𝗮𝘁 𝘁𝗼 𝗱𝗼?

The world had to quickly adapt to a new reality, and Apple keeps profiting for enabling such change, and the best part is, new consumers will just keep pouring money into the company with services and new gadgets.

Has Jim Crammer said
𝘖𝘸𝘯 𝘈𝘱𝘱𝘭𝘦, 𝘥𝘰𝘯’𝘵 𝘵𝘳𝘢𝘥𝘦 𝘪𝘵