Apple Holiday-Quarter Revenue Soared Double Digits on 17% IPhone Spike

Apple had double-digit fiscal Q1 growth across all product categories despite “ongoing COVID-19 impact at retail locations,” said CEO Tim Cook on a Wednesday investor call. Record $111.4 billion revenue, up 21% year on year, outperformed expectations, as iPhone grew 17%, iPad 41% and Mac 21%. Cook referenced the role all three played in users’ lives during the pandemic. The quarter ended Dec. 26.

IPhone revenue was a record $65.6 billion, up 17%. Demand remained strong “despite COVID-19 and social distancing measures, which have impacted store operations in a significant manner,” said Chief Financial Officer Luca Maestri. He cited especially strong growth in China on pent-up demand for 5G iPhones.

The iPhone 12 family had strong demand in its first quarter on the market, taking the installed base of iPhones to over 1 billion, said Cook. Apple had significant increases in switchers and upgrade customers, he said. Responding in Q&A on the impact of carrier subsidies from “aggressive” trade-in programs during the quarter, Cook called it a “win across the board,” saying, “anything that reduces the price to the customer is good for the customer and obviously good for the carrier that's doing it and good for us as well." He expects the fierce competition to continue in the U.S. market as 5G takes off.

Wearables jumped 30% on holiday demand for the latest Apple Watch, the AirPods lineup and HomePod mini, Maestri said. The iPad continued to get adoption in the education market, including the largest deployments ever in Germany and Japan, Cook said.

Services revenue rose to $15.8 billion from $12.8 billion, said the company. AppleCare felt the effects of store closures, said Maestri in Q&A. When stores are closed, “it’s tougher, of course, for customers to have interaction with us,” he said. AppleCare didn’t grow as much as the company average, but it set a quarterly revenue record, he said, as “we were able to support more customers than in past quarters.” Services growth came from strength in the App Store, cloud services and Apple Music.

Responding to a question on what factors determine Apple’s decision to enter a new product category, Cook said, “We ask ourselves if this is a product that we would want to use ourselves or a service that we would want to use ourselves, and that's a pretty high bar.” Considerations include whether it’s a big enough market, unless it’s an adjacent product, he said. The kinds of things the company wants to work on are where hardware, software and services come together “because we believe that the magic really occurs at that intersection.” He referenced some “really good opportunities out there.” He didn’t address reports it's working on a self-driving car for 2024.