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Apple had its most successful quarter in India, thanks in part to its online store

Apple’s online store in India — launched only in the last week of September — played a considerable part in the company’s strongest ever September quarter in the country, CEO Tim Cook said during a call with investors on Thursday. On top of that, everything that Apple offers — barring the iPhone — set either September sales records, or all-time sales records. The Mac, for instance, set and all-time revenue record, and iPad saw the strongest September quarter in eight years.

However, amid all this, there was a big surprise: sales in Greater China fell by around 29% compared to last year. In fact, Greater China was the only region to see contracted sales numbers.

It was also an unusual quarter for Apple, for a very significant reason. This was for the first time since the original iPhone’s launch that Apple’s September quarter numbers didn’t reflect early demand for new iPhones: the iPhone 12 lineup this year saw a delayed launch owing to the pandemic, and will only factor in the company’s results in the quarter ending December. Not having the latest iPhones on time this year especially hurt Apple in Greater China, admitted Cook.

Key takeaways from Apple’s September 2020 quarter

Apple posted a revenue of $64.7 billion, a September quarter record. International sales accounted for 59% of that:

  • Not having new iPhones before September affected Apple: iPhone revenue fell, and not having a new iPhone for this year before the end of the September quarter did have an impact on iPhones, the company admitted. “iPhone revenue was $26.4 billion, as we did not have availability of new iPhone models during the September quarter this year,” CFO Luca Maestri said.
  • Apple’s services segment making strides: Apple’s services segment, which includes properties such as the App Store, Apple Music, Apple News, iCloud, among others, set an all-time record of $14.5 billion, growing 16% year-over-year. “We grew strong double digits and set all-time records in App Store, Cloud Services, Music, Advertising and Payment Services,” Maestri said. Apple Care also set an all time revenue record as in-store traffic improved and Apple was able to support more customers. “Our new services, Apple TV+, Apple Arcade, Apple News+, and Apple Card, are also contributing to overall services growth, and continue to add users, content and features,” Maestri said.
    • Maestri also said that the number of both transacting and paid accounts on Apple’s digital content stores reached a new all-time high during the September quarter. The company did not specify exact numbers to support these claims.
    • Paid subscriptions grew more than 35 million compared to the June quarter, and Apple now has over 585 million paid subscriptions across its services, up 135 million from just a year ago. The company said it was confident of amassing 600 million paid subscribers by the end of the year. During the quarter, Apple had launched two new services — an all-in-all subscription to several Apple services called Apple One, and a fitness program called Fitness+.
  • Over 75% Watch purchasers were first time buyers: Just as with services, the wearables, home and accessories segment established a new September quarter record, with revenue of $7.9 billion, up 21% year-over-year. In fact, the company set September quarter records in every geographic segment and for each of the three product categories; Wearables, Home and Accessories, Maestri said. This segment includes products like the Apple Watch, and Homepod smart speakers. More than 75% of the people who bought an Apple Watch in the September quarter, were first time buyers.
  • Mac records historically highest sales:  Mac sales in September were the highest in the company’s history: Mac too had an all-time record at $9 billion, up 29% over last year and Apple said this was over $1.5 billion above the previous record for Mac sales. This was despite supply constraints during the quarter. The June quarter was also a strong one for Mac sales, owing to the lockdowns.
  • iPad had the strongest Q4 in eight years: iPad saw a revenue of of $6.8 billion, up 46% from last year. “This demand even exceeded Apple’s own expectations,” as Maestri put it, “as iPad demand exceeded our expectations around the world, as we grew very strong double digits in every geographic segment, including an all-time record in Japan and a September quarter record in the Americas.”
  • Apple thinks it’ll be long before antitrust case against Google is over. The company said it doesn’t know how the investigation into Google will go. This came in response to a question by an investor who wanted to know how the investigation might potentially affect Apple’s licensing segment.
  • Apple doesn’t have much to talk about its payments ecosystem: Apple currently offers three products and services in the fintech space: Apple Pay, Apple Card, and Apple Cash. However, when an investor asked how the segment was doing for Apple, Cook gave an evasive reply and said he didn’t talk about the payments ecosystem much through the investors call because there’s just a “limited” number of things he can talk about.
  • Company’s supply chain is constrained: Cook admitted that iPhone’s supply chain is currently admitted, and it’s hard to predict how long this situation will go on for. He said the company faces constraints in Mac, iPad and watches, even though the sales figures suggest the opposite.
  • ‘Normal will become something different’: Painting an uncertain future about what the new normal might be going forward, Cook said “the moves that have taken place to remote learning and remote work are not going to go back to normal, normal will become something different”. He added, “I don’t believe that we’re going to go back to where we were”.

Financial snapshot

  • Revenue: $64.7 billion, up 1% YoY
  • iPhone revenue: $26.44 billion, down 21% YoY
  • Services revenue: $14.55 billion, up 16.3% YoY
  • Wearables, accessories, and home products revenue: $7.88 billion, up 21% YoY
  • Mac revenue: $9.0 billion, up 28% YoY
  • iPad revenue: $6.8 billion, up 46% YoY

Downloads: Financials | Investors call transcript

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