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China plays significant role in Apple’s $111.4 billion revenue December 2020 quarter

The iPhone recorded more than $65 billion in revenue for Apple in the December 2020 quater, and a lot of that came from China — overall quarterly revenue in the region was up nearly 57% over last year. “We saw both switchers and upgraders [of iPhone] increase on a year-over-year basis. And in fact, we saw the largest number of upgraders that we’ve ever seen in a quarter,” CEO Tim Cook said during a call with investors on Wednesday. A lot of the buyers of the 5G-enabled iPhone 12 lineup came from China, where the 5G network is well established, he added.

Apple is also expecting a slowdown in growth in its Wearables, Home and Accessories category in the upcoming March quarter, Apple’s CFO Luca Maestri said. “As you know, we were chasing demand on AirPods last year as we expanded channel inventory from Q1 to Q2. This year, we plan to decrease AirPods channel inventory as is typical after the holiday quarter,” Maestri said.

In the September 2020 quarter, Apple doubled its business in India compared to the same quarter a year ago, the company’s CEO Tim Cook revealed during the same call.  However, despite that growth, the company’s absolute level of business is “still quite low relative to the size of opportunity,” Cook added. Apple had launched an online store in India in the last week of December and had at the time said that it played a considerable part in the company’s strongest ever September quarter in the country.

It is worth noting that in the December 2020 quarter, Apple was coming on the back of the launch of the iPhone 12 lineup, along with a new range of MacBooks and Mac mini which are equipped with Apple manufactured silicon.

Key takeaways from Apple’s December 2020 quarter

The company set an all-time revenue record of $111.4 billion in the December 2020 quarter — an increase of 21% from a year ago. Cook said the company saw double-digit growth across every product category, and saw all-time revenue records in each of its geographic segments:

  • All categories in the services segment set quarterly revenue records: The App Store, cloud services, Music, advertising, AppleCare and Apple’s payment service all set quarterly revenue record. Overall, Services recorded a revenue of $15.8 billion, growing 24% year-over-year. Nearly 90% of stores in the United States now are accepting Apple Pay

Reason behind services growth: “The key drivers for our Services growth all continue to move in the right direction: first, our installed base growth has accelerated and each major product category; second, the number of both transacting and paid accounts on our digital content stores reached a new all-time high during the December quarter, with paid accounts increasing double digits in each of our geographic segments; third, paid subscriptions continue to grow nicely, and we exceeded our target of 600 million paid subscriptions before the end of calendar 2020.” — Tim Cook, Apple CEO

  • Paid subscribers increase: During the December quarter, Apple added more than 35 million subscribers compared to the September quarter, and has more than 620 million paid subscriptions across the services on its platforms, up 140 million from a year ago.
  • Installed device base reaches all time high: The company had more than 1.65 billion devices worldwide during the December quarter. iPhones account for over 1 billion of those.
  • 75% Apple Watch customers were first time buyers: Even though Apple is expecting a bit of a slowdown in this segment, Wearables, Home and Accessories grew by 30% year-over-year in the December quarter, driven by significant holiday demand, and the company set new revenue records for each of these three subgroups. In fact, nearly 75% of the customers purchasing Apple Watch during the quarter were new to the product, Cook said.
  • Maximum number of device activations in December: Apple also recorded the highest number of device activations in the last week of the December 2020 quarter. The company also saw the highest volumes of FaceTimes calls ever on Christmas.

Financial Snapshot

  • Revenue: $111.4 billion, up 21% YoY (International sales accounted for 64% of the quarter’s revenue)
  • Net income: $28.75 billion, up 29.3% YoY
  • iPhone revenue: $65.6 billion, up 17% YoY
  • iPad revenue: $8.4 billion, up 41% YoY
  • Mac revenue: $8.6 billion, up 21.1% YoY

Downloads: Financials | Press Release | Earnings Call Transcript

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