Despite Inflation and Supply Chain Issues... Apple Smiles at Strong Q1 Performance

[Image source=Reuters Yonhap News]

[Asia Economy Reporter Jeong Hyunjin] Apple, the iPhone manufacturer, smiled upon receiving strong results for the first quarter of this year despite supply chain issues and rising inflation concerns.

According to the Wall Street Journal (WSJ) and others on the 28th (local time), Apple announced that its fiscal second quarter (January to March) revenue was $97.28 billion (approximately 123.9 trillion KRW), and net profit was $25 billion, representing increases of 9% and 6% respectively compared to the same period last year. Earnings per share were $1.52. Both figures significantly exceeded Wall Street’s expectations. The market had forecasted Apple’s January to March revenue at $93.89 billion and earnings per share at $1.43.

Foreign media reported that Apple’s results were the best for a first quarter and the third largest for any quarter overall. However, the growth rate was the lowest since the pandemic.

Looking at the details, iPhone sales reached $50.57 billion, up 5.5% year-over-year. The increase was attributed to more Android phone users switching to iPhones and the contribution of the low-priced iPhone SE, released in March, to revenue growth. iPad sales fell 1.9% to $7.65 billion, while Mac computer sales, including desktops and laptops, rose 14.7% to $10.44 billion.

Apple’s new growth engine, the Services segment, recorded revenue of $19.8 billion, up 17.3% year-over-year. The Services segment includes subscription services such as the App Store, Apple Music, Apple TV+, Apple News, and Apple Arcade (games). Apple is also reportedly considering launching hardware subscription services for iPhones, Macs, and other devices.

Apple’s strong performance came amid challenges such as high inflation, supply chain disruptions, China’s COVID-19 lockdowns, and the Ukraine war. Apple CEO Tim Cook said, "Supply constraints have eased significantly compared to what we experienced in the fourth quarter of last year," and noted that China’s lockdown measures did not impact the results.

Apple has not provided earnings guidance since February 2020 due to COVID-19 uncertainties. There was no mention of earnings guidance for this year either.

Meanwhile, Apple announced that its board approved a $90 billion share repurchase program. CNBC reported that Apple spent $88.3 billion on share buybacks last year. Apple also raised its dividend by 5% to $0.23 per share.