Eye-catching Hot Stock- Apple Inc. (NASDAQ:AAPL) Q1 2021 Earnings Call Transcript

On Thursday,  shares of Apple Inc. (NASDAQ:AAPL) reached at $142.06 price level during last trade its distance from 20 days simple moving average was 7.03%, and its distance from 50 days simple moving average was 12.21% while it has a distance of 33.80% from the 200 days simple moving average.

AAPL earnings call for the period ending December 31, 2020.

Apple (NASDAQ:AAPL)
Q1 2021 Earnings Call
Jan 27, 2021, 5:00 p.m. ET

Contents:

  • Prepared Remarks
  • Questions and Answers
  • Call Participants

Prepared Remarks:

Operator

Good day, and welcome to the Apple Q1 fiscal-year 2021 earnings conference call. Today’s call is being recorded. At this time, for opening remarks and introductions, I would like to turn the call over to Tejas Gala, director of investor relations and corporate finance. Please go ahead.

Tejas Gala — Director of Investor Relations and Corporate Finance

Thank you. Good afternoon, and thank you for joining us. Speaking first today is Apple’s CEO, Tim Cook, and he’ll be followed by CFO Luca Maestri. After that, we’ll open the call to questions from analysts.

Please note that some of the information you’ll hear during our discussion today will consist of forward-looking statements, including, without limitation, those regarding revenue, gross margin, operating expenses, other income and expense, taxes, capital allocation, and future business outlook, including the potential impact of COVID-19 on the company’s business and results of operations. These statements involve risks and uncertainties that may cause actual results or trends to differ materially from our forecast. For more information, please refer to the risk factors discussed in Apple’s most recently filed annual report on Form 10-K and the Form 8-K filed with the SEC today, along with the associated press release. Apple assumes no obligation to update any forward-looking statements or information, which speak as of their respective dates.

I’d now like to turn the call over to Tim for introductory remarks.

Tim Cook — Chief Executive Officer

Thank you, Tejas. Good afternoon, everyone. Thanks for joining the call today. It’s with great gratitude for the tireless and innovative work of every Apple team member worldwide that I share the results of a very strong quarter for Apple.

We achieved an all-time revenue record of $111.4 billion. We saw strong double-digit growth across every product category, and we achieved all-time revenue records in each of our geographic segments. It is not far from many of our minds that this result caps off the most challenging year any of us can remember. And it is an understatement to say that the challenges it posed to Apple as a business paled in comparison to the challenge it posed to Apple as a community of individuals, to employees, to their families, and to the communities we live in and love to call home.

While these results show the central role that our products played in helping our users respond to these challenges, we are doubly aware that the work ahead of all of us to navigate the end of this pandemic, to restore normal life and prosperity in our neighborhoods and local economies, and to build back with a sense of justice is profound and urgent. We will speak to these needs and Apple’s efforts throughout today’s call, but I want to first offer the context of a detailed look at our results this quarter, including why we outperformed our expectations. Let’s get started with hardware. We hit a new high watermark for our installed base of active devices, with growth accelerating as we passed 1.65 billion devices worldwide during the December quarter.

iPhone grew by 17% year over year, driven by strong demand for the iPhone 12 family, and our active installed base of iPhones is now over 1 billion. The customer response to the new iPhone 12 models’ unprecedented innovation from world-class cameras to the great and growing potential of 5G has been enthusiastic, even in light of the ongoing COVID-19 impact at retail locations. iPad and Mac grew by 41% and 21%, respectively, reflecting the continuing role these devices have played in our users’ lives during the COVID-19 pandemic. During this quarter, availability began for both our new iPad Air as well as the first generation of Macs to feature our groundbreaking M1 chip.

The demand for all of these products has been very strong. We have also continued our efforts to bring the latest iPad’s enriching content and professional support to educators, students and parents. Educational districts and governments worldwide are continuing major deployments, including the largest iPad deployments ever to schools in Germany and Japan. Wearables, Home and Accessories grew by 30% year over year, driven by significant holiday demand for the latest Apple Watch, our entire AirPods lineup, including the new AirPods Max, as well as the new HomePod mini.

This broad strength across the category led to new revenue records for each of its three subgroups, and we’re very excited about the road ahead for these products. Look no further than the great potential of Fitness+, which pairs with Apple Watch to deliver real-time, on-screen fitness data alongside world-class workouts by the world’s best trainers. There are new sessions added each week, and customers are loving the flexibility, challenge, and fun of these classes, as well as how the pairing with Apple Watch pushes you to achieve your fitness goals. This deep integration of hardware, software, and services have always defined our approach here, and it has delivered an all-time quarterly services record of $15.8 billion.

This was the first quarter of the Apple One bundle, which brings together many of our great services into an easy subscription; and with new content being added to these services every day, we feel very optimistic about where we are headed. The App Store ecosystem has been so important as individuals, families, and businesses worldwide evolve and adapt to the COVID-19 pandemic, and we want to make sure that this unrivaled engine of innovation and opportunity continues. This quarter, we also took a significant new step to help smaller developers continue to experiment, innovate and scale the latest great app ideas. The App Store Small Business Program reduces the commission on the sale of digital goods and services to 15% for small businesses earning less than $1 million a year.

The program launched on January 1, and we are already hearing from developers about how this change represents a transformation in their potential to create and grow on the App Store. Tomorrow is International Privacy Day, and we continue to set new standards to protect users’ right to privacy, not just for our own products but to be the ripple in the pond that moves the whole industry forward. Most recently, we’re in the process of deploying new requirements across the App Store ecosystem that give users more knowledge about and new tools to control the ways that apps gather and share their personal data. The winter holiday season is always a busy time for us and our products.

But this year was unique. We had a record number of device activations during the last week of the quarter. And as COVID-19 kept us apart, we saw the highest volume of FaceTime calls ever this Christmas. As always, we could not have made so many holidays special without our talented and dedicated retail teams who helped us achieve a new all-time revenue record for retail, driven by very strong performance in our online store.

Particularly, after the events of the last few weeks, we’re focused on how we can help a moment of great national need. Because none of us should have any illusions about the challenges we face as we begin a new chapter in the American story, hope for healing, for unity, and for progress begins with and depends on addressing the things that continue to wound us. In our communities, we see how every burden from COVID-19 to the resulting economic challenges, to the closure of in-person learning for students, falls heaviest on those who have always faced structural barriers to opportunity and equality. This month, Apple announced major new commitments through a $100 million Racial Equity and Justice Initiative.

The Propel Center launched with a $25 million commitment and with the support of historically black colleges and universities across the country, will help support the next generation of leaders in fields ranging from machine learning to app development to entrepreneurship and design. And our new Apple Developer Academy in downtown Detroit will be the first of its kind in the United States. Detroit has a vibrant culture of Black entrepreneurship, including over 50,000 Black-owned businesses. We want to accelerate the potential of the app economy here, knowing there is no shortage of good ideas in such a creative, resilient, and dedicated community.

Finally, we’re committing $35 million across two investments in Harlem Capital and the Clear Vision Impact Fund that support, accelerate, and grow minority-owned businesses in areas of great potential and need. In December, we concluded an unmatched year of giving. Since the inception of the Apple Giving program in 2011, Apple employees have donated nearly $600 million and volunteered more than 1.6 million hours to over 34,000 organizations of every stride. Through our partnership with (PRODUCT)RED, we’ve adapted our 14-year $250 million effort to support HIV and AIDS work globally to ensure that care continues even in the time of COVID.

That includes delivering millions of units of personal protective equipment to healthcare providers in Zambia. And here in the United States, even with COVID’s effects, we are ahead of schedule on our multiyear commitment to invest $350 billion throughout the American economy. As proud as this makes us, we know there is much more to be done. Looking forward, we continue to contend with the COVID-19 pandemic, but we must also now work to imagine what we will inherit on the other side.

When a disease recedes, we cannot simply assume that healing follows. Even now, we see the deep scars that this period has left in our communities. Trust has been compromised. Opportunities have been lost.

Entire portions of our lives that we took for granted, schools for children, meetings with our colleagues, small businesses that have endured for generations have simply disappeared. It will take a societywide effort across the public and private sectors as individuals and communities, every one of us, to ensure that what’s ahead of us is not simply the end of a disease but the beginning of something durable and hopeful for those who gave, suffered, and endured during this time. At Apple, we have every intention to be partners in this effort, and we look forward to working in communities around the world to make it possible. And as this chapter of uncertainty continues, so will our tireless work to help our customers stay safe, connected, and well.

With that, I’ll hand things over to Luca.

Luca Maestri — Chief Financial Officer

Thank you, Tim. Good afternoon, everyone. We started our fiscal 2021 with exceptional business and financial performance during the December quarter as we set all-time records for revenue, operating income, net income, earnings per share, and operating cash flow. We are thrilled with the way our teams continued to innovate and execute throughout this period of elevated uncertainty.

Our revenue reached an all-time record of $111.4 billion, an increase of nearly $20 billion or 21% from a year ago. We grew strong double digits in each of our product categories, with all-time records for iPhone; wearables, Home and Accessories; and services, as well as a December quarter record for Mac. We also achieved double-digit growth and new all-time records in each of our five geographic segments and in the vast majority of countries that we track. Products revenue was an all-time record of $95.7 billion, up 21% over a year ago.

As a consequence of this level of sales performance and the unmatched loyalty of our customers, our installed base of active devices passed 1.65 billion during the December quarter and reached an all-time record in each of our major product categories. Our services set an all-time record of $15.8 billion, growing 24% year over year. We established new all-time records in most service categories and December quarter records in each geographic segment. I’ll cover our services business in more detail later.

Past 5 years growth of AAPL observed at 7.30%, and for the next five years the analysts that follow this company are expecting its growth at 12.92%. The average true range (ATR) is a measure of volatility introduced by Welles Wilder in his book, “New Concepts in Technical Trading Systems.” The true range indicator is the greatest of the following: current high less the current low, the absolute value of the current high less the previous close and the absolute value of the current low less the previous close. The average true range is a moving average, generally 14 days, of the true ranges.

Liquidity:

The stock has a market cap of $2352.11B with 17.06B shares outstanding, of which the float was 16.63B shares. Analysts consider this stock active, since it switched Trading volume reached 140,843,760 shares as compared to its average volume of 110.45M shares. The Average Daily Trading Volume (ADTV) demonstrates trading activity related to the liquidity of the security. When Ave Volume tends to increase, it shows enhanced liquidity.

But when Ave Volume is lower, the security will tend to be cheap as people are not as keen to purchase it. Hence, it might have an effect on the worth of the security. AAPL’s relative volume was 1.22. Relative volume is a great indicator to keep a close eye on, but like most indicators it works best in conjunction with other indicators and on different time frames. Higher relative volume you will have more liquidity in the stock which will tighten spreads and allow you to trade with more size without a ton of slippage.

Apple Inc. has an average true range (ATR) of 4.06. Other technical indicators are worth considering in assessing the prospects for EQT. AAPL’s price to sales ratio for trailing twelve months was 8.57 and price to book ratio for most recent quarter was 37.09, whereas price to cash per share for the most recent quarter was 25.86. The Company’s price to free cash flow for trailing twelve months was 39.68. Its quick ratio for most recent quarter was 1.30. Analysts mean recommendation for the stock was 2.00. This number is based on a 1 to 5 scale where 1 indicates a Strong Buy recommendation while 5 represents a Strong Sell.

Apple Inc.‘s shares owned by insiders remained 0.07%, whereas shares owned by institutional owners are 60.30%.

Meanwhile, AAPL traded under umbrella of Technology sector, the stock was traded -2.09% ahead of its 52-week high and 167.27% beyond its 52-week low. So, both the price and 52-week high indicators would give you a clear-cut picture to evaluate the price direction.

Peter Mayer

About Peter Mayer

I am Peter Mayer and I have over 7 years experience in the Technology services industry giving me a huge understanding of how news affects the Tech markets. I am an active day trader spending the majority of my time analyzing earnings reports and watching commodities and derivatives. I have a Masters Degree in Economics from Ryerson University with previous roles counting Investment Banking.

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