The most surprising thing in Apple’s recent earnings call

The first quarter of the 2020 fiscal year was a huge success for Apple when it broke most of the company’s previous records. Thanks to strong sales of the new iPhone and the growing demand for wearables, Apple has beaten even the most optimistic expectations of analysts.

However, those unimaginable successes were not the only surprises in Apple’s last quarter earnings report. Here are a series of impressive numbers mentioned by CEO Tim Cook in the recent earnings report.

IPhone sales have grown again

In the past two years, Apple has always had to find ways to expand into other businesses to offset the slowdown of iPhone growth. But in the last quarter, iPhone sales not only rebounded but also accounted for 61% of total revenue and grew nearly 8% over the same period last year.

With sales of $ 55.9 billion – far superior to $ 51.9 billion in the first quarter of 2019 – this is the best quarter of the iPhone since Q1 2018 so far. But there are strong signs that this momentum can be maintained during the holiday season of 2020.

Numerous investors have been curious about the 5G-equipped iPhone launched this year in the hope that it will create a new super cycle of upgrades. Although Cook did not comment on this future product, he said that 5G is still at an early stage of deployment. This could be a sign that he doesn’t think 5G will be as appealing as people are hyped up.

Wearables are Apple’s new pillar

Everyone saw Services as a new growth engine over the past two years, but wearables were Apple’s fastest growing division during that period. AirPods Pro and Apple Watch are in such high demand that Apple cannot literally produce them.

AirPods Pro is out of stock.

Some statistics below show the importance of this business:

– Apple’s wearable business is currently similar to a Fortune 500 company.

– Wearable devices’ annual revenue growth (more than $ 2.7 billion) is now greater than that of services (more than $ 1.8 billion).

– With a 37% growth in the last quarter, the Wearable device marked the 10th consecutive month of growth of over 30%.

– 75% of Apple Watch buyers are the first buyers of this device.

Last quarter, Services increased by only 17%. One of the reasons for the lower growth is because not everyone who buys an iPhone will subscribe to Apple TV + and Apple Music services. Meanwhile, Apple Watch or AirPods do not depend on the number of iPhone buyers. Cook said a significant number of users have joined the ecosystem of the company because of the Apple Watch.

However, the issue of supply of Apple Watch and AirPods Pro is an issue that investors are concerned about. Cook said the supply of Apple Watch Series 3 will be balanced in the current quarter. But for AirPods Pro, Mr. Cook has to admit the supply “will basically be in short supply” and it is also impossible to give a timeline when Apple will catch up with demand.

The future is AR

A few years ago, Mr. Tim Cook once said “Augmented reality (AR) is the future”. Now, that vision is further strengthened when he points to thousands of user apps built on ARKit and already available on iPhones. That’s not to mention countless other applications for businesses.

Apple ARKit – Apple’s platform for building AR applications for iPhone and iPad.

” This is why we’re excited about it. You rarely get a new technology that both businesses and consumers find important to them .” Mr. Cook said. ” That’s why I think it will flood your life because it will appear in every business. And your whole life too. And I think these things will happen in parallel . ”

Apple is said to have developed augmented reality wearables several years ago. But rumors say these devices won’t launch until 2022 or 2023, so don’t be too excited about a future with AR devices pervading your life.

Apple is very cautious of corona viruses

Despite a successful business quarter, Apple is making cautious forecasts for Q2 2020. The cause is thought to be the potential effects of corona virus outbreaks in China. Apple had to close a retail store in China and limit its opening time. Even staff travel is restricted from last weekend due to the impact of this dangerous epidemic.

Retail activity across China is also affected by the disease. Cook said Apple is implementing thorough cleaning measures inside stores as well as conducting temperature checks on employees.

In a Foxconn factory in China

In addition, Apple also has a number of suppliers in Wuhan, but their products can be completely replaced by other sources. The impact outside the Wuhan area becomes less obvious. Some factories had to close at the end of January and will not reopen before February 10 – due to Lunar New Year holidays and corona virus.

Apple TV + is taking off

Apple did not announce the number of specific Apple TV + subscribers, but Mr. Tim Cook said he was happy about the level of its success so far. When asked about the success of the service, Mr. Cook emphasized his interest in the number of subscribers. In addition, because the focus of this service is telling a story, he also said that the praise for the quality of the program is also an important measure of success (For example, The Morning Show was nominated for a Golden Globe Award).

However, Apple’s CFO Luca Maestri also acknowledged that revenue from Apple TV + is not very significant at this time.

“Because we haven’t launched this service until recently, the amount of revenue we’ve earned from the last quarter is insignificant compared to our results.” Mr. Maestri explained. In addition, Apple did not say how much it spent on new content of the service.

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