Apple has posted its earnings for the first fiscal quarter of 2022, in which it managed a pull in revenue of $123.9 billion—up 11 percent from last year—and a record profit of $34.9 billion. The company managed this incredible feat despite COVID-induced restrictions in many parts of the world, supply-chain disruptions, and a semiconductor shortage.
Below is a breakdown of Apple’s fiscal Q1 2022 earnings and how it managed to make so much money.
How Apple Made So Much Money During the Holiday Season
The holiday season is always important for Apple, where its products are usually in high demand. The company also launches several new products in this time period that help further boost its revenues.
MacBook Sales
In the last quarter of 2021, Apple released the Apple Watch Series 7, M1 Pro and M1 Max MacBook Pro models, and the AirPods 3, with the iPhone 13 series availability expanding to more markets with improving supply. The new MacBooks were pathbreaking products, offering performance and efficiency never seen before in such a form factor.
The new MacBooks led to a record number of people upgrading to them in the quarter. The machines were also popular in China, where typially Macs have low penetration.
iPhone Sales
Despite looking like a minor upgrade on paper, the iPhone 13 series did incredibly well for Apple. The company saw a record number of customers upgrading to its latest iPhones and a double-digit growth in this area. Additionally, the new iPhones did well in China, with Apple claiming that it had the top four selling phones in urban China. It also recorded the highest ever revenues in China during this quarter.
The iPhone 13 series was among the top-selling smartphones in many parts of the world in Q1 2022, including the US, Australia, France, Germany, and the UK.
Apple also managed to handle the semiconductor shortage better than other companies, thanks to the close ties with its suppliers. This ensured that despite the high demand and the shortage, it was able to have adequate stock of its products for the holiday season.
Service Growth
Another reason for the company’s excellent Q1 2022 numbers is its services business, which has seen phenomenal growth over the last few years. In Q1 2022 alone, the business generated $19.5 billion in revenue—a 24 percent growth over last quarter—with a gross margin of 72.4 percent. Apple’s services business now has 785 million subscribers alone, an impressive number since Apple has a worldwide device base of 1.8 billion—up from 1.65 billion in 2021.
Putting It All Together
Thanks to all the above factors, Mac, iPhone, wearables, and service revenues reached an all-time high in the quarter. Below are the numbers provided posted by the company on the Apple Newsroom:
- iPhone: $71.6 billion—up 9.1 percent year on year
- Services: $19.52 billion—up 23.4 percent year on year
- Mac: $10.85 billion—up 25 percent year on year
- Wearables, Home & Accessories: $14.70 billion—up 13 percent year on year
- iPad: $7.2 billion—down 14.3 percent year on year
The iPad’s revenue took a hit during the quarter because of significant supply disruption. Additionally, Apple reportedly moved chips meant for the iPad to the production of the iPhone 13 series during the quarter to ensure its availability wasn’t limited. Despite this, almost half the customers who purchased an iPad during the quarter were first-time buyers.
With supply-chain constraints expected to subside in the ongoing quarter, the company expects to have a record-setting Q2 2022 as well.
Apple’s Growth Is Unstoppable
Strong iPhone demand initially powered Apple’s growth. However, the company has diversified its business over the years, with wearables, Macs, and services pulling in impressive numbers now.
The services business alone has seen tremendous growth and now rakes in the most revenue after the iPhone, and it is only going to grow further. The Mac business should continue to see strong growth in 2022 thanks to some impressive Apple-silicon-based products that are in the pipeline.