Apple posts record quarter thanks to iPhone sales

Apple reports high iPhone sales 1:15

New York (CNN Business) -

More than 14 years after their launch, iPhones are still in high demand.

Apple announced Tuesday that its earnings for the three months ended June 26 were higher than the previous quarter, thanks to a nearly 50% year-on-year increase in iPhone sales, which reached $ 39.6 billion.

The company posted a 36% total quarterly revenue increase, representing $ 81.4 billion, a record for the June quarter and nearly $ 8 billion above analyst expectations.

"This quarter, our teams built on a period of unmatched innovation sharing powerful new products with our users, at a time when using technology to connect people everywhere has never been more important," he said. Apple CEO Tim Cook in a statement.

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The June quarter is typically the slowest of the year for Apple.

So some analysts feared, before the report, that the company faced harsh year-on-year comparisons of hardware sales because the pandemic was driving strong demand for Macs and iPads around this time last year.

Others were concerned that a global chip shortage could cause a slowdown in sales of Apple products.

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But Apple's results suggest that it remains strong even as COVID-19 conditions have improved in many parts of the world.

The company posted double-digit revenue growth in each of its product categories.

The launches that helped Apple

During the quarter, Apple announced a redesigned iMac and a new iPad Pro, both built on Apple's own M1 chip.

Although the new iMac design was controversial, Cook said during Tuesday's earnings call that the new product helped push Mac revenue to a June quarter record.

Chief Financial Officer Luca Maestri added that the last four quarters have been the best ever for Mac sales thanks to the success of the M1 chip.

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"Apple has delivered another strong quarter, highlighting the durability of the company's brand," Jesse Cohen, principal analyst at Investing.com, said in an email.

"IPhones were the biggest driver of growth, suggesting that consumers are continuing to upgrade to 5G."

Apple may also have benefited from a larger share of its customers opting to buy the higher-end versions of the iPhone 12, the company's first 5G phone that was introduced last fall.

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Strong growth in services

Services, an area of ​​Apple's business that has become increasingly important in recent years, also posted strong growth.

With nearly $ 17.5 billion in quarterly sales, services generated the second-highest revenue of any product category behind the iPhone.

In Tuesday's earnings call, Apple executives declined to give a revenue forecast for the September quarter.

However, they said they expected a slower revenue growth rate than the June quarter due to currency exchange shocks and supply constraints affecting the iPhone and iPad.

Maestri also said that the year-on-year growth rate of services will likely slow after the June quarter rate benefited from the comparison with last year's drop in service sales due to the pandemic.

Shares of Apple fell more than 2% in after-results trading.

As Apple's business continues to boom even as the broader economy has taken a hit, the company has faced increasing regulatory scrutiny that could put its business in jeopardy.

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The risk of a possible antitrust law

House lawmakers last month proposed a series of antitrust bills that, if passed, could seriously disrupt the business model of Apple and other tech giants.

Specifically, one of the proposed laws could harm Apple's ability to charge developers a 30% commission for all purchases within its operating system applications, a practice that is also at issue in a legal battle in course between Apple and video game developer Epic.

Another could open the door to third-party app stores on the iPhone.

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