“Many thought the March quarter was as good as it gets for Apple, with 70% and 79% growth for Mac and iPad, respectively.”
From a note to Loup Ventures subscribers that landed on my desktop Tuesday:
Demand for Mac and iPad over the past 12 months has been strong, propelled by the digital transformation and work- and learn-from-anywhere tailwind. On Apple’s March earnings call, management guided to a $3-4B combined headwind for these two segments in the June quarter due to supply constraints, noting, “we expect to be supply gated, not demand-gated.” Our spot check of Apple lead times suggest the company was right, and that demand is still outpacing supply as we exit the June quarter. Net net, we see the positive demand tailwind as much stronger and more sustainable than any supply headwinds. Estimated delivery dates for some iPad and Mac models are more than a month out:
Regarding the digital transformation, we’re still in the early stages of a new hybrid paradigm, with businesses, schools, and consumers electing to outfit and upgrade their hardware. Based on this, we believe Mac and iPad can both grow revenue 8%, 7%, 6%, and 4% in FY22, FY23, FY24, and FY25, respectively, which would be above consensus estimates. For context, in the five years leading up to the pandemic, Mac and iPad were generally flat businesses:
My take: Okay, but to me 8% and 7% seem like a letdown after 70% and 79%, respectively.