Apple’s disappointing September 2021 quarter in five easy charts

The ups and downs of Apple’s revenue, earnings per share, iPhone sales, services and wearables.

Apple missed consensus estimates pretty much across the board and was quickly punished in after-hours trading. In fact, 30 minutes before the news hit the wires the stock had given up all of the days gains and more. (Memo to SEC: How does that happen?]

In prepared remarks during the conference call, Tim Cook wasted no time citing supply chain constraints. Then he wasted my tellings me things I already knew for 13 minutes over what sounded like a weak iPhone connection.

From the press release:

Apple today announced financial results for its fiscal 2021 fourth quarter ended September 25, 2021. The Company posted a September quarter revenue record of $83.4 billion, up 29 percent year over year, and quarterly earnings per diluted share of $1.24.

“This year we launched our most powerful products ever, from M1-powered Macs to an iPhone 13 lineup that is setting a new standard for performance and empowering our customers to create and connect in new ways,” said Tim Cook, Apple’s CEO. “We are infusing our values into everything we make — moving closer to our 2030 goal of being carbon neutral up and down our supply chain and across the lifecycle of our products, and ever advancing our mission to build a more equitable future.”

“Our record September quarter results capped off a remarkable fiscal year of strong double-digit growth, during which we set new revenue records in all of our geographic segments and product categories in spite of continued uncertainty in the macro environment,” said Luca Maestri, Apple’s CFO. “The combination of our record sales performance, unmatched customer loyalty, and strength of our ecosystem drove our active installed base of devices to a new all-time high. During the September quarter, we returned over $24 billion to our shareholders, as we continue to make progress toward our goal of reaching a net cash neutral position over time.”

Apple’s board of directors has declared a cash dividend of $0.22 per share of the Company’s common stock. The dividend is payable on November 11, 2021 to shareholders of record as of the close of business on November 8, 2021.

Jason Snell has a transcript of the earnings call.

Below: The five charts. Click the second column to see year-over-year growth. (Not seeing the charts? Try the website.)

35 Comments

  1. Robert Harris said:
    Stock was down $ .14 at 4:30 when it was released not the 3.72 it was up today

    0
    October 28, 2021
    • Alan Birnbaum said:
      down about $5.8 or so. % pm EST

      Alan Birnbaum MD

      Sorry no blowout this qtr- last 3 qtr blowouts were also down- go figure

      2
      October 28, 2021
  2. Alessandro Luethi said:
    Numbers not depending from supply constraints, services and paying subscribers, are up quite a bit.

    5
    October 28, 2021
  3. bas flik said:
    70% eps rise and p/e only 26,15

    9
    October 28, 2021
  4. Dan Scropos said:
    Quick current quarter buyback math. $30 billion at an average price of $150. Goodbye to 200,000,000 shares. That’ll be a nice tailwind going forward and uses $0 net cash.

    3
    October 28, 2021
    • Jerry Doyle said:
      “… During the September quarter, we returned over $24 billion to our shareholders, as we continue to make progress toward our goal of reaching a net cash neutral position over time.” …. Luca Maestri

      Perhaps during the Q1 Apple will ramp up their buyback program to $30B. That would be an unthinkable $120B annually if pace maintained. Unbelievable!

      1
      October 28, 2021
      • Bart Yee said:
        @Jerry According to the consolidated financial statement, Apple spent $86B in FY2021 and $72.4B in FY2020 buying back stock. That would be about $21.5 and 18.1B per quarter average respectively. This does not include the ~$3B in dividends / quarter which adds up to the roughly $24B spent last quarter giving back to shareholders.

        My sense is Apple May push to $30B combined ($27B buybacks, $3B dividends) for Q1, especially if stock price is depressed some and FCF is buoyant but scale back in following quarters. I’m thinking they move to $88-96B in buybacks this coming fiscal year.

        1
        October 29, 2021
  5. bas flik said:
    luca had no explanation for the service growth which was huge.
    and then later he expects a deceleration for q1 also unfounded.
    it looks like services is gaining momentum beyond control of Apple.
    can save the price of the stock.

    0
    October 28, 2021
  6. Daniel Epstein said:
    Headline for this article should say Record breaking but disappointing in 5 easy pieces! Without Apple Guidance people got out over their skis on Revenue. As I said elsewhere it is a weird average. Overall Revenue Growth was impressive. Nothing to be dissatisfied with. Funny if you add in just half of so called supply chain effect it is a pretty big number. Expecting growth on Last years monster 1 qtr revenues even with supply issues expected this year is nothing to complain about either. Should be interesting to see if they underpromised and over deliver this quarter!

    1
    October 28, 2021
  7. John Konopka said:
    Curious that iPhone sales were down sequentially from last quarter. The vibe was that it was selling well. Perhaps this can be blamed on the supply chain?

    0
    October 28, 2021
    • Troy Thoman said:
      The iPhone 13 was announced but only was shipping for the last week of the quarter. Next quarter will be a monster.

      2
      October 28, 2021
      • Bart Yee said:
        Not even that, the iPhone 13 event was Sept. 14, preorders began on Sept. 17, and first availability for purchase Sept. 24. The September quarter ended on September 25. Now I don’t know when and how many iPhone 13 sales were recorded during the 4th week of Sept. but there were still 5 days left in September that now fall into the December quarter, with the December quarter ending on December 25, leaving another 6 days for the next quarter.

        I do recall someone saying this quarter has one additional selling week so there is that to add potential sales revenue assuming sufficient supply.

        1
        October 29, 2021
  8. David Emery said:
    Reading the quick (thank you Jason Snell) transcription of the call, what caught my eye was this: “We expect revenue for each product category to grow on a year over year basis, except for iPad, which we expect to decline year over year, due to supply constraints.” Don’t know what’s in an iPad that is so constrained, but it seems to be significant for that particular product!

    1
    October 28, 2021
  9. Jerry Doyle said:
    When Steve was running Apple, he did a really good job of managing expectations. He learned over the years to under promise and over deliver. When you do that, the stock price will jump. Other companies seemingly are applying that strategy. The current Apple regime abdicated that skill. To exacerbate matters, I agree with Daniel Epstein that in the absence of forward guidance folk got out-in-front of their skis on revenue.

    4
    October 28, 2021
  10. Gregg Thurman said:
    All the reasons/excuses in the world doesn’t change the fact that 4 quarters in a row, some AAPL investors weren’t rewarded for their loyalty to the equity.

    Having learned the hard way, I hedged my bet and did quite well. Next week I’ll make more, and it won’t matter if AAPL goes up or down. You won’t see me wringing my hands and proclaiming the markets are rigged or whatever.

    Thank you options.

    2
    October 28, 2021
  11. David Drinkwater said:
    Revenue up 28.8% YoY.
    Diluted EPS up 69.9% YoY.
    iPhone Revenue up 47% YoY.
    Services Revenue up 25.6% YoY.
    Wearables and Other Revenue up 11.5% YoY.

    Clearly, Apple *MUST* be punished for such a poor performance.

    8
    October 28, 2021
  12. Cy Manning said:
    Much of Mr Cook’s leadership is high-caliber and admirable. However, his expectations management of the stock apparently falls somewhere between hapless, helpless or hopeless.

    The 3Q21 earnings call was already one month into 4Q21. Is there any credibility to the thought that everything within Apple was so out-of-control that reasonable guidance guardrails weren’t feasible? Same for 1Q22? Any damage or volatility in the stock is a needless self-inflicted wound.

    4Q21 reality is Apple’s workforce delivered incredible results (e.g., revenue nearly up one third and pre-tax of $23.2 billion – a stunning number). Unfortunately, reality risks being undone for investors, which includes many Apple employees, because a handful of analysts guessed wrongly. The prevalent narrative now for AAPL is the ‘miss’ and ‘disappointment’, undercutting the employees’ undoubtedly Herculean and successful efforts.

    Add to this an inability to control the narrative around Apple’s future roadmap as well as total predictability (i.e., silence) dealing with stories and rumors and I believe AAPL’s stock also carries a volatility discount.

    Anyway, I have my fingers crossed that the market sees through to the actual results tomorrow.

    2
    October 28, 2021
    • David Drinkwater said:
      Related to Cy’s post:

      Maybe Apple doesn’t need to manage expectations. Maybe Apple just has to know “sell on the news” and set its programmatic buying accordingly. If they set a program in April to buy or sell in July, who can fault them. Same for October.

      They are not obligated to manage expectations (though they may have their own): they are only obligated to report the facts per GAAP practices.

      Here again I remind of Tim Cook’s words:

      “Don’t bet against us.”

      3
      October 29, 2021
  13. Bart Yee said:
    So AAPL in after hours trading ended up down 5.38 at $147.19. I would expect similar activity tomorrow with a likely drop of between 4-6 points to around $145-146 and change. I’d remind everyone that is still above the $143.16 January 2021 high and even if it went down another 5 points to ~$140+, that’s still above the recent $139.14 October 4, 2021 closing low. That would put AAPL at just around the 10% correction level and we know Apple is already ready and willing to push buybacks further this quarter.

    With $6B in constrained, IMO, but “not lost” revenue for Q4, and qualitative guidance for Q1 as further supply constrained (to the tune of $8-10B?), I think Q1 estimates will be recalibrated with in this light. I’m sure we and PED will be seeing many analysts comment on this quarter’s possibilities. It’s likely that we could see a flat to modest beat for Q1 as supply balance is pushed out to Q2 or even Q3 assuming demand remains reasonably intact worldwide.

    1
    October 28, 2021
  14. Daniel Epstein said:
    Don’t put much stock (grin) in After Market response to this earnings report. The magnitude of the downward move is not proportional to the situation or the so called miss. Apple is guiding to growth over a previous years 1St quarter of 111B in revenue. Expecting record revenue in the current quarter even with supply restraints which proportional to this quarter would be about 7.5B so the company looks to be making profit hand over fist even in this environment.

    1
    October 29, 2021
    • Gregg Thurman said:
      Excellent Daniel. Whatever revenue was lost during FQ4/2021 will be captured in FY2022.

      This report is but a bump in the road and has probably already passed.

      1
      October 29, 2021
  15. Gregg Thurman said:
    At ~1:30 AM Pacific Time the world’s indexes are off marginally, excepting the Nasdaq, which is down about double everywhere else. I’m guessing that’s a result of the response to Apple’s report.

    Strength in the world’s indexes will support AAPL until WS gets its collective head around what happened, then issues new (maybe) price target with justifications.

    I see this dip as temporary and of short duration when everyone realizes “lost” September quarter sales were only kicked down the road. .

    1
    October 29, 2021
  16. bas flik said:
    amazon eps decrease of 50%
    apple eps 70% increase
    amazon p/e 60
    apple p/e 26

    what am i missing?
    only increasing eps can sustain high p/e
    apple had massive profit increase.
    jan. 140+ level was with p/e of 40.
    current price same level wit p/e 26

    numbers are actually really good.
    street should value profit instead of sales.

    bottom line: apple is really cheap at this price level compared to peers.

    3
    October 29, 2021
    • Daniel Epstein said:
      The long time disparity of Apple PE vs Amazon PE and other stocks is one of the reasons I believe the market is not very accurate in valuing different companies dollar for dollar. And some times that is something to take advantage of and some times it is worth avoiding. You would think that Amazon’s earning miss would have meant a much larger reaction in its stock price if you use the response in Apple’s stock as a baseline. If you do the reverse and say Amazon’s move is the baseline then Apple’s move seems overdone. And if you throw in MSFT you see it as well. (Don’t get me started on Tesla either.) The street is paying a large premium for both Amazon and MSFT earnings power while ranking Apple as a lesser value. And Amazon’s earnings power seems to be waning a bit in this environment. The bias toward accepting bumps in the road from Amazon but not for Apple is hard to change. Today I would be more worried if I was an Amazon stock holder about the future than as an Apple stock holder but can’t ask for rationality to be the reaction at least in the short term.

      1
      October 29, 2021
  17. Cy Manning said:
    G’day @ Joseph – I wouldn’t think it controversial to suggest a valuation discount resulting from long-term volatility and a narrative controlled by analysts, traders, speculators, manipulators and leakers.

    The counterargument that these are accretive to valuation more deserves explanation.

    For example, I fail to see the 7%+ absolute change in stock price between close yesterday and open this morning is either necessary, the optimal outcome, or inspired investor confidence and commitment.

    Further, ‘management’ is different from ‘manipulation’. The former implies ethical control and appropriately balanced transparency and the latter malfeasance. I suggested better management (e.g., accurate guidance to reduce volatility). We agree manipulation is unacceptable.

    0
    October 29, 2021

Leave a Reply