29th January 2021
Apple and Facebook released their latest quarterly earnings this week, which covered the holiday shopping period. Both companies reported strong results which surpassed the already high expectations of analysts. Here are some of the key highlights.
Apple: A rise in higher end iPhone sales coupled with a pandemic-induced increase in demand for its laptops and tablets helped drive Apple’s revenues to a record-breaking high of $111.4bn for its fiscal first quarter, significantly more than the $103bn analysts were expecting and a 21% YoY increase. Of that, a reported $65.6bn was iPhone revenue following the October release of the 5G equipped iPhone 12, up 17% YoY. ‘Services’ revenue was $15.76bn vs $14.89bn expected, another all time high and includes cash generated from Apple’s App Store, Apple Music and Apply Pay amongst others. Apple’s ‘Other Products’ category, which includes Apple Watch and headphones, set another record and was up 29% from last year to $12.97bn vs analyst estimates of $11.84bn.
Apple is not providing guidance for Q2 2021 because of the ongoing uncertainty caused by the COVID-19 pandemic.
Facebook: The company reported a 53% YoY increase in revenues to $28bn for the fourth quarter of 2020 as online shopping and increased use of its platforms during the pandemic drove a surge in its advertising business. Facebook’s ‘Other’ category which includes its Portal device and Oculus VR business saw a 156% increase in revenue to $885m. Daily Active Users (DAUs) increased to 1.8bn and Monthly Active Users jumped 12% YoY to 2.8bn. Usage figures across its family of apps show that more than 2.6bn people check one of Facebook’s apps every day while more than 3.3bn check one of the apps at least once a month.
However, looking ahead the company says it will: “continue to face significant uncertainty as we manage through a number of cross currents in 2021”, indicating that it may not be able to sustain the same pace of growth into the second half of 2021. The company also said that Apple was one of its biggest competitors and warned that the impending changes in advertiser tracking on Apple’s iOS 14 and a reversal in pandemic trends could start to impact Facebook’s advertising business.
Apple had a blowout quarter that benefitted from increased laptop and gadget sales as both working from home and home schooling continued – meaning more devices were bought to facilitate this. The 5G phone release created an inital desire for iPhone upgrades, but we will need to wait and see if that drives the ‘supercycle’ of user upgrades that investors believe could happen and if the business can continue its record-breaking streak.
Facebook finished 2020 in a much stronger financial position than at the beginning of the year, benefiting from the shift to online commerce and products during the pandemic, but the company warned these trends could moderate or even reverse which could slow its advertising growth in 2021.