Apple Stock Climbs After Q1 Earnings Blow Past Estimates: What Investors Need To Know

Apple, Inc. AAPL reported strong holiday quarter results, with record operating metrics that came in ahead of the most optimistic forecasts. Despite supply chain disruptions, Cupertino showed resilience.

iPhone revenue rose to a record thanks to strong performance in China. The company also said its installed base of active devices was at a record.

Apple's Key Q4 Numbers: Apple reported first-quarter earnings of $2.10 per share, exceeding the consensus estimate of $1.89 per share.

The bottom-line result was better than the year-ago EPS of $1.68 and the previous quarter's $1.24.

Revenue climbed 11% year-over-year to $123.9 billion compared to the consensus estimate of $118.66 billion. In the fourth quarter, the company had generated revenue of $83.4 billion.

Morgan Stanley analyst Katy Huberty estimated EPS of $1.97 per share on revenues of $122.3 billion.

Product sales came in at $104.43 billion, accounting for 84.3% of the total revenues and increasing 9.2%, while Services grew about 23.9% to $19.52 billion.

"The very strong customer response to our recent launch of new products and services drove double-digit growth in revenue and earnings, and helped set an all-time high for our installed base of active devices," said Luca Maestri, Apple's chief financial officer.

The first-quarter gross margin expanded from 39.8% in 2021 to 43.8% in 2022.

Apple Q1 Revenues By product: iPhone sales nearly doubled from the previous quarter. Mac sales saw strong year-over-year and quarter-over-quarter growth. The iPad was a sore spot. Services revenue was at a record. Wearable, home and accessories jumped strongly from the previous quarter after seeing anemic growth in the previous quarter.

Morgan Stanley's Huberty estimated shipments of 83 million units of iPhones, 7.6 million units of Macs and 14.9 million units of iPads.

Related Link: Why Apple's 'AR/VR Opportunity' Gets This Analyst Excited About Cupertino's Growth

Apple Q1 Revenues By Geography: Apple saw across-the-board strength in all geographies. China was a standout, with the sequential growth coming in at an enviable 77%. Japan was the only region that saw a year-over-year drop in revenues.

A report released earlier this week showed that Apple become the top Chinese smartphone vendor in the December quarter after a six-year hiatus.

Apple's Forward Outlook: For the seasonally slower March quarter, analysts, on average, estimate EPS of $1.32 and revenues of $90.56 billion.

With more products coming online over the year, the company's earnings momentum is expected to accelerate further.

The tech giant is expected to release the iPhone SE3 in April or May of this year and the iPhone 14 in fall 2022.

Apple's Dividend: Apple announced board approval for a cash dividend of 22 cents per share, payable on Feb. 10 to shareholders of record as on Feb. 7.

The company also stated that it has returned nearly $27 billion to shareholders during the quarter thanks to the record operating results.

AAPL Price Action: Apple shares have pulled back in the new year, in line with the broader market. Year-to-date, the stock has shed over 10%.

Reacting to the earnings, the stock was adding 3.82% to $165.30 in Thursday's after-hours session after closing the regular session down 0.29% at $159.22.

Morgan Stanley said it views Apple as a more "defensive/quality outperformer" in challenging markets.

Related Link: Apple Becomes First Company To Top $3 Trillion Market Cap; Analyst Says Rally Has Further Legs

Photo courtesy of Apple.