Apple revenue up 54% as services hit all-time high

Dive Brief:

Apple reported revenue of $89.6 billion in the second quarter of 2021, a 54% year-over-year increase and a record for the March period, according to an earnings release. Services and the company's Mac hardware offering saw record sales, while its iPhone, Wearables, Home and Accessories categories set records for the quarter.
Services sales, which include the App Store, the cloud, advertising, Apple Music, Apple Pay and Apple TV+, saw 27% YoY growth to $16.9 billion on the quarter. The company added more than 40 million paid subscriptions to reach 660 million total, twice the total number from just over two years ago, CEO Tim Cook said on an earnings call.
IPhone sales grew 66% YoY due to the popularity of the iPhone 12, which features 5G capabilities and an improved camera system. However, Cook noted that global penetration of 5G is still low and that the technology is in its early days.

Dive Insight:

Apple's Q2 earnings results brought another blowout quarter for the tech company as it continued to grow device sales and an increasingly essential services business. Along with setting an all-time record for revenue, Apple saw its Services category reach new heights across the App Store, cloud division, music, video, advertising and payments. Newer offerings including Apple TV+, Apple Arcade, Apple News Fitness+ and the Apple One bundle now serve as key means of engaging users who are hungry for content and other forms of entertainment.

"Our Services business did better than what we were expecting when we had the last call in January. It was stronger across the board," Chief Financial Officer Luca Maestri said on a call discussing the results with analysts. "One of the things that we've noticed is that throughout COVID ... digital services have done very well."

Apple continues to boost its Services offerings to drive revenue, especially through subscriptions, which also hit a new high in Q2. The company this month announced Apple Podcast Subscriptions to increase revenue from a format that it helped popularize at a time when competitors like Spotify are ramping up investments in the space.

While Apple's App Tracking Transparency framework rolled out this week, it is too early to see how the privacy changes will impact the earnings of Apple and competitors that previously relied on the Identifier for Advertisers (IDFA) to track and target users. The privacy changes may help to boost Apple's advertising offerings, as marketers could be able to get more data about ad performance through Apple than through third parties, The Wall Street Journal reported.

The rollout of 5G has helped to boost iPhone sales, and while Maestri noted several uses of the technology by companies including Delta Airlines, executives acknowledged that the tech is still in the early days of adoption, suggesting that marketers hoping to utilize the tech for mobile activations will have to wait.