Apple Inc. beat market expectations today with its latest quarterly earnings report, but the company warned that it’s facing supply shortages in its current quarter.

For its fiscal second quarter ended March 27, Apple reported revenue of $89.6 billion, up 54% year-over-year and quarterly earnings of $1.40 per share. Analysts had been predicting a profit of 99 cents a share on revenue of $77.4 billion.

The revenue figure was driven by growth across Apple’s entire portfolio of products. Mac revenue in the quarter jumped 70% from a year ago, to $9.1 billion. Meanwhile, iPad revenue rocketed 79%, to $7.8 billion, up 78.9%. Other product revenues rose 24%, to $7.83 billion.

Despite a report in March that suggested Apple was cutting iPhone 12 production by 20% on weaker-than-expected demand, iPhone sales were again strong. In the quarter Apple booked iPhone revenue of $48 billion, up 66% year-over-year. The revenue was notably down from $65.6 billion in sales in the previous quarter which came following the debut of the iPhone 12 in October.

Apple’s services revenue was also strong in the quarter, up 24% year-over-year, to $16.9 billion. Apple services include Apple TV+, Apple Music, the App Store, iCloud and software sales. Apple Chief Financial Officer Luca Maestri told analysts on an earnings call that Apple now has more than 660 million paid subscriptions across its services division and that video, music, games and advertising all had their best quarter yet.

“This quarter reflects both the enduring ways our products have helped our users meet this moment in their own lives, as well as the optimism consumers seem to feel about better days ahead for all of us,” Apple Chief Executive Officer Tim Cook said in a statement.

Shortages

Apple stock rose more than 2% in after-hours trading, but it could have been bigger if not for a warning about potential supply shortages.

Not only did Apple not provide official guidance for the following quarter, Cook said on the earnings call that supply shortages could constrain growth in both the Mac and iPad ranges. “We expect to be supply-gated, not demand-gated,” Cook said. Apple Insider reported that Maestri also warned that Apple expects to see greater seasonal revenue declines heading into the June quarter.

The warning on supply issues at Apple is not a complete surprise. A report April 8 already detailed issues with the iPad and Mac lineup.

The issue is part of a broader global chip shortage that is affecting all players in the market, driven by a COVID-19 pandemic supply chain crunch and a soaring demand for products such as laptops and mobile devices that can facilitate remote work. According to comments from Intel Corp. CEO Pat Gelsinger earlier this month, the shortage could continue into 2023.

Others are more optimistic about Apple’s ability to obtain chip supply.

“I think the big story on Apple is that it can get ahold of components while others cannot,” said Moor Insights & Strategy analyst Patrick Moorhead. “The 79%-70% iPad-Mac growth indicates that its supply chain team excelled when many others didn’t. Apple makes strategic, multibillion-dollar capital expenditures to increase its chances of getting enough chips and displays.”

Photo: Apple