Apple Inc. delivered impressive first-quarter results today, beating estimates in every product category except for iPads.

The company also revealed its supply chain situation is improving, causing its stock to gain almost 5% in extended trading.

The iPhone maker reported net income of $34.63 billion for the quarter, with earnings before certain costs such as stock compensation coming to $2.10 per share. Revenue for the period rose 11% from the same time last year, to $123.9 billion. Analysts had been looking for earnings of just $1.90 per share on sales of $119 billion, so it was a solid beat.

Apple Chief Executive Tim Cook (pictured) said in a statement the quarter’s record results were the direct consequence of the “most innovative lineup” of products and services the company has ever had.

“We are gratified to see the response from customers around the world at a time when staying connected has never been more important,” Cook continued. “We are doing all we can to help build a better world — making progress toward our goal of becoming carbon neutral across our supply chain and products by 2030, and pushing forward with our work in education and racial equity and justice.”

Each of Apple’s product lines showed year-over-year sales growth with the exception of iPads. That caught some by surprise, as Apple had warned in October that supply chain challenges could affect its sales over the holiday period.

Apple’s iconic iPhone continues to be the company’s main money-making machine, with sales rising 9% from a year ago, to $71.63 billion. The next-biggest earner, by some distance now, is Apple’s services business, which saw its revenue grow to $19.5 billion, up 24%. Mac sales jumped 25%, to $10.85 billion.

Apple’s iPad revenue was the only blot on its copybook, falling by 14%, to $7.25 billion.

Other stats likely to impress investors include a gross profit margin in the quarter of 43.8% of its sales, Apple said. The company added that its growth was faster in the “Greater China” region than anywhere else, with revenues there rising 21% to $25.8 billion.

Cook told analysts on a conference call the quarter had turned out better than expected, with both iPhone and Mac sales hitting a record quarterly high. The company now claims more than 1.8 billion devices in its global installed base.

Apple Chief Financial Officer Luca Maestri said the increased sales came despite the company facing “significant supply constraints” throughout the quarter. He added these challengers were “particularly pronounced” with regard to iPads.

“IPad sales were down 14% due to very significant supply constraints, but customer demand was strong across all models,” the CFO said. “Despite the supply shortages, our installed base of iPads reached a new all-time high during the quarter.”

Meanwhile, Cook said Apple’s AppStore continues to be an “economic miracle,” not only for the company but also for application developers. The store’s $19.5 billion in revenue was another new record. Altogether, Cook said developers have earned more than $260 billion in sales through the App Store since its inception — a number the CEO has constantly touted amid antitrust concerns and ongoing criticism of what some see as high fees charged to developers.

Analyst Holger Mueller of Constellation Research Inc. said Apple had done extraordinarily well to navigate the supply chain cliffs it had warned about three months ago. He added that it was especially remarkable to see Apple grow its bottom line revenue by more than $13 billion compared to the year prior, despite its costs only rising $2.6 billion.

“This is even more pronounced in the services area which is a strategic growth imperative for Apple,” Mueller said. “Services revenue grew almost $4 billion year-over-year while the unit’s costs were up merely $400 million. It is remarkable Apple has managed to grow its revenue here so fast without increasing its underlying cost base.”

As far as negatives go, Mueller said he could see very few. The main one, he said, is Apple’s ongoing dependence on the North American region and its reliance on iPhone sales, with revenue from that unit higher than that of all of its other businesses together. “For every iPhone dollar Apple makes, it gets just 73 cents from the rest of its businesses,” Mueller added.

Looking to the next quarter, Apple once again declined to provide any official guidance. However, Maestri told analysts on the call that the supply chain constraints it continues to face will likely ease during the current quarter.

“Despite significant supply constraints, which we estimate to be less than what we experienced during the December quarter, we expect to achieve solid year over year revenue growth, and set a March-quarter revenue record,” he said.

Cook elaborated on the supply constraints, telling analysts that Apple had faced more than $6 billion of limitations in its shipments. That will be less this quarter, he said.

Once again, Cook said Apple’s supply issues are mostly to do with older technology components.
“The challenge is on legacy nodes, and these legacy nodes are by legacy supplier, and so it’s by supplier more than anything else,” he explained.

Asked about the revenue impact these supply constraints will have on the March quarter, Cook declined to offer any numbers. “It’s very difficult to estimate with great precision,” he said, adding that the impact will be “less than the December quarter.”

Photo: The Climate Group