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Mark Your Calendar: Apple Earnings

By Daniel Sparks – Sep 30, 2021 at 7:36AM

Key Points

  • Apple management guided for more sharp growth in fiscal Q4, albeit at a slower rate.
  • Supply constraints are making forecasting difficult.
  • Apple's guidance for the holiday quarter could help investors have an idea of how much supply constraints are impacting the company.

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The tech giant has been growing very rapidly in recent quarters. Can it keep up this momentum?

Apple (AAPL -0.80%) just put a date to its fiscal fourth-quarter earnings release: Oct. 28. Investors will likely be watching the update closely, as it follows the release of new products and comes at a time when the tech giant is facing global supply and logistical challenges. Investors will look to see whether the iPhone-maker was able to navigate these challenges and still managed to grow revenue meaningfully.

Analysts, on average, certainly expect a strong quarter from Apple. The consensus analyst estimate calls for robust double-digit revenue and bottom-line growth during the period. Can the Cupertino-based company deliver?

Here's an early preview of some of the items investors should check on when Apple reports earnings.

A person looking at the new iPhone 13 Pro in an Apple store.

Image source: Apple.

Revenue and profits

Apple's fiscal third quarter of 2021 was exceptionally strong, setting the bar high for fiscal Q4. The tech-company's revenue grew 36% year over year to $81.4 billion. Net income skyrocketed, climbing from $11.2 billion in the year-ago period to $21.7 billion. 

"Our record June quarter operating performance included new revenue records in each of our geographic segments, double-digit growth in each of our product categories, and a new all-time high for our installed base of active devices," said Apple CFO Luca Maestri in the company's fiscal third-quarter earnings call.

While Apple refrained from providing revenue guidance for fiscal Q4, it did say in its earnings call that it expects "very strong double-digit year-over-year revenue growth" during the period. It also said it expected growth to slow relative to its fiscal Q3 growth rate, citing foreign-exchange impact, more normalized growth in its services business, and challenges from supply constraints.

Analysts, on average, expect fiscal fourth-quarter revenue to increase 31% year over year to $84.7 billion. Their consensus estimate for earnings per share is $1.23, up from $0.73 in the year-ago period.

iPhone sales

Of course, investors will check on iPhone revenue. Not only is it the company's biggest product segment, but Apple started shipping its newest iPhone models in the last week of the quarter. Investors should look from commentary from management in the company's earnings call about how demand for new iPhone models is faring. 

Revenue guidance

As global consumer electronic-supply shortages persist, there's significant uncertainty about how well Apple will be able to navigate these issues during the holiday quarter. When asked during the company's fiscal third-quarter earnings call how supply constraints could impact the December-ending period, Apple CEO Tim Cook said that the company didn't plan to provide any color on its expectations for the period at the time. "We're going to take it ... one quarter at a time," he said.

An uncertain operating environment makes guessing how Apple's guidance for fiscal Q1 revenue will look challenging. For what it's worth (probably not much), the consensus analyst forecast currently calls for revenue of $119.8 billion in the important quarter, up from $111.4 billion in the first quarter of fiscal 2021.

Apple is scheduled to report its fiscal fourth-quarter earnings after market close on Thursday, Oct. 28.

Daniel Sparks owns shares of Apple. The Motley Fool owns shares of and recommends Apple. His clients may own shares of the companies mentioned. The Motley Fool recommends the following options: long March 2023 $120 calls on Apple and short March 2023 $130 calls on Apple. The Motley Fool has a disclosure policy.

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