Reprinted from TidBITS by permission; reuse governed by Creative Commons license BY-NC-ND 3.0. TidBITS has offered years of thoughtful commentary on Apple and Internet topics. For free email subscriptions and access to the entire TidBITS archive, visit http://www.tidbits.com/ Apple Q4 2021 Results Smash Revenue Records but Could Have Been Even Better Michael E. Cohen Reporting on its financial results for the final fiscal quarter of 2021, Apple has announced profits of $20.6 billion ($1.24 per diluted share) on revenues of $83.4 billion, slightly under analyst expectations, where the consensus estimates were for $84.9 billion. Apple CEO Tim Cook attributed these lower-than-expected revenues to supply constraints, which he said may have reduced the revenue total by as much as $6 billion. Apple's revenues, nonetheless, were up 28.9% compared to the year-ago quarter, with profits for the quarter up by 62.6% (see [1]Apple's Q4 2020 Marks Record Revenues but Lower Profits as Mac and iPad Boom, 29 October 2020). 'Supply constraints,' in fact, was a continuing theme in Apple's quarterly conference call with financial analysts. Cook described two kinds of constraints: chip shortages, which are a worldwide problem, and COVID-related manufacturing disruptions in Southeast Asia (which was hit particularly hard by the Delta variant of COVID'see [2]Josh's analysis of recent supply chain woes). During the call, Cook said that while the COVID-related constraints are easing, he expected the chip shortage to continue. When paired with increased demand for Apple products, the chip shortage may again result in revenue shortfalls to the tune of another $6 billion in Q1, which is traditionally Apple's most lucrative quarter of the year. In other words, don't expect your [3]Apple cleaning cloth to ship anytime soon. As far as Apple's revenue mix goes, the iPhone still reigns supreme, but now represents less than half of Apple's quarterly income, with Services now being in a strong second place. (Which category does the cloth fit under? Mac or 'Wearables, Home, and Accessories?') iPhone After experiencing a big drop in Q4 2020, the iPhone has recovered with an eye-popping 47% year-over-year increase in revenue, bringing in $38.9 billion versus $26.4 billion in the year-ago quarter. However, the comparison between this quarter's iPhone revenues and those in the same quarter last year may be somewhat misleading, since new iPhones did not enter the market until after the end of the Q4 2020 (see '[4]Apple Q3 2020 Breaks Records While the World Burns, Next iPhone to Be Fashionably Late,' 30 July 2020). Nonetheless, iPhone demand itself is strong, and that, combined with supply chain problems, has caused, Cook said, channel inventory to be well below the company's target figures. iPad Unlike most of us, the iPad had a strong 2020, and that is continuing into 2021, with a 21.4% revenue increase over the year-ago quarter. The iPad raked in $8.3 billion this quarter, up from $6.8 billion in the same quarter last year. Apple, however, expects continuing supply constraints to reduce iPad revenues for Q1 2022. Mac The Mac boomed in 2020, but its growth is back to modest gains in Q4. It saw a 1.6% increase in revenue since the year-ago quarter, bringing in $9.2 billion vs. $9.0 billion in Q4 2020. Nonetheless, this set an all-time Mac revenue record for the quarter; in fact, each of the last five quarters have set all-time records for Mac revenues. The increase this quarter was buoyed by releases of new consumer MacBooks and iMacs, both powered by Apple silicon, earlier this year. The most recent releases of MacBook Pro models, however, began after the end of the fiscal quarter and did not factor into the results. Services Services continue to boom, climbing 25.6% year-over-year, from $14.5 billion in Q4 2020 to $18.3 billion in Q4 2021. Services revenue has tripled since it became its own category in 2015. And it's the one aspect of Apple's business not heavily tied to the supply chain. Cook was especially ebullient about the success of its Apple TV+ offerings, citing the popularity (and recent Emmy award wins) for shows like Ted Lasso and The Morning Show. More importantly, however, in terms of revenue, are the subscriber numbers for Apple services, which Cook pegged at 745 million. These services include not only Apple TV+ but the company's Apple Fitness+ offerings, Apple Music business, and Apple Arcade service. One possible fly in Apple's services ointment is the attempts by government legislators and regulators to reduce Apple's close control over its App Store. Cook several times made clear that Apple is committed to protecting the privacy and security of its software customers and repeated a phrase he has made several times recently: 'We believe privacy is a basic human right.' Wearables Wearables continues to be a strong performer for Apple, up 11.5% from the year-ago quarter, bringing in $8.8 billion from $7.9 billion. Little was said about wearables during the quarterly investor call, but between the Apple Watch Series 7 and the third-generation AirPods, we expect this business segment to do well in Q1 2022. And Apple continues to smash records in global regions, experiencing increased revenues during the quarter in every geographic segment of its business. The chart speaks for itself. Summing it all up: Apple remains an antifragile company. Despite COVID, an uncertain global economy, increased governmental oversight, and an overstressed supply chain, Apple continues to grow'whether Wall Street likes it or not. (See '[5]Apple Is Now an Antifragile Company,' 30 July 2021.) References Visible links 1. https://tidbits.com/2020/10/29/apples-q4-2020-marks-record-revenues-but-lower-profits-as-mac-and-ipad-boom/ 2. https://theprepared.com/blog/deep-dive-on-whats-behind-the-supply-chain-disruptions-of-2021-and-what-you-should-do-about-it/ 3. https://appleinsider.com/articles/21/10/26/apples-cleaning-cloth-is-sold-out-through-january----get-this-instead 4. https://tidbits.com/2020/07/30/apple-q3-2020-breaks-records-while-the-world-burns-next-iphone-to-be-fashionably-late/ 5. https://tidbits.com/2021/07/30/apple-is-now-an-antifragile-company/ Hidden links: 6. https://tidbits.com/wp/../uploads/2021/10/Q4-2021-category-time.jpg 7. https://tidbits.com/wp/../uploads/2021/10/Q4-2021-category-share.jpg 8. https://tidbits.com/wp/../uploads/2021/10/Q4-iPhone-2021.jpg 9. https://tidbits.com/wp/../uploads/2021/10/Q4-iPad-2021.jpg 10. https://tidbits.com/wp/../uploads/2021/10/Q4-Mac-2021.jpg 11. https://tidbits.com/wp/../uploads/2021/10/Q4-Services-2021.jpg 12. https://tidbits.com/wp/../uploads/2021/10/Q4-2021-wearables.jpg 13. https://tidbits.com/wp/../uploads/2021/10/Q4-regional-2021.jpg .