Tim Cook: Apple Met 2022 Challenges Head On, With Only iPad Slipping

‘The world continues to be unpredictable, as old challenges evolve and new ones emerge. What remains constant is the ability of our teams to create great products, service and experiences while being a force for good in the world,’ said Apple CEO Tim Cook during Apple’s financial conference call.

Apple Thursday beat fiscal year 2022 expectations despite coming up a bit short on expected iPad sales.

Apple had a record fourth fiscal quarter 2022 and full fiscal year, which CEO Tim Cook said was better than anticipated despite stronger-than-expected foreign currency headwinds.

“Over the past year, despite a range of challenges facing the world, our teams have come together in incredible ways to drive unparalleled innovation and deliver again and again for our customers,” he told financial analysts in his prepared remarks during the company fourth fiscal quarter 2022 financial conference call.

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Apple saw an all-time revenue record for Mac sales and fiscal fourth quarter revenue records for iPhone and for wearables, home and accessories, as well as for services, Cook said. The company also set another record for its installed base of active devices thanks to what Cook called a quarterly record of upgraders and double-digit growth in switchers on iPhone.

“Across nearly every geographic segment, we reached a new revenue record for the quarter,” he said. “And we continue to perform incredibly well in emerging markets with very strong double-digit growth in India, Southeast Asia and Latin America. I’m also happy to report that during the quarter, silicon-related supply constraints were not significant.”

However, Cook said, there continue to be headwinds from macroeconomic issues.

“I want to acknowledge that we are still living through unprecedented times,” he said. “From war in Eastern Europe to the persistence of COVID-19, from climate disasters around the world to an increasingly difficult economic environment, a lot of people in a lot of places are struggling. Through it all, we’ve aimed to help our customers navigate through the challenges while giving them the tools to drive progress for themselves and their communities. “

Apple also understands the responsibility it has to the communities it serves, Cook said.

“That’s why we continue to invest in education, racial equity and justice, and the environment,” he said. “And we are making important progress toward a more inclusive and diverse workforce. Through our community education initiative, we’re working alongside more than 150 partners to help students around the world learn new science and technology skills.”

Apple is also focused on improving the earth’s environment, Cook said.

“In support of our 2030 environmental goals, we have asked all of our suppliers to become carbon-neutral across their entire Apple-related footprint by the end of the decade,” he said. “We are also providing them with resources based on what we learned achieving net zero carbon in our own global operations. Across our entire product lineup, we also continue to source more materials through recycling, while taking less from the earth. Every iPhone 14 is made with 100 percent recycled rare earth elements in all magnets, including those used in MagSafe [chargers]. And in a first for Apple Watch and iPad, we’re using recycled gold in the plating of multiple printed circuit boards in our newest devices.”

Challenges persist for the industry, Cook said.

“The world continues to be unpredictable, as old challenges evolve and new ones emerge,” he said. “What remains constant is the ability of our teams to create great products, services and experiences while being a force for good in the world. Whatever challenges lie ahead in the new year, we’re moving forward as we always have investing for the long term to deliver incredible innovations for our customers like only Apple can.”

Apple CFO Luca Maestri said during his prepared comments that fiscal 2022 was also a strong year for Apple’s enterprise business.

“We set new annual records for iPhone, iPad and Mac during fiscal 2022, and grew strong double digits year over year as our devices and services continue to help more and more companies empower their employees and serve their customers,” Maestri said.

When asked by an analyst what he saw regarding iPhone demand going forward, Cook said iPhone sales grew 10 percent during the fourth fiscal quarter to $42.6 billion.

“Customer demand was strong and better than we anticipated that it would be,” he said. “And keep in mind that this is on top of a fiscal year 2021 that had iPhone revenue grow by 39 percent. And so it’s a tough compare as well. And so we were happy with it.”

In terms of Apple’s new iPhone 14 and iPhone 14 Pro and Pro Max, it is still very early in their release, Cook said.

“But since the beginning, we’ve been constrained on the 14 Pro and the 14 Pro Max, and we continue to be constrained today, so we’re working very hard to fulfill the demand,” he said. “It’s difficult to say what the mix will be until we can satisfy the demand because we’re not able to determine the accurate mix until then. And so we were working very hard to do that.”

When asked by an analyst about performance of Apple’s Mac and iPad products, Cook said the fourth quarter was the best in the company’s history supported in part by the launch of the MacBook Air with M2.

Cook reminded analysts that Apple in the third fiscal quarter lost output from the factory for a significant portion of the quarter, leading to a backlog heading into the fourth quarter.

“We were able to satisfy all of that demand during Q4 and fill the channel for the Mac,” he said. “And so that led to an incredible Mac quarter. If you look at iPad, iPad had sort of the opposite happening from a launch point of view. The comp from a year ago, we launched iPads in September, we launched iPads this year in October. The other point to remember is that the iPad Pro had just launched before the quarter started in the year-ago quarter, so it was our first full quarter of iPad Pro. So it was an exceptionally strong iPad quarter a year ago, and the launches were really key to that performance. And so that’s the reason iPad contracted during this quarter.”

For its fourth fiscal quarter 2022, Apple reported total revenue of $90.15 billion, up from the $83.36 billion the company reported for its fourth fiscal 2021 quarter.

This included iPhone sales of $42.63 billion, up from $38.87 billion; Mac sales of $11.51 billion, up from $9.18 billion; iPad sales of $7.17 billion, down from $8.25 billion; and wearable, home and accessory sales of $9.65 billion, up from $8.79 billion. The company also reported services revenue of $19.19 billion, up from $18.28 billion.

On a GAAP basis, Apple reported net income of $20.7 billion, or $1.29 per share, up from last year’s $20.55 billion, or $1.25 per share.

For all of fiscal year 2022, Apple reported total revenue of $394.33 billion, up from the $365.82 billion the company reported for iys fiscal year 2021.

This included iPhone sales of $205.49 billion, up from $191.97 billion; Mac sales of $40.18 billion, up from $35.19 billion; iPad sales of $29.29 billion, down from $31.86 billion; and wearable, home,and accessory sales of $41.24 billion, up from $38.37 billion. The company also reported services revenue of $19.19 billion, up from $68.43 billion.

On a GAAP basis, Apple reported net income of $99.80 billion, or $6.15 per share, up from last year’s $94.68 billion, or $5.67 per share.