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Apple delivers best-ever third quarter as iPhone sales soar

Apple Inc reported blockbuster earnings in its third quarter as strong sales of its new iPhone 12 and growth in its services business pushed revenues to record levels. In its results for the three months to June 30, reported after the close on Tuesday, the tech giant said net sales jumped 36% year-on-year to US$81.4bn, smashing market expectations, while operating profits jumped to US$24.1bn from US$13.1bn a year ago. The figures, the best third quarter numbers in the company’s history, were driven by a 49.8% rise in iPhone sales to US$39.6bn, while Mac and iPad sales grew 16.3% and 11.9% respectively. Services, meanwhile, jumped 32.9% to US$17.5bn. The group’s key Chinese market saw the fastest rate of sales growth during the period, rising more than 58% to US$14.8bn, while the US market, Apple’s largest region, grew 44% to US$35.9bn. Despite the record performance, the market reaction after hours was very muted, with Apple shares down 2.1% at US$143.70 overnight. One possible reason could be that growth in the quarter is slightly slower than the last, with the second quarter of the year seeing revenues jump 54% year-on-year to US$89.6bn. However, another reason may be that after successive blockbuster results the market is now used to the performance from Apple and has already priced in the dramatic rises in sales and profit. “The problem with being the best is you risk becoming a victim of your own success…quarterly revenues of over US$81bn would put most businesses on the planet to shame. Almost any way you frame this picture, it looks good. That just goes to prove that heavy is the head that wears the crown”, said Sophie Lund-Yates at Hargreaves Lansdown. However, the analyst added that despite the muted reaction the future for Apple looked bright going forward despite post-pandemic uncertainty. “Apple is a resilient creature, its unbendingly loyal customer base means that there’s an element of revenue visibility other businesses simply don’t have. The powerful brand should also help it stand strong in the face of possible rising inflation. Most big-ticket items are quickly rubbed off shopping lists as money loses its value, but there’s an army of Apple fans who are likely to keep the next iPhone clearly in their sight. Apple’s huge success also means concerns over potential supply constraints don’t pack as much of a punch as they could. The group’s amassed enormous resources, meaning if things do get tough, it can wait it out. If the last eighteen months have taught us anything, it’s that Apple can hold its own amid disruption”, Lund-Yates said.