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Deep Dive: Apple just reported its best performance of the past five years by three key measures


Apple Inc. just posted its best quarterly results over the past five years by three measures. And the numbers are even more impressive if you look back 10 years.

After the market close on Jan. 27, Apple AAPL, +6.98% reported record earnings of $34.63 billion for the quarter ended Dec. 25 — the first time its quarterly profit exceeded $30 billion. Sales came in at $123.95 billion, up 11% from a year earlier, with record iPhone sales, despite the worldwide shortage of computer chips and high inflation.

Read: After blowout earnings, beaten-down Apple shares are ripe for the picking, say analysts

To top it off, Apple CEO Tim Cook said during the company’s earnings call that the spectacular results were achieved even though the company “experienced supply constraints that were higher than the September quarter.”

Cook went on to say that for the March 2022 quarter (the second quarter of the company’s fiscal 2022), “we will do better or have less constraints than we had in the December quarter,” according to a transcript provided by FactSet.

Profit margins

Check out these numbers for more insight into how well Apple performed during the December quarter:

Profitability measure
Q1, Fiscal 2022
Rank – five years
Rank – 10 years
Max – 10 years
Quarter for max
Net margin
Q1, fiscal 2013
Operating margin
Q1, fiscal 2013
Gross margin
Q1, fiscal 2013
Source: FactSet

Apple’s fiscal year ends Sept. 25, so the quarter ending Dec. 25 was the first quarter of fiscal 2022. Apple’s quarterly net margin, operating margin and gross margin for the holiday quarter were all at their highest levels over the past 20 quarters. The highs for the three profit margins over the past 40 quarters were all in the first quarter of fiscal 2013, which ended Dec. 25, 2012.

Some notes about the profit margins and the results:

A company’s net margin is its net income divided by sales. Over the past 10 years, Apple’s quarterly net margin has only exceeded 27% during the most recent quarter and during the first quarter of fiscal 2013.
The operating margin is, essentially, earnings before interest, taxes, depreciation and amortization (EBITDA) divided by sales. For Apple, the holiday quarter was the first with an operating margin above 35% since the fourth quarter of fiscal 2012.
A company’s gross margin is sales, less the cost of goods sold, divided by sales. It is higher than operating margin, because it excludes overhead not related to producing or selling products or services. It also gives an indication of pricing power — a declining gross margin while sales are increasing might indicate a company is lowering prices or offering more discounts to defend its market share. A widening gross margin as sales increase is a good sign. Apple’s gross margin has now exceeded 40% for five straight quarters. Looking further back, the margin hadn’t exceeded 40% since the third quarter of fiscal 2012.

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