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Apple's Holiday Quarter Was Nearly Flawless

Apple's( AAPL -2.39% ) revenue growth is expected to slow down this year as it laps the supercycle from the iPhone 12 release. However, that didn't stop the tech giant from breezing past estimates in its fiscal first-quarter earnings report.

In this episode of "Beat and Raise,"recorded onJan. 27, Fool contributors Trevor Jennewine and Brian Withers discuss Apple's latest quarter and why the company looks unstoppable.

Brian Withers: Let's give it a go. Apple always makes you sweat for the earnings and they make you wait for the iPhone release and all that. Why wouldn't they make you wait for earnings? We should just count on it.

Trevor Jennewine: I agree. [laughs] Yeah, they reported earnings after the close of market today. The stock was up 3 or 4% when I last checked after-hours. Pretty solid quarter for Apple, based on the market's reaction. Revenue came in at $123 billion, that was up 11%, that should say $123.9 billion there. Beat on the topline, earnings-per-share rose 25%. That was a beat on the bottom line. To put those numbers in perspective, the company beat by 4% on the top and 11% on the bottom. It's good to see both of those numbers coming in higher than expectations. Last quarter, Apple narrowly missed its revenue estimate.

Apple's Holiday Quarter Was Nearly Flawless

The rest of the story is good too. Gross margin is up to 43.8%. That's up from 41.7, so 2% jump in gross margin. Free cash flow up 25% to $44.2 billion. iPhone and Mac and wearables segments all beat expectations. iPhone sales were up 9% to $71.6 billion. This is the first full quarter of iPhone 13 sales so a sharp deceleration from their iPhone sales growth last quarter, but still coming in above expectations. Max segment was $10.9 billion, that was up 25%. Then, the wearables home and accessories was up 13% to $14.7 billion.

The only thing they missed was iPad. iPad was up 14%, and that was a slight miss on iPad sales. Also, noteworthy, the services segment grew 24% to $19.5 billion. Good to see that high-margin services segment growing. This is a slight deceleration from the previous quarter, but 24% still strong. In the press release, it comes out, Tim Cook also noted that the supply chain constraints are loosening. I'll be interested to hear management elaborate a little bit more on that during the earnings call. But all things considered, Apple was talking about the supply chain situation being a headwind for the quarter and all things considered, it looks like they posted some pretty strong results.

Withers: Absolutely, excited about seeing the iPhone sales pop up, as well as that services revenue which, to me, shouldn't depend on supply chain stuff, which is becoming just a juggernaut of a business in and of itself and that is, to me, just the power of the ecosystem that Apple has built piece-by-piece, brick-by-brick over the last 50 years of them as a company.

Jennewine: I agree. I think that's a big opportunity for the company going forward. Hopefully, they can maintain that strong double-digit growth for a while.

Withers: It's just super impressive this a couple of trillion-dollar market cap company continues to post 20+%. I guess, it was 20+% on the bottom line, and low double-digits on the top line. It's just absolutely amazing.

Jennewine: I'll be interested to hear management go a little bit deeper into some of these things on the call, which is starting very shortly.

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