Hello Risers,

As the earnings release season begins to kick in, more of our portfolio companies are releasing their results and Apple Inc released its earnings result, validating our investment thesis to be a resilient asset both in great and harsh economic realities. 

The world’s most valuable company posted the highest revenue in its history as Apple’s sales in Q1 of 2022 climbed 11% to $123.9B, led by strength in the iPhone which generated $71.6B of revenue over the three-month period with earnings also topping $30bn for the first time.

The iPhone maker’s financial performance, despite supply chain problems costing the company “more than $6B” in revenue, showed a victory against the logjams and chip shortages that have hit many industries during the pandemic. Apple’s wearables unit which includes the Apple Watch and AirPods, generated $14.7B in revenue during the period, up from the $12.9B seen in the first quarter of 2021. Services revenue also rose to $19.5B in the quarter, up from $15.7B year over year, with more than 785M paid subscriptions across the segment.

Rise believes that the proliferation of 5G technology in China helped the company achieve remarkable growth in China 20%  year over year. It is also expected that the continued proliferation of 5G in both China and the US will drive further growth.  

Meanwhile, the trend of work from home, learning remotely, and things of that nature has reinvigorated growth for the iPad and Mac. Rise understands that these products are more important now as we continue to make our way through the post-pandemic era, changing Apple’s offerings story from being just a story about the iPhone to including tablets and Macs.

“This quarter’s record results were made possible by our most innovative lineup of products and services ever,” said Tim Cook, Apple’s CEO. “We are gratified to see the response from customers around the world at a time when staying connected has never been more important.”

Finally, we expect Apple’s expansion and entry into new markets such as the metaverse business, Augmented and Virtual Realities (AR/VR) and electric vehicles will also help the company continue to march its unprecedented growth forward. 

Q1 2021Q1 2022
Return on Asset8.12%9.08%
Return on Equity43.42%48.14%
Gross Margin39.78%43.76%
Net Margin25.80%27.94%