Tim Cook’s array of new products boosted Apple Inc.’s sales growth last quarter to the highest level in three years, and the acceleration is set to continue with the introduction of its first smartwatch.
Apple on Tuesday posted a 30 percent jump in fiscal first-quarter revenue to $74.6 billion, as net income rose 38 percent to a record $18 billion. The results were fueled by sales of larger-screened iPhones and refreshed Mac computers that Apple had unveiled in September, part of a barrage of new products from Chief Executive Officer Cook as he sought to revitalize the company’s revenue.
The growth was Apple’s most robust since the fiscal second quarter of 2012, when revenue soared 59 percent, according to data compiled by Bloomberg. The Cupertino, California-based company forecast the strong performance would continue, projecting revenue would rise by at least 14 percent in the March quarter. Cook also said Apple would ship the Apple Watch — its first new gadget category since debuting the iPad in 2010 — starting in April.
The results, combined with Apple Watch’s rollout date, underscored how Cook still has levers left to pull for growth. Even with Apple producing more than $182 billion in annual revenue and at a market capitalization of more than $635 billion, it still has the ability to expand faster than other technology companies, many of which have seen their growth rates decline to the low single digits.
“Given what we see ahead for Apple in 2015 and beyond, we are even more excited about the company’s early-stage ramp in this transformational cycle,” Brian White, an analyst with Cantor Fitzgerald, said in note to investors.
Apple shares gained 8.7 percent to $118.64 at 7:28 a.m. New York time on Wednesday. Investor enthusiasm for Apple’s new products helped push shares to a high in November, briefly boosting the company’s market capitalization to more than $700 billion.
Apple still faces challenges to growth, including the strengthening U.S. dollar. Chief Financial Officer Luca Maestri cautioned Tuesday that the company’s forecasted revenue growth would’ve been five points higher if currency stayed constant. In addition, iPad sales declined for the fourth consecutive quarter as some consumers gravitate to bigger-screened smartphones instead of tablets.
Gene Munster, an analyst at Piper Jaffray Cos., said Apple also faces a tough comparison in the second half of the year to a strong 2014 performance.
Still, he added that with more new devices set to become available, Apple will “definitely keep cooking for the next couple of quarters.”
The fiscal first quarter was boosted by the bigger-screen iPhone 6 and 6 Plus, with sales rising 46 percent to 74.5 million units, topping analysts’ average estimate of 64.9 million. That exceeded the full-year iPhone sales of 72.3 million that Apple made in all of fiscal 2011, according to data compiled by Bloomberg.
“We had the highest number of customers new to iPhone last quarter than in any prior launch,” Cook said on a conference call with analysts.
The iPhones helped boost margins to 39.9 percent. That topped Apple’s forecast in October of 37.5 percent to 38.5 percent and exceeded the average prediction of analysts for 38.5 percent.
Sales were particularly robust in China, where revenue rose 70 percent as the company works to expand in the country. Cook has said Apple will open 25 new stores in the country within two years. In the Americas, sales rose 23 percent, while revenue from Europe increased 20 percent, Apple said.
With China celebrating Chinese New Year in February, the holiday may provide another boost to Apple.
“We have a lot of momentum in China,” Maestri said in an interview. “Chinese New Year is a very important part of the cycle in China, and so we hope to take advantage of that.”
The strength of the U.S. dollar challenged Apple in places such as Russia, where the company briefly halted online sales during the quarter.
“Our results would’ve been even stronger absent fierce foreign-exchange volatility,” Cook said on the call.
IPad unit sales fell 18 percent to 21.4 million units in the quarter, while Mac sales rose 14 percent to 5.5 million units. Apple is looking to fuel iPad sales by teaming up with International Business Machines Corp. to create programs for iPads and iPhones, including 12 apps this quarter. Apple is also preparing for a larger-screened iPad this year, Bloomberg News has reported.
Apple said its new digital payment service, Apple Pay, also showed promise after its rollout in October. Apple Pay already accounts for more than $2 out of $3 of purchases using contactless mobile-phone payments across the three major credit- card networks, the company said.
Now Apple Watch, which Apple has said will cost $349 for a basic version, is on deck. The device must be paired with an iPhone to work and has a rectangular, touch-screen face. A dial on the side will be used for navigating between functions, and it includes sensors to detect a pulse rate and has other health- tracking features for monitoring things like calories burned.
“The creativity and software innovation going on around Apple Watch is incredibly exciting and we can’t wait for our customers to experience them when Apple Watch becomes available,” Cook said on the call.
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