Apple (AAPL): iPhone Average Selling Price Up 24% to $880 in Q2, But a Likely Reversion to a More Traditional Mix in 2022 Will Impact Margins and Revenues - Bernstein
- Wall Street ends down as data spooks investors awaiting Fed report
- Roblox (RBLX) Lower as DAUs Fall Sequentially
- DraftKings (DKNG) Plunges as Hindenburg's Report Indicates Betting Company's Links to Black Market Operations
- Oracle (ORCL) Tops Q4 EPS by 23c
- U.S. retail sales take step back as spending pivots to services, trend remains strong
News and research before you hear about it on CNBC and others. Claim your 1-week free trial to StreetInsider Premium here.
Bernstein analyst Tony Sacconaghi breaks down Apple's (NASDAQ: AAPL) Q2 earnings report with a focus on margins and average selling price (ASP).
Apple raised iPhone ASPs by $170 YoY (24%) to over $880 in Q2, which is the highest level since the iPhone launch in 2008. According to Sacconaghi, the Q2 ASP growth also represents the second-highest sequential change in iPhone ASPs in the last nine years.
“What is driving strength in iPhone ASPs? We believe it is largely a mix shift to Pro/ProMax models. Moreover, our analysis suggests that this mix shift was the principal driver (~50%) of Apple's stunning 575 bps of YoY improvement in product GMs in Q2. We estimate that the mix of Pro/Pro Max models in Q2 may have been 2000 bps higher than a year ago. Moreover, we believe that margins are 1000 bps+ higher than non-Pro Models, largely due to richer attach rates of storage/NAND, which generates up to 90% incremental gross margin,” the analyst writes in a note.
So, what happens to ASPs going forward?
“We struggle with whether strong ASPs will persist into next year. On one hand, Apple is optimistic that financing and trade-in plans will continue to encourage consumers to buy the best available/most expensive devices. That said, we believe that pandemic wallet share shifts may have contributed to the increase in ASPs (and could reverse); and, as noted above, we suspect that Apple's wealthiest and most feature sensitive customers were the first to upgrade to Apple's iPhone 12 5G offering, and that consumers over the next few quarters/cycle will be less enthusiastic/affluent on balance, potentially opting for less expensive models and lower storage configurations,” explains Sacconaghi.
In case the market reverses to “a more traditional Pro mix,” we could see ASPs drop by 5% or more in FY 22, impacting Apple' revenues by $10B+ and company GMs by over 100 bps, concludes Sacconaghi.
Serious News for Serious Traders! Try StreetInsider.com Premium Free!
You May Also Be Interested In
- Forward Industries (FORD) Shares UP over 40% Following Earnings, Distribution Agreement with Chipolo
- PURE Bioscience Reports Fiscal 2021 Third Quarter and Nine-Month Financial Results
- Active options: AAPL AMC TSLA NIO WISH F PLTR CRSR CLOV INTC
Create E-mail Alert Related CategoriesAnalyst Comments
Related EntitiesSanford C. Bernstein, Earnings
Sign up for StreetInsider Free!
Receive full access to all new and archived articles, unlimited portfolio tracking, e-mail alerts, custom newswires and RSS feeds - and more!