Apple reports record revenue with IDFA changes set for ‘early spring’

Dive Brief:

  • Apple announced record revenue of $111.4 billion in Q1 2021, a 21% year-over-year lift fueled by double-digit growth in each product category.
  • Sales of iPhones grew 17% year-over-year to nearly $65.6 billion during the first quarter that the iPhone 12 was available, per the earnings report. Apple’s services business, which includes the App Store, cloud services, advertising, Apple Music, Apple Pay and Apple TV+, increased 24% to $15.8 billion. Wearables, home and accessories sales rose almost 30% to nearly $13 billion.
  • Apple setting new all-time revenue records demonstrates the company has weathered the challenges of COVID-19, with some areas of its business getting a boost as more consumers engage online. However, its planned changes to its Identifier for Advertisers (IDFA) are coming in “early spring,” the company confirmed to CNBC, adding to the data privacy challenges facing mobile marketers.

Dive Insight:

Apple’s record revenue in Q1 2021, across all facets of its business, is a reminder of how central the company remains for mobile marketing, even as changes to IDFA loom. Its active installed base of iPhones is now over 1 billion as consumer enthusiasm for the improved features of the iPhone 12 helped to drive sales.

Growing faster than the mature iPhone market is Apple’s services business. The company exceeded its target of 600 million paid subscriptions before the end of 2020, CFO Luca Maestri said on the earnings call. The key drivers of services growth all trended up, per Maestri, including the installed base across major product categories, transacting and paid accounts on digital content stores as well as paid subscriptions. Increasing revene from Apple’s services has long been a priority for CEO Tim Cook.

Included in services is Apple Pay, which is now accepted in nearly 90% of stores in the U.S., according to Maestri. Touchless payments have become a priority during the pandemic as consumers seek safer shopping experiences. And while COVID-19 has negatively impacted AppleCare and advertising, the company saw a sequential acceleration in advertising in the last quarter, per Maestri.

“The search advertising business is going well,” Cook said on the earnings call, attributing the success to Apple’s privacy policies. “We have been growing nicely in that area.”

Key to the company’s data privacy policies are the planned changes to IDFA, which will require app developers to receive opt-in permission from new users. The next beta version of iOS will include this change and will roll out in “early spring,” per CNBC. More than half (56%) of marketers expect to see a negative effect from the changes, an AppsFlyer survey found. Amid IDFA and other changes to the privacy landscape, collecting first-party data has become more important for marketers across categories.

Facebook used its own earnings call this week to continue its attacks on Apple’s proposed privacy changes, after last year warning that the change would cause a 50% drop in revenue for its Audience Network.

“Many small businesses will no longer be able to reach their customers with targeted ads,” Facebook CEO Mark Zuckerberg said on Wednesday’s call. “Apple may say that they’re doing this to help people, but the moves clearly track their competitive interests.”

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