Highest Gross Margin in Years
For years, Apple’s gross margin — the ratio of the company’s profits compared to its net sales — has hovered around 38 percent. It’s a healthy and respectable number, but this year it jumped to the highest level that it’s been in nine years, at $38 billion, or 42.5%.
Basically, this means that out of Apple’s $89.5 billion in revenue, $38 billion of that was straight profit. The last second quarter where Apple broke the 40% mark was in Q2 2015, when a $23.7 billion in profit out of $58 billion in revenue gave it a gross margin of 40.8%.
During the earnings call, CFO Luca Maestri indicated that strong demand for the higher-end iPhone 12 Pro and iPhone 12 Pro Max was one of the driving factors in pushing the gross margin higher, along with internal cost savings and favourable foreign exchange rates. Strong sales across all product categories contributed overall, however, and Apple expects the higher gross margin to continue into Q3.