Apple 3rd Quarter Financial Reports
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Posted on 07/26/2016 1:57:43 PM PDT by Swordmaker
Apple today announced financial results for its fiscal 2016 third quarter ended June 25, 2016. Apple posted quarterly revenue of $42.4 billion and quarterly net income of $7.8 billion, or $1.42 per diluted share. These results compare to revenue of $49.6 billion and net income of $10.7 billion, or $1.85 per diluted share, in the year-ago quarter. Gross margin was 38 percent compared to 39.7 percent in the year-ago quarter. International sales accounted for 63 percent of the quarter’s revenue.
“We are pleased to report third quarter results that reflect stronger customer demand and business performance than we anticipated at the start of the quarter,” said Tim Cook, Apple’s CEO, in a statement. “We had a very successful launch of iPhone SE and we’re thrilled by customers’ and developers’ response to software and services we previewed at WWDC in June.”
“Our Services business grew 19 percent year-over-year and App Store revenue was the highest ever, as our installed base continued to grow and transacting customers hit an all-time record,” said Luca Maestri, Apple’s CFO, in a statement. “We returned over $13 billion to investors through share repurchases and dividends, and we have now completed almost $177 billion of our $250 billion capital return program.”
Operating Segments:
• Americas: $17.953 billion (-11% YOY)
• Europe: $9.643 billion (-7% YOY)
• Greater China: $8.848 billion (-33% YOY)
• Japan: $3.529 billion (+23% YOY)
• Rest of Asia Pacific: $2.375 billion (-20% YOY)
Product Summary:
• iPhone: 40.399 million units, $24.048 billion revenue (-15% units, -23% revenue YOY)
• iPad: 9.950 million units, $4.876 billion revenue (-9% units, +7% revenue YOY)
• Mac: 4.252 million units, $5.239 billion revenue (-11% units, -13% revenue YOY)
• Services: $5.976 billion revenue (+19% YOY)
• Other Products: $2.219 billion revenue (-16% YOY)
Notes:
1. Services includes revenue from Internet Services, AppleCare, Apple Pay, licensing and other services.
2. Other Products includes sales of Apple TV, Apple Watch, Beats products, iPod and Apple-branded and third-party accessories.
Apple is providing the following guidance for its fiscal 2016 fourth quarter:
• revenue between $45.5 billion and $47.5 billion
• gross margin between 37.5 percent and 38 percent
• operating expenses between $6.05 billion and $6.15 billion
• other income/(expense) of $350 million
• tax rate of 25.5 percent
Apple’s board of directors has declared a cash dividend of $.57 per share of Apple’s common stock. The dividend is payable on August 11, 2016 to shareholders of record as of the close of business on August 8, 2016.
Apple will provide live streaming of its Q3 2016 financial results conference call beginning at 2:00 p.m. PDT on July 26, 2016 at . This webcast will also be available for replay for approximately two weeks thereafter.
Analysts expected:
• EPS of $1.38 (Thomson Reuters) – $1.40 (FactSet) – $1.42 (Estimize)
• Revenue of $42.09 billion (Thomson Reuters) – $42.2 billion (FactSet) – $42.1 billion (Estimize)
MacDailyNews Take: Solid.
UPDATE: AAPL After hours: $101.56, up $4.89 (+5.06%) as of 4:53PM EDT.
The interesting thing is that Apple did much better in the US and I would have expected them to do better in Europe.
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Thanks for posting.
Apple ended the quarter with $231 billion in cash PLUS additional assets in short term assets. $218 billion of this is off shore.
Once President Trump takes charge, Apple can continue to flourish because other PC makers are almost completely overseas in China, or other Asian countries, while Apple has strong roots here with thousands of employees in the U.S.A. and much manufacturing. Apple can easily shift more manufacturing here; other PC companies would have to start from scratch once extra tariffs are put in place.
Actual iPhone sales during the quarter when inventory draw down is taken into account, was close to 45 million units, not the 40.4 million!
And I'll venture to guess that a whole lot of that bump in sales was mostly the 5SE. (Along with iPad Pro....)
Grandma and I are both liking heck out of those phones and our old iPad is getting replaced with the 'Pro before the end of the month based solely on the way those 5SE's have worked out for us.
• Start of conference call
• Quarterly revenue: $42.4 billion
• Net income of $7.8 billion
• Gross margin was 38 percent
• Cook feels good about channel inventory levels
• iPhone SE demand outstripped supply all quarter – just recently brought into balance
• iPhone SE is popular in both developed and emerging markets
• iPhone SE is bringing in new users are high levels
• Switchers account for greatest Apple has ever seen for any 9 month period
• Apple’s Services business alone will be the size of a Fortune 100 company next year
• Apple’s Services includes revenue from Internet Services, AppleCare, Apple Pay, licensing and other services.
• Best iPad compare in 10 quarters thanks to rollout of 9.7-inch iPad Pro
• Apple Watch continues to be best-selling smartwatch in the world
• Cook: We’re just getting started with Apple Watch and look forward to more exciting announcements in that space
• Cook: Opened 41st retail store in China last quarter. Cook very excited about Greater China prospects
• Cook: In first three quarters, revenue from Greater China topped $40 billion, up 55% vs. same time frame two years ago, iPhone units up 47%
• Cook: Our biggest WWDC ever was held during quarter in June. We now have four platforms (macOS, iOS 10, tvOS, watchOS)
• AAPL After hours: $103.40, up $6.73 (+6.96%) as of 5:12PM EDT
• Cook recaps WWDC announcements
• Cook thrilled by customers’ and developers’ response to software and services we previewed at WWDC in June
• Differential Privacy will enhance Apple’s ability to deliver groundbreaking services without compromising security and privacy
• Apple Pay customers up more than 450% YOY in June
• More than 11 million Apple Pay-ready locations, including 3 million in the USA
• Apple Pay now live in 9 markets; adoption outside USA has been explosive
• Apple’s unparalleled Continuity across device will become even more powerful (and inimitable – MDN Ed.)
• Cook: I am very bullish on the future
• Apple CFO Luca Maestri: Operating Segments:
– Americas: $17.953 billion (-11% YOY)
– Europe: $9.643 billion (-7% YOY)
– Greater China: $8.848 billion (-33% YOY)
– Japan: $3.529 billion (+23% YOY)
– Rest of Asia Pacific: $2.375 billion (-20% YOY)<
• Product Summary:
– iPhone: 40.399 million units, $24.048 billion revenue (-15% units, -23% revenue YOY)
– iPad: 9.950 million units, $4.876 billion revenue (-9% units, +7% revenue YOY)
– Mac: 4.252 million units, $5.239 billion revenue (-11% units, -13% revenue YOY)
– Services: $5.976 billion revenue (+19% YOY)
– Other Products: $2.219 billion revenue (-16% YOY)<
• Overall iPhone ASP was $595; Apple expects higher this quarter
• 75% of corporate customer in USA intend to buy Apple iPhones (highest ever)
• App Store growth rate 37% in Q316
• AAPL After hours: $103.14, up $6.47 (+6.69%) as of 5:20PM EDT
• NPD: iPad gained share in overall US tablet market and has 84% share of tablets over $200
• Services business grew 19 percent year-over-year and App Store revenue was the highest ever, as our installed base continued to grow and transacting customers hit an all-time record
• Apple has now returned over $13 billion to investors through share repurchases and dividends, and has now completed almost $177 billion of the company’s $250 billion capital return program
• Apple cash on-hand: $231.5 billion (+$1.4 billion this quarter)
• Apple invested $1 billion in Didi Chuxing during the quarter
• Apple’s board of directors has declared a cash dividend of $.57 per share of Apple’s common stock
• Apple is providing the following guidance for its fiscal 2016 fourth quarter:
– revenue between $45.5 billion and $47.5 billion
– gross margin between 37.5 percent and 38 percent
– operating expenses between $6.05 billion and $6.15 billion
– other income/(expense) of $350 million
– tax rate of 25.5 percent
• Apple’s board of directors has declared a cash dividend of $.57 per share of Apple’s common stock
• The dividend is payable on August 11, 2016 to shareholders of record as of the close of business on August 8, 2016
• Cook on investments: We invest in our business (R&D and production). We’re constantly looking for great talent and great IP. We have been buying companies, on average, every 3-4 weeks and we continue to do that
• Cook: We see Didi Chuxing as a great financial investment and see things companies could work together on in the future and as a learning opportunity
• Maestri: 37.5%-38% gross margin guidance (product transition costs, see overall commodity prices to decline)
• Cook: We will not discuss future products or product transitions
• We saw double-digit growth in some important countries last quarter
• Highest ever recorded number of iPhone switchers
• We expect Services to grow “very briskly”
• We think to have a great platform you have to have a really healthy ecosystem
• We want to do everything we can to help developers create and offer great apps
• AAPL After hours: $103.79, up $7.12 (+7.37%) as of 5:34 PM EDT
• Maestri: Gross margin impacted by specific product mixes, currency headwinds, hedging programs rolling off, etc. US dollar about 15% stronger than it was this time in 2014
• Cook on iPhone upgrade rate: Won’t talk about unannounced products.
• We have seen iPhone upgrade rates fro the iPhone 6S is very similar to the 5S
• iPhone 6 was significantly higher that 6S
• Cook: I’m very optimistic about the future of iPhone upgrade rate
• iPhone install base has gotten incredibly large
• iPhone is becoming even more essential to people’s lives
• High rates of switchers – all of these vectors are positive for iPhone upgrade rates
• iPhone SE is opening the door to people Appel hasn’t reached before
• Maestri: $3.6 billion channel inventory reduction during the quarter counts across all product lines, not just iPhone
• Maestri: The macroeconomic environment is slowing down in numerous places around the world, so we’ve accounted for that in our guidance
• Cook: iPhone demand is made up of upgraders, switchers, and new-to-smartphone (penetration is at 42% currently worldwide; there’s much opportunity there)
• Switchers: We really like what we’re seeing. As the smartphone itself becomes more and more essential in users’ daily lives, we think people will put more focus on what they’re buying and the user experience Apple offers will lead people to iPhone
• Upgraders: More and more people have joined upgrade programs. Apple’s plans and carriers’ plans will change out the iPhone every year or every 18 months – as of today, there are more people on these types of programs than ever before – these programs really just started in the last year
• Cook: I’m very optimistic on iPhone
• Cook: In China for Books and Movies, our online stores are currently off (those two stores’ revenue during the several months they were operational were less than $1 million)
• The stores are to increase the value of the iPhone. Apple looks to run those stores back on in China ASAP
• Cook: Apple Pay revenue are in the Service line, the growth is astronomical, but the base is very small
• Cook: Augmented Reality (AR) and Pokémon GO phenomenon shows the power of App Store distribution model
• Cook: Apple has been and continues to invest in AR
• Cook calls them “Pokémans” when describing what game players are chasing.
• Cook: We do continue to invest significantly in R&D
• Cook: Quite a bit of R&D growth and expenditures are beyond products that Apple is currently shipping
• Maestri: We’ve reduced more than 4 million units of iPhone channel inventory on the high end
• Maestri: We believe the iPhone SE is doing exactly what is intended: Higher rate of switchers and current customers upgrading who prefer the 4-inch form factor
• iPhone SE is bringing more people into the iOS ecosystem
• AAPL After hours: $103.25, up $6.58 (+6.81%) as of 5:59PM EDT
• Cook: Apple TV last October and and tvOS are building the foundation for what Apple beleives can be a broader business over time. You shouldn’t look at what’s there today and think that’s all Apple wants to do.
• AAPL After hours: $103.27, up $6.60 (+6.83%) as of 6:02PM EDT
• End of conference call.
As I recall Apple took moves to move some manufacturing back into the US a couple years ago. I think it may have been driven by concerns on IP getting out, but don’t think the article I read mentioned anything other than diversifying the manufacturing base.
Here’s a couple of notes on the topic from 2012 and 2013.
Naturally Wall Street rewards with the stock going down... Never understood that.
Looks like Apple is no longer a growth play.
It’s plenty big enough and shall continue to deliver massive profits to shareholders for many years to come.
I would not be suprised that Apple will substantially bump up iPhone SE production—especially to meet demand in emerging markets like India. Besides, it’s actually a nice phone to use, since it is very comfortable to use in one-handed operation.
I agree, it is not a bad investment, but it was undervalued when it was growing YOY by huge amounts, and now it may be settling in to a range that will involve slow growth and small dividends from here on out. Unless they come up with a new iPhone, a new product that revolutionizes and creates a new market.
Tim Cook: Apple’s services business alone will be the size of a Fortune 100 company by next year
Tuesday, July 26, 2016 · 8:06 pm“CEO Tim Cook said he feels ‘fantastic’ about iPhone sales in the last quarter and touted the strength of the company’s services business,” Harriet Taylor and Josh Lipton report for CNBC.
“Globally, Apple grew its revenue from Services 19 percent and the app store hit an all-time record,” Taylor and Lipton report. “Services will be “the size of a Fortune 100 company by next year,” said Cook.”
“‘I feel fantastic about how iPhone did this quarter,’ CEO Tim Cook told CNBC. ‘Looking ahead, iPhone will be more important than ever,'” Taylor and Lipton report. “Cook told CNBC he feels really good about sales in China. ‘We are not backing off our investment in China,’ he said.”
As I showed last week, the revenues from Apple's newest product, the Apple Watch, in the last year alone were larger than the annual revenues earned by 116 of the Fortune 500 companies. . . had the Apple Watch line been a stand alone company.
Sorry, no, not this time. After Hours trading is UP almost 7% since the conference call today. Close was 97.34. Current quote (delayed 15 minutes) is 103.31, up 6.87%! It's been up as high as 109 in after hours today!
That’s all well and good, but you are referencing growth in a small part of Apple’s revenue stream. If the decrease in YOY revenue since last year is a momentary blip, fine. But if next year, growth in revenue and profits OVERALL will be flat or decline, then it is no longer a growth company. iPhone is such a huge part of the company that a decline in sales of that segment will bring down growth and revenue for the whole company. It’s not a terrible thing, the iPhone is so good that fewer people are upgrading and they have expanded in so many markets that growth for new users has slowed down. But it does mean the multiple you would apply to Apple earnings would be different. It was too low before, so it may even out.
If I was Trump I would not allow Foxconn and Pegatron to set up shop here. This is just more foreign colonization. We have enough of this. I would tell CrApple they have to set up their own assembly lines in the US or forget it....or perhaps collaborate with US companies on this.
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