MacDailyNews presents live notes from Apple’s Q318 conference call

MacDailyNews ^ | July 31, 2017— 4:45PM PDT

[Swordmaker]

>MacDailyNews presents live notes from Apple’s Q318 Conference Call with analysts starting at 5pm EDT/2pm PDT today.

Apple will provide live audio streaming of its Q318 Results Conference Call using Apple’s industry-leading QuickTime multimedia software.

The live webcast will begin at 2pm PDT/ 5pm EDT today here.

The company posted quarterly revenue of $53.3 billion, an increase of 17 percent from the year-ago quarter, and quarterly earnings per diluted share of $2.34, up 40 percent. International sales accounted for 60 percent of the quarter’s revenue.

For Q418, Apple guided for revenue between $60 billion and $62 billion.

Live notes from Apple’s Q318 Conference Call in reverse chronological order:Q

(reversed to chronological order with some editing to make it more sensible by Swordmaker)

• AAPL after hours: $195.05, +4.76 (+2.50%) @ 4:45PM EDT
• AAPL after hours: $195.19, +4.90 (+2.58%) @ 4:50PM EDT
  

• Apple Revenue by Geographic Segment:  
  • Americas: $24.542 billion (+20% YOY)  
  • Europe: $12.138 billion (+14% YOY)  
  • Greater China: $9.551 billion (+19% YOY)  
  • Japan: $3.867 billion (+7% YOY)
  • Rest of Asia Pacific; $3.167 billion (+16% YOY)

• AAPL after hours: $196.45, +6.16 (+3.24%) @ 4:55PM EDT
• Conference call begins
• Apple CEO Tim Cook Takes The Microphone:
  • We’re proud to report our best June quarter ever driven by continued strong sales of iPhone, Services, and Wearables.
  • This is Apple’s fourth consecutive quarter of double-digit revenue growth
  • iPhone X was the most popular iPhone in the quarter as it has been since it’s release
  • Paid subscriptions have now surpassed $300 million; revenue from subscriptions counts for a significant portion of Services
  • App Store turned 10 years old this quarter
  • App Store generated nearly twice the revenue of Google Play so far in 2018
• AAPL after hours: $195.89, +5.60 (+2.94%) @ 5:04PM EDT
  • Apps are generating tens of millions of jobs around the world
  • Rapid growth in App Store search ad business
  • Apple seeing strong growth in services; Apple Music grew over 50% YOY
  • All-time highs for number of FaceTime calls and Siri requests
  • Apple Pay over 1 billion transactions last quarter
  • CVS and 7-11 will roll out Apple Pay across the U.S. this year
  • Wearables up over 60% YOY (Apple Watch grew in mid 40% range YOY); AirPods sales are strong
  • WWDC 2018 previewed many advancements coming this year to macOS, tvOS, iOS, and watchOS
  • With iOS 12, Siri will take a major step forward with Siri Shortcuts
  •  iOS 12 adds tools to help customers understand and take control of the time spent with iOS devices
• AAPL after hours: $196.08, +5.79 (+3.04%) @ 5:12PM EDT
  • Apple is uniquely positioned in AR because of control of both hardware and software
  • iOS and macOS has shared a common foundation from the very beginning; now some iOS apps will be available on the Mac with macOS Mojave
  • Mac App Store getting a full redesign this fall
  • Privacy is one of the most important issues of the 21st century
  • Apple Watch will receive major improvements with watchOS 5
  • Apple TV 4K has seen major growth as cable companies adopt Apple TV 4K to deliver their content
  • We are always working to leave the world better than we found it
  • First of its kind investment fun in China; $300 million China Clean Energy Fund
  • Great momentum in Everyone Can Code and Everyone Can Create projects
  • Apple teaming with leading educators in blind and deaf schools for Everyone Can Code
• Luca Maestri Takes Over The Microphone:
  • We’re very happy to report Apple’s best June quarter ever
  • Quarterly revenue of $53.3 billion:
    •  iPhone: 41.3 million units (+1% YOY), $29.906 billion revenue (+20% YOY)
    •  Services: $9.548 billion (+31% YOY)
    •  Mac: 3.720 million units (-13% YOY), $5.330 billion revenue (-5% YOY)
    •  iPad: 11.553 million units (+1% YOY), $4.741 billion revenue (-5% YOY)
    •  Other Products: $3.740 billion (+37% YOY)
  • Apple grew in each of Apple’s top 15 markets.
    • iPhone channel inventory reduced by 3.5 million units during the quarter
    • Services: Best results ever (double digit Services growth in every market)
    • Mac: Double digit YOY growth; nearly 60% of purchase coming from customers who are new to Mac
    • Enterprises are are deploying Macs due to employee choice programs
    • Different timing of MacBook pro launch caused unfavorable YOY comparison
    • Double digit iPad unit growth in China
    • Almost half of iPad purchases in quarter were new to iPad
    • NPD: iPad has 60% share, up from 51% YOY, in U.S. tablet market
    • Apple is making great headway in the enterprise with iPhone and iPad
  • Business Chat for iMessage seeing strong adoption
  • Retail and Onlie Stores had a great quarter; over 250K Today at Apple sessions
  • Apple opened 50th retail store in China during the quarter
  • Net cash position $129.1 billion
  • Apple plans to reach a net cash neutral position over time
  • 112.8 million shares repurchased during the quarter
• Next Quarter Guidance:
  • Apple is providing the following guidance for its fiscal 2018 fourth quarter:
    • Revenue between $60 billion and $62 billion
    • Gross margin between 38 percent and 38.5 percent
    • Operating expenses between $7.95 billion and $8.05 billion
    • Other income/(expense) of $300 million
    • Tax rate of approximately 15 percent before discrete items
• Dividend Declared
  • Apple’s board of directors has declared a cash dividend of $0.73 per share of the Company’s common stock
  • The dividend is payable on August 16, 2018 to shareholders of record as of the close of business on August 13, 2018
• Tim Cook Takes The Microphone Back:
  • Services results were very broad based. We couldn’t be happier with how things are going.
  • We are thrilled about our pipeline that has some new Services in it as well (streaming content—MDN Ed.)
• Microphone Back to Luca:
  • Luca: We are very happy to see gross margin sequentially flat for June
  • Foreign exchange has been a very significant headwind over the past 3-4 years, but we’ve been able to manage that
• Tim Cook Takes The Microphone Back:
  • We feel great about iPhone results
  • iPhone X is the most innovative smartphone on the market and we could not be happier that it’s been the top-selling iPhone since its launch
  • It’s clear that Apple picked up global smartphone and tablet market share in the quarter
  • This is the 4th consecutive quarter that Apple has had double-digit growth in China
  • Our view on tariffs is that they show up as a tax on consumers, but the trade agreements that the U.S. has with China and several other countries are in need of modernizing
  • None of our products are directly affected by current tariffs; we are evaluating a fourth tariff which is in the comment period
  • Risk associated due to tariffs is very difficult to quantify and Apple is not even trying to quantify it
  • Apple is optimistic about U.S.- China trade relations
  • We’re very excited to work with Oprah
  • We think we can do some great original content with Oprah
  • We hired two very respected TV executives last year (Jamie Erlicht and Zach Van Amburg – MDN Ed.)
  • We are not ready to talk about it yet, but we are very excited about what we’ll eventually offer
  • Cord-cutting is only going to accelerate
  • Apple TV 4K units and revenue grew by very strong double-digits in Q318
  • We’re really happy to be working on something that we’re not ready to talk about yet
  • Apple Music has well over 50 million listeners (paid and trial users)
  • Apple took leadership position in streaming music in the U.S. and Japan
  • There is an extraordinary opportunity to grow streaming music
  • Our revenues on Apple Music grew over 50% during Q3
  •  Luca: We expect strong growth to come from iPhone, Services and Wearables
  • Cook: I think the smartphone market is very healthy
  • Smartphone market is a great market because it’s just huge.
  • Some smartphone replacement cycles are lengthening due to subsidy plans becoming a much smaller percentage of sales
  • iPhone X shows that when you deliver a great innovative product, people want it
  • Apple has not conducted an analysis of how many people opted for low-cost battery replacement vs. buying a new iPhone
  • A lot of people that buy Apple products buy for the whole ecosystem even if they do not utilize the entire ecosystem to start
  • It is clear from my communications with customers that some are attracted to iPhone thanks to Apple Watch and AirPods; the reverse of that is also true
• AAPL after hours:$197.05, +6.76 (+3.55%) @ 6:00PM EDT
• End of the conference call

[Swordmaker]

Apple releases Third Quarter Financial Results. . . best in Company History.

• Quarterly revenue of $53.3 billion:
• iPhone: 41.3 million units (+1% YOY), $29.906 billion revenue (+20% YOY)
• Services: $9.548 billion (+31% YOY)
• Mac: 3.720 million units (-13% YOY), $5.330 billion revenue (-5% YOY)
• iPad: 11.553 million units (+1% YOY), $4.741 billion revenue (-5% YOY)
• Other Products: $3.740 billion (+37% YOY)

Next Quarter guidance:

• revenue between $60 billion and $62 billion
• gross margin between 38 percent and 38.5 percent
• operating expenses between $7.95 billion and $8.05 billion
• other income/(expense) of $300 million
• tax rate of approximately 15 percent before discrete items

—PING!

Apple 3rd Quarter Financials Ping!

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[SamAdams76]

This is another very impressive performance by Apple.

Even though revenue is slightly down YOY on iPads, the unit sales are increasing, which suggests that prices are coming down to more affordable levels. The iPad is a unheralded product for the most part but over 11 million plus iPads were sold last quarter alone which suggests the penetration is increasing. I still have my original iPad from several years ago and it still works perfectly today, which tells me a lot of people out there are getting years and years out of this product.

[ProtectOurFreedom]

$10 Billion in China with 19% YOY growth. I had no idea their Chinese business had grown that big.

Americas have 1 billion people with $25 Billion in sales. It’s surprising that China has hit 40% of the Americas market considering how many cheap knock-offs are available in Asia.

[roadcat]

I still have my original iPad from several years ago and it still works perfectly today, which tells me a lot of people out there are getting years and years out of this product.

Yikes, I've had mine since 2010, got my moneys' worth out of it. Still works fine. Upgraded my wife to an iPad mini a few years ago, and it's fine also. I think I'll go for a new one this fall. Other people I know pass the old ones down to their kids when they buy a newer one. My old one will go to a granddaughter.

[grwcfl537]

Upgraded to 12+ for myself and 10+ for Mrs. Sent iPad mini and older iPad Air to grandkids. Hppy with mine and Apple pencil and with few exceptions could replace my mac book air !3”. It streams TV better than the air. Only problem is it doesn’t do local HD channels.

[roadcat]

Hppy with mine and Apple pencil and with few exceptions could replace my mac book air !3”.

How do you like the Apple pencil with iPad? My original 2010 model had 3G, I later bought a newer one with 3G and the carrier transferred my account to it (unlimited data), so the 2010 model is just wi-fi now but still works. I think the other one I bought was 2012, and I use it when traveling (I put in several movies and reading material, and 3G is great for GPS mapping). If I buy a new model, I don't think I could again transfer my account so I'll get wi-fi only and keep it home. What I'm interested in with a newer model is drawing at home with the Pencil features. Streaming on a big iPad would also be nice, would be easier than on my MacBook which I use often for video streaming from other sources.

[grwcfl537]

I have the new model of both. The screen is retina and very nice. The wifi antenna seems better than the older ones, so reception seems better. This is objective, I haven’t seen any lab numbers on this antenna selectivity and the 4G seems as good as that on my Apple 8 phone. I haven’t checked out the “hot spot” pairing since we haven’t had a hurricane since I got them.

The Apple pencil is better, more touch sensitive but needs more user training to use. As I said, it could replace my macbook air 13” except for OTAR HDTV reception.

[BunnySlippers]

Thank you.