Rumors of AAPL's demise have once again been greatly exaggerated. Moments ago, Apple reported Q1 earnings which not only beat on the top and bottom line, but also sold a record number of iPhonea in the quarter at a record 78.4 million, 2 million more than expected, at higher ASPs than expected. Earnings of $3.36 were higher than the $3.22 expected, on record revenue of $78.4 billion, above the $77.3 BN expected, and 3.3% higher than a year ago. While sales grew across the globe, revenue in China declined by 12% in the quarter, the 4th consecutive quarterly decline in a row.
“We were surprised by the strength of iPhone 7 Plus where we were actually short of supply throughout the quarter. We’ve been able to come into supply-demand balance in January," Chief Financial Officer Luca Maestri told Bloomberg.
The result in a nutshell:
- Q1 EPS: $3.36, Exp. $3.22
- Q1 Revenue: $78.4Bn, Exp. $77.3Bn
- Gross margin: Exp. 38.4%
- iPhone unit sales: 78.3 milion, Exp. 76.3 million. iPhone sales generated $54.4 billion in revenue, 69% of total.
- iPhone average selling price: $694.6, Exp. $688
Putting Apple's numbers in context: in Q1 2017 iPhone sales generated 69% of the company's total revenue. This compares to 2.5% in Q1 2008.
The only fly in the ointment appears to have been a modest cut to guidance, as it now expects to generate Q2 revenue of $51.5BN to $53.5BN, beow the $53.8BN expected.
In an interview, Apple CFO Luca Maestri said that app store sales increased 40% y/y in the quarter. Apple also provided the following guidance for its fiscal 2017 second quarter:
- revenue between $51.5 billion and $53.5 billion
- gross margin between 38 percent and 39 percent, Exp. 38.7%
- operating expenses between $6.5 billion and $6.6 billion
- other income/(expense) of $400 million
- tax rate of 26 percent
Tim cook was happy:
“We’re thrilled to report that our holiday quarter results generated Apple’s highest quarterly revenue ever, and broke multiple records along the way. We sold more iPhones than ever before and set all-time revenue records for iPhone, Services, Mac and Apple Watch,” said Tim Cook, Apple’s CEO. “Revenue from Services grew strongly over last year, led by record customer activity on the App Store, and we are very excited about the products in our pipeline.”
The result in chart format:
While Apple revenue grew Y/Y, Net Income failed to rise from a year ago, dipping 2.6% to $17.9 billion from $18.4 billion, even as iPhone sales rose by 5% from a year ago.
Q1 Revenue of $78.4 billion was an all time high.
Product sales: a record number of iPhone sold in the quarter
Regional breakdown: sales grew in every region expect China where they declined by 11.6%
Finally, the company's record cash hoard grew once more, rising to $246 billion total, and $159 billion net. Most of this cash remains offshore.