Consumer electronics giant Apple reported better than expected fiscal first quarter earnings Tuesday. Revenue from iPhones rose 8% to $55.97 billion on new models.. Services grew 17% growth to $12.7 billion. $AAPL was cautious going forward with the Coronavirus.
Consumer electronics giant Apple reported better than expected fiscal first quarter earnings Tuesday. Revenue from iPhones rose 8% to $55.97 billion on new models.. Services grew 17% growth to $12.7 billion. $AAPL was cautious going forward with the Coronavirus.
Apple (NASDAQ: $AAPL) Reported Earnings After Close Tuesday
$4.99 Beat $4.55 EPS Forecast AND $91B Beat $88.50 Billion forecast in revenue
Earnings
Apple reported fiscal first quarter earnings of EPS $4.99 vs. $4.55 estimated and revenue of $91.8B vs $88.50 billion estimated.
Net income rose to $22.24 billion from $19.97 billion in the first quarter of 2019.
The company’s new iPhone 11 models went on sale ten days before the company’s last quarter ended on September 30, so last quarterly report included 10 days worth of sales data.
A high point for the company was its other products segment, which saw revenue of $10.0 billion, above the FactSet consensus of $9.52 billion.
Market Reaction > Apple. Nasdaq: AAPL
Market Reaction After hours $325.38 +7.69 (+2.42%) New ATH $325.74
Highlights
- iPhone revenue: $55.97 vs. $51.62 billion estimated
- Services revenue: $12.7 vs $13.07 billion estimated
- Other Products revenue: $10B vs. $9.52 billion estimate
- Gross Margin: 38.4% vs 38.1% estimated .
- Apple “Other Products” category did $10 billion in sales during the quarter
- Apple Watch, AirPods, and Beats Headphones alone would be a “Fortune 150″ company.
- Apple’s services business, which comprises online software like iCloud, warranties like AppleCare, and content like Apple TV+, was up 17% year-over-year to $12.7 billion.
- Wearables, Home & Accessories sales were up 37%.
- Sales of Mac and iPad dropped 3% and 11% respectively from the year-ago period.
Apple’s CEO Tim Cook said, “During the holiday quarter our active installed base of devices grew in each of our geographic segments and has now reached over 1.5 billion. We see this as a powerful testament to the satisfaction, engagement and loyalty of our customers — and a great driver of our growth across the board.”It was sort of a blockbuster quarter all the way around,”
Geographic breakdown:
Cook said that Apple’s “Greater China” segment, which also includes Taiwan and Hong Kong, had returned to growth in the quarter.
- Americas sales rose 12% year over year to $41.37 billion and accounted for 45.1% of total sales.
- Europe generated $23.27 billion in sales, up 14.3% on a year-over-year basis and accounted for 25.3% of total sales.
- Greater China sales rose 3.1% from the year-ago quarter to $13.58 billion and accounted for 14.8% of total sales.
- Apple stated that the Services segment grew at a double-digit rate in China.
- Japan sales declined 9.9% year over year to $6.22 billion and accounted for 6.8% of total sales.
- Rest of the Asia Pacific generated sales of $7.38 billion, up 6.5% year over year.
- The region accounted for 8% of total sales.
- Apple established new first-quarter records in the United States, Canada, Mexico, Brazil, the U.K., Germany, France, Italy, Spain, Poland, Thailand, Malaysia and Vietnam.
Back last January Apple warned on revenue, the last time it warned on revenue guidance was 15 years prior. The Cook announcement merely confirmed specualtion after guidance cuts by a number of reliant material suppliers and partner manufacturers. With the revenue decline and unit sales figures removed from its financial reporting operating margin becomes a keen focus. From here Apple has bounced to new all time high
Balance Sheet & Cash Flow
- As of Dec 28, 2019, cash & marketable securities were $207.06 billion compared with $205.89 billion as of Sep 30.
- Term debt, as of Dec 28, was $93.08 billion, up from $98.47 billion as of Sep 30.
- Apple issued a €2-billion green bond, retired $1 billion of maturing debt and reduced commercial paper by $1 billion during the reported quarter. As of Dec 28, total debt was $108 billion.
- Cash flow from operations was $30.5 billion in the first quarter compared with $19.9 billion in the previous quarter.
- Apple returned almost $25 billion in the reported quarter through dividend payouts and share repurchases.
- The company repurchased 40 million shares for $10 billion and paid out $3.5 billion in dividends.
- Moreover, it declared a cash dividend of 77 cents per share to be payable on Feb 13, 2020, to shareholders of record as of Feb 10.
Outlook
Q2 revenue guidance: $63 billion to $67 billion vs. $62.45 billion Q2 margin guidance: 38% to 239% vs. 38.2% However, Apple’s range of guidance for next quarter is wider than typically, a change that Cook attributed to uncertainty caused by the deadly coronavirus, which has shut down travel in China. “There’s more uncertainty, it’s a very fluid situation,” Cook said.
The growth rate of operating expenses, as a percentage of revenues, is higher compared to prior quarters due to investments related to the baseband business acquired from Intel (INTC – Free Report) and the Apple TV+ streaming service.
Source: Apple, TradersCommunity, AlphaStreet
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