A veteran analyst suggests six new metrics.
From a note by Gene Munster to Loup Ventures’ subscribers that landed on my desktop Thursday:
I’m guilty of falling into the unit trap. It took me 5 days to realize the company grew revenue 20% y/y and earnings 40% y/y in the Sept. 2018 quarter, despite Apple highlighting those data points 3 times on the earnings call…
We believe this is how Apple would have reported the Sep-18 quarter under the new reporting approach:
- Grew revenue by 20% (highest rate in 3 years) and earnings by 41%. (We expect 11% revenue growth and 26% earnings growth in FY19).
- Grew installed base at “double digits,” which now likely exceeds 1.4B devices.
- Services grew at 17% despite a difficult y/y comp.
- Returned $23.2B to investors.
- Retail now has 506 locations, with 70k employees, up from 65k earlier in the year.
- Saw Wearables growth of over 50%, compared to 60% in Jun-18, and 50% in Mar-18…
In a separate list, Munster suggested six data points Apple ought to release each quarter going forward:
- Earnings growth
- Revenue growth
- Hardware gross margin
- Services gross margin
- Installed base
- Revenue per user
My take: If that is Munster’s wish list, it falls pretty short. It doesn’t even provide the kind of detail he says Apple would have reported in the new regime. The fact is we have no idea—and investors have no control over—the level of transparency Apple chooses to offer. The whole thing is a mystery and a source of uncertainty. It will remain one until the company posts the new schedule Luca Maestri promised last week. I’ve been keeping an eye on the Investor Relations website. No sign of it as of Thursday morning.