The ups and downs of Apple’s revenue, diluted earnings, iPhone sales, services and wearables.
Apple beat Wall Street's diminished expectations, growing revenue and earnings despite reduced iPhone sales. Services and wearables both grew by double digits. "Resilience" was the word of the day.
The stock zig-zagged in after-hours trading.
From the press release:
"Despite COVID-19’s unprecedented global impact, we’re proud to report that Apple grew for the quarter, driven by an all-time record in Services and a quarterly record for Wearables," said Tim Cook, Apple’s CEO. "In this difficult environment, our users are depending on Apple products in renewed ways to stay connected, informed, creative, and productive."
"We are proud of our Apple teams around the world and how resilient our business and financial performance has been during these challenging times," said Luca Maestri, Apple’s CFO. "Our active installed base of devices reached an all-time high in all of our geographic segments and all major product categories. We also generated operating cash flow of $13.3 billion during the quarter, up $2.2 billion over a year ago."
Apple’s board of directors has declared a cash dividend of $0.82 per share of the Company’s common stock, an increase of 6 percent. The dividend is payable on May 14, 2020 to shareholders of record as of the close of business on May 11, 2020. The board of directors has also authorized an increase of $50 billion to the existing share repurchase program.
No guidance given for the June quarter.
iMore's earnings call transcript.
Below: The five charts. Click the second column to see year-over-year growth. (Not seeing the charts? Try the website.)
EPS:
Gonna take some reading to find out where that went.
No guidance. Oh noes!
Bright spot; Services and Wearables both up significantly over a year ago.
And Apple commited to return another $50 B to stockholders.
iPhone revenue down $2.1B YOY, 6.75% amounting to a -2.9M units @ my estimated $725 ASP, an ASP of $749 would imply -2.8M units. That would imply units sold ~40M sold during the quarter, buoyed probably due to early Lunar New Year sales prior to the China lockdown and late in quarter US market slowdown.
Meanwhile Services UP $2.0B YOY, +17.7%, a nice jump. Wearables UP $1.2B YOY, +23.5%, a solid increase and passed 2019 Q3 and approaching 2019 Q4 revenues.
Overall, not bad considering and if no Covid crisis, certainly would have met original guidance. I suspect the aftermarket drop is due to no guidance given for Q3 2020. Few other companies are guiding and Apple is correct to withhold guidance with all the economic uncertainty in the short and mid term. Let the analysts fret and estimate, meanwhile Apple will go about its business with a wary and cautious eye and approach.
I do think the SE will prove popular and provide an early floor to any revenue declines.
“I suspect the aftermarket drop is due to no guidance given for Q3 2020.”
I suspect you’re right. Boo hoo hoo. Doncha just feel for those poor analysts who now have to do some actual work for a living?
/s
On to the present quarter, where the SE-2 has knocked it out of the ball park.
I’m proud to own AAPL; And more secure financially.
Gems:
Tim: “There’s an upside in being forced to innovate and do things in a new way.”
Best response to about worry about lowering ASP, Tim; “We always strive to make the best products at a good price.”
Again on SE, Tim; “…faster than the fastest Android.”
The last quote, deserves more attention. Ten years ago, Apple started designing their own chips. Now no one can catch them, as in Apple plus TSMC, in SmartPhones, tablets, and wearables. Plus there’s rumor of an A-series powered Mac.
Here’s advice for analysts still counting iPhones and rehashing supply chain rumors: Start counting all the A-series devices sold each quarter.
iPhone -28,962
Mac – 5,351
iPad – 4,368
Wearables, Home, Accessories – 6,284
Services – 13,348
Total – 58,313
FQ2 ‘19 in $M:
iPhone – 31,051
Mac – 5,513
iPad – 4,872
Wearables, Home, Acc. – 5,129
Services – 11,450
Total – 58,015
Net income, FQ2 ’20 – $11.249 B
Net income, FQ2 ’19 – $11.561 B
Basically, a carbon copy of last year, but with a shift in revenue from iPhone/Mac/iPad to Wearables/Home/Acc./Services.
And that is in the historically lowest revenue and earnings quarter of the year, which this year AND last was coincident with major macro headwinds.
Bottom line: Apple has come out of this smelling like a rose.
Apple beats on top & bottom
….. Services continue to grow robustly @17%
….. Wearables set a quarterly record!
….. Buybacks continue with authorization increase of $50B 🙂
….. Cash on hand at $192.8B
….. Online sales set records 🙂
….. Dividend increase to $.82 per share
This is what got MY attention: Luca Maestri denoted that: “…Our active installed base of devices reached an all-time high in all our geographic segments and all our major product categories, ….”. WOW!
That last factor will pay perpetually going forward…..
Worth noting the $40B remaining plus the $50B newly authorized is $90B for buybacks or 7% at today’s market cap.
“ Based on Apple’s performance during the first five weeks of the quarter, we were confident we were headed toward a record second quarter. At the very high end of our expectations.”
I wouldn’t be surprised for Apple to come out with estimates 1/2 way through the quarter.
https://www.city-journal.org/fda-blocks-apple-watch-blood-oxygen-feature
A lot will depend on what parameters will prove useful for Covid-monitoring apps besides just location and contact tracing. It would be a fascinating study if the Watch came with temperature monitoring as well – a full temp, heart rate, and Oxygen saturation monitor would be significantly useful for potential Covid symptom discovery, or for that matter, simple influenza flu.
Despite the fact that other bands like Garmin and Fitbit have had pulse ox function, Apple’s Health Apps should tie all this together plus allow drop off of data via bluetooth or email to your doctor or hospital ER if needed.
Bart
Apple remains a very healthy company and I think the analysts will increasingly see the underlying values of Apple. The stock price got knee-jerked downward a little in after-hours but it likely will come up again once people study the results with it strong positives.
The positives don’t include yet the iPhone SE. Given the very positive report I read on Android websites—they’re jealous—I think it will be a runaway hit.
Maybe it’s just an example of the broken clock being right two times a day?