Apple’s March quarter pandemic earnings in five easy charts

The ups and downs of Apple’s revenue, diluted earnings, iPhone sales, services and wearables.

Apple Five easy charts Q2 2020 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.)

Revenues:

EPS:

iPhone revenues:

Services:

Wearables:

24 Comments

  1. Gregg Thurman said:
    Revenue and EPS are great given the circumstances of the period, but shareholder equity declined $18 Billion YoY. Initially, I’m thinking it went into share buyback.

    Gonna take some reading to find out where that went.

    1
    April 30, 2020
  2. Dan Scropos said:
    It appears they retired 50 million shares quarter over quarter. That’s perfect and maintains my narrative of 200 million shares per year for 5+ more years. That equates to the potential for $75 billion in earnings, 3 billion shares, $25 in eps and a p/e of 25, all which loosely equal a $625 share price in ~5 years.

    7
    April 30, 2020
  3. Bart Yee said:
    Relatively unsurprising report given the circumstances. Perhaps now naysayers will understand that Apple has successfully diversified its overall revenue streams?

    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.

    5
    April 30, 2020
  4. Jamie McDaniel said:
    Reassuring numbers by Apple given the circumstances. My hunch was wrong about suspending the buybacks. Having sold at $255 and now back at $300 I missed out on about $250k in the ol IRA. Congratulations to those that held during this report!

    1
    April 30, 2020
  5. Fred Stein said:
    Talk about anti fragile. Apple are a case history despite being a device maker, a storefront operator, and global in a global pandemic.

    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.

    6
    April 30, 2020
  6. John Konopka said:
    Philip, something is off in the numbers for your chart of wearables revenue. The numbers for Q1 2020 are off. According to Apple’s PDF the revenue should be 10.01B, you have 6.8B. If you click the percentage button even 6.8B doesn’t compute right. I downloaded the chart numbers and using the chart revenue numbers I get -7% for YoY. With 10.01B I get 37% YoY growth. Maybe I’m missing something.

    1
    April 30, 2020
  7. Jerry Doyle said:
    Congratulations to all those who predicted no forward guidance and that includes Horace Dediu who weighed in on that subject correctly. I missed that one….

    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…..

    6
    April 30, 2020
    • Dan Scropos said:
      Jerry, that also caught my attention. What it doesn’t include is just as important, though. It *doesn’t* include the iPhone SE 2020 release. How does that price point penetrate a brand new demographic? I would expect that installed base to continue to grow. Apple is now offering more products at more price points to more people worldwide than ever before, and that makes this shareholder sleep well.

      4
      April 30, 2020
    • Fred Stein said:
      Good points.

      Worth noting the $40B remaining plus the $50B newly authorized is $90B for buybacks or 7% at today’s market cap.

      2
      April 30, 2020
  8. Dan Scropos said:
    I found an absolute gem in Tim Cook’s comments:

    “ 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.”

    3
    April 30, 2020
  9. David Emery said:
    All-in-all, a really strong showing despite the pandemic!

    I wouldn’t be surprised for Apple to come out with estimates 1/2 way through the quarter.

    2
    April 30, 2020
  10. Kathy Corby said:
    Q: Seems to me I recall that the analysts were upset and the stock price took a hit a few quarters ago when Apple said it would no longer separate out iPhone revenue/sales. But it looks like that’s what we got. Did I misunderstand? Or did Apple change their minds?

    0
    April 30, 2020
    • Dan Scropos said:
      I believe they stopped reporting unit sales, Kathy.

      0
      April 30, 2020
    • What I remember is the stock taking a hit because Apple stopped reporting iPhone units. I think I was even more upset than the analysts!

      0
      April 30, 2020
  11. Doug Montgomery said:
    Was surprised that given the focus on Wearables and Covid-19 that nobody asked Tim Cook about calling in a marker with the President to bypass the FDA’s block of the Pulse Oximeter function already in the Apple Watch. If blood oxygen levels are a key metric to watch in infected individuals, then it is dumb that the FDA continues to block it’s use.

    4
    April 30, 2020
    • Bart Yee said:
      Doug, thanks for bringing that pulse oximeter issue up, I was not aware all Watch models already had that built in but function disabled. The following article discusses the FDA regulation issue. I agree, now is the time to request approval or start a pilot study to prove accuracy and usefulness. I, like you, am confident Apple already has the Watch PulseOx app ready to deploy, either in a current Watch update to Watch OS 6 or with Watch OS 7.

      https://www.city-journal.org/fda-blocks-apple-watch-blood-oxygen-feature

      0
      April 30, 2020
      • Bart Yee said:
        Now there are reports that iOS 14 and next Watch OS will have Watch pulse Oximeter (pulseOx) activated, along with possible stress monitoring and other features. I suggest that this has been in the works for some time and I’d love to see it activated early for Covid-monitoring during the summer and fall if possible. Otherwise, Apple is using it for feature-driven upgrades to Watch 6 and older Watches.
        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

        0
        May 2, 2020
  12. Jacob Feenstra said:
    I was positively surprised by the numbers. Apple continues to show real strength. I definitely had hoped for guidance for Q3 but fully understand that there are too many variables. (Why does Dediu always have to be right—doesn’t seem fair? ;-))

    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.

    3
    April 30, 2020
  13. Robert Stack said:
    And of all the ironies in the PED’s “Earnings Smackdown” for the quarter, who would have thought that Toni Sacconaghi would come closest in his estimates to AAPL’s actual reported revenue and earnings for the quarter? He even beat the amateurs, who are the real pros!
    Maybe it’s just an example of the broken clock being right two times a day?

    3
    April 30, 2020

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